Digital Ally, Inc. Reports Record Third Quarter Sales and Earnings

For the nine months ended September 30, 2007 , the Company's revenue totaled approximately $12.4 million, compared with revenue of approximately $2.3 million in the first nine months of 2006. Gross profits totaled $8,271,618 in the first nine months of 2007, for a gross profit margin of 66.9% of revenue, compared with gross profits of $1,276,718 (56.2% of revenue) for the nine months ended September 30, 2006 .

The Company reported net income of $3,539,584 for the nine months ended September 30, 2007 , versus a net loss of ($3,196,034) in the corresponding period of the previous year. Basic earnings per share of $0.26 in the first nine months of 2007 compared with a net loss of ($0.25) per share in the year-earlier period. Diluted earnings per share totaled $0.23 in the nine months ended September 30, 2007 , versus a net loss of ($0.25) per share in the first nine months of 2006. Net income for the nine months ended September 30, 2007 included a $2,153,143 income tax benefit. This benefit resulted from the Company's reduction of its deferred tax valuation allowance due to the utilization of its net operating loss carryforward in the period and anticipated future usage of the carryforward because of its expected profitability, among other items. Excluding this income tax benefit, the Company would have reported record net income of $1,386,441, or $0.10 per basic and $0.09 per diluted share, for the nine months ended September 30, 2007 .

The Company incurred non-cash stock compensation expense of $1,294,278 for the nine months ended September 30, 2007 , compared with $1,578,336 in the corresponding period of the previous year.

"From a balance sheet perspective, our financial condition continued to strengthen during the first nine months of 2007," observed Ross. "As of September 30, 2007 , we had no debt outstanding and our shareholders' equity totaled approximately $7.5 million. By comparison, at the end of 2006, the Company had $1 million in outstanding debt and shareholders' equity of approximately $1.9 million."

The Company will host an investor conference call at 11:00 a.m. Eastern Time today, November 7, 2007 , to discuss its third quarter and nine-month operating results and the outlook for the balance of 2007. Shareholders and other interested parties may participate in the conference call by dialing 866-406-5369 (international/local participants dial 973-582-2847) and referencing the ID code 9407945 a few minutes before 11:00 a.m. EST on November 7, 2007 . A replay of the conference call will be available two hours after completion of the conference call from November 7, 2007 until November 14, 2007 by dialing 877-519-4471 (international/local participants dial 973-341-3080) and entering the conference ID 9407945.

About Digital Ally, Inc.

Digital Ally, Inc. develops, manufactures and markets advanced technology products for law enforcement, homeland security and commercial security applications. The Company's primary focus is the field of Digital Video Imaging and Storage. For additional information, visit http://www.digitalallyinc.com

The Company is headquartered in Overland Park, Kansas, and its shares are traded on the OTC Bulletin Board under the symbol "DGLY."