Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 139

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 139
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NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature
of Business:

Digital
Ally, Inc. was originally incorporated in Nevada on December 13, 2000 as Vegas Petra, Inc. and had no operations until 2004. On November
30, 2004, Vegas Petra, Inc. entered into a Plan of Merger with Digital Ally, Inc., at which time the merged entity was renamed Digital
Ally, Inc. (such merged entity, the “Predecessor Registrant”).

The
Company formed Digital Ally International, Inc. during August 2009 to facilitate the export sales of its products. The Company formed
Nobility Healthcare, LLC (“Nobility Healthcare”) in June 2021 to facilitate the operations of its revenue cycle management
solutions and back-office services for healthcare organizations. The Company formed TicketSmarter, Inc. upon its acquisition of Goody
Tickets, LLC and TicketSmarter, LLC, to facilitate its global ticketing operations. The Company formed Kustom Entertainment, Inc. and
Kustom 440, Inc. in 2022 to create unique entertainment experiences directly for consumers.

The
business of the Registrant, Digital Ally, Inc. (with its wholly-owned subsidiaries, Digital Ally International, Inc., Digital Ally Healthcare,
LLC (“Digital Ally Healthcare”), TicketSmarter, Inc. (“TicketSmarter”), Kustom 440, Inc. (“Kustom 440”),
Kustom Entertainment, Inc., and its majority-owned subsidiary Nobility Healthcare, LLC, collectively, “Digital Ally,” “Digital,”
and the “Company”), is divided into three reportable operating segments: 1) the Video Solutions Segment, 2) the Revenue Cycle
Management Segment and 3) the Entertainment Segment. The Video Solutions Segment is our legacy business that produces digital video imaging,
storage products, security and commercial applications. This segment includes both service and product revenues through our subscription
models offering cloud and warranty solutions, and hardware sales for video and health safety solutions. The Revenue Cycle Management
Segment provides working capital and back-office services to a variety of healthcare organizations throughout the country, as a monthly
service fee. Our entertainment sector generates product revenue through our production of live events and concerts including our annual
Country Stampede music festival. The Entertainment Segment also acts as an intermediary between ticket buyers and