Digital Ally, Inc. (Nasdaq: DGLY), which develops, manufactures and
markets advanced video surveillance products for law enforcement,
homeland security and commercial applications, today announced its
second quarter 2020 operating results. An investor conference call
is scheduled for 4:00 p.m. EDT on Thursday, August 13, 2020 (see
details below).
Highlights for the Second Quarter Ended
June 30, 2020
● |
Total revenues decreased in the second quarter 2020 to $1,732,192
from $2,546,983 in the comparable 2019 period. The primary reason
for the overall revenue decrease is a decline of $892,143 (46%), in
2020 product revenues, offset by an increase in service and other
revenue of $77,352 (13%), from 2019 levels. Product sales continue
to face challenges for our in-car and body-worn systems because of
the effects of the Covid-19 pandemic, and our competitors’ actions
of releasing new products with advanced features and maintaining
their product price cuts. In response, we have launched a program
to migrate current and new customers, and in particular our
commercial customers, from a “hardware sale” to a service fee
model. Therefore, we expect a reduction in law enforcement and
commercial hardware sales (principally EVO-HD, DVM-800, DVM-250’s
and FirstVU’s) as we convert these customers to a service model
under which we provide the hardware as part of a recurring monthly
service fee. |
|
|
● |
The Covid-19 pandemic delayed the shipment of orders in the second
quarter 2020 as police forces and governments reacted to its
impact. In general, our salesmen were unable to travel and meet
with potential customers as they normally do to demonstrate our
hardware, to promote our integrated solutions and close hardware
sales. Specifically, we were unable to ship the initial purchase
orders under a substantial contract awarded by the Director of
Strategic Procurement of a country for the expected deployment of
body cameras to its entire national police force. The contract was
expected to include up to 5,000 body cameras with our web-based
software infrastructure service over a three-year period. Contract
deliveries were suspended pending the government’s decision to
freeze the planned deployment until such time as the pandemic is
contained within its population. The initial purchase order was
expected to ship during the first quarter 2020 with follow-on
orders for the second quarter 2020 and would have made a
substantial impact to our product revenues for the second quarter
of 2020. At this point, we are unable to forecast if and when this
major project will be restarted or how it may be modified as a
result of the pandemic. Upon completion, the original contract
would have been the largest body camera deployment in our history
and the largest contract for recurring service revenues for our
web-based software related to the body cameras. |
● |
Our overall gross margin percentage declined to 23% in the second
quarter 2020 compared to 37% in the 2019 period. The deterioration
is attributable to the manufacturing inefficiencies and unfavorable
overhead variances caused by the Covid-19 pandemic. We also
experienced significant disruptions in the second quarter 2020 as
we moved our office, manufacturing and warehouse facility to a
newer and smaller location. We scrapped many older and damaged
inventory items rather than moving them to the new facility coupled
with the loss of production as we prepared for and moved our
manufacturing operations which adversely affected our gross
margins. |
|
|
● |
Selling, general and administrative expenses were $2,535,912 and
$(1,616,830) for the second quarter 2020 and 2019, respectively, an
increase of $4,152,742 (257%). The significant increase was
attributable to the patent litigation settlement of $6.0 million
that we received in the second quarter of 2019. Exclusive of the
patent litigation settlement, overall selling, general and
administrative expenses would have decreased by $1,847,258 (42%) in
the second quarter 2020 compared to the 2019 period. The
significant decrease was the result of sales and support staff
headcount reductions and we reduced overall travel in response to
the impact of the Covid-19 pandemic during the second quarter
2020. |
|
|
● |
The Company recently added two new lines of branded products: (1)
the ThermoVu™ which is a line of self-contained temperature
monitoring systems 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. We began offering such products
beginning late in the second quarter 2020. Shield™ disinfectants
has been listed on the United States Environmental Protection
Agency’s List N: Disinfectants for Use Against SARS-CoV-2, the
virus that causes COVID-19. We are ramping up our supply chain for
both of these new product lines, which are manufactured by
third-parties. These branded products are being offered to our
first responder customers including police, fire and paramedics.
