1 mitchell law offices, p.c - class actionsecurities.stanford.edu/filings-documents/1033/... ·...

1 MITCHELL LAW OFFICES, P .C .Robert Mitchell (AZ 011922 )

2 Anchor Centre One, Suite 122B2210 East Camelback Roa d

3 Phoenix, Arizona 85016Tel : (602) 468-141 1

4 Fax : (602) 468-131 1

5 Liaison Counsel for Plaintiffand the Class

6BERNSTEIN LIEBHARD & LIFSHITZ, LLP

7 Mel. E. LifshitzKeith M. Fleischman

8 Timothy J . MacFall9 Joseph R. Seidman, Jr .

Stephanie Beige10 Russell M. Iger

Jeffrey Lerner11 10 East 40th Street

New York, NY 1001612 Tel : (212) 779-141 4

Fax: (212) 779-321813

Lead Counsel for Plaintiff14 and the Class

15 UNITED STATES DISTRICT COURT16 FOR THE DISTRICT OF ARIZONA

17In re : TASER INTERNATIONAL

18 SECURITIES LITIGATION

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20 This Document Relates to :

21 ALL ACTIONS

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No. C05-0115-PHX-SRB

CLASS ACTION

CONSOLIDATED AMENDEDCLASS ACTION COMPLAINT FORVIOLATION OF THE SECURITIESEXCHANGE ACT OF 1934

DEMAND FOR JURY TRIAL

Lead Plaintiff Eli Wilamowsky ("Plaintiff'), on behalf of himself and all others similarl y

25situated, by his undersigned attorneys, upon personal knowledge as to himself and his own acts, and

26information and belief as to all other matters, based upon, inter alia, the investigation conducted by

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and through his attorneys, which included, among other things, interviews with former employees o f

TASER International, Inc . ("TASER" or the "Company"), review of the public documents and

announcements made by Defendants, Securities and Exchange Commission ("SEC") filings ,

Company press releases, and various scientific, medical, and safety studies and reports regardin g

conducted energy weapons, alleges for his Amended Complaint, as follows :

NATURE OF THE ACTIO N

1 . This is a federal class action on behalf ofpurchasers of TASER securities between

May 29, 2003 and January 11, 2005, inclusive (the "Class Period"), seeking to pursue remedies

under the Securities Exchange Act of 1934 (the "Exchange Act") .

2 . TASER develops, assembles and markets conducted energy weapons , or stun-guns ,

for use in the law enforcement, private security and personal defense markets . Throughout the Class

Period, TASER reported meteoric revenue growth as the result of the increasing acceptance and us e

of the Company's weapons, particularly its newest model, the X26, by law enforcement agencies .

According to a posting on TASER's website, more than 7,000 police departments around the worl d

have purchased TASER products . The Company' s success was based on its claims that its weapons

could incapacitate dangerous , combative or high-risk subjects without any adverse long-term health

effects. Indeed, TASER's website states that "[t]he ADVANCED TASER® provides for maximum

safety for both the officer and the subject by bringing dangerous situations quickly under contro l

before force escalates to lethal levels ." (Emphasis added) .

3 . During the Class Period, however, significant questions arose concerning the safety

of TASER' s weapon systems due to the increasing incidence of death and se rious injury following

TASER device use . The Company vociferously defended the safety of its devices, citing variou s

scientific studies that Defendants claimed established that TASER weapons were safe. Defendants '

CONSOLIDATED AMENDED CLASS ACTION COMPLAINT FOR

VIOLATION OF THE SECURITIES EXCHANGE ACT OF 1934-2-

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vigorous defense of the safety of its products was largely successful and the Company continued to

report record revenues during the Class Period . As a result, in 2004 alone, TASER's stock rose

361% and split three times . Indeed , based on the purported strength of TASER' s 2004 third quarter ,

Defendants revised its 2004 annual revenue growth projections upwards, from a 150% increase over

2003 to a 175% percent increase .

4. Unbeknownst to investors , however, du ring September 2004, TASER 's busines s

started to slow due to concerns about its weapons' safety, endemic quality control issues, and th e

weapons' performance . Moreover, TASER insiders were aware that the Company's business would

be further adversely impacted by the imminent publication of a comprehensive, highly critical report

by Amnesty International, which called for a ban on the use of TASER devices pending further

research regarding their safety, as well as an announcement concerning the introduction o f

competing products . Based on the undisclosed information concerning lagging sales and the

looming publication of the Amnesty Inte rnational report, Company insiders, and various members of

TASER's Board - who had previously sold approximately $51 million of stock du ring an

undisclosed suspension of shipments in the first quarter of 2004 - engaged in massive insider sales,

selling approximately $85 million worth of TASER stock in a two-week period at the end of October

through mid-November 2004 . The insiders' concerns were well-founded as the delays and/o r

cancellations of contemplated orders following issuance of the Amnesty International repor t

dramatically increased. Indeed, TASER was only able to meet its 2004 revenue projections due to

two suspect "eleventh-hour" sales : a December 20, 2004 sale of $1 .5 million worth of its new

civilian model weapon to Davidson's Inc . ("Davidson's"), a distributor; and the December 30, 2004

sale of $700,000 worth of products - which was accompanied by a handwritten note that stated ,

"Hope this will help outs i t i i "

CONSOLIDATED AMENDED CLASS ACTION COMPLAINT FORVIOLATION OF THE SECURITIES EXCHANGE ACT OF 1934

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5. Shortly after the end of the fiscal year, the truth about the Company was revealed . On

January 6, 2005, in a partial disclosure released after the market closed, the Company revealed that

the SEC had initiated an inquiry regarding TASER's statements about the safety of its devices, a s

well as the Davidson ' s transaction . As a result , TASER' s stock dropped almost 20% from a close of

$27 .62 per share on January 6, 2005 (prior to the disclosure of the SEC investigation) to a closing

price of $22 .72 per share on January 7, 2005 ( the first trading day following the disclosure of th e

SEC investigation) . Then, on January 11, 2005, while attempting to explain away the highly

criticized insider sales, Defendants disclosed that TASER's sales might be adversely impacted a s

police departments evaluated the newly introduced devices of two competing companies . Following

this final disclosure, TASER stock fell approximately 30%, closing at $14 . 10 per share on January

11, 2005, the first trading day after the issuance of the foregoing press release, compared to th e

closing price of $20.05 per share on January 10, 2005 . The massive fourth quarter insider sales

directly preceded the above disclosures and the subsequent fall in TASER's revenues b y

approximately 47%, from $19.2 million in the fourth quarter of 2004 to $10.2 million in the first

quarter of 2005 .

