Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 35

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 35
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, while the revenue cycle management and
entertainment segments were determined to be impaired.

We
held goodwill of $5,480,966 as of September 30, 2024, related to businesses within our revenue cycle management segment. We held goodwill
of $6,112,507 as of September 30, 2024, respectively, related to businesses within our entertainment segment. As a result of our September
30, 2024 interim impairment test, we concluded that the carrying amount of the revenue cycle management and the entertainment reporting
units exceeded its estimated fair values. Thus, we recorded a non-cash goodwill impairment charge of $4,322,000, related to the goodwill
carrying balance for the revenue cycle management segment, and a non-cash goodwill impairment charge of $307,000, related to the goodwill
carrying balance for the entertainment segment, both of which was included in goodwill and intangible asset impairment charge on our
Condensed Consolidated Statements of Operations for the three months ended September 30, 2024. The goodwill impairment was primarily
driven by recent performance of the revenue cycle management and entertainment reporting units since our annual impairment testing date,
as well as a delay in the projected timing of recovery. The remaining balance for the goodwill carrying balance related to businesses
within our revenue cycle management segment was $1,158,966 and within the entertainment segment was $5,805,507, as of September 30, 2025
and December 31, 2024.

Indefinite-lived
intangible assets

We
held indefinite-lived trade names/trademarks of $699,000 as of September 30, 2025 and December 31, 2024, respectively, related to businesses
within our entertainment segment.

As
a result of our interim impairment test as of the last day of the fiscal third quarter of 2024 management concluded that the carrying
amount of a trade name/trademark related to the entertainment segment exceeded its estimated fair value and we recorded a non-cash impairment
charge of $201,000, which was included in goodwill and intangible asset impairment charge on our Condensed Consolidated Statements of
Operations for the year ended December 31, 2024. The charge was primarily driven by the split-off transaction not being completed when
and as expected and our recent revenue and operating performance of the related business given a decline in demand and overall economic
uncertainty. The remaining balance for this trade name/trademark was