Digital Ally, Inc. (Nasdaq: DGLY) (the “Company” or “our”), today
announced its operating results for fiscal year 2023. An investor
conference call is scheduled for 11:15 a.m. EDT on Tuesday, April
2, 2024 (see details below).
Highlights for the year ended December
31, 2023
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Overall gross profits for the year ended December 31, 2023 were
$5,762,484, an increase of $3,440,543, or 148%, as compared to
$2,321,941 for the year ended December 31, 2022. The overall
increase is attributable to the consistent focus on the cost of
goods sold, particularly surrounding the Entertainment Segment, as
well as the enhanced margins within the video solutions segment,
with its new and expanded product offerings. Our goal is to
continue to improve our margins over the longer term based on the
expected margins generated by our new operating segments together
with continued enhancements within our video solutions segment and
its expected margins from our EVO-Fleet, EVO-HD, DVM-800, VuLink,
FirstVu Pro, FirstVu II, InterVu Room, Shield disinfectants and our
cloud evidence storage and management offerings, as they gain
traction in the marketplace. In addition, if revenues from the
video solutions segment increase, we will seek to further improve
our margins from this segment through expansion and increased
efficiency utilizing fixed manufacturing overhead components. We
plan to continue our initiative for more efficient management of
our supply chain through outsourcing production, quantity purchases
and more effective purchasing practices. |
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Total revenues decreased in 2023 to $28,248,344 from $37,009,895 in
2022 a deterioration of $8,761,551 (24%). The primary reason for
the overall revenue decrease is a decrease of $6,253,892 (41%) in
service revenues from 2022 levels at the entertainment operating
segment. Service and other revenues experienced a significant
decrease during the year ended December 31, 2023, in comparison to
the same period in 2022, due to the Company’s focus to work towards
profitability and focus on cash flow during the year ended December
31, 2023. Additionally, the Company’s subscription plan model
continues to gain traction in the marketplace, resulting in the
Company building and recognizing its recurring revenues. |
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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 $14,063,381 in service and product revenues for the year
ended December 31, 2023, a decrease of $6,808,119, or (33%), as
compared to $20,871,500 in service and product revenues for the
year ended December 31, 2022. The decrease is largely due to
management’s focus on right-sizing the entertainment segment, and
working towards profitability; thus, decreasing marketing expenses,
directly correlating to a decrease in revenues. |
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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 100% of the capital stock of a private dental
billing company. Additionally, on February 1, 2022, Nobility
Healthcare also completed an asset purchase for a portfolio of a
medical billing company. These acquisitions further enhanced the
Company’s revenue cycle management operating segment, which
provides revenue cycle management solutions to medium to large
healthcare organizations throughout the country. The compilation of
acquisitions generated service revenues for the year ended December
31, 2023 of $6,713,678, a decrease of $1,172,429, or (15%), as
compared to $7,886,107 for the year ended December 31, 2022. |
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Selling, general and administrative expenses for the year ended
December 31, 2023 were $28,003,037, a decrease of $4,052,162, or
(13%), as compared to $32,055,199 for the year ended December 31,
2022. The decrease was primarily attributable to the reduction in
new sponsorships being entered into by the Company. |
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Recent Developments
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In June 2023, the Company, entered into an Agreement and Plan of
Merger (the “Merger Agreement”) with Clover Leaf Capital Corp., a
Delaware corporation (Nasdaq: CLOE) (“Clover Leaf”), CL Merger Sub,
Inc., a Nevada corporation and a wholly owned subsidiary of Clover
Leaf (“Merger Sub”), Yntegra Capital Investments LLC, a Delaware
limited liability company, in the capacity as the representative
from and after the Effective Time (as defined in the Merger
Agreement) for the stockholders of Clover Leaf in accordance with
the terms and conditions of the Merger Agreement, and Kustom
Entertainment, Inc., a Nevada corporation, a wholly owned
subsidiary of the Company, with a focus and mission to own and
produce events, festivals, and entertainment alongside its evolving
primary and secondary ticketing technologies (“Kustom
Entertainment”). Pursuant to the Merger Agreement, subject to the
terms and conditions set forth therein upon the consummation of the
transactions contemplated by the Merger Agreement (the “Closing”),
Merger Sub will merge with and into Kustom Entertainment, with
