Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 17

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 1
Chunk 17
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 services or replacement products. The Company has also elected the practical expedient under ASC
340-40-25-4 to expense commissions for product sales when incurred as the amortization period of the commission asset the Company would
have otherwise recognized is less than one year.

Service and other revenue
is comprised of revenues from extended warranties, repair services, cloud revenue and software revenue. Revenue is recognized upon shipment
of the product and acceptance of the service or materials by the end customer for repair services. Revenue for extended warranty, cloud
service or other software-based products is over the term of the contract warranty or service period. A time-elapsed method is used to
measure progress because the Company transfers control evenly over the contractual period. Accordingly, the fixed consideration related
to these revenues is generally recognized on a straight-line basis over the contract term, as long as the other revenue recognition criteria
have been met.

The Company’s multiple
performance obligations may include future  body-worn camera devices to be delivered at defined points within a multi-year contract,
and in those arrangements, the Company allocates total arrangement consideration over the life of the multi-year contract to future deliverables
using management’s best estimate of selling price.

Revenue Cycle Management

The Company reports revenue
cycle management revenues on a net basis, as its primary source of revenue is its end-to-end service fees which is generally determined
as a percentage of the invoice amounts collected. These service fees are reported as monthly revenue upon completion of the Company’s
performance obligation to provide the agreed upon service.

    9

Entertainment

The Company reports ticketing
revenue on a gross or net basis based on management’s assessment of whether the Company is acting as a principal or agent in the
transaction. The determination is based upon the evaluation of control over the event ticket, including the right to sell the ticket,
prior to its transfer to the ticket buyer.

The Company sells tickets
held in inventory, which consists of one performance obligation, being to transfer control of an event ticket to the buyer upon confirmation
of the order. The Company acts as the principal in these transactions as the ticket is owned by the Company at the time of the sale, therefore
controlling the ticket prior to transferring to the customer. In these transactions, revenue is recorded on a gross basis based on the
value of the ticket and is recognized when an order is confirmed. Payment is typically due upon delivery of the ticket.

The Company also acts as an
intermediary between buyers and sellers through online secondary