Business Context and Reporting Period
This Form 8-K is filed by Digital Ally, Inc. (not Kustom Entertainment, Inc., as indicated in the metadata) on April 24, 2020, regarding an event that occurred on April 22, 2020. The Company is incorporated in Nevada and its common stock (Ticker: DGLY) is listed on the Nasdaq Capital Market.
Key Financial Metrics
This filing is a current report regarding listing status and does not contain financial statements. Consequently, data on revenue, profit, cash flow, margins, debt, and liquidity are not provided in this document.
Material Changes
- Non-Compliance Notification: The Company received notice from Nasdaq that it failed to meet Listing Rule 5550(a)(2) because its closing bid price remained below $1.00 per share for 30 consecutive business days.
- Compliance Timeline Extension: Due to the global market impact of COVID-19, Nasdaq suspended compliance periods from April 16, 2020, through June 30, 2020. The Company's deadline to regain compliance has been extended to December 28, 2020.
Outlook, Risks, and Contingencies
- Regaining Compliance: To maintain listing, the Company must achieve a closing bid price of at least $1.00 per share for 10 consecutive business days within the compliance period.
- Management View: Management believes its current operating and business plan will enable the Company to regain compliance.
- Delisting Risk: If the Company fails to comply by December 28, 2020, it may be afforded a second 180-day period if it meets other initial listing standards (excluding bid price). Failure to comply within all allotted periods will result in delisting and potential trading on the OTC market.
- Forward-Looking Statements: The filing includes standard disclaimers that actual results may differ materially from expectations due to various risk factors detailed in the Company's 2019 Form 10-K.
Investor Verification Checklist
- Verify the current closing bid price of DGLY stock to assess progress toward the $1.00 threshold.
- Review the Company's 2019 Form 10-K for detailed risk factors and financial health.
- Monitor future 8-K filings for updates on the compliance status or potential reverse stock splits.
- Confirm the Company's ability to meet the "market value of publicly held shares" requirement if a second compliance period is needed.