Digital Ally(DGLY) - 2024 Q2 - Quarterly Report

Financial Performance - Total net revenues for the six months ended June 30, 2024, were $11,145,586, a decrease of 30.5$15,976,820 for the same period in 2023[170]. - Total revenue for Q2 2024 was $5,616,235, a decrease of$2,663,397 (32%) compared to $8,279,632 in Q2 2023[184]. - Total revenues for the six months ended June 30, 2024, were$11,145,586, a decrease of $4,831,234 (30$15,976,820 in 2023[219]. - Total identifiable assets as of June 30, 2024, were $43,327,215, a decrease from$47,028,809 as of December 31, 2023[170]. Segment Performance - Video Solutions segment revenue decreased to $3,303,963 in the first half of 2024, down 13.1$3,798,953 in the first half of 2023[170]. - Revenue Cycle Management segment revenue fell to $2,998,952, a decline of 14.5$3,506,361 in the prior year[170]. - Entertainment segment revenue dropped significantly to $4,842,671, down 44.5$8,671,506 in the same period last year[170]. - The entertainment operating segment generated $2,431,320 in product revenues for the six months ended June 30, 2024, down from$3,189,847 in 2023, attributed to the first Country Stampede music festival and ticket resale activities[213]. - Video solutions operating segment revenues totaled $1,342,127 for the six months ended June 30, 2024, compared to$2,341,622 in 2023, impacted by increased competition and price-cutting[214]. Profitability and Loss - Total gross profit for the first half of 2024 was $1,763,830, a decrease of 58.8$4,281,829 in the first half of 2023[170]. - Overall gross profit decreased by $2,517,999 (59$1,763,830 for the six months ended June 30, 2024, from $4,281,829 in 2023[225]. - Operating loss for Q2 2024 was$(3,914,221), representing an operating loss margin of (69.7)%, compared to (59.7)% in Q2 2023[174]. - The Company reported a net loss attributable to common stockholders of $5,083,861 for the three months ended June 30, 2024, an improvement of$3,309,443 (39%) from $8,393,304 in 2023[209]. - The net loss attributable to common stockholders for the six months ended June 30, 2024, was$3.12 per share, improved from a loss of $5.24 per share in 2023[211]. Expenses - Selling, general and administrative expenses decreased by$6,078,317 (39%) to $9,317,023 for the six months ended June 30, 2024, compared to$15,395,340 in 2023[227]. - Research and development expenses totaled $545,776 for the three months ended June 30, 2024, slightly up from$540,276 in 2023[193]. - Selling, advertising, and promotional expenses decreased by $1,357,719 (65$728,906 for the three months ended June 30, 2024, compared to $2,104,625 in 2023[194]. - Interest expenses decreased to$1,085,063 for the three months ended June 30, 2024, from $1,515,509 in 2023[198]. Cash Flow and Liquidity - Cash, cash equivalents, and restricted cash totaled$614,713 as of June 30, 2024, a decrease from $778,149 at December 31, 2023[247]. - Net cash used in operating activities increased by$298,771 to $3,408,757 for the six months ended June 30, 2024, compared to$3,109,986 in 2023[247]. - Cash provided by financing activities increased to $3,208,817 for the six months ended June 30, 2024, from$2,628,614 in 2023[249]. Inventory and Reserves - The reserve for excess and obsolete inventory represented 65% of the gross inventory balance at June 30, 2024, up from 54% at December 31, 2023[269]. - Total inventories decreased to $2,218,133 as of June 30, 2024, from$3,845,281 at December 31, 2023, reflecting a reduction of 42%[269]. - The Company had $4,135,001 in reserves for obsolete and excess inventories as of June 30, 2024[269]. Debt and Obligations - Outstanding debt obligations increased to$7,879,321 as of June 30, 2024, compared to $6,113,750 as of December 31, 2023[255]. Internal Controls and Compliance - The Company concluded that its disclosure controls and procedures were not effective as of June 30, 2024, requiring a full review and implementation of new controls[295]. - There have been no changes in the Company's internal control over financial reporting that materially affected its internal control during the last fiscal quarter[297]. Other Information - Inflation has not materially affected the Company during the past fiscal year, and the Entertainment Segment is expected to generate higher revenues in the second half of the calendar year[293]. - The most recent annual impairment test of goodwill indicated no impairment as of December 31, 2023[278].