Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 171

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 171
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    Other 
     64,791  
     21,983 
  
    Total
    accrued expenses 
    $436,682  
    $1,514,508 

    19

NOTE
8. INCOME TAXES

The
effective tax rate for the three and nine months ended September 30, 2025, and 2024 varied from the expected statutory rate due to the
Company continuing to provide a 100% valuation allowance on net deferred tax assets. The Company determined that it was appropriate to
continue the full valuation allowance on net deferred tax assets as of September 30, 2025, primarily because of the recent operating
losses.

The
Company incurred operating losses in recent years, and it continues to be in a three-year cumulative loss position at September 30, 2025.
Accordingly, the Company determined there was not sufficient positive evidence regarding its potential for future profits to outweigh
the negative evidence of our three-year cumulative loss position under the guidance provided in ASC 740. Therefore, it determined to
fully reserve its deferred tax assets at September 30, 2025. The Company expects to continue to maintain a full valuation allowance until
it determines that it can sustain a level of profitability that demonstrates its ability to realize these assets. To the extent the Company
determines that the realization of some or all of these benefits is more likely than not based upon expected future taxable income, a
portion or all of the valuation allowance will be reversed. Such a reversal would be recorded as an income tax benefit and, for some
portion related to deductions for stock option exercises, an increase in shareholders’ equity.

As
of September 30, 2025, the Company had the following estimated Federal net operating loss carry-forwards available to offset future taxable
income:

 SCHEDULE OF FEDERAL NET OPERATING LOSS CARRY FORWARDS

    Amount 
  
    Tax years generated: 

    2017 and before 
    $49,459,000 
  
    2018 and after 
     110,506,000 

    Federal net operating loss carry-forwards available 
    $159,965,000 

Such
tax net operating loss carry-forwards expire between 2025 and 2043 relative to Federal net operating loss carry-forwards generated in
tax years 2017 and prior. Federal net operating loss carry-forwards generated in tax years 2018 and after cannot be carried back