Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 231

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 231
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obligations during the three months ended September 30, 2025 utilizing funds generated by the closing of the February 2025 public equity
offering on February 13, 2025.

Gain
on Sale of Property, Plant and Equipment

During
the three months ended September 30, 2024, the Company sold its building for $5,900,000 less closing costs of $7,194. The carrying amount
of the building on the date of sale was $5,461,623. As a result of the sale the Company recorded a gain of $431,183 in the Consolidated
Statement of Operation during the three months ended September 30, 2024.

Loss
before Income Tax Benefit

As
a result of the above, we reported a net loss before income tax benefit of $(963,342) and $(5,470,712) for the three months ended September
30, 2025 and 2024, respectively, an improvement of $4,507,370 (82.4%).

Income
Tax Benefit

We
recorded an income tax benefit of $-0- for the three months ended September 30, 2025 and 2024, respectively. The effective tax rate for
both 2025 and 2024 varied from the expected statutory rate due to our continuing to provide a 100% valuation allowance on net deferred
tax assets. We determined that it was appropriate to continue the full valuation allowance on net deferred tax assets as of September
30, 2025 and December 31, 2024 primarily because of the recurring operating losses.

We
have further determined to continue providing a full valuation reserve on our net deferred tax assets as of September 30, 2025.

We
had approximately $159,965,000 of federal net operating loss carryforwards and $1,796,111 of research and development tax credit carryforwards
as of September 30, 2025 and December 31, 2024 available to offset future net taxable income.

44

Net
Income (Loss)

As
a result of the above, we reported net income (loss) of $(963,342) and $(5,470,712) for the three months ended September 30, 2025 and
2024, respectively, an improvement of $4,507,370 (82.4%).

Net
Income Attributable to Noncontrolling Interests of Consolidated Subsidiary

The