CLOE Clover Leaf Capital Corporation

Digital Ally, Inc. (Nasdaq: DGLY) (the “Company” or “our”), today announced its operating results for fiscal year 2023. An investor conference call is scheduled for 11:15 a.m. EDT on Tuesday, April 2, 2024 (see details below).

Highlights for the year ended December 31, 2023

●	Overall gross profits for the year ended December 31, 2023 were $5,762,484, an increase of $3,440,543, or 148%, as compared to $2,321,941 for the year ended December 31, 2022. The overall increase is attributable to the consistent focus on the cost of goods sold, particularly surrounding the Entertainment Segment, as well as the enhanced margins within the video solutions segment, with its new and expanded product offerings. Our goal is to continue to improve our margins over the longer term based on the expected margins generated by our new operating segments together with continued enhancements within our video solutions segment and its expected margins from our EVO-Fleet, EVO-HD, DVM-800, VuLink, FirstVu Pro, FirstVu II, InterVu Room, Shield disinfectants and our cloud evidence storage and management offerings, as they gain traction in the marketplace. In addition, if revenues from the video solutions segment increase, we will seek to further improve our margins from this segment through expansion and increased efficiency utilizing fixed manufacturing overhead components. We plan to continue our initiative for more efficient management of our supply chain through outsourcing production, quantity purchases and more effective purchasing practices.
●	Total revenues decreased in 2023 to $28,248,344 from $37,009,895 in 2022 a deterioration of $8,761,551 (24%). The primary reason for the overall revenue decrease is a decrease of $6,253,892 (41%) in service revenues from 2022 levels at the entertainment operating segment. Service and other revenues experienced a significant decrease during the year ended December 31, 2023, in comparison to the same period in 2022, due to the Company’s focus to work towards profitability and focus on cash flow during the year ended December 31, 2023. Additionally, the Company’s subscription plan model continues to gain traction in the marketplace, resulting in the Company building and recognizing its recurring revenues.
●	On September 1, 2021, the Company formed a wholly-owned subsidiary, TicketSmarter, Inc., through which the Company completed the acquisition of Goody Tickets, LLC (“Goody Tickets”) and TicketSmarter, LLC (“TicketSmarter”) (collectively the “TicketSmarter Acquisition”). Goody Tickets and TicketSmarter®, are ticket resale marketplaces with seats offered at over 125,000 live events, offering over 48 million tickets for sale through its TicketSmarter.com platform. Within this Entertainment Segment, the Company also formed Kustom 440, Inc. (“Kustom 440”) in late 2022 to create unique entertainment experiences through concerts, festivals, and private experiences. This segment generated revenues totaling $14,063,381 in service and product revenues for the year ended December 31, 2023, a decrease of $6,808,119, or (33%), as compared to $20,871,500 in service and product revenues for the year ended December 31, 2022. The decrease is largely due to management’s focus on right-sizing the entertainment segment, and working towards profitability; thus, decreasing marketing expenses, directly correlating to a decrease in revenues.
●	We remain in the revenue cycle management business through the formation of our wholly owned subsidiary, Digital Ally Healthcare, Inc. and its majority-owned subsidiary Nobility Healthcare, LLC (“Nobility Healthcare”). Nobility Healthcare completed its first acquisition on June 30, 2021, when it acquired a private medical billing company, and a second acquisition on August 31, 2021 upon the completion of its acquisition of another private medical billing company. On January 1, 2022, Nobility Healthcare completed the acquisition of 100% of the capital stock of a private dental billing company. Additionally, on February 1, 2022, Nobility Healthcare also completed an asset purchase for a portfolio of a medical billing company. These acquisitions further enhanced the Company’s revenue cycle management operating segment, which provides revenue cycle management solutions to medium to large healthcare organizations throughout the country. The compilation of acquisitions generated service revenues for the year ended December 31, 2023 of $6,713,678, a decrease of $1,172,429, or (15%), as compared to $7,886,107 for the year ended December 31, 2022.
●	Selling, general and administrative expenses for the year ended December 31, 2023 were $28,003,037, a decrease of $4,052,162, or (13%), as compared to $32,055,199 for the year ended December 31, 2022. The decrease was primarily attributable to the reduction in new sponsorships being entered into by the Company.

