Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 304

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 2
Chunk 304
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 Report on Form 10-Q for information on our litigation.

Critical
Accounting Estimates

Our
significant accounting policies are summarized in Note 1, “Nature of Business and Summary of Significant Accounting Policies,”
to our condensed consolidated financial statements. While the selection and application of any accounting policy may involve some level
of subjective judgments and estimates, we believe the following accounting policies and estimates are the most critical to our financial
statements, potentially involve the most subjective judgments in their selection and application, and are the most susceptible to uncertainties
and changing conditions:

    ●
    Revenue
    Recognition / Allowance for Doubtful Accounts;

    ●
    Allowance
    for Excess and Obsolete Inventory;

    ●
    Goodwill
    and other intangible assets;

    ●
    Warranty
    Reserves;

    ●
    Fair
    value of assets and liabilities acquired in business combinations;

    ●
    Fair
    value of warrant derivative liabilities;

    ●
    Stock-based
    Compensation Expense; and

    ●
    Accounting
    for Income Taxes.

Revenue
Recognition / Allowances for Doubtful Accounts. Revenue is recognized for the shipment of products or delivery of service when
all five of the following conditions are met:

    (i)
    Identify
    the contract with the customer;

    (ii)
    Identify
    the performance obligations in the contract;

    (iii)
    Determine
    the transaction price;

    (iv)
    Allocate
    the transaction price to the performance obligations in the contract; and

    (v)
    Recognize
    revenue when a performance obligation is satisfied.

We
consider the terms and conditions of the contract and our customary business practices in identifying our contracts under ASC 606. We
determine we have a contract when the customer order is approved, we can identify each party’s rights regarding the services to
be transferred, we can identify the payment terms for the services, we have determined the customer has the ability and intent to pay
and the contract has commercial substance. At contract inception we evaluate whether the contract includes more than one performance
obligation. We apply judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors,
including the customer’s historical payment experience or, in the case of a new customer, credit and financial information pertaining
to the customer.

Performance
obligations promised in a contract are identified based on the services and the products that will be transferred to the