This conference call contains forward-looking statements within the meaning of Section 27E of the Securities Exchange Act of 1934 as amended relating to Digital Ally's future business expectations and projections and financial condition and results of operations. These forward-looking statements involve certain risks and uncertainties. Digital Ally has listed some of the important factors that could cause actual results to differ materially from those discusses such forward-looking statements, which are referred to as cautionary statement in its earnings press release, which can be viewed under company's website. All subsequent listed are forward-looking statements, attributable to the company at present acting on its behalf are expressly qualified in their entirety by such cautionary statements. I would like to turn the call over to our speaker today Stan Ross. You may begin.

Thank you very much and thanks everybody for joining us. This is going to be quite an exciting call. We're very excited to be able to go over and recap the third quarter numbers with. Tom Heckman, our CFO, is here to do that. We also want to have the opportunity to -- I guess really for the first time, to elaborate a little bit on the acquisitions that we've made to date, including give you some insight on valuations associated with those acquisitions. And then also, give you some insight in regards to how we see the remainder of this year playing out along with 2022 in regards to new products, acquisitions, and stuff that we have along the lines. And then I'm going to close with as we haven't done it some time, but because of the clarity I think of where we're at and what we have to offer, we'll give you guidance on what we believe how our fourth quarter will come in and then also guidance on 2022 right before we close up to go into the Q&A. So a couple of exciting things to cover today. But let me -- let's get started with the third quarter numbers with Tom Heckman.

Thank you, Stan and welcome everyone. I appreciate you joining us today. We will be filing our 10-Q shortly. So, please review the 10-Q for more -- complete discussion of what happened during the quarter. We did do a press release this morning and showing our third quarter financials, which really is the first quarter that everyone can see the results of our new strategy of acquisitions and not just relying on our core business the Video segment and Shield segment. So, just as a recap, when COVID hit, it really had a damaging impact, especially on our commercial video segment. The cruise lines shutdown, taxicabs pretty much shutdown, so on and so forth. So, from that, and through the Board and Stan's leadership, we decided to go out and embark on an acquisition strategy to diversify somewhat away from our core business. Not that we're not going to focus on the core business, but we wanted to grow the company by accretive acquisitions. And we did finalize three acquisitions here year-to-date that we'd like to go over a little further. Our overall goal through these acquisitions is we look for companies that can benefit from our corporate infrastructure, our access to capital and our synergies and leadership. And as we get deeper into the acquisitions that we've done, I'm hopeful that you'll see the type of synergies and infrastructure and capital access, how that's going to impact positively the acquisitions that we did, as well as our consolidated company after the acquisition. If you look at the acquisitions, we really did two different areas. First was the healthcare division. And that is really a medical billing service, where they bill -- doctor services, hospital services, and it really just professional services. It's a roll up strategy. It's a very…

Great. Thanks a lot Tom. And again, we're very excited about the acquisitions that we made. And I think one of the things that I want to touch on is that when we do look at opportunities that are out there, we're looking at number one is how this acquisition -- we can sit there and enhance it. And I mean, by enhancing it through our contacts, our relationships, whether that be with law enforcement or situational security, or some of our partnerships that we've had over the years. And we're starting to see that rather quickly in regards to TicketSmarter for sure. And we know that we will get there as well with Nobility on the healthcare. We've been very successful in selling our ThermoVu and some of our other products into very nice hospitals and clinics throughout the country. And those are acquisitions or those are opportunities that Nobility we could make the introduction and they possibly could be able to do the billing for them, whether they just go ahead and outright do it and the handle the fee side of it, or maybe they've already have someone and that they get defer them to, and it may be a potential acquisition for Nobility. So, we look at those type of things and like TicketSmarter, obviously, we've talked about NASCAR, we've talked about Indy, we've talked about the situational security we do for NFL teams. Again, we have some of the highest level of capability of introducing them and hopefully because of our relationships, getting them the business of either clearly being involved in the secondary market, but maybe even being able to primary and that would continue to enhance their numbers, which we believe we're seeing. And I'll elaborate on that when I give guidance here…

[Operator Instructions] Our first question comes from the line of Rommel Dionisio from Aegis Capital.

