Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 14

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 14
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 assess whether a contract has a significant financing component.
The Company allocates the transaction price to each distinct product based on its relative standalone selling price. The product price,
as specified on the purchase order, is considered the standalone selling price as it is an observable input which depicts the price as
if sold to a similar customer in similar circumstances. Revenue is recognized when control of the product is transferred to the customer
(i.e. when the Company’s performance obligations is satisfied), which typically occurs at shipment. Further in determining whether
control has been transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards
of ownership having transferred to the customer. Customers do not have a right to return the product other than for warranty reasons for
which they would only receive repair services or replacement products. The Company has also elected the practical expedient under ASC
340-40-25-4 to expense commissions for product sales when incurred as the amortization period of the commission asset the Company would
have otherwise recognized is less than one year.

Service and other revenue is comprised
of revenues from extended warranties, repair services, cloud revenue and software revenue. Revenue is recognized upon shipment of the
product and acceptance of the service or materials by the end customer for repair services. Revenue for extended warranty, cloud service
or other software-based products is over the term of the contract warranty or service period. A time-elapsed method is used to measure
progress because the Company transfers control evenly over the contractual period. Accordingly, the fixed consideration related to these
revenues is generally recognized on a straight-line basis over the contract term, as long as the other revenue recognition criteria have
been met.

    9

The Company’s multiple performance
obligations may include future in-car or body-worn camera devices to be delivered at defined points within a multi-year contract, and
in those arrangements, the Company allocates total arrangement consideration over the life of the multi-year contract to future deliverables
using management’s best estimate of selling price.

Revenue Cycle Management

The Company reports revenue cycle
management revenues on a net basis, as its primary source of revenue is its end-to-end service fees which is generally determined as a
percentage of the invoice amounts collected. These service fees are reported as monthly revenue upon completion of the Company’s
performance obligation to provide the agreed upon service.

Entertainment

The Company reports ticketing
revenue on a gross or net basis based on management’s assessment of whether the Company is