Source Capital Announces Investment Opinion: Upgrades Recommendation on Digital Ally, Inc. Strong Buy Recommendation

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Source Capital Group, Inc. (“Source Capital”) announced today that it has upgraded its recommendation on Digital Ally, Inc. (NASDAQ:DGLY) (“Digital Ally” or the “Company”) to a STRONG BUY recommendation from buy. The new 12-month price target is $12.00 per share. Digital Ally produces and sells digital video imaging and storage products for use in law enforcement and security applications. Our upgrade is predicated on the continuing strength of DGLY revenue and operating profit in a difficult market environment. Although municipal and state budgets are under pressure, we believe that police and security budgets will not be proportionally impacted. For the quarter ended September 30, 2008, the Company reported revenue of approximately $8.5 million, an increase of 66% from the same quarter last year.

“Digital Ally introduced product expansions and new products at the recent Annual International Chiefs of Police Conference. Our estimates of revenue and income have not considered the impact of sales of these product expansions” stated Joe Blankenship, Vice President Research at Source Capital in Scottsdale, Ariz. “With international sales beginning to get traction and additional product products to sell, we believe that DGLY can still grow in a declining economy,” continued Mr. Blankenship.

“In addition to good operating performance, Digital Ally announced on November 13, 2008 that it had engaged an investment advisor to review strategic alternatives. This indicates that the Company may be in discussions, or is prepared to enter into discussions for a sale or merger of the Company. Under any circumstance the sell-off of the market, and DGLY shares, has created what we would consider an exceptional value,” stated Mr. Blankenship.

Our twelve-month price target for Digital Ally, Inc. common stock is $12.00 per share.

About Source Capital Group, Inc: Source Capital, headquartered in Westport, Conn., provides high-quality independent investment services, removed from the typical Wall Street environment, to individuals and institutions.