DGLY

[la-onda]

Insider are selling, Market is buying 

[la-onda]

DGLY update:

nice IR Video:

http://www.digitalallyinc.com/DigitalAlly2008StockholdersVideo.wmv

from the research report:

FINANCIAL PROJECTIONS
We are expecting continued strong revenue growth from Digital Ally based on the fact that the company has achieved less than 10% market penetration among the number of law enforcement agencies in the United States and a much smaller penetration of the number of police cars in the current fleet. Add the potential revenue from digital flashlights and the broader transportation market, we are of the opinion that Digital Ally can again double its sales
in 2008 and probably again in 2009.
The Company has provided no guidance for quarterly revenue for 2008, so we have projected a reasonable progression of sales throughout the year. We expect continued use of options as employment incentives so we have increased the share count accordingly. Our estimates follow the Company’s guidance with revenue of $40 million forecast for 2008 and advancing to over $76 million in 2009. With maintenance of current gross margins and slight improvements in operating margin we are estimating diluted EPS of $0.46 in 2008 and $0.82 for FY 2009. Our
quarterly and annual estimates are shown on the following page.

VALUATION
Almost all of the direct competitors for in-car video systems are private companies or subsidiaries of very large communication or systems companies. Companies such as Kustom Signals, Apollo Video, Safety Vision and MPH Industries are private and therefore public comparables are hard to find. We have used companies that sell to the law enforcement market but may not have a comparable product or service offering. Also, since these are more
mature companies, the growth rates will be significantly lower than what we expect form Digital Ally.
Based on any valuation comparative we could derive, we believe that Digital Ally is  undervalued. The above comparisons are not reflective of the technology lead that Digital Ally brings to its market or the impact that other products can have on the operations of the Company. L-1, with over $1.0 billion in capitalization might be illustrative of a more mature company in a high growth state.
For Digital Ally we are establishing our initial price target based on our EPS estimate for FY2009 and a price earnings ratio of 22x, similar to TASR above. We believe the low market penetration of the DVM-500 and the introduction of the DVM-250 offer substantial upside potential to our revenue and EPS estimates. So, in many ways our multiple is low, but we want to see a few more quarters of consistent performance to begin to raise the multiple.
The PE of 22x and the $0.82 estimate yields a 12-month price target of $18.00.

chart:

[la-onda]

Digital Ally Garners 'Best Law Enforcement Technology Award'
Sunday , June 08, 2008 14:35ET

Digital Ally, which develops, manufactures and markets video surveillance products for law enforcement, homeland security and commercial security applications, announced that its DVM-500 In-Car Digital Rearview Mirror System received the "Best Law Enforcement Technology Award" at the Second Annual Global Border Security Conference and Expo, which was held May 21-22, at the Austin Convention Center in Austin, Texas.

According to the company, over 75 other vendors participated in the conference, which is known as the conference and expo on International Border Security.

"The U.S. Senate has passed a bill that calls for a $4 billion expansion in Homeland Security spending specifically targeted at increased border security," stated Stanton E. Ross, Chief Executive Officer of Digital Ally, Inc. "A number of U.S. law enforcement agencies, along with Mexico, Canada and various European countries, sent delegations to the conference."

"We are very honored and proud that our DVM-500 was selected as 'Best in Show' for law enforcement technology products at this conference," continued Ross. "This represents yet another testimonial to the growing acceptance that we are experiencing with the DVM-500 in the global law enforcement market."