Commercial customers such as schools, cruise lines, taxi-cab and
para transit may also be good candidates for the products. |
|
|
● |
On June 2, 2020, the Company entered into an underwriting
agreement, pursuant to which the Company agreed to sell in an
underwritten public offering an aggregate of 3,090,909 shares of
the Company’s common stock, at a public price of $1.65 per share
(the “June 2nd Offering”). The Company also granted the
underwriters a forty-five (45)-day option to purchase up to an
additional 463,636 shares of common stock to cover over-allotments,
if any (the “June 2nd Option Shares”). The common shares sold in
the June 2nd Offering were registered and issued under the
Company’s effective shelf registration statement on Form S-3. |
|
On June 8, 2020, the underwriters fully exercised their
over-allotment option to acquire the June 2nd Option Shares at
$1.65 per share, which closed on June 10, 2020. The exercise of
such over-allotment option resulted in additional gross proceeds,
before deducting underwriting discounts and commissions and other
estimated offering expenses, of $765,000, which the Company used
for general corporate purposes, including continued investments in
the Company’s commercialization efforts. |
|
|
|
The net proceeds to the Company from the June 2nd Offering totaled
$5,350,413, including the exercise of the underwriter’s
overallotment option and after deducting underwriting discounts and
commissions and estimated expenses payable by the Company. |
|
|
● |
On June 8, 2020, the Company entered into an underwriting
agreement, pursuant to which the Company agreed to sell in an
underwritten public offering an aggregate of 2,325,581 shares of
common stock at a public price of $2.15 per share (the “June 8th
Offering”). The Company also granted the underwriters a forty-five
(45)-day option to purchase up to an additional 213,953 shares of
common stock to cover over-allotments, if any (the “June 8th Option
Shares”).The common shares in the June 8th Offering were registered
and issued under the Company’s effective shelf registration
statement on Form S-3. |
|
|
|
On June 10, 2020, the underwriters fully exercised their
over-allotment option to acquire the June 8th Option Shares at
$2.15 per share, which closed on June 10, 2020. The exercise of
such over-allotment option resulted in additional gross proceeds,
before deducting underwriting discounts and commissions and other
estimated Offering expenses, of $460,000, which the Company intends
to use for general corporate purposes, including continued
investments in the Company’s commercialization efforts. |
|
|
|
The net proceeds to the Company from the June 8th Offering totaled
$4,976,692, including the exercise of the underwriter’s
overallotment option and after deducting underwriting discounts and
commissions and estimated expenses payable by the Company. |
|
|
● |
On April 17, 2020, the Company entered into a securities purchase
agreement with accredited investors providing for the issuance of
(i) the Company’s 8% Senior Secured Convertible Promissory Notes
due April 16, 2021 with an aggregate principal face amount of
$1,666,666, which were convertible into an aggregate of 1,650,164
shares of the Company’s common stock at a price per share of $1.01
and (ii) five-year warrants to purchase an aggregate of up to
1,237,624 shares of common stock at an exercise price of $1.31. The
offering closed on April 17, 2020 whereby the investors purchased
the securities for an aggregate purchase price of $1,500,000.
