Digital Ally Reports Higher Sales and Earnings, Net of One-Time Tax Benefit, for Third Quarter and First Nine Months of 2008

OVERLAND PARK, Kan. , Oct. 29 /PRNewswire-FirstCall/ -- Digital Ally, Inc. (Nasdaq: DGLY), which develops, manufactures and markets advanced video surveillance products for law enforcement, homeland security and commercial security applications...


OVERLAND PARK, Kan. , Oct. 29 /PRNewswire-FirstCall/ -- Digital Ally, Inc. (Nasdaq: DGLY), which develops, manufactures and markets advanced video surveillance products for law enforcement, homeland security and commercial security applications, today announced substantially higher sales and earnings (excluding tax benefits) for the third quarter and first nine months of 2008. An investor conference call is scheduled for 11:00 a.m. EDT tomorrow , October 30, 2008 (see details below).

For the three months ended September 30, 2008 , revenue increased 66% to approximately $8.5 million, compared with approximately $5.1 million in the quarter ended September 30, 2007 . During the most recent quarter the total number of customers expanded to over 2,500.

Gross profits increased 56% to $5,167,824 (61.1% of revenue) in the most recent quarter, compared with gross profits of $3,310,760 (64.9% of revenue) in the third quarter of 2007. Pretax income rose 70% to $1,391,609 in the quarter ended September 30, 2008 , versus $820,419 in the prior-year period, even though the Company incurred substantial research and development costs and legal expenses related to the resolution of the L-3 Communications Mobile Vision patent litigation, in the most recent quarter. After an income tax provision of $518,000, the Company recorded net income of $873,609 in the third quarter of 2008. This compared with net income of $2,973,563, including a significant, one time, non-cash income tax benefit of $2,153,143, in the quarter ended June 30, 2007 .

Basic and diluted earnings per share totaled $0.06 and $0.05, respectively, in the quarter ended September 30, 2008 , compared with earnings of $0.21 per basic share and $0.18 per diluted share in the prior-year period. The weighted average number of basic shares outstanding increased 13% to 15,736,559 in the quarter ended September 30, 2008 , versus 13,963,820 shares in the third quarter of 2007. The weighted average number of diluted shares outstanding increased 10% to 17,634,577 in the most recent quarter, compared with 16,087,850 in the prior-year quarter.

Non-GAAP adjusted net income (net income before income taxes, depreciation, amortization and stock-based compensation), a non-GAAP financial measure, increased 68% to $2,083,370 ($0.13 per basic share and $0.12 per diluted share) in the most recent quarter, when compared with $1,242,573 ($0.09 per basic share and $0.08 per diluted share) in the quarter ended September 30, 2007 . (Non-GAAP adjusted net income is described in greater detail in a table at the end of this release).

For the nine months ended September 30, 2008 , the Company reported that its revenue increased 110% to approximately $25.9 million, compared with revenue of approximately $12.4 million in the first nine months of 2007. Pretax income increased 348% to $6,215,676, versus $1,386,441 in the corresponding period of 2007. After an income tax provision of $2,253,000, the Company reported net income of $3,962,676 in the first nine months of 2008, compared with $3,539,584 (which included an income tax benefit of $2,153,143) in the nine months ended September 30, 2007 .

Basic and diluted earnings per share totaled $0.26 and $0.22, respectively, in the nine months ended September 30, 2008 , versus $0.26 and $0.23, respectively, in the first nine months of 2007. The weighted average number of basic shares outstanding increased 11% to 15,181,662 in the nine months ended September 30, 2008 , versus 13,637,108 shares in the first nine months of 2007. The weighted average number of diluted shares outstanding increased 16% to 17,625,361 in the first nine months of 2008, compared with 15,141,322 in the prior-year period.

Non-GAAP adjusted net income increased 172% to $7,614,845 ($0.50 per basic and $0.43 per diluted share) in the nine months ended September 30, 2008 , versus $2,806,123 ($0.21 per basic and $0.19 per diluted share) in the corresponding period of the previous year.

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