DIGITAL ALLY, INC ANNOUNCES SECOND QUARTER 2024 OPERATING RESULTS
Digital Ally, Inc. (DGLY) announced its Q2 2024 operating results, highlighting significant changes in financial performance. Overall gross profits decreased by 91% to $242,392, primarily due to a decline in the entertainment segment. Total revenues fell by 32% to $5,616,235, with the entertainment segment experiencing a 47% decrease. The company's revenue cycle management business saw a 9% decrease in service revenues.
Notably, selling, general and administrative expenses decreased by 46% to $4,156,613. The company also reported progress in its video solutions segment and recent developments, including the sale of its office building and a potential business combination between Kustom Entertainment and Clover Leaf Capital Corp. Net losses attributable to common stockholders improved to $5,083,861 ($1.74 per share) compared to $9,014,882 ($3.12 per share) in the same period last year.
Digital Ally, Inc. (DGLY) ha annunciato i risultati operativi del secondo trimestre 2024, evidenziando cambiamenti significativi nelle performance finanziarie. I profitti lordi complessivi sono diminuiti del 91%, raggiungendo $242,392, principalmente a causa di un calo nel segmento dell'intrattenimento. I ricavi totali sono diminuiti del 32%, scendendo a $5,616,235, con il segmento dell'intrattenimento che ha subito una riduzione del 47%. Il settore della gestione del ciclo di entrate dell'azienda ha registrato un calo del 9% nei ricavi dei servizi.
È importante notare che le spese di vendita, generali e amministrative sono diminuite del 46%, raggiungendo $4,156,613. L'azienda ha anche riportato progressi nel suo segmento di soluzioni video e sviluppi recenti, tra cui la vendita del proprio edificio per uffici e una potenziale combinazione aziendale tra Kustom Entertainment e Clover Leaf Capital Corp. Le perdite nette attribuibili agli azionisti comuni sono migliorate a $5,083,861 ($1.74 per azione) rispetto ai $9,014,882 ($3.12 per azione) dello stesso periodo dell'anno scorso.
Digital Ally, Inc. (DGLY) anunció sus resultados operativos del segundo trimestre de 2024, destacando cambios significativos en el desempeño financiero. Los beneficios brutos totales disminuyeron un 91%, alcanzando $242,392, principalmente debido a una caída en el segmento de entretenimiento. Los ingresos totales cayeron un 32%, sumando $5,616,235, con el segmento de entretenimiento experimentando una disminución del 47%. El negocio de gestión del ciclo de ingresos de la empresa vio una reducción del 9% en los ingresos por servicios.
Es notable que los gastos de venta, generales y administrativos disminuyeron un 46%, alcanzando $4,156,613. La empresa también informó sobre avances en su segmento de soluciones de video y recientes desarrollos, incluida la venta de su edificio de oficinas y una posible combinación empresarial entre Kustom Entertainment y Clover Leaf Capital Corp. Las pérdidas netas atribuibles a los accionistas ordinarios mejoraron a $5,083,861 ($1.74 por acción) en comparación con $9,014,882 ($3.12 por acción) en el mismo período del año pasado.
Digital Ally, Inc. (DGLY)는 2024년 2분기 운영 결과를 발표하며 재무 성과의 중요 변화를 강조했습니다. 총 총이익은 91% 감소하여 $242,392에 달했습니다, 이는 주로 엔터테인먼트 부문의 감소 때문입니다. 총 수익은 32% 감소하여 $5,616,235에 도달했습니다, 엔터테인먼트 부문은 47% 감소했습니다. 회사의 수익 사이클 관리 비즈니스는 서비스 수익에서 9% 감소를 보였습니다.
특히, 판매, 일반 및 관리 비용이 46% 감소하여 $4,156,613에 달했습니다. 회사는 비디오 솔루션 부문에서 진전을 보고했으며, 최근 사무실 건물 매각과 Kustom Entertainment와 Clover Leaf Capital Corp 간의 잠재적 비즈니스 조합을 포함한 개발 사항이 있습니다. 보통주주에게 귀속된 순손실은 $5,083,861 ($1.74 per share)로 개선되었습니다, 지난해 같은 기간의 $9,014,882 ($3.12 per share)과 비교됩니다.
