Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 226

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 8
Chunk 226
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 2025, and 2024 was $4,560,926 and $4,395,109, respectively, an increase of $165,817 (3.8%). Overall
cost of goods sold for services as a percentage of service revenues for the six months ended June 30, 2025, and 2024 were 64% and 60%,
respectively. Cost of service revenues by operating segment is as follows:

    Six months ended June 30, 

    2025  
    2024 
  
    Cost of Service Revenues: 

    Video Solutions 
    $687,406  
    $694,473 
  
    Revenue Cycle Management 
     1,766,119  
     1,933,815 
  
    Entertainment 
     2,107,401  
     1,766,821 
  
    Total Cost of Service Revenues 
    $4,560,926  
    $4,395,109 

The slight decrease in cost
of service revenues for our video solutions segment demonstrates the leverage we are enjoying as we increase our service revenues during
the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Cost of service revenues as a percentage of service
revenues for the video solutions segment increased to 39% for the six months ended June 30, 2025 as compared to 35% for the six months
ended June 30, 2024. This represents an increase in costs for securing cloud storage from our providers in 2025 compared to 2024.

The decrease in revenue cycle
management operating segment cost of service revenue is commensurate with the decline in revenues due to certain loss generating services
being eliminated during the year. Cost of service revenues as a percentage of product revenues for the revenue cycle management operating
segment remained stable at 63% for the six months ended June 30, 2025 as compared to 64% for the six months ended June 30, 2024.

56

The increase in entertainment
operating segment cost of service revenues is due to management right sizing the business working towards profitability. The entertainment
segment terminated several unprofitable sponsorships which required termination payments during the six months ended June 30, 2025, that
is expected to lead to improvements in costs of service revenues during the remainder of 2025. The entertainment segment cost of service