Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 236

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 8
Chunk 236
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, we believe the following accounting policies and estimates are the most critical to our financial statements, potentially
involve the most subjective judgments in their selection and application, and are the most susceptible to uncertainties and changing conditions:

    ●
    Revenue Recognition / Allowance for Doubtful Accounts;

    ●
    Allowance for Excess and Obsolete Inventory;

    ●
    Goodwill and other intangible assets;

    ●
    Warranty Reserves;

    ●
    Fair value of assets and liabilities acquired in business combinations;

    ●
    Fair value of warrant derivative liabilities;

    ●
    Stock-based Compensation Expense; and

    ●
    Accounting for Income Taxes.

Revenue Recognition
/ Allowances for Doubtful Accounts. Revenue is recognized for the shipment of products or delivery of service when all five of
the following conditions are met:

    (i)
    Identify the contract with the customer;

    (ii)
    Identify the performance obligations in the contract;

    (iii)
    Determine the transaction price;

    (iv)
    Allocate the transaction price to the performance obligations in the contract; and

    (v)
    Recognize revenue when a performance obligation is satisfied.

We consider the terms and
conditions of the contract and our customary business practices in identifying our contracts under ASC 606. We determine we have a contract
when the customer order is approved, we can identify each party’s rights regarding the services to be transferred, we can identify
the payment terms for the services, we have determined the customer has the ability and intent to pay and the contract has commercial
substance. At contract inception we evaluate whether the contract includes more than one performance obligation. We apply judgment in
determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical
payment experience or, in the case of a new customer, credit and financial information pertaining to the customer.

Performance obligations promised
in a contract are identified based on the services and the products that will be transferred to the customer that are both capable of
being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily
available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the services and the
products is separately identifiable from other promises in the contract. Our performance obligations consist of (i) products, (ii) professional
services, and (iii) extended warranties.

The transaction price