50EMA holding as support 

[la-onda]

next support @ 8.95 and 8.74:

http://www.stockta.com/cgi-bin/analysis.pl?symb=DGLY&num1=5&cobrand=windchart&mode=stock

Hope DGLY will bounce back 

[la-onda]

 
DGLY Digital Ally initiated with a Strong Buy at Dawson James; tgt $17.50 (8.97 )

Dawson James initiates DGLY with a Strong Buy and price target of $17.50 saying the potential market opportunity for DGLY probably exceeds $1 bln because of the wide variety of applications its technology can be applied to. The firm notes the co became profitable in the first quarter of 2007 and should experience increased profitability as it enjoys economies of scale on rapidly growing revenues. The firm says Digital Ally recently launched its innovative digital video flashlight which should begin to produce revenues in the second half of this year. The DVM-250 Pro is the first in a series of professional-quality event recorders being developed for the transportation Industry, should be introduced in the third quarter.

Any more details Rams?
tia
Oliver

[Ramsburg]

Hi la-onda,

This report is not yet available 

[Ramsburg]

I've just found the complete 22 pages Research Note from Dawson James for DGLY:

Download here:

Current Price $8.97
Target Price $17.50
STRONG BUY

Investment Highlights:

1) Digital Ally produces digital video imaging and storage products for use in law enforcement and security applications. The company's current products are a low cost, easy-to-install, in-car digital video rear view mirror and a digital video flashlight. The company should be able to almost double its revenues in each of the next two years, reaching $75 million in 2009.

2) Large, Underserved Market: The potential market opportunity for DGLY probably exceeds $1 billion because of the wide variety of applications its technology can be applied to. The law enforcement market for its DVM-500 In-Car Digital Rearview Mirror System is approximately $280 million in the U.S. alone.

3) The company became profitable in the first quarter of 2007 and should experience increased profitability as it enjoys economies of scale on rapidly growing revenues. The company has no debt.

4) Near-term Catalysts: Digital Ally recently launched its innovative digital video flashlight which should begin to produce revenues in the second half of this year. The DVM-250 Pro is the first in a series of professional-quality event recorders being developed for the transportation Industry, should be introduced in the third quarter.

[la-onda]

DGLY support mentioned before is holding, bad timing for insider selling
VP McCoy has not sold anything yet. He is also by far the most seasoned veteran of the bunch when it comes to running a company, and he is the "SALES" Guy.

quotation from the research file:

OTHER POTENTIAL OPPORTUNITIES
Built-in digital video recording is growing in multiple uses. For example, Taser International, Inc.
(NASDAQ:TASR-Not Rated) has demonstrated the use of digital video recording for its hand held stun gun. Applications exist in many sports products, such as baseball and tennis speed measuring instruments. Medical practitioners are recording procedures for liability and teaching purposes, many with recording capabilities built into their devices. Medical laboratories are recording digital photographs and video of slides and samples to provide proof of results and to transmit to other researchers.
Rather than encouraging the creation of technology that could prospectively compete with DGLY, it may choose to sell board-level components or complete units for inclusion in non-competing products marketed under other brand names. By making it easy for other companies to obtain digital video technology, Digital Ally can provide a bridge between the large semiconductor companies and smaller businesses with distinct and effective marketing skills. It will utilize its design and production expertise to provide subsystems that can be incorporated into the customer's product. Once a design is accepted, fabrication can be done by one of its subcontractors. The original equipment manufacturing (OEM) opportunity is not expected to be a significant part of DGLY's revenue and profitability in its early stages.

THE MARKETS FOR DIGITAL ALLY'S PRODUCTS
We believe the market for Digital Ally's products is very large, probably exceeding $1 billion annually, but is difficult to calculate with any degree of precision because of the variety of applications in which it may be used and the difficulty in determining the number of users in each application. As the following discussion illustrates, the only market that is subject to some degree of specificity is that of the law enforcement market which we estimate to be approximately $280 million in the U.S. and probably 2X that on a world-wide basis.

