Digital Ally Inc (DGLY) 2023 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Digital Ally Inc. Second Quarter 2023 Operating Results Conference. (Operator Instructions) 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.

女士們、先生們，早安，歡迎參加 Digital Ally Inc. 2023 年第二季營運績效會議。 （操作員說明）本次電話會議可能包含 1933 年《證券法》第 27A 條及 1934 年《證券交易法》第 21E 條意義內的前瞻性陳述。

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 they 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 the conference call, and readers are cautioned not to place undue reliance on such forward-looking statements.

我們可能會使用預測或指示未來事件和趨勢的字詞和其他表達方式，與歷史事件無關，而是代表前瞻性陳述。這些前瞻性陳述主要基於我們對未來事件的預期或預測，可能受到不準確假設的影響，並受到各種業務風險以及已知和未知的不確定因素的影響，其中許多因素超出了我們的控制範圍。因此，實際結果可能與電話會議中表達的前瞻性陳述有重大差異，請讀者不要過度依賴此類前瞻性陳述。

We generally do not publicly update or revise any forward-looking statements expressed in this conference call whether as a result of new information, further events or otherwise. There can be no assurance that forward-looking statements contained in this document will, in fact, transpire or prove to be accurate. I would like to remind everyone that this conference is being recorded on August 15, 2023.

無論是由於新資訊、進一步事件或其他原因，我們通常不會公開更新或修改本次電話會議中表達的任何前瞻性聲明。無法保證本文件中包含的前瞻性陳述實際上會發生或被證明是準確的。我想提醒大家，本次會議錄製時間為2023年8月15日。

I will now turn the call over to Stan Ross, CEO. Please go ahead, Mr. Ross.

我現在將把電話轉給執行長 Stan Ross。請繼續，羅斯先生。

Thanks, Michelle. Thanks, everybody, for joining us today. Also in the room with me is Brody Green, the President and also -- we have Tom Heckman that has called in as the CFO, but Brody and I will be conducting the call today. I just like to, first of all, thank all the Digital Ally employees and especially the hard efforts that went into getting the 10-Q filed on time, which was really a task when you look at the significant amount of work that is also going on concerning the announced business collaboration agreement that we have concerning Kustom Entertainment with Clover Leaf.

謝謝，米歇爾。謝謝大家今天加入我們。和我一起在房間裡的還有總裁布羅迪·格林（Brody Green），還有湯姆·赫克曼（Tom Heckman），他已被任命為首席財務官，但布羅迪和我今天將主持電話會議。首先，我想感謝所有 Digital Ally 員工，特別是為按時提交 10-Q 所付出的辛勤努力，當你看到還有大量工作要做時，這確實是一項任務。關於我們已宣布的Kustom Entertainment與Clover Leaf 的業務合作協議。

So it wasn't an easy task, a lot of folks had to wear a lot of different hats, but it's real nice to see that everyone pulled together and got it done on time. Also very proud of seeing the reduction starting to really start to come into play that I think we talked about on the last call concerning the moves that we started making and some transitions that we're making to get away from some of the contracts that we were in, in regards to TicketSmarter that has really helped to dramatically bring down a lot of the expenses.

所以這不是一件容易的事，很多人必須身兼數職，但很高興看到每個人都齊心協力並按時完成任務。我也非常自豪地看到削減開始真正開始發揮作用，我想我們在上次電話會議上談到了我們開始採取的行動以及我們正在做出的一些轉變，以擺脫我們所簽訂的一些合約。我們參與其中，TicketSmarter 確實幫助大幅降低了許多費用。

So while the revenue side was off a little that is very explainable, recognizing that we have such a massive amount of capital allocated towards some programs that just were not successful for us. And so getting through those and getting those was quite a project. The other thing is this was a very important 10-Q to get completed as it is also now gives us the very current numbers that will be a big part of the next filing that will be done very shortly in regards to -- essentially, it's an S-4, those that you're familiar with, SPAC purchases. Anyways, so now that we have that, I think we're going to see a lot of movement towards the Kustom Entertainment Clover Leaf agreements.

因此，雖然收入方面略有下降，但這是可以解釋的，因為我們認識到我們有大量資金分配給了一些對我們來說並不成功的項目。因此，完成這些任務並獲得這些任務是一個相當大的工程。另一件事是，這是一個需要完成的非常重要的10-Q，因為它現在也為我們提供了當前的數據，這些數據將成為下一個文件的重要組成部分，下一個文件將很快完成，本質上是S-4，那些你熟悉的，SPAC 購買的。無論如何，現在我們已經有了這個，我認為我們將看到 Kustom Entertainment Clover Leaf 協議的許多進展。

So with that being said, I'll let Brody go over into a lot more details on the numbers, and then we'll come back with some comments and then open it up for Q&A.

