Company: DGLY
Filing Date: 2025-02-14
Form Type: 424B4
Source: 0001493152-25-006704
Chunk: 73

Company: DIGITAL ALLY, INC.
Filing Date: 2025-02-14
Form: 424B4
Chunk 73
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 event date. We believe the reserves are appropriate given our inventory levels as of December 31, 2023.

| 48 |

Cost of Service Revenue

Overall cost of service revenue sold for the years ended December 31, 2023, and 2022 was $12,510,970 and $20,315,839, respectively, a decrease of $7,804,869 (38%). Overall cost of goods sold for services as a percentage of service revenues for the years ended December 31, 2023, and 2022 were 66% and 78%, respectively. Cost of service revenues by operating segment is as follows:

| Cost of Service Revenues:      |     | Years Ended December 31, 
 2023                     |            |     | 2022 |            |
|:-------------------------------|:----|:-------------------------|-----------:|:----|:-----|-----------:|
| Video Solutions                |     | $                        |  1,355,809 |     | $    |  1,170,081 |
| Revenue Cycle Management       |     |                          |  3,941,407 |     |      |  4,582,630 |
| Entertainment                  |     |                          |  7,213,754 |     |      | 14,563,128 |
| Total Cost of Service Revenues |     | $                        | 12,510,970 |     | $    | 20,315,839 |

The increase in cost of service revenues for our video solutions segment is commensurate with the increase in service revenues in the year ended December 31, 2023 compared to the year ended December 31, 2022. Cost of service revenues as a percentage of service revenues for the video solutions segment increased to 43% for the year ended December 31, 2023 as compared to 41% for the year ended December 31, 2022.

The decrease in revenue cycle management operating segment cost of service revenue is commensurate with the decline in revenues due certain loss generating services being eliminated during the year. Cost of service revenues as a percentage of product revenues for the revenue cycle management operating segment increased to 59% for the year ended December 31, 2023 as compared to 58% for the year ended December 31, 2022.

The decrease in entertainment operating segment cost of service revenues is due to management right sizing the business working towards profitability. The Entertainment