Company: DGLY
Filing Date: 2025-02-11
Form Type: S-1/A
Source: 0001493152-25-005949
Chunk: 79

Company: DIGITAL ALLY, INC.
Filing Date: 2025-02-11
Form: S-1/A
Chunk 79
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2022, respectively, a decrease of $2,493,925 (32%) which was attributable to a reduction in inventory for the video solutions product lines and a large decrease in ticket inventory for the newly acquired entertainment segment. The decrease in the inventory reserve is primarily due to the disposal of obsolete inventory that was included in the reserves during 2022. Additionally, the Company determined a reasonable reserve for inventory held at the ticket operating segment, in which some inventory items sell below cost or go unsold, thus having to be fully written-off following the event date. We believe the reserves are appropriate given our inventory levels as of December 31, 2023.

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Cost of Service Revenue

Overall cost of service revenue sold for the years ended December 31, 2023, and 2022 was $12,510,970 and $20,315,839, respectively, a decrease of $7,804,869 (38%). Overall cost of goods sold for services as a percentage of service revenues for the years ended December 31, 2023, and 2022 were 66% and 78%, respectively. Cost of service revenues by operating segment is as follows:

| Cost of Service Revenues:      |     | Years Ended December 31, 
 2023                     |            |     | 2022 |            |
|:-------------------------------|:----|:-------------------------|-----------:|:----|:-----|-----------:|
| Video Solutions                |     | $                        |  1,355,809 |     | $    |  1,170,081 |
| Revenue Cycle Management       |     |                          |  3,941,407 |     |      |  4,582,630 |
| Entertainment                  |     |                          |  7,213,754 |     |      | 14,563,128 |
| Total Cost of Service Revenues |     | $                        | 12,510,970 |     | $    | 20,315,839 |

The increase in cost of service revenues for our video solutions segment is commensurate with the increase in service revenues in the year ended December 31, 2023 compared to the year ended December 31, 2022. Cost of service revenues as a percentage of service revenues for the video solutions segment increased to 43% for the year ended December 31, 2023 as compared to 41% for the year ended December 31,