Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 93

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 1
Chunk 93
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 cost of product revenues for the entertainment operating segment was $3,317,407 and $2,460,792 for the three
months ended June 30, 2025 and 2024, an increase of $856,615 (34.8%). Cost of product sold as a percentage of product revenues for the
entertainment segment increased to 191% for the three months ended June 30, 2025 as compared to 155% for the three months ended June 30,
2024.

Cost of Service Revenue

Overall cost of service revenue
sold for the three months ended June 30, 2025, and 2024 was $2,362,800 and $1,954,589, respectively, an increase of $408,211 (20.9%).
Overall cost of goods sold for services as a percentage of service revenues for the three months ended June 30, 2025, and 2024 were 68%
and 81%, respectively. Cost of service revenues by operating segment is as follows:

    Three months ended June 30, 

    2025  
    2024 
  
    Cost of Service Revenues: 

    Video Solutions 
    $385,438  
    $339,368 
  
    Revenue Cycle Management 
     883,231  
     962,948 
  
    Entertainment 
     1,094,131  
     652,273 
  
    Total Cost of Service Revenues 
    $2,362,800  
    $1,954,589 

48

The increase in cost of service
revenues for our video solutions segment demonstrates the leverage we are enjoying as we increase our service revenues during the three
months ended June 30, 2025 compared to the three months ended June 30, 2024. Cost of service revenues as a percentage of service revenues
for the video solutions segment increased to 43% for the three months ended June 30, 2025 as compared to 35% for the three months ended
June 30, 2024. This represents an increase in costs for securing cloud storage from our providers in 2025 compared to 2024.

The decrease in revenue cycle
management operating segment cost of service revenue is commensurate with the decline in revenues due to certain loss generating services
being eliminated during the year. Cost of service revenues as a percentage of product revenues for the revenue cycle management operating
segment remained