Company: DGLY
Filing Date: 2025-02-06
Form Type: S-1/A
Source: 0001493152-25-005144
Chunk: 273

Company: DIGITAL ALLY, INC.
Filing Date: 2025-02-06
Form: S-1/A
Chunk 273
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 | 1,418,272 |
| 2026                                        |     |   |   913,733 |
| Year III                                    |     |   |   913,733 |
| 2027                                        |     |   |   116,387 |
| Year IV                                     |     |   |   116,387 |
| 2028 and thereafter                         |     |   |   575,830 |
| Year V                                      |     |   |   575,830 |
| Total                                       |     | $ | 3,395,449 |

Interim impairment test

We performed an interim impairment test as of the last day of the fiscal third quarter of 2024 as management determined that a triggering
event had occurred resulting from the additional decline in demand for our services, prolonged economic uncertainty, the fact that the
split-off transaction did not occur when and as expected and a further decrease in our stock price. Therefore, we performed an interim
impairment test as of the September 30, 2024 for our reporting units with remaining goodwill.

The fair value
of each reporting unit was estimated using a weighting of the income and market valuation approaches. The income approach applied a
fair value methodology to each reporting unit based on discounted cash flows. This analysis requires significant judgments,
including estimation of future cash flows, which is dependent on internally-developed forecasts of revenue and profitability,
estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and
determination of our weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting
unit being tested. The weighted average cost of capital used in our most recent impairment test ranged from 21% to 32.5%. We also
applied a market approach, which develops a value correlation based on the market capitalization of similar publicly traded
companies, referred to as a multiple, to apply to the operating results of the reporting units. The primary market multiples used
are revenue and earnings before interest, taxes, depreciation, and amortization. The income and market approaches were equally
weighted in our most recent annual impairment test, for all of the reporting units.

The combined
fair values for all reporting units were then reconciled to our aggregate market value of our shares of common stock on the date of
valuation, while considering a reasonable control premium. We consider a reporting unit’s fair value to be substantially in
excess of the reporting