DIGITAL ALLY |
DGLY |
| DIGITAL ALLY (DGLY) |
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| NASDAQ:DGLY |
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Digital Ally Reports Higher Sales and Earnings, Net of One-Time Tax Benefit, for Third Quarter and F
OVERLAND PARK, Kan., Oct. 29 /PRNewswire-FirstCall/ -- Digital Ally, Inc.
( 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. "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 $6,144,158 was 340% higher than the $1,398,514 we generated in the
first nine months of 2007." "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 $34 and $38 million, compared with $19.4 million in 2007, and our
operating margin should range between 22% and 26% of sales. While these
expectations are below our previous guidance, we believe Digital Ally will
have an outstanding fourth quarter and fiscal year relative to the overall
economy, our competitors, and our performance last year." "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 $3.2
million, and we had no short or long-term debt outstanding. Financially, we
believe the Company is well-positioned to pursue its near and long-term
strategic objectives, despite the uncertainties facing the U.S. and global
economies." 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 $34 to $38 million in revenues and an
operating margin of 22% to 26% in 2008; whether the Company will be able to
adapt its technology to new and different uses, including being able to
introduce new products; competition from larger, more established companies
with far greater economic and human resources; its ability to attract and
retain customers and quality employees; its ability to obtain patent
protection on any of its products and, if obtained, to defend such
intellectual property rights; the effect of changing economic conditions; and
changes in government regulations, tax rates and similar matters. These
cautionary statements should not be construed as exhaustive or as any
admission as to the adequacy of the Company's disclosures. The Company cannot
predict or determine after the fact what factors would cause actual results to
differ materially from those indicated by the forward-looking statements or
other statements. The reader should consider statements that include the
words "believes", "expects", "anticipates", "intends", "estimates", "plans",
"projects", "should", or other expressions that are predictions of or indicate
future events or trends, to be uncertain and forward-looking. The Company
does not undertake to publicly update or revise forward-looking statements,
whether as a result of new information, future events or otherwise.
Additional information respecting factors that could materially affect the
Company and its operations are contained in its reports on Form 10-KSB for the
year ended December 31, 2007 and Form 10-Q for the nine months ended September
30, 2008 as filed with the Securities and Exchange Commission. For Additional Information, Please Contact:
Stanton E. Ross, CEO at (913) 814-7774
or
RJ Falkner & Company, Inc., Investor Relations Counsel at (800) 377-9893 or via email at info@rjfalkner.com
(Financial Highlights Follow)
DIGITAL ALLY, INC.
CONDENSED BALANCE SHEETS
SEPTEMBER 30, 2008 AND DECEMBER 31, 2007
September 30, December 31,
2008 2007
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $3,217,070 $4,255,039
Accounts receivable-trade, less allowance for
doubtful accounts of $30,000 - 2008 and
$28,224 - 2007 5,892,434 523,011
Accounts receivable-other 422,170 211,687
Inventories 6,779,601 2,964,098
Prepaid expenses 227,562 232,901
Prepaid income taxes 75,140 -
Deferred taxes 815,000 795,000
Total current assets 17,428,977 8,981,736
Furniture, fixtures and equipment 2,246,361 1,180,318
Less accumulated depreciation and amortization (593,611) (301,632)
1,652,750 878,686
Deferred taxes 1,085,000 980,000
Intangible assets, net 115,460 -
Other assets 17,192 65,007
Total assets $20,299,379 $10,905,429
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,087,095 $1,008,831
Accrued expenses 924,625 507,695
Income taxes payable - 26,000
Customer deposits 7,238 243,171
Total current liabilities 3,018,958 1,785,697
Unearned income - 3,864
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value;
75,000,000 shares authorized;
Shares issued: 15,926,077 - 2008;
14,092,260 - 2007 15,926 14,092
Additional paid in capital 17,935,286 12,110,890
Treasury stock, at cost (210,360 shares) (1,624,353) -
Retained earnings (deficit) 953,562 (3,009,114)
Total stockholders' equity 17,280,421 9,115,868
Total liabilities and stockholders' equity $20,299,379 $10,905,429
(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 $ - $500,000
SOURCE Digital Ally, Inc.
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