Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 134

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 8
Chunk 134
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 accounting principles in the United States for interim financial
information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information
and footnotes required by generally accepted accounting principles in the United States for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
Operating results for the three and six-month periods ended June 30, 2025 are not necessarily indicative of the results that may be expected
for the year ending December 31, 2025.

The balance sheet as of December
31, 2024 has been derived from the audited financial statements at that date but does not include all the information and footnotes required
by generally accepted accounting principles in the United States for complete financial statements.

For further information, refer
to the audited consolidated financial statements and footnotes included in the Company’s annual report on Form 10-K for the year
ended December 31, 2024.

Basis of Consolidation:

The accompanying condensed
consolidated financial statements include the consolidated accounts of Digital Ally, its wholly-owned subsidiaries, Digital Ally International,
Inc., Digital Ally Healthcare, LLC, TicketSmarter, Inc., Kustom Entertainment, Inc., Kustom 440, Inc., and its majority-owned subsidiary
Nobility Healthcare, LLC. All intercompany balances and transactions have been eliminated during consolidation.

Fair Value of Financial Instruments:

The carrying amounts of financial
instruments, including cash and cash equivalents, accounts receivable, accounts payable and subordinated notes payable approximate fair
value because of the short-term nature of these items.

    8

Revenue Recognition:

The Company applies the provisions
of Accounting Standards Codification (ASC) 606-10, Revenue from Contracts with Customers, and all related appropriate guidance.
The Company recognizes revenue under the core principle to depict the transfer of control to its customers in an amount reflecting the
consideration to which it expects to be entitled. In order to achieve that core principle, the Company applies the following five-step
approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction
price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance
obligation is satisfied.

The Company has two different
revenue streams, product and service