Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 28

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 28
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In that regard, the Company raised approximately $15.5 million during the nine months ended September 30, 2025 and $4.9 million in the
year ended December 31, 2024 through private placement transactions and an underwritten public offering. In February 2025, the Company
completed an underwritten public offering for net proceeds of approximately $14.3 million and issued an unsecured promissory note, generating
an additional $600,000 in net cash proceeds. In September 2025, the Company issued senior secured convertible notes with detachable warrants,
resulting in $610,000 of net cash proceeds. These financing activities provided additional liquidity to execute the Company’s business
plans and were used to repay debt obligations, settle accounts payable, and fund operations. Management expects to continue accessing
the capital markets until the Company achieves consistent positive cash flow from operations; however, there can be no assurance as to
the timing or availability of such financing.

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 nine months ended September 30, 2025, the Company implemented a cost-reduction program and enhanced its short- and long-term liquidity
through (i) the February 2025 public equity offering, (ii) the issuance of senior secured convertible notes, and (iii) entry into a committed
equity facility (the “ELOC”). Within the entertainment segment, the Company exited several large partnerships and sponsorships
that did not meet expected returns; management does not expect discontinuing these arrangements to materially hinder total revenues in
2025 or thereafter. In the video segment, the Company reduced headcount and relocated to smaller, lower-cost facilities following the
sale of its warehouse/office building.

The
Company has successfully recorded $8.93 million in deferred revenue as of September 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, although it can
offer no