Digital Ally Reports Higher Sales and Earnings, Net of One-Time Tax Benefit, for Third Quarter and First Nine Months of 2008
Source PRNOTW
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
Gross profits increased 56% to
Basic and diluted earnings per share totaled
Non-GAAP adjusted net income (net income before income taxes,
depreciation, amortization and stock-based compensation), a non-GAAP financial
measure, increased 68% to
For the nine months ended September 30, 2008 , the Company reported that
its revenue increased 110% to approximately
Basic and diluted earnings per share totaled
Non-GAAP adjusted net income increased 172% to
"I am pleased to report that the results for the three months ended
September 30, 2008 , represented a substantial increase in our sales, pretax
income and non-GAAP adjusted net income (excluding depreciation, amortization,
income tax benefits and stock-based compensation), when compared with the
prior-year period," stated Stanton E. Ross , Chief Executive Officer of Digital
Ally, Inc. "We are proud of the 110% increase in sales and 172% rise in
non-GAAP adjusted net income achieved during the first nine months of 2008, as
we have continued to increase our share of the market for in-car video systems
within the domestic and international law enforcement communities. Operating
income of
"The U.S. economic recession has worsened in recent months and this, along
with the collapse in the housing market, has reduced tax revenues for many
state, county and local governments, thus forcing some law enforcement
agencies to delay near-term purchases of equipment," continued Ross. "While
we are not immune to such macro-economic factors and recognize that caution is
required in making any forecasts, we are confident in our ability to expand
market share and successfully enter new markets in the coming quarters.
International markets have become a significant and consistent source of
business for us, representing a trend that we believe will continue in the
fourth quarter of 2008 and into 2009. In light of the various complementary
products and marketing initiatives we are developing, we believe new records
in sales and earnings will be achieved in the fourth quarter of 2008 and in
the year 2009. For the year ending December 31, 2008 , we now expect sales to
be between
"We continue to pursue an aggressive research and development program, with projects underway that are focused on (1) new products designed for the school bus, mass transit, taxi cab, military and other markets and (2) upgrades to our existing product lines. During the next twelve months, we expect to begin marketing at least six complementary new products and/or product upgrades to new and existing customers. This should allow Digital Ally to maintain a rate of growth in sales and earnings that substantially exceeds that of our competitors and our industry."
"We ended the third quarter with a very strong balance sheet. After
expanding inventories and accounts receivable to support our growth, and
repurchasing over 210,000 shares of DGLY common stock in the open market since
August 2008 , our cash and cash equivalents at September 30, 2008 exceeded
Non-GAAP Financial Measures
Digital has provided financial information in this release that has not been prepared in accordance with GAAP. This information includes non-GAAP adjusted net income. Digital uses such non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Digital's ongoing operational performance. Digital believes that the use of these non-GAAP financial measures provides an additional tool for investors in evaluating ongoing operating results and trends and in comparing its financial measures with other companies in Digital's industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial measures discussed above exclude certain non-cash expenses/income, including: (1) income tax expense/benefit, (2) depreciation and amortization expenses and (3) share-based compensation expense pursuant to SFAS 123(R).
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure as detailed above. As previously mentioned, a reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.
Investor Conference Call
The Company will host an investor conference call at 11:00 a.m. Eastern Time tomorrow , October 30, 2008 , to discuss its third quarter and nine-month operating results, along with other topics of interest. Shareholders and other interested parties may participate in the conference call by dialing 800-860-2442 (international/local participants dial 412-858-4600) and asking to be connected to the "Digital Ally, Inc. Conference Call" a few minutes before 11:00 a.m. EDT on October 30, 2008 . The call will also be broadcast live on the Internet at http://www.videonewswire.com/event.asp?id=51880. A replay of the conference call will be available one hour after the completion of the conference call from October 30, 2008 until December 29, 2008 by dialing 877-344-7529 (international/local participants dial 412-317-0088) and entering the conference ID 423909.
The call will also be archived on the Internet through November 29, 2008 , at http://www.videonewswire.com/event.asp?id=50129 and on the Company's website at http://www.digitalallyinc.com.
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 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 Nasdaq Capital Market under the symbol "DGLY".
This press release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Act of 1934. These forward-looking statements are based largely on the
expectations or forecasts of future events, can be affected by inaccurate
assumptions, and are subject to various business risks and known and unknown
uncertainties, a number of which are beyond the control of management.
