Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 188

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 188
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 a liability when losses are deemed probable and reasonably estimable. When losses are deemed reasonably possible but not
probable, we determine whether it is possible to provide an estimate of the amount of the loss or range of possible losses for the claim,
if material for disclosure. In evaluating matters for accrual and disclosure purposes, we take into consideration factors such as our
historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood of our prevailing,
the availability of insurance, and the severity of any potential loss. We re-evaluate and update accruals as matters progress over time.

While the ultimate resolution
is unknown, we do not expect that these lawsuits will individually, or in the aggregate, have a material adverse effect to our results
of operations, financial condition or cash flows. However, the outcome of any litigation is inherently uncertain and there can be no assurance
that any expense, liability or damages that may ultimately result from the resolution of these matters will be covered by our insurance
or will not be in excess of amounts recognized or provided by insurance coverage and will not have a material adverse effect on our operating
results, financial condition or cash flows. See Note 9, “Commitments and Contingencies,” to the condensed consolidated financial
statements of this Quarterly 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