Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 163

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 8
Chunk 163
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 after the Company and Depew reached a settlement.

In March 2024, the Company
filed a complaint against Larry Roberts (“defendant”) in the Superior Court of the State of California, County of Orange.
The lawsuit arises from the defendant’s multiple breaches of his obligations to the Company. The Company seeks monetary damages
based on certain conduct by the defendant. On May 28, 2024, the defendant filed a motion to strike portions of the complaint and a motion
for demurrer. On October 4, 2024, the Court sustained in part and overruled in part defendant’s motion for demurrer. The Court further
denied the defendant’s motion to strike in its entirety. A jury trial has been scheduled for October 19, 2026.

As of June 30, 2025 and December
31, 2024, we are able to estimate a range of reasonably possible loss related to the Culp McCauley case (when taking into account, among
other things, the uncertainty of recovering the judgment amount owed to the Company by Culp McAuley, Brandon Culp and Campbell McAuley,
jointly and severally), our estimate of the aggregate reasonably possible loss could be the entire balance of the judgment. The Company
has recorded an additional loss of $1,959,396 on this matter as of December 31, 2024 which together with the previously recorded losses
in prior years, reduces the Company’s net exposure to zero at June 30, 2025 and December 31, 2024. Our estimate with respect to
the aggregate reasonably possible loss is based upon currently available information and is subject to significant judgment and a variety
of assumptions and known and unknown uncertainties, which may change quickly and significantly from time to time, particularly if and
as we engage with applicable governmental agencies or plaintiffs in connection with a proceeding. Also, the matters underlying the reasonably
possible loss will change from time to time. As a result, actual results may vary significantly from the current estimate.

    24

While the ultimate resolution
is unknown, based on the information currently available, we do not expect that the pending lawsuit or the enforcement of the judgment
will have a material adverse effect on our operations, financial condition or cash flows. However, the outcome of any litigation is inherently
uncertain and there can be no assurance that any expense, liability or damages that may ultimately result from the resolution of the pending
lawsuit or enforcement