Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 150

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
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angible assets acquired to goodwill. The use of alternative valuation assumptions, including
estimated growth rates, cash flows, discount rates and estimated useful lives could result in different purchase price allocations and
amortization expenses in current and future periods. Transaction costs associated with these acquisitions are expensed as incurred through
selling, general and administrative expenses on the condensed consolidated statement of operations. In those circumstances where an acquisition
involves a contingent consideration arrangement, the Company recognizes a liability equal to the fair value of the contingent payments
expected to be made as of the acquisition date. The Company re-measures this liability for each reporting period and records changes
in the fair value through operating income within the condensed consolidated statements of operations.

Warrant
Derivative Liabilities:

In
accordance with FASB ASC 815-40, Derivatives and Hedging: Contracts in an Entities Own Equity, entities must consider whether to classify
contracts that may be settled in its own stock, such as warrants to purchase shares of Common Stock, as equity of the entity or as an
asset or liability. If an event that is not within the entity’s control could require net cash settlement, then the contract should
be classified as an asset or a liability rather than as equity. We have determined that because the terms of the various warrants issued
and remain outstanding, include a provision that entitles all the warrant holders to receive cash for their warrants in the event of
a qualifying cash tender offer, while only certain of the holders of the underlying shares of Common Stock would be entitled to cash,
our warrants should be classified as liability measured at fair value, with changes in fair value each period reported in earnings. Volatility
in the price of our Common Stock may result in significant changes in the value of the derivatives and resulting gains and losses on
our condensed consolidated statement of operations.

Segment
Reporting

The
accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial
statements and requires selected information of those segments to be presented in the condensed consolidated financial statements. Operating
segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation
by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how
to allocate resources and assess performance. The Company’s three operating segments are Video Solutions, Revenue Cycle Management,
and Entertainment, each of which has specific personnel responsible for that business and reports to the CODM. Corporate expenses capture
the Company’s