Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 28

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 28
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 depreciation, and amortization. The
income and market approaches were equally weighted in our most recent annual impairment test, for all of the reporting units.

The combined fair values for all
reporting units were then reconciled to our aggregate market value of our shares of Common Stock on the date of valuation, while considering
a reasonable control premium. We consider a reporting unit’s fair value to be substantially in excess of the reporting unit’s
carrying value at a 25% premium or greater. Based on our most recent impairment test, the video solutions reporting unit’s fair
value was substantially in excess of its carrying value, while the revenue cycle management and entertainment segments were determined
to be impaired.

We held goodwill of $5,480,966
as of September 30, 2024, related to businesses within our revenue cycle management segment. We held goodwill of $6,112,507 as of September
30, 2024, respectively, related to businesses within our entertainment segment. As a result of our September 30, 2024 interim impairment
test, we concluded that the carrying amount of the 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 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 March 31, 2025 and December 31, 2024.

Indefinite-lived intangible assets

We held indefinite-lived trade
names/trademarks of $699,000 as of March 31, 2025 and December 31, 2024, respectively, related to businesses within our entertainment
segment.

As a result of our interim impairment
test as of the last day of the fiscal third quarter of 2024 management concluded that the carrying amount of