UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023. or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to __________. Commission File Number: 001-33899 Digital Ally, Inc. (Exact name of registrant as specified in its charter) Nevada 20-0064269 (State or o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023. or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to __________. Commission File Number: 001-33899 Digital Ally, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of in ...

Financial Data and Key Metrics Changes - The company reported an operating loss of $6.2 million for Q1 2023, which is an improvement compared to 2022 [5] - Total revenue for Q1 2023 was $7.7 million, down from the previous year but still relatively high compared to two years ago [61] - Deferred revenue increased from $5 million in Q1 2022 to $9 million in Q1 2023, indicating growth in subscriptions [6] Business Line Data and Key Metrics Changes - The Video Solutions division generated approximately $1.9 million in revenue, while Medical Billing revenue cycle management brought in $1.8 million, and the Entertainment segment contributed $4 million [63] - The majority of recurring revenue (over 95%) comes from the law enforcement side, with the commercial side starting to gain traction [12][13] Market Data and Key Metrics Changes - The company has established a strong foothold in the law enforcement market and is now expanding into the commercial sector with the new EVO system [10] - The recent Kustom 440 concert sold nearly 7,500 tickets, exceeding expectations and indicating strong market interest [9] Company Strategy and Development Direction - The company is considering a potential spinout of its Entertainment division to enhance clarity and valuation [3][8] - The long-term strategy includes rolling up smaller entities in a fragmented market to improve profitability and efficiency [32][33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in the Video Solutions division and the success of recent events [10][9] - The company aims to address the disparity between its stockholder equity of $30 million and a market cap of $10 million, which is viewed as unacceptable [36][55] Other Important Information - The company completed a reverse stock split of 20-for-1 on February 6, 2023, to improve its stock price [62] - The company is actively pursuing additional concerts and events to drive revenue growth in the Entertainment segment [96] Q&A Session Summary Question: What is the timeline for the spin-off of TicketSmarter? - Management indicated that the timeline is dependent on SEC reviews and the completion of necessary audits, with hopes for a quick resolution [54][72] Question: How does the company plan to break out profitability between Kustom 440 and TicketSmarter? - Management confirmed that they plan to separate the financials of Kustom 440 and TicketSmarter in future filings, especially after the spin-off [27][28] Question: What is the strategy for acquiring new companies in the medical billing sector? - The focus is on acquiring companies with growth potential and positive earnings, integrating them into existing systems to improve margins [32][101]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023. Commission File Number: 001-33899 Digital Ally, Inc. (Exact name of registrant as specified in its charter) Nevada 20-0064269 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 14001 Marshall Drive, Lenexa, KS 66215 (Address of principal execut ...

Financial Data and Key Metrics Changes - The company reported a revenue of $8.3 million for the Video Solutions segment, down approximately 9% year-over-year, attributed to the subscription model and larger sales in 2021 compared to 2022 [6] - The Revenue Cycle Management segment saw a significant increase of 393%, reaching nearly $8 million, primarily due to a full year of operations from acquisitions made in early 2022 [7] - The entertainment segment generated $20.9 million in revenue, a 95% increase from 2021, benefiting from a full year of operations for TicketSmarter [21] - The company reported $3.5 million in cash and $11.4 million in positive working capital, with minimal interest-bearing debt obligations of $900,000 [9] Business Line