話雖如此，我會讓布羅迪詳細介紹這些數字，然後我們會提出一些評論，然後進行問答。

Thanks, Stan. And I'm just going to -- like Stan said, I'm going to roll through the numbers. I'll start with the balance sheet and then go through the P&L and touch on a few other points and then probably turn it back over to Stan to go further into detail on the transaction itself. I wasn't sure that's going to be a hot topic for this call. So I'll just briefly go through the balance sheet. As you guys -- everybody saw in the 10-Q, our cash and cash equivalents was about $2.9 million at the end of the quarter. Total receivables. We had about $4.6 million in receivables, along with a net inventory of $5.8 million and prepaid expenses of $7 million bringing current assets to a little over $20 million, along with some other noncurrent assets, our total asset value at June 30 was $53.5 million.

謝謝，斯坦。我只是要——就像史丹說的那樣，我要滾動一下這些數字。我將從資產負債表開始，然後查看損益表並觸及其他一些要點，然後可能會將其轉回斯坦以進一步詳細了解交易本身。我不確定這會成為本次電話會議的熱門話題。我將簡要瀏覽一下資產負債表。正如大家在 10 季末看到的那樣，我們的現金和現金等價物在本季末約為 290 萬美元。應收帳款總額。我們的應收帳款約為460 萬美元，加上580 萬美元的淨庫存和700 萬美元的預付費用，使流動資產略高於2000 萬美元，再加上一些其他非流動資產，截至6 月30 日，我們的總資產價值為5,350 萬美元。

Our current liabilities that at $23.4 million with long-term liabilities, bringing our total liabilities to $31 million. So you can see as total stockholders' equity at June 30 of about $22.5 million with 2.8 million shares outstanding at June 30, and I think that number stands true today as well.

我們的流動負債為 2,340 萬美元，加上長期負債，使我們的總負債達到 3,100 萬美元。因此，您可以看到截至 6 月 30 日的總股東權益約為 2,250 萬美元，截至 6 月 30 日已發行股數為 280 萬股，我認為這個數字在今天也是如此。

On the P&L side, our total revenue was just under $8.3 million. As Stan mentioned, it's slightly down from Q2 of last year. But as we walk -- go down this P&L, you'll notice, it really directly correlates with our cost of revenue as we rein back quite a few things on the TicketSmarter side, especially the paper click and some other sponsorship agreements that didn't really reap the benefits that we are hoping for with a high price tag.

在損益表方面，我們的總收入略低於 830 萬美元。正如史丹所提到的，與去年第二季相比略有下降。但當我們仔細查看這個損益表時，您會注意到，它確實與我們的收入成本直接相關，因為我們控制了TicketSmarter 方面的很多事情，尤其是紙質點擊和其他一些贊助協議，這些協議並沒有'並沒有真正獲得我們希望以高價格獲得的好處。

Our cost of revenue for the quarter was $5.5 million, bringing a gross profit to $2.7 million for the second quarter of '23. That's up almost -- it's up over $1 million from the same quarter in 2022. So kind of like as Stan mentioned, we really focused on working on our cost of revenue increasing those margins, which you can see in $1 million boost in gross profit for the quarter, even with lower revenues.

我們本季的營收成本為 550 萬美元，使 2023 年第二季的毛利達到 270 萬美元。這幾乎增加了- 比2022 年同一季度增加了超過100 萬美元。就像斯坦提到的那樣，我們真正專注於提高收入成本，提高利潤率，您可以在毛利增加100 萬美元中看到這一點即使收入較低，本季的收入也有所下降。

You can see our total SG&A expense was just under $7.7 million, bringing our operating loss to $4.9 million. However, that's a dramatic improvement from an operating loss of $6.7 million in the quarter prior -- or year prior. Also, there's some other income or expenses flowing through related to the interest expense for the convertible note we did in April, along with an accrual we put together for a lawsuit, we're dealing with as well, bringing a total net loss to $8.3 million for the quarter, $8.4 million once you pull out the income attributable to the medical billing side.

您可以看到我們的 SG&A 總支出略低於 770 萬美元，這使得我們的營運虧損達到 490 萬美元。然而，與上一季或前一年 670 萬美元的營運虧損相比，這是一個巨大的改善。此外，還有一些其他收入或支出與我們 4 月份進行的可轉換票據的利息支出相關，以及我們正在處理的訴訟累積的應計費用，使總淨損失達到 8.3 美元如果扣除醫療賬單方面的收入，則該季度的收入為840 萬美元。

One point I would like to touch on is our deferred revenue balance. So that's up $1.5 million from the beginning of the year. So we have a current balance of $9.5 million in deferred revenue for -- at June 30, 2023. So that's related to the subscription model and that -- it's continuing to grow and evolve. I think this quarter, we had over 36 new subscriptions with over 300 Pros and almost 50 EVOs included.

我想談談我們的遞延收入餘額。比年初增加了 150 萬美元。截至 2023 年 6 月 30 日，我們目前的遞延收入餘額為 950 萬美元。這與訂閱模式有關，並且它正在繼續成長和發展。我認為本季度，我們有超過 36 個新訂閱，其中包括超過 300 個專業版和近 50 個 EVO。

So you can see those subscription models are just starting to stack up as we've discussed historically, and just I think that deferred revenue number is going to continue to grow quarter-over-quarter as we move forward. Net inventory was $5.8 million at June 30. That's down about $1 million from year-end as we continue to try and rightsize our inventory levels to keep less unnecessary inventory on hand and wrap up capital in that sense. Related to the $3 million convertible note, we did in April, we issued a little over 1 million warrants along with that, those would be at $5.50 exercise price, $6.50 and $7.50 each tiered up as we disclosed in 8-K previously. So that's all high-level stuff. We also, during the quarter, completed our first event under the Kustom440 division that featured Chris Young and Gabby Barrett was a very successful show.

