Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 229

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 8
Chunk 229
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4 is primarily attributable to a decrease in administrative salaries and reductions
in headcount in order to right-size our expenses in this area with our revenues. The decrease in general and administrative expenses was
offset by a substantial increase legal and professional expenses for the six months ended June 30, 2025 compared to the same period in
2024 due to the failed merger with CloverLeaf and various capital raises we have undertaken.

Operating Loss

For the reasons previously
stated, our operating loss was $5,069,753 and $7,553,193 for the six months ended June 30, 2025 and 2024, respectively, an improvement
of $2,483,440 (32.9%). Operating loss as a percentage of revenues improved to 50.2% in 2025 as compared to 67.8% in 2024.

Interest Income

Interest income increased
to $77,921 for the six months ended June 30, 2025, from $49,289 in 2024, which reflects our overall increase in our cash and cash equivalent
levels in 2025 compared to 2024 due to funds generated in the February 2025 public equity offering.

Interest Expense

We incurred interest expenses
of $869,553 and $1,733,690 during the six months ended June 30, 2025 and 2024, respectively. The large decrease is attributable to the Company
paying off most of its interest-bearing debt in late 2024 and early 2025 including the senior secured promissory notes that were paid
off with proceeds from the February 2025 public equity offering.

Other income (expense)

Other income (expense) decreased
to $35,467 for the six months ended June 30, 2025, from $58,046 during the six months ended June 30, 2024, which reflects income related
to a warehouse sublease within the corporate headquarters during early 2024 which ceased upon the sale of the building which occurred
in 2024.

58

Loss on Extinguishment of debt

During the second quarter of 2024, the Company
refinanced its merchant advance loan and determined the refinancing of the debt should be treated as a debt extinguishment. As a result,
the Company recorded a loss of $68,827 on the debt extinguishment during the six months ended June 30, 2024.

Change in Fair Value of Derivative Liabilities