Digital Ally, Inc. (DGLY) a annoncé ses résultats opérationnels du deuxième trimestre 2024, mettant en évidence des changements significatifs dans la performance financière. Les bénéfices bruts globaux ont diminué de 91%, atteignant $242,392, principalement en raison d'un déclin dans le segment de divertissement. Les revenus totaux ont chuté de 32%, s'établissant à $5,616,235, le segment de divertissement ayant connu une diminution de 47%. L'activité de gestion du cycle des revenus de l'entreprise a enregistré une baisse de 9% des revenus de services.
Il est à noter que les dépenses de vente, générales et administratives ont diminué de 46%, atteignant $4,156,613. L'entreprise a également signalé des progrès dans son segment de solutions vidéo et des développements récents, notamment la vente de son bâtiment de bureaux et une combinaison d'affaires potentielle entre Kustom Entertainment et Clover Leaf Capital Corp. Les pertes nettes attribuables aux actionnaires ordinaires se sont améliorées à $5,083,861 ($1,74 par action) par rapport à $9,014,882 ($3,12 par action) au cours de la même période de l'année dernière.
Digital Ally, Inc. (DGLY) hat die Betriebsergebnisse für das zweite Quartal 2024 bekannt gegeben, das signifikante Veränderungen in der finanziellen Leistung zeigt. Die gesamten Bruttogewinne gingen um 91% auf $242,392 zurück, was hauptsächlich auf einen Rückgang im Unterhaltungssegment zurückzuführen ist. Die Gesamteinnahmen fielen um 32% auf $5,616,235, wobei das Unterhaltungssegment einen Rückgang von 47% erlebte. Das Geschäftsbereich für das Einnahmenzyklusmanagement verzeichnete einen Rückgang der Dienstleistungseinnahmen um 9%.
Bemerkenswert ist, dass die Vertriebs-, allgemeinen und Verwaltungskosten um 46% auf $4,156,613 gesenkt wurden. Das Unternehmen berichtete auch über Fortschritte im Segment der Video-Lösungen sowie über aktuelle Entwicklungen, darunter der Verkauf des Bürogebäudes und eine mögliche Unternehmenszusammenführung zwischen Kustom Entertainment und Clover Leaf Capital Corp. Die den Stammaktionären zurechenbaren Nettoverluste verbesserten sich auf $5,083,861 ($1,74 pro Aktie) im Vergleich zu $9,014,882 ($3,12 pro Aktie) im gleichen Zeitraum des Vorjahres.
- Selling, general and administrative expenses decreased by 46% to $4,156,613
- Net losses attributable to common stockholders improved to $5,083,861 ($1.74 per share) from $9,014,882 ($3.12 per share)
- Deferred revenue balance grew to $10.1 million, up from $9.5 million in the previous year
- Operating losses improved by 21% to $3,914,221
- Overall gross profits decreased by 91% to $242,392
- Total revenues fell by 32% to $5,616,235
- Entertainment segment revenues decreased by 47% to $2,466,211
- Revenue cycle management segment saw a 9% decrease in service revenues to $1,564,354
- Video solutions segment gross profits declined by 63% to $287,840
Insights
Digital Ally's Q2 2024 results reveal significant challenges. Overall gross profits plummeted by 91% to $242,392, primarily due to a sharp decline in the entertainment segment. The company's total revenues decreased by 32% to $5,616,235, with the entertainment segment experiencing a 47% drop.
The company's cost of sales as a percentage of revenues increased dramatically from 67% to 96%, indicating severe margin pressure. While selling, general and administrative expenses decreased by 46%, this wasn't enough to offset the revenue decline, resulting in an operating loss of $3,914,221.
The company's focus on "right-sizing" its entertainment segment and working towards profitability is evident, but it's coming at the cost of substantial revenue declines. The deferred revenue balance of $10.1 million is a positive sign, suggesting potential future revenue recognition. However, the company's overall financial health remains precarious, with significant challenges ahead in turning around its performance.
The company's recent legal and financial maneuvers raise some concerns. The amended Note Purchase Agreement with Mosh Man, increases the principal amount from
The sale of the office building, completed on August 12, 2024, appears to be a move to meet these obligations. However, the terms of the Letter Agreement, including potential penalties and the requirement for the Purchaser to be party to any extraordinary capital receipts, suggest significant financial pressure.
