Digital Ally(US:DGLY)2022-05-19 16:00Revenue Performance - Total net revenues for the three months ended March 31, 2022, were $10,294,781, a significant increase from $2,535,829 in the same period of 2021, representing a growth of approximately 305%[201]. - Total revenues for the three months ended March 31, 2022, increased by $7,758,952 (306%) to $10,294,781 from $2,535,829 in the same period of 2021[228]. - Ticketing segment revenue reached $6,380,775, indicating a strong performance since its establishment[201]. - Revenue Cycle Management segment generated $1,903,957 in revenue, reflecting the company's recent entry into this market[201]. - Video Solutions segment revenue decreased to $2,010,049 from $2,535,829 year-over-year, a decline of about 21%[201]. - Product revenues for the three months ended March 31, 2022, were $2,410,060, an increase of $497,483 (26%) compared to $1,912,577 in the same period of 2021[219]. - Service and other revenues surged to $7,884,721 for the three months ended March 31, 2022, an increase of $7,261,469 (1,165%) from $623,252 in the same period of 2021[224]. - The new ticketing operating segment generated $5,306,945 in service revenues for the three months ended March 31, 2022, compared to $0 in the same period of 2021, marking a 100% increase[226]. - The revenue cycle management operating segment generated $1,903,957 in service revenues for the three months ended March 31, 2022, also a 100% increase from $0 in the same period of 2021[227]. Profitability and Loss - The company reported a net loss of $6,698,242 on revenues of $10,294,781 for the first quarter of 2022, compared to a net income of $21,721,858 in the same quarter of 2021[204]. - Operating loss for the first quarter of 2022 was $6,803,338, compared to a loss of $2,865,693 in the same period of 2021[201]. - The company experienced a gross profit margin decrease to 19% in Q1 2022 from 32% in Q1 2021, attributed to increased cost of revenue[207]. - Operating loss for Q1 2022 was (66)% of total revenues, an improvement from (113)% in the same quarter of 2021[207]. - Gross profit for Q1 2022 was $1,939,619, an increase of $1,127,737 (138.9%) compared to Q1 2021[237]. - Selling, general and administrative expenses for Q1 2022 were $8,742,957, an increase of $5,065,382 (137.7%) compared to Q1 2021[238]. - Operating loss for Q1 2022 was $6,803,338, an increase of $3,937,645 (137.4%) compared to Q1 2021[242]. - The company reported an income/(loss) before income tax benefit of ($6,698,242) for Q1 2022, a decrease of $28,420,100 (130.8%) compared to Q1 2021[249]. - Net income for the three months ended March 31, 2022, was reported at a loss of $6,698,242, a decrease of $28,420,100 (130.8%) compared to the same period in 2021[252]. - Net loss attributable to common stockholders for the three months ended March 31, 2022, was ($6,600,148), a deterioration of $28,322,006 (130.4%) from $21,721,858 in 2021[254]. - Basic and diluted loss per share was ($0.13) for the three months ended March 31, 2022, compared to $0.49 in 2021[255]. Assets and Liabilities - Total identifiable assets as of March 31, 2022, were $79,026,018, down from $82,989,197 at the end of 2021[201]. - Cash and cash equivalents decreased to $20,561,116 as of March 31, 2022, from $32,007,792 at December 31, 2021, reflecting a net decrease of $11,446,676[260]. - The company had approximately $81.4 million of net operating loss carryforwards available as of March 31, 2022[250]. - Total outstanding debt obligations amounted to $1,912,064 as of March 31, 2022, with long-term debt obligations at $1,249,347[266]. - The company had $19,483,613 in net positive working capital as of March 31, 2022, with accounts receivable representing $5,602,094 of this amount[263]. Cash Flow - Net cash used in operating activities was $6,055,672 for the three months ended March 31, 2022, an increase of $2,848,828 compared to $3,206,844 in 2021[260]. - Cash used in investing activities was $3,195,346 for the three months ended March 31, 2022, compared to $99,274 in 2021[261]. - Cash used in financing activities was $2,195,658 for the three months ended March 31, 2022, down from cash provided of $66,570,600 in 2021[262]. Inventory and Reserves - Total inventories as of March 31, 2022, amounted to $9,405,920, a decrease from $9,659,536 as of December 31, 2021[286]. - The reserve for obsolete and excess inventories was $3,896,460 as of March 31, 2022, representing 29.3% of the gross inventory balance[288]. - Raw materials and component parts increased by $777,750 (25%) from $3,062,046 as of December 31, 2021, to $3,839,796 as of March 31, 2022[288]. - Finished goods decreased by $1,050,051 (10%) from $10,512,579 as of December 31, 2021, to $9,462,528 as of March 31, 2022[288]. - Warranty reserves decreased to $10,582 as of March 31, 2022, compared to $13,742 as of December 31, 2021[298]. New Products and Market Strategy - The company has introduced new product lines, including ThermoVu® temperature monitoring stations and Shield™ disinfectants, to diversify its offerings[191]. - The company introduced new products, including the FirstVu Pro and FirstVu II body-worn cameras, which are expected to gain traction in the market[221]. - The company is transitioning customers from hardware sales to a service fee model, which is anticipated to reduce product revenues but increase recurring service revenues over the next three to five years[222]. - The Ticketing Segment is expected to generate higher revenues in the second half of the calendar year compared to the first half[307]. Tax and Valuation - The company has fully reserved all deferred tax assets as of March 31, 2022, with a valuation allowance of $16,980,000[304]. - The company expects to maintain a full valuation allowance until it can demonstrate a sustainable level of profitability[304]. - The company has generated substantial deferred income tax assets primarily from stock options, tax credit carryforwards, and net operating loss carryforwards[306]. - The realization of deferred income tax assets is contingent on generating sufficient taxable income in future periods[306]. - As of March 31, 2022, the company has no recorded liability representing uncertain tax positions[305]. Interest and Financial Instruments - Interest income increased to $71,362 in Q1 2022 from $41,686 in Q1 2021[243]. - Interest expense for Q1 2022 was $17,009, an increase from $1,428 in Q1 2021[245]. - The company recorded a net loss of $56,050 related to changes in fair value of contingent consideration promissory notes in Q1 2022[247]. - The company issued warrants to purchase a total of 42,550,000 shares of Common Stock, which are treated as derivative liabilities[299]. - The fair value of warrant derivative liabilities was calculated using a volatility range of 106.6% to 166.6% at issuance and 104.1% as of March 31, 2022[300]. Cost Structure - Overall cost of product revenue for Q1 2022 was $2,822,051, an increase of $1,260,741 (81%) compared to Q1 2021[230]. - Cost of service revenue for Q1 2022 was $5,553,111, an increase of $5,370,474 (3,302%) compared to Q1 2021[233].