Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 145

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 8
Chunk 145
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 of June 30,
2025. These matters raise substantial doubt about Company’s ability to continue as a going concern.

In recent years the Company
has accessed the public and private capital markets to raise funding through the issuance of debt and equity. In that regard, the Company
raised approximately $14.3 million during the six months ended June 30, 2025 and $4.9 million in the year ended December 31, 2024 through
a private placement transaction and two underwritten public offerings. During February 2025, the Company raised net proceeds of approximately
$14.3 million through an underwritten public offering which has provided adequate levels of liquidity for the Company to execute its business
plans. These equity raises were utilized to fund the repayment of debt obligations, payment of accounts payable and its operations. Management
expects this pattern to continue until it achieves positive cash flow from operations on a consistent basis, although it can offer no
assurance in this regard.

The Company will have to restore
positive operating cash flows and profitability over the next year and/or raise additional capital to fund its operational plans, meet
its customary payment obligations and otherwise execute its business plan. There can be no assurance that it will be successful in restoring
positive cash flows and profitability, or that it can raise additional financing when needed, and obtain it on terms acceptable or favorable
to the Company.

During the six months ended
June 30, 2025 the Company completed a program to reduce costs and expenditures and raised its short and long-term liquidity position through
the completion of the February 2025 public equity offering. In that regard, the Company has significantly cut costs in its entertainment
segment through the removal of several large partnerships and sponsorships. These partnerships and sponsorships did not yield the results
management expected; thus, it is not expected that these costs will significantly hinder total revenues in 2025 and beyond. In addition,
the Company has significantly cut costs in its video segment through the reduction in headcount and relocating to smaller and less costly
facilities after completing the sale of its warehouse/office building.

    14

The Company has increased
its deferred revenue to nearly $8.9 million as of June 30, 2025, which results in recurring revenue during the period of 2025 to 2028.
The Company believes that its quality control and cost-cutting initiatives, expansion to non-law enforcement sales channels and new product
introduction will eventually restore positive operating cash flows and profitability