Company: DGLY
Filing Date: 2025-01-24
Form Type: S-1
Source: 0001493152-25-003451
Chunk: 84

Company: DIGITAL ALLY, INC.
Filing Date: 2025-01-24
Form: S-1
Chunk 84
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 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.

| 57 |

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 excess and obsolescence. Management uses its best judgment to estimate appropriate reserves based on this analysis. In addition, we adjust the carrying value of inventory if the current market value of that inventory is below its cost.

Inventories consisted of the following at September 30, 2024 and December 31, 2023:

|                                                                    |     |   | September 30,  2024 |   |     |   | December 31,  2023 |   |
|:-------------------------------------------------------------------|:----|:--|--------------------:|:--|:----|:--|-------------------:|:--|
| Raw material and component parts– video solutions segment          |     | $ |           2,638,063 |   |     | $ |          3,044,653 |   |
| Work-in-process– video solutions segment                           |     |   |              11,565 |   |     |   |             20,396 |   |
| Finished goods – video solutions segment                           |     |   |           3,533,839 |   |     |   |          4,623,489 |   |
| Finished goods – entertainment segment                             |     |   |             364,641 |   |     |   |            699,204 |   |
| Subtotal                                                           |     |   |           6,548,108 |