Recent Developments

●	In June 2023, the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Clover Leaf Capital Corp., a Delaware corporation (Nasdaq: CLOE) (“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, in the capacity as the representative from and after the Effective Time (as defined in the Merger Agreement) for the stockholders of Clover Leaf in accordance with the terms and conditions of the Merger Agreement, and Kustom Entertainment, Inc., a Nevada corporation, a wholly owned subsidiary of the Company, with a focus and mission to own and produce events, festivals, and entertainment alongside its evolving primary and secondary ticketing technologies (“Kustom Entertainment”). Pursuant to the Merger Agreement, subject to the terms and conditions set forth therein upon the consummation of the transactions contemplated by the Merger Agreement (the “Closing”), Merger Sub will merge with and into Kustom Entertainment, with Kustom Entertainment continuing as the surviving corporation in the Merger and a wholly owned subsidiary of Clover Leaf. Upon the Closing, which is subject to the satisfaction or waiver of certain other customary closing conditions (including the approval of Clover Leaf’s shareholders), the common stock of the combined company is expected to be listed on Nasdaq under a mutually agreed new ticker symbol that reflects the name “Kustom Entertainment.” In February 2024, Kustom Entertainment and Clover Leaf announced the filing of Amendment No. 2 to a Registration Statement on Form S-4 by Clover Leaf with the SEC on February 5, 2024, relating to the previously announced proposed business combination between Kustom Entertainment and Clover Leaf.
●	On March 1, 2024, Kustom 440, entered into an Asset Purchase Agreement (the “Acquisition Agreement”) with JC Entertainment, LLC, a Kansas limited liability company (“JC Entertainment”). Pursuant to the Acquisition Agreement, Kustom 440 acquired certain assets associated with a music entertainment event (“Country Stampede”), including all intellectual property arising out of and relating to Country Stampede (“Country Stampede Intellectual Property”) and certain contracts in which JC Entertainment is a party to host and operate the 2024 Country Stampede (the “Assumed Contracts”, and together with the Country Stampede Intellectual Property, the “Purchased Assets”).
●	On March 1, 2024, the Company entered into a Note Purchase Agreement (the “Note Agreement”), by and between the Company, Kustom Entertainment (together with the Company, the “Borrowers”), and Mosh Man, LLC, a New Jersey limited liability company (the “Purchaser”), pursuant to which the Borrowers issued to the Purchaser a Senior Secured Promissory Note (the “Note”) with a principal amount of $1,425,000. In connection with the Agreement, the Borrowers entered into a Security Agreement (the “Security Agreement”) by and between the Borrowers, as grantor, and the Purchaser, as grantee. The gross proceeds to the Company are $1,000,000, before paying customary fees and expenses.

	Pursuant to the Note, the Borrowers shall repay the Note, in full, on the earlier of (i) November 1, 2024, and (ii) the consummation of the merger between Kustom Entertainment and Clover Leaf pursuant to the Merger Agreement among the Company, Kustom Entertainment, Clover Leaf, Yntegra Capital Investments LLC and Merger Sub, dated as of June 1, 2023. The Borrowers shall pay in arrears in cash an amount equal to 50% of revenues from all ticket sales generated by Kustom Entertainment, up nine thousand tickets sold, and thereafter equal to 10% of all revenues from all ticket sales until the earlier of the date on which the Note is repaid in full or the Maturity Date. The Note bears interest at a rate of 1.58% per month. The Borrowers have the right, but not the obligation, under the Note to prepay the Note, upon written notice to the Purchaser, by payment in full of the entire outstanding principal balance plus interest. Upon a change of control of either Borrower or a sale or all or substantially all of either Borrower’s assets, the Purchaser may require the Borrowers to repay the Note, upon written notice to the Borrowers, by payment in full of the entire outstanding principal balance plus interest. In addition, upon the receipt of proceeds from any financing or extraordinary receipts, the Borrowers are required to repay the Note as follows: (A) if the aggregate proceeds of all such financings and extraordinary receipts are less than $3,000,000, the Borrowers shall prepay an amount equaling to 50% of the outstanding principal of the Note, and (B) if the aggregate proceeds of all such financings and extraordinary receipts are equal to or greater than $3,000,000, the Borrowers shall prepay the Note in full. Pursuant to the Security Agreement, the Borrowers’ obligations under the Note and Agreement are secured by substantially all of the assets of the Borrowers, other than any real property.
●	On March 14, 2024, the Nasdaq Listing Qualifications staff notified the Company, that due to resignation of Mr. Michael J. Caulfield from the Company’s board of directors (the “Board”) effective on January 31, 2024, the Company no longer complies with the audit committee and compensation committee requirements as set forth in Listing Rule 5605 of The Nasdaq Stock Market LLC (“Nasdaq”), including the requirements that there are at least three independent directors on the Company’s audit committee and at least two independent directors on the Company’s compensation committee. The notification has no immediate effect on the Company’s listing on the Nasdaq Capital Market. In accordance with Nasdaq Listing Rules, the Company is provided a cure period until the earlier of the Company’s next annual shareholders’ meeting (or July 29, 2024 if the next shareholders’ meeting will be held before July 29, 2024) or January 31, 2025 (the “Cure Period”). If the Company does not regain compliance by within the Cure Period, Nasdaq will provide written notice that the Company’s common stock, par value $0.001 per share, will be subject to delisting from the Nasdaq Capital Market, at which time, the Company may appeal the delisting determination to a Hearings Panel. The management of the Company has resolved to take commercially reasonable steps to fill the vacancy on the Board with a new director who qualifies as independent under the Nasdaq Listing Rules as soon as is practical and anticipates regaining compliance during the Cure Period. However, there can be no assurance that the Company will be able to satisfy Nasdaq Listing Rule 5605 or will otherwise be in compliance with other Nasdaq listing criteria.