因此，您可以看到，正如我們歷史上討論的那樣，這些訂閱模式才剛剛開始積累，而且我認為，隨著我們的前進，遞延收入數量將繼續逐季度增長。截至 6 月 30 日，淨庫存為 580 萬美元。這比年底減少了約 100 萬美元，因為我們繼續嘗試調整我們的庫存水平，以減少手頭不必要的庫存並從這個意義上包裝資本。與300 萬美元的可轉換票據相關，我們在4 月發行了略多於100 萬張的認股權證，這些認股權證的行使價為5.50 美元，每張認股權證分別為6.50 美元和7.50美元，正如我們之前在8-K 中披露的那樣。這就是所有高級的東西。我們也在本季完成了 Kustom440 部門的第一場活動，由 Chris Young 和 Gabby Barrett 參加，這是一場非常成功的表演。

I think everybody that attended had a great time. We were pleased with out win. And obviously, that's just a stepping stone for us moving forward as we look forward to announcing more events yet this year and especially into 2024. But it's good to get the first one under our belt and grow from there.

我認為參加的每個人都度過了一段愉快的時光。我們對勝利感到高興。顯然，這只是我們前進的一塊墊腳石，因為我們期待今年宣布更多活動，尤其是 2024 年。但能獲得第一個活動並從那裡開始成長是件好事。

Outside of that, we have some new products coming out on the Digital Ally side that were in the market for Q3 and Q4. Those being the EVO fleet, the commercial in-car systems along with the interview room solution. Those have all been disclosed through press releases. So we're encouraged about how the marketplace are taking those, and we'll see some good results here in Q3 and Q4 with those newer product lines. So for any further details, in more detail, you can heard you guys all read the Form 10-Q we filed yesterday afternoon.

除此之外，我們在 Digital Ally 方面推出了一些新產品，這些產品已在第三季和第四季上市。這些是 EVO 車隊、商用車載系統以及採訪室解決方案。這些都已透過新聞稿披露。因此，我們對市場如何接受這些產品感到鼓舞，我們將在第三季和第四季看到這些新產品線的一些良好成果。因此，如果您想了解更多詳細信息，請大家閱讀我們昨天下午提交的 10-Q 表格。

And with that, I'll just turn it back over to Stan, and I'm sure we'll go into more detail from there.

有了這個，我就把它轉回給斯坦，我相信我們會從那裡討論更多細節。

Yes. Thanks, Brody. And again, a couple of things that I guess I understand the environment that the stock markets in and how hard it is, sometimes to really get a lot of exposure out there, especially going through the summer, too, when there's so many people doing their vacations and they're off on their trips.

是的。謝謝，布羅迪。再說一次，我想我了解股市所處的環境以及它有多麼困難，有時要真正獲得大量的曝光，尤其是在整個夏天，當有這麼多人在做的時候他們的假期即將結束，他們要去旅行了。

But schools kick it back up, and I think people will start focusing again on their investments. But to sit there and, again, Digital Ally having a market cap of only $2.5 million and shareholder equities at $22.5 million. Deferred revenue that Brody was talking about is really just the video solutions side of things at $9.5 million.

但學校重新開始，我認為人們將開始再次關注他們的投資。但坐在那裡，再說一遍，Digital Ally 的市值僅為 250 萬美元，股東權益為 2,250 萬美元。布羅迪所說的遞延收入實際上只是視訊解決方案的 950 萬美元。

And then you look at the value that the medical billing company continues to generate and build right now, again, with the ticketing platform and the Kustom440, having the ability and has had some very first production or concert or festival whatever you want to call it, which really did well. We were very pleased. It probably exceeded by as much as 20% of what our target was.

然後你會看到醫療計費公司現在繼續透過票務平台和 Kustom440 繼續產生和建構的價值，有能力並且已經舉辦了一些首次製作或音樂會或節日，無論你如何稱呼它，確實做得很好。我們非常高興。它可能超出了我們目標的 20%。

So the turnout was great. The lineup was great. The -- without any hiccups in regards to the event. So looking forward to being able to repeat that, not only repeat that model back here in Kansas City, again, but we have identified numerous locations that will be announced in the coming months in regards to conduct them to similar festivals in other parts of the country in which we will also be utilizing our ticketing platform to maximize the profitability on those.

所以投票率很高。陣容很棒。該活動沒有任何問題。因此，期待能夠重複這一點，不僅在堪薩斯城再次重複這種模式，而且我們已經確定了許多地點，這些地點將在未來幾個月內宣布，以便在美國其他地區舉辦類似的節日。我們還將舉辦利用我們的票務平台來最大限度地提高這些國家的獲利能力。

So anyways, I was very, very pleased and continue to be very excited about the direction that Digital Ally has going and the opportunities that it has in front of us. And including some new and innovative products that I do believe that will be talked about before the years out as well.

