Digital Ally Exploring Strategic Alternatives
November 08 2017 - 7:00AM
Roth Capital Partners Engaged to Assist in the
Process
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 AllyDigital 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
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