Company: DGLY
Filing Date: 2025-02-06
Form Type: S-1/A
Source: 0001493152-25-005144
Chunk: 80

Company: DIGITAL ALLY, INC.
Filing Date: 2025-02-06
Form: S-1/A
Chunk 80
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31, 2022. This is primarily driven by large inventory reserve being established in 2022, a focus on right sizing recent acquisitions to increase profitability and a transition to a service subscription-based model in our video solutions segment. Our goal is to improve our margins over the longer term based on the expected margins generated by our new recent revenue cycle management and entertainment operating segments together with our video solutions operating segment and its expected margins from our EVO-HD, DVM-800, VuLink, FirstVu Pro, FirstVu II, Shield TMdisinfectants and our cloud evidence storage and management offering, provided that they gain traction in the marketplace. We plan to continue our initiative to more efficient management of our supply chain through outsourcing production, quantity purchases and more effective purchasing practices.

| 49 |

Selling, General and Administrative Expenses

Overall selling, general and administrative expenses were $28,003,037 and $32,055,199 for the years ended December 31, 2023 and 2022, respectively, a decrease of $4,052,162 (13%). The decrease is primarily attributable to a focus on right-sizing the business with a reduction in administrative headcount coupled with a reduction in sponsorships and advertising where costs outweighed the returns. Our selling, general and administrative expenses as a percentage of sales increased to 99% for 2023 compared to 87% in the same period in 2022.

The significant components of selling, general and administrative expenses are as follows:

|                                              |     | Year ended December 31, |       2023 |     |   |       2022 |
|:---------------------------------------------|:----|:------------------------|-----------:|:----|:--|-----------:|
| Research and development expense             |     | $                       |  2,618,746 |     | $ |  2,290,293 |
| Selling, advertising and promotional expense |     |                         |  7,137,529 |     |   |  9,312,204 |
| General and administrative expense           |     |                         | 18,246,762 |     |   | 20,452,702 |
| Total                                        |     | $                       | 28,003,037 |     | $ | 32,055,199 |

Research and development expense.Our video solutions operating segment continues to focus on bringing new products to market, including updates and improvements to current products. Our research and development expenses totaled $2,