SUMMARY OF THE CLAIMS

TASER's Business

6. TASER's primary products are the Advanced TASER M26 (the "M26") and

Advanced TASER X26 (the "X26") . Both weapons utilize compressed nitrogen to fire two probe s

up to 21 feet, at a speed of over 180 feet per second. These probes are connected to the TASER

device by insulated wire . A five second electrical signal is transmitted through the wires to where th e

probes make contact with the body or clothing. According to the Company's website, the electrical

shock delivered by the M26 is 26 watts ; 1 .76 joules per pulse ; and 3 .6mA average current. TASER

calls the electrical pulses delivered by the M26, TASER-Waves or T-Waves . The shock delivere d


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by the M26 causes the target to experience uncontrollable muscle contractions . As detailed in the

Company's 10-K SEC filing dated March 4, 2004, "[t]he T-Waves temporarily overwhelm th e

normal electrical signals within the body's nerve fibers, impairing subjects' ability to control their

bodies or perform coordinated actions ."

7. On May 30, 2003, TASER introduced the X26 with "Shaped Pulse Technology ."

According to the Company's website, the electrical output of the X26 is 5 watts ; 0.36 joules per

pulse; and 2 .1 milliamps average current . Although the charge delivered by the X26 is less powerful

than that of the M26, in the press release announcing the introduction of the device, the Company

claimed that X26's "Shaped Pulse Technology" enabled the weapon "to achieve even greater

stopping power" than the M26 "with the same margin of safety ." In its public filings, TASER

claimed that the X26 "uses a highly refined energy pulse that concentrates a small portion of energy

to first penetrate the barrier, while the majority of electrical charge is held in reserve, flowing freely

through the barrier once the leading edge has been penetrated . "

8. The M26 and the X26 repeatedly cycle, delivering continual electrical shocks if th e

trigger is continually depressed after firing. Both weapons can also be utilized as "drive" or "touch "

stun guns, in which shocks are delivered directly from electrodes at the front end of each weapon ,

without firing the probes .

The Safety Controvers y

9. TASER has consistently represented that its weapon systems are a safe, "non-lethal "

force option for law enforcement . For example, in its Form 10-KSB for 2003, TASER stated with

respect to the X26, that "[t]he product design was completed, comprehensive medical safety

testing was conducted , and the first weapons began shipping in September of 2003 ." (Emphasis

added). During the Class Period, however, an increasing number of deaths were reported following

use of TASER devices by law enforcement. In addition, there were a growing number of reports of



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injuries to police officers who had been subjected to application of the TASER devices durin g

training sessions . In total, eighteen wrongful death or personal injury lawsuits were filed agains t

TASER in connection with the use of its weapons by law enforcement or during training exercises

during the Class Period . As a consequence of the growing number of fatalities and injuries, the

Company's representations conce rning the safety of the TASER weapons systems came under

increasing scrutiny .

10. Critics charged that even if safe for healthy individuals, the electrical shock delivere d

by the TASER weapons could cause fatal vent ricular fib ri llation in certain "at risk" populations ;

could result in fatal acidosis ; or could cause fatal respiratory complications as a result of the repeate d

delivery of electrical shocks . In their efforts to address the Company's increasingly vocal critics,

Defendants made materially misleading statements about the safety of its weapons, the adequacy of

the medical testing of its devices, and the findings of the various studies conducted .

11 . For example , to support its claims that the TASER weapons were safe, Defendants

repeatedly touted the findings of various scientific studies, such as the study conducted by the

Human Effects Center of Excellence ("HECOE") of the Department of Defense. In a press release ,

TASER said that the military study had found its guns "generally effective without significant risk of

unintended consequences ." Defendant Patrick W. Smith, the chief executive officer of TASER,

called the study "the latest chapter in a series of comprehensive medical and scientific studies which

conclude that TASER technology is safe and effective." TASER posted the initial HECOE repor t

summary on the Company's website (an expanded summary of the HECOE report was published o n

March 1, 2005 (the "March 2005 HECOE Report")) .

12 . As alleged more fully below, Defendants materially overstated the findings in th e

HECOE study. In fact, according to The New York Times, at a symposium on non-lethal weapons ,



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the Air Force laboratory that conducted the HECOE study stated that it had actually found "that the

guns could be dangerous and that more data was needed to evaluate their risks ." Moreover, military

officials asked Defendants to "tone down" their statements reading the findings of the HECO E

Report .

13 . Furthermore, Defendants failed to disclose that TASER had participated in, or funded

certain studies and, therefore , such research was not independent . In their efforts to skew scientifi c

research, TASER officials went so far as to try to participate in an ostensibly independent study

without disclosing their affiliation with the Company . During the Class Period, Dr . Robert

Stratbucker, TASER's Medical Director , omitted any mention of his affiliation with the Company in

the curriculum vitae he submitted in connection with the "Less-Lethal Technologies, Fiscal Yea r

2004" grant solicitation by the National Institute of Justice (the "NIJ") . Moreover, nothing

submitted to NIJ indicated that Dr. Stratbucker had already conducted studies for TASER, or that he

had already concluded that the weapons are safe, despite the fact that a $500,000 grant was awarded

to specifically assess the safety of the TASER International TASER Energy Weapon .

14. Defendants also made materially misleading statements during the Class Period i n

order to minimize adverse publicity in the law enforcement community arising from police officer

injuries sustained during TASER training . In the Company's public filings, for example, Defendant s

falsely described one products liability action against TASER as resulting from a shoulder injury

sustained by a police officer during training. In fact, that officer had sustained a T7 vertebra fracture

as a result of the muscle contractions caused by a TASER device shock .



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Design and Manufacturing Defect s

15 . As the number of fatalities and the attendant controversy surrounding the safety of th e

weapons grew, the investing public was unaware that the Company was also plagued by qualit y

control problems due to design flaws and poor manufacturing processes that resulted in a steady

stream of defective product returns . As alleged more fully below, a key component of the X26 and

the M26 was a circuit board manufactured by First Electronics, Inc . ("First Electronics") . According

to a former supervisory employee of TASER, who was familiar with the manufacturing process fo r

the X26 and the M26, the "unstable" design of the circuit board caused the devices to fail to fire, fir e

intermittently, or fire repeatedly and uncontrollably (due to a failure in a component of the circui t

board to shut-off) . In addition, the units did not accurately record data concerning the weapons '

functions, including data concerning use of the device, and the devices' laser sight was not visible i n

sunlight .

