Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 24

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 24
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 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 three months ended March 31, 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.

The Company has increased its
deferred revenue to nearly $9.9 million as of March 31, 2025, which results in recurring revenue during the period of 2025 to 2027.
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, although it can offer no assurances in this regard.

As a result of the Company’s implementation of cost cutting measures and liquidity generated by the recent
public equity offerings, the Company has significantly improved its financial position. During the three months ended March 31, 2025,
the Company generated $$4,267,082 of net income, improved its working capital position to a positive balance of $3,385,051 and improved
its stockholders equity to a positive balance of $11,569,375. These represent improvements from the negative working capital position
of $19,377,507 and stockholders’ deficit balance of $9,013,430 reported at December 31, 2024.

Based on the
uncertainties described above and the corrective actions implemented by management, the Company believes its business plan including the implementation of corrective actions mitigates the existence of substantial doubt about
its ability to continue as a going concern within one year from the date of the issuance of these condensed consolidated financial
statements. The accompanying condensed consolidated financial statements do not include any adjustments related to the
recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company
be unable to continue as a going concern.

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NOTE 2.