Data and Key Metrics Changes - Video Solutions segment had a deferred revenue increase from $4.3 million at the end of 2021 to $8 million at the end of 2022 [6] - Revenue Cycle Management achieved a gross margin of $3.3 million, indicating strong profitability [22] - The entertainment division had a gross profit of approximately $300,000, with efforts underway to enhance profitability [22] Market Data and Key Metrics Changes - The ticketing platform, TicketSmarter, generated approximately $21 million in revenue, with potential for growth as the company plans to conduct more live events [11][29] - The company anticipates a strong performance in the entertainment sector, with Live Nation predicting record years, indicating a positive market environment [29][44] Company Strategy and Development Direction - The company is considering a spin-off of the entertainment side of the business, allowing Medical Billing and Video Solutions to remain under Digital Ally [3] - The focus is on maximizing profitability and operational synergies from recent acquisitions, with no new acquisitions since February 2022 [8][19] - The company aims to enhance its ticketing and entertainment division, leveraging existing relationships with municipalities and law enforcement agencies to drive growth [34][55] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the potential for growth in the entertainment sector and the positive reception of new products in the law enforcement market [13][39] - The anticipated spin-off is expected to clarify the company's structure and enhance shareholder value [43][48] - The company is on track to complete necessary audits for the spin-off by mid-2023, with a potential separation date around July 1 [28] Other Important Information - The company regained NASDAQ compliance on February 6, 2023, and extinguished most of its outstanding warrants, resulting in a $3.6 million gain [18][19] - The Video Solutions segment faced challenges with a negative gross margin of $1.25 million due to inventory reserves related to PPE products [41] Q&A Session Summary Question: Potential of the entertainment ticketing side of the business - Management highlighted the unique opportunities in the entertainment division, leveraging relationships with municipalities and the ability to host events in various venues [31][34] Question: Future concert events and revenue generation - Management expressed excitement about upcoming concerts and the potential to generate significant additional revenue through ticket sales and production [35][55]

Revenue Performance - Total net revenues for 2022 reached $37,009,895, a significant increase from $21,413,434 in 2021, representing a growth of approximately 73%[109] - Total revenue for the year ended December 31, 2022, was $37,009,895, representing a 72.8% increase from $21,413,434 in 2021[125] - Revenue Cycle Management segment generated $7,886,107 in revenues for 2022, a substantial increase from $1,630,048 in 2021, reflecting a growth of approximately 384%[109] - Entertainment segment revenues surged to $20,871,500 in 2022, compared to $10,709,760 in 2021, marking an increase of around 95%[109] - Product revenues increased by 19.8% to $10,999,892 in 2022, driven by a 100.9% increase in entertainment segment revenues[119] - Service and other revenues surged by 112.6% to $26,010,003 in 2022, compared to $12,233,147 in 2021[119] - Revenue cycle management segment revenues increased by 384.0% to $7,886,107 in 2022, compared to $1,630,048 in 2021[119] Segment Performance - Video Solutions segment reported revenues of $8,252,288 in 2022, down from $9,073,626 in 2021, indicating a decline of about 9%[109] - Video Solutions segment incurred an operating loss of $9,278,721 in 2022, worsening from a loss of $4,497,196 in 2021[109] - Revenue Cycle Management segment achieved an operating income of $357,705 in 2022, up from $93,763 in 2021, showing improvement in profitability[109] - Entertainment segment reported an operating loss of $7,369,241 in 2022, compared to a profit of $235,432 in 2021, indicating a significant decline in performance[109] Profitability and Loss - Total gross profit for 2022 was $2,321,941, down from $5,663,775 in 2021, indicating a decline of approximately 