New York (TheStreet) -- President Obama's call last week to spend $75M to outfit America's police departments with body cameras has set the companies which make the body cameras on fire. In fact, their stocks have been on a tear ever since the Ferguson tragedy in mid-August. The parabolic rise is most glaring in shares of Digital Ally (DGLY) , which is up nearly 400% in the past six months alone, even though it is more than 22 times smaller than its largest competitor Taser International (TASR) . While I do believe police body cameras will in time become the new norm, Digital Ally is not positioned to capture this tailwind, and is already getting stomped out by its larger, more powerful competitors which have the scale, networks, distribution channels and customer relationships necessary to dominate the industry. This is a true house of cards situation, and I would not be surprised to see this company collapse under the weight of its own financial missteps.
Digital Ally isn't just in bad financial health. It's on its metaphorical death bed, propped up by an unmanageable debt load. The company has yet to turn an operating profit this year, let alone at any point in the last five years. It has been unable to convert recent publicity into sales, and only managed to grow revenue by 3.7% in the latest quarter. In the same quarter, the company lost over $6M while its long-term debt swelled over 280% sequentially. This imbalance is startling, and a deeper dive into its financials tell an even sadder story.