Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 216

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 2
Chunk 216
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 35% for the three months ended March 31, 2025 as compared to 36% for the three months ended
March 31, 2024.

48

The decrease in revenue cycle
management operating segment cost of service revenue is commensurate with the decline in revenues due to 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 decreased to 65% for the three months ended March 31, 2025 as compared to 68% for the three months ended March 31, 2024.

The decrease in entertainment
operating segment cost of service revenues is due to management right sizing the business working towards profitability. The Entertainment
cost of service revenue was $1,013,170 for the three months ended March 31, 2025, compared to $1,112,287 for the three months ended March
31, 2024. Cost of service revenues as a percentage of service revenues for the entertainment segment decreased to 66% for the three months
ended March 31, 2025 as compared to 73% for the three months ended March 31, 2024.

Gross Profit

Overall gross profit for the three
months ended March 31, 2025 and 2024 was $1,796,034 and $1,523,699, respectively, an increase of $272,335 (18%). Gross profit by operating
segment was as follows:

    Three months ended March 31, 

    2025  
    2024 
  
    Gross Profit: 

    Video Solutions 
    $555,761  
    $565,694 
  
    Revenue Cycle Management 
     467,663  
     463,731 
  
    Entertainment 
     578,075  
     494,274 
  
    Total Gross Profit 
    $1,601,499  
    $1,523,699 

The increase in
gross profits is primarily due to improvements in our cost of sales as a percentage of sales particularly in our entertainment
segment service revenues. There was an overall decrease in the cost of sales as a percentage of overall revenues to 64% for the
three months ended March 31, 2025 from 72% for the three months ended March 31, 2024. This is primarily driven by large head-count
reductions in our work-force during