Management Comments

Stanton E. Ross, Chief Executive Officer of the Company, stated, “We are very pleased to close out another great year in 2023, with greatly improved gross profits compared to 2022, showing the success of our focus of margins and working towards profitability. We are pleased to see the continued success and traction in the marketplace with our new video products, particularly the EVO-HD, FirstVu Pro, and QuickVu docking stations, which are continuing to build upon our existing subscription plans and deferred revenue. It is exciting to see our deferred revenue balance reach $10.3 million, as our balance grew dramatically by about $2.3 million from less than $8.0 million at December 31, 2022. There is additional excitement about new upcoming product releases and additional patent filings that will continue to display our commitment to innovation and success within our video solutions operating segment. We continue to see continued success in our Digital Ally Healthcare venture, as Nobility Healthcare, LLC continues to right-size and maintain profitability of the four completed acquisitions.” 

Ross added: “Additionally, we are very excited about the 2022 filing of a Registration Statement on Form S-4 by Clover Leaf with the SEC relating to the proposed business combination between Kustom Entertainment and Clover Leaf Capital Corp. to create Kustom Entertainment, Inc., a company with a focus and mission to own and produce events, festivals, and entertainment alongside its evolving primary and secondary ticketing technologies. We expect that this business combination will provide clarity to both shareholder as well as the marketplace, showing two distinct, stand-alone entities, Digital Ally and Kustom Entertainment, Further, we remain excited about the organic growth opportunities with the Kustom 440 subsidiary. Kustom 440 hosted its first festival during 2023, in Kansas City at Legends Field, headlining Chris Young and Gabby Barrett. We are also thrilled about the recent launch of KustomTicket.com, an advanced online ticketing platform, right alongside our recently completed acquisition of Country Stampede that marks a significant milestone for Kustom Entertainment, solidifying its presence and influence in the entertainment industry. We will continue to inform our investors as we move forward with the business combination, alongside our continuous efforts to take advantage of new business opportunities and to maximize our existing business lines to benefit the Company and its shareholders through 2024 and beyond.”

2023 Operating Results

Overall gross profit for the year ended December 31, 2023 and 2022 was $5,762,484 and $2,321,941, respectively, an increase of $3,440,543 (148%). The video solution operating segment’s gross profits for the years ended December 31, 2023 and 2022 were $1,290,509 and ($1,250,278), respectively, an improvement of $2,540,787 (203%). The entertainment operating segment’s gross profits for the years ended December 31, 2023 and 2022 were $1,699,704 and $268,742, respectively, an improvement of $1,430,962 (532%). The revenue cycle management operating segment’s gross profits for the years ended December 31, 2023 and 2022 were $2,772,271 and $3,303,477, respectively, a deterioration of $531,206 (16%).