Kustom Entertainment continuing as the surviving corporation in the
Merger and a wholly owned subsidiary of Clover Leaf. Upon the
Closing, which is subject to the satisfaction or waiver of certain
other customary closing conditions (including the approval of
Clover Leaf’s shareholders), the common stock of the combined
company is expected to be listed on Nasdaq under a mutually agreed
new ticker symbol that reflects the name “Kustom
Entertainment.” In February 2024, Kustom Entertainment and
Clover Leaf announced the filing of Amendment No. 2 to a
Registration Statement on Form S-4 by Clover Leaf with the SEC on
February 5, 2024, relating to the previously announced proposed
business combination between Kustom Entertainment and Clover
Leaf. |
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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 (“Country Stampede Intellectual Property”) and
certain contracts in which JC Entertainment is a party to host and
operate the 2024 Country Stampede (the “Assumed Contracts”, and
together with the Country Stampede Intellectual Property, the
“Purchased Assets”). |
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On March 1, 2024, the Company entered into a Note Purchase
Agreement (the “Note 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 $1,425,000. In connection with the Agreement,
the Borrowers entered into a Security Agreement (the “Security
Agreement”) by and between the Borrowers, as grantor, and the
Purchaser, as grantee. The gross proceeds to the Company are
$1,000,000, before paying customary fees and expenses. |
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Pursuant to the Note, the Borrowers shall repay the Note, in full,
on the earlier of (i) November 1, 2024, and (ii) the consummation
of the merger between Kustom Entertainment and Clover Leaf pursuant
to the Merger Agreement among the Company, Kustom Entertainment,
Clover Leaf, Yntegra Capital Investments LLC and Merger Sub, dated
as of June 1, 2023. The Borrowers shall pay in arrears in cash an
amount equal to 50% of revenues from all ticket sales generated by
Kustom Entertainment, up nine thousand tickets sold, and thereafter
equal to 10% of all revenues from all ticket sales until the
earlier of the date on which the Note is repaid in full or the
Maturity Date. The Note bears interest at a rate of 1.58% per
month. The Borrowers have the right, but not the obligation, under
the Note to prepay the Note, upon written notice to the Purchaser,
by payment in full of the entire outstanding principal balance plus
interest. Upon a change of control of either Borrower or a sale or
all or substantially all of either Borrower’s assets, the Purchaser
may require the Borrowers to repay the Note, upon written notice to
the Borrowers, by payment in full of the entire outstanding
principal balance plus interest. In addition, upon the receipt of
proceeds from any financing or extraordinary receipts, the
Borrowers are required to repay the Note as follows: (A) if the
aggregate proceeds of all such financings and extraordinary
receipts are less than $3,000,000, the Borrowers shall prepay an
amount equaling to 50% of the outstanding principal of the Note,
and (B) if the aggregate proceeds of all such financings and
extraordinary receipts are equal to or greater than $3,000,000, the
Borrowers shall prepay the Note in full. Pursuant to the
Security Agreement, the Borrowers’ obligations under the Note and
Agreement are secured by substantially all of the assets of the
Borrowers, other than any real property. |
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On March 14, 2024, the Nasdaq Listing Qualifications staff notified
the Company, that due to resignation of Mr. Michael J. Caulfield
from the Company’s board of directors (the “Board”) effective on
January 31, 2024, the Company no longer complies with the audit
committee and compensation committee requirements as set forth in
Listing Rule 5605 of The Nasdaq Stock Market LLC (“Nasdaq”),
including the requirements that there are at least three
independent directors on the Company’s audit committee and at least
two independent directors on the Company’s compensation
committee. The notification has no immediate effect on the
Company’s listing on the Nasdaq Capital Market. In accordance with
Nasdaq Listing Rules, the Company is provided a cure period until
the earlier of the Company’s next annual shareholders’ meeting (or
July 29, 2024 if the next shareholders’ meeting will be held before
July 29, 2024) or January 31, 2025 (the “Cure Period”). If the
Company does not regain compliance by within the Cure Period,
Nasdaq will provide written notice that the Company’s common stock,
par value $0.001 per share, will be subject to delisting from the
Nasdaq Capital Market, at which time, the Company may appeal the
delisting determination to a Hearings Panel. The management of
the Company has resolved to take commercially reasonable steps to
fill the vacancy on the Board with a new director who qualifies as
independent under the Nasdaq Listing Rules as soon as is practical
and anticipates regaining compliance during the Cure Period.