The proposed business combination with Clover Leaf Capital Corp. through a Form S-4 filing is a major development. While this could provide new opportunities, it also introduces complex legal and regulatory requirements. Shareholders should carefully review the proxy statement for full details on the transaction and its implications.
Digital Ally's market position appears to be weakening across its segments. In the video solutions segment, new products like EVO-HD and FirstVu Pro are gaining traction, but not enough to offset overall declines. The entertainment segment, including TicketSmarter, saw a dramatic
The revenue cycle management segment through Nobility Healthcare is showing some resilience but still experienced a
The planned separation of Digital Ally and Kustom Entertainment could provide more focused strategies for each entity. However, the current financial strain may limit the company's ability to invest in growth initiatives. The market will likely view these results negatively, questioning the company's ability to compete effectively in its chosen sectors without significant restructuring or capital infusion.
LENEXA, Kansas, Aug. 16, 2024 (GLOBE NEWSWIRE) -- Digital Ally, Inc. (Nasdaq: DGLY) (the “Company” or “our”), today announced its operating results for the second quarter of 2024. An investor conference call is scheduled for 11:15 a.m. EDT on Monday, August 19, 2024 (see details below).
Highlights for the second quarter ended June 30, 2024
| ● | Overall gross profits for the three months ended June 30, 2024 were |
| ● | Total revenues decreased during the three months ended June 30, 2024 to |
| ● | On September 1, 2021, the Company formed a wholly-owned subsidiary, TicketSmarter, Inc., through which the Company completed the acquisition of Goody Tickets, LLC (“Goody Tickets”) and TicketSmarter, LLC (“TicketSmarter”) (collectively the “TicketSmarter Acquisition”). Goody Tickets and TicketSmarter®, are ticket resale marketplaces with seats offered at over 125,000 live events, offering over 48 million tickets for sale through its TicketSmarter.com platform. Within this entertainment segment, the Company also formed Kustom 440, Inc. (“Kustom 440”) in late 2022 to create unique entertainment experiences through concerts, festivals, and private experiences. This segment generated revenues totaling |
| ● | We remain in the revenue cycle management business through the formation of our wholly owned subsidiary, Digital Ally Healthcare, Inc. and its majority-owned subsidiary Nobility Healthcare, LLC (“Nobility Healthcare”). Nobility Healthcare completed its first acquisition on June 30, 2021, when it acquired a private medical billing company, and a second acquisition on August 31, 2021 upon the completion of its acquisition of another private medical billing company. On January 1, 2022, Nobility Healthcare completed the acquisition of |
| ● | Selling, general and administrative expenses for the three months ended June 30, 2024 were |
| ● | On March 1, 2024, Kustom 440, entered into an Asset Purchase Agreement (the “Acquisition Agreement”) with JC Entertainment, LLC, a Kansas limited liability company (“JC Entertainment”). Pursuant to the Acquisition Agreement, Kustom 440 acquired certain assets associated with a music entertainment event (“Country Stampede”), including all intellectual property arising out of and relating to Country Stampede and certain contracts in which JC Entertainment is a party to host and operate the 2024 Country Stampede. |
Recent Developments
| ● | As previously disclosed, on March 1, 2024, the Company entered into a Note Purchase Agreement (the “Agreement”), by and between the Company, Kustom Entertainment (together with the Company, the “Borrowers”), and Mosh Man, LLC, a New Jersey limited liability company (the “Purchaser”), pursuant to which the Borrowers issued to the Purchaser a Senior Secured Promissory Note (the “Note”) with a principal amount of On July 13, 2024, the Company entered into a Letter Agreement (the “Letter Agreement”), by and between the Company, Kustom Entertainment and the Purchaser, increasing automatically the principal amount of the Note from Except as stated above, the Letter Agreement does not result in any other substantive changes to the Agreement. |