During June 2020, the holders of the convertible notes exercised
their right to convert principal balances aggregating $1,665,666
into equity. In addition, on June 12, 2020, the Company exercised
its right to prepay in cash the remaining outstanding principal
balance aggregating $1,000. The convertible notes balances are
fully paid-off as of June 30, 2020 as a result of these conversions
and prepayments. In addition, all warrants to purchase an aggregate
of up to 1,237,624 shares of common stock at an exercise price of
$1.31 were exercised in June 2020. |
● |
On April 4, 2020, the Company entered into a promissory note with a
bank, which provided for a loan in the amount of $1,418,900 (the
“PPP Loan”) pursuant to the Paycheck Protection Program under the
Coronavirus Aid, Relief, and Economic Security Act (the “CARES
Act”). The PPP Loan has a two-year term and bears interest at a
rate of 1% per annum. Monthly principal and interest payments are
deferred for six months after the date of disbursement. The PPP
Loan may be prepaid at any time prior to maturity with no
prepayment penalties. The promissory note contains events of
default and other provisions customary for a loan of this type. The
Paycheck Protection Program provides that the PPP Loan may be
partially or wholly forgiven if the funds are used for certain
qualifying expenses as described in the CARES Act. The Company
intends to use the majority of the PPP Loan amount for qualifying
expenses and to apply for forgiveness of the loan in accordance
with the terms of the CARES Act. |
|
|
● |
We had previously received notice from the Nasdaq’s staff stating
that, the Company did not meet the $35 million minimum Market Value
of Listed Securities MVLS requirement for continued listing under
Nasdaq Listing Rule 5550(b)(2). During June 2020, we consummated
underwritten public offerings whereby we raised aggregate gross
proceeds of approximately $11.3 million, before underwriting
discounts and commissions and other estimated expenses of such
offerings. As a result of such offerings, we achieved compliance
with Rule 5550(b)(1) and on June 18, 2020 we received written
notice from the Staff stating that we had regained compliance with
such rule and the matter was closed. |
|
|
|
On April 22, 2020, we received notice from the Nasdaq’s staff
indicating that we were not in compliance with Nasdaq Listing Rule
5550(a)(2), as the closing bid price for our common stock was below
$1.00 per share for the previous thirty (30) consecutive business
days. To regain compliance, the closing bid price of the common
stock had to have met or exceeded $1.00 per share for at least ten
(10) consecutive business days by no later than December 28, 2020.
On June 11, 2020, our common stock met such minimum bid price
requirement, as the closing sale price of our common stock had
equaled or exceeded $1.00 per share on Nasdaq at the close of each
trading day since May 29, 2020, and we received written notice from
the Staff stating that the Company regained compliance with such
requirement and the matter was closed. |
|
|
● |
We asserted two significant patent infringement lawsuit involving
Axon and WatchGuard that have had significant impacts on our
quarterly results primarily due to the timing and amount of legal
fees expended on such lawsuits. We settled the WatchGuard lawsuit
in May 2019 for a total payment of $6.0 million. In June 2019 the
District Court granted Axon’s Motion for Summary Judgment, and
accepted Axon’s position that it did not infringe on our patents
and dismissed the lawsuit. We appealed the District Court’s ruling.
On April 22, 2020, a three-judge panel of the United States Court
of Appeals denied our appeal and affirmed the District Court’s
previous decision to grant Axon summary judgment. On May 22, 2020,
we filed a petition for panel rehearing requesting that we be
granted a rehearing of our appeal of the U.S. District Court’s
summary judgment ruling. Furthermore, we requested that we be given
an opportunity to make our case through oral argument in front of
the three-judge panel of the Court of Appeals, all of which was
denied. The Company is reviewing its alternatives at this point.
Future quarterly results during 2020 will continue to be impacted
as this appeal is finalized |
Recent Developments
Warehouse Building Acquisition.
On July 13, 2020, the Company entered into a Commercial and
Industrial Real Estate Sale Contract whereby it will purchase new
warehouse space which will serve as the company’s warehouse and
distribution location for its new branded temperature screening
device ThermoVU™ and its Shield™ line of disinfectant/cleanser
products. The terms of the Contract include a total purchase price
of $420,000 with the closing expected to occur on or before August
21, 2020. The Company will use available cash to close the purchase
of the building.
Proceeds Investment Agreement
Termination Agreement. - On July 20, 2020, the Company and
Brickell Key Investments LP (“BKI”) executed a Termination
Agreement and Mutual Release (the “Termination Agreement”). Under
the terms of the Termination Agreement the parties agreed to
terminate the Proceeds Investment Agreement (“PIA”) and to release
one another from any further liability under the PIA
obligation.