所以無論如何，我非常非常高興，並且對 Digital Ally 的發展方向和我們面前的機會繼續感到非常興奮。其中包括一些我相信在幾年前也會被討論的新產品和創新產品。

So Michelle, I think I'd like to go ahead and open up the floor for questions and answers.

米歇爾，我想我想繼續開放大家提問和回答。

(Operator Instructions) The first question in the queue comes from Allen Klee with Maxim Group.

（操作員說明）隊列中的第一個問題來自 Maxim Group 的 Allen Klee。

This is Derek Greenberg on for Allen. My first question is just if you could maybe provide an update on how sales are going to fleets currently?

這是艾倫的德里克·格林伯格。我的第一個問題是，您是否可以提供目前車隊銷售狀況的最新資訊？

Going to what, I'm sorry?

去什麼地方，對不起？

Sales to fleet.

銷售給車隊。

Fleets Yes. So that really other products I think we rolled out in early Q3. So we had quite a big pipeline prior to that we have several T&Es out there right now as well as some existing customers that are starting to utilize that new commercial product as well as we finally finalized some of this pricing and whatnot with our large insurance partner we have so they can push it out to their current customers as well. So it's really starting to pick up.

艦隊 是的。因此，我認為我們在第三季初就推出了其他產品。因此，在此之前我們有相當大的管道，我們現在有幾個 T&E，以及一些開始使用該新商業產品的現有客戶，並且我們最終與我們的大型保險合作夥伴最終確定了其中的一些定價等我們有，這樣他們也可以推廣給目前的客戶。所以它真的開始好轉了。

It just rolled out recently. So I don't really want to speak to sales that happened in Q3 either, but it's really gaining some traction early this quarter and into this latter half of the quarter as well that I think we're going to see the fruits of that labor here pretty soon.

它最近剛推出。因此，我也不想談論第三季度發生的銷售，但它確實在本季度初和本季後半段獲得了一些關注，我認為我們將看到這種勞動的成果很快就到了。

Yes, Allen. One other thing, too, as you may recall, and I think we talked about it maybe a little bit on a previous call, but the neat thing about the insurance company that we're working with. They actually did a white paper on our fleet in-car video system. And Brody, you may have to help me with the numbers again. But essentially, they've seen such a dramatic reduction in the incidences that particular company was having that they paid for almost 90% of the cost of the equipment in the very first year of a 5-year contract but just the reductions that they had in costs associated with those incidences they had prior -- the year prior.

是的，艾倫。您可能還記得，還有另一件事，我想我們在之前的電話中可能討論過一點，但關於我們正在合作的保險公司的巧妙之處。他們實際上製作了一份關於我們車隊車載視訊系統的白皮書。布羅迪，你可能要再幫我算數字。但本質上，他們看到特定公司的事故發生率大幅下降，以至於他們在 5 年合約的第一年支付了近 90% 的設備成本，但這只是他們所減少的費用與他們之前（前一年）發生的事件相關的費用。

So they clearly, clearly are a big fan and advocate of Digital Ally's commercial in-car system. And they've got -- what was it, 200 reps or so that they'll be pushing it out to some, I think, 35,000 customers that they have. So we've really got to be on top of our game in regards to making sure that we can keep up with what we hope to be a very strong demand and be able to have the product in-house to get it out to them.

因此，他們顯然是 Digital Ally 商業車載系統的忠實粉絲和擁護者。他們有 - 是什麼，大約 200 名代表，他們將把它推廣給他們擁有的 35,000 名客戶。因此，我們確實必須處於領先地位，以確保我們能夠滿足我們希望的非常強勁的需求，並能夠在內部擁有產品以將其提供給他們。

Great. I also wanted to touch on the medical billing segment of the business. I was wondering if you maybe saw any opportunities to expand that I guess your overall outlook.

偉大的。我還想談談該業務的醫療計費部分。我想知道您是否看到了任何擴展的機會，我猜您的整體前景。

Right now, we've really been focusing on -- so part of that, we're buying decent mom-and-pop sized companies and really pushing for increased gross profit within those companies like just some of the procedures and practices that we have in place with our managing members. So I think we've been in the process of maximizing the profitability of those for the time being with those 4 recent acquisitions.

現在，我們真的一直在關注 - 因此，其中一部分是，我們正在收購像樣的夫妻規模公司，並真正推動這些公司增加毛利，就像我們擁有的一些程序和做法一樣與我們的管理成員就位。因此，我認為我們目前正在透過最近的 4 次收購來最大化這些公司的獲利能力。

But our eyes are always open and looking at other opportunities as well in that same segment. So right now, we're just working on rightsizing and maximizing the bottom line of the recent acquisitions, but we're also keeping our ear to the ground for potential opportunities that pop up in the near future as well.

但我們總是睜大眼睛，尋找同一細分市場的其他機會。因此，目前我們只是致力於調整規模並最大化最近收購的利潤，但我們也在密切關注在不久的將來出現的潛在機會。

Okay. Great. I just have one last question. And that's just relating to revenue. I was wondering what percentage of that is recurring?