16. According to this, and other former employees familiar with the production process,

problems in the manufacturing process caused additional problems with the X26 and the M26 .

These former employees stated that the TASER weapons were primarily hand-assembled, and tha t

the widespread use of unskilled workers on the production line often resulted in improper solderin g

of components and other assembly defects . According to one former employee, these defects

sometimes caused the devices to deliver charges at frequencies far higher than that shown in th e

weapons' specifications, as well as other weapon malfunctions .

17 . In addition, during the Class Period, the law enforcement community becam e

increasingly dissatisfied with the performance of the X26 . In public statements, the Company touted

the X26 as delivering greater stopping power than the older M26, despite its less powerful charge . In

fact, because the X26 did not deliver a uniform number of pulses per second during the entire fiv e

second fi ring cycle, it did not have greater stopping power than the M26 . The X26 delivered 1 9


VIOLATION OF THE SECURITIES EXCHANGE ACT OF 1934

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pulses per second for the first two seconds of the firing cycle . The pulse rate, however, dropped t o

15 pulses per second for the last three seconds of the firing cycle . Because of the lower number o f

pulses per second during the last three seconds of the firing cycle, the X26 simply did not delive r

greater stopping power than the M26. According to a former TASER employee, there were a

growing number of undisclosed complaints from law enforcement that the individuals hit with th e

X26 were able to gain mobility after the first two seconds of the firing cycle . Tacitly acknowledgin g

the validity of these complaints, in September 2004, TASER increased the weapon's pulse rate to 1 9

pulses for the entire five second cycle in order to maintain the immobilizing effects of the X26 .

The Insider Sale s

18. Despite the controversy involving the safety of the TASER weapons, as well as the

endemic product defects and the issues concerning the effectiveness of the X26, during the Clas s

Period , TASER consistently repo rted positive financial results because it held a vi rtual monopoly in

the conducted energy weapon market . Having bought out its only competitor in June 2003, TASE R

had no competitors for most of the Class Period . Shortly after it began to ship, however, Defendant s

became aware of a software defect with the Company's new X26 device . Thus, in the first quarter of

2004, TASER suspended product shipments while it attempted to rectify the problem . The

Company did not disclose the existence of the problem, or the resulting suspension of shipments ,

until in or about May 2004. The Individual Defendants , as well as other Company insiders and

members of TASER' s Board sold approximately $51 million during February 2004, after the

suspension, but prior to any public disclosure of the problems with the X26 or the temporary halt o f

shipments .

19. Despite the first quarter suspension of shipments, sales of the X26 continued to climb .

In fact, due to the purported success of the third quarter 2004, TASER revised its projected annua l

revenue growth for 2004 upward, from a 150% increase compared to 2003, to a 175% increase over



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2003 . While Defendants were issuing their favorable public statements, however, they were awar e

that the Company's sales had actually started to slow in September 2004 due to the safet y

controversy and widespread quality problems with the TASER devices . Moreover, Defendants soo n

learned that the TASER's business prospects were about to substantially worsen .

20. Several weeks before its November 30, 2004 publication, Defendants became aware

that Amnesty International was about to issue a highly critical report on the safety of the TASE R

devices . Citing the numerous incidents of fatalities and injuries repo rted following TASER use ,

Amnesty International recommended a moratorium on continued use of the weapons pending

comprehensive safety testing . In addition, on October 21, 2004, Law Enforcement Associates

announced that it had completed the housing design for its new stun weapon which had a projected

launch date of March 2005 . Further, on November 15, 2004, Stinger Systems announced that it had

entered the projectile stun gun market with the introduction of "The Stinger ." Both products were to

compete directly with TASER's M26 and X26 weapons . While TASER had already successfully

penetrated an estimated 20% of the domestic law enforcement market , Defendants knew that

because of (i) the falsity of their statements conce rn ing the TASER weapons' safety ; (ii) the

undisclosed design and manufactu ring defects; and (iii) the undisclosed issues regarding the

effectiveness of the X26, the emergence of competing products would have a calamitous effect o n

the Company' s sales .

21 . Thus, shortly after Defendants announced the upward revision of the Company's

projected 2004 revenues, Defendants Phillips W. Smith, Patrick W . Smith and Thomas P. Smith, a s

well as numerous members of the TASER Board and other Company employees, engaged i n

massive insider sales of almost 1 .7 million shares of TASER common stock, for proceeds of more

than $85 million. Thus, insider and Board member sales during the Class Period totaled more than



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$120 million - approximately $40 million more than the Company's total revenues for all of 200 3

and 2004 .

The Fall-Out from the Amnesty International Report and Product Defect s

22 . Shortly after the massive insider selling by TASER directors, officers and employees,

on November 30, 2004, Amnesty International released its report entitled "Excessive and Letha l

Force? Amnesty International's Concerns About Deaths and Ill Treatment Involving Police Use o f

TASERs" ("Amnesty International Report") . According to the Amnesty International Report, more

than 70 people had died in the United States and Canada after being shocked by either the TASER

M26 or X26 as of November 30, 2004 .

23. As a consequence of the safety issues cited in that repo rt, as well as the product

defects noted above, an increasing number of police departments postponed and/or cancelled order s

with TASER during the fourth quarter 2004 due to safety conce rns and in order to evaluate

competing products .

The Suspect Fourth Quarter Transaction s

24. On December 20, 2004, TASER announced that it had entered into an exclusive .

distribution agreement with Davidson 's, to market and distribute the TASER X26C Citizen Defense

System, a civilian version of its X26 weapon. Under the terms of the agreement, Davidson's will be

the exclusive distributor for the X26C for one year . The Company further announced tha t

Davidson's initial order was for $1 .5 million in products, including 1,000 X26Cs, which was

expected to ship in the fourth quarter of 2004 .

25. In addition, on December 30, 2004, the last business day of the fiscal year, an

unidentified distributor placed a $700,000 order for TASER products . There was a handwritten note

on the purchase order that said "Hope this helps out! ! ! ! ! "

26. The Davidson's transaction and the $700,000 transaction were critical to th e


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Company because, as was subsequently disclosed after the end of the Class Period, without those

eleventh-hour sales, TASER would not have met its fourth quarter and fiscal year 2004 revenu e

projections .