However, there can be no assurance that the Company will be able to
satisfy Nasdaq Listing Rule 5605 or will otherwise be in compliance
with other Nasdaq listing criteria. |
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Management Comments
Stanton E. Ross, Chief Executive Officer of the
Company, stated, “We are very pleased to close out another great
year in 2023, with greatly improved gross profits compared to 2022,
showing the success of our focus of 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 $10.3 million, as our balance grew dramatically by
about $2.3 million from less than $8.0 million at December 31,
2022. There is additional excitement about new upcoming product
releases and additional patent filings that will continue to
display our commitment to innovation and success within our video
solutions operating segment. We continue to see continued success
in our Digital Ally Healthcare venture, as Nobility Healthcare, LLC
continues to right-size and maintain profitability of the four
completed acquisitions.”
Ross added: “Additionally, we are very excited
about the 2022 filing 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. Kustom 440 hosted its
first festival during 2023, in Kansas City at Legends Field,
headlining Chris Young and Gabby Barrett. We are also thrilled
about the recent launch of KustomTicket.com, an advanced online
ticketing platform, right alongside our recently completed
acquisition of Country Stampede 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 through 2024 and
beyond.”
2023 Operating Results
Overall gross profit for the year ended December
31, 2023 and 2022 was $5,762,484 and $2,321,941, respectively, an
increase of $3,440,543 (148%). The video solution operating
segment’s gross profits for the years ended December 31, 2023 and
2022 were $1,290,509 and ($1,250,278), respectively, an improvement
of $2,540,787 (203%). The entertainment operating segment’s gross
profits for the years ended December 31, 2023 and 2022 were
$1,699,704 and $268,742, respectively, an improvement of $1,430,962
(532%). The revenue cycle management operating segment’s gross
profits for the years ended December 31, 2023 and 2022 were
$2,772,271 and $3,303,477, respectively, a deterioration of
$531,206 (16%).
Total revenues for the year ended December 31,
2023 and 2022 were $28,248,344 and $37,009,985, respectively, a
decrease of $8,761,551 (24%).
Selling, general and administrative expenses for
the year ended December 31, 2023 and 2022 were $28,003,037 and
$32,055,199, respectively, a decrease of $4,052,162 (13%). The
decrease was primarily attributable to the reduction in new
sponsorships being entered into by the Company.
Operating losses for the year ended December 31,
2023 and 2022 were $22,240,553 and $29,733,258, respectively, a
decrease of $7,492,705 (25%). Operating loss as a percentage of
revenues improved to 78% in 2023 from 80% in 2022.
Net loss attributable to common stockholders for
the year ended December 31, 2023 and 2022 were $25,688,547, or
$9.22 per share, and $21,666,691, or $8.50 per share, respectively.
No income tax provision or benefit was recorded in either 2023 or
2022 as the Company has maintained a full valuation reserve on its
deferred tax assets.