好的。偉大的。我只有最後一個問題。這僅與收入有關。我想知道其中重複發生的百分比是多少？

I want to say the recurring per quarter is about [$750,000] million of every quarter. So -- and that's all pertaining to the video solutions side. So I would say on the video solution revenue, it's probably 35% to 40% of the quarterly recognized revenue is the recurring portion.

我想說的是，每季的經常性費用約為每季 [750,000] 百萬美元。這就是視訊解決方案方面的全部內容。所以我想說，就視訊解決方案收入而言，季度確認收入的 35% 到 40% 可能是經常性部分。

The next question in the queue comes from Rommel with Aegis Capital.

隊列中的下一個問題來自隆美爾和宙斯盾資本。

Just a couple of questions on the Entertainment segment. I appreciate your comments earlier on the country roots. So I wonder if you could just give us a little more color in terms of kind of attendance relative to expectations, the reception you had in the marketplace, sounds like you generated some nice product revenues. And as we look forward, do you expect that entertainment sentiment to really kind of start to generate -- looking at the 2024, 2025, the lion's share of its revenues from proprietary events such as this one?

只是關於娛樂部分的幾個問題。我很欣賞你之前對國家根源的評論。所以我想知道您是否可以在與預期相關的出席率方面給我們更多的色彩，您在市場上的接待，聽起來您創造了一些不錯的產品收入。當我們展望未來時，您是否認為娛樂情緒真的會開始產生——看看 2024 年、2025 年，其收入的最大份額來自像這樣的專有活動？

Yes. So what -- give you a little idea of how we have a sort of a structured. We have an entity called Kustom440, and it is the production company that actually puts on the festivals. And so to give you a little insight on what we do before we go and take on even attempt to look at a market and then a line up, then obviously, the facility, the food and beverage and the deal terms that we -- we do a full-blown analysis in regards to the economics of it.

是的。那又怎樣——讓你稍微了解一下我們是如何建立某種結構的。我們有一個名為 Kustom440 的實體，它是實際舉辦節日的製作公司。因此，為了讓您對我們所做的事情有一些了解，然後再去嘗試考察市場，然後排隊，顯然，我們的設施、食品和飲料以及交易條款對其經濟學進行全面的分析。

And so in this particular one, being here in Kansas City. They've had quite a few events going on in town. I mean I think Brooks & Dunn was just a week or 2 earlier at the T-Mobile Center. And so we're essentially doing this in a Minor League ballpark in the actual baseball park. And so our goal was trying to exceed over 6,000 tickets sold. And I think we came in right around 7,200. The other thing that was a little bit -- a very nice surprise is the food and beverage side of things, we were looking at about $29 as far as per head, and we came in closer to 49%. That's sometimes a real combination to weather because weather was beautiful.

因此，在這一特殊的時刻，在堪薩斯城。他們在城裡舉辦了許多活動。我的意思是，我認為 Brooks & Dunn 只在一兩週前就到達了 T-Mobile 中心。因此，我們實際上是在實際棒球場的小聯盟棒球場中進行此操作。因此，我們的目標是售出超過 6,000 張門票。我想我們的人數大約是 7,200 人。另一件事是——一個非常好的驚喜是食品和飲料方面的事情，我們考慮的是每人大約 29 美元，我們接近 49%。有時這是與天氣的真正結合，因為天氣很好。

I mean we got lucky, and it just -- it was just beautiful. So there was a lot of people having a lot of fun, they were out there. We're actually putting a presentation together that we will do an 8-K filings so that you can take a look at just the attendance, the people having a great time and get a feel for what kind of an event that we put on.

我的意思是我們很幸運，而且它非常美麗。所以有很多人在那裡玩得很開心。實際上，我們正​​在整理一個演示文稿，我們將進行 8-K 歸檔，以便您可以查看出席情況、人們玩得很開心，並了解我們舉辦的活動類型。

So we clearly -- we had representatives from other venues that came to town to see what we were talking about as far as the country routes festival. And so everything I've heard from those that went back is how soon can you come in new country roots at our festival?

所以很明顯，我們有來自其他場館的代表來到城裡，看看我們正在談論的鄉村路線節的內容。因此，我從那些回去的人那裡聽到的一切都是，你多久才能在我們的音樂節上融入新的鄉村根源？

And is there a chance that you could do one yet this year, things along those lines. So it went really well. And our expectations are to try to do somewhere -- I'm afraid you threw out a number, but I will, I think the country roots itself that brand will try to do approximately 10 of those throughout the country in 2024. Now we will mix that up with other different genres as far as we may have Kustom440 rock classic or something, we'll just have a different mix. And then what you do there, Rommel, what I could do is one day I'm doing the country genre and the next day, I may be doing the rock.

今年你是否有機會做這樣的事情？所以一切都很順利。我們的期望是嘗試在某個地方做一些事情——恐怕你會拋出一個數字，但我會的，我認為這個國家紮根於這個國家，該品牌將嘗試在2024 年在全國範圍內做大約10個這樣的事情。現在我們將將其與其他不同流派混合起來，只要我們可能有 Kustom440 搖滾經典之類的東西，我們就會有不同的混合。然後你在那裡做什麼，隆美爾，我能做的就是有一天我會做鄉村音樂，第二天我可能會做搖滾樂。

In that way, then your numbers really get to look nice because you essentially already have the stage, the lights, the power, your arena, everything is already there, all you're really doing is switching out signage and changing up the theme a little bit, right? So that's when I think we're really going to start to maximize some numbers associated with the festivals that we'll be able to put on.

