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DIGITAL ALLY, INC.

(DGLY)
  Report
Delayed Nasdaq  -  04:00:00 2023-02-01 pm EST
0.3174 USD   -0.81%
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DIGITAL ALLY, INC. Management's Discussion and Analysis of Financial Condition and Results of Operation. (form 10-Q)

11/14/2022 | 04:59pm EST
This quarterly report on Form 10-Q (the "Report") of Digital Ally, Inc. (the
"Company", "we", "us", or "our") contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
words "aim," "anticipate," "believe," "continue," "could," "estimate," "expect,"
"feel," "forecast," "intend," "may," "outlook," "plan," "potential," "predict,"
"project," "seek," "should," "will," "would," and similar expressions intended
to identify forward-looking statements, although not all forward-looking
statements contain these identifying words. These forward-looking statements are
based largely on our 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 our control. Therefore,
actual results could differ materially from the forward-looking statements
contained in this document, and readers are cautioned not to place undue
reliance on such forward-looking statements.



We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
A variety of factors could cause or contribute to such differences and could
adversely impact revenues, profitability, cash flows and capital needs. There
can be no assurance that the forward-looking statements contained in this
document will, in fact, transpire or prove to be accurate.



Factors that could cause or contribute to our actual results differing
materially from those discussed herein or for our stock price to be adversely
affected include, but are not limited to: (1) our losses in recent years, and
the substantial doubt about our ability to continue as a going concern; (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 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; (7) our ability to produce our products in a
cost-effective manner; (8) competition from larger, more established companies
with far greater economic and human resources; (9) our ability to attract and
retain quality employees; (10) risks related to dealing with governmental
entities as customers; (11) our expenditure of significant resources in
anticipation of sales due to our lengthy sales cycle and the potential to
receive no revenue in return; (12) characterization of our market by new
products and rapid technological change; (13) our dependence on sales of our
EVO-HD, DVM-800, DVM-250 and FirstVU products; (14) that stockholders may lose
all or part of their investment if we are unable to compete in our markets and
return to profitability; (15) defects in our products that could impair our
ability to sell our products or could result in litigation and other significant
costs; (16) 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; (17) our ability to protect technology through patents
and to protect our proprietary technology and information, such as trade
secrets, through other similar means; (18) our ability to generate more
recurring cloud and service revenues; (19) risks related to our license
arrangements; (20) the fluctuation of our operation results from quarter to
quarter; (21) 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;
(22) the issuance or sale of substantial amounts of our common stock, or the
perception that such sales may occur in the future, which may have a depressive
effect on the market price of our securities; (23) potential dilution from the
issuance of common stock underlying outstanding options and warrants; (24) our
additional securities available for issuance, which, if issued, could adversely
affect the rights of the holders of our common stock; (25) the volatility of our
stock price due to a number of factors, including, but not limited to, a
relatively limited public float; (26) our ability to integrate and realize the
anticipated benefits from acquisitions; (27) our ability to maintain the listing
of our common stock on the Nasdaq Capital Market.



38






Current Trends and Recent Developments for the Company



Segment Overview



Video Solutions Operating Segment - Within our video solutions operating segment
we supply technology-based products utilizing our portable digital video and
audio recording capabilities for the law enforcement and security industries and
for the commercial fleet and mass transit markets. We have the ability to
integrate electronic, radio, computer, mechanical, and multi-media technologies
to create positive solutions to our customers' requests. Our products include:
the EVO-HD, DVM-800 and DVM-800 Lite, which are in-car digital video systems for
law enforcement and commercial markets; the FirstVu body-worn camera line,
consisting of the FirstVu Pro, FirstVu II, and the FirstVu HD; our patented and
revolutionary VuLink product which integrates our body-worn cameras with our
in-car systems by providing hands-free automatic activation for both law
enforcement and commercial markets; the FLT-250, DVM-250, and DVM-250 Plus,
which are our commercial line of digital video mirrors that serve as "event
recorders" for the commercial fleet and mass transit markets; and FleetVu and
VuLink, which are our cloud-based evidence management systems. We further
diversified and broadened our product offerings in 2020, by introducing two new
lines of branded products: (1) the ThermoVu® which is a line of self-contained
temperature monitoring stations that provides alerts and controls facility
access when an individual's temperature exceeds a pre-set threshold and (2) our
Shield™ disinfectants and cleansers which are for use against viruses and
bacteria.



Our video solutions segment revenue encompasses video recording products and
services for our law enforcement and commercial customers and the sale of Shield
disinfectant and personal protective products. This segment generates revenues
through our subscription models offering cloud and warranty solutions, and
hardware sales for video and personal protective safety products and solutions.
Revenues for product sales are recognized upon delivery of the product, and
revenues from our cloud and warranty subscription plans are deferred over the
term of the subscription, typically 3 or 5 years.



