Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 293

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 2
Chunk 293
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 acquired intangible assets, we consider, among other factors, analyses of
historical financial performance and an estimate of the future performance of the acquired business. The fair values of the acquired intangible
assets are primarily calculated using an income approach that relies on discounted cash flows. This method starts with a forecast of the
expected future net cash flows for the asset and then adjusts the forecast to present value by applying a discount rate that reflects
the risk factors associated with the cash flow streams. We consider this approach to be the most appropriate valuation technique because
the inherent value of an acquired intangible asset is its ability to generate future income. In a typical acquisition, we engage a third-party
valuation expert to assist us with the fair value analysis for acquired intangible assets.

Determining the fair values
of acquired intangible assets requires us to exercise significant judgment. We select reasonable estimates and assumptions based on evaluating
a number of factors, including, but not limited to, marketplace participants, consumer awareness and brand history. Additionally, there
are significant judgments inherent in discounted cash flows such as estimating the amount and timing of projected future cash flows, the
selection of discount rates, hypothetical royalty rates and contributory asset capital charges. Specifically, the selected discount rates
are intended to reflect the risk inherent in the projected future cash flows generated by the underlying acquired intangible assets.

Determining an acquired intangible
asset’s useful life also requires significant judgment and is based on evaluating a number of factors, including, but not limited
to, the expected use of the asset, historical client retention rates, consumer awareness and trade name history, as well as any contractual
provisions that could limit or extend an asset’s useful life.

65

The Company’s goodwill
is evaluated in accordance with FASB ASC Topic 350, which requires goodwill to be assessed for impairment at least annually and whenever
events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. In addition, an impairment evaluation
of our amortizable intangible assets may also be performed if events or circumstances indicate potential impairment. Among the factors
that could trigger an impairment review are current operating results that do not align with our annual plan or historical performance;
changes in our strategic plans or the use of our assets; restructuring changes or other changes in our business segments; competitive
pressures and changes in the general economy or in the markets in which we operate; and a significant decline in our stock price and our
market capitalization relative to our net book value.