Under the terms of the Termination Agreement,
and upon the payment of $1,250,000 by the Company to BKI, both
parties agreed to terminate the PIA and to release each other from
any further liability thereunder. Such $1,250,000 payment was made
on July 22, 2020. In addition to the $1,250,000 payment, the
Company further agreed to pay BKI the following: (a) a contingent
payment in the amount of $2,750,000 following the closing of an
asset purchase, membership interest purchase, or similar
transaction between the Company and a specified third-party (the
“Purchase Transaction”) and (b) any and all future proceeds
received from Watchguard and its successors and assigns by the
Company for Watchguard’s use of U.S. Patent Nos. 8,781,292 and
9,253,452. For clarity, the Company and BKI further agreed that the
payment of the contingent payment would only be due and payable
upon the closing of the specified Purchase Transaction.
Furthermore, the relevant contingent payment portion of the
Termination Agreement, and any obligations stemming therefrom,
would automatically terminate if the specified Purchase Transaction
is abandoned prior to its closing, including its failure to close
within three years from the date of the Termination Agreement. The
specified Purchase Transaction has not yet occurred and there is no
binding agreement to complete such Purchase Transaction.
Shelf Registration Statement on Form
S-3. On July 2, 2020 the SEC declared the Company’s shelf
registration statement on Form S-3 effective. The Shelf
Registration Statement allows the Company to offer and sell, from
time to time in one or more offerings, any combination of our
common stock, debt securities, debt securities convertible into
common stock or other securities in any combination thereof, rights
to purchase shares of common stock or other securities in any
combination thereof, warrants to purchase shares of common stock or
other securities in any combination thereof or units consisting of
common stock or other securities in any combination thereof having
an aggregate initial offering price not exceeding $125,000,000.
Covid-19 Pandemic. Subsequent
to June 30, 2020 economies throughout the world have continued to
be severely disrupted by the effects of the quarantines, business
closures and the reluctance of individuals to leave their homes as
a result of the outbreak of the coronavirus (Covid-19). Although we
remain open as an “essential business,” our supply chain has been
disrupted and our customers, and in particular our commercial
customers, have been significantly impacted, which has in turn
reduced our operations and activities. In addition, the capital
markets have been disrupted and our efforts to raise necessary
capital will likely be adversely impacted by the outbreak of the
virus. We cannot forecast with any certainty when the disruptions
caused by the virus will cease to impact our business and the
results of our operations.
Management Comments
Stanton E. Ross, Chief Executive Officer of
Digital Ally, stated, “The disruptions cause by the Covid-19
pandemic adversely affected our second quarter 2020 operations as
many of our law enforcement customers delayed purchasing decisions
and many of our commercial customers were shut-down by governmental
mandates. We expanded our product offerings to include our Shield™
brand line of disinfectants/sanitizers to provide our customers
with an eco-friendly product for use against SARS-CoV-2, the virus
that causes COVID-19 and the ThermoVu™ brand line of self-contained
temperature screening systems that provides alerts and controls
facility access when an individual’s temperature exceeds a pre-set
threshold. We introduced our branded Shield™ and ThermoVu™ products
to our first-responder customers and many of our commercial
customers during the second quarter 2020 and are very excited about
the prospects of these new products. We also reduced our SG&A
expenses by reducing staffing levels, limiting travel and reducing
many advertising and promotional activities. In addition, we moved
to a new, smaller office and warehouse space in June 2020 that will
dramatically reduce our occupancy costs for the balance of 2020 and
beyond.”
Second quarter 2020 Operating
Results
Total revenues decreased in the second quarter
2020 to $1,732,192 from $2,546,983 in 2019. The primary reason for
the overall revenue decrease is a decline of $892,143 (46%), in
2020 product revenues, offset by an increase in service and other
revenue of $77,352 (13%), from 2019 levels.
Gross profit declined 59% to $392,758 for the
second quarter 2020 versus $950,812 in 2019. Our gross margin
decrease is primarily attributable to the 46% decrease in sales and
our cost of sales as percentage of revenues increasing to 77% for
the second quarter 2020 from 63% for 2019.
