Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 283

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 2
Chunk 283
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 loss of $351,710 during the six months ended June 30, 2024. The Company has issued various
detachable warrants in connection with capital raises during 2024 and 2025 that were required to be treated as warrant derivative liabilities.
Warrant derivative liabilities are required to be marked-to-market at each balance sheet date with the change in fair value recorded as
a gain or loss in the Condensed Statement of Operations. The gain recorded in the six months ended June 30, 2025 reflects the large decline
in the closing market value of our common stock at June 30, 2025 when compared to December 31, 2024 closing market values.

Gain on Extinguishment of Liabilities

The Company recorded a gain
on the extinguishment of liabilities for the six months ended June 30, 2025 and 2024 of $2,230,716, and $682,345, respectively. The gains
reflect income related to the video solutions and entertainment segment’s ability to negotiate down payables and other contract
obligations during the six months ended June 30, 2025 utilizing funds generated by the closing of the February 2025 public equity offering
on February 13, 2025.

The gain on extinguishment
of liabilities was $682,345 for the six months ended June 30, 2024, which reflects income related to the entertainment segment’s
ability to negotiate down payables and other contract obligations during the period. The Company utilized funds from the related party
note payable to resolve numerous outstanding payables at a discounted rate, the discount received was recognized as a gain on extinguishment
of liabilities in the condensed consolidated statement of operations for the six months ended June 30, 2024.

Gain on disposal of intangibles

Gain on disposal of intangibles
decreased to $-0- for the six months ended June 30, 2025, from $5,582 during the six months ended June 30, 2024.

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 six months ended June 30, 2025, and 2024, respectively.

Loss before Income Tax Benefit

As a result of the above,
we reported net loss before income tax benefit of $(222,122) and $(8,953,819) for the six months