Total revenues for the year ended December 31, 2023 and 2022 were $28,248,344 and $37,009,985, respectively, a decrease of $8,761,551 (24%).

Selling, general and administrative expenses for the year ended December 31, 2023 and 2022 were $28,003,037 and $32,055,199, respectively, a decrease of $4,052,162 (13%). The decrease was primarily attributable to the reduction in new sponsorships being entered into by the Company.

Operating losses for the year ended December 31, 2023 and 2022 were $22,240,553 and $29,733,258, respectively, a decrease of $7,492,705 (25%). Operating loss as a percentage of revenues improved to 78% in 2023 from 80% in 2022.

Net loss attributable to common stockholders for the year ended December 31, 2023 and 2022 were $25,688,547, or $9.22 per share, and $21,666,691, or $8.50 per share, respectively. No income tax provision or benefit was recorded in either 2023 or 2022 as the Company has maintained a full valuation reserve on its deferred tax assets.

Investor Conference Call

The Company will host an investor conference call at 11:15 a.m. EDT on Tuesday, April 2, 2023, to discuss its 2023 financial results, corporate and individual subsidiary outlook, and previously announced corporate separation. Shareholders and other interested parties may participate in the conference call by dialing 888-886-7786 and entering conference ID #55765907 a few minutes before 11:15 a.m. Eastern on Tuesday, April 2, 2024.

For additional news and information please visit DigitalAlly.com or follow additional Digital Ally Inc. social media channels here: 

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Additional Information and Where to Find It