| ● | On August 2, 2024, the Company entered into a purchase and sale agreement (the “Purchase Agreement”) with Serenity Now, LLC, a Kansas limited liability company (the “Buyer”) to sell a commercial office building and associated property located at 14001 Marshall Drive, Lenexa, KS (the “Office Building”). On August 12, 2024, pursuant to the Agreement, the Company and the Buyer completed the sale of the Property. The Buyer has no prior material relationship with the Company beyond the Agreement. |
| ● | Clover Leaf Capital Corp.’s (“Clover Leaf”) registration statement on Form S-4 was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) as of Tuesday, July 30, 2024, relating to the previously announced proposed business combination by and among Clover Leaf, Kustom Entertainment, Inc. and CL Merger Sub, Inc. On August 1, the board of directors of the Company (the “Board”) set the record date for the dividend distribution to August 12, 2024 for determining stockholders entitled to receive the dividend distribution (the “Record Date”). |
Management Comments
Stanton E. Ross, Chief Executive Officer of the Company, stated, “We are very pleased to keep our momentum from the end of 2023 into the second half of 2024, with greatly reduced net losses compared to the second quarter of 2023, showing the continued success of our focus on margins and working towards profitability. We are pleased to see the continued success and traction in the marketplace with our new video products, particularly the EVO-HD, FirstVu Pro, and QuickVu docking stations, which are continuing to build upon our existing subscription plans and deferred revenue. It is exciting to see our deferred revenue balance reach
Ross added: “Additionally, we are very excited about the effectiveness of a Registration Statement on Form S-4 by Clover Leaf with the SEC relating to the proposed business combination between Kustom Entertainment and Clover Leaf Capital Corp. to create Kustom Entertainment, Inc., a company with a focus and mission to own and produce events, festivals, and entertainment alongside its evolving primary and secondary ticketing technologies. We expect that this business combination will provide clarity to both shareholder as well as the marketplace, showing two distinct, stand-alone entities, Digital Ally and Kustom Entertainment, further, we remain excited about the organic growth opportunities with the Kustom 440 subsidiary along with the acquisition of Country Stampede, a prestigious festival within the Midwest. Country Stampede hosted headliners Chris Jansen, Riley Green, and Jon Pardi at Azura Amphitheater in Bonner Springs, on June 27th through 29th. We are also thrilled about the recent launch of KustomTickets.com, an advanced online ticketing platform, that marks a significant milestone for Kustom Entertainment, solidifying its presence and influence in the entertainment industry. We will continue to inform our investors as we move forward with the business combination, alongside our continuous efforts to take advantage of new business opportunities and to maximize our existing business lines to benefit the Company and its shareholders throughout the remainder of 2024 and beyond.”
First Quarter 2024 Operating Results
Overall gross profit for the three months ended June 30, 2024 and 2023 was
Total revenues for the three months ended June 30, 2024 and 2023 were
Selling, general and administrative expenses for the three months ended June 30, 2024 and 2023 were
Operating losses for the three months ended June 30, 2024 and 2023 were
Net losses attributable to common stockholders for the six months ended June 30, 2024 and 2023 were
Investor Conference Call
The Company will host an investor conference call at 11:15 a.m. EDT on Monday, August 19, 2024, to discuss its second quarter 2024 financial results, corporate and individual subsidiary outlook, and previously announced corporate separation. Shareholders and other interested parties may participate in the conference call by dialing 1-800-717-1738 and entering conference ID #63061 a few minutes before 11:15 a.m. Eastern on Monday, August 19, 2024.
