DIGITAL ALLY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2015 AND DECEMBER 31, 2014
September 30,
2015
Assets
Current assets:
Cash and cash equivalents ....................................................................................................................
Restricted cash ......................................................................................................................................
Accounts receivable-trade, less allowance for doubtful accounts
of $74,997 – 2015 and $65,977 – 2014 ..............................................................................................
Accounts receivable-other .....................................................................................................................
Inventories, net .......................................................................................................................................
Prepaid expenses ....................................................................................................................................
December 31,
2014
(Unaudited)
—
$ 3,049,716
1,500,000
3,180,886
128,588
12,635,401
548,447
3,043,899
139,204
9,243,455
372,326
Total current assets ....................................................................................................
24,306,083
17,348,600
Furniture, fixtures and equipment ...............................................................................................................
Less accumulated depreciation and amortization .......................................................................................
1,867,314
856,718
4,228,139
3,182,473
1,010,596
1,045,666
Other assets......................................................................................................................................................
369,843
332,491
245,684
234,342
Total assets ............................................................................................................................................
$26,019,013
$18,874,292
$ 1,808,109
1,209,671
—
$ 2,410,876
1,142,973
2,019,720
2,444,813
2,186,214
61,140
138,052
7,954
1,878
3,580,025
10,413,620
—
49,195
1,253,711
3,849
1,486,172
939,100
1,535,367
2,196,660
Stockholder’s equity:
Common stock, $0.001 par value; 25,000,000 shares authorized; shares
issued: 5,055,999– 2015 and 3,092,497–2014 ..................................................................................
Additional paid in capital......................................................................................................................
Treasury stock, at cost (shares: 63,518 – 2015 and 63,518 - 2014) ...................................................
Accumulated deficit ...............................................................................................................................
5,056
57,308,816
(2,157,226)
(34,253,025)
3,092
33,326,908
(2,157,226)
(24,908,762)
Total stockholders’ equity .........................................................................................
20,903,621
6,264,012
Total liabilities and stockholders’ equity .............................................................................
$26,019,013
$18,874,292
Intangible assets, net ......................................................................................................................................
$ 7,812,761
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable ...................................................................................................................................
Accrued expenses ...................................................................................................................................
Senior secured convertible note payable-current ...............................................................................
Subordinated note payable-short-term, net of discount of $0 – 2015 and $55,187 – 2014 ...........
Derivative liabilities ...............................................................................................................................
Capital lease obligation-current ...........................................................................................................
Deferred revenue-current .....................................................................................................................
Income taxes payable .............................................................................................................................
Customer deposits ..................................................................................................................................
Total current liabilities ..............................................................................................
Long-term liabilities:
Secured convertible note payable- less current portion, at fair value .............................................
Capital lease obligations-less current portion ....................................................................................
Deferred revenue- less current portion ...............................................................................................
Total long term liabilities ...............................................................................................................................
—
—
66,631
36,607
451,050
7,957
Commitments and contingencies ...................................................................................................................
(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY’S QUARTERLY REPORT ON
FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 FILED WITH THE SEC)
DIGITAL ALLY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2015 AND 2014
(Unaudited)
Three months ended
September 30,
Nine months ended
September 30,
2015
2014
2015
2014
Product revenue ..........................................................
Other revenue ..............................................................
$4,914,411
181,677
$4,563,084
103,629
$ 14,471,609
507,480
$ 11,682,138
342,670
Total revenue ...............................................................
Cost of revenue ............................................................
5,096,088
3,056,314
4,666,713
2,204,780
14,979,089
8,193,381
12,024,808
5,313,547
Gross profit ...........................................................
Selling, general and administrative expenses:
Research and development expense ....................
Selling, advertising and promotional expense ....
Stock-based compensation expense.....................
General and administrative expense ...................
2,039,774
2,461,933
6,785,708
6,711,261
720,640
1,175,498
479,084
1,805,337
654,142
836,471
262,598
1,749,281
2,247,863
2,951,791
1,077,485
5,429,511
2,204,492
2,107,692
576,864
4,374,574
Total selling, general and administrative expenses ..
4,180,559
3,502,492
11,706,650
9,263,622
Operating loss .......................................................
(2,140,785)
(1,040,559)
(4,920,942)
(2,552,361)
Interest income ............................................................
Change in warrant derivative liabilities ....................
Change in fair value of secured convertible notes
payable .....................................................................
Senior secured convertible note payable issuance
expenses....................................................................
Other income (expense) ..............................................
Interest expense ...........................................................
4,430
89,645
2,388
(4,440,376)
12,573
371,428
12,412
(4,343,234)
—
(464,030)
(4,434,383)
(466,838)
(19,495)
(341,513)
—
—
(74,958)
(118,468)
(93,845)
1,878
(280,972)
(565,951)
(3,453)
(342,721)
Loss before income tax (benefit) ................................
Income tax (benefit) ...................................................
(2,141,163)
(6,402,558)
(9,344,263)
(8,262,146)
—
—
—
—
Net loss .........................................................................
$ (2,141,163)
$ (6,402,558)
$(9,344,263)
$(8,262,146)
Net loss per share information:
Basic.......................................................................
Diluted ...................................................................
$
$
$
$
$
$
Weighted average shares outstanding:
Basic.......................................................................
Diluted ...................................................................
(0.45)
(0.45)
4,799,126
4,799,126
(2.32)
(2.32)
2,763,726
2,763,726
(2.29)
(2.29)
4,076,493
4,076,493
(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY’S QUARTERLY REPORT ON
FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 FILED WITH THE SEC)
$
$
(3.38)
(3.38)
2,445,922
2,445,922
DIGITAL ALLY, INC.
RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED NET LOSS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2015 AND 2014
Three Months Ended
September 30,
2015
Net loss
.............................................................
Non-GAAP adjustments:
Stock-based compensation...............................
Depreciation and amortization .......................
Change in fair value of secured convertible
notes payable ..................................................
Senior secured convertible note payable
issuance expenses ..........................................
Change in warrant derivative liabilities .........
Net interest expense..........................................
Nine Months Ended
September 30,
2014
2015
2014
$ (2,141,163)
$ (6,402,558)
$(9,344,263)
$(8,262,146)
479,084
144,082
262,598
134,635
1,077,485
472,785
576,864
378,954
—
464,030
4,434,383
466,838
19,495
(89,645)
70,528
341,513
4,440,376
116,080
93,845
(371,428)
268,399
565,951
4,343,234
330,309
623,544
5,759,232
5,975,469
6,662,150
Total Non-GAAP adjustments .............................
Non-GAAP adjusted net loss ................................
$ (1,517,619)
$ (643,326)
$(3,368,794)
$(1,599,996)
Non-GAAP adjusted net loss per share
information:
Basic .................................................................
Diluted.................................................................
$
$
(0.32)
(0.32)
$
$
(0.23)
(0.23)
$
$
(0.83)
(0.83)
$
$
(0.65)
(0.65)
GAAP basis net loss per share information:
Basic .................................................................
Diluted ...............................................................
$
$
(0.45)
(0.45)
$
$
(2.32)
(2.32)
$
$
(2.29)
(2.29)
$
$
(3.38)
(3.38)
Weighted average shares outstanding:
Basic .................................................................
Diluted................................................................
4,799,126
4,799,126
2,763,726
2,763,726
4,076,493
4,076,493
(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY’S QUARTERLY REPORT ON
FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 FILED WITH THE SEC)
2,445,922
2,445,922
DIGITAL ALLY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(Unaudited)
Nine Months Ended September 30,
2015
2014
Cash Flows From Operating Activities:
Net loss ..................................................................................................................
Adjustments to reconcile net loss to net cash flows
(used in) operating activities:
Depreciation and amortization ..................................................................
Secured convertible note payable expenses ...............................................
Stock-based compensation .........................................................................
Change in derivative liabilities...................................................................
Change in fair value of secured convertible note payable ........................
Interest expense related to stock conversion and note extension .............
Provision for inventory obsolescence.........................................................
Provision for doubtful accounts receivable ...............................................
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable - trade ........................................................................
Accounts receivable - other ........................................................................
Inventories...................................................................................................
Prepaid expenses .........................................................................................
Other assets .................................................................................................
Increase(decrease) in:
Accounts payable ........................................................................................
Accrued expenses ........................................................................................
Income taxes payable..................................................................................
Litigation accrual........................................................................................
Deposits .......................................................................................................
Deferred revenue ........................................................................................
$(9,344,263)
$(8,262,146)
472,785
93,845
1,077,485
(371,428)
4,434,383
93,244
411,357
9,020
378,954
565,952
576,864
4,343,234
466,838
—
351,460
4,341
(146,007)
10,616
(3,803,303)
(193,667)
(98,149)
(1,377,559)
20,255
(486,894)
(132,734)
1,507
(602,767)
66,698
3
—
(1,878)
860,070
(113,392)
(238,549)
(346)
(530,000)
—
731,405
Net cash (used in) operating activities ................................................................
(7,031,956)
(3,700,810)
Cash Flows from Investing Activities:
Purchases of furniture, fixtures and equipment ................................................
Additions to intangible assets ..............................................................................
Restricted cash for appealed litigation ...............................................................
Release (restriction) of cash in accordance with the secured convertible note
(247,335)
(147,439)
—
1,500,000
(160,586)
(20,490)
662,500
(1,500,000)
Net cash provided by (used in) investing activities ............................................
1,105,226
(1,018,576)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock and warrants, net of issuance costs .
(Payment) proceeds of notes payable ...................................................................
Debt issuance expense for secured convertible notes payable ............................
Proceeds from exercise of stock options and warrants .......................................
Principal payments on capital lease obligation ...................................................
11,223,285
(2,500,000)
(93,845)
2,133,889
(73,554)
—
6,000,000
(565,952)
1,780,327
(67,719)
Net cash provided by financing activities ...........................................................
10,689,775
7,146,656
Net increase in cash and cash equivalents ...................................................................
Cash and cash equivalents, beginning of period .........................................................
4,763,045
3,049,716
2,427,270
454,978
Cash and cash equivalents, end of period ....................................................................
$ 7,812,761
$ 2,882,248
Supplemental disclosures of cash flow information:
Cash payments for interest ..................................................................................
$ 176,769
Supplemental disclosures of non-cash investing and financing activities:
Restricted common stock grant .............................................................................
$
$ 190,898
190,898
190,898
$
192
Restricted common stock forfeitures ....................................................................
$
—
$
(6)
Capital expenditures financed by capital lease obligations .................................
$
94,367
$
—
Issuance of common stock upon exercise of stock options and warrants ...........
$
—
$
622
Common stock surrendered in cashless exercise of stock options and warrants
$
—
$
18
Conversion of secured convertible note into common stock ................................
$ 7,740,834
$ 2,168,656
Issuance of stock purchase warrants with convertible note payable ..................
$
—
$ 2,393,905
Issuance of common stock for accrued interest ....................................................
$
—
$
139
(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY’S QUARTERLY REPORT ON
FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 FILED WITH THE SEC)
2,963