Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 81

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 81
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 and $1,567,393, respectively, a decrease of $891,754 (57%). Overall
cost of goods sold for products as a percentage of product revenues for the three months ended March 31, 2025, and 2024 were 94% and 100%,
respectively. Cost of products sold by operating segment is as follows:

    Three Months Ended March 31, 

    2025  
    2024 
  
    Cost of Product Revenues: 

    Video Solutions 
    $64,552  
    $797,494 
  
    Revenue Cycle Management 
     —  
     — 
  
    Entertainment 
     611,087  
     769,899 
  
    Total Cost of Product Revenues 
    $675,639  
    $1,567,393 

The decrease in cost of goods
sold for our video solutions segment products is due to large decrease in product sales experienced during the three months ended March
31, 2025. 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. Cost of product sold as a percentage of product
revenues for the video solutions segment decreased to 119% for the three months ended March 31, 2025 as compared to 111% for the three
months ended March 31, 2024.

The decrease in entertainment
operating segment cost of product sold directly correlates to the lower product revenues for the three months ended March 31, 2025. Cost
of Product Revenues were $611,087 and $769,899 for the three months ended March 31, 2025 and 2024, a decrease of $158,812 (21%). Cost
of product sold as a percentage of product revenues for the entertainment segment increased to 92% for the three months ended March 31,
2025 as compared to 91% for the three months ended March 31, 2024.

Cost of Service Revenue

Overall cost of service revenue
sold for the three months ended March 31, 2025, and 2024 was $2,198,126 and $2,438,259, respectively, a decrease of $240,133 (10%). Overall
cost of goods sold for services as a percentage of service revenues for the three months