For additional news and information please visit DigitalAlly.com or follow additional Digital Ally Inc. social media channels here:
Facebook | Instagram | LinkedIn | Twitter
Additional Information and Where to Find It
In connection with the business combination between Clover Leaf and Kustom Entertainment (the “Business Combination”), Clover Leaf has filed a proxy statement and registration statement on Form S-4 (the “Proxy/Registration Statement”) with the SEC (as defined herein), which includes a proxy statement to be distributed to holders of Clover Leaf’s common stock in connection with Clover Leaf’s solicitation of proxies for the vote by Clover Leaf’s stockholders with respect to the Business Combination and other matters as described in the Proxy/Registration Statement, as well as, a prospectus relating to the offer of the securities to be issued to Kustom Entertainment’s stockholder in connection with the Business Combination. After the Proxy/Registration Statement has been approved by the SEC, Clover Leaf will mail a definitive proxy statement, when available, to its stockholders. Before making any voting or investment decision, investors and security holders of Clover Leaf and other interested parties are urged to read the proxy statement and/or prospectus, any amendments thereto and any other documents filed with the SEC carefully and in their entirety when they become available because they will contain important information about the Business Combination and the parties to the Business Combination. Investors and security holders may obtain free copies of the preliminary proxy statement/prospectus and definitive proxy statement/prospectus (when available) and other documents filed with the U.S. Securities and Exchange Commission (the “SEC”) by Clover Leaf through the website maintained by the SEC at http://www.sec.gov, or by directing a request to: 1450 Brickell Avenue, Suite 1420, Miami, FL 33131.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. These forward-looking statements are based largely on the expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond the control of management. Therefore, actual results could differ materially from the forward-looking statements contained in this press release. These forward-looking statements include, without limitation, the Company’s, Clover Leaf’s and Kustom Entertainment’s expectations with respect to the proposed Business Combination between Clover Leaf and Kustom Entertainment, including statements regarding the benefits of the Business Combination, the anticipated timing of the Business Combination, the implied valuation of Kustom Entertainment, the products offered by Kustom Entertainment and the markets in which it operates, and Kustom Entertainment’s projected future results. A wide variety of factors that may cause actual results to differ from the forward-looking statements include, but are not limited to, the following: (1) our losses in recent years, including fiscal years 2023 and 2022; (2) economic and other risks for our business from the effects of the COVID-19 pandemic, including the impacts on our law-enforcement and commercial customers, suppliers and employees and on our ability to raise capital as required; (3) our ability to increase revenues, increase our margins and return to consistent profitability in the current economic and competitive environment; (4) our operation in developing markets and uncertainty as to market acceptance of our technology and new products; (5) the availability of funding from federal, state and local governments to facilitate the budgets of law enforcement agencies, including the timing, amount and restrictions on such funding; (6) our ability to deliver our new product offerings as scheduled in 2024, and whether new products perform as planned or advertised and whether they will help increase our revenues; (7) whether we will be able to increase the sales, domestically and internationally, for our products in the future; (8) our ability to maintain or expand our share of the market for our products in the domestic and international markets in which we compete, including increasing our international revenues; (9) our ability to produce our products in a cost-effective manner; (10) competition from larger, more established companies with far greater economic and human resources; (11) our ability to attract and retain quality employees; (12) risks related to dealing with governmental entities as customers; (13) our expenditure of significant resources in anticipation of sales due to our lengthy sales cycle and the potential to receive no revenue in return; (14) characterization of our market by new products and rapid technological change; (15) that stockholders may lose all or part of their investment if we are unable to compete in our markets and return to profitability; (16) defects in our products that could impair our ability to sell our products or could result in litigation and other significant costs; (17) our dependence on key personnel; (18) our reliance on third-party distributors and sales representatives for part of our marketing capability; (19) our dependence on a few manufacturers and suppliers for components of our products and our dependence on domestic and foreign manufacturers for certain of our products; (20) our ability to protect technology through patents and to protect our proprietary technology and information, such as trade secrets, through other similar means; (21) our ability to generate more recurring cloud and service revenues; (22) risks related to our license arrangements; (23) our revenues and operating results may fluctuate unexpectedly from quarter to quarter; (24) sufficient voting power by coalitions of a few of our larger stockholders, including directors and officers, to make corporate governance decisions that could have a significant effect on us and the other stockholders; (25) the sale of substantial amounts of our common stock that may have a depressive effect on the market price of the outstanding shares of our common stock; (26) the possible issuance of common stock subject to options and warrants that may dilute the interest of stockholders; (27) our nonpayment of dividends and lack of plans to pay dividends in the future; (28) future sale of a substantial number of shares of our common stock that could depress the trading price of our common stock, lower our value and make it more difficult for us to raise capital; (29) our additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of our common stock; (30) our stock price is likely to be highly volatile due to a number of factors, including a relatively limited public float; (31) whether such technology will have a significant impact on our revenues in the long-term; (32) whether we will be able to meet the standards for