Financial Data and Key Metrics Changes - Current assets decreased to $14.2 million, down $1.3 million from year-end [4] - Total assets were $43.3 million compared to $47 million on December 31 [4] - Total current liabilities increased to $27.6 million, with a significant portion attributed to warrant derivative liabilities [4] - Total liabilities amounted to $40.3 million [4] - Total stockholders' equity at the end of Q2 was just over $3 million [5] - Total revenue for the quarter was $5.6 million, with a gross profit of $242,000 [5] - Operating loss was $3.9 million, and net loss was $5 million, resulting in a net loss per share of $1.74 [5] Business Line Data and Key Metrics Changes - Deferred revenue grew to over $10.5 million, indicating a successful subscription model [6] Market Data and Key Metrics Changes - The company is involved in the entertainment sector through the acquisition of Country Stampede, a significant country festival in Kansas [12] Company Strategy and Development Direction - The company is focused on the business combination agreement to sell Kustom Entertainment to Clover Leaf Capital, which is expected to enhance clarity and value for shareholders [7][10] - The strategy includes a subscription model to reduce capital expenditures for clients, allowing for recurring revenue [17][18] Management Comments on Operating Environment and Future Outlook - Management expressed excitement about the merger prospects and the value it brings to Digital Ally and its shareholders [9][11] - The company is optimistic about the future of the Country Stampede festival and plans to enhance its offerings for the next year [12] Other Important Information - The company is preparing for a shareholder vote regarding the business combination agreement, with updates to follow [20] Q&A Session Summary Question: Clarification on shares outstanding - Management clarified that shares outstanding were 3.5 million at quarter-end due to unexercised prefunded warrants, which have since increased to a little less than 3.9 million [13][14][15] Question: Update on FirstVu Pro and deferred revenue - Management confirmed that the FirstVu Pro and associated docking stations are being successfully deployed, with the subscription model proving effective for various sectors, including sports teams and cruise lines [16][17][18]

Financial Performance - Total net revenues for the six months ended June 30, 2024, were $11,145,586, a decrease of 30.5% compared to $15,976,820 for the same period in 2023[170]. - Total revenue for Q2 2024 was $5,616,235, a decrease of $2,663,397 (32%) compared to $8,279,632 in Q2 2023[184]. - Total revenues for the six months ended June 30, 2024, were $11,145,586, a decrease of $4,831,234 (30%) from $15,976,820 in 2023[219]. - Total identifiable assets as of June 30, 2024, were $43,327,215, a decrease from $47,028,809 as of December 31, 2023[170]. Segment Performance - Video Solutions segment revenue decreased to $3,303,963 in the first half of 2024, down 13.1% from $3,798,953 in the first half of 2023[170]. - Revenue Cycle Management segment revenue fell to $2,998,952, a decline of 14.5% from $3,506,361 in the prior year[170]. - Entertainment segment revenue dropped significantly to $4,842,671, down 44.5% from $8,671,506 in the same period last year[170]. - The entertainment operating segment generated $2,431,320 in product revenues for the six months ended June 30, 2024, down from $3,189,847 in 2023, attributed to the first Country Stampede music festival and ticket resale activities[213]. - Video solutions operating segment revenues totaled $1,342,127 for the six months ended June 30, 2024, compared to $2,341,622 in 2023, impacted by increased competition and price-cutting[214]. Profitability and Loss - Total gross profit for the first half of 2024 was $1,763,830, a decrease of 58.8% compared to $4,281,829 in the first half of 2023[170]. - Overall gross profit decreased by $2,517,999 (59%) to $1,763,830 for the six months ended June 30, 2024, from $4,281,829 in 2023[225]. - Operating loss for Q2 2024 was $(3,914,221), representing an operating loss margin of (69.7)%, compared to (59.7)% in Q2 2023[174]. - The Company reported a net loss attributable to common stockholders of $5,083,861 for the three months ended June 30, 2024, an improvement of $3,309,443 (39%) from $8,393,304 in 2023[209]. - The net loss attributable to common stockholders for the six months ended June 30, 2024, was $3.12 per share, improved from a loss of $5.24 per share in 2023[211]. Expenses - Selling, general and administrative expenses decreased by $6,078,317 (39%) to $9,317,023 for the six months ended June 30, 2024, compared to $15,395,340 in 2023[227]. - Research and development expenses totaled $545,776 for the three months ended June 30, 2024, slightly up from $540,276 in 2023[193]. - Selling, advertising, and promotional expenses decreased by $1,357,719 (65%) to $728,906 for the three months ended June 30, 2024, compared to $2,104,625 in 2023[194]. - Interest expenses decreased to $1,085,063 for the three months ended June 30, 2024, from $1,515,509 in 2023[198]. Cash Flow and Liquidity - Cash, cash equivalents, and restricted cash totaled $614,713 as of June 30, 2024, a decrease from $778,149 at December 31, 2023[247]. - Net cash used in operating activities increased by $298,771 to $3,408,757 for the six months ended June 30, 2024, compared to $3,109,986 in 2023[247]. - Cash provided by financing activities increased to $3,208,817 for the six months ended June 30, 2024, from $2,628,614 in 2023[249]. Inventory and Reserves - The reserve for excess and obsolete inventory represented 65% of the gross inventory balance at June 30, 2024, up from 54% at December 31, 2023[269]. - Total inventories decreased to $2,218,133 as of June 30, 2024, from $3,845,281 at December 31, 2023, reflecting a reduction of 42%[269]. - The Company had $4,135,001 in reserves for obsolete and excess inventories as of June 30, 2024[269]. Debt and Obligations - Outstanding debt obligations increased to $7,879,321 as of June 30, 2024, compared to $6,113,750 as of December 31, 2023[255]. Internal Controls and Compliance - The Company concluded that its disclosure controls and procedures were not effective as of June 30, 2024, requiring a full review and implementation of new controls[295]. - There have been no changes in the Company's internal control over financial reporting that materially affected its internal control during the last fiscal quarter[297]. Other Information - Inflation has not materially affected the Company during the past fiscal year, and the Entertainment Segment is expected to generate higher revenues in the second half of the calendar year[293]. - The most recent annual impairment test of goodwill indicated no impairment as of December 31, 2023[278].