Good morning. Congratulations on the quarter. Sounds like you guys -- a lot of exciting things going on. I wanted to ask, so many are chatting about this or talking about this supply chain challenges with regards to components and shipping. Could you maybe walk us through the impact that might have happened [core Ally[ (ph)? I realize there's a lot of moving parts and it's probably had more to do with your core business than anything else. But could you just maybe talk us through the margin impact and maybe the outlook going forward for that? And to the extent also, just on top of that, you could maybe pass-through some price increases to your customers there. Thanks.

Yeah. I'll let Tom handle a little bit, but I will just make the one comment. One of the things that we did early on when we were fortunate to have some additional capital come into the company, we did look at our long lead items and some of the more crucial items and went ahead and bought in, in rather large quantities. For a couple reasons, one, the discounts that we could get associated with that. And just knowing that -- because of the lead time, we needed to make sure and be in a position that if there did become a supply issue, we wouldn't be facing it. But it is truly out there. And the pricing -- and such that some of our PPE products, we're seeing [C&B effected] (ph).

Yeah. From a shipping time and shipping costs, it's just been very, very difficult. Just getting cargo on a ship has been difficult and the pricing of the shipping has been very difficult as well. So -- but I think our -- one of our bigger challenges is people. We've taken a couple of initiatives to increase salaries, do a little more stock compensation for people to retain them. But it's very, very difficult on the labor market. And we're seeing direct results of that, especially in our Video segment on the sales side. We're challenged with getting the number of salesmen and the quality of salesmen out there that we really would like to have. So, we're getting difficulties in both sides, labor and the cost of shipping and the supply chain itself.

Okay. And just to clarify the guidance, and Stan, that was very, very helpful for us and for you to do. Looking at $50 million in excess, I think you said for next year, is that all from -- that would just be the company with what you've acquired so far and what you've announced, or does that assume additional acquisition. So I just wanted to clarify that.

No. And I'll give you a little more insight, on it a little bit. I mean, I think the medical billing company, I mean, just what they really got as a run rate right now -- right, and I'm talking about right now and a couple of acquisitions that they've already got some letters of intent on, it's probably going to come in somewhere between eight and 10. Okay? And so, then if you look at TicketSmarter and how they're performing and again, so excited about the opportunities to introduce them to a lot of our partners that we've already have out there, such as NASCAR, I mentioned numerous times, but I'd be surprised if they'll come in around 30. And so, you look at our new products and you look at the run rate and you don't try to get too crazy because you know that our subscription model, obviously, is a lot better, lot different revenue looking when you're deferring the cost over five years or three to five years. So, you don't try to ramp that up just dramatically, but again, there's no reason it's not going to do $10 million to $15 million. And so, I'm not putting any burden on the Shield. I'm not putting any new burdens on us, having to go out there and create new acquisitions. So, I know where you're -- I believe I know where you're going on the question, but that's pretty much what we see as a run rate right now, let alone if we can be successful in finding more opportunities.

Great. All right. Thanks again. Congratulations again, guys.

Thank you.

Our next question comes from the line of Bryan Lubitz from Aegis Capital.

Morning, gentlemen.

Good morning, Bryan.

Nice quarter, and it looks like we're going to have some wind in our sails moving forward. In terms of the $50 million and guidance -- and Stan, you just elaborated. Now, these companies that you're acquiring, are you looking for basic synergies where you're going to leverage your Rolodex and it's going to grow from the $50 million and you anticipate year-over-year, just consistent growth, or is this the run rate you just kind of expect, and as you acquire more companies, that'll add to the bottom line?