The Truth Emerge s

27. On January 6, 2005, after the market closed, TASER announced that the SEC ha d

initiated an informal inquiry concerning the Company's statements concerning the safety of it s

weapons, as well as the Davidson ' s transaction . The price of TASER common stock dropped from a

close of $27.62 per share on January 6, 2005 (p rior to the disclosure of the SEC investigation) to a

closing p rice of $22.72 per share on January 7, 2005 ( the first trading day following the disclosure o f

the SEC investigation) .

28. On January 11, 2005, after the market closed, the Company issued a press releas e

entitled "An Open Letter to Our Shareholders and Customers ." In that press release, Defendant

Thomas P. Smith attempts, inter alia, to explain away the massive insider sales by the Individua l

Defendants (without mention of the massive sales by other Company insiders) . Significantly, the

press release also states, "[d]uring the first half of 2005, it is possible that we may see some delays in

orders as agencies test and evaluate potential new entrants ." With that disclosure, all the artificia l

inflation in the price of the Company's common stock was removed, as TASER closed at $14 .10 per

share on January 11, 2005, the first trading day after the issuance of the foregoing press release,

compared to the closing price of $20.05 per share on January 10, 2005 .

29. In the Company's annual report filed with the SEC on Form 10-KSB on March 31 ,

2005 , TASER acknowledged that the adverse publicity from the safety controversy surrounding it s

devices, as well as the advent of competition in the conducted energy weapons market had adversely

affected the Company' s business .



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JURISDICTION AND VENUE

30. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of th e

Exchange Act [15 U.S.C. §§ 78j(b) and 78t(a)] and Rule lOb-5 promulgated under Section 10(b) by

the SEC [17 C .F.R. § 240 .1Ob-5] .

31 . This Court has jurisdiction over the subject matter of this action pursuant to 28 U .S.C.

§§ 1331 and 1337 , and Section 27 of the Exchange Act [15 U .S .C . § 78aa] .

32. Venue is proper in this District pursuant to Section 27 of the Exchange Act and 28

U.S.C. § 1391(b) . Many of the acts charged herein , including the preparation and dissemination o f

materially false and misleading information, occurred in substantial part in this District and TASER

conducts business in this District .

33. In connection with the acts alleged in this Complaint, Defendants, directly or

indirectly, used the means and instrumentalities of interstate commerce, including, but not limited to,

the mails, interstate telephone communications, and the facilities of the national securities markets .

PARTIES

34. Lead Plaintiff Eli Wilamowsky , as set forth in the certification previously filed wit h

the Court and incorporated by reference herein, purchased the common stock of TASER at

artificially inflated prices during the Class Period and has been damaged thereby .

35. Defendant TASER is incorporated in Delaware and maintains its principal place o f

business in this District at 7860 East McClain Drive, Suite 2, Scottsdale, Arizona 85260.

36. Defendant Dr. Phillips W. Smith ("Dr. Smith"), served as the Company's Chairman

of the Board of Directors and a director from 1993 until December 2004 . Dr. Smith also served as

the Company's Director of Investor Relations . Dr. Smith is the father of Defendants Patrick W .

Smith and Thomas P . Smith .

37. Defendant Patrick W. Smith ("Rick Smith"), served as Chief Executive Officer and a s


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a director of the Company since 1993 . He is a co-founder of the Company .

38. Defendant Thomas P . Smith ("Tom Smith"), served as President of the Compan y

since April 1994 and as a director since 1993_ He is a co-founder of the Company .

39. Defendant Kathleen C . Hanrahan ("Hanrahan") served as the Company's Chie f

Operating Officer since November 2003 . Hanrahan joined the Company in January 1996 as an

internal controls consultant and served as its controller from March 1996 to November 2000 and also

served as the Company's Chief Financial Officer from November 2000 through May 2004 .

40. Defendant Daniel Behrendt ("Behrendt"), served as Chief Financial Officer of th e

Company since May 2004 .

41 . Defendant Steven Tuttle ("Tuttle") served as Vice President of Communications and

was chief spokesman for Taser during the Class Period .

42. The defendants referenced above in paragraphs 36-41 are collectively referred to

herein as the "Individual Defendants . "

43 . During the Class Period, the Individual Defendants, as senior executive officers an d

directors of TASER were privy to confidential and proprietary information concerning TASER, its

operations, finances, financial condition, and present and future business prospects, including :

information concerning the medical testing of its weapons systems ; the Company's participation in

certain safety studies ; the findings made and conclusions reached in those studies; the relative

effectiveness or "stopping" power of the M26 and the X26 ; the design flaws of the TASER devices ;

the problems in the manufacturing process of the TASER devices ; the numerous returns of defectiv e

products ; the decline in orders during the third quarter of 2004 ; and the facts and circumstances

surrounding the Davidson's transaction. The Individual Defendants also had access to material ,

adverse, non-public information conce rning TASER. For example, Defendants Rick Smith and


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Hanrahan attended daily production meetings during which the manufacturing problems, desig n

flaws, and defective products were discussed . Defendant Tom Smith also attended some of thes e

meetings . Furthermore, Defendant Rick Smith was aware that the manufacturer of the circuit board s

used in the TASER devices, First Electronics, had informed the Company that the circuit boards di d

not function properly due to design flaws by TASER, and not manufactu ring flaws by Firs t

Electronics . In addition, Defendants Rick Smith, Tom Smith, Hanrahan, and Behrendt were aware

of the massive number of defective products being returned because they were present when an extra

room had to be built at the TASER manufacturing facility to store all the returned goods . Moreover ,

the Individual Defendants were aware that there was an undisclosed slowdown in sales during th e

third quarter of 2004 . Because of their possession of such information, the Individual Defendant s

knew or recklessly disregarded the fact that adverse facts specified herein had not been disclosed to ,

and were being concealed from, the investing public . Moreover, the Individual Defendants, and

other Company insiders, who were aware of the foregoing, sold massive quantities of their persona l

holdings in the Company shortly before the end of the Class Period .

44. The Individual Defendants are liable as direct pa rticipants in, and as co-conspirators

with respect to, the wrongs complained of herein. In addition, the Individual Defendants, by reaso n

of their status as senior executive officers and directors were "controlling persons" within the

meaning of Section 20 of the Exchange Act and had the power and influence to cause the Company

to engage in the unlawful conduct complained of herein . Because of their positions of control, th e

Individual Defendants were able to and did, directly or indirectly, control the conduct of TASER' s

business .