continued listing on the Nasdaq Capital Market; (33) indemnification of our officers and directors; (34) risks related to our proposed business combination, including our ability to consummate the transactions and our ability to realize some or all of the anticipated benefits therefrom; (35) the risk that the Business Combination may not be completed in a timely manner or at all, which may adversely affect the price of the Company’s and Clover Leaf’s securities; (36) the risk that the Business Combination may not be completed by Clover Leaf’s business combination deadline, even if extended by its stockholders; (37) the potential failure to obtain an extension of the business combination deadline if sought by Clover Leaf; (38) the failure to satisfy the conditions to the consummation of the Business Combination, including the adoption of the Merger Agreement by the stockholders of Clover Leaf; (39) the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement; (40) the failure to obtain any applicable regulatory approvals required to consummate the Business Combination; (41) the receipt of an unsolicited offer from another party for an alternative transaction that could interfere with the Business Combination; (42) the effect of the announcement or pendency of the Business Combination on Kustom Entertainment’s business relationships, performance, and business generally; (43) the inability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the post-combination company to grow and manage growth profitability and retain its key employees; (44) costs related to the Business Combination; (45) the outcome of any legal proceedings that may be instituted against Kustom Entertainment or Clover Leaf following the announcement of the proposed Business Combination; (46) the ability to maintain the listing of Clover Leaf’s securities on the Nasdaq prior to the Business Combination; (47) the ability to implement business plans, forecasts, and other expectations after the completion of the proposed Business Combination, and identify and realize additional opportunities; (48) the risk of downturns and the possibility of rapid change in the highly competitive industry in which Kustom Entertainment operates; (49) the risk that demand for Kustom Entertainment’s services may be decreased due to a decrease in the number of large-scale sporting events, concerts and theater shows; (50) the risk that any adverse changes in Kustom Entertainment’s relationships with buyer, sellers and distribution partners may adversely affect the business, financial condition and results of operations; (51) the risk that changes in Internet search engine algorithms and dynamics, or search engine disintermediation, or changes in marketplace rules could have a negative impact on traffic for Kustom Entertainment’s sites and ultimately, its business and results of operations; (52) the risk that any decrease in the willingness of artists, teams and promoters to continue to support the secondary ticket market may result in decreased demand for Kustom Entertainment’s services; (53) the risk that Kustom Entertainment is not able to maintain and enhance its brand and reputation in its marketplace, adversely affecting Kustom Entertainment’s business, financial condition and results of operations; (54) the risk of the occurrence of extraordinary events, such as terrorist attacks, disease epidemics or pandemics, severe weather events and natural disasters; (55) the risk that because Kustom Entertainment’s operations are seasonal and its results of operations vary from quarter to quarter and year over year, its financial performance in certain financial quarters or years may not be indicative of, or comparable to, Kustom Entertainment’s financial performance in subsequent financial quarters or years; (56) the risk that periods of rapid growth and expansion could place a significant strain on Kustom Entertainment’s resources, including its employee base, which could negatively impact Kustom Entertainment’s operating results; (57) the risk that Kustom Entertainment may never achieve or sustain profitability; (58) the risk that Kustom Entertainment may need to raise additional capital to execute its business plan, which many not be available on acceptable terms or at all; (59) the risk that third-parties suppliers and manufacturers are not able to fully and timely meet their obligations; (60) the risk that Kustom Entertainment is unable to secure or protect its intellectual property; (61) the risk that the post-combination company’s securities will not be approved for listing on Nasdaq or if approved, maintain the listing and (62) other risks and uncertainties indicated from time to time in the proxy statement and/or prospectus to be filed relating to the Business Combination. These cautionary statements should not be construed as exhaustive or as any admission as to the adequacy of the Company’s disclosures. The Company cannot predict or determine after the fact what factors would cause actual results to differ materially from those indicated by the forward-looking statements or other statements. The reader should consider statements that include the words “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans,” “projects,” “should,” or other expressions that are predictions of or indicate future events or trends, to be uncertain and forward-looking. It does not undertake to publicly update or revise forward-looking statements, whether because of new information, future events or otherwise. Additional information respecting factors that could materially affect the Company and its operations are contained in its filings with the SEC.
The foregoing list of factors is not exhaustive. Recipients should carefully consider such factors, with respect to the proposed Business Combination, and the other risks and uncertainties described and to be described in the “Risk Factors” section of Clover Leaf’s Annual Report on Form 10-K filed for the year ended December 31, 2023 filed with the SEC on March 22, 2024 and subsequent periodic reports filed by Clover Leaf with the SEC, the Proxy Statement and Registration Statement and other documents filed or to be filed by Clover Leaf from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements with respect to the proposed Business Combination. Forward-looking statements speak only as of the date they are made. Recipients are cautioned not to put undue reliance on forward-looking statements with respect to the proposed Business Combination, and neither Kustom Entertainment nor Clover Leaf assume any obligation to, nor intend to, update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Neither Kustom Entertainment nor Clover Leaf gives any assurance that either Kustom Entertainment or Clover Leaf, or the combined company, will achieve its expectations.
