Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 260

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 260
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. Therefore,
we may be required to increase our valuation allowance in future periods should our assumptions regarding the generation of future taxable
income not be realized.

Inflation
and Seasonality

Inflation
has not materially affected us during the past fiscal year. We do not believe that our Video Solutions and Revenue Cycle Management segments
business is seasonal in nature, however; the Entertainment Segment is expected to generate higher revenue during the second half of the
calendar year than in the first half.

Item
3. Quantitative and Qualitative Disclosures about Market Risk.

Not
Applicable.

Item
4. Controls and Procedures.

Evaluation
of Disclosure Controls and Procedures

The
Company maintains disclosure controls and procedures, as such terms are defined in Rules 13a-15(e) under the Exchange Act. The Company,
under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer,
has evaluated the effectiveness of the design and operation of such disclosure controls and procedures for this Report. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures
were not effective as of September 30, 2025 to provide reasonable assurance that material information required to be disclosed by the
Company in this Report was recorded, processed, summarized and communicated to the Company’s management as appropriate and within
the time periods specified in SEC rules and forms.

As
part of our plan to remediate our controls which were not effective, we are performing a full review of our internal control procedures.
We have implemented, and plan to continue to implement, new controls and new processes. We have hired and plan to continue to hire additional
qualified personnel and establish more robust processes to support our internal control over financial reporting, including clearly defined
roles and responsibilities. The Company anticipates time being required to complete the implementation and to assess and ensure the sustainability
of these controls. The effectiveness will not be considered remediated until the applicable controls operate for a sufficient period
of time and management has concluded, through testing, that these controls are operating effectively.

Changes
in Internal Control over Financial Reporting

There
have not been any changes in the Company’s internal control over financial reporting, as such term is defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act, during the Company’s last fiscal quarter that have materially affected, or are reasonably
likely to materially affect, its internal control over financial reporting.

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PART
II –