Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 146

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 146
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allowances are recognized at the time of sales on an accrual basis. The accrual is determined based upon historical return rates adjusted
for known changes in key variables affecting these return rates.

Use
of Estimates:

The
preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the condensed consolidated balance sheets and the reported amount of revenues
and expenses during the reporting period. Actual results could differ from those estimates. Management utilizes various other estimates,
including but not limited to, determining the estimated lives of long-lived assets, determining the potential impairment of long-lived
assets, the fair value of warrants, options, the recognition of revenue, inventory valuation reserve, allowances for doubtful accounts
and other receivables, incremental borrowing rate on leases, the valuation allowance for deferred tax assets and other legal claims and
contingencies. The results of any changes in accounting estimates are reflected in the condensed consolidated financial statements in
the period in which the changes become evident. Estimates and assumptions are reviewed periodically, and the effects of revisions are
reflected in the period that they are determined to be necessary.

    9

Cash
and cash equivalents:

Cash
and cash equivalents include funds on hand, in bank and short-term investments with original maturities of ninety (90) days or less.

The
Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that
at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits
with major financial institutions. At September 30, 2025 and December 31, 2024, the uninsured balance amounted to $-0-.

Restricted
Cash:

Restricted
cash of $-0- was included in other assets as of September 30, 2025 and 2024, respectively. Restricted cash consists of bank deposits
that collateralize a debt obligation. Such debt obligation was paid off as of December 31, 2024.

The
following table provides a reconciliation of cash and cash equivalents in the condensed consolidated balance sheets to cash, cash equivalents
and restricted cash in the condensed consolidated statements of cash flows:

 SCHEDULE OF RECONCILIATION OF CASH AND CASH EQUIVALENTS

    September