The Law Enforcement Market
The primary market for the DVM-500 In-Car Digital Video System is the replacement of police
vehicles on an annual basis since most police cars have some form of video recording, albeit, not state of the art. In the United States there are 18,000 law enforcement agencies, (Source: U.S. Department of Justice, Bureau of Justice Statistics, Census of State and Local Law Enforcement Agencies, 2000) Smaller departments with 20 or fewer officers account for the majority of sworn officers. (Source: National Institute of Justice, Law Enforcement Technology – Are Small and Rural Agencies Equipped and Trained? June 2004). The agencies are responsible for driving 450,000 vehicles which are growing at approximately 5% per annum. Only an estimated 25% of all police vehicles have digital recording devices with the remainder having analog on no recording devices. This represents an upgrade opportunity for DGLY.
In addition, police vehicles are replaced every three to five years depending on mileage and wear and tear. They are replaced at an annual rate of 70,000. Digital Ally has approximately 1,700 customers, many of whom are smaller law enforcement departments. However, sales of only 10,000 units in 2008 could produce our $40 million revenue estimate and would represent only 14% of the domestic replacement market. It is worth noting that at the end of May, the company received an international order for 1,000 units that will ship in the second quarter and that it sold approximately 2,100 units in the first quarter. Assuming that 70,000 law enforcement vehicles are replaced annually in the U.S. at an average revenue per vehicle of $4,000, but excluding the 75% of the 450,000 vehicles that could be upgraded from analog or do not have video systems at all, the domestic market would be approximately $280 million. Additionally, the company has received inquiries from the U.S. Military Police and college campus police departments. We could easily envision a world-wide law enforcement vehicle market at least twice as large as the U.S. domestic market.
While the Digital Video Flashlight is available for sale, the company has not shipped any in significant quantity and does not expect to do so until the second half of 2008. This device would address an initial sales market as opposed to a replacement market because the product is just being introduced to the market.
As we have suggested, the Digital Video Flashlight has significantly greater application than just law enforcement including, but not limited to, private security, the insurance industry, homeland security, underground inspections of telephone, cable, water and sewer lines, home inspection, military applications, fire departments, coast guard, border patrol and customs inspectors.
The most valuable uses of DGLY's digital video flashlight may be in the recording of roadside DWI sobriety tests. According to the Department of Justice, in 2003 there were almost 14 million arrests each year, with approximately 10%, or 1.4 million of those arrests for DWI (Source: FBI Crime Reports, Crime in the United States, annually.) Without some form of video or audio recording, court proceedings usually consist of the police officer's word against the suspect's. Records show that where there is video evidence to back up officer testimony, conviction rates increase substantially. Video evidence also helps to protect police departments against frivolous lawsuits. The largest source of police video evidence today is in-car video. Unfortunately, some police cars still do not have in-car video, and in those that do, the camera usually points forward rather than to the side of the road where the sobriety test takes place. The in-car video is typically of little use for domestic violence investigations, burglary or theft investigations, disorderly conduct calls or simple assaults. In all of these cases the digital video flashlight may provide recorded evidence of the suspect's actions and reactions to police intervention.
Additionally, motorcycle patrolmen rarely have video systems. The digital video flashlight can become an essential tool for the motorcycle policeman to provide the evidence that previously had not been available. Crime scene investigations, including detailed photography, take up a large part of the budgets of metropolitan police forces. The digital video flashlight may record a significant portion of such evidence at a much lower cost, for gathering, analyzing and storing data/evidence.

The Private Security Market
There are approximately 10,000 private security agencies in the United States that employ over two million guards. (Source: International Association of Chiefs of Police, President's Message: Building Partnerships between Private-Sector Security and Public-Sector Police, 2004) In 1997, Americans were spending over $90 billion a year on private security services. (Source: National Center for Policy Analysis, citing "Welcome to the New World of Private Security," Economist, April 17, 1997) Police forces use video systems for proof of correct conduct by officers, but private security services usually have no such tool.
The digital video flashlight presents an excellent management tool for these companies to monitor conduct and timing of security rounds. In addition to the digital video flashlight, the digital video security camera can provide fill-in security when guards have large areas to cover or in areas that do not have to be monitored around the clock.

