Company: DGLY
Filing Date: 2025-01-24
Form Type: S-1
Source: 0001493152-25-003451
Chunk: 269

Company: DIGITAL ALLY, INC.
Filing Date: 2025-01-24
Form: S-1
Chunk 269
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revenue cycle management and the entertainment reporting units exceeded its estimated fair values. Thus, we recorded a non-cash
goodwill impairment charge of $4,322,000,
related to the goodwill carrying balance for the revenue cycle management segment, and a non-cash goodwill impairment charge of
$307,000, related to the goodwill carrying balance for the entertainment segment, both of which was included in goodwill and
intangible asset impairment charge on our Condensed Consolidated Statements of Operations for the three and nine months ended
September 30, 2024. The goodwill impairment was primarily driven by recent performance of the revenue cycle management and
entertainment reporting units since our annual impairment testing date, as well as a delay in the projected timing of recovery. The
remaining balance for the goodwill carrying balance related to businesses within our revenue cycle management segment and
entertainment segment was $1,158,966 and $5,805,507, respectively
as of September 30, 2024.

Indefinite-lived intangible assets

We held indefinite-lived trade names/trademarks of $900,000 and $600,000 as of September 30, 2024 and December 31, 2023, respectively,
related to businesses within our entertainment segment.

During the three
months ended September 30, 2024, we concluded that the carrying amount of a trade name/trademark related to the entertainment
segment exceeded its estimated fair value and we recorded a non-cash impairment charge of $201,000,
which was included in goodwill and intangible asset impairment charge on our Condensed Consolidated Statements of Operations for the
three and nine months ended September 30, 2024. The charge was primarily driven by the split-off transaction not being completed
when and as expected and our recent revenue and operating performance of the related business given a decline in demand and overall
economic uncertainty. The remaining balance for this trade name/trademark was $699,000
as of September 30, 2024.

NOTE 9. COMMITMENTS AND CONTINGENCIES

Litigation

From time to time, we are notified that we may be a party to a lawsuit or that a claim is being made against us. It is our policy to not disclose the specifics of any claim or threatened lawsuit until the summons and complaint are actually served on us. After carefully assessing the claim, and assuming we determine that we are not at fault or we disagree with the damages or relief demanded, we vigorously defend any lawsuit filed