Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 135

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 8
Chunk 135
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, represented through its three segments. The Company reports all revenues on a gross basis, other
than service revenues from the Company’s entertainment and revenue cycle management segments, Revenues generated by all segments
are reported net of sales taxes.

Video Solutions

The Company considers customer
purchase orders, which in some cases are governed by master sales agreements, to be the contracts with the customer. In situations where
sales are to a distributor, the Company has concluded its contracts are with the distributor as the Company holds a contract bearing enforceable
rights and obligations only with the distributor. As part of its consideration for the contract, the Company evaluates certain factors
including the customers’ ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products,
each of which is distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether
the price is subject to refunds or adjustment to determine the net consideration to which it expects to be entitled. As the Company’s
standard payment terms are generally less than one year for product sales (although some subscriptions for services may reach out 3-5
years), it has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component.
The Company allocates the transaction price to each distinct product based on its relative standalone selling price. The product price,
as specified on the purchase order, is considered the stand-alone selling price as it is an observable input which depicts the price as
if sold to a similar customer in similar circumstances. Revenue is recognized when control of the product is transferred to the customer
(i.e. when the Company’s performance obligations is satisfied), which typically occurs at shipment. Further in determining whether
control has been transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards
of ownership having transferred to the customer. Customers do not have a right to return the product other than for warranty reasons for
which they would only receive repair 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