Digital Ally (DGLY) Misses Q4 EPS by 22c; Updates on TASER Litigation

Digital Ally (NASDAQ: DGLY) reported Q4 EPS of ($0.40), $0.22 worse than the analyst estimate of ($0.18). Revenue for the quarter came in at $4.9 million versus the consensus estimate of $5.7 million.

Taser International Litigation Developments

The Company received notice in April 2015 that TASER International, Inc. ("Taser") had commenced an action in the United States Patent & Trademark Office ("USPTO") for a re-examination of its U.S. Patent No. 8,781,292 ("the '292 Patent"), which is principally embodied in its VuLink product relating to the Company's auto-activation technology for law enforcement body-worn cameras and in-car audio/video cameras.

On January 14, 2016 the USPTO rejected Taser's efforts and confirmed the validity of the '292 patent with 59 claims covering various aspects of the Company's auto-activation technology. On February 2, 2016 the USPTO issued another patent relating to the Company's auto-activation technology for law enforcement cameras. U.S. Patent No. 9,253,452 ("the '452 patent") generally covers the automatic activation and coordination of multiple recording devices in response to a triggering event such as a law enforcement officer activating the light bar on the vehicle.

The Company filed suit on January 15, 2016 in the U.S. District Court for the District of Kansas (Case No: 2:16-cv-02032) against Taser, alleging that Taser willfully infringed the '292 Patent by selling and offering to sell its Axon camera product line and Signal Performance Power Magazine. The Company initiated the lawsuit after the USPTO reconfirmed the validity of its '292 patent. On February 2, 2016, the Company amended its complaint against Taser, further alleging that Taser is directly and indirectly liable for infringing the '452 Patent in addition to the 292' patent. The Company's amended complaint seeks both monetary damages and a permanent injunction against Taser for infringing both the '452 and '292 Patents.

In addition to these patent infringement claims, the amended complaint added a new set of claims to the lawsuit alleging that Taser conspired to keep the Company out of the marketplace by engaging in improper, unethical, and unfair competition. The amended lawsuit alleges Taser bribed officials and otherwise conspired to secure no-bid contracts for its products in violation of both state law and federal antitrust law. The Company's lawsuit also seeks monetary and injunctive relief, including treble damages, for these alleged violations. On March 4, 2016, Taser filed a motion to dismiss our complaint which is now pending before the court.

For earnings history and earnings-related data on Digital Ally (DGLY) click here.

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