The Homeland Security Market
In addition to government spending, American corporations are spending heavily for protection against the potential of terrorist attacks. In 2004, the New York Times reported on the "Homeland Security- Industrial Complex." That report indicated that private-sector outlays for antiterrorism measures and to guard against other forms of violence may be as much as $40 billion to $50 billion per year, or two to three times higher than the annual rate prior to September 11, 2001. (Source: Louis Uchitelle, The Rise of the Homeland Security-Industrial Complex, NEW YORK TIMES, October 17, 2004) As of 2004, the federal government's expenditure for security also passed $40 billion per year, double what it was before 9/11. (Source: Congressional Budget Office, Federal Funding for Homeland Security, April 30,
2004) Estimates for the fiscal year of 2005 are for the federal government to have spent $47 billion and state and local governments to spend an additional $7 billion for antiterrorism security. (Source: Congressional Budget Office, Federal Funding for Homeland Security, April 30, 2004)

Consumer and Other Markets
There are numerous potential applications for the digital video flashlight and digital video security camera products. We believe that other markets for the digital video flashlight include private investigators, the U.S. Coast Guard, municipal fire departments and the U.S. military. Commercial markets for the digital video flashlight include plumbers and appraisers. Markets for the digital video security camera product also include surveillance of construction job sites.

chart update:

[la-onda]

nice recovery, still holding. this will be  a winner 2008 

[la-onda]

DGLY update:

Greenville, Texas article "The Council is scheduled to consider the purchase of six DVM500 Digital Video Mirror Kits from Digital-Ally, at a cost of $25,936.80" - June 23
http://www.heraldbanner.com/local/local_story_175003504.html

Article about the latest additional to the Russel Microcap index:
http://microcapspeculator.net/2008/06/22/preliminary-additions-to-russell-microcap-index/

Summarization:
Digital Ally: You've got a friendWednesday June 25, 6:20 am ET

When red-and-blue flashing lights appear in your rear-view mirror, chances are that an image of your vehicle is being relayed from the patrol car into law enforcement's computers.

Law enforcement is dangerous work, and products from Digital Ally, Inc. (NasdaqCM:DGLY - News) could revolutionize the systems that help protect the officers and the citizens they protect and serve.

The Overland Park, Kan., company has come a long way within an extraordinarily short period. So far, two analysts have initiated coverage, with both saying it's time to buy and expecting the current share price of around $9 to double by next year. Shares of Digital Ally, which began trading over-the-counter in May 2007 at $2.25, closed Tuesday at $8.88.

Digital Ally began in 2003 as Trophy Tech, a maker of bow-hunting products that included video-recording systems. The business plan changed in 2004 to bring its video system to law enforcement. Products began shipping in March 2006.

State-of-the-art public safety vehicles are rolling data points but space is at a premium. In this space race, Digital Ally is winning.

The first product was a compact solid-state video recording system that replaces any rearview mirror — a competitive advantage — with cameras monitoring the windshield and rear seat. Data is transmitted wirelessly. The potential market is huge around the world and at $3,995, Digital Ally says its units cost $1,500 less than its competitors.

Digital Ally also has a high-intensity flashlight that's just coming to market, which includes a built-in video recorder and similar proprietary technology.

"Its technology is state of the art, in terms of their ability to put in a system that takes up very little space," John Putnam, senior analyst with Dawson James Securities in Boca Raton, Fla., told SmallCapInvestor.com. "Competitors' systems need four or five different components, and block the view of the driver."

Putnam initiated coverage June 12, with a "strong buy" and a $17.50 price target for Digital Ally. Putnam thinks the stock is undervalued and remains mostly below Wall Street's radar. "We doubt the company has a great deal of visibility among investors as evidenced by the fact that institutional ownership is only 2% of the shares outstanding."

At the beginning of the year, Digital Ally shares moved to the Nasdaq Capital Market, after trading over the counter. Its advisers include John Ashcroft, the former U.S. Attorney General, and William Sessions, the former FBI director.

