Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 131

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 131
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 consisted of
the following at March 31, 2025 and December 31, 2024:

 SCHEDULE OF ACCRUED EXPENSES

    March 31, 2025  
    December 31, 2024 
  
    Accrued warranty expense 
    $11,615  
    $11,615 
  
    Accrued payroll and related fringes 
     87,703  
     428,380 
  
    Accrued sales returns and allowances 
     93,170  
     93,170 
  
    Accrued sales taxes 
     113,816  
     104,404 
  
    Accrued interest - related party 
     5,918  
     492,177 
  
    Accrued board of directors’ fees 
     40,000  
     197,000 
  
    Customer deposits 
     2,400  
     165,779 
  
    Other 
     176,931  
     21,983 
  
    Total accrued expenses 
    $531,553  
    $1,514,508 

NOTE 8. INCOME TAXES

The effective tax rate for the
three months ended March 31, 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 March 31, 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 March 31, 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
March 31, 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