Financial Performance - Overall gross profits for Q2 2024 were $242,392, a decrease of $2,494,648, or 91%, compared to $2,737,040 in Q2 2023[1] - Total revenues decreased to $5,616,235 in Q2 2024 from $8,279,632 in Q2 2023, a decline of $2,663,397, or 32%[2] - Revenue from the entertainment segment fell by $2,189,059, or 47%, to $2,466,211 in Q2 2024 compared to $4,655,270 in Q2 2023[3] - Service revenues from the revenue cycle management segment decreased by $160,418, or 9%, to $1,564,354 in Q2 2024 from $1,724,772 in Q2 2023[4] - Total revenue for the six months ended June 30, 2024, was $11,145,586, a decrease of 30.5% compared to $15,976,820 for the same period in 2023[21] - Gross profit for the six months ended June 30, 2024, was $1,763,830, down 58.8% from $4,281,829 in the prior year[21] - Operating loss for the six months ended June 30, 2024, was $(7,553,193), compared to $(11,113,511) for the same period in 2023, reflecting an improvement of 32.5%[21] - Net loss attributable to common stockholders for the six months ended June 30, 2024, was $(9,014,882), a decrease of 37.5% from $(14,499,122) in 2023[21] Expenses and Liabilities - Selling, general and administrative expenses were $4,156,613 in Q2 2024, down $3,521,131, or 46%, from $7,677,744 in Q2 2023[5] - Selling, general and administrative expenses totaled $9,317,023 for the six months ended June 30, 2024, down 39.5% from $15,395,340 in 2023[21] - Total current assets decreased to $14,244,761 as of June 30, 2024, from $15,584,494 at the end of 2023, a decline of 8.6%[20] - Total liabilities increased to $40,277,022 as of June 30, 2024, compared to $35,580,414 at the end of 2023, an increase of 13.8%[20] - Cash and cash equivalents decreased to $517,113 as of June 30, 2024, from $680,549 at the end of 2023, a decline of 24.0%[20] - Accounts payable increased to $11,501,822 as of June 30, 2024, compared to $10,732,089 at the end of 2023, an increase of 7.2%[20] - Research and development expenses for the six months ended June 30, 2024, were $1,033,242, a decrease of 30.0% from $1,475,215 in the prior year[21] Strategic Initiatives - The company completed the acquisition of assets related to the Country Stampede music event on March 1, 2024[5] - The proposed business combination with Clover Leaf Capital Corp. aims to create Kustom Entertainment, focusing on events and ticketing technologies[11] - The proposed Business Combination between Clover Leaf and Kustom Entertainment is subject to various business risks and uncertainties, including recent losses in fiscal years 2023 and 2022[15] - The company aims to increase revenues and return to consistent profitability in the current economic environment, facing challenges such as competition and market acceptance of new products[15] - Kustom Entertainment's ability to deliver new product offerings as scheduled in 2024 is critical for revenue growth, with performance expectations tied to market demand[15] - The company is focused on expanding its market share both domestically and internationally, with an emphasis on increasing international revenues[15] - The company emphasizes the importance of maintaining its brand reputation and relationships with key stakeholders to ensure ongoing business success[16] Risks and Challenges - Significant risks include reliance on government funding for law enforcement agencies, which may affect operational budgets and revenue generation[15] - The company acknowledges the potential impact of external factors such as economic downturns, pandemics, and changes in consumer behavior on its business performance[16] - Kustom Entertainment's operations are seasonal, leading to variability in financial performance across different quarters and years[16] - The company may need to raise additional capital to execute its business plan, which could be challenging under current market conditions[16] - The completion of the Business Combination is contingent upon various regulatory approvals and shareholder votes, which introduces uncertainty regarding timing and execution[17] Operational Improvements - Operating losses improved by $1,026,483, or 21%, to $3,914,221 in Q2 2024 from $4,940,704 in Q2 2023[13] - The company plans to enhance margins through improved supply chain management and increased efficiency in manufacturing[1] - Deferred revenue reached $10.1 million at June 30, 2024, an increase of approximately $0.6 million from $9.5 million at June 30, 2023[11]