這樣，你的數字就會看起來很漂亮，因為你基本上已經有了舞台、燈光、電源、競技場，一切都已經在那裡了，你真正要做的就是切換標牌並改變主題一點點，對吧？因此，我認為那時我們真的要開始最大限度地增加與我們能夠舉辦的節日相關的一些數字。

And then possibly even in 3 days in the bigger cities. So we've got a lot of them identified, like I said, there will be a presentation and fairly soon that we'll file an 8-K, and you'll be able to go on there. And it'll have some not only alert you to what happened, but also we're going ahead and identify some of the cities that we anticipate in doing this at.

在大城市甚至可能需要 3 天。所以我們已經確定了很多，就像我說的，將會有一個演示，很快我們就會提交一份 8-K，你就可以繼續在那裡。它不僅會提醒您發生了什麼事，而且我們還會繼續確定我們預計會在哪些城市進行此操作。

Great. Well, please do one on the East Coast, Stan so I can attend. Thanks very much.

偉大的。斯坦，請在東海岸舉辦一場，這樣我就可以參加。非常感謝。

Okay. You got it.

好的。你說對了。

(Operator Instructions) The next question in the queue comes from Bryan Lubitz with Equitable Advisors.

（操作員說明）佇列中的下一個問題來自 Equitable Advisors 的 Bryan Lubitz。

Glad to see the SG&A is going down, the expenses are coming down. And obviously, we're working through the cycle with the sponsorship deals. Are we fully through that sponsorship deal?

很高興看到 SG&A 正在下降，費用也在下降。顯然，我們正在透過贊助協議來完成整個週期。我們完全完成贊助協議了嗎？

I think they're real close, Bryan. It probably -- they may have a little bit that wraps over into the remainder of the year. But I think there's stuff there that we were able to negotiate some value out of. And what I mean by there is it doesn't have to be just 100% driven by TicketSmarter.

我認為他們非常親密，布萊恩。很可能——他們可能會有一些延續到今年剩餘時間的事情。但我認為我們可以透過談判從中獲得一些價值。我的意思是，它不必 100% 由 TicketSmarter 驅動。

So what we may be able to do is utilize the spots, the money that we're committed to spend for advertisement for country roots or our next festival and or some things along those lines. So I think we're at a point where what little bits remaining, we're going to be able to get some value out and whether it be, like I said, the advertising of concerts or maybe even the announcement of new products that video solutions coming out with.

因此，我們可以做的就是利用這些景點、我們承諾花在鄉村根源或我們下一個節日或類似的事情上的廣告的資金。因此，我認為我們正處於這樣一個階段，即剩下的一點點，我們將能夠獲得一些價值，無論是，就像我說的，音樂會的廣告，甚至是視頻中發布的新產品解決方案出來了。

And Bryan, real quick, I also think a lot of the school deals and whatnot we had their year-end is 630 because they do the summer year-ends. So I do think in Q3, you'll see that number continue to go down. And I think after Q3, it probably should be where the number lands going forward without some other adjustments we make along the way. But I do think you saw still a bit of the implications from those deals hit Q2. I think Q3 will continue to see improvements there due to what the schools year-ends are.

Bryan，很快，我也認為很多學校的交易以及我們的年終工資是 630，因為他們在夏季年終工資。所以我確實認為在第三季度，你會看到這個數字繼續下降。我認為在第三季之後，這個數字可能應該是在我們不進行任何其他調整的情況下繼續前進的地方。但我確實認為您仍然看到了第二季這些交易的一些影響。我認為由於學校年終情況，第三季將繼續看到改善。

Good. Good. Okay. So as far as with the Kustom Entertainment, when you guys moved with the merger, does that deal, I assume just goes with you guys over to Kustom Entertainment. It's not canceled out because you're no longer TicketSmarter, right?

好的。好的。好的。就 Kustom Entertainment 而言，當你們進行合併時，是否達成了這筆交易，我想只是和你們一起去 Kustom Entertainment。它不會被取消，因為您不再是 TicketSmarter，對嗎？

Correct.

正確的。

Okay. All right. So I actually have 2 questions more. I'd like if you guys can indulge me. The first one is about the actual merger. And I know, Stan, you talked earlier about filing the S-4 and hopefully, thereafter, we can see you on that roadshow, so we can start to see exactly what's going to be handed out to the shareholders. As far as the $125 million takeover, just looking at the shares that you guys have outstanding and the shares that Chloe have outstanding, if I'm reading this right, $18 million is coming in cash and the rest of it is going to be coming in the form of stock.

