Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 172

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 172
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 to prior
years and have an indefinite life since the enactment of the Tax Cuts and Jobs Act of 2017. The Tax Cuts and Jobs Act of 2017 further
provides for an annual limitation on usage equivalent to 80% of taxable income. In addition, the Company had research and development
tax credit carry-forwards totaling $1,796,111 available as of September 30, 2025, which expire between 2025 and 2040.

The
Company’s 2023 federal tax return was recently examined by the Internal Revenue Service resulting in no proposed adjustments.

NOTE
9. COMMITMENTS AND CONTINGENCIES

Litigation.

From
time to time, we are notified that we may be a party to a lawsuit or that a claim is being made against us. It is our policy not to disclose
the specifics of any claim or threatened lawsuit until the summons and complaint are actually served on us. After carefully assessing
the claim, and assuming we determine that we are not at fault or we disagree with the damage or relief demanded, we vigorously defend
any lawsuit filed against us. We record a liability when losses are deemed probable and reasonably estimable. When losses are deemed
reasonably possible but not probable, we determine whether it is possible to provide an estimate of the amount of the loss or range of
possible losses for the claim, if material for disclosure. In evaluating matters for accrual and disclosure purposes, we take into consideration
factors such as our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood
of our prevailing, the availability of insurance, and the severity of any potential loss. We reevaluate and update accruals as matters
progress over time.

On
May 31, 2022, the Company filed a lawsuit against Culp McAuley, Inc. (“Culp McAuley”) and four individuals (Brandon Culp,
Campbell McAuley, Mark Depew and Larry Roberts) (collectively the “defendants”) in the United States District Court for the
District of Kansas, seeking monetary damages and injunctive relief based on certain conduct by the defendants. On July 18, 2022, Culp
McAuley filed its Answer to the Company’s Verified Complaint and included Counterclaims alleging breach of contract and seeking
monetary damages. On August 8, 2022, the Company filed its Reply and Affirmative Defenses to the Counterclaims by,