Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 21

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 21
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 contract should be classified as an asset or
a liability rather than as equity. We have determined that because the terms of the various warrants issued and remain outstanding, include
a provision that entitles all the warrant holders to receive cash for their warrants in the event of a qualifying cash tender offer, while
only certain of the holders of the underlying shares of Common Stock would be entitled to cash, our warrants should be classified as liability
measured at fair value, with changes in fair value each period reported in earnings. Volatility in the price of our Common Stock may result
in significant changes in the value of the derivatives and resulting gains and losses on our condensed consolidated statement of operations.

Segment Reporting

The accounting guidance on Segment
Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected
information of those segments to be presented in the condensed consolidated financial statements. Operating segments are identified as
components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision
maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess
performance. The Company’s three operating segments are Video Solutions, Revenue Cycle Management, and Entertainment, each of which
has specific personnel responsible for that business and reports to the CODM. Corporate expenses capture the Company’s corporate
administrative activities, is also to be reported in the segment information. Therefore, its operations are eliminated in consolidation
and is not considered a separate business segment for financial reporting purposes.

    13

The Company adopted ASU 2023-07
in 2024 and applied the amendment retrospectively to all periods presented in the Company’s condensed consolidated financial statements.
See Note 17, Operating Segments, for more information.

Non-Controlling Interests

Non-controlling interests in the
Company’s Condensed Consolidated Financial Statements represent the interest in subsidiaries held by venture partners. The venture
partners hold noncontrolling interests in the Company’s consolidated subsidiary Nobility Healthcare, LLC. Since the Company consolidates
the financial statements of all wholly-owned and majority owned subsidiaries, the noncontrolling owners’ share of each subsidiary’s
results of operations are deducted and reported as net income attributable to noncontrolling interest in the Condensed Consolidated Statements
of Operations.

New Accounting Standards

Recently Adopted Accounting
Standard Updates. - ASU 2023-07, Improvements to Reportable Segment Disclosures, which requires companies to disclose significant
segment expenses provided to the