On an April 30 conference call to discuss first-quarter results, Digital Ally said it has 8,000 units in the field, with orders coming from 1,700 customers. On May 30, the company said it received an order for 1,000 additional units from a large international law-enforcement customer. Digital Ally also reiterated a full-year outlook calling for revenue to double to $40 million.

In the three months ended March 31, revenue increased 150% to $8.6 million from the year before, with a 22% sequential improvement from the last three months of 2007. Net income climbed to $1.68 million, from $162,150 the year before, with earnings per diluted share of $0.10, compared with the year-ago $0.01. The company's cash position also remains strong at $4.9 million.

Stan Ross, chief executive of Digital Ally, told investors on the April call that the quarterly results could serve as "a template that can be developed. We're not slanted with international orders, we're not slanted with any one-time big orders from individuals."

In addition to state contracts from Arkansas, Mississippi, West Virginia and others, along with orders from Canada, Mexico and Europe, Digital Ally is focusing on small- to medium-sized jurisdictions. One reason, company executives explain, is that the smaller agencies can commit to purchases faster than larger ones.

At its May 1 annual meeting, Digital Ally introduced a slimmed-down model for taxicabs and other transportation businesses that also includes global positioning. A system for school buses and a helmet cam are coming.

"I'm a little more excited about how '09 is look like," Ross told investors, noting the new products.

Digital Ally is just starting to mine homeland security and other security markets.

On May 13, Joe Blankenship, vice president of research at Source Capital Group in Scottsdale, Ariz., initiated coverage with a "buy" recommendation and an $18 price target, because of sales potential.

Bigger brokerages haven't initiated coverage of Digital Ally. The name has shown up on financial blogs, and Dan Jacome, who just finished his MBA at Indiana University, wrote about the stock at SeekingAlpha.com in March. Jacome, who has started a small investment fund called Ceviche Fund Partners LP, explained what piqued his interest: "It became a three-legged stool. This was a stock that not many analysts appeared to have discovered; the stock had just moved to Nasdaq, and it was a law-enforcement-related stock, which I thought could potentially offer returns such as Taser (NasdaqGS:TASR - News). It looked cheap even at two times sales." In March, Digital Ally was trading around $7.

Digital Ally intends to become a good buddy of law-enforcement agencies, and its stock could prove to be a solid ally of investors as sales grow. 
Chart:

[la-onda]

 
Digital Ally, Inc. to Report Ninth Consecutive Quarter of Record Revenues
Monday June 30, 8:30 am ET
Company Announces Authorization of Stock Repurchase Plan

OVERLAND PARK, Kan., June 30 /PRNewswire-FirstCall/ -- Digital Ally, Inc. (Nasdaq: DGLY - News), which develops, manufactures and markets advanced video surveillance products for law enforcement, homeland security and commercial security applications, today announced that it expects to report its operating results for the second quarter of 2008 towards the end of July.

"We expect to report that the Company achieved its ninth consecutive quarter of record revenues during the quarter that ends today," stated Stanton E. Ross, Chief Executive Officer of Digital Ally, Inc. "The Company began shipping its advanced digital surveillance products to customers in March 2006, and revenues in each quarter since that time have exceeded the revenues recorded in the preceding quarter. While our growth to date has been driven primarily by the DVM-500 In-Car Digital Video Rearview Mirror System's rapid increase in its share of the market for in-car video systems within the domestic and international law enforcement community, we expect new products and new markets to play an expanding role in our future sales gains. An increasing number of law enforcement agencies are testing our Digital Video Flashlight, and our recently announced DVM-250 Pro will be the first in a series of professional-quality event recorders being developed for the transportation industry."