KANSAS CITY, Aug. 05, 2024 (GLOBE NEWSWIRE) -- Digital Ally, Inc. (Nasdaq: DGLY) – Kustom Entertainment, Inc. ("Kustom Entertainment"), a premier live event marketing and concert production company and current subsidiary of Digital Ally Inc. ("Digital Ally"), today announced that Clover Leaf Capital Corp.'s ("Clover Leaf") registration statement on Form S-4 has been declared effective by the U.S. Securities and Exchange Commission (the "SEC") as of Tuesday, July 30, 2024, relating to the previously announce ...

KANSAS CITY, Aug. 05, 2024 (GLOBE NEWSWIRE) -- Digital Ally, Inc. (Nasdaq: DGLY) – Kustom Entertainment, Inc. ("Kustom Entertainment"), a premier live event marketing and concert production company and current subsidiary of Digital Ally Inc. ("Digital Ally"), today announced that Clover Leaf Capital Corp.'s ("Clover Leaf") registration statement on Form S-4 has been declared effective by the U.S. Securities and Exchange Commission (the "SEC") as of Tuesday, July 30, 2024, relating to the previously announce ...

Lenexa, Kansas, June 25, 2024 (GLOBE NEWSWIRE) -- Digital Ally, Inc. (NASDAQ: DGLY) (the "Company"), a leading provider of video solutions which develops, manufactures, and markets advanced video recording products and other critical safety products for law enforcement, emergency management, fleet safety and event security, today announced the closing of a private placement with certain institutional investors. The aggregate gross cash proceeds were approximately $2.9 million, before deducting fees to the p ...

Lenexa, Kansas, June 25, 2024 (GLOBE NEWSWIRE) -- Digital Ally, Inc. (NASDAQ: DGLY) (the "Company"), a leading provider of video solutions which develops, manufactures, and markets advanced video recording products and other critical safety products for law enforcement, emergency management, fleet safety and event security, today announced the closing of a private placement with certain institutional investors. The aggregate gross cash proceeds were approximately $2.9 million, before deducting fees to the p ...

Lenexa, Kansas, June 24, 2024 (GLOBE NEWSWIRE) -- Digital Ally, Inc. (NASDAQ:DGLY) (the "Company"), a leading provider of video solutions which develops, manufactures, and markets advanced video recording products and other critical safety products for law enforcement, emergency management, fleet safety and event security, today announced the pricing of a private placement with certain institutional investors. The aggregate gross cash proceeds are expected to be approximately $2.9 million, before deducting ...

DIGITALALLY, INC ANNOUNCES FIST QUARTER 2024 OPERATING RESULTS LENEXA, Kansas (May 20, 2024) – Digital Ally, Inc. (Nasdaq: DGLY) (the "Company" or "our"), today announced its operating results for the first quarter of 2024. An investor conference call is scheduled for 11:15 a.m. EDT on Tuesday, May 21, 2024 (see details below). Exhibit 99.1 Highlights for the first quarter ended March 31, 2024 ● Overall gross profits for the three months ended March 31, 2024 were $1,523,699, a slight decrease of $21,093, or ...