You hit it on the head, Bryan. I mean, the very, very first thing I look at, obviously, we don't want to catch a falling knife. We're not looking to get too involved in startups and stuff like that. We're looking for companies that are Rolodex. Our relationship with all our partners and the -- let's say, the distribution channel that we have and doors that we can open, that is number one. If we can sit there much like TicketSmarter or the medical billing, and know that if they could just get introduced to this party and get a little more business here and there, and maybe even expand on instead of the secondary market, more of the primary market because of relationships, that is absolutely number one on the box. It's got to be the need for the Rolodex in our infrastructure. Number two is where the capital comes into play. We can find companies out there that are still trying to recover from COVID and maybe the -- what was it that the PPP money helped them. And maybe there's some other monies after that, or that's helped them stay afloat, but to really get healthy and get back into the game, it's going to take time, although their numbers have turned around much like TicketSmarter. I mean, there, we could see they were turning the corner. So, instead of them taking a couple of years to get healthy, we can help them heal them up overnight and not without -- not a lot of capital needed to do that, but what gives them the real jumpstart and a leg up on those that are having to recover slowly. So, those number one and two, and then it really -- there's a lot of entities out there where if you really look at our -- I guess, again, infrastructure that we have on the corporate level, whether it be some assistance in engineering, some assistance in our web design, assistance in HR, I mean, insurance, all the above. I mean, there's things like that, that we bring to the table that can be very accommodating as well. And so, those are the three things that we really want to see. And then, we also are checking the boxes to make sure that we're doing things that we believe are very accretive to our shareholders.

Okay. Now, with all that being said, you guys -- your core business for a very long time has been the body camera. And I know you guys just released the EVO 2, which does look exciting. I've seen all the features on it. The service revenue that you generate from that, as you mentioned, is spread out over time with the subscription program, great margins. Are you guys shifting your business model where that's not going to be your core business? I mean, because $30 million from the ticket sales alone is going to do more revenue than I've seen you guys doing in five or six years, just off the cameras.

Yeah. I mean, Bryan, I think our all time high with when we were just in the -- in-car system. And I don't even know that we had that many body cameras way back when was $33 million, that was an all-time high in annual sales. So, we're, obviously, looking at shattering it in 2022. We will not lose focus on our core business. The only difference is that we got to look at it a little differently instead of the core business being law enforcement. It's more a video solutions. So, we continue to expand our footprint, because the law enforcement sector is only 18,000 agencies. And you may notice, I mean, the 800 pound gorilla in the industry has now started getting into dabbling into the commercial side of business as well, because you go sell up in-car system to an agency that has a five-year warranty, or is on a five-year subscription or the same thing with a body camera. That -- they're pretty much out of the market for you for, at least, five years, unless they want to upgrade or get another car or additional personnel. So, you've got to sit there and expand into the different markets like we have with the -- in the taxicabs and other fleets, and other areas where this type of technology comes in. So, while we -- we'll always have a good position in law enforcement, we've got to look at ourselves as a video solutions company, because we are going to get into a lot of other areas that are just extensions of what we started 10 years ago, or better in law enforcement. We're not abandoning.

Okay. I'm not saying that you are -- I'm just -- I'm curious. Now when you get tickets sales, you get these acquisitions, is your goal to not only introduce them to the NASCAR and MetLife and Kansas City partnerships, but is your goal to get there, for example, it doesn't the ticket company manage over 200 college stadiums, is to goal to get the Shield product and hopefully the body cameras on the people that work at those stadiums. Is that where you see the synergy?

Absolutely. Yeah. You're dead on. You're dead on. I mean, they -- so there are certain areas where his infrastructure has, or distribution channel, however you want to say it, have some very good contacts. Because I mean, he's negotiated some very good deals at the very highest level of those institutions. And so, again, he can make that introduction for our video solutions division, our Shield division. And hopefully again, we expand on the Digital Ally family of companies or slash products, I'm already seeing it. I mean, there's a couple of incidents right now where we went and talked to them and they understand all this services and products and capabilities that we have, meaning Digital Ally. And they don't -- they all of a sudden look at us differently. Then a secondary ticket company, as when he's going in there. So, yes. The web, the networking that we're -- these acquisitions are very, very important to us.

Okay. Last question. I think this is more for Tom. I'm not sure, Tom, if you've covered, where you guys sit currently in terms of your cash position.

Yeah. Bryan, we're over $41 million in cash. So, we got plenty of cash on the balance sheet. We've got 30 -- $35 million in positive working capital and $56 million in net equity. So, our balance sheet is very, very strong right now. And it gives us a great platform to go out and do more acquisitions. That's why it's so important that we do get these -- this increase in authorized shares approved by the shareholders.

