Company: DGLY
Filing Date: 2025-02-11
Form Type: S-1/A
Source: 0001493152-25-005949
Chunk: 280

Company: DIGITAL ALLY, INC.
Filing Date: 2025-02-11
Form: S-1/A
Chunk 280
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 capitalization of similar publicly traded
companies, referred to as a multiple, to apply to the operating results of the reporting units. The primary market multiples used
are revenue and earnings before interest, taxes, 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 20%
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 and December 31, 2023, related to businesses within our revenue cycle management segment. We held goodwill
of $6,112,507 and $5,886,548 as of September 30, 2024 and December 31, 2023, 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 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/tr