"As we have stated before, management expects Digital Ally's revenues for the year ending December 31, 2008 to increase over 100% from last year, to approximately $40 million, and operating margins for the full year should at least approximate the 29% reported in the first quarter of 2008," continued Ross. "While it is too early to issue any specific guidance for 2009, we are optimistic that next year will again witness strong growth in sales and earnings for the Company."

The Company also announced that its Board of Directors has approved a program that authorizes the repurchase of up to $10 million of the Company's common stock in the open market, or in privately negotiated transactions, through July 1, 2010. The repurchases, if and when made, will be subject to market conditions, applicable rules of the Securities and Exchange Commission and other factors. Purchases may be commenced, suspended or discontinued at any time. The repurchase program will be funded using a portion of available cash and cash equivalent balances, along with "free" cash flows being generated from operations

"We are currently earning interest on our growing cash balances at an annualized rate of less than 2%. Meanwhile, our Company's after-tax net income during the first quarter of 2008 was equivalent to an annualized return on December 31, 2007 shareholders' equity of more than 73%. From a long-term perspective, we believe the investment of some of our cash in DGLY common stock when we deem it to be undervalued represents a prudent and attractive alternative to the currently low interest rates that we are earning on our cash equivalent investments," concluded Ross.

As of June 29, 2008, Digital Ally, Inc. had 15,646,243 shares of common stock outstanding.

http://biz.yahoo.com/prnews/080630/lam027.html?.v=101

[la-onda]

chart update, consolidation before next move up imho (bought more @ 8$)

[la-onda]

DGLY COVERAGE INITIATED: Digital Ally (DGLY) initiated by Dougherty & Company. Initial rating Buy with 15$ price target.

Dougherty initiated (DGLY: 8.63 +0.82%) with a Buy and $15 tgt. Firm believes the features of DGLY's core DVM-500 product positions the company favorably relative to the offerings of its competitors. Furthermore, firm believes the domestic and international markets in which DGLY competes are sizeable (~70,000 domestic law enforcement fleet vehicles are replaced annually) and large followon orders from existing customers have provided evidence of positive customer experience with DGLY products. Firm expects upcoming radio frequency certification of the DVM- 500 for use in the European Union will position DGLY to capitalize on emerging international opportunities that were not previously accessible to the company.

Rams, any update from your side?[/color]

[la-onda]

from Dougherty (thnx Rams  ):
Key Points
1. We are initiating coverage of DGLY with a BUY rating and $15 price target. Our earnings per share estimates for 2008 and 2009 are $0.40 and $0.60, respectively. With our outlook for 30% compounded earnings growth over the next several years, we believe the 25x valuation multiple on 2009E EPS implied in our price target to be reasonable.
2. We believe the features of DGLY's core DVM-500 product positions the company favorably relative to the offerings of its competitors. Furthermore, we believe the domestic and international markets in which DGLY competes are sizeable (~70,000 domestic law enforcement fleet vehicles are replaced annually) and large follow on orders from existing customers have provided evidence of positive customer experience with DGLY products.
3. DGLY has built its business from $4 million in revenues in 2006 to a $34 million annualized run-rate in the March 2008 quarter on the basis of one key product – the DVM-500. Additional product introductions are planned for 2H 2008 to supplement the company's law enforcement offerings, while expanding the company's presence into new markets including transportation services and military applications. Strong revenue growth has driven significant leverage in margins from losses in 2006 to a 29% operating income margin in the March 2008
quarter.
4. We believe DGLY's recent introduction of wireless data download capabilities for the DVM-500 removes a competitive disadvantage for the company in the marketplace and we believe the add-on sale of this feature will be accretive to gross margin rates. Furthermore, we expect upcoming radio frequency certification of the DVM- 500 for use in the European Union will position DGLY to capitalize on emerging international opportunities that were not previously accessible to the company.
5. DGLY enjoys a strong balance sheet with $4.9 million in cash and no debt at the end of the March 2008 quarter. Our outlook for strong EBITDA margins in the upper 20%-low 30% range in 2008-2009 amidst modest capital expenditure requirements lead us to believe that DGLY will be a healthy free cash flow generator over the next several years. As evidence of the company's confidence in its fundamental outlook and its ability to generate positive cash flow while investing for growth in its business, DGLY recently announced a $10 million share
repurchase authorization.

