Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 298

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 2
Chunk 298
---
 at September 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 nine months ended September 30, 2025 and 2024 of $2,243,991, and
$691,730, 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 nine months ended September 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 $691,730 for the nine months ended September 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 nine months ended September
30, 2024.

Gain
on disposal of intangibles

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

Gain
on Sale of Property, Plant and Equipment

The
Company reported a gain on sale of property, plant and equipment of $-0- and $389,522 during the nine months ended September 30, 2025,
and 2024, respectively.

During
the nine 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 nine months ended September 30, 2024. This amount was offset by a separate loss on sale of fixed assets
of $41,661 for the nine months ended September 30, 2024

Loss
before Income Tax Benefit

As
a result of the above, we reported net loss before income tax benefit of $(1,185,464) and $(