Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 119

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 119
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31, 2025 and it had an accumulated deficit of $133.2 million as of March 31,
2025. These matters raise substantial doubt about Company’s ability to continue as a going concern.

In recent years the
Company has accessed the public and private capital markets to raise funding through the issuance of debt and equity. In that
regard, the Company raised approximately $14.3
million during the three months ended March 31, 2025 and $4.9
million in the year ended December 31, 2024 through a private placement transaction and two underwritten public offerings. During
February 2025, the Company raised net proceeds of approximately $14.3
million through an underwritten public offering which has provided adequate levels of liquidity for the Company to execute its
business plans. These equity raises were utilized to fund the repayment of debt obligations, payment of accounts payable and its
operations. Management expects this pattern to continue until it achieves positive cash flow from operations on a consistent basis,
although it can offer no assurance in this regard.

The Company will have to restore
positive operating cash flows and profitability over the next year and/or raise additional capital to fund its operational plans, meet
its customary payment obligations and otherwise execute its business plan. There can be no assurance that it will be successful in restoring
positive cash flows and profitability, or that it can raise additional financing when needed, and obtain it on terms acceptable or favorable
to the Company.

During
the three months ended March 31, 2025 the Company completed a program to reduce costs and expenditures and raised its short and long-term
liquidity position through the completion of the February 2025 public equity offering. In that regard, the Company has significantly
cut costs in its entertainment segment through the removal of several large partnerships and sponsorships. These partnerships and sponsorships
did not yield the results management expected; thus, it is not expected that these costs will significantly hinder total revenues in
2025 and beyond. In addition, the Company has significantly cut costs in its video segment through the reduction in headcount and relocating
to smaller and less costly facilities after completing the sale of its warehouse/office building.

The Company has increased its
deferred revenue to nearly $9.9 million as of March 31, 2025, which results in recurring revenue during the period of 2025 to 2027.
The Company believes that its quality control and cost-cutting initiatives, expansion to non-law enforcement sales