In connection with the business combination between Clover Leaf and Kustom Entertainment (the “Business Combination”), Clover Leaf has filed a proxy statement and registration statement on Form S-4 (the “Proxy/Registration Statement”) with the SEC (as defined herein), which includes a proxy statement to be distributed to holders of Clover Leaf’s common stock in connection with Clover Leaf’s solicitation of proxies for the vote by Clover Leaf’s stockholders with respect to the Business Combination and other matters as described in the Proxy/Registration Statement, as well as, a prospectus relating to the offer of the securities to be issued to Kustom Entertainment’s stockholder in connection with the Business Combination. After the Proxy/Registration Statement has been approved by the SEC, Clover Leaf will mail a definitive proxy statement, when available, to its stockholders. Before making any voting or investment decision, investors and security holders of Clover Leaf and other interested parties are urged to read the proxy statement and/or prospectus, any amendments thereto and any other documents filed with the SEC carefully and in their entirety when they become available because they will contain important information about the Business Combination and the parties to the Business Combination. Investors and security holders may obtain free copies of the preliminary proxy statement/prospectus and definitive proxy statement/prospectus (when available) and other documents filed with the U.S. Securities and Exchange Commission (the “SEC”) by Clover Leaf through the website maintained by the SEC at http://www.sec.gov, or by directing a request to: 1450 Brickell Avenue, Suite 1420, Miami, FL 33131.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. These forward-looking statements are based largely on the 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 the control of management. Therefore, actual results could differ materially from the forward-looking statements contained in this press release. These forward-looking statements include, without limitation, the Company’s, Clover Leaf’s and Kustom Entertainment’s expectations with respect to the proposed Business Combination between Clover Leaf and Kustom Entertainment, including statements regarding the benefits of the Business Combination, the anticipated timing of the Business Combination, the implied valuation of Kustom Entertainment, the products offered by Kustom Entertainment and the markets in which it operates, and Kustom Entertainment’s projected future results. A wide variety of factors that may cause actual results to differ from the forward-looking statements include, but are not limited to, the following: (1) our losses in recent years, including fiscal years 2023 and 2022; (2) economic and other risks for our business from the effects of the COVID-19 pandemic, including the impacts on our law-enforcement and commercial customers, suppliers and employees and on our ability to raise capital as required; (3) our ability to increase revenues, increase our margins and return to consistent profitability in the current economic and competitive environment; (4) our operation in developing markets and uncertainty as to market acceptance of our technology and new products; (5) the availability of funding from federal, state and local governments to facilitate the budgets of law enforcement agencies, including the timing, amount and restrictions on such funding; (6) our ability to deliver our new product offerings as scheduled in 2024, and whether new products perform as planned or advertised and whether they will help increase our revenues; (7) whether we will be able to increase the sales, domestically and internationally, for our products in the future; (8) our ability to maintain or expand our share of the market for our products in the domestic and international markets in which we compete, including increasing our international revenues; (9) our ability to produce our products in a cost-effective manner; (10) competition from larger, more established companies with far greater economic and human resources; (11) our ability to attract and retain quality employees; (12) risks related to dealing with governmental entities as customers; (13) our expenditure of significant resources in anticipation of sales due to our lengthy sales cycle and the potential to receive no revenue in return; (14) characterization of our market by new products and rapid technological change; (15) that stockholders may lose all or part of their investment if we are unable to compete in our markets and return to profitability; (16) defects in our products that could impair our ability to sell our products or could result in litigation and other significant costs; (17) our dependence on key personnel; (18) our reliance on third-party distributors and sales representatives for part of our marketing capability; (19) our dependence on a few manufacturers and suppliers for components of our products and our dependence on domestic and foreign manufacturers for certain of our products; (20) our ability to protect technology through patents and to protect our proprietary technology and information, such as trade secrets, through other similar means; (21) our ability to generate more recurring cloud and service revenues; (22) risks related to our license arrangements; (23) our revenues and operating results may fluctuate unexpectedly from quarter to quarter; (24) sufficient voting power by coalitions of a few of our larger stockholders, including directors and officers, to make corporate governance decisions that could have a significant effect on us and the other stockholders; (25) the sale of substantial amounts of our Common Stock that may have a depressive effect on the market price of the outstanding shares of our Common Stock; (26) the possible issuance of Common Stock subject to options and warrants that may dilute the interest of stockholders; (27) our nonpayment of dividends and lack of plans to pay dividends in the future; (28) future sale of a substantial number of shares of our Common Stock that could depress the trading price of our common stock, lower our value and make it more difficult for us to raise capital; (29) our additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of our Common Stock; (30) our stock price is likely to be highly volatile due to a number of factors, including a relatively limited public float; (31) whether such technology will have a significant impact on our revenues in the long-term; (32) whether we will be able to meet the standards for continued listing on the Nasdaq Capital Market; (33) indemnification of our officers and directors; (34) risks related to our proposed business combination, including our ability to consummate the transactions and our ability to realize some or all of the anticipated benefits therefrom; (35) the risk that the Business Combination may not be completed in a timely manner or at all, which may adversely affect the price of the Company’s and Clover Leaf’s securities; (36) the risk that the Business Combination may not be completed by Clover Leaf’s business combination deadline, even if extended by its stockholders; (37) the potential failure to obtain an extension of the business combination deadline if sought by Clover Leaf; (38) the failure to satisfy the conditions to the consummation of the Business Combination, including the adoption of the Merger Agreement by the stockholders of Clover Leaf; (39) the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement; (40) the failure to obtain any applicable regulatory approvals required to consummate the Business Combination; (41) the receipt of an unsolicited offer from another party for an alternative transaction that could interfere with the Business Combination; (42) the effect of the announcement or pendency of the Business Combination on Kustom Entertainment’s business relationships, performance, and business generally; (43) the inability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the post-combination company to grow and manage growth profitability and retain its key employees; (44) costs related to the Business Combination; (45) the outcome of any legal proceedings that may be instituted against Kustom Entertainment or Clover Leaf following the announcement of the proposed Business Combination; (46) the ability to maintain the listing of Clover Leaf’s securities on the Nasdaq prior to the Business Combination; (47) the ability to implement business plans, forecasts, and other expectations after the completion of the proposed Business Combination, and identify and realize additional opportunities; (48) the risk of downturns and the possibility of rapid change in the highly competitive industry in which Kustom Entertainment operates; (49) the risk that demand for Kustom Entertainment’s services may be decreased due to a decrease in the number of large-scale sporting events, concerts and theater shows; (50) the risk that any adverse changes in Kustom Entertainment’s relationships with buyer, sellers and distribution partners may adversely affect the business, financial condition and results of operations; (51) the risk that changes in Internet search engine algorithms and dynamics, or search engine disintermediation, or changes in marketplace rules could have a negative impact on traffic for Kustom Entertainment’s sites and ultimately, its business and results of operations; (52) the risk that any decrease in the willingness of artists, teams and promoters to continue to support the secondary ticket market may result in decreased demand for Kustom Entertainment’s services; (53) the risk that Kustom Entertainment is not able to maintain and enhance its brand and reputation in its marketplace, adversely affecting Kustom Entertainment’s business, financial condition and results of operations; (54) the risk of the occurrence of extraordinary events, such as terrorist attacks, disease epidemics or pandemics, severe weather events and natural disasters; (55) the risk that because Kustom Entertainment’s operations are seasonal and its results of operations vary from quarter to quarter and year over year, its financial performance in certain financial quarters or years may not be indicative of, or comparable to, Kustom Entertainment’s financial performance in subsequent financial quarters or years; (56) the risk that periods of rapid growth and expansion could place a significant strain on Kustom Entertainment’s resources, including its employee base, which could negatively impact Kustom Entertainment’s operating results; (57) the risk that Kustom Entertainment may never achieve or sustain profitability; (58) the risk that Kustom Entertainment may need to raise additional capital to execute its business plan, which many not be available on acceptable terms or at all; (59) the risk that third-parties suppliers and manufacturers are not able to fully and timely meet their obligations; (60) the risk that Kustom Entertainment is unable to secure or protect its intellectual property; (61) the risk that the post-combination company’s securities will not be approved for listing on Nasdaq or if approved, maintain the listing and (62) other risks and uncertainties indicated from time to time in the proxy statement and/or prospectus to be filed relating to the Business Combination. These cautionary statements should not be construed as exhaustive or as any admission as to the adequacy of the Company’s disclosures. The Company cannot predict or determine after the fact what factors would cause actual results to differ materially from those indicated by the forward-looking statements or other statements. The reader should consider statements that include the words “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans,” “projects,” “should,” or other expressions that are predictions of or indicate future events or trends, to be uncertain and forward-looking. It does not undertake to publicly update or revise forward-looking statements, whether because of new information, future events or otherwise. Additional information respecting factors that could materially affect the Company and its operations are contained in its filings with the SEC. 

