Roth Capital Partners Engaged to Assist in the Process
Lenexa, KS, Nov. 08, 2017 (GLOBE NEWSWIRE) -- Digital Ally, Inc. (NASDAQ: DGLY) today announced that its Board of Directors has
initiated a process to explore a full range of strategic alternatives to best position the Company for the future including, but
not limited to, monetizing its patent portfolio and related patent infringement litigation against Axon Enterprise, Inc. (“Axon,”
formerly known as TASER International, Inc.) and Enforcement Video, LLC d/b/a WatchGuard Video (“WatchGuard”), the sale of the
Company as a whole, or the sale of select properties or groups of properties or individual businesses. The result of the strategic
review may also include the continued implementation of the Company’s business plan. The Company has retained Roth Capital
Partners LLC (“Roth”) to assist in this process. There can be no assurance a transaction will result from this process and the
Company does not intend to disclose additional details unless and until it has entered into a specific transaction.
The Company has recently received several unsolicited inquiries from parties involving a variety of alternatives including, but
not limited to, 1) seeking distribution and/or licensing rights to the Company’s patented VuLink® auto-activation technology, 2)
seeking distribution and/or licensing rights to the Company’s suite of patents other than the VuLink; 3) full sale of the Company;
and 4) partial sale of its law enforcement or commercial divisions. In addition, the Company has recently entered into an
exclusive distribution agreement with VieVU, LLC regarding the Company’s patented VuLink product line. The Company believes the
unsolicited inquiries are being driven by the recent and important wins it received in the U.S. Patent Office (the “Patent Office”)
that confirm the validity of our VuLink and related auto-activation technologies. Digital’s Board of Directors and management
engaged Roth to ensure that the Company and its shareholders consider all reasonable alternatives to maximize shareholder value,
given the multiple inquiries.
On July 6, 2017, the Patent Office denied Axon’s petition for inter partes review (“IPR”) of Digital’s Patent No. 9,253,452
(the “’452 Patent”). And on August 3, 2017, the Patent Office denied Axon’s final petition for IPR of the ‘452 Patent. This
was Axon’s final attempt to invalidate the ‘452 Patent before the Patent Office.
With the Patent Office determining that Axon failed to demonstrate even a reasonable likelihood of invalidating the ‘452
Patent in its IPR petition, an IPR status update was submitted to the District Court of Kansas. The Court can now decide
whether to maintain the stay of the litigation that was implemented pending the results of the IPR petitions. The Company
believes that there will be no reason to maintain the stay and, if lifted, it will request an expedited schedule for trial.
On May 27, 2016, Digital filed a complaint against WatchGuard in the U.S. District Court for the District of Kansas
alleging patent infringement based on WatchGuard's VISTA Wifi and 4RE In-Car product lines. In May 2016, WatchGuard filed an
IPR petition with the Patent Office challenging the validity of the ‘950 Patent and filed a motion to stay litigation, pending at
least a preliminary decision from the PTAB regarding the IPR petition filed challenging the ‘950 Patent and four additional IPR
petitions filed by Axon challenging the ‘292 Patent and the ‘452 Patent. In doing so, WatchGuard agreed to be bound by the Patent
Office’s decision in connection with the four IPR petitions filed by Axon against the ‘292 Patent and the ‘452 Patent. A compromise
was subsequently reached under which the court stayed the case, and ordered the parties to submit a report by January 5, 2018
notifying the court about the status of the pending IPR petitions. The Patent Office subsequently denied institution of all of
Axon’s IPR petitions against the ‘452 Patent, which means these requests will not proceed. The Company expects Patent Office to
render its decision in the near future regarding whether it will grant institution of WatchGuard’s IPR regarding the ‘950
Patent.
“We are excited to pursue the cases and now focus on the significant damages associated with Axon’s infringement of the
‘452 Patent,” said Digital’s CEO, Stanton E. Ross. “With the defeat of Axon’s IPRs for the ‘452 Patent, we will request an
expedited path to trial where a jury can assess Axon’s willful infringement of the ‘452 Patent and award Digital Ally
appropriate damages. We also seeking the Court to enjoin all further sales of Axon’s non-SPPM Signal technology.”
About Digital Ally
Digital Ally®, headquartered in Lenexa, KS, specializes in the design and manufacturing of the
highest quality video recording equipment and video analytic software. Digital Ally pushes the boundaries of technology in
industries such as law enforcement, emergency management, commercial fleets, and consumer use. Digital Ally’s complete product
solutions include in-car and body cameras, cloud and local management software, and automatic recording technology. These products
work seamlessly together and are simple to install and operate. Digital Ally products are sold by domestic direct sales
representatives and international distributors worldwide.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Act of 1934. These forward-looking statements are based largely on the expectations or forecasts of
future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown
uncertainties, a number of which are beyond the control of management. Therefore, actual results could differ materially from the
forward-looking statements contained in this press release. A wide variety of factors that may cause actual results to differ from
the forward-looking statements include, but are not limited to, the following: whether a transaction will result from the
initiative with Roth Capital Partners; whether the Company will achieve positive outcomes in its patent litigation with
various parties, including Axon Enterprise, Inc. and WatchGuard; whether the Patent Office rulings will curtail, eliminate or
otherwise have an effect on the actions of Axon, WatchGuard and other parties respecting the Company, its products and customers;
competition from larger, more established companies with far greater economic and human resources; its ability to attract and
retain customers and quality employees; the effect of changing economic conditions; and changes in government regulations, tax
rates and similar matters. These cautionary statements should not be construed as exhaustive or as any admission as to the adequacy
of the Company's disclosures. The Company cannot predict or determine after the fact what factors would cause actual results to
differ materially from those indicated by the forward-looking statements or other statements. The reader should consider statements
that include the words "believes", "expects", "anticipates", "intends", "estimates", "plans", "projects", "should", or other
expressions that are predictions of or indicate future events or trends, to be uncertain and forward-looking. The Company does not
undertake to publicly update or revise forward-looking statements, whether as a result of new information, future events or
otherwise. Additional information respecting factors that could materially affect the Company and its operations are contained in
its annual report on Form 10-K for the year ended December 31, 2016 and quarterly report on Form 10-Q for the three and six months
ended June 30, 2017, as filed with the Securities and Exchange Commission.
Contact Information Stanton Ross, CEO Tom Heckman, CFO Digital Ally, Inc 913-814-7774 info@digitalallyinc.com
