Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 88

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 88
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 changes reported in the condensed consolidated statement
of operations as the change in fair value of warrant derivative liabilities. The increase in the estimated fair value of the 2023 warrants
resulted in a loss from the change in fair value of warrant derivative liabilities in the condensed consolidated statement of operations
for the three months ended March 31, 2025.

Loss on Sale of Property, Plant and Equipment

The Company reported a loss on
sale of property, plant and equipment of $-0- and $41,661 during the three months ended March 31, 2025, and 2024, respectively.

Income (loss) before Income Tax Benefit

As a result of the above, we reported
net income (loss) before income tax benefit of $4,267,082 and $(3,943,268) for the three months ended March 31, 2025 and 2024, respectively,
an improvement of $8,210,350 (208%).

Income Tax Benefit

We recorded an income tax benefit
of $-0- for the three months ended March 31, 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 March 31, 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 March 31, 2025.

We had approximately $159,280,000
of federal net operating loss carryforwards and $1,742,000 of research and development tax credit carryforwards as of March 31, 2025 and
December 31, 2024 available to offset future net taxable income.

Net Income (Loss)

As a result of the above, we reported
a net income (loss) of $4,267,082 and $(3,943,268) for the three months ended March 31, 2025 and 2024, respectively, an improvement of
$8,210,350 (208%).

Net Income Attributable to Noncontrolling Interests
of Consolidated Subsidiary

The Company owns a 51% equity
interest in its consolidated subsidiary, Nobility Healthcare. As