The foregoing list of factors is not exhaustive. Recipients should carefully consider such factors, with respect to the proposed Business Combination, and the other risks and uncertainties described and to be described in the “Risk Factors” section of Clover Leaf’s Annual Report on Form 10-K filed for the year ended December 31, 2023 filed with the SEC on March 22, 2024 and subsequent periodic reports filed by Clover Leaf with the SEC, the Proxy Statement and Registration Statement and other documents filed or to be filed by Clover Leaf from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements with respect to the proposed Business Combination. Forward-looking statements speak only as of the date they are made. Recipients are cautioned not to put undue reliance on forward-looking statements with respect to the proposed Business Combination, and neither Kustom Entertainment nor Clover Leaf assume any obligation to, nor intend to, update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Neither Kustom Entertainment nor Clover Leaf gives any assurance that either Kustom Entertainment or Clover Leaf, or the combined company, will achieve its expectations.

Participants in the Solicitation

Clover Leaf and Kustom Entertainment and their respective directors and certain of their respective executive officers and other members of management and employees may be considered participants in the solicitation of proxies from the stockholders of Clover Leaf with respect to the Business Combination. Information about the directors and executive officers of Clover Leaf is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 22, 2024. Additional information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be included in the proxy statement and/or prospectus and other relevant materials to be filed with the SEC regarding the Business Combination when they become available. Stockholders, potential investors and other interested persons should read the proxy statement and/or prospectus carefully when it becomes available before making any voting or investment decisions. When available, these documents can be obtained free of charge from the sources indicated above.

No Offer or Solicitation

This communication shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed Business Combination. This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended, or an exemption therefrom.

For Additional Information, Please Contact:Brody J. Green, President, at (913) 814-7774,Stanton E. Ross, CEO, at (913) 814-7774, orThomas J. Heckman, CFO, at (913) 814-7774

(Financial Highlights Follow)

