Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 128

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 128
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 and we collect the service
fees charged with the transaction. Thus, leading to minimal risk for uncollectible accounts, to which we then consider a specific reserve
for bad debts based on their individual circumstances. As we continue to learn more about the collectability related to this recent acquisition,
we will track historical bad debts and continue to assess appropriate reserves.

For
our revenue cycle management segment, our customers are mainly medium to large healthcare organizations that are charged monthly upon
the execution of our services. Being these customers are healthcare organizations with minimal risk for uncollectible accounts; we consider
a specific reserve for bad debts based on their individual circumstances. As we continue to learn more about the collectability related
to this recently added segment, we will track historical bad debts and continue to assess appropriate reserves.

Allowance
for Excess and Obsolete Inventory. We record valuation reserves on our inventory for estimated excess or obsolete inventory items.
The amount of the reserve is equal to the difference between the cost of the inventory and the estimated market value based upon assumptions
about future demand and market conditions. On a quarterly basis, management performs an analysis of the underlying inventory to identify
reserves needed for excess and obsolescence. Management uses its best judgment to estimate appropriate reserves based on this analysis.
In addition, we adjust the carrying value of inventory if the current market value of that inventory is below its cost.

Inventories
consisted of the following at September 30, 2025 and December 31, 2024:

    September 30, 2025  
    December 31, 2024 
  
    Raw material and component parts– video solutions segment 
    $2,833,268  
    $2,589,804 
  
    Work-in-process– video solutions segment 
     49,400  
     4,906 
  
    Finished goods – video solutions segment 
     1,071,682  
     1,655,317 
  
    Finished goods – entertainment segment 
     435,077  
     505,694 
  
    Subtotal 
     4,389,427  
     4,755,721 
  
    Reserve for excess and obsolete inventory– video solutions segment 
     (1,659,289) 
     (2,037,252)
  
    Reserve for excess and obsolete inventory – entertainment segment 
     (107,596) 
     (132,403)
  
    Total invent