59%[109] - Gross profit margin for 2022 was 6%, down from 26% in 2021, indicating increased cost pressures[116] - Operating loss for the year ended December 31, 2022, was 80% of total revenues, compared to 69% in 2021[116] - Net loss attributable to common stockholders for 2022 was $8.50 per share, compared to a net income of $10.14 per share in 2021[116] - The company reported a net loss of ($18,873,758) for the year ended December 31, 2022, a decline of $44,404,719 (174%) compared to a net income of $25,530,961 in 2021[155] Cash Flow and Working Capital - Cash and cash equivalents decreased to $3,532,199 as of December 31, 2022, down from $32,007,792 in 2021, resulting in a net decrease of $28,475,593 during the year[168] - Net cash used in operating activities was $18,580,385 for the year ended December 31, 2022, a deterioration of $755,277 compared to $17,825,108 in 2021[168] - As of December 31, 2022, the company had $3,532,199 in cash and cash equivalents and net positive working capital of $11,447,313[171] - Accounts receivable and other receivable balances accounted for $6,120,578 of net working capital as of December 31, 2022, with plans to collect outstanding receivables timely[171] - Inventory represented $6,839,406 of net working capital as of December 31, 2022, with a goal to reduce inventory levels through increased sales activities in 2023[171] Expenses and Costs - Overall cost of product revenue sold rose to $14,372,115 in 2022, an increase of $5,737,068 (66%) from $8,635,047 in 2021, with the video solutions segment's cost of goods sold as a percentage of revenue increasing to 154%[127] - Selling, general and administrative expenses increased to $32,055,199 in 2022, an increase of $11,630,514 (57%) from $20,424,685 in 2021, largely due to recent acquisitions[135] - Research and development expenses rose to $2,290,293 in 2022, an increase of $359,509 (19%) from $1,930,784 in 2021, reflecting the company's focus on new product development[136] - Professional fees and expenses surged to $3,297,895 in 2022, up by $1,784,033 (118%) from $1,513,862 in 2021, driven by increased legal and due diligence costs related to strategic transactions[140] Inventory and Reserves - Total inventories as of December 31, 2022, were $6,839,406, down 29.0% from $9,659,536 in 2021, primarily due to declining inventory for the new Shield product line and the entertainment segment[206] - The reserve for excess and obsolete inventory increased to $5,489,541 as of December 31, 2022, compared to $3,915,089 in 2021, representing a 40.2% increase[206] - Inventory reserves represented 44.5% of the gross inventory balance as of December 31, 2022, compared to 28.8% in 2021[206] - Warranty reserves increased to $15,694 as of December 31, 2022, from $13,742 in 2021, indicating a 14.2% increase[217] Acquisitions and Growth Strategy - The company completed its fourth medical billing asset acquisition for approximately $230,000 in cash, with a contingent consideration of $105,000[175] - The revenue cycle management segment completed its third medical billing company acquisition for approximately $1.2 million in cash, with a contingent consideration of $750,000[174] Future Outlook and Challenges - Management anticipates needing to restore positive operating cash flows and/or raise additional capital in the short term to fund operations over the next 12 months[165] - Inflation is expected to significantly impact all operating segments in 2023 and beyond, although it has not materially affected the company in the past fiscal year[226] - The company does not believe its business is seasonal, but generally generates higher revenues in the second half of the calendar year compared to the first half[226]

Digital Ally, Inc. (NASDAQ:DGLY) Q3 2022 Earnings Conference Call November 16, 2022 11:15 AM ET Company Participants Stanton Ross - Chief Executive Officer Tom Heckman - Chief Financial Officer Brody Green - Chief Accounting Officer Conference Call Participants Rommel Dionisio - Aegis Capital Michael Albanese - EF Hutton Operator Good morning, ladies and gentlemen, and welcome to the Digital Ally, Inc. 2022 Third Quarter Operating Results Conference Call. This conference call may contain forward-looking st ...

