Digital Ally, Inc.

Good morning, ladies and gentlemen, and welcome to the Digital Alley Inc. Q1 2023 Operating Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for a question. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. This conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We may use words and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters, rather represent forward-looking statements. 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 expressed in this conference call, and readers are cautioned not to place undue reliance on such forward-looking statements. We generally do not publicly update or revise any forward-looking statements expressed in this conference call, whether as a result of new information, future events, or otherwise. There can be no assurance that the forward-looking statements contained in this document will in fact transpire or prove to be accurate. I would like to remind everyone that this call is being recorded on May 16th, 2023. I will now turn the conference over to Stan Ross. Please go ahead.

Thank you, everybody, for joining us today. I have with me Brody Green, who is the company's president. He will be going over some of the numbers. He's also the acting CFO as of now. Our dear friend, after almost 17 years, Tom Heckman, is the CEO. decided to retire and take a little slower pace nowadays. So anyways, with me is Brody. Brody will be covering the numbers, going into quite a bit of detail there, and then letting you obviously dig a little bit more into this in regards to the Q&A. I'm excited to talk to you a little bit about where we're at in regards to the relationship of our strategic opportunities that are out there, as we've talked and have mentioned and went public with in regards to a possible spin-out or another avenue that would help define, I guess, some of the companies that are under the Digital Ally umbrella and hopefully give a lot more clarity to the excitement and valuations within those, including a recent event that we have that will show up in the second quarter's numbers. But we just finished with our very first – custom 440 concert that was put together and also utilized our ticketing platform as well. So I'll cover that in a little more detail after Brody goes through the numbers and we'll go from there. Anyways, Brody.

Yeah, thanks, Dan. And like, happy to talk to everybody again. I know it's only been about 45 days since our last call. So as I'm looking through the balance sheet again, you can see there's not a there's not many dramatic changes as our total assets are 55 and a half million relative to 56.7 at year end. Similarly with total liabilities, they're pretty constant with year end as well, they're 25 million. So our total stockholder equity remains relatively healthy at 30 million that are above. In the equity section, obviously not much, That's transpired during Q1, a couple of issuances. And we also did our reverse stock split, which I'll get into here shortly. On the income statement side, revenues were still higher than with all these acquisitions. You can see our revenues continue to stay fairly high compared to where we were a couple of years ago. I know we're down relative to Q1 of 22, but still 7.7 million in total revenue for Q1 2023. Gross profits, the 20% gross profit, which is much better than we looked at in Q4. So, you know, the changes we talked about during our last call have obviously been effective and we'll continue to make sure those are staying in effect and even more so enhancing our gross profit as we move along here throughout 2023. You can see an operating loss of $6.2 million. I mean, improvement over 2022, obviously not where we want to be, so we're going to continue to work on that and make changes as fast as we can. Stockholder's equity side, we're sitting at 2.7 million shares outstanding. We have 200,000 authorized, so plenty of room there. And as I mentioned, we did the reverse stock split back on February 6th. So we did a 20 to 1 split, as we talked about at the year-end call. Very few options and warrants left out there right now. At quarter end, there was only 53,000 options outstanding and 39,000 warrants. So cleaning all those up, and they'll run their course here shortly. I think there's only – they'll all go away at the end of June or July on the warrant side. We're excited to see our deferred revenue number as we continue to talk about. It just continues to grow. At Q1 2022, that number was sitting at $5 million, and now we're looking at $9 million at Q1 2023. So nearly doubled. We're excited to have that number out there. It raises our floor every quarter for what our sales number will be. So it's nice to have that number continue to grow with these subscriptions we've put in place. And a majority of those are five-year subscriptions. So I think our total subscriptions are well above 200,000 subscriptions now, and that's departments – or sorry, 200 subscriptions. So that's probably over 250 at this point. And those are departments. Those aren't units. So those subscriptions can range from one to several hundred in-car body-worn cameras. So A lot of deferred revenues sitting out there, which is nice, and we love seeing that. On the segment side, you know, Video Solutions did about 1.9 in revenue. Medical Billing Revenue Cycle Management did 1.8. And the entertainment side did four. And we're excited to see what happens in Q2 with all of those, especially on the entertainment side, as Stan mentioned, the concert concluding this past weekend. which was a success, and I'll let him go into more detail on that. Depreciation and amortization for the quarter was about $543,000, so those are non-cash items that flow through the P&L, so those, you know, we can calculate either at another time. One last comment I have, and then I'll turn it back over to Stan. I just wanted a subsequent event was a convertible note we issued and filed an AK on, so. It was for $3 million, a convertible note at 550. So more details, it's in the 10Q as well as an AK file at that issuance. So feel free to look into that. Just want to make you guys all aware of it as we have already. I'll tell you that, Stan.