$DGLY Confident It Will Prevail in Lawsuit Against Axon Enterprise

Axon Enterprise continues to accrue significant potential damages through sales of infringing products while the case proceeds to trial

Lenexa, KS, Jan. 26, 2018 – Digital Ally, Inc. (NASDAQ:DGLY) today provided an update on the potential damages accruing in its patent infringement lawsuit against Axon Enterprise, Inc. (“Axon,” formerly known as TASER International, Inc.). The lawsuit, filed in the United States District Court of Kansas, accuses Axon of willfully infringing Digital’s U.S. Patent No. 9,253,452 (the “’452 Patent”). The products accused of infringement in this lawsuit cover Axon’s camera products sold with Axon’s Signal functionality, which Digital Ally alleges incorporate its patented auto-activation technology.

Axon has continued to increase its sales of products utilizing Digital’s patented technology while the lawsuit is pending. For example, in 2016 and 2017, Axon’s public filings show $37,848,000 in total net sales of the accused Axon Body and Axon Flex cameras. Net sales of Evidence.com, which drives the sales of the accused products and is sold in conjunction with nearly every camera sale, totaled $69,958,000 in those years.  Finally, Axon’s public filings indicate that “bookings,” which Axon believes to be the best statistical measure of future contractual sales attributable to the company segment responsible for the accused cameras and evidence.com subscriptions, totaled $254,093,000 in 2016 and $219,998,000 in 2017.

In November 2017, the Court rejected Axon’s request to maintain a stay of the litigation and the case is now proceeding towards trial. The measure of Digital Ally’s potential damages may be derived from Axon’s reported sales from the infringing products and Digital will determine and provide a full accounting of the damages owed to it when it submits its expert report on damages.  Digital will be seeking a reasonable royalty applied to the sales of Axon’s products that have been accused of infringement, which it believes will amount to significant monetary damages, as well as an injunction and/or an accounting of damages for future sales. Digital also has alleged that Axon’s infringement has been willful and, as such, Digital is also seeking that any damages awarded by a jury be tripled.

“Axon has continued to build its line of Axon camera products on the back of Digital’s patented auto-activation technology,” said Digital’s CEO, Stanton E. Ross. “It is frustrating to see our technology being used by a competitor to generate such massive sales, but we are confident the jury in Kansas will put an end to this willful infringement and reward Digital for its industry changing auto-activation technology.”

About Digital Ally

Digital Ally, Inc., 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 the Company will prevail in its patent litigation against Axon Enterprise, Inc.; the amount of any damages that might be awarded to the Company if it is successful in the litigation;  terms of any royalty it may obtain from Axon as a result of the litigation; whether the Company will be able to obtain an injunction against Axon; competition from larger, more established companies with far greater economic and human resources; its ability to attract and retain customers and quality employees; and the effect of changing economic conditions. These cautionary statements should not be construed as exhaustive or as any admission as to the adequacy of the Company’s disclosures. It 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. Digital Ally does not undertake to publicly update or revise forward-looking statements, whether because 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 nine months ended September 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