Investor Conference Call
The Company will host an investor
conference call at 11:15 a.m. EDT on Tuesday, April 2, 2023, to
discuss its 2023 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 888-886-7786 and entering conference ID
#55765907 a few minutes before 11:15 a.m. Eastern on Tuesday, April
2, 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:Brody J. Green, President, at (913)
814-7774,Stanton E. Ross, CEO, at (913) 814-7774,
orThomas J. Heckman, CFO, at (913)
814-7774
(Financial Highlights Follow)
DIGITAL ALLY,
INC.CONSOLIDATED BALANCE
SHEETSDECEMBER 31, 2023 AND 2022
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|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
680,549 |
|
|
$ |
3,532,199 |
|
Accounts receivable-trade, less allowance for doubtful accounts of
$200,668 – 2023 and $152,736 – 2022 |
|
|
1,584,662 |
|
|
|
2,044,056 |
|
Other receivables, net of $5,000 allowance – 2023 and $0 - 2022
(including $-0- due from related parties – 2023 and $138,384– 2022,
refer to Note 19) |
|
|
3,107,634 |
|
|
|
4,076,522 |
|
Inventories, net |
|
|
3,845,281 |
|
|
|
6,839,406 |
|
Prepaid expenses |
|
|
6,366,368 |
|
|
|
8,466,413 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
15,584,494 |
|
|
|
24,958,596 |
|
|
|
|
|
|
|
|
|
|
Property, plant, and
equipment, net |
|
|
7,283,702 |
|
|
|
7,898,686 |
|
Goodwill and other intangible
assets, net |
|
|
16,510,422 |
|
|
|
17,872,970 |
|
Operating lease right of use
assets, net |
|
|
1,053,159 |
|
|
|
782,129 |
|
Other assets |
|
|
6,597,032 |
|
|
|
5,155,681 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
47,028,809 |
|
|
$ |
56,668,062 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
10,732,089 |
|
|
$ |
9,477,355 |
|
Accrued expenses |
|
|
3,269,330 |
|
|
|
1,090,967 |
|
Current portion of operating lease obligations |
|
|
279,538 |
|
|
|
294,617 |
|
Contract liabilities – current |
|
|
2,937,168 |
|
|
|
2,154,874 |
|
Notes payable – related party – current portion |
|
|
2,700,000 |
|
|
|
— |
|
Debt obligations – current |
|
|
1,260,513 |
|
|
|
485,373 |
|
Warrant derivative liabilities |
|
|
1,369,738 |
|
|
|
— |
|
Income taxes payable |
|
|
61 |
|
|
|
8,097 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
22,548,437 |
|
|
|
13,511,283 |
|
|
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
Debt obligations – long term |
|
|
4,853,237 |
|
|
|
442,467 |
|
Operating lease obligation – long term |
|
|
827,836 |
|
|
|
555,707 |
|
Contract liabilities – long term |
|
|
7,340,459 |
|
|
|
5,818,082 |
|
Lease deposit |
|
|
10,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
35,580,414 |
|
|
|
20,327,539 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
Common stock, $0.001 par value; 200,000,000 shares authorized;
shares issued: 2,800,754 – 2023 and 2,720,170 – 2022 |
|
|
2,801 |
|
|
|
2,721 |
|
Additional paid in capital |
|
|
128,441,083 |
|
|
|
127,869,342 |
|
Noncontrolling interest in consolidated subsidiary |
|
|
673,292 |
|
|
|
448,694 |
|
Accumulated deficit |
|
|
(117,668,781 |
) |
|
|
(91,980,234 |
) |
|
|
|
|
|
|
|
|
|
Total equity |
|
|
11,448,395 |
|
|
|
36,340,523 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and
equity |
|
$ |
47,028,809 |
|
|
$ |
56,668,062 |
|
(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE
COMPANY’S ANNUAL REPORTON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
2023 FILED WITH THE SEC ON APRIL 1, 2024)
DIGITAL ALLY,
