Company: DGLY
Filing Date: 2025-05-02
Form Type: 424B3
Source: 0001641172-25-008437
Chunk: 94

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-02
Form: 424B3
Chunk 94
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 (ii) the high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating the significant assumptions used in management’s fair value estimates; and (iii) the audit effort involved in the use of professionals with specialized skill and knowledge.

How the Critical Audit Matter Was Addressed in the Audit

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.

| ● | These procedures included,                                                                                                                   
 among others, (i) testing management’s process for determining the fair value estimates of the entertainment segment; (ii)                   
 testing the completeness and accuracy of the underlying data used in the income and market approach; and (iii) evaluating the reasonableness 
 of the significant assumptions used by management related to future levels of revenue growth, gross profit margin, EBITDA as a percentage    
 of revenue, cash-free debt-free net working capital as a percentage of revenue, capital expenditures as a percentage of revenue,             
 discount rate, selection of guideline public companies and revenue market multiples.                                                         |
| ● | Evaluating management’s                                                                                                                      
 assumptions related to the future levels of revenue growth, gross profit margin, EBITDA as a percentage of revenue, cash-free debt-free      
 net working capital as a percentage of revenue, capital expenditures as a percentage of revenue, discount rate, selection of guideline       
 public companies and revenue market multiples and involved evaluating whether the assumptions were reasonable considering (i) current        
 and past performance of the entertainment segment; (ii) the consistency with external market and industry data; and (iii) whether these      
 assumptions were consistent with evidence obtained in other areas of the audit.                                                              |
| ● | Professionals with specialized                                                                                                               
 skill and knowledge were used to assist in evaluating (i) the appropriateness of the income and market approach and (ii) the reasonableness  
 of significant assumptions related to the future levels of revenue growth, gross profit margin, EBITDA as a percentage of revenue,           
 cash-free debt-free net working capital as a percentage of revenue, capital expenditures as a percentage of revenue, discount rate,          
 selection of guideline public companies and revenue market multiples.                                                                        |

Goodwill and Other Intangibles arising from the acquisition of Country Stampede – Refer to Notes 1 and 21 to the consolidated financial statements

Critical Audit Matter Description

As disclosed in Note 1, Goodwill arises in connection with acquisitions. The excess purchase price over the fair value of net tangible assets and identifiable intangible assets acquired is recorded as goodwill.