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Digital Ally, Inc. Reports Sales of $4.1 Million

Digital Ally, Inc. Press Release

FlashlightNews.org - 3/1/2007

Maker of digital video flashlight enjoys impressive first-year sales levels

Digital Ally's Video Flashlight

Digital Ally's Video Flashlight

LEAWOOD, Ks. - Digital Ally, Inc. (OTC: DGLY), which develops, manufactures and markets advanced video surveillance products for law enforcement, homeland security and commercial security applications, today announced its audited financial results for the year ended December 31, 2006. The Company’s financial statements have been posted on the Internet at www.pinksheets.com and www.digitalallyinc.com.

For the year ended December 31, 2006, the Company’s revenues totaled approximately $4.1 million, compared with no revenues in the twelve months ended December 31, 2005. The Company began shipping its digital surveillance products to customers in March 2006. Digital Ally, Inc. reported a net loss of ($3,361,227) or ($0.26) per share, for 2006, versus a net loss of ($2,340,287), or ($0.27) per share, in 2005. The net loss for 2006 included non-cash stock option expense of approximately $1.8 million related to stock options granted under the Company’s 2005 and 2006 Stock Option Plans. The weighted average number of shares outstanding totaled 12,829,610 in the year ended December 31, 2006, compared with 8,675,027 in 2005.

Digital Ally CEO Stanton E. Ross, noted the following accomplishments during and subsequent to the year ended December 31, 2006:

  • Impressive growth in sales each quarter, as follows:
    • First Quarter = $0.1 million
    • Second Quarter = $0.8 million
    • Third Quarter = $1.4 million
    • Fourth Quarter = $1.8 million
  • Receipt of orders for Compact Digital In-Car Video Systems (DVM) from law enforcement organizations in 45 states and 10 foreign countries, as well as from a number of U.S. government agencies.
  • Strong response to the Company’s exhibition at the 113th Annual International Chiefs of Police (IACP) Conference in Boston during October 2006.
  • First commercial shipments of Digital Video Flashlight (DVF) during the fourth quarter of 2006.
  • The achievement of positive cash flow from operations in December 2006.
  • Receipt of the largest order in Company’s history, from the West Virginia State Police, in February 2007.

“We recorded impressive sequential growth in quarterly revenue throughout the year, and 2006 ended on a strong note with $1.8 million in fourth quarter sales,” stated Mr. Ross. “I am also pleased to report that we shipped over $2.0 million in digital surveillance products during the first two months of 2007, and it now appears that first quarter sales will reach or exceed $3.0 million.”

“Our greatest challenge during the past year has involved the ramping up of production capabilities in order to meet the growing demand for our products on a timely basis. Late in 2006, we more than doubled the size of our existing assembly facility, and this should allow the Company to increase its production of DVMs and DVFs substantially to meet growing demand as the current year progresses. In addition, our research and development team is working on a number of complementary new products, including consumer applications, and our goal is to launch one or more of these new products during 2007.”

“We achieved a major milestone during the month of December 2006, when the Company’s operations were cash-flow-positive. I consider this a significant accomplishment in light of the fact that Digital Ally has been shipping products to customers for less than a year.”

“While most of the orders we received during 2006 involved small unit shipments to a growing number of police departments and other law enforcement agencies that wanted to see how well our DVMs performed ‘in the field’, we are now seeing more orders and inquiries involving larger scale deployments of our surveillance technology,” continued Ross. “In February 2007, we announced a one-year contract with the West Virginia State Police that allows for all state, county and municipal law enforcement agencies within the State of West Virginia to purchase our DVM-500 incar video systems. We are currently in discussions with several other state police agencies, as well as law enforcement organizations in a number of foreign countries. Management is very optimistic regarding the outlook for the year 2007, when we plan to leverage the credibility established in the past twelve months to increase sales significantly and achieve profitability.”

About Digital Ally, Inc.

Digital Ally, Inc. is involved in the development, manufacturing and marketing of advanced technology products for law enforcement, homeland security and commercial security applications. The Company’s primary development focus involves the field of Digital Video Imaging and Storage.

For additional information, visit www.digitalallyinc.com.

The Company is headquartered in Leawood, Kansas, and its shares are traded on the Pink Sheets under the symbol “DGLY”.



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