Company: DGLY
Filing Date: 2025-02-11
Form Type: S-1/A
Source: 0001493152-25-005949
Chunk: 162

Company: DIGITAL ALLY, INC.
Filing Date: 2025-02-11
Form: S-1/A
Chunk 162
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600,000, respectively as of December 31, 2023. The Company also has amortizable identifiable intangible assets of $5,600,000 and $600,000 which are being amortized over 5 years and 4 years, respectively, and are related to the Entertainment/Ticketing reporting unit. Management tests these assets annually for impairment or more frequently when potential impairment triggering events are present. Goodwill is tested for impairment by comparing the estimated fair value of a reporting unit to its carrying value. Management uses a market approach to estimate the fair value of its reporting unit. The key assumptions and estimates utilized in the market approach primarily include market multiples, peer group and comparable transaction selection and selection of relevant financial matrices for concluding the fair value of reporting unit, and future levels of revenue growth.

The principal considerations for our determination that performing procedures relating to the goodwill and intangible asset impairment assessments of the Entertainment/Ticketing reporting unit is a critical audit matter because (i) the significant judgment used by management when determining the fair value estimates of the reporting units; (ii) the high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating the significant assumptions used in management’s fair value estimates; and (iii) the audit effort involved in the use of professionals with specialized skill and knowledge.

How the Critical Audit Matter Was Addressed in the Audit

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

| ● | These                                                                                                                                       
 procedures included, among others, (i) testing management’s process for determining the fair value estimates of the entertainment/ticketing 
 reporting unit; (ii) testing the completeness and accuracy of the underlying data used in the market approach; and (iii) evaluating         
 the reasonableness of the significant assumptions used by management related to market multiples, peer group and comparable transaction     
 selection and selection of relevant financial matrices for concluding the fair value of reporting unit and future levels of revenue         
 growth.                                                                                                                                     |
| ● | Evaluating                                                                                                                                  
 management’s assumptions related to the future levels of revenue growth and involved evaluating whether the assumptions were                
 reasonable considering (i) current and past performance of the reporting units; (ii) the consistency with external market and industry      
 data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.                               |
| ● | Professionals                                                                                                                               
 with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the market approach and