Selling, General and Administrative (“SG&A”)
expenses increased approximately 257% to $2,535,396 in the second
quarter 2020 versus $(1,616,830) in 2019. The significant increase
was attributable to the patent litigation settlement of $6.0
million that we received in the second quarter 2019. Exclusive of
the patent litigation settlement, overall selling, general and
administrative expenses would have decreased by $1,847,258 (42%) in
the second quarter 2020 compared to the same period in 2019. The
significant decrease was the result of sales and support staff
headcount reductions and we reduced overall travel in response to
the impact of the Covid-19 pandemic during the second quarter
2020.
We reported an operating loss of $2,143,154 for
the second quarter 2020, compared to operating income of $2,567,642
in 2019. This represents a deterioration of $4,710,796 or 183% in
2020 compared to 2019. Exclusive of the patent litigation
settlement, operating loss would have improved by $1,289,204 (38%)
in the second quarter 2020 compared to the same period in 2019.
We incurred $25,636 in interest expense during
the second quarter 2020 which is primarily attributable to the
secured convertible notes that were partially outstanding during
the second quarter 2020.
We elected to account for the secured
convertible notes that were issued in April of 2020 on their fair
value. These secured convertible notes were fully converted and/or
paid off in the second quarter 2020. The change in fair value from
their April 2020 issuance date through their pay-off date was
$887,807, which was recorded as a non-cash charge during the second
quarter 2020.
We elected to record the obligation related to
the PIA at fair-value. Accordingly, the estimated fair value of the
obligation decreased as a result of the District Court ruling on
the Axon’s motion for summary judgment on the patent litigation and
its confirmation by the Appellate Court. The decrease in fair value
of the PIA resulted in a non-cash credit of $2,587,000 for the
second quarter 2020 compared to a non-cash charge of $2,961,000 in
2019.
We reported a net loss of $497,894, or ($0.03)
per share, in the second quarter ended June 30, 2020 compared to a
prior-year net loss of $387,730, or ($0.03) per share. No income
tax provision or benefit was recorded in the either 2020 or 2019 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 4:00 p.m. EDT on Thursday, August 13, 2020, to
discuss its operating results for the second quarter 2020, the
status of its patent infringement litigation against Axon,
developments related to its disinfectant and safety products, the
impact of the Covid-19 pandemic and other topics of interest.
Shareholders and other interested parties may participate in the
conference call by dialing 844-761-0863 and entering conference ID#
3376759 a few minutes before 4:00 p.m. EDT on Thursday August 13,
2020.
A replay of the conference call will be
available two hours after its completion, from August 13, 2020
until 11:59 p.m. on October 13, 2020 by dialing 855-859-2056 and
entering the conference ID # 3376759.
For additional news and information please visit
or follow us on Twitter @digitalallyinc and Facebook
www.facebook.com/DigitalAllyInc
Follow additional Digital Ally Inc. social media
channels here:
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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. 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: whether the Company will be able to
improve its revenue and operating results, especially in light of
the adverse effects of the Covid-19 pandemic on our customers,
suppliers and employees; whether it will be able to resolve its
liquidity and operational issues and raise sufficient capital given
the impact of the Covid-19 pandemic; whether it will be able to
achieve improved production and other efficiencies to restore its
gross and operating margins in the future; whether the Company will
be able to continue to expand into non-law enforcement markets,
including disinfectant/sanitizer and temperature screening
products, and increase its service based revenue; whether the
Company has resolved its product quality and supply chain issues;
whether the EVO-HD will help the Company increase its product
revenues; whether the Company will achieve positive outcomes in its
patent litigation; whether and the extent to which the US Patent
and Trademark Office (USPTO) rulings will curtail, eliminate or
otherwise have an effect on the actions of competitors and others
in the marketplace respecting the Company, its products and
customers; its ability to deliver its newer product offerings as
scheduled, and in particular the new EVO-HD product platform,
obtain the required components and products on a timely basis, and
have them perform as planned; its ability to maintain or expand its
share of the markets in which it competes, including those outside
the law enforcement industry; whether it will be able to adapt its
technology to new and different uses, including being able to
introduce new products; competition from larger, more established
companies with far greater economic and human resources; its
ability to attract and retain customers and quality employees; the
effect of changing economic conditions; and changes in government
regulations, tax rates and similar matters. 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 Quarterly Report on Form 10-Q for
the three and six months ended June 30, 2020 and in its annual
report on Form 10-K for the year ended December 31, 2019, filed
with the Securities and Exchange Commission.
