DIGITAL ALLY, INC ANNOUNCES 2022 OPERATING RESULTS
LENEXA, Kansas (April 3, 2023) – Digital Ally, Inc. (Nasdaq: DGLY) (the “Company” or “our”), today announced its operating results for 2022. An investor conference call is scheduled for 11:15 a.m. EDT on Monday, April 3, 2023 (see details below).
All share and price per share information in this press release has been adjusted to reflect the Company’s 1-for-20 reverse stock split, which was effective on February 6, 2023.
Highlights for the year ended December 31, 2022
Stanton E. Ross, Chief Executive Officer of Digital Ally, stated, “We are very pleased to report a 73% increase in total annual revenues for 2022 as compared to 2021. We are very pleased with the traction gained in the marketplace with our new products, consisting of our FirstVu Pro, FirstVu II, 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 nearly double throughout 2022, as our contract liabilities went from a little over $4.3 million at December 31, 2021, to nearly $8.0 million at December 31, 2022. We continue to build excitement around the momentum being gained in our Digital Ally Healthcare venture, as Nobility Healthcare, LLC continues to complete acquisitions, as we completed two in 2021 and two at the beginning of 2022, with the goal to maximize the profitability of those accumulated acquisitions in 2023. The numerous acquisitions we have already completed of medical billing companies demonstrates our roll-up strategy is effective and attractive to potential targets. We look forward to seeing the growth potential of this venture come to fruition and continue throughout 2023 and beyond.”
Ross added: “Additionally, we continue to be thrilled with the addition of TicketSmarter to our growing holdings of solid earnings and growth-potential businesses, as the acquisition of TicketSmarter proved to be accretive to our revenue growth in 2022. We are excited to maximize the profitability of this subsidiary and have it work hand in hand with our new Kustom 440 subsidiary. Kustom 440 will be hosting its first festival on May 13, 2022 in Kansas City, which the Company is very excited and pleased with the sales thus far for this event. We believe shareholders will benefit from TicketSmarter and Kustom 440’s long-term value based on the multiples commanded by similar public companies in the market. We continue to right size and adjust to the nuances of each new subsidiary, as we learn to navigate and effectively grow each of them. We will continue to inform our investors as we attempt to take advantage of new business opportunities and to maximize our existing business lines to benefit the Company and its shareholders for 2023 and beyond.”
2022 Operating Results
For the year ended December 31, 2022, our total revenue increased by 73% to approximately $37.0 million, compared to revenue of approximately $21.4 million for the year ended December 31, 2021. gross profit decreased 59% to $2,321,941 for the year ended December 31, 2022 versus $5,663,775 in 2021. The overall decrease is attributable to the large overall increase in revenues for the year ended December 31, 2022 offset by an increase in the overall cost of sales as a percentage of overall revenues to 94% for the year ended December 31, 2022 from 74% for the year ended December 31, 2021.
Selling, General and Administrative expenses increased approximately 57% to $32,055,199 in the year ended December 31, 2022 versus $20,424,685 in 2021. The increase was primarily attributable to the recent acquisitions completed in 2021. Our selling, general and administrative expenses as a percentage of sales decreased to 87% for 2022 compared to 96% in the same period in 2021.
We reported an operating loss of $29,733,258 for the year ended December 31, 2022, compared to an operating loss of $14,760,910 in 2021.
Total other income decreased to $10,859,500 for the year ended December 31, 2022, compared to total other income of $40,291,871 in 2021. The decrease in other income was largely attributable to the $6,726,638 change in fair value of warrant derivative liabilities for the year ended December 31, 2022, compared to the $36,664,907 change for the year ended December 31, 2021. The change in fair value of warrant derivative liabilities was related to reductions in the value of the detachable common stock purchase warrants issued in conjunction with the two registered direct offerings we completed in 2021.
We reported a net loss attributable to common stockholders of ($21,666,691), or ($8.50) per share, in the year ended December 31, 2022 compared to a prior-year net income of $25,474,508, or $10.14 per share. No income tax provision or benefit was recorded in either 2022 or 2021 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 Monday, April 3, 2023, to discuss its 2022 financial results, corporate and individual subsidiary outlook, and previously announced corporate spin-off. Shareholders and other interested parties may participate in the conference call by dialing 888-886- 7786 and entering conference ID #35877546 a few minutes before 11:15 a.m. Eastern on Monday, April 3, 2023.
A replay of the conference call will be available two hours after its completion, from April 3, 2023 until 11:59 p.m. on June 4, 2023 through our company website.
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: (1) our losses in recent years, including fiscal years 2022 and 2021; (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 2023, 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; and (34) risks related to our proposed spin-off, including our ability to consummate the transactions and our ability to realize some or all of the anticipated benefits therefrom. 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.
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. CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2022 AND 2021
(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY’S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 2022 FILED WITH THE SEC ON MARCH 31, 2023)
DIGITAL ALLY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY’S ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2022 FILED WITH THE SEC ON MARCH 31, 2023)