Company: DGLY
Filing Date: 2025-01-24
Form Type: S-1
Source: 0001493152-25-003451
Chunk: 56

Company: DIGITAL ALLY, INC.
Filing Date: 2025-01-24
Form: S-1
Chunk 56
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       |     |                                          |         — |     |      |         — |
| Entertainment                  |     |                                          | 3,620,853 |     |      | 3,449,876 |
| Total Cost of Product Revenues |     | $                                        | 5,534,209 |     | $    | 7,108,366 |

The decrease in cost of goods sold for our video solutions segment products is directly correlated with the decrease in product sales for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. In addition, the video solutions segment recorded valuation allowances for its older product lines and a portion of its Shield products during the first nine months of 2023, directly increasing cost of goods sold for the period. Cost of product sold as a percentage of product revenues for the video solutions segment remained steady at 116% for the nine months ended September 30, 2024 as compared to 110% for the nine months ended September 30, 2023.

The increase in entertainment operating segment cost of product sold was driven by the costs of the Country Stampede music festival for the nine months ended September 30, 2024 compared to September 30, 2023, resulting in cost of product revenue of $3,620,853 for the nine months ended September 30, 2024, compared to $3,449,876 for the nine months ended September 30, 2023. Cost of product sold as a percentage of product revenues for the entertainment segment was 124% for the nine months ended September 30, 2024 as compared to 80% for the nine months ended September 30, 2023.

Cost of Service Revenue

Overall cost of service revenue sold for the nine months ended September 30, 2024, and 2023 was $6,159,284 and $9,698,175, respectively, a decrease of $3,538,891 (36%). Overall cost of goods sold for services as a percentage of service revenues for the nine months ended September 30, 2024, and 2023 were 58% and 66%, respectively. Cost of service revenues by operating segment is as follows:

| Cost of Service Revenues:      |     | For the nine months ended  September 30, 
 2024                                     |           |     | 2023 |           |
|:-------------------------------|:----|:-----------------------------------------