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
SHEETSJUNE 30, 2020 AND DECEMBER 31,
2019
|
|
June 30, 2020 |
|
|
December 31, 2019 |
|
|
|
(Unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
16,165,550 |
|
|
$ |
359,685 |
|
Accounts receivable-trade, less allowance for doubtful accounts of
$123,224 – 2020 and 2019 |
|
|
1,080,884 |
|
|
|
1,071,018 |
|
Accounts receivable-other |
|
|
538,350 |
|
|
|
514,730 |
|
Inventories, net |
|
|
4,752,285 |
|
|
|
5,280,412 |
|
Income tax refund receivable, current |
|
|
44,650 |
|
|
|
44,650 |
|
Prepaid expenses |
|
|
574,456 |
|
|
|
381,090 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
23,156,175 |
|
|
|
7,651,585 |
|
|
|
|
|
|
|
|
|
|
Furniture, fixtures and
equipment, net |
|
|
208,291 |
|
|
|
197,063 |
|
Intangible assets, net |
|
|
431,006 |
|
|
|
413,268 |
|
Operating lease right of use
assets |
|
|
769,635 |
|
|
|
122,459 |
|
Other assets |
|
|
452,519 |
|
|
|
532,500 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
25,017,626 |
|
|
$ |
8,916,875 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
(Deficit) |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,535,865 |
|
|
$ |
2,339,985 |
|
Accrued expenses |
|
|
838,747 |
|
|
|
845,881 |
|
Operating lease obligations – Current |
|
|
44,308 |
|
|
|
159,160 |
|
Contract liabilities – Current |
|
|
1,756,402 |
|
|
|
1,707,943 |
|
Proceeds investment agreement obligation, at fair value –
Current |
|
|
3,615,000 |
|
|
|
— |
|
Debt obligations – Current |
|
|
552,258 |
|
|
|
1,827,748 |
|
Income taxes payable |
|
|
1,158 |
|
|
|
5,934 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
8,343,738 |
|
|
|
6,886,651 |
|
|
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
Proceeds investment agreement obligation, at fair value –
Long-term |
|
|
— |
|
|
|
6,500,000 |
|
Operating lease obligation – Long-term |
|
|
731,334 |
|
|
|
44,460 |
|
Debt obligations – Long-term |
|
|
1,016,642 |
|
|
|
— |
|
Contract liabilities – Long-term |
|
|
1,580,085 |
|
|
|
1,803,143 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
11,671,799 |
|
|
|
15,234,254 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity
(Deficit): |
|
|
|
|
|
|
|
|
Common stock, $0.001 par value per share; 50,000,000 shares
authorized; shares issued: 26,645,118 – June 30, 2020 and
12,079,095 – December 31, 2019 |
|
|
26,645 |
|
|
|
12,079 |
|
Additional paid in capital |
|
|
105,697,031 |
|
|
|
83,216,387 |
|
Treasury stock, at cost (63,518 shares) |
|
|
(2,157,226 |
) |
|
|
(2,157,226 |
) |
Accumulated deficit |
|
|
(90,220,623 |
) |
|
|
(87,388,619 |
) |
|
|
|
|
|
|
|
|
|
Total stockholders’ equity (deficit) |
|
|
13,345,827 |
|
|
|
(6,317,379 |
) |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity (deficit) |
|
$ |
25,017,626 |
|
|
$ |
8,916,875 |
|
(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE
COMPANY’S QUARTERLY REPORT ON FORM 10-Q FOR THE THREE AND SIX
MONTHS ENDED JUNE 30, 2020 FILED WITH THE SEC)
DIGITAL ALLY,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONSFOR THE THREE AND SIX MONTHS
ENDEDJUNE 30, 2020 AND
2019(Unaudited)
