Company: DGLY
Filing Date: 2025-05-02
Form Type: 424B3
Source: 0001641172-25-008437
Chunk: 36

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-02
Form: 424B3
Chunk 36
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 and work towards profitability. Our entertainment            
 segment has focused on cost cutting and overall improvements in gross margin rather than top line revenues which has resulted in a            
 reduction in revenues for ticketing events that did not meet its gross margin goals.                                                          |
| ● | Our revenue cycle management                                                                                                                  
 operating segment generated service revenues totaling $6,131,650 and $6,713,678 for the years ended December 31, 2024 and 2023, respectively, 
 a decrease of $582,028 (9%). Our revenue cycle management operating segment provides revenue cycle management solutions and back-office       
 services to healthcare organizations throughout the country. The decrease in revenue is due                                                   
 to refinement within one of the recent acquisitions, as they strive to maximize profitability rather than focus on top line revenue.          |

Total revenues for the years ended
December 31, 2024, and 2023 were $19,650,802 and $28,248,344, respectively, a decrease of $8,597,542 (30%), due to the reasons noted above.

| 21 |

Cost of Product Revenue

Overall cost of product revenue sold for the years ended December 31, 2024, and 2023 was $5,899,130 and $9,974,890, respectively, a decrease of $4,075,760 (41%). Overall cost of goods sold for products as a percentage of product revenues for the years ended December 31, 2024, and 2023 were 109% and 107%, respectively. Cost of products sold by operating segment is as follows:

| Cost of Product Revenues:      |     | Years Ended December 31, 
 2024                     |           |     | 2023 |           |
|:-------------------------------|:----|:-------------------------|----------:|:----|:-----|----------:|
| Video Solutions                |     | $                        | 1,780,284 |     | $    | 4,824,967 |
| Revenue Cycle Management       |     |                          |         — |     |      |         — |
| Entertainment                  |     |                          | 4,118,846 |     |      | 5,149,923 |
| Total Cost of Product Revenues |     | $                        | 5,899,130 |     | $    | 9,974,890 |

The decrease in cost of goods sold for our video solutions segment products is due to numerous factors including a