Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 306

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 2
Chunk 306
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 ticket.

We
also act as an intermediary between buyers and sellers through the online secondary marketplace. Revenues derived from this marketplace
primarily consist of service fees from entertainment operations, and consist of one primary performance obligation, which is facilitating
the transaction between the buyer and seller, being satisfied at the time the order has been confirmed. As we do not control the ticket
prior to the transfer, we act as an agent in these transactions. Revenue is recognized on a net basis, net of the amount due to the seller
when an order is confirmed, the seller is then obligated to deliver the tickets to the buyer per the seller’s listing. Payment
is due at the time of sale.

We
review all significant, unusual, or non-standard shipments of product or delivery of services as a routine part of our accounting and
financial reporting process to determine compliance with these requirements. Extended warranties are offered on selected products, and
when a customer purchases an extended warranty, the associated proceeds are treated as deferred revenue and recognized over the term
of the extended warranty.

For
our video solutions segment, our principal customers are state, local, and federal law enforcement agencies, which historically have
been low risks for uncollectible accounts. However, we have commercial customers and international distributors that present a greater
risk for uncollectible accounts than such law enforcement customers and we consider a specific reserve for bad debts based on their individual
circumstances. Our historical bad debts have been negligible since we commenced deliveries during 2006.

For
our entertainment segment, our customers are mainly online visitors that pay at the time of the transaction, and we collect the service
fees charged with the transaction. 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.

Allowance
for Excess and Obsolete Inventory. We record valuation reserves on our inventory for estimated excess or