Digital Ally, Inc. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Digital Ally, Inc. has filed its annual 10-K report for the fiscal year ended December 31, 2023.</b>

AI Summary

DIGITAL ALLY, INC. (KUST) filed a Annual Report (10-K) with the SEC on April 1, 2024. Digital Ally, Inc. filed its 10-K report for the fiscal year ending December 31, 2023. The filing covers the period from January 1, 2023, to December 31, 2023. The company is incorporated in Nevada (NV) and its fiscal year ends on December 31. Digital Ally, Inc. is listed under SIC code 3663 (Radio & TV Broadcasting & Communications Equipment). The filing was submitted on April 1, 2024.

Why It Matters

For investors and stakeholders tracking DIGITAL ALLY, INC., this filing contains several important signals. This 10-K filing provides a comprehensive overview of Digital Ally's financial performance, business operations, and risk factors for the fiscal year 2023, which is crucial for investors to assess the company's current standing and future prospects. The detailed financial data and disclosures within the 10-K are essential for investors and analysts to understand the company's financial health, including revenue streams, expenses, assets, liabilities, and any significant changes from the previous year.

Risk Assessment

Risk Level: medium — DIGITAL ALLY, INC. shows moderate risk based on this filing. The company's financial performance and future prospects are subject to various risks, including market conditions, competition, and operational challenges, as detailed in the risk factors section of the 10-K. Specific financial figures and growth rates are not yet available in this header data.

Analyst Insight

Investors should review the full 10-K filing to analyze Digital Ally's financial statements, management discussion and analysis, and risk factors to make informed investment decisions.

Key Numbers

• 2023-12-31 — Fiscal Year End (Reporting period)
• 2024-04-01 — Filing Date (Date of submission)
• 135 — Public Document Count (Number of documents in the filing)
• 0001493152-24-012365 — Accession Number (Unique identifier for the filing)

Key Players & Entities

• DIGITAL ALLY, INC. (company) — Filer name
• 2024-04-01 (date) — Filing date
• 2023-12-31 (date) — Fiscal year end
• NV (location) — State of incorporation
• KS (location) — Business address state
• 913-232-5349 (phone) — Business phone number
• 001-33899 (other) — SEC file number
• 3663 (other) — Standard Industrial Classification

FAQ

Industry Context

Digital Ally, Inc. operates in the Radio & TV Broadcasting & Communications Equipment industry, as indicated by its SIC code 3663.

Regulatory Implications

As a publicly traded company, Digital Ally, Inc. is subject to the reporting requirements of the Securities and Exchange Commission (SEC), including the annual filing of Form 10-K.

What Investors Should Do

1. Review the full 10-K filing for detailed financial statements and performance metrics.
2. Analyze the Management's Discussion and Analysis of Financial Condition and Results of Operations section for insights into business trends and strategies.
3. Examine the Risk Factors section to understand potential challenges and uncertainties facing the company.

Key Dates

• 2023-12-31: Fiscal Year End — End of the reporting period for the 10-K.
• 2024-04-01: Filing Date — Date the 10-K was officially submitted to the SEC.

Year-Over-Year Comparison

This is the initial header data extracted for the 2023 10-K filing; comparison to the previous filing requires access to the full document content.

Key Financial Figures

• $0.001 — ction 12(b) of the Act: Common Stock, $0.001 par value DGLY Nasdaq Capital Mark
• $4.05 — uted by reference to the closing price ($4.05), was: $ 10,255,337 , which have been a
• $125 m — ual to (the "Merger Consideration") (i) $125 million, minus (ii) the estimated consoli
• $11.14 — af Class A Common Stock, each valued at $11.14 per share (the "Merger Consideration Sh
• $125 million — saction contemplates an equity value of $125 million for Kustom. The combined company is exp
• $222.2 m — pro forma equity value of approximately $222.2 million, with the proposed Business Combi
• $18.1 million — ation expected to provide approximately $18.1 million in gross proceeds from the cash held in

Filing Documents

• form10-k.htm (10-K) — 2611KB
• ex4-1.htm (EX-4.1) — 7KB
• ex4-6.htm (EX-4.6) — 14KB
• ex21-1.htm (EX-21.1) — 14KB
• ex23-1.htm (EX-23.1) — 7KB
• ex24-1.htm (EX-24.1) — 11KB
• ex31-1.htm (EX-31.1) — 13KB
• ex31-2.htm (EX-31.2) — 13KB
• ex32-1.htm (EX-32.1) — 8KB
• ex32-2.htm (EX-32.2) — 8KB
• ex97.htm (EX-97.DESCRIPTION) — 52KB
• logo_001.jpg (GRAPHIC) — 27KB
• 0001493152-24-012365.txt (&nbsp;) — 13407KB
• dgly-20231231.xsd (EX-101.SCH) — 115KB
• dgly-20231231_cal.xml (EX-101.CAL) — 138KB
• dgly-20231231_def.xml (EX-101.DEF) — 439KB
• dgly-20231231_lab.xml (EX-101.LAB) — 854KB
• dgly-20231231_pre.xml (EX-101.PRE) — 653KB
• form10-k_htm.xml (XML) — 2158KB

Business

Business 2 Item 1A.

