Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 154

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 154
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 returns; management does not expect discontinuing these arrangements to materially hinder total revenues in
2025 or thereafter. In the video segment, the Company reduced headcount and relocated to smaller, lower-cost facilities following the
sale of its warehouse/office building.

The
Company has successfully recorded $8.93 million in deferred revenue as of September 30, 2025, which results in recurring revenue during
the period of 2025 to 2028. The Company believes that its quality control and cost-cutting initiatives, expansion to non-law enforcement
sales channels and new product introduction will eventually restore positive operating cash flows and profitability, although it can
offer no assurances in this regard.

As
a result of the Company’s implementation of cost-cutting measures and liquidity generated by the recent public equity offerings,
the Company has significantly improved its financial position. During the nine months ended September 30, 2025, the working capital deficit
improved significantly to $115,393 from $19,377,507 as of December 31, 2024, and stockholders’ equity increased to a positive $7,516,665
from a $9,013,430 deficit; the Company nonetheless recorded a net loss attributable to common stockholders of $1,303,597.

Based
on the uncertainties described above and the corrective actions implemented by management, the Company believes its business plan including
the implementation of corrective actions mitigates the existence of substantial doubt about its ability to continue as a going concern
within one year from the date of the issuance of these condensed consolidated financial statements. The accompanying condensed consolidated
financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the classification
of liabilities that might be necessary should the Company be unable to continue as a going concern.

    12

NOTE
2. INVENTORIES

Inventories
consisted of the following at September 30, 2025 and December 31, 2024:

 SCHEDULE OF INVENTORIES

    September 30, 2025  
    December 31, 2024 
  
    Raw material and component parts– video solutions segment 
    $2,833,268  
    $2,589,804 
  
    Work-in-process– video solutions segment 
     49,400  
     4,906 
  
    Finished goods – video solutions segment 
     1,071,682  
     1,655,317 
  
    Finished