Participants in the Solicitation
Clover Leaf and Kustom Entertainment and their respective directors and certain of their respective executive officers and other members of management and employees may be considered participants in the solicitation of proxies from the stockholders of Clover Leaf with respect to the Business Combination. Information about the directors and executive officers of Clover Leaf is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 22, 2024. Additional information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be included in the proxy statement and/or prospectus and other relevant materials to be filed with the SEC regarding the Business Combination when they become available. Stockholders, potential investors and other interested persons should read the proxy statement and/or prospectus carefully when it becomes available before making any voting or investment decisions. When available, these documents can be obtained free of charge from the sources indicated above.
No Offer or Solicitation
This communication shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed Business Combination. This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended, or an exemption therefrom.
For Additional Information, Please Contact:
Stanton E. Ross, CEO, at (913) 814-7774, or
Thomas J. Heckman, CFO, at (913) 814-7774
(Financial Highlights Follow)
DIGITAL ALLY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2024 AND DECEMBER 31, 2023
| June 30, 2024 (Unaudited) | December 31, 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 517,113 | $ | 680,549 | ||||
| Accounts receivable – trade, net of | 1,343,205 | 1,584,662 | ||||||
| Other receivables, net of | 3,545,833 | 3,107,634 | ||||||
| Inventories, net | 2,218,133 | 3,845,281 | ||||||
| Prepaid expenses | 6,620,477 | 6,366,368 | ||||||
| Total current assets | 14,244,761 | 15,584,494 | ||||||
| Property, plant, and equipment, net | 6,033,091 | 7,283,702 | ||||||
| Goodwill and other intangible assets, net | 16,281,622 | 16,510,422 | ||||||
| Operating lease right of use assets, net | 869,166 | 1,053,159 | ||||||
| Other assets | 5,898,575 | 6,597,032 | ||||||
| Total assets | $ | 43,327,215 | $ | 47,028,809 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 11,501,822 | $ | 10,732,089 | ||||
| Accrued expenses | 3,380,005 | 3,269,330 | ||||||
| Current portion of operating lease obligations | 223,629 | 279,538 | ||||||
| Contract liabilities – current portion | 3,093,492 | 2,937,168 | ||||||
| Notes payable – related party – current portion | 2,700,000 | 2,700,000 | ||||||
| Debt obligations – current portion | 2,980,903 | 1,260,513 | ||||||
| Warrant derivative liabilities | 3,796,746 | 1,369,738 | ||||||
| Income taxes payable | — | 61 | ||||||
| Total current liabilities | 27,676,595 | 22,548,437 | ||||||
| Long-term liabilities: | ||||||||
| Debt obligations – long term | 4,898,418 | 4,853,237 | ||||||
| Operating lease obligation – long term | 692,423 | 827,836 | ||||||
| Contract liabilities – long term | 6,999,141 | 7,340,459 | ||||||
| Lease Deposit | 10,445 | 10,445 | ||||||
| Total liabilities | 40,277,022 | 35,580,414 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ Equity: | ||||||||
| Common stock, | 3,502 | 2,801 | ||||||
| Additional paid in capital | 128,995,997 | 128,441,083 | ||||||
| Noncontrolling interest in consolidated subsidiary | 734,354 | 673,292 | ||||||
| Accumulated deficit | (126,683,662 | ) | (117,668,781 | ) | ||||
| Total stockholders’ equity | 3,050,191 | 11,448,395 | ||||||
| Total liabilities and stockholders’ equity | $ | 43,327,215 | $ | 47,028,809 | ||||
(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY’S QUARTERLY REPORT
