Digital Ally(DGLY) - 2024 Q2 - Quarterly Results

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]