Company: DGLY
Filing Date: 2025-02-06
Form Type: S-1/A
Source: 0001493152-25-005144
Chunk: 91

Company: DIGITAL ALLY, INC.
Filing Date: 2025-02-06
Form: S-1/A
Chunk 91
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|:--|--------------------:|:--|:----|:--|-------------------:|:--|
| Raw material and component parts– video solutions segment          |     | $ |           2,638,063 |   |     | $ |          3,044,653 |   |
| Work-in-process– video solutions segment                           |     |   |              11,565 |   |     |   |             20,396 |   |
| Finished goods – video solutions segment                           |     |   |           3,533,839 |   |     |   |          4,623,489 |   |
| Finished goods – entertainment segment                             |     |   |             364,641 |   |     |   |            699,204 |   |
| Subtotal                                                           |     |   |           6,548,108 |   |     |   |          8,387,742 |   |
| Reserve for excess and obsolete inventory– video solutions segment |     |   |          (4,144,749 | ) |     |   |         (4,355,666 | ) |
| Reserve for excess and obsolete inventory – entertainment segment  |     |   |             (78,241 | ) |     |   |           (186,795 | ) |
| Total inventories                                                  |     | $ |           2,325,118 |   |     | $ |          3,845,281 |   |

We balance the need to maintain strategic inventory levels to ensure competitive delivery performance to our customers against the risk of inventory obsolescence due to changing technology and customer requirements. As reflected above, our inventory reserves represented 65% of the gross inventory balance at September 30, 2024, compared to 54% of the gross inventory balance at December 31, 2023. We had $4,222,990 and $4,542,461 in reserves for obsolete and excess inventories at September 30, 2024 and December 31, 2023, respectively. The decrease in the inventory reserve is primarily due to the reduction in finished goods and movement of excess inventory. Additionally, the Company determined a reasonable reserve for inventory held at the ticket operating segment, in which some inventory items sell below cost or go unsold, thus having to be fully written-off following the event date. We believe the reserves are appropriate given our inventory levels as of September 30, 2024.

If