Company: DGLY
Filing Date: 2025-05-02
Form Type: 424B3
Source: 0001641172-25-008437
Chunk: 50

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-02
Form: 424B3
Chunk 50
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. While the selection and application of any accounting policy may involve some level of subjective judgments and estimates, 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