DIGITAL ALLY, INC. SEC 10-Q Report

Digital Ally, Inc., a company specializing in digital video imaging and storage products for law enforcement and commercial applications, has released its Form 10-Q report for the first quarter. The report highlights significant financial and operational developments, reflecting the company's strategic adjustments and future outlook.

Financial Highlights

• Total Revenue: $4.48 million, reflecting a decrease from the previous year's $5.53 million, primarily due to a decline in product sales.
• Gross Profit: $1.60 million, an increase from $1.52 million in the prior year, indicating improved cost management despite lower revenues.
• Operating Loss: $(0.97) million, a significant improvement from the $(3.64) million loss in the previous year, driven by reduced selling, general, and administrative expenses.
• Net Income: $4.27 million, compared to a net loss of $(3.94) million in the prior year, largely due to gains on extinguishment of debt and changes in fair value of warrant derivative liabilities.
• Net Income Per Share: $1.41, a substantial improvement from the $(27.48) loss per share in the previous year, reflecting the company's return to profitability.

Business Highlights

• Revenue Segments: Digital Ally, Inc. operates through three main segments: Video Solutions, Revenue Cycle Management, and Entertainment. The Video Solutions segment includes digital video imaging and storage products for law enforcement and commercial applications. The Revenue Cycle Management segment provides services to healthcare organizations, while the Entertainment segment focuses on ticketing operations through TicketSmarter.
• Segment Performance: The Video Solutions segment continues to be the legacy business, offering both product and service revenues through subscription models. The Revenue Cycle Management segment provides working capital and back-office services, while the Entertainment segment acts as an intermediary in ticket sales.
• Operational Adjustments: The company has implemented cost-cutting measures, particularly in the Entertainment segment, by removing several large partnerships and sponsorships that did not meet expectations. This is expected to not significantly hinder total revenues in 2025 and beyond.
• Future Outlook: Management anticipates that quality control and cost-cutting initiatives, along with expansion into non-law enforcement sales channels and new product introductions, will eventually restore positive operating cash flows and profitability.
• Deferred Revenue: The company has increased its deferred revenue to nearly $9.9 million as of March 31, 2025, which is expected to result in recurring revenue during the period of 2025 to 2027.
• Goodwill Impairment: An interim impairment test conducted in September 2024 led to a non-cash goodwill impairment charge for the Revenue Cycle Management and Entertainment segments due to a decline in demand and economic uncertainty.
• Segment Reporting: The company has adopted new segment reporting standards, which require disclosure of significant segment expenses and other segment items, providing more detailed operational insights.

SEC Filing: DIGITAL ALLY, INC. [ DGLY ] - 10-Q - May. 20, 2025