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
1,053,581 |
|
|
$ |
1,945,724 |
|
|
$ |
2,820,116 |
|
|
$ |
3,866,188 |
|
Service and other |
|
|
678,611 |
|
|
|
601,259 |
|
|
|
1,337,820 |
|
|
|
1,231,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
1,732,192 |
|
|
|
2,546,983 |
|
|
|
4,157,936 |
|
|
|
5,097,779 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
|
1,165,528 |
|
|
|
1,468,828 |
|
|
|
2,154,774 |
|
|
|
2,731,899 |
|
Service and other |
|
|
173,906 |
|
|
|
127,343 |
|
|
|
345,374 |
|
|
|
233,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenue |
|
|
1,339,434 |
|
|
|
1,596,171 |
|
|
|
2,500,148 |
|
|
|
2,965,227 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
392,758 |
|
|
|
950,812 |
|
|
|
1,657,788 |
|
|
|
2,132,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense |
|
|
359,697 |
|
|
|
582,905 |
|
|
|
845,445 |
|
|
|
1,045,076 |
|
Selling, advertising and promotional expense |
|
|
486,649 |
|
|
|
1,237,947 |
|
|
|
1,169,030 |
|
|
|
1,993,936 |
|
Stock-based compensation expense |
|
|
376,738 |
|
|
|
585,195 |
|
|
|
688,415 |
|
|
|
1,310,393 |
|
General and administrative expense |
|
|
1,312,828 |
|
|
|
1,977,123 |
|
|
|
3,025,417 |
|
|
|
4,301,663 |
|
Patent litigation settlement |
|
|
— |
|
|
|
(6,000,000 |
) |
|
|
— |
|
|
|
(6,000,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total selling, general and
administrative expenses |
|
|
2,535,912 |
|
|
|
(1,616,830 |
) |
|
|
5,728,307 |
|
|
|
2,651,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
|
(2,143,154 |
) |
|
|
2,567,642 |
|
|
|
(4,070,519 |
) |
|
|
(518,516 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
15,609 |
|
|
|
5,628 |
|
|
|
21,869 |
|
|
|
23,612 |
|
Interest expense |
|
|
(25,636 |
) |
|
|
— |
|
|
|
(333,196 |
) |
|
|
— |
|
Secured convertible notes
issuance expense |
|
|
(34,906 |
) |
|
|
— |
|
|
|
(34,906 |
) |
|
|
— |
|
Change in fair value of
proceeds investment agreement |
|
|
2,578,000 |
|
|
|
(2,961,000 |
) |
|
|
2,885,000 |
|
|
|
(3,098,000 |
) |
Change in fair value of
secured convertible notes |
|
|
(887,807 |
) |
|
|
— |
|
|
|
(1,300,252 |
) |
|
|
— |
|
Total other income
(expense) |
|
|
1,645,260 |
|
|
|
(2,955,372 |
) |
|
|
1,238,515 |
|
|
|
(3,074,388 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
benefit |
|
|
(497,894 |
) |
|
|
(387,730 |
) |
|
|
(2,832,004 |
) |
|
|
(3,592,904 |
) |
Income tax benefit |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(497,894 |
) |
|
$ |
(387,730 |
) |
|
$ |
(2,832,004 |
) |
|
$ |
(3,592,904 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.32 |
) |
Diluted |
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.32 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
18,976,724 |
|
|
|
11,305,248 |
|
|
|
16,430,214 |
|
|
|
11,124,222 |
|
Diluted |
|
|
18,976,724 |
|
|
|
11,305,248 |
|
|
|
16,430,214 |
|
|
|
11,124,222 |
|
(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE
COMPANY’S QUARTERLY REPORT ON FORM 10-Q FOR THE THREE AND SIX
MONTHS ENDED JUNE 30, 2020 FILED WITH THE SEC)
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