FINANCIAL CONDITION AND ESTIMATES OF FUTURE OPERATING RESULTS
We are initiating coverage of DGLY with estimates for revenues and earnings per share of $38.0 million and $0.40, respectively, in 2008 and $49.4 million and $0.60, respectively, in 2009. Our 2008 revenue estimates are within range of the company's guidance for revenues of "approximately $40 million," however, we have positioned our estimate somewhat conservatively in relation to guidance due to our belief that large international orders have been and will remain a key source of revenues for DGLY and we acknowledge that the timing and scale of such orders can be difficult to predict over short periods of time. The company estimates that its model will generate operating margins of 29% at a $40 million revenue threshold. As our revenue estimate is somewhat below the $40 million level, our earnings per share estimate is based off of operating margins of 27.8%, which implies our expectations for slightly lower fixed cost leverage at our revenue estimate. Our FY2008 estimates reflect YOY revenue growth of 96%, pretax earnings growth of 270%, and earnings per share growth of 43%.
Our FY2009 estimates include revenue growth of 30% to $49.4 million on continued strong adoption of the company's DVM-500 product as well as emerging contributions as the year progresses from the DVF, DVM-250, DVM-750, the bus transport recording device, and the helmet recording devices described above. We are expecting further operating margin expansion in 2009 to 32% due to leverage of fixed costs. We note DGLY estimates it can increase unit production by 50% from levels implied in 2008 revenue guidance without requiring additional headcount. As such, we see substantial labor cost leverage in DGLY's
operating model with continued revenue growth. We believe DGLY will remain a company with modest capital investment requirements in 2008-2009. We are projecting capital expenditures of ~$800,000 in 2008 and $600,000 in 2009. We expect lower capital expenditures in 2009 due to a non-recurring 2008 investment to construct a radio test chamber. With projected EBITDA margins of 28.5% in 2008 and 33.0% in 2009, we expect that modest investment requirements will enable DGLY to produce free cash flows of almost $3 million in 2008 and ~$8 million in 2009, which should bolster the company's already healthy balance sheet. DGLY's March balance sheet includes $4.9 million in cash and no debt. We note DGLY recently demonstrated confidence in its ability to maintain a healthy balance sheet with free cash flow generation as it invests to grow its business by approving a $10 million share repurchase authorization effective through June 2010.

Regarding June quarter estimates, we are projecting revenues of $8.8 million and earnings of $0.07 per share. We note DGLY disclosed on June 30 that it expected its revenue for the June quarter to mark the ninth consecutive quarter of sequential revenue growth, although it did not specifically quantify expected June quarter sales. Our June quarter estimate is modestly above March quarter revenues of $8.6 million. We are modeling for June quarter gross margins in the mid-fifty percent range, down from 61.9% in the March quarter due to sales mix shift into international markets. We note DGLY announced a 1,000-unit order from an international customer on May 30 and we believe the order was delivered in the June quarter. As international orders are fulfilled through distributors as opposed to DGLY's sales
force, gross margins earned on such transactions are lower than domestic orders. We expect the large international order volume in the June quarter to dilute gross margins sequentially. In addition, we also expect several sources of higher operating costs to emerge in the June quarter versus March including compensation expense under the 2008 stock option plan, which had not yet been ratified at the beginning of the year, higher R&D costs tied to the aforementioned development of products slated for 2H 2008 launch, and costs such as printing and production related the annual shareholder meeting, which was held in the June quarter.


please download the attached research file

[la-onda]

no news; more insider selling: http://www.secform4.com/insider-trading/1342958.htm ; chart update