45. The Individual Defendants , because of their positions with the Company, controlled

and/or possessed the authority to control the contents of its reports, press releases, and presentations



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to securities analysts, and through them, reached the investing public . The Individual Defendants

were provided with copies of the Company's press releases and SEC filings alleged herein to b e

misleading, prior to or shortly after their issuance and had the ability and opportunity to prevent thei r

issuance or cause them to be corrected . Thus, the Individual Defendants had the opportunity to

commit the fraudulent acts alleged herein .

46. As senior executive officers and/or directors and as controlling persons of a publicly-

traded company whose securities were, and are, registered with the SEC pursuant to the Exchange

Act, and which were traded on the NASDAQ and gove rned by the federal securities laws, th e

Individual Defendants had a duty to promptly disseminate accurate and truthful information with

respect to TASER's financial condition and performance , growth , operations , financial statements,

business , products, markets, management , earnings, and present and future business prospects, and

to correct any previously issued statements that had become materially misleading or untrue, so that

the market price of TASER's stock would be based upon truthful and accurate information . The

Individual Defendants' misrepresentations and omissions during the Class Period violated these

specific requirements and obligations .

47. The Individual Defendants are liable as participants in a fraudulent scheme an d

course of conduct that operated as a fraud or deceit on purchasers of TASER' s stock by

disseminating materially false and misleading statements and/or concealing material, adverse facts .

The scheme: (i) deceived the investing public regarding TASER's business , operations, and

management and the intrinsic value of TASER stock; and (ii ) caused Plaintiff and the other members

of the Class to purchase TASER' s stock at art ificially inflated p rices.

PLAINTIFF'S CLASS ACTION ALLEGATION S

48. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of all those who purchased the stock of TASER during the


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Class Period and who were damaged thereby (the "Class") . Excluded from the Class are

Defendants, the officers and directors of the Company during the Class Period, members of their

immediate families and their legal representatives, heirs, successors or assigns and any entity in

which Defendants have or had a controlling interest .

49. The members of the Class are so numerous that joinder of all members i s

impracticable . Throughout the Class Period, TASER stock was publicly traded . While the exact

number of Class members is unknown to Plaintiff at this time and can only be ascertained through

appropriate discovery, TASER had approximately 59 million shares of common stock outstanding as

of November 4, 2004. Plaintiff believes that there are hundreds or thousands of members in th e

proposed Class. Record owners and other members of the Class may be identified from record s

maintained by TASER or its transfer agent and may be notified of the pendency of this action b y

mail, using the form of notice similar to that customarily used in securities class actions .

50. Plaintiffs claims are typical of the claims of the Class, as all Class members were

similarly affected by Defendants' wrongful conduct in violation of federal law that is complained o f

herein .

51 . Plaintiff will fairly and adequately protect the interests of the Class and has retaine d

counsel competent and experienced in class and securities litigation .

52. Common questions of law and fact exist as to all members of the Class an d

predominate over any questions solely affecting individual members of the Class . Among the

questions of law and fact common to the Class are :

a. whether the federal securities laws were violated by Defendants' acts asalleged herein ;

b. whether statements made by Defendants to the investing public during theClass Period misrepresented material facts about the business and operationsof TASER; and


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c. to what extent the members of the Class have sustained damages and theproper measure of damages .

53 . A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable . Furthermore, as th e

damages suffered by individual Class members may be relatively small, the expense and burden o f

individual litigation make it impossible for members of the Class to individually redress the wrong s

done to them . There will be no difficulty in the management of this action as a class action .

SUBSTANTIVE ALLEGATIONS

TASER' s Business

54. TASER describes itself is a market leader in providing advanced non-lethal device s

for use in the law enforcement, military, private security and personal defense markets . Prior to

1999, the Company's primary product was the AIR TASER device . The AIR TASER had a power

output of between 5-7 Watts . According to the sworn deposition of Defendant Rick Smith ,

TASER's CEO, which was taken in the personal injury action entitled Powers v. TASER

International, Inc ., No. CV2003-013457, pending in the Superior Court of the State of Arizona,

Maricopa County (the "Powers Action"), "[t]he [then] existing generation of Taser devices were no t

effective against motivated subjects ." As a consequence, TASER retained Dr. Robert A . Stratbucker

in 1996 to conduct tests "to determine if [TASER] could make the device more effective . . . ."

55. Dr. Stratbucker conducted the developmental tests on an anesthetized pig in 1996 .

That testing led to the 1999 introduction of the M26 . The M26 was the first conducted energy

weapon to cause what the Company describes as electro -muscular disruption ("EMD"). According

to TASER's website :

EMD weapons use a more powerful 18 to 26 Watt electrical signal tocompletely override the central nervous system and directly control theskeletal muscles. This EMD effect causes an uncontrollable contraction ofthe muscle tissue, allowing the M-Series to physically debilitate a target



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regardless of pain tolerance or mental focus . The ADVANCED TASER®M-Series are EMD weapons specifically designed to stop even the mostelite, aggressive, focused combatants . Rather than simply interfe ring withcommunication between the brain and muscles , the ADVANCED TASER®EMD systems directly tell the muscles what to do : contract until the target isin the fetal position on the ground .

According to the Company's sales brochure for the M26 :

Upon fi ring, compressed nitrogen projects two ADVANCED TASER®probes 15 or 21 feet (depending on cartridge) at a speed of 180 feet persecond . The probes are connected by thin insulated wire back to the M26 .An electrical signal transmits throughout the region where the probes makecontact with the body or clothing . The result is an instant loss of theattacker 's neuromuscular control and any ability to perform coordinatedaction . ADVANCED TASER uses an automatic timing mechanism to applythe electrical charge for 5 seconds .

If the trigger of the M26 is continually depressed, it will continue to cycle and deliver the burst s

continually . In addition, the M26 may be used as a "drive" or "touch" stun gun, delivering a n

electrical charge directly from two stun electrodes at the front of the weapon . In the drive or touch

mode, the M26 does not cause an EMD response, but rather causes incapacitation through the

infliction of localized pain .

57. At the start of the Class Period, on May 29, 2003, TASER introduced its most recent

law enforcement conducted energy weapon , the X26. The firing and touch stun features of the X26

are the same as the M26. The X26 has a far lower power output - 5 Watts - however, the Compan y

claimed that it had 5% greater stopping power than the M26 because of its "Shaped Pulse"

technology:

The Shaped Pulse is comprised of two pulse phases .