Risk Factors

Risk Factors 11 Item 1B. Unresolved Staff Comments 11 Item 1C. Cybersecurity 11 Item 2.

Properties

Properties 11 Item 3.

Legal Proceedings

Legal Proceedings 12 Item 4. Mine Safety Disclosures 13 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 13 Item 6. [Reserved] 13 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 7a.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 38 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 38 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 38 Item 9A

Controls and Procedures

Controls and Procedures 38 Item 9B. Other Information 39 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 39 PART III Item 10. Directors, Executive Officers and Corporate Governance 40 Item 11.

Executive Compensation

Executive Compensation 45 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 52 Item 13. Certain Relationships and Related Transactions, and Director Independence 54 Item 14. Principal Accountant Fees and Services 54 PART IV Item 15. Exhibits and Financial Statement Schedules 54

Signatures

Signatures 57 Part I Item 1. Business. Overview We were incorporated in Nevada on December 13, 2000 as Vegas Petra, Inc. From that date until November 30, 2004, when we entered into a Plan of Merger with Digital Ally, Inc., a Nevada corporation which was formerly known as Trophy Tech Corporation (the "Predecessor Registrant"), we had not conducted any operations and were a closely-held company. In conjunction with the merger, we were renamed Digital Ally, Inc. On January 2, 2008, we commenced trading on the Nasdaq Capital Market under the symbol "DGLY." We conduct our business from 14001 Marshall Drive, Lenexa, Kansas 66215. Our telephone number is (913) 814-7774. Our website address is www.digitalallyinc.com. The contents of, or information accessible through, our website are not part of this Annual Report on Form 10-K. We make our filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports, as well as beneficial ownership filings available free of charge on our website as soon as reasonably practicable after we file such reports with, or furnish such reports to, the SEC. Our filings with the SEC are available to the public through the SEC's website at www.sec.gov. On August 23, 2022 (the "Effective Time"), the Predecessor Registrant merged with and into its wholly owned subsidiary, DGLY Subsidiary Inc., a Nevada corporation (the "Registrant"), pursuant to an agreement and plan of merger, dated as of August 23, 2022 (the "Merger Agreement"), between the Predecessor Registrant and the Registrant, with the Registrant as the surviving corporation in the merger (such transaction, the "Merger"). At the Effective Time, Articles of Merger were filed with the Secretary of State of the State of Nevada, pursuant to which the Registrant was renamed "Digital Ally, Inc." and, by operation of law, succeeded to the assets, continued the business and assumed the rights

Financial Statements"

Financial Statements". 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 TM 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

Business

Business Combination On June 1, 2023, the Company, entered into an Agreement and Plan of Merger (the "CLOE Merger Agreement") with Clover Leaf Capital Corp., a Delaware corporation ("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 ("Yntegra"), in the capacity as the representative from and after the effective time for the stockholders of Clover Leaf in accordance with the terms and conditions of the CLOE Merger Agreement (the "Sponsor" or the "Purchaser Representative"), and Kustom, with a focus and mission to own and produce events, festivals, and entertainment alongside its evolving primary and secondary ticketing technologies. Pursuant to the CLOE Merger Agreement, subject to the terms and conditions set forth therein upon the consummation of the transactions contemplated by the CLOE Merger Agreement (the "Closing"), Merger Sub will merge with and into Kustom (the "Merger" and, together with the other transactions contemplated by the Merger Agreement, the "Business Combination"), with Kustom continuing as the surviving corporation in the Merger and a wholly owned subsidiary of Clover Leaf. In the Merger, all of the issued and outstanding capital stock of Kustom immediately prior to the effective time shall no longer be outstanding and shall automatically be cancelled and shall cease to exist in exchange for the right for the Company to receive the Merger Consideration (as defined below). Upon consummation of the Business Combination, Clover Leaf will change its name to "Kustom Entertainment, Inc." The aggregate merger consideration to be paid pursuant to the CLOE Merger Agreement to the Company as of immediately prior to the effective time will be an amount equal to (the "Merger Consideration") (i) $125 million, minus (ii) the estimated consolidated indebtedness of Kustom as of the Closing ("Closing Indebtedness"). The

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View this 10-K filing on SEC EDGAR