UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to __________.

Commission File Number: 001-33899

Digital Ally, Inc.

(Exact name of registrant as specified in its charter)

Nevada

20-0064269

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

15612 College Blvd, Lenexa, KS 66219

(Address of principal executive offices) (Zip Code)

(913) 814-7774

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of exchange on which registered
Common stock, $0.001 par value per share		DGLY		The Nasdaq Capital Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class		Outstanding at August 18, 2021
Common Stock, $0.001 par value per share		51,513,691

FORM 10-Q

DIGITAL ALLY, INC.

JUNE 30, 2021

TABLE OF CONTENTS		Page(s)
PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Condensed Consolidated Balance Sheets – June 30, 2021 (Unaudited) and December 31, 2020		3

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 31, 2021 and 2020 (Unaudited)		4

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)		5

Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)		6

Notes to the Condensed Consolidated Financial Statements (Unaudited)		7-26

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		27-47

Item 3. Quantitative and Qualitative Disclosures About Market Risk.		47

Item 4. Controls and Procedures.		47

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.		48

Item 1A. Risk Factors.		48

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		48

Item 3. Defaults Upon Senior Securities		48

Item 4. Mine Safety Disclosures		48

Item 5. Other Information.		48

Item 6. Exhibits.		49

SIGNATURES		50

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements.

DIGITAL ALLY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

JUNE 30, 2021 AND DECEMBER 31, 2020

	June 30, 2021 (Unaudited)		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	58,276,178	$	4,361,758
Accounts receivable-trade, less allowance for doubtful accounts of $123,224 – June 30, 2021 and December 31, 2020		888,384		1,705,461
Other receivables		1,795,547		1,529,920
Inventories, net		9,615,759		8,202,274
Prepaid expenses		2,421,777		2,030,693

Total current assets		72,997,645		17,830,106

Property, plant and equipment, net		6,024,184		666,800
Intangible assets, net		1,583,576		392,564
Operating lease right of use assets, net		722,843		753,175
Other assets		1,770,887		1,154,882

Total assets	$	83,099,135	$	20,797,527

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	674,380	$	1,144,676
Accrued expenses		875,311		796,094

SEC Form 10-Q filed by Digital Ally, Inc.