DIGITAL ALLY, INC.CONSOLIDATED BALANCE SHEETSDECEMBER 31, 2023 AND 2022

		2023				2022
Assets
Current assets:
Cash and cash equivalents		$	680,549			$	3,532,199
Accounts receivable-trade, less allowance for doubtful accounts of $200,668 – 2023 and $152,736 – 2022			1,584,662				2,044,056
Other receivables, net of $5,000 allowance – 2023 and $0 - 2022 (including $-0- due from related parties – 2023 and $138,384– 2022, refer to Note 19)			3,107,634				4,076,522
Inventories, net			3,845,281				6,839,406
Prepaid expenses			6,366,368				8,466,413
Total current assets			15,584,494				24,958,596
Property, plant, and equipment, net			7,283,702				7,898,686
Goodwill and other intangible assets, net			16,510,422				17,872,970
Operating lease right of use assets, net			1,053,159				782,129
Other assets			6,597,032				5,155,681
Total assets		$	47,028,809			$	56,668,062
Liabilities and Equity
Current liabilities:
Accounts payable		$	10,732,089			$	9,477,355
Accrued expenses			3,269,330				1,090,967
Current portion of operating lease obligations			279,538				294,617
Contract liabilities – current			2,937,168				2,154,874
Notes payable – related party – current portion			2,700,000				—
Debt obligations – current			1,260,513				485,373
Warrant derivative liabilities			1,369,738				—
Income taxes payable			61				8,097
Total current liabilities			22,548,437				13,511,283
Long-term liabilities:
Debt obligations – long term			4,853,237				442,467
Operating lease obligation – long term			827,836				555,707
Contract liabilities – long term			7,340,459				5,818,082
Lease deposit			10,445
Total liabilities			35,580,414				20,327,539
Commitments and contingencies
Equity:
Common stock, $0.001 par value; 200,000,000 shares authorized; shares issued: 2,800,754 – 2023 and 2,720,170 – 2022			2,801				2,721
Additional paid in capital			128,441,083				127,869,342
Noncontrolling interest in consolidated subsidiary			673,292				448,694
Accumulated deficit			(117,668,781	)			(91,980,234	)
Total equity			11,448,395				36,340,523
Total liabilities and equity		$	47,028,809			$	56,668,062

(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY’S ANNUAL REPORTON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2023 FILED WITH THE SEC ON APRIL 1, 2024)

DIGITAL ALLY, INC.CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE YEARS ENDEDDECEMBER 31, 2023 AND 2022

		2023				2022
Revenue:
Product		$	9,347,945			$	10,999,892
Service and other			18,900,399				26,010,003
Total revenue			28,248,344				37,009,895
Cost of revenue:
Product			9,974,890				14,372,115
Service and other			12,510,970				20,315,839
Total cost of revenue			22,485,860				34,687,954
Gross profit			5,762,484				2,321,941
Selling, general and administrative expenses:
Research and development expense			2,618,746				2,290,293
Selling, advertising and promotional expense			7,137,529				9,312,204
General and administrative expense			18,246,762				20,452,702
Total selling, general and administrative expenses			28,003,037				32,055,199
Operating loss			(22,240,553	)			(29,733,258	)
Other income (expense):
Interest income			95,717				131,025
Interest expense			(3,134,253	)			(37,196	)
Other income			144,735				—
Other expense			—				(230,744	)
Loss on accrual for legal settlement			(1,792,308	)			—
Loss on conversion of convertible debt			(1,112,705	)			—
Change in fair value of short-term investments			—				(84,818	)
Change in fair value of warrant derivative liabilities			1,846,642				6,726,638
Change in fair value of contingent consideration promissory notes and earn-out agreements			177,909				516,970
Gain on the extinguishment of liabilities			550,867				—
Gain on extinguishment of warrant derivative liabilities			—				3,624,794
Gain on sale of property, plant and equipment			—				212,831
Total other income (loss)			(3,223,396	)			10,859,500
Loss before income tax benefit (provision)			(25,463,949	)			(18,873,758	)
Income tax expense benefit (provision)			—				—
Net loss			(25,463,949	)			(18,873,758	)
Net income attributable to noncontrolling interests of consolidated subsidiary			(224,598	)			(407,933	)
Loss on redemption – Series A & B convertible redeemable preferred stock			—				(2,385,000	)
Net loss attributable to common stockholders		$	(25,688,547	)		$	(21,666,691	)
Net loss per share attributable to common information:
Basic		$	(9.22	)		$	(8.50	)
Diluted		$	(9.22	)		$	(8.50	)
Weighted average shares outstanding:
Basic			2,784,894				2,548,549
Diluted			2,784,894				2,548,549

(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY’S ANNUAL REPORTON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2023 FILED WITH THE SEC ON APRIL 1, 2024)