Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 143

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 143
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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