Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 245

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 245
---
unds 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 $(14,424,531) for the nine months ended September
30, 2025 and 2024, respectively, an improvement of $13,239,067 (91.8%).

50

Income
Tax Benefit

We
recorded an income tax benefit of $-0- for the nine 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,