And Bryan, again, that's why I sort of wanted to point out to really emphasize, the acquisitions that we made, while it's going to take some analysts and some people that really see what's going on to get to get behind it, we're going to get there. But these are very creative acquisitions that we've made. And there are comparisons out there that you -- on the Street that you can look at. And if you sat there and did, value the medical billing company, as I mentioned, compared to other publicly held companies, and you did TicketSmarter the same way as some other privately held companies and then law and everything else, we're as frustrated with the stock prices as anybody, because there's a lot of underlying value there.

Well, it's clear that you guys are undervalued. And I'll say it to you again -- I've said it probably on the last four or five calls. I know corona is kind of put a crimp in -- you come in to hang out with me in New York, but we got to get you guys out here. You got to get on the road show California, wherever, because a quarter like this, and no one knows, we got to get that word out there. We need more analysts. We need more support because $50 million, if you guys get to that next year, when you get to that next year, I've been with you guys for 10 years on and off, I've never seen you do a number like that. So, I'm real excited for you guys as well.

Appreciate it, Bryan, and look at your calendar after Thanksgiving. I'll be there.

Super. And Tom, get something for that cough [ph] back there. It looks like you're going through the same thing we are up here. All right.

Yeah.

All right, guys. Listen, happy Thanksgiving to you. I look forward to speaking to you soon.

Sounds good. Same to you, Bryan.

Our next question comes into line as Patrick McGrady from Stonefish Capital.

Hey. Good morning, guys. Thanks for taking my question. Tom, I wanted to see -- I may have missed it, but can you just break down the gross and the net margins for the three business lines?

Well, the -- at the gross margin line, we're looking at about 30% in the traditional business, as gross margin, roughly the same in TicketSmarter business 30% and 35% in Nobility. Now, Nobility, that's prior to any integration and synergies, because our partner at Nobility, gosh, they employ about 500 people billing specialists that are going to be leveraged into that platform. So, we're up -- excuse me -- we're looking for much improvement on Nobility side, as well as the TicketSmarter and hopefully, the traditional video segment.

Okay. Great. And I have one follow-up question. Now that you guys have acquired these two or starting these two new businesses, it seems like you're generating some good net income. You got a lot of cash on hand. I know that you're proposing to do an increase in shares or share sales potentially in the future. But can you talk a little bit more about using organic cash flow and cash on hand for these acquisitions?

Yeah. This is Stan. I'm sure Tom will chime in as well. I mean, absolutely, right now, we think that we're quite undervalued and would prefer to look at opportunities and utilize the cash. What happens though, you do have -- like a lot of our acquisitions, we're really not looking to acquire something that we've got to backfill with personnel. And so, those that are wanting to stay recognize the difference of being privately held versus publicly held and maybe also recognize the upside value associated with it, so they are requesting stock. And so, what we want to do is make sure -- like Tom said, it's very expensive to do this procedures, especially with -- you really got to reach out and try to grab that guy that has a thousand shares and said can you vote your shares please? And hopefully you'll support the board and management in how you vote. But to get the amount of numbers that we have to is expensive, so we want to go ahead and do it one time and be in a position that when we do find more TicketSmarters and medical billing companies, that we can make sure and do something that's accretive obviously, but we also can have some very happy and committed employees that are coming along with that entity.

Yeah. And I'll just echo what Stan said, a lot of these acquisition, the owners and the upper level management want -- they see the synergies and the incentive of joining the Digital Ally companies. And with that they want common stock. They want, as part of the consideration that they're being paid for the acquisition, as well as some restricted stock based on cash flows in the future and in operating results. So, we just need to have that quiver in our -- that arrow in our quiver to be able to use when and as needed. We're not going to just give away stock, hopefully that's not coming through here. I realized we are asking for a large increase, $100 million to $300 million. But again, the reason we're doing that is it's so darn expensive. And it's such a drag on and focus of management right now that could be spent better on operations and that -- and we're having to do a lot of outreaches to potential shareholders to talk to them about voting and all that stuff. So, that's more of the reason. We're going to be judicious in giving out those shares. But I think, by doing so, it's going to attract better management. It's going to attract better acquisitions for the company that it'll be accretive to the current shareholders.