The first phase, called the "Arc Phase" is optimized to generate a very highvoltage to penetrate clothing, skin or other barriers . The "Arc Phase" is avery high voltage short duration pulse that can arc through up to 2 inches ofclothing or barriers . Once the arc is created, the air in the arc is ionized andbecomes a low impedance electrical conductor that conducts the secondpulse phase into the body .

CONSOLIDATED AMENDED CLASS ACTION COMPLAINT FOR -19-VIOLATION OF THE SECURITIES EXCHANGE ACT OF 1934

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The second phase of the Shaped Pulse is the stimulation phase, or "StimPhase ." The Stim Phase does not have to arc across a barrier , since this wasaccomplished by the Arc Phase. The Stim phase only has to flow across thehighly conductive arc from the Arc Phase. Hence, the Stim Phase isoptimized to provide maximum incapacitation for a human target whileoperating at super-efficient power levels .

58 . The M26 and X26 are sold exclusively to law enforcement , military, correction

agencies and the commercial airline industry. Law enforcement agencies have used TASER's stun

guns as alternatives to using their firearms or batons to control dangerous or combative individuals .

TASER's products are promoted to the public and law enforcement agencies on the ground that the y

can save lives in situations where police would otherwise use deadly force .

59 . Because most law enforcement, military and corrections agencies will not purchas e

I new weapons until a training program is in place to certify all officers in their proper use, TASER

offers a sixteen-hour class that certifies law enforcement and corrections agency trainers a s

instructors . Certified instructors may undergo further training and become certified as maste r

instructors . Master Instructors are authorized to train other law enforcement and corrections agenc y

trainers . Military personnel are trained by TASER' s Chief Master Instructor . Approximately 150 o f

TASER's master instructors conduct TASER device training classes on a regular basis . The master

instructors are independent professional trainers , serve as local area TASER experts, and assist in

conducting TASER demonstrations at other police departments within regions . On January 1, 2001 ,

TASER implemented a $195 charge for each training attendee . TASER pays master instructors a

per-session training fee for each session they conduct . The Company conducted over 350 training

courses in 2004 and, as of December 31, 2004, has conducted a cumulative 1,006 training course s

during which it trained more than 17,700 individuals in the use of TASER products .

60 . The Company generates revenues from three different sources : (i) the sale of it s

I weapons systems; (ii) the sale of replacement cartridges for its weapons systems ; and (iii) revenu e


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from training . TASER sells most of its products in the United States through its network o f

approximately 28 law enforcement distributors . The Company also utilizes a small number o f

military and international distributors, as well as engaging in direct sales with a small number o f

customers . The Company's publicly repo rted revenue recognition policy is that TASE R

"recognize[s] revenues when persuasive evidence of an arrangement exists, delivery has occurred or

services have been rendered, title has transferred, the price is fixed and collectability is reasonabl y

assured . All of the Company' s sales are final and our customers do not have a right to retu rn the

product . "

61 . Throughout the Class Period , TASER consistently repo rted increasing revenue based

on growing acceptance and use of its weapons systems by law enforcement agencies throughout th e

United States . In the Company's 2004 Form 10-KSB/A, filed with the SEC on May 23, 2005 ,

TASER reported that "[n]et Sales increased $43 .2 million , or 177%, to $67.6 million for 2004

compared to $24 .5 million for 2003 . This increase was due to the increased unit sales of the higher

priced TASER X26 devices, and increased single cartridge sales associated with the wider-sprea d

and continued use of TASER devices by law enforcement . "

62. The Company' s manufacturing and final assembly facilities , as well as its offices and

storage facilities , are located in Scottsdale, Arizona. In 2003, TASER's devices were assembled

completely by hand . The Company states that it began to automate certain aspects of th e

manufactu ring process in 2004 . TASER 's weapons utilize finished circuit boards and injection-

molded plastic components provided by outside vendors . The circuit boards are manufactured by

First Electronics .

The Safety Controversy

63 . Since its introduction in the 1970s, the safety of electric stun weapons have been th e

source of controversy . In Consumer Products Safety Commission ("CPSC") studies authored b y



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Ted Bernstein in the mid-70s, it was concluded that stun weapons less powerful than the M26 coul d

be lethal depending on individual susceptibility .

64. In 1987, Dr. Gary Ordog published a paper on injuries and the use of conducted

energy weapons . Dr. Ordog's study involved the review of 218 cases in one hospital between 198 0

and 1985. Dr. Ordog found mild rhabdomyolysis (the breakdown of muscle fibers) and

myoglobinuria (the release of muscle components into blood circulation) in a number of cases, but

could not determine if that was due to drug abuse or stun gun use. Dr. Ordog also concluded that

continuous application of electrical current could result in respiratory arrest . In three of the cases

studied, the patients died and Dr . Ordog concluded that the stun gun "cannot be held solely

responsible for their deaths ."

65. On March 31, 1991, a study conducted by Dr . Ronald Kornblum and others, entitled

Effects of the TASER in Fatalities Involving Police Confrontation, was published in the Journal of

Forensic Sciences . The study examined the records of 16 deaths connected with the use of th e

earlier generation, pre-EMD inducing, taser stun guns in Los Angeles . That study concluded that

"the taser in and of itself does not cause death ." The study found that 11 of the 16 deaths resulte d

from an overdose of drugs. The other five were described as follows : "gunshot wounds in three ,

heart attack and TASER shock in one, and an undetermined cause in the last one . "

66. In July 1992, Dr. Terence B . Allen published a follow up discussion in the Jou rnal of

Forensic Sciences, entitled Discussion of Effects of the TASER in Fatalities Involving Police

Confrontation . Criticizing Dr . Kornblum's findings, Dr . Allen concluded that "certain medica l

conditions, including drug use and heart disease, may increase the risk that the taser will be lethal ."

Further, Dr. Allen noted that 9 of the 16 deaths that Dr . Kornblum reviewed were "individuals who

were alive and active, collapsed on tasering, and did not survive . In my opinion, the taser



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contributed to at least these nine deaths ." Specifically, in the one death that was attributed to a hear t

attack and a taser shock, Dr. Allen concluded that the "death was an immediate and direct result o f

the taser . "

67. On December 1, 1995, a Texas Corrections Officer, Harry Landis, died after a

training exercise during which he was exposed to an electric shield, a stun device that emitted pulse s

of electrical current to prevent prisoners from attacking guards . Landis' death was publicly reported

in a 1996 article in Progressive magazine .

