Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 280

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 2
Chunk 280
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 segment increased to 81% for the six months ended June 30,
2025 as compared to 73% for the six months ended June 30, 2024.

Gross Profit

Overall gross profit for the
six months ended June 30, 2025 and 2024 was $(632,625) and $242,392, respectively, a decrease of $875,017 (361%). Gross profit by operating
segment was as follows:

    Six months ended June 30, 

    2025  
    2024 
  
    Gross Profit: 

    Video Solutions 
    $926,539  
    $853,534 
  
    Revenue Cycle Management 
     1,016,726  
     1.065,137 
  
    Entertainment 
     (974,391) 
     (154,841)
  
    Total Gross Profit 
    $968,874  
    $1,763,830 

The decrease in gross profits
is primarily due to a deterioration in our cost of sales as a percentage of sales particularly in our entertainment segment service product
and service revenues. The primary reason is the larger negative margins generated by our 2025 Country Stampede Music Festival as compared
to the 2024 Festival. There was an overall increase in the cost of sales as a percentage of overall revenues to 90% for the six months
ended June 30, 2025 from 84% for the six months ended June 30, 2024. The primary reason for the overall negative gross margins in 2025
is the larger negative margins generated by our 2025 Country Stampede Music Festival as compared to the 2024 Festival.

Selling, General and Administrative Expenses

Selling, general and administrative
expenses were $6,038,627 and $9,317,023 for the six months ended June 30, 2025 and 2024, respectively, a decrease of $3,278,396 (35%).
The decrease was primarily attributable to the reduction in new advertising sponsorships being entered into by the Company and large reductions
in selling, general and administrative head count as the Company right-sized its operations across all operating segments. Our selling,
general and administrative expenses as a percentage of sales increased to 60% for the six months ended June 30, 2025 compared to 84% in
the same period in 2024. The significant components of selling, general and