好的。好的。所以我其實還有兩個問題。我希望你們能縱容我一下。第一個是關於實際合併。我知道，Stan，您之前談到了提交 S-4 的事宜，希望此後我們可以在路演中見到您，這樣我們就可以開始確切地了解將向股東發放的內容。至於 1.25 億美元的收購，只要看看你們已發行的股票和 Chloe 已發行的股票，如果我沒看錯的話，1800 萬美元將以現金形式到來，其餘的將以現金形式支付以股票的形式。

Well, the way it's structured is based upon a value. And of course, with SPACs, they have the ability to do what do you want to say some redemptions and stuff like that. And they had a meeting the other day and had minimal redemption. So that was very, very encouraging. And so once the -- let's say, the SPAC really understands the Kustom Entertainment story, then everyone will be able to really wrap their arms around it. And so then you really get a sense of the amount of cash versus stock. But right now, I think their stock is still trading north of $11 a share is where it's at.

嗯，它的結構方式是基於一個值。當然，透過 SPAC，他們有能力做你想做的事情，例如贖回之類的事情。前幾天他們開了一個會，並得到了最低限度的救贖。所以這非常非常令人鼓舞。因此，一旦 SPAC 真正了解 Kustom Entertainment 的故事，那麼每個人都將能夠真正擁抱它。這樣你就能真正了解現金與股票的數量。但現在，我認為他們的股票交易價格仍高於每股 11 美元。

Okay. All right. So the formula could change. But essentially, shareholders of digital are going to get roughly $125 million takeover for the Kustom Entertainment. That's the value.

好的。好的。所以公式可能會改變。但本質上，數位公司股東將以約 1.25 億美元收購 Kustom Entertainment。這就是價值。

Correct.

正確的。

Okay. All right. So now -- as far as -- and this might be a Brody question because, obviously, Stan, we know you're going to be moving with Kustom Entertainment. As far as just looking at you guys' balance sheet and having assets over $50 million and having $9 million in deferred income coming your way and $20 million worth of revenue roughly that you're going to be looking at?

好的。好的。所以現在 - 就 - 這可能是布羅迪問題，因為顯然，斯坦，我們知道你將與 Kustom Entertainment 合作。只要看看你們的資產負債表，資產超過 5,000 萬美元，遞延收入為 900 萬美元，收入約為 2,000 萬美元？

And then looking at a market cap of 14%, again, we find ourselves in a spot where I don't know if we have a poison pill or protection for us, but what you guys are generating, the market's just not simply giving you value on it. At some point, Brody, are you looking to shop the company because, again, you have $15 million in assets out there and have a market cap of 15%, but then to sell a portion of the company at $125 million, just the numbers are just not working out where you guys are getting value to be public.

然後再看看 14% 的市值，我們發現自己處於這樣一個境地：我不知道我們是否有毒丸或保護措施，但你們所創造的，市場不僅僅是給你們的對它的價值。布羅迪，在某個時候，你是否打算收購這家公司，因為你擁有 1500 萬美元的資產，市值為 15%，但隨後以 1.25 億美元的價格出售公司的一部分，只是數字只是沒有弄清楚你們從哪裡獲得公開的價值。

Yes. And I think that's part of the driver for us doing this spinoff/agreement -- merger agreement is to kind of provide clarity between the 2 companies and 2 stocks to show what Digital Ally is and what Kustom is because we think there's been a lot of confusion in the marketplace about what the company is because we're kind of a conglomerate of quite a few things. So I think we're going to see how it plays out post separation and see if we can start getting increased value in the marketplace for what Digital Ally is as well as what Kustom is going to be. And I think we'll go from there. There's no imminent plans to shop it around by any stretch. But yes, we're just -- I think we're going to see where the market takes it after this separation as it's kind of one of the driving forces is the lack of value we're getting as we currently said.

是的。我認為這是我們進行分拆/協議的部分驅動力——合併協議是為了澄清兩家公司和兩隻股票之間的關係，以展示什麼是 Digital Ally 和什麼是 Kustom，因為我們認為已經有很多市場上對公司是什麼感到困惑，因為我們是一個由很多東西組成的集團。因此，我認為我們將看看它在分離後會如何發揮作用，並看看我們是否能夠開始在市場上為 Digital Ally 以及 Kustom 的價值增加價值。我想我們會從那裡開始。目前還沒有立即購買它的計劃。但是，是的，我們只是 - 我認為我們將看看這次分離後市場的走向，因為正如我們目前所說，驅動力之一是我們所獲得的價值的缺乏。

Yes, because I mean, to have a market cap of 15% and a portion of the company sold for $125 million, it's just -- it's manning for the shareholders. You guys know I've been with you guys for a long time. It's just -- for whatever reason, we're not getting the respect that we deserve.

是的，因為我的意思是，擁有 15% 的市值並且公司的一部分以 1.25 億美元的價格出售，這只是——它是為股東配備的。你們知道我和你們在一起很久了。只是──無論出於何種原因，我們都沒有得到應有的尊重。

And I know I said guys, I had 2, actually well I have one more. This might be a pawn question, but I'm going to ask in regards to this year being really, really positive on the AI movement. And I know you guys have had a lot of AI incorporated into your body cameras as well as the thermal views and things of that nature. Do you see Digital Ally going more down that road in the future in regards to AI with your products?