68 . As noted above, in 1996, TASER retained Dr . Stratbucker as a consultant to conduc t

tests in an effort to make the then-current generation of conducted energy devices more effective .

The March 2005 HECOE Report describes the 1996 test, which was based on data provided b y

TASER. According to the March 2005 HECOE Report, the 1996 test was conducted with the AIR

TASER 34000 on a pig that was pre-medicated with atropine and sedated with Ketamine mixed wit h

Xylazine . Dr. Stratbucker subjected the pig to various strength electrical charges using the AI R

TASER. According to the March 2005 HECOE Report, Dr. Stratbucker found there was no ectopi c

heartbeats and no evidence of myocardial injury resulting from the discharge of the TASER device .

It further noted that while respiration was briefly arrested during some chest discharges, it returne d

spontaneously at cessation of stimulation . In all cases, both respiration and heartbeat returned t o

normal within a few minutes according to Dr. Stratbucker .

69. In or about November or December of 1999, Dr. Stratbucker and Dr . W. McDanie l

of the University of Missouri were retained by TASER to perform tests of the AIR TASER and th e

M26 to determine if external application of the devices could cause ventricular fibrillation in dogs .

That testing was done at the Cardiothoracic Surgery Center at the University of Missouri . That

testing is also discussed in the March 2005 HECOE Report . According to that report, Drs .



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Stratbucker and McDaniel repo rted 16 discharges of the Air TASER and 192 discharges of the

Advanced TASER (M26 Test Model) through electrodes in multiple configurations resulting in n o

episodes of ventricular fibrillation . In 3 dogs implanted with a pair of separated 20-gauge spina l

needles through the chest wall so that the sharpened point just contacted the beating heart, the

Advanced TASER caused no ventricular fibrillation with 13 stimulations . Dogs given

sympathomimetic drugs and Ketamine, a close chemical relative of phencyclidine (PCP or ange l

dust), also showed no adverse cardiac effect with repeated applications of the M26 .

70. In September 2002, the Police Scientific Development Branch (the "PSDB") in

Britain published a report entitled "PSDB Evaluation of Taser Devices ." In that report, the PSD B

compared the TASER 34000 and M26 to competing products manufactured by Tasertron . With

respect to the TASER 34000, the PSDB noted that there were product defects, such as

malfunctioning laser sights and a recall for TASER' s rechargeable batteries, which demonstrate d

that TASER had "either not tested all of [its] products and related equipment thoroughly enough, o r

do not have a sufficiently rigorous quality control procedure in place . . . . "

71 . The PSDB report stated the Defence Science and Technology Laboratory ("Dstl" )

had produced an assessment of the medical implications associated with the use of TASER device s

and had highlighted the areas where further research may be required, particularly with high

powered models . The report specifically stated that among the areas of concern identified by Dst l

during their initial assessment included :

• No objective scientific studies have been carried out to determine themagnitude and distribution of electric currents from tasers in the body .

• The manufacturer's explanations of the physiological mechanisms ofincapacitation through use of the taser devices are speculative .

• The effect of taser devices on pacemakers or other implanted electricalequipment is unclear .


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• The effects of tasers on the heart have not been thoroughlyinvestigated . The experimental work previously carried out onanimals was poorly designed.

• Certain substances or metabolic conditions may increase thesusceptibility of the heart to arrhythmia e .g. pre-existing heart diseaseor use of recreational drugs . There is no experimental evidence thatthese factors increase the susceptibility of the heart to tasers sufficientto cause an arrhythmic event, however caution should be expressedregarding the use of tasers on excitable, intoxicated individuals .

72. The report further stated that "[t]he epidemiological evidence for the safety of th e

M26 Advanced Taser is certainly not as robust as that for the low-power devices. With the lack of

substantial historical data of use and inadequate experimental evidence , the high -power Tasers

cannot be classed, in the vernacular, as "safe" . [Emphasis added . ]

73 . On April 27, 2003, a report entitled The Advanced Taser : A Medical Review, was

published (the "Bleetman Report") . That report, authored by Anthony Bleetman and Richard Steyn ,

was paid for by TASER . In the preamble to the report, Anthony Bleetman described it as a

"literature review describing the injury potential of the Advanced Taser product . I have been asked

to draw conclusions on the device's relative safety and to identify potential medical issues i n

deploying this product." The authors qualified the report by noting that "[t]he Advanced Taser is a

new weapon that has only recently been deployed . We have not identified any material published in

peer reviewed medical literature on the medical effects of this new weapon . "

74. While the Bleetman Repo rt concluded that "[t]here exists no convincing evidenc e

directly implicating Taser weaponry in deaths of subjects in over 25 years' experience in America, "

it, nonetheless, cautioned that :

The risk of harm might well be higher for using these devices on patientswith pre-existing heart and neurological diseases . These risks are largelytheoretical and have not been demonstrated in field application or laboratorytesting to date .

75 . According to the deposition testimony of Defendant Rick Smith in the Powers



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Action, in or about May 2003, TASER was apprised that Maricopa County Sheriff's Deputy Samue l

Powers claimed to have sustained a compression fracture of his vertebra during a training exercis e

involving the M26, and had been provided with a videotape of the training exercise .

76. In November 2003, Samuel Powers filed a complaint in the Powers Action in th e

Superior Court of the State of Arizona, Maricopa County . In that products liability suit, the plaintiff

Samuel Powers alleged, inter alia, that he sustained a compression fracture of the T7 vertebra durin g

a training exercise while being subjected to a shock from an M26. Powers claimed, among other

things, that TASER had falsely represented to law enforcement agencies that its conducted energ y

weapons, including the M26, were safe .

77. An article, dated February 10, 2004 in the Star Tribune: Newspaper of the Twin

Cities, entitled, "Taser safety questioned after man's heart attack / The guns use a small enough jol t

to be considered safe, their manufacturer says," stated :

When officers see Taser guns at trade shows, company spokesman SteveTuttle says the first question they always ask is whether a weapon thattemporarily paralyzes a person with a 50,000 volt jolt of electricity can causea heart attack .

His short answer is no . But it's a safety issue that Taser International dealswith nearly every time somebody is hurt or killed after a Taser incidentinvolving law enforcement .

