Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 112

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 112
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 three months ended March 31, 2025. Obligations for estimated sales returns and allowances are recognized
at the time of sales on an accrual basis. The accrual is determined based upon historical return rates adjusted for known changes in
key variables affecting these return rates.

Use of Estimates:

The preparation of the condensed
consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the condensed consolidated balance sheets and the reported amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates. Management utilizes various other estimates, including but not limited to, determining
the estimated lives of long-lived assets, determining the potential impairment of long-lived assets, the fair value of warrants, options,
the recognition of revenue, inventory valuation reserve, allowances for doubtful accounts and other receivables, incremental borrowing
rate on leases, the valuation allowance for deferred tax assets and other legal claims and contingencies. The results of any changes in
accounting estimates are reflected in the condensed consolidated financial statements in the period in which the changes become evident.
Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period that they are determined
to be necessary.

Cash and cash equivalents:

Cash and cash equivalents include
funds on hand, in bank and short-term investments with original maturities of ninety (90) days or less.

The Company maintains its cash
and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of
the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions.
At March 31, 2025 and December 31, 2024, the uninsured balance amounted to $3,009,668 and $-0-, respectively.

Restricted Cash:

Restricted cash of $-0- and $97,600
was included in other assets as of March 31, 2025 and 2024, respectively. Restricted cash consists of bank deposits that collateralize
a debt obligation. Such debt obligation was paid off as of December 31, 2024.

The following table provides a reconciliation of cash
and cash equivalents in the condensed consolidated balance sheets to cash, cash equivalents and restricted cash in the condensed consolidated
statements of cash flows: