Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 250

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 250
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 threatened lawsuit until the summons and complaint are actually served on us. After carefully assessing
the claim, and assuming we determine that we are not at fault or we disagree with the damages or relief demanded, we vigorously defend
any lawsuit filed against us. We record a liability when losses are deemed probable and reasonably estimable. When losses are deemed
reasonably possible but not probable, we determine whether it is possible to provide an estimate of the amount of the loss or range of
possible losses for the claim, if material for disclosure. In evaluating matters for accrual and disclosure purposes, we take into consideration
factors such as our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood
of our prevailing, the availability of insurance, and the severity of any potential loss. We re-evaluate and update accruals as matters
progress over time.

While
the ultimate resolution is unknown, we do not expect that these lawsuits will individually, or in the aggregate, have a material adverse
effect to our results of operations, financial condition or cash flows. However, the outcome of any litigation is inherently uncertain
and there can be no assurance that any expense, liability or damages that may ultimately result from the resolution of these matters
will be covered by our insurance or will not be in excess of amounts recognized or provided by insurance coverage and will not have a
material adverse effect on our operating results, financial condition or cash flows. See Note 9, “Commitments and Contingencies,”
to the condensed consolidated financial statements of this Quarterly Report on Form 10-Q for information on our litigation.

Critical
Accounting Estimates

Our
significant accounting policies are summarized in Note 1, “Nature of Business and Summary of Significant Accounting Policies,”
to our condensed consolidated financial statements. While the selection and application of any accounting policy may involve some level
of subjective judgments and estimates, we believe the following accounting policies and estimates are the most critical to our financial
statements, potentially involve the most subjective judgments in their selection and application, and are the most susceptible to uncertainties
and changing conditions:

    ●
    Revenue
    Recognition / Allowance for Doubtful Accounts;

    ●
    Allowance
    for Excess and Obsolete Inventory;

    ●
    Goodwill
    and other intangible assets;

    ●
    Warranty
    Reserves;

    ●
    Fair
    value of assets and liabilities acquired in business combinations;

    ●
    Fair
    value of