Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 95

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 95
---
 between
the buyer and seller, being satisfied at the time the order has been confirmed. As we do not control the ticket prior to the transfer,
we act as an agent in these transactions. Revenue is recognized on a net basis, net of the amount due to the seller when an order is confirmed,
the seller is then obligated to deliver the tickets to the buyer per the seller’s listing. Payment is due at the time of sale.

56

We review all significant, unusual,
or nonstandard shipments of product or delivery of services as a routine part of our accounting and financial reporting process to determine
compliance with these requirements. Extended warranties are offered on selected products, and when a customer purchases an extended warranty,
the associated proceeds are treated as deferred revenue and recognized over the term of the extended warranty.

For our video solutions segment,
our principal customers are state, local, and federal law enforcement agencies, which historically have been low risks for uncollectible
accounts. However, we have commercial customers and international distributors that present a greater risk for uncollectible accounts
than such law enforcement customers and we consider a specific reserve for bad debts based on their individual circumstances. Our historical
bad debts have been negligible since we commenced deliveries during 2006.

For our entertainment segment,
our customers are mainly online visitors that pay at the time of the transaction, 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