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the company's financial statements, management's discussion and analysis, market risk disclosures, and internal controls [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for Q3 and nine months ended September 30, 2022, show decreased cash and assets, substantial revenue growth from acquisitions, and a shift from net income to a net loss [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2022, total assets decreased to **$68,397,464** from **$82,989,197**, primarily due to a sharp reduction in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | Sep 30, 2022 ($) | Dec 31, 2021 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 6,295,391 | 32,007,792 | | Total current assets | 34,680,191 | 56,144,975 | | Total assets | 68,397,464 | 82,989,197 | | **Liabilities & Equity** | | | | Warrant derivative liabilities | — | 14,846,932 | | Total current liabilities | 13,935,052 | 23,022,687 | | Total liabilities | 20,352,356 | 27,125,958 | | Total stockholders' equity | 48,045,108 | 55,863,239 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q3 and the nine months ended September 30, 2022, revenues significantly increased, but the company reported a net loss due to higher costs and a non-cash gain in the prior year Statement of Operations Summary (Unaudited) | Metric | Q3 2022 ($) | Q3 2021 ($) | Nine Months 2022 ($) | Nine Months 2021 ($) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 8,484,153 | 4,639,822 | 28,130,392 | 9,669,323 | | Gross Profit | 595,500 | 1,400,570 | 4,254,198 | 3,473,254 | | Operating Loss | (6,567,023) | (3,598,973) | (20,031,610) | (9,081,553) | | Change in fair value of warrant derivative liabilities | 1,164,849 | 11,585,204 | 6,726,638 | 33,274,039 | | Net Income (Loss) | (1,919,071) | 8,048,936 | (9,299,498) | 24,388,307 | | Basic EPS | (0.04) | 0.16 | (0.19) | 0.49 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2022, cash decreased by **$25,712,401** due to significant outflows from operating, investing, and financing activities, including stock repurchases Cash Flow Summary for Nine Months Ended Sep 30 (Unaudited) | Cash Flow Activity | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (17,797,992) | (12,230,781) | | Net cash used in investing activities | (3,488,972) | (17,958,520) | | Net cash (used in) provided by financing activities | (4,425,437) | 66,570,600 | | **Net (decrease) increase in cash** | **(25,712,401)** | **36,381,299** | | Cash, end of period | 6,295,391 | 40,743,057 | - The company repurchased and cancelled **$4,026,523** of common stock in the first nine months of 2022[25](index=25&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's segment structure, accounting policies, a going concern warning, Nasdaq delisting notice, and a subsequent preferred stock purchase agreement - The company is divided into three reportable operating segments: **Video Solutions**, **Revenue Cycle Management**, and **Ticketing**[31](index=31&type=chunk) - Management concluded that without additional funding, the company will not have sufficient funds to meet its obligations within one year, raising substantial doubt about its ability to continue as a going concern[36](index=36&type=chunk)[38](index=38&type=chunk) - On July 7, 2022, the company received a delisting notice from Nasdaq for its stock price falling below the **$1.00** minimum bid price requirement, with a compliance deadline of January 3, 2023[138](index=138&type=chunk) - Subsequent to the quarter, on October 13, 2022, the company entered into a securities purchase agreement to sell **$15,000,000** in Series A and Series B Convertible Redeemable Preferred Stock[211](index=211&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=52&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses significant revenue growth driven by acquisitions, alongside compressed gross margins, widened operating losses, tightened liquidity, and a going concern warning, with capital bolstered by a preferred stock offering [Results of Operations](index=54&type=section&id=Results%20of%20Operations) For the nine months ended September 30, 2022, total revenues surged **191.0%** due to new segments, but gross margin compressed, operating losses widened, and the company shifted to a net loss Revenue by Segment - Nine Months Ended Sep 30 | Segment | 2022 Revenue ($) | 2021 Revenue ($) | % Change | | :--- | :--- | :--- | :--- | | Video Solutions | 6,152,733 | 7,058,161 | -12.8% | | Revenue Cycle Management | 6,039,807 | 2,050,679 | +194.5% | | Ticketing | 15,937,852 | 560,483 | +2743.6% | | **Total Net Revenues** | **28,130,392** | **9,669,323** | **+191.0%** | Gross Profit by Segment - Nine Months Ended Sep 30 | Segment | 2022 Gross Profit ($) | 2021 Gross Profit ($) | % Change | | :--- | :--- | :--- | :--- | | Video Solutions | 1,543,057 | 2,663,131 | -42.1% | | Revenue Cycle Management | 2,520,709 | 197,681 | +1175.1% | | Ticketing | 190,432 | 612,442 | -68.9% | | **Total Gross Profit** | **4,254,198** | **3,473,254** | **+22.5%** | - Selling, general and administrative (SG&A) expenses increased by **93%** to **$24,300,000** for the nine months ended Sep 30, 2022, up from **$12,600,000** in the prior year, primarily due to