Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 126

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 126
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 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 is determined based on the consideration to which we expect to be entitled in exchange for transferring services to
the customer. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future
reversal of cumulative revenue under the contract will not occur. None of our contracts contain a significant financing component.

53

If
the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.
Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation
based on the relative standalone selling price (“SSP”).

Revenue
for our video solutions segment is recognized at the time the related performance obligation is satisfied by transferring the control
of the promised service to a customer. Revenue is recognized when control of the service is transferred to the customer, in an amount
that reflects the consideration that we expect to receive in exchange for our services. We generate all our revenue from contracts with
customers.

Revenue
for our revenue cycle management segment is recorded on a net basis, as its primary source of revenue is its end-to-end service fees.
These service fees are reported as