Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 23

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 23
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 basis. The Company is currently evaluating
the impact of this ASU to the Company’s consolidated financial statements, however the Company does not anticipate this guidance
having a material impact to the condensed consolidated financial statements.

    14

The other recent accounting pronouncements
issued by the Financial Accounting Standards Board (“FASB”) are not expected to have a significant impact on the Company’s
consolidated financial statements and related disclosures.

Going Concern Matters and Management’s Plans

The accompanying condensed consolidated
financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company incurred substantial operating losses in the years ended December 31, 2024 and
2023 primarily due to reduced gross margins caused by a combination of competitors’ introduction of newer products with more advanced
features together with significant price cutting of their products and the recent acquisitions with much smaller margins than the video
solutions segment, historically. The Company incurred operating losses of approximately $15.2 million for the year ended December
31, 2024 and $974,680 during the three months ended March 31, 2025 and it had an accumulated deficit of $133.2 million as of March 31,
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 three months ended March 31, 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