Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 37

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 37
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 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 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, among other things, denying the allegations and any and all liability.

On December 20, 2022, the Company
filed a motion for leave to file a second amended complaint to add additional claims against the defendants to avoid fraudulent transfers,
to pierce the corporate veil of Culp McAuley, and for remedies related to the claims for fraudulent transfers and piercing the corporate