INC.CONSOLIDATED STATEMENTS OF
OPERATIONSFOR THE YEARS
ENDEDDECEMBER 31, 2023 AND 2022
|
|
2023 |
|
|
2022 |
|
Revenue: |
|
|
|
|
|
|
|
|
Product |
|
$ |
9,347,945 |
|
|
$ |
10,999,892 |
|
Service and other |
|
|
18,900,399 |
|
|
|
26,010,003 |
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
28,248,344 |
|
|
|
37,009,895 |
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
Product |
|
|
9,974,890 |
|
|
|
14,372,115 |
|
Service and other |
|
|
12,510,970 |
|
|
|
20,315,839 |
|
|
|
|
|
|
|
|
|
|
Total cost of revenue |
|
|
22,485,860 |
|
|
|
34,687,954 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
5,762,484 |
|
|
|
2,321,941 |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses: |
|
|
|
|
|
|
|
|
Research and development expense |
|
|
2,618,746 |
|
|
|
2,290,293 |
|
Selling, advertising and promotional expense |
|
|
7,137,529 |
|
|
|
9,312,204 |
|
General and administrative expense |
|
|
18,246,762 |
|
|
|
20,452,702 |
|
|
|
|
|
|
|
|
|
|
Total selling, general and
administrative expenses |
|
|
28,003,037 |
|
|
|
32,055,199 |
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(22,240,553 |
) |
|
|
(29,733,258 |
) |
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest income |
|
|
95,717 |
|
|
|
131,025 |
|
Interest expense |
|
|
(3,134,253 |
) |
|
|
(37,196 |
) |
Other income |
|
|
144,735 |
|
|
|
— |
|
Other expense |
|
|
— |
|
|
|
(230,744 |
) |
Loss on accrual for legal
settlement |
|
|
(1,792,308 |
) |
|
|
— |
|
Loss on conversion of
convertible debt |
|
|
(1,112,705 |
) |
|
|
— |
|
Change in fair value of
short-term investments |
|
|
— |
|
|
|
(84,818 |
) |
Change in fair value of
warrant derivative liabilities |
|
|
1,846,642 |
|
|
|
6,726,638 |
|
Change in fair value of
contingent consideration promissory notes and earn-out
agreements |
|
|
177,909 |
|
|
|
516,970 |
|
Gain on the extinguishment of
liabilities |
|
|
550,867 |
|
|
|
— |
|
Gain on extinguishment of
warrant derivative liabilities |
|
|
— |
|
|
|
3,624,794 |
|
Gain on sale of property,
plant and equipment |
|
|
— |
|
|
|
212,831 |
|
|
|
|
|
|
|
|
|
|
Total other income (loss) |
|
|
(3,223,396 |
) |
|
|
10,859,500 |
|
|
|
|
|
|
|
|
|
|
Loss before income tax benefit
(provision) |
|
|
(25,463,949 |
) |
|
|
(18,873,758 |
) |
Income tax expense benefit
(provision) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(25,463,949 |
) |
|
|
(18,873,758 |
) |
|
|
|
|
|
|
|
|
|
Net income attributable to
noncontrolling interests of consolidated subsidiary |
|
|
(224,598 |
) |
|
|
(407,933 |
) |
|
|
|
|
|
|
|
|
|
Loss on redemption – Series A
& B convertible redeemable preferred stock |
|
|
— |
|
|
|
(2,385,000 |
) |
|
|
|
|
|
|
|
|
|
Net loss attributable to
common stockholders |
|
$ |
(25,688,547 |
) |
|
$ |
(21,666,691 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to common information: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(9.22 |
) |
|
$ |
(8.50 |
) |
Diluted |
|
$ |
(9.22 |
) |
|
$ |
(8.50 |
) |
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
2,784,894 |
|
|
|
2,548,549 |
|
Diluted |
|
|
2,784,894 |
|
|
|
2,548,549 |
|
(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE
COMPANY’S ANNUAL REPORTON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
2023 FILED WITH THE SEC ON APRIL 1, 2024)
Clover Leaf Capital (NASDAQ:CLOE)
과거 데이터 주식 차트
부터 11월(11) 2024 으로 12월(12) 2024
Clover Leaf Capital (NASDAQ:CLOE)
과거 데이터 주식 차트
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