Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 132

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 132
---
 recorded as an income tax benefit and, for some portion related to deductions for stock option
exercises, an increase in shareholders’ equity.

As of March 31, 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 
     109,821,000 

    Federal net operating loss carry-forwards available 
    $159,280,000 

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 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
$1,742,000 available as of March 31, 2025, which expire between 2025 and 2040.

The Company’s 2022 federal
tax return was recently examined by the Internal Revenue Service resulting in no proposed adjustments.

    24

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 to not 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 damages 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