Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 120

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 120
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 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.

    15

NOTE 2. INVENTORIES

Inventories consisted of the following
at March 31, 2025 and December 31, 2024:

 SCHEDULE OF INVENTORIES

    March 31, 2025  
    December 31,
                                                                                2024 
  
    Raw material and component parts– video solutions segment 
    $2,590,526  
    $2,589,804 
  
    Work-in-process– video solutions segment 
     71,592  
     4,906 
  
    Finished goods – video solutions segment 
     1,301,474  
     1,655,317 
  
    Finished goods – entertainment segment 
     174,061  
     505,694 
  
    Subtotal 
     4,137,653  
     4,755,721 
  
    Reserve for excess and obsolete inventory– video solutions segment 
     (1,600,459) 
     (2,037,252)
  
    Reserve for excess and obsolete inventory – entertainment segment 
     (48,083) 
     (132,403)