Revenue Cycle Management Operating Segment - We have recently entered the
revenue cycle management business late in the second quarter of 2021 with the
formation of our wholly owned subsidiary, Digital Ally Healthcare, Inc. and its
majority-owned subsidiary 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, along with two more
acquisitions completed during the three months ended March 31, 2022, in which we
assist in providing working capital and back-office services to healthcare
organizations throughout the country. Our assistance consists of insurance and
benefit verification, medical treatment documentation and coding, and
collections. Through our expertise and experience in this field, we aim to
maximize our customers' service revenues collected, leading to substantial
improvements in their operating margins and cash flows.



Our revenue cycle management segment consists of our medical billing subsidiaries. Revenues of this segment are recognized after we perform the obligations of our revenue cycle management services. Our revenue cycle management services are services, performed and charged monthly, generally based on a contractual percentage of total customer collections, for which we recognize our net service fees.



39







Ticketing Operating Segment - We have also recently entered into live
entertainment and events ticketing services through the formation of our wholly
owned subsidiary, TicketSmarter and its completed acquisitions of Goody Tickets,
LLC and TicketSmarter, LLC, on September 1, 2021. TicketSmarter provides ticket
sales, partnerships, and mainly, ticket resale services through its online
ticketing marketplace for live events, TicketSmarter.com. TicketSmarter offers
tickets for over 125,000 live events through its platform, for a wide range of
events, including concerts, sporting events, theatres, and performing arts,
throughout the country.



Our ticketing operating segment consists of ticketing services provided through
TicketSmarter and its online platform, TicketSmarter.com. Revenues of this
segment include ticketing service charges generally determined as a percentage
of the face value of the underlying ticket and ticket sales from our ticket
inventory which are recognized when the underlying tickets are sold. Ticketing
direct expenses include the cost of tickets purchased for resale by the Company
and held as inventory, credit card fees, ticketing platform expenses, website
maintenance fees, along with other administrative costs.



Results of Operations


Summarized financial information for the Company's reportable business segments is provided for the indicated periods and as of September 30, 2022, and September 30, 2021:




                                 Three months ended September 30,          

Nine months ended September 30,

                                     2022                  2021                2022                  2021
Net Revenues:
Video Solutions                $       2,092,927       $   2,028,660     $       6,152,733       $  7,058,161
Revenue Cycle Management               2,015,112           2,050,679       
     6,039,807          2,050,679
Ticketing                              4,376,114             560,483            15,937,852            560,483
Total Net Revenues             $       8,484,153       $   4,639,822     $      28,130,392       $  9,669,323

Gross Profit (Loss):
Video Solutions                $         515,615       $     590,447     $       1,543,057       $  2,663,131
Revenue Cycle Management                 866,277             197,681             2,520,709            197,681
Ticketing                               (786,392 )          612,4412               190,432            612,442
Total Gross Profit             $         595,500       $   1,400,570     $       4,254,198       $  3,473,254

Operating Income (loss):
Video Solutions                $      (1,481,048 )     $    (940,039 )   $      (4,327,049 )     $ (1,919,559 )
Revenue Cycle Management                 117,844             (40,537 )             236,628            (40,537 )
Ticketing                             (2,149,412 )            44,026            (5,915,953 )           44,026
Corporate                             (3,054,407 )        (2,662,423 )         (10,025,236 )       (7,165,483 )
Total Operating Income
(Loss)                         $      (6,567,023 )     $  (3,598,973 )   $     (20,031,610 )     $ (9,081,553 )

Depreciation and
Amortization:
Video Solutions                $         213,446       $     119,560     $         584,266       $    236,131
Revenue Cycle Management                 320,004               2,890               959,366              2,890
Ticketing                                102,211                 609               102,575                609
Total Depreciation and
Amortization                   $         635,661       $     123,059     $       1,646,207       $    239,630




                                 September 30,      December 31,
                                     2022               2021
Assets (net of eliminations):
Video Solutions                 $    33,656,285     $  25,983,348
Revenue Cycle Management              2,446,740           934,095
Ticketing                            15,072,548        12,260,780
Corporate                            17,221,891        43,810,974
Total Identifiable Assets       $    68,397,464     $  82,989,197




40







Segment net revenues reported above represent only sales to external customers.
Segment gross profit represents net revenues less cost of revenues. Segment
operating income (loss), which is used in management's evaluation of segment
performance, represents net revenues, less cost of revenues, less all operating
expenses. Identifiable assets are those assets used by each segment in its
operations. Corporate assets primarily consist of cash, property, plant and
equipment, accounts receivable, inventories, and other assets.

© Edgar Online, source Glimpses

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Financials (USD)
Sales 2022 39,6 M - -
Net income 2022 -20,4 M - -
Net Debt 2022 - - -
P/E ratio 2022 -1,04x
Yield 2022 -
Capitalization 17,1 M 17,1 M -
Capi. / Sales 2022 0,43x
Capi. / Sales 2023 0,37x
Nbr of Employees 146
Free-Float 93,3%
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Number of Analysts 2
Last Close Price 0,32 $
Average target price 2,75 $
Spread / Average Target 766%
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Managers and Directors
Stanton E. Ross Chairman & Chief Executive Officer
Brody J. Green President
Thomas J. Heckman CFO, Secretary, Treasurer, & Vice President
Peng Han Chief Operating Officer
Daniel F. Hutchins Independent Director
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