Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 116

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 116
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 2024.

48

Gross
Profit

Overall
gross profit for the nine months ended September 30, 2025 and 2024 was $2,340,449 and $3,503,804, respectively, a decrease of $1,163,355
(33.2%). Gross profit by operating segment was as follows:

    Nine months ended September 30, 

    2025  
    2024 
  
    Gross Profit: 

    Video Solutions 
    $1,597,487  
    $1,622,557 
  
    Revenue Cycle Management 
     1,527,679  
     1,731,860 
  
    Entertainment 
     (784,717) 
     149,387 
  
    Total Gross Profit 
    $2,340,449  
    $3,503,804 

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 84% for the nine months ended September 30, 2025 from 77% for the nine months ended September 30, 2024.

Selling,
General and Administrative Expenses

Selling,
general and administrative expenses were $8,531,984 and $18,439,296 for the nine months ended September 30, 2025 and 2024, respectively,
a decrease of $9,907,312 (53.7%). 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 58% for the nine
months ended September 30, 2025 compared to 121% in the same period in 2024. The significant components of selling, general and administrative
expenses are as follows:

    Nine months ended September 30, 

    2025  
    2024 
  
    Research and development expense 
    $405,983  
    $1,244,060 
  
    Selling