我知道我說過，夥計們，我有 2 個，實際上我還有 1 個。這可能是個典當問題，但我要問的是，今年人工智慧運動是否真的非常積極。我知道你們的隨身相機以及熱視圖和類似的東西中已經融入了許多人工智慧。您認為 Digital Ally 未來在您產品的人工智慧方面會更多地走這條路嗎？

Yes, absolutely. I think the whole market is going to trend towards AI in some way, shape or form, and I don't see us not being included in that. I think you're going to have to utilize AI in some fashion down the road now to what extent that's yet to be determined. I know AI is also a bit of a scare for quite a few people. So it's a fine line to walk. Obviously, we know AI is coming, but you have to be careful with how much you dabble with it, and it will be interesting to see how we develop that into our current products and systems and to what extent it will be. But yes, we're looking at where the market is going. We all know that.

是的，一點沒錯。我認為整個市場將以某種方式、形式或形式走向人工智慧，我認為我們不會被納入。我認為你現在必須以某種方式利用人工智慧，但具體程度尚未確定。我知道人工智慧對很多人來說也有點害怕。所以這是一條很好走的路線。顯然，我們知道人工智慧即將到來，但你必須謹慎對待它的涉足程度，看看我們如何將其發展到我們當前的產品和系統中，以及它會發展到什麼程度，將會很有趣。但是，是的，我們正在關注市場的走向。我們都知道。

So the thermal view has like facial recognition and stuff like that included in it, right? Where else do you guys have AI attached to your products right now, if any?

所以熱視圖包含臉部辨識之類的東西，對吧？現在你們的產品還有哪些地方有人工智慧（如果有的話）？

Bryan, I mean, obviously, the in-car systems and even a lot of the body cameras have some of it. And I'll tell you this as well. I mean, there's ways to continue to bring AI even into the Kustom Entertainment side of things. Obviously, we've got a lot of people coming into arenas. We're going to be wanting to make sure and monitor that.

布萊恩，我的意思是，顯然，車載系統甚至很多隨身攝影機都有一些這樣的功能。我也會告訴你這一點。我的意思是，有很多方法可以繼續將人工智慧引入 Kustom Entertainment 方面。顯然，我們有很多人進入競技場。我們將希望確保並監控這一點。

Everything on -- from that on the ticketing side and then keep a track of that to where you're not only a production company that's doing great events, but you're a ticketing company that is working right along with the security of those events, therefore, we can identify if there happens to be someone, let's say, like on the no-fly list, right? In other words, they're not supposed to be attending Taylor Swift concerts. So AI is going to be big in our world throughout.

一切都在進行——從票務方面開始，然後跟踪它，直到您不僅是一家舉辦大型活動的製作公司，而且是一家與這些活動的安全性一起正常工作的票務公司因此，我們可以確定是否碰巧有人，比如說，在禁飛名單上，對吧？換句話說，他們不應該參加泰勒絲的音樂會。因此，人工智慧將在我們的世界中發揮重要作用。

Well, listen, guys, I'm glad to see that expenses are coming down and revenues, hopefully, will start going in the right direction for us, and we're all very excited to see that S-4 that you're talking about, Stan, and obviously, in the next leg of the Kustom/Digital chapter. So kudos to the quarter and looking forward to seeing more news from you guys soon.

好吧，聽著，夥計們，我很高興看到支出正在下降，收入有望開始朝著對我們來說正確的方向發展，我們都很高興看到你們正在談論的 S-4關於斯坦，顯然，在定制/數位章節的下一部分。因此，對本季表示讚賞，並期待很快看到你們的更多消息。

Thank, Bryan.

謝謝，布萊恩。

Thanks, Bryan. Okay. I think we're going to go ahead and wrap things up now and really do appreciate the -- everyone that attended. I appreciate the questions. If there -- like Brody said, please take a look at the 10-Q. Please keep your alerts on for when the S-4 is filed and also the presentation that I referred to earlier. And if there is some additional questions, feel free to give us or shoot us an e-mail or a call and we'll try to get back to you and answer those, that we can answer.

謝謝，布萊恩。好的。我想我們現在就可以結束了，並且非常感謝所有參加的人。我很欣賞這些問題。如果有的話——就像布羅迪說的那樣，請看一下 10-Q。請留意 S-4 提交時間以及我之前提到的簡報。如果還有其他問題，請隨時給我們發送電子郵件或致電，我們會盡力回覆您並回答我們可以回答的問題。

Meanwhile, I could tell you on a personal front, how excited I am to see the direction and the improvement and just the excitement for all the Digital Ally opportunities that are ahead of us. And so hopefully, that turns in and monetizes for you all. So thank you, everyone, have a wonderful day, and we'll talk to you all soon.

同時，我可以從個人角度告訴您，看到方向和改進我是多麼興奮，並且對我們面前的所有數字盟友機會感到興奮。希望這能為大家帶來收益並獲利。謝謝大家，祝您有美好的一天，我們很快就會與大家交談。

Thank you, ladies and gentlemen. This concludes your conference. Please disconnect your lines.

謝謝你們，女士們、先生們。您的會議到此結束。請斷開您的線路。