The question was being asked again after an incident Friday in whichMinneapolis police used the company's advanced Taser M26 to subdue a 40year old man. The man, Ray Siegler, had threatened fellow residents at agroup home for adults diagnosed with mental illness and suffered cardiacarrest shortly after he was shocked . He is in critical condition at HannepinCounty Medical Center in Minneapolis . . . .

While few studies have been done on their safety, Tuttle said the U .S. AirForce's Human Effects Center of Excellence will be conducting anindependent study in April on the weapon and reviewing cases in whichpeople died when it was used on them .

78. An article, dated March 13, 2004, in the Milwaukee Journal Sentinel , entitled "39


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Officers to Carry Stun Guns Milwaukee Police to use Tasers on a Trial Basis" reported :

Thirty-nine Milwaukee police officers will begin carry ing Taser stun gunsbeginning Sunday, giving them what officials described as another tool tostop uncooperative suspects and prevent officer injuries . . . .

Questions have been raised about the device's safety . Around the country,suspects have been hospitalized after being shot with a Taser, and 41 havedied, according to the company. All the deaths in which an autopsy hasbeen completed have cleared the Taser as the cause , said Steve Tuttle,spokesman for Taser International Inc . He said most of the deaths are fromdrug overdoses. [Emphasis added . ]

79. On April 6, 2004, CBS Evening News reported that at least 40 people have died afte r

being hit with TASER' s stun guns . In one instance , a person died immediately after being stunned .

Further, in November 2003, James Borden was shocked three times and died a short while later in

prison. While Rick Smith claimed that no medical examiner's report attributed the cause of death t o

the TASER's stun guns, the shock from a stun gun is listed as one of the causes of Mr . Borden' s

death, along with a heart attack and drug intoxication according to the news report .

80. An Associated Press Alert - Ohio, dated April 10, 2004 , entitled "Use of chemical

irritant dropped after stun gun introduced" described how suspects often have to be repeatedl y

tasered to subdue them :

Police use of chemical irritants has dropped 30 percent in the three monthssince officers started carrying stun gun, The Cincinnati Enquirer reported onSaturday . . . .

But as more law-enforcement agencies start using them, questions areemerging about the Tasers' health effects .

The newspaper found :

[ . . .] One 5-second jolt from a distance often isn't enough. In many cases,officers fired their Taser more than once and used it in its secondarycapacity, as a stun gun applied directly to the body. One man was fired at 12times before officers were able to handcuff him . Loose or thick clothing canprevent the metal barbs from delivering the electricity .

81 . An article in The Macon Telegraph, dated April 25, 2004, entitled "Taser Death


Stirring Debate Macon Police Suspend Use Of Device After Death Of Houston Inmate," reported :

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One Middle Georgia law enforcement agency has suspended the use ofTaser stun guns, and another is taking a wait-and-see approach before usingthem, following the death of a second person shocked by Houston Countysheriff's deputies .

Tasers, which can temporarily incapacitate someone by delivering a 50,000-volt shock, are normally used to stun and gain control of people who are notcooperating with officers . The manufacturer says the guns are safe, andmany law enforcement officers say they are effective .

But others have their doubts .

There have been more than 40 in-custody inmate deaths in which a Taserwas used since the stun gun was first introduced to law enforcement in 1998,but none has been attributed to the device, says the Taser manufacturer .Taser International also says its studies have found that the gun's shock,which temporarily overrides the central nervous system, cannot cause a heartattack.

But Amnesty International USA says there have been no independent studieson the medical effects, and that use of the Taser should be suspended untilsuch studies are done . The human rights organization also says there's apotential for abuse , mistreatment and even torture .

But the Taser is not used everywhere in Middle Georgia :

The Macon Police Department suspended the use of Tasers, which wereassigned only to its Special Weapons Assault Team, on April 19 in light ofthe Houston County incidents, said Macon police spokeswoman MelanieHoffman. The suspension is indefinite, pending the outcome of the GBIinvestigation of the most recent death, she said .

The Fort Valley Police Department had considered the use of Tasers butbacked off because of the numbers of deaths nationally, said Police ChiefJan Carey.

"We're waiting until the smoke clears to get a definitive answer on what'sgoing on," Cary said .

About 4,400 of the nation's 18,000 law enforcement agencies use Tasers,according to Taser International . Company spokesman Steve Tuttle said thatin all of the 42 deaths, the Taser was found not to have caused the deaths .



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Most of the deaths were attributed to drug overdoses and/or heart failures,said Tuttle .

But while the Taser may not have been named as the cause of the death, themedical examiner's findings were inconclusive or unavailable on the causeof death in three of the 42 deaths, and no autopsy reports were available oneight of the 42 deaths, according to summaries of the deaths and Taser useprovided by Taser International . . . .

82 . In an article dated April 28, 2004, in PR Newswire Europe, entitled "Taser(R)

International, Inc . Responds to Media Sensationalism Regarding Alleged Taser Technology in

Custody Deaths / No Deaths Have Ever Been Directly Caused by Taser Technology to Date, "

Defendant Rick Smith continued to tout the safety of the TASER devices based on the findings o f

various medical examiners . Notably, however, Smith dropped TASER's former claim that no

medical examiner had found a TASER weapon to be a contributory factor in any death . Instead ,

Smith's statement is much more narrowly circumscribed to reflect recent disclosures by The Macon

Telegraph that the medicals examiner ' s findings were inconclusive in three of the 42 deaths that

occurred after a TASER device was used :

Taser International, Inc., a market leader in advance non-lethal weaponannounced today that no deaths have occurred as a direct result of the useof its Taser technology products .

"In every single case the medical examiner has attributed the direct cause ofdeath in the autopsy reports to causes other than the Taser device," saidRick Smith, CEO of Taser International, Inc . "In over a decade of use, ourproducts have not yet been listed as a direct cause of death by anyindependent medical examiner or coroner . . . . [Emphasis added . ]

83 . In 2004, another animal study was conducted at the University of Missouri by Dr .

McDaniel, Dr. Stratbucker (who was now employed by TASER), Max Nerheim (TASER' s Chief

Electrical Engineer), and James E . Brewer. The tests were funded by the Office of Naval Research

and TASER. The test were conducted on 10 adult pigs, ranging in weight from 66 to 258 pound s


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I and utilized a custom built device that matched the electrical discharge and waveform characteristic s

I of the X26 . The test showed that ventricular fib ri llation thresholds ranged from 15 to 42 times

normal the normal output of the X26, with variation in the margin of safety related to