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Digital Ally, Inc. Reports Record Sales

Digital Ally, Inc. Press Release (excerpted) - 5/01/2007

Digital Video Flashlight maker sees sales total $7.4 million during first twelve months of product availability

Digital Ally's Digital Video Flashlight

Digital Ally's Digital 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 record revenue and net income for the first quarter of 2007. The Company's financial statements have been posted on the Internet at and An investor conference call is scheduled for 4:15 p.m. EDT today, April 25, 2007 (see details below).

For the three months ended March 31, 2007, the Company's revenue reached approximately $3.4 million, compared with minimal revenues of approximately $12,000 in the first quarter of 2006. Revenue in the most recent quarter compared with approximately $1.8 million in the fourth quarter of 2006 and approximately $1.4 million in the third quarter of 2006, and continued a trend of impressive sequential growth in quarterly sales that has been evident since Digital Ally began shipping its advanced digital surveillance products in March 2006.

Gross profits totaled $2,076,166 in the first quarter of 2007, when gross profit margin approximated 60.3% of revenue. This compared with gross profit margins of 56.2% and 56.3% of revenue, respectively, in the third and fourth quarters of 2006. The Company reported net income of $236,514, or $0.02 per diluted share, in the quarter ended March 31, 2007, versus a net loss of ($1,016,559), or ($0.08) per share, in the corresponding period of the previous year. The weighted average number of diluted shares outstanding totaled 13,309,027 in the most recent quarter, compared with 12,200,027 in the first quarter of 2006.

Digital Ally CEO Stanton E. Ross, noted that the Company generated revenue of approximately $7.4 million during the twelve months ended March 31, 2007. Impressive sequential growth in revenue has been evident in each quarter, as follows:

* First Quarter 2006 = $0.01 million
* Second Quarter 2006 = $0.8 million
* Third Quarter 2006 = $1.4 million
* Fourth Quarter 2006 = $1.8 million
* First Quarter 2007 = $3.4 million

"I am extremely pleased to report that our first quarter 2007 sales increased more than 90% when compared with the fourth quarter of 2006, and we achieved profitability less than twelve months after the Company began shipping products to law enforcement agencies. We generated first quarter earnings before non-cash items, including, but not limited to, interest, depreciation, and stock option expense (a non-GAAP measure) of $743,259, and I am happy to report that the Company has been cash-flow-positive every month since December 2006." (Note: See table at the end of this release for further information on non-GAAP information.)

"The number of municipal, county, state, regional, federal and international law enforcement agencies ordering our In-Car Video Systems (DVM) continued to expand in the quarter ended March 31, 2007. The addition of our Digital Video Flashlight (DVF) to the Company's product line has also been well-received by customers, and our research and development team is working on a number of complementary new products that will advance the practical applications for our digital surveillance technology."

"Looking towards the balance of 2007, we believe Digital Ally should be profitable and cash-flow-positive for the full year, on sharply higher sales when compared with 2006 levels," concluded Ross.

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

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

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