Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 12

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 1
Chunk 12
---
 with sale of shares 
    $6,748,425  
    $2,075,300 

    Transition of warrant derivative liability to equity upon exercise of warrants 
    $7,928,030  
    $— 

    Issuance of common stock upon exercise of pre-funded warrants 
    $49  
     — 

See Notes to Unaudited Condensed Consolidated Financial
Statements.

6

DIGITAL ALLY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

Nature of Business:

Digital Ally, Inc. was originally
incorporated in Nevada on December 13, 2000 as Vegas Petra, Inc. and had no operations until 2004. On November 30, 2004, Vegas Petra,
Inc. entered into a Plan of Merger with Digital Ally, Inc., at which time the merged entity was renamed Digital Ally, Inc. (such merged
entity, the “Predecessor Registrant”).

The Company formed Digital Ally International, Inc. during August 2009 to facilitate the export sales of its products.
The Company formed Nobility Healthcare, LLC (“Nobility Healthcare”) in June 2021 to facilitate the operations of its revenue
cycle management solutions and back-office services for healthcare organizations. The Company formed TicketSmarter, Inc. upon its acquisition
of Goody Tickets, LLC and TicketSmarter, LLC, to facilitate its global ticketing operations. The Company formed Kustom Entertainment,
Inc. and Kustom 440, Inc. in 2022 to create unique entertainment experiences directly for consumers.

The business of the Registrant, Digital Ally,
Inc. (with its wholly-owned subsidiaries, Digital Ally International, Inc., Digital Ally Healthcare, LLC (“Digital Ally Healthcare”),
TicketSmarter, Inc. (“TicketSmarter”), Kustom 440, Inc. (“Kustom 440”), Kustom Entertainment, Inc., and its majority-owned
subsidiary Nobility Healthcare, LLC, collectively, “Digital Ally,” “Digital,” and the “Company”),
is divided into three reportable operating segments: 1) the Video Solutions Segment, 2) the Revenue Cycle Management Segment and 3) the
Entertainment Segment. The Video Solutions Segment is our legacy business that produces digital video imaging, storage products, security and commercial applications. This segment