ON FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 2024 FILED WITH THE SEC ON AUGUST 16, 2024)
DIGITAL ALLY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED
JUNE 30, 2024 AND 2023
(Unaudited)
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product | $ | 2,207,601 | $ | 3,077,661 | $ | 3,773,447 | $ | 5,531,469 | ||||||||
| Service and other | 3,408,634 | 5,201,971 | 7,372,139 | 10,445,351 | ||||||||||||
| Total revenue | 5,616,235 | 8,279,632 | 11,145,586 | 15,976,820 | ||||||||||||
| Cost of revenue: | ||||||||||||||||
| Product | 3,419,254 | 2,219,515 | 4,986,647 | 4,520,616 | ||||||||||||
| Service and other | 1,954,589 | 3,323,077 | 4,395,109 | 7,174,375 | ||||||||||||
| Total cost of revenue | 5,373,843 | 5,542,592 | 9,381,756 | 11,694,991 | ||||||||||||
| Gross profit | 242,392 | 2,737,040 | 1,763,830 | 4,281,829 | ||||||||||||
| Selling, general and administrative expenses: | ||||||||||||||||
| Research and development expense | 545,776 | 540,276 | 1,033,242 | 1,475,215 | ||||||||||||
| Selling, advertising and promotional expense | 728,906 | 2,104,625 | 1,487,762 | 3,952,115 | ||||||||||||
| General and administrative expense | 2,881,931 | 5,032,843 | 6,796,019 | 9,968,010 | ||||||||||||
| Total selling, general and administrative expenses | 4,156,613 | 7,677,744 | 9,317,023 | 15,395,340 | ||||||||||||
| Operating loss | (3,914,221 | ) | (4,940,704 | ) | (7,553,193 | ) | (11,113,511 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 29,933 | 55,730 | 49,289 | 71,085 | ||||||||||||
| Interest expense | (1,085,063 | ) | (1,515,509 | ) | (1,733,690 | ) | (1,521,049 | ) | ||||||||
| Other income | 30,445 | 25,394 | 58,046 | 50,786 | ||||||||||||
| Loss on accrual for legal settlement | — | (1,792,308 | ) | — | (1,792,308 | ) | ||||||||||
| Loss on conversion of convertible note | — | (93,386 | ) | — | (93,386 | ) | ||||||||||
| Change in fair value of warrant derivative liabilities | (2,819 | ) | (59,766 | ) | (351,710 | ) | (59,766 | ) | ||||||||
| Change in fair value of contingent consideration promissory notes | — | — | — | 158,021 | ||||||||||||
| Gain on extinguishment of liabilities | — | — | 682,345 | — | ||||||||||||
| Loss on extinguishment of debt | (68,827 | ) | (68,827 | ) | ||||||||||||
| Gain on sale of intangibles | — | — | 5,582 | — | ||||||||||||
| Loss on sale of property, plant and equipment | — | — | (41,661 | ) | — | |||||||||||
| Total other income (expense) | (1,096,331 | ) | (3,379,845 | ) | (1,400,626 | ) | (3,186,617 | ) | ||||||||
| Loss before income tax benefit | (5,010,551 | ) | (8,320,549 | ) | (8,953,819 | ) | (14,300,128 | ) | ||||||||
| Income tax benefit | — | — | — | — | ||||||||||||
| Net loss | (5,010,551 | ) | (8,320,549 | ) | (8,953,819 | ) | (14,300,128 | ) | ||||||||
| Net (income) attributable to noncontrolling interests of consolidated subsidiary | (73,310 | ) | (72,755 | ) | (61,063 | ) | (198,994 | ) | ||||||||
| Net loss attributable to common stockholders | $ | (5,083,861 | ) | $ | (8,393,304 | ) | $ | (9,014,882 | ) | $ | (14,499,122 | ) | ||||
| Net loss per share information: | ||||||||||||||||
| Basic | $ | (1.74 | ) | $ | (3.01 | ) | $ | (3.12 | ) | $ | (5.24 | ) | ||||
| Diluted | $ | (1.74 | ) | $ | (3.01 | ) | $ | (3.12 | ) | $ | (5.24 | ) | ||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 2,921,307 | 2,785,663 | 2,891,205 | 2,768,683 | ||||||||||||
| Diluted | 2,921,307 | 2,785,663 | 2,891,205 | 2,768,683 | ||||||||||||
(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY’S ANNUAL REPORT
ON FORM 10-K FOR THE SIX MONTHS ENDED JUNE 30, 2024 FILED WITH THE SEC ON AUGUST 16, 2024)
FAQ
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