Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 85

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 85
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31, 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 $974,680 and $3,639,034 for the three months ended March 31, 2025 and 2024, respectively, an improvement of $2,664,354
(73%). Operating loss as a percentage of revenues improved to 22% in 2025 as compared to 66% in 2024.

Interest Income

Interest income increased to $31,975
for the three months ended March 31, 2025, from $19,356 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 $792,273 and $648,567 during the three months ended March 31, 2025 and 2024, respectively. The increase is attributable to the amortization
of debt discounts associated with 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 $16,700 for the three months ended March 31, 2025, from $27,602 during the three months ended March 31, 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.

Gain on Extinguishment of Debt - related
party

On September 22, 2023, a trust, the beneficiaries
of which are TicketSmarter’s Chief Executive Officer and his spouse, made a loan in the amount of $2,325,000 to TicketSmarter
to support TicketSmarter’s operations. The Related Party Note bears interest of 13.25% per annum with repayment beginning January
2, 2024. On October 2, 2023 an additional $375,000 was advanced to Ticketsmarter which increased the loan balance to $2,700,000.
The use of proceeds of the TicketSmarter Related Party Note was to resolve numerous outstanding payables at a discounted rate, the discount
received is recognized as a gain on extinguishment of liabilities on