Therefore, actual results could differ materially from the forward-looking
statements contained in this press release. A wide variety of factors that
may cause actual results to differ from the forward-looking statements
include, but are not limited to, the following: the Company's ability to have
all of its new product offerings perform as planned or advertised; whether the
Company will be able to produce and market six new products or product
upgrades in the next 12 months; whether there will be a commercial market,
domestically and internationally, for one or more of such new products or
product upgrades; its ability to commercialize its products and production
processes, including increasing its production capabilities to satisfy orders
in a cost-effective manner; its ability to continue to increase revenue and
profits, including the achievement of
(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 TO BE FILED
WITH THE SEC) DIGITAL ALLY, INC. CONDENSED STATEMENTS OF INCOME FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Revenue $8,451,270 $5,100,525 $25,940,996 $12,359,594 Cost of revenue 3,283,446 1,789,765 9,914,682 4,685,163 Gross profit 5,167,824 3,310,760 16,026,314 7,674,431 Operating expenses 3,798,436 2,496,197 9,882,156 6,275,917 Operating income 1,369,388 814,563 6,144,158 1,398,514 Financial income (expense): Interest income 22,221 6,445 71,518 15,630 Interest expense - (589) - (27,703) 22,221 5,856 71,518 (12,073) Income before income tax provision 1,391,609 820,419 6,215,676 1,386,441 Income tax (provision) benefit (518,000) 2,153,143 (2,253,000) 2,153,143 Net income $873,609 $2,973,562 $3,962,676 $3,539,584 Net income per share information: Basic $0.06 $0.21 $0.26 $0.26 Diluted $0.05 $0.18 $0.22 $0.23 Weighted average shares outstanding: Basic 15,736,559 13,963,820 15,181,662 13,637,108 Diluted 17,634,577 16,087,850 17,625,361 15,141,322(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 TO BE FILED
WITH THE SEC) DIGITAL ALLY, INC. RECONCILIATION OF NET INCOME TO NON-GAAP ADJUSTED NET INCOME FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (unaudited) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Net income $873,609 $2,973,562 $3,962,676 $3,539,584 Non-GAAP adjustments: Income tax provision (benefit) 518,000 (2,153,143) 2,253,000 (2,153,143) Stock-based compensation 531,947 385,756 1,106,258 1,294,277 Depreciation and amortization 159,814 36,398 292,911 125,405 Total Non-GAAP adjustments 1,209,761 (1,730,989) 3,652,169 (733,461) Non-GAAP adjusted net income $2,083,370 $1,242,573 7,614,845 $2,806,123 Non-GAAP adjusted net income per share information: Basic $0.13 $0.09 $0.50 $0.21 Diluted $0.12 $0.08 $0.43 $0.19 Weighted average shares outstanding: Basic 15,736,559 13,963,820 15,181,662 13,637,108 Diluted 17,634,577 16,087,850 17,625,361 15,141,322(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 TO BE FILED
WITH THE SEC) DIGITAL ALLY, INC. CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (unaudited) Nine Months Ended September 30, 2008 2007 Cash Flows From Operating Activities: Net income $3,962,676 $3,539,584 Adjustments to reconcile net income to net cash flows (used in) provided by operating activities: Depreciation and amortization 292,911 125,405 Stock based compensation 1,106,258 1,294,278 Common stock issued in lieu of cash compensation - 87,500 Reserve for inventory obsolescence 175,575 185,394 Reserve for bad debts 1,776 27,646 Deferred tax provision (125,000) (2,153,143) Change in assets and liabilities: (Increase) decrease in: Accounts receivable - trade (5,371,199) (1,854,578) Accounts receivable - other (210,483) 57,225 Inventories (3,991,078) (890,167) Prepaid expenses 5,339 (75,152) Other assets 47,815 (63,503) Increase (decrease) in: Accounts payable 1,078,264 249,142 Accrued expenses 416,930 315,009 Income taxes payable (101,140) - Customer deposits (235,933) (4,420) Unearned income (3,864) 8,074 Net cash (used in) provided by operating activities (2,951,153) 848,294 Cash Flows from Investing Activities: Purchases of furniture, fixtures and equipment (1,066,043) (360,322) Intangible assets acquired (116,392) - Other assets - deposits - (10,837) Net cash (used in) investing activities (1,182,435) (371,159) Cash Flows from Financing Activities: Repayment of line of credit, net - (500,000) Purchase of treasury stock (1,624,353) - Proceeds from exercise of stock options and warrants 2,374,972 165,000 Excess tax benefits related to stock-based compensation 2,345,000 - Net cash provided by (used in) financing activities 3,095,619 (335,000) Increase (decrease) in cash and cash equivalents (1,037,969) 142,135 Cash and cash equivalents, beginning of period 4,255,039 57,160 Cash and cash equivalents, end of period $3,217,070 $199,295 Supplemental disclosures of cash flow information: Cash payments for interest $ - $27,703 Cash payments for income taxes $131,000 $ - Supplemental disclosures of non-cash investing and financing activities: Common stock surrendered as consideration for cashless exercise of stock options $539,566 $ - Common stock issued for settlement of note payable $ - $500,000SOURCE Digital Ally, Inc.