Yeah. That's very helpful. I appreciate that explanation. And then, Nobility and TicketSmarter, are you guys -- obviously, great deals for you guys. Good price points, it seems like in terms of getting in. Are you still seeing those types of opportunities in the marketplace? I know -- I think you probably hit it at a good time when you made those acquisitions, are you still seeing opportunities and the RCM business seems to -- seem like there's a lot of growth there in the future here?

Yeah. So, I guess, the easier one is, is the medical billing side, because it is so fragmented. It is. I mean, there's a lot of mom and pops out there that being part of a bigger organization helps them too, because they can go into different clinics and hospitals and now say, no, we're a size of a 600 employees, not 30 or something along those lines. So, it helps their core business too. So, we're seeing quite a bit of those opportunities that are out there. The key is just to make sure do your due diligence and make sure the contracts are good. And long-term on that front. And the TicketSmarter, while we're excited about the potential of -- maybe there's some other entities out there along those ways, what I'm excited about is just the relationships in how well these relationships that -- the introductions that we've made, how receptive they have been to entertain TicketSmarter as maybe not just a secondary partnership, but actually step in as the primary, which again, is a bigger margins, bigger numbers, bigger all the above. So, I'm really been focusing on getting them in front of those opportunities. But meanwhile, my eyes open for what else may be out there.

Yeah. There are some complimentary businesses to TicketSmarter that we have been in touch with. And it's complimentary not competitors of TicketSmarter. Really what we're seeing is, customers don't want more vendors. They want fewer vendors and the more services we can provide around that in a one-stop shop the better. So, there's a number of laterals that we could go with TicketSmarter and Nobility for that matter, that's available for us. And we're looking at very, very serious now.

Well said. Because it is. Like I said, the one entity, it's a professional club. And when they realized what all we could do, everything from stepping in with -- our electrostatic sprayers, utilizing our HOCl Shield products to situational security and outfit and their security people on game day, with body cameras, along with helping them with the ticket sales. I mean -- or a concert, I mean, we offer quite a bit so far. And like Tom said, there's some other complimentary opportunities that were out there that we've been in talks with that we think will continue to enhance the company.

Perfect. No, that's great. A lot of exciting growth. I appreciate you guys answering my questions and congratulations again on the quarter and on the acquisition.

Well, thank you very much. And tell you what we're going to go ahead and take one more call. We've got -- take one more and then we'll go ahead and wrap this up.

We have the line of Rommel Dionisio from Aegis Capital.

Thank you so much, guys. I'll make it a quick one. So, as I look at the TicketSmarter business, I just want to ask, does it -- do you just feel it helps for that company to be part of a publicly traded larger financially stable, obviously significant cash reserve company in that segment of business? Do you get the sense that -- I see that they have links with ESPN and some of these other really high profile, can you just get the sense that just being part of you guys, a bigger company with, all this credibility in the marketplace, and obviously your other businesses brings credibility, it enables them to help win business faster than they otherwise would have won, as a standalone. Thanks.

Yeah. Well, absolutely. I mean, I'm glad you brought that up, because Jeff Goodman, he's the CEO of TicketSmarter, he's still the TicketSmarter CEO. And he has reflected that to me that, because of now the association with Digital Ally and some of the other things that we have to offer and the financial strength has greatly enhanced his ability to win this business. So, you're dead on. That was a great question. It has clearly assisted in what he's capable of doing.

Great. Thanks so much, guys.

Thank you all. Listen, thanks everybody for joining us today. Sorry. We had to delay it a couple of days. As Tom mentioned, we'll get that 10-Q file right away, and then also really encourage you to -- if you would reach out to your brokers wherever you need to, to submit your votes. Hopefully, you will follow the board and management's decision on own how we're going. And then again, we're just very excited about the future. So, have a wonderful Thanksgiving, happy holidays and be watching us closely. We're excited about finishing this year strong and having a wonderful 2022. Thank you all.

Ladies and gentlemen, this concludes today's conference call. Thank you everyone for participating. You may now disconnect.