Revenue Performance - Total net revenues for Q1 2024 were $5,529,351, a decrease of 28.2% compared to $7,697,190 in Q1 2023[186] - Video Solutions segment revenue decreased to $1,718,293 in Q1 2024 from $1,899,364 in Q1 2023, reflecting a decline of 9.5%[186] - Revenue Cycle Management segment revenue fell to $1,434,598 in Q1 2024 from $1,781,590 in Q1 2023, a decrease of 19.5%[186] - Entertainment segment revenue decreased significantly to $2,376,460 in Q1 2024 from $4,016,236 in Q1 2023, a decline of 40.9%[186] - Total revenues for the three months ended March 31, 2024, were $5,529,351, a decrease of $2,167,839 (28%) compared to $7,697,190 in 2023[197] - Product revenues decreased by $887,964 (36%) to $1,565,846 for the three months ended March 31, 2024, from $2,453,810 in 2023[195] - Service and other revenues decreased by $1,279,875 (24%) to $3,963,505 for the three months ended March 31, 2024, from $5,243,380 in 2023[196] Profitability and Loss - Total operating loss for Q1 2024 was $3,639,034, an improvement from a loss of $6,172,806 in Q1 2023[186] - The company reported a net loss of $3,943,268 for Q1 2024, compared to a net loss of $5,979,579 in Q1 2023[189] - Operating loss decreased by $2,533,772 (41%) to $3,639,034 in Q1 2024 from $6,172,806 in Q1 2023, with operating loss as a percentage of revenues improving to 66%[208] - Net loss attributable to common stockholders was $3,931,020 in Q1 2024, a decrease of $2,174,798 (36%) from $6,105,818 in Q1 2023[220] Efficiency and Cost Management - Gross profit margin for Q1 2024 was 27.6%, compared to 20.1% in Q1 2023, indicating improved efficiency[189] - Gross profit margin improved to 28% in Q1 2024 from 20% in Q1 2023, driven by a reduction in cost of revenue from 80% to 72%[197] - Operating loss decreased to (66)% of total revenues in Q1 2024, compared to (80)% in Q1 2023[197] - Cost of service revenue decreased by $1,413,039 (37%) to $2,438,259 in Q1 2024, with service revenues as a percentage of service revenues improving from 73% to 62%[201] - Selling, general and administrative expenses decreased by $2,554,865 (33%) to $5,162,732 in Q1 2024 from $7,717,598 in Q1 2023[205] - Research and development expenses totaled $487,466 in Q1 2024, down $447,473 (48%) from $934,939 in Q1 2023, focusing on new body-worn camera products[205] Assets and Liabilities - Identifiable assets decreased to $45,164,195 as of March 31, 2024, down from $47,028,809 as of December 31, 2023[186] - Debt obligations increased to $7,278,860 as of March 31, 2024, compared to $6,113,750 as of December 31, 2023, reflecting a significant rise in financial leverage[226] - Total undiscounted minimum future lease payments amount to $1,159,779, with total operating lease liability at $975,678 as of March 31, 2024[226] - Debt obligations maturing in 2024 are $2,402,188, with long-term debt obligations totaling $4,875,831 as of March 31, 2024[226] Inventory and Reserves - Reserves for obsolete and excess inventories were $4,486,389 as of March 31, 2024, slightly down from $4,542,461 at the end of 2023[200] - The reserve for excess and obsolete inventory represented 59% of the gross inventory balance at March 31, 2024, up from 54% at December 31, 2023[242] - Total inventories decreased to $3,148,689 as of March 31, 2024, from $3,845,281 at December 31, 2023, indicating a reduction in stock levels[242] - Finished goods balances decreased by 12% to $4,670,553 as of March 31, 2024, from $5,322,693 at December 31, 2023[242] Cash Flow and Capital Needs - Cash, cash equivalents, and restricted cash increased to $1,025,461 as of March 31, 2024, up from $778,149 at December 31, 2023[224] - Net cash used in operating activities decreased to $918,545 in Q1 2024 from $1,216,876 in Q1 2023, a decrease of $298,331[225] - The company anticipates needing to restore positive operating cash flows and/or raise additional capital in the short term to fund operations[222] Other Financial Metrics - Interest expenses rose to $648,567 in Q1 2024 from $5,664 in Q1 2023, primarily due to interest charges and amortization of debt[210] - Gain on extinguishment of liabilities increased to $682,345 in Q1 2024 from $0 in Q1 2023, reflecting improved negotiation of payables[213] - The company's warranty reserves increased to $20,529,000 as of March 31, 2024, compared to $17,699,000 as of December 31, 2023, due to newer products gaining a longer history of claims[251] Strategic Developments - The company has diversified its product offerings with the introduction of ThermoVu™ and Shield™ lines in 2020[179] - The revenue cycle management segment has completed four acquisitions since its formation in 2021, enhancing its service capabilities[181] - Historical bad debts for the video solutions segment were negligible, with less than $258,000 charged off as uncollectible on cumulative revenues of $248.0 million since 2006[238] - The company has fully reserved all of its deferred tax assets, increasing the valuation allowance by $7,410,000 to a total of $41,610,000 as of December 31, 2023[256] - The company has no recorded liability as of March 31, 2024, representing uncertain tax positions[257] - Inflation has not materially affected the company during the past fiscal year, and the Entertainment Segment is expected to generate higher revenues in the second half of the calendar year[260]