Digital Ally (KUST) investor relations material

Executive summary

• Completed transformation to a pure-play entertainment company after divesting Video Solutions and Revenue Cycle Management businesses; both are now classified as discontinued operations.

• Revenues surged 88.2% year-over-year to $5.38M for Q2 2026, driven by the Country Stampede festival and higher ticketing activity.

• Net loss attributable to common stockholders was $4.55M for Q2 2026 and $10.43M for the six months ended June 30, 2026, reflecting losses from discontinued operations and a litigation settlement.

• Significant cost reductions and operational streamlining followed the business shift, with a focus on improving gross margins and profitability.

Financial highlights

• Q2 2026 revenues: $5.38M (up 88.2% YoY); six-month revenues: $8.59M (up 69.7% YoY).

• Gross loss improved to $1.18M in Q2 2026 from $1.55M in Q2 2025; six-month gross loss was $0.96M.

• Operating loss for Q2 2026 was $2.85M, a 24.1% improvement YoY; six-month operating loss was $3.89M.

• Net loss from continuing operations: $3.79M for Q2 2026; $5.04M for six months.

• Cash and cash equivalents at June 30, 2026: $0.83M; working capital deficit of $2.05M.

Outlook and guidance

• Management expects to continue accessing capital markets via a $25M equity line of credit, with $19.36M available as of the report date.

• Substantial doubt remains about the ability to continue as a going concern due to ongoing losses and negative cash flows.

• Recent divestitures and cost reductions are expected to improve future profitability, but success depends on restoring positive cash flows and raising additional capital.