Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 190

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 190
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 generate all our revenue from contracts with customers.

Revenue for our revenue cycle
management segment is recorded on a net basis, as its primary source of revenue is its end-to-end service fees. These service fees are
reported as revenue monthly, upon completion of our performance obligation to provide the agreed upon services.

Revenue for our entertainment
segment is recorded on a gross or net basis based on management’s assessment of whether we are acting as a principal or agent in
the transaction. The determination is based upon the evaluation of control over the event ticket, including the right to sell the ticket,
prior to its transfer to the ticket buyer.

We sell our tickets held in inventory,
which consists of one performance obligation, being to transfer control of an event ticket to the buyer upon confirmation of the order.
We act as the principal in these transactions as we own the ticket at the time of sale, therefore we control the ticket prior to transferring
to the customer. In these transactions, revenue is recorded on a gross basis based on the value of the ticket and is recognized when an
order is confirmed. Payment is typically due upon delivery of the ticket.

We also act as an intermediary
between buyers and sellers through the online secondary marketplace. Revenues derived from this marketplace primarily consist of service
fees from entertainment operations, and consists of one primary performance obligation, which is facilitating the transaction between
the buyer and seller, being satisfied at the time the order has been confirmed. As we do not control the ticket prior to the transfer,
we act as an agent in these transactions. Revenue is recognized on a net basis, net of the amount due to the seller when an order is confirmed,
the seller is then obligated to deliver the tickets to the buyer per the seller’s listing. Payment is due at the time of sale.

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We review all significant, unusual,
or nonstandard shipments of product or delivery of services as a routine part of our accounting and financial reporting process to determine
compliance with these requirements. Extended warranties are offered on selected products, and when a customer purchases an extended warranty,
the associated proceeds are treated as deferred revenue and recognized over the term of the extended warranty.

For our video solutions segment,
our principal customers are state, local, and federal law enforcement agencies, which historically have been low risks for uncollectible
accounts. However, we have commercial customers and international distributors that present a greater risk for uncollectible accounts
than such law enforcement customers and we consider a specific reserve for bad debts based on their individual circumstances. Our historical