Digital Ally (NASDAQ: DGLY) reported Q4 EPS of $0.05, versus ($0.50) reported in the same period last year. Revenue for the quarter came in at $5.42 million, from $3.51 million in Q413.

"While our revenue decreased slightly in 2014, we are pleased to report that sales strengthened considerably towards the end of the year," stated Stanton E. Ross, Chief Executive Officer of Digital Ally, Inc. "Fourth quarter revenue increased 55% from prior-year levels, to $5.4 million, representing the strongest three-month period in the past twelve quarters. The strengthening in sales during the second half of 2014 was likely related to increased interest in video evidence collection and storage among law enforcement agencies following the civil unrest in Ferguson, Missouri, along with our legal actions to stop a competitor, Utility Associates, from sending letters to our customers that unfairly disparaged our products. For the year 2014 as a whole, while we reported a greater net loss due primarily to non-cash charges related to warrant derivative issues and changes in the fair value of convertible notes payable, we are very pleased to note that non-GAAP adjusted net income (defined later in this release) in the fourth quarter improved to $146,846, compared with a non-GAAP net loss of ($1,116,204) in the prior-year period."

"We have seen a large increase in inquiries, requests for test and evaluation units and pilot programs being conducted by police departments since the events in Ferguson last August. We are optimistic this will result in higher sales in 2015 as existing and potential customers evaluate our body-worn and in-car video camera solutions. Our patented VuLink connectivity device is also generating great interest among law enforcement agencies that recognize the value of collecting video evidence of interactions between officers and the public from multiple perspectives."

"Demand for our FirstVU HD body-worn cameras has increased at a faster pace than the current capacity of suppliers of certain components, but we have taken steps to address this issue. We are confident that we are well-positioned to ramp up production to meet expected demand in the coming months. With the introduction of our VuVault.net cloud-based video evidence storage and management solution in the third quarter of 2014, we are now prepared to satisfy the video evidence needs of virtually any law enforcement agency, regardless of whether it wants storage in the cloud or desires to maintain evidence on its own servers."

"The DVM-800 in-car video system and FirstVU HD body-worn camera, which were introduced in 2013, contributed 51% of total sales during 2014, compared with 5% in the previous fiscal year," continued Ross. "We expect our sales mix to continue to migrate from the legacy DVM-500 Plus and DVM-750 product lines to the newer products in 2015. Our MicroVU HD in-car video system was named a 'product of the year' at the International Association of Chiefs of Police (IACP) conference last fall. We are commencing commercial production of the MicroVU HD this month."

"While international revenue decreased to $961,763 last year, from $1,159,183 in 2013, international bidding activity has picked up in recent months. We believe that our new products, particularly the DVM-800, FirstVU HD and MicroVU HD, may appeal to our international customers. While we are optimistic in this regard, international sales cycles generally are longer than is the case with domestic business."

"We entered 2015 with a stronger balance sheet and greater liquidity, which should be able to support a significantly higher level of product sales and shipments if anticipated orders are forthcoming," added Ross. "Unrestricted cash and equivalents totaled $3.0 million at December 31, 2014, compared with less than $0.5 million a year earlier, and since the end of 2014 another $1.5 million in previously restricted cash has become unrestricted. We had approximately $6.9 million in net working capital available at the end of 2014, including $3.0 million of accounts receivable and $9.2 million of inventory. We believe inventory levels can be reduced during 2015 to provide additional funding for operations, but no assurances can be given in this regard."

"The civil unrest in several American cities during 2014 has greatly elevated the level of priority that law enforcement agencies now place upon audio/video evidence collection and storage capabilities, and we believe this will translate into growth in demand for body-worn cameras and in-car video systems. We are confident that Digital Ally has developed the most robust line of video solutions for law enforcement and commercial customers."

"We look to 2015 with a high degree of optimism. We are seeing steady improvement in our domestic and international law enforcement channels, as well as in our commercial fleet business. Based upon information currently available, we believe that 2015 revenue should increase to approximately $25 million and that operating income should approximate $2.5 million, absent any unanticipated non-recurring expenses. We are not forecasting net income or earnings per share at this time because of the unpredictability and volatility of the financial derivatives related to the Company's convertible notes and warrants exercisable to purchase its common stock. Further, our quarterly operating results may not demonstrate an even progression toward achieving our 2015 guidance because of the volatility of our revenue," concluded Ross.

Guidance:

Digital Ally believes that its 2015 revenue should increase to approximately $25 million and that operating income should approximate $2.5 million, absent any unanticipated non-recurring expenses.

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