Business Context and Reporting Period
This Form 8-K is filed by Digital Ally, Inc. (not Kustom Entertainment, Inc.) on January 14, 2020, regarding events occurring on January 8, 2020. The Company is incorporated in Nevada and its common stock (Symbol: DGLY) is listed on the Nasdaq Capital Market.
Key Financial Metrics
The filing does not provide specific financial data such as revenue, profit, cash flow, margins, debt, or liquidity. The report focuses exclusively on regulatory compliance regarding the Market Value of Listed Securities (MVLS).
Material Changes and Events
- Nasdaq Non-Compliance: On January 8, 2020, Nasdaq notified the Company that it failed to regain compliance with the MVLS Standard (Rule 5550(b)(2)).
- Threshold Breach: The Company's market value of listed securities remained below the required $35 million minimum for the entire 180-day grace period (ending January 7, 2020).
- Initial Notice: The Company was originally notified of non-compliance on July 11, 2019, after the MVLS was below $35 million for 30 consecutive business days.
Outlook, Risks, and Management Commentary
- Appeal Filed: On January 13, 2020, the Company requested a hearing to appeal the delisting determination. The hearing is scheduled for February 20, 2020.
- Compliance Plan: The Company must submit a plan to the Nasdaq Hearings Panel detailing how it intends to regain compliance with the $35 million MVLS requirement.
- Trading Status: Trading suspension is stayed pending the appeal. The stock will continue to trade on Nasdaq until a written decision is issued.
- Delisting Risk: If the appeal fails, the stock will be delisted from Nasdaq and is expected to trade on the OTC Markets Group.
- Uncertainty: Management states there can be no assurance that the Panel will grant continued listing.
Investor Verification Checklist
- Verify the current Market Value of Listed Securities (MVLS) to assess the gap from the $35 million threshold.
- Monitor the outcome of the Nasdaq Hearings Panel scheduled for February 20, 2020.
- Review the specific compliance plan submitted by the Company to Nasdaq.
- Assess the potential impact of a transfer to the OTC Markets Group on liquidity and trading volume.