acquisitions[303](index=303&type=chunk) [Liquidity and Capital Resources](index=71&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity significantly decreased, with cash falling to **$6,295,391**, driven by cash outflows from operations, investing, and financing, leading to a going concern warning and the termination of a stock repurchase program - The company experienced a net decrease in cash of **$25,712,401** during the first nine months of 2022, reducing the cash balance to **$6,295,391**[324](index=324&type=chunk) - Management states that recurring losses and cash used in operations raise substantial doubt about the company's ability to continue as a going concern[323](index=323&type=chunk) - A stock repurchase program was terminated on June 30, 2022, after the company repurchased **5,460,824** shares for a total cost of **$6,001,602** under the program[170](index=170&type=chunk)[329](index=329&type=chunk) [Critical Accounting Estimates](index=73&type=section&id=Critical%20Accounting%20Estimates) Management identifies critical accounting estimates including revenue recognition, inventory valuation, goodwill, warranty reserves, warrant derivative liabilities, stock-based compensation, and income taxes, with a full valuation allowance on deferred tax assets - Key critical accounting estimates include: **Revenue Recognition**, **Allowance for Excess and Obsolete Inventory**, **Goodwill**, **Warranty Reserves**, **Fair value of warrant derivative liabilities**, **Stock-based Compensation**, and **Accounting for Income Taxes**[332](index=332&type=chunk) - Inventory reserves for excess and obsolete items were **$3,800,000** as of September 30, 2022, representing **25.6%** of the gross inventory balance[351](index=351&type=chunk) - The company maintains a full valuation allowance on its net deferred tax assets as of September 30, 2022, due to its history of operating losses[110](index=110&type=chunk)[367](index=367&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=79&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This section is not applicable for the company's current reporting status - Not Applicable[373](index=373&type=chunk) [Controls and Procedures](index=79&type=section&id=Item%204.%20Controls%20and%20Procedures.) As of September 30, 2022, the company's disclosure controls and procedures were deemed effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[375](index=375&type=chunk) - No material changes to internal control over financial reporting occurred during the third quarter of 2022[376](index=376&type=chunk) [PART II - OTHER INFORMATION](index=80&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides details on legal proceedings, risk factors, equity sales, other information, and exhibits [Legal Proceedings](index=80&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in a lawsuit against Culp McAuley, Inc. for breach of obligations, with counterclaims filed, though management does not expect a material adverse effect - The company filed a lawsuit against Culp McAuley, Inc. on May 31, 2022, alleging breach of obligations, with the defendant filing counterclaims for breach of contract[136](index=136&type=chunk) - Management does not expect the lawsuit, individually or in aggregate with other claims, to have a material adverse effect on its financial results or condition[137](index=137&type=chunk)[380](index=380&type=chunk) [Risk Factors](index=80&type=section&id=Item%201A.%20Risk%20Factors.) As a smaller reporting company, the registrant is not required to provide risk factor disclosures in its Form 10-Q - As a smaller reporting company, the registrant is not required to provide risk factor disclosures in its Form 10-Q[381](index=381&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=80&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) No unregistered sales of equity securities occurred in Q3 2022 that were not already reported on a Form 8-K - No unregistered sales of equity securities occurred in Q3 2022 that were not already reported on a Form 8-K[382](index=382&type=chunk) [Other Information](index=80&type=section&id=Item%205.%20Other%20Information.) This section is not applicable for the company's current reporting status - Not applicable[388](index=388&type=chunk) [Exhibits](index=81&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the quarterly report, including merger agreements, articles of incorporation, bylaws, and officer certifications

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022. or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to __________. Commission File Number: 001-33899 Digital Ally, Inc. (Exact name of registrant as specified in its charter) Nevada 20-0064269 (State or other ...

Digital Ally, Inc. (NASDAQ:DGLY) Q1 2022 Earnings Conference Call May 24, 2022 11:15 AM ET Company Participants Stan Ross - Chief Executive Officer Tom Heckman - Chief Financial Officer Conference Call Participants Rommel Dionisio - Aegis Capital Bryan Lubitz - Aegis Capital Mike Albanese - EF Hutton Operator Ladies and gentlemen, thank you for standing by, and welcome to Digital Ally’s 2022 First Quarter Operating Results Call. At this time, all participants lines are in a listen-only mode. After the speak ...