DIGITAL ALLY, INC. ANNOUNCES 2019 FIRST QUARTER OPERATING RESULTS

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LENEXA, Kansas, May 15, 2019 (GLOBE NEWSWIRE) -- Digital Ally, Inc. (Nasdaq: DGLY), which develops, manufactures and markets advanced video surveillance products for law enforcement, homeland security and commercial applications, today announced its operating results for the first quarter of 2019.  An investor conference call is scheduled for 11:15 a.m. EDT on Wednesday, May 15, 2019 (see details below).

                        

“We are encouraged that our service- based revenues increased 31% from the prior year and continued our trend of growth in this area.,” stated Stanton E. Ross, Chief Executive Officer of Digital Ally, Inc. “We are also very pleased that we have settled our lawsuit with WatchGuard. The settlement should serve notice to the industry that we are the rightful owner of “auto-activation” patents and that we intend to defend our patents and to hold infringing parties responsible for their actions. We believe that this settlement begins our process of monetizing our robust patent portfolio and specifically the “auto-activation” technology that we invented and patented. We have long been the leading company in developing new and advanced technologies used by our law enforcement and commercial customers, and competitors like Axon have felt it necessary to infringe on our patents rather than develop their own new technology.” concluded Ross.

For the three months ended March 31, 2019, our total revenue increased by 3% to approximately $2.6 million, compared with revenue of approximately $2.5 million for the three months ended March 31, 2018.  The primary reasons for the revenue increase in 2019 compared to 2018 was that our service-based revenues were up 31%. However, our law enforcement revenues declined over the prior period due to the willful infringement of our patents and other actions by our competitors and adverse marketplace effects related to the patent litigation. We will introduce our EVO-HD in 2019 with the goal of enhancing our product line features to meet these competitive challenges. Our gross margin increased 7% to $1,181,740 for the three months ended March 31, 2019 versus $1,109,394 in 2018. The gross margin increase is commensurate with the 3% increase in total revenues and a decline in our cost of sales as a percentage of revenues to 54% during the three months ended March 31, 2019 from 55% for the three months ended March 31, 2018.

Selling, General and Administrative (“SG&A”) expenses increased approximately 38% to $4,267,898 in the three months ended March 31, 2019 versus $3,082,710 a year earlier. The primary cause for the increase in SG&A expenses for the three months ended March 31, 2019 compared to the prior year was professional fees and expenses attributable to legal fees and expenses related to the Axon, WatchGuard and PGA lawsuits. The WatchGuard lawsuit was resolved and settled in May 2019; however, the Axon lawsuit remains active. The PGA lawsuit was resolved on April 17, 2019 and the cost to resolve this suit was accrued as of March 31, 2019. We expect that the legal fees related to the Axon litigation will remain high in 2019 as we proceed to trial. We intend to pursue recovery from Axon, its insurers and other responsible parties as appropriate.

We reported a net loss of ($3,205,174), or ($0.29) per share, in the first quarter of 2019, compared with a prior-year net loss of ($2,588,232), or ($0.37) per share. 

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(Financial Highlights Follow)

(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY’S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2019 FILED WITH THE SEC)

(FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE COMPANY’S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2019 FILED WITH THE SEC)

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Globe Newswire: 14:00 GMT Wednesday 15th May 2019

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