Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 278

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 2
Chunk 278
---
 is as follows:

    Six Months Ended June 30, 

    2025  
    2024 
  
    Cost of Product Revenues: 

    Video Solutions 
    $649,009  
    $1,755,956 
  
    Revenue Cycle Management 
     —  
     — 
  
    Entertainment 
     3,928,494  
     3,230,691 
  
    Total Cost of Product Revenues 
    $4,577,503  
    $4,986,647 

The decrease in cost of goods
sold for our video solutions segment products is due to large decrease in product sales experienced during the six months ended June 30,
2025 compared to 2024. We were not able to fulfil open orders due to low inventory levels. We have utilized funds from the February 2025
public equity offering to ramp the supply chain which we believe will lead to improved product sales during the remainder of 2025. Cost
of product sold as a percentage of product revenues for the video solutions segment increased to 132% for the six months ended June 30,
2025 as compared to 131% for the six months ended June 30, 2024.

The increase in entertainment
operating segment cost of product sold directly correlates to the increased revenues and costs associated with our annual Country Stampede
Music Festival. Cost of product sold related to the 2025 Country Stampede Music Festival totaled $2,992,052 as compared to $1,848,167
for the 2024 Festival. Total cost of product revenues for the entertainment operating segment was $3,928,494 and $3,230,691 for the six
months ended June 30, 2025 and 2024, an increase of $697,803 (21.6%). Cost of product sold as a percentage of product revenues for the
entertainment segment increased to 161% for the six months ended June 30, 2025 as compared to 133% for the six months ended June 30, 2024.

Cost of Service Revenue

Overall cost of service revenue
sold for the six months ended June 30, 2025, and 2024 was $4,560,926 and $4,395,109, respectively, an increase of $165,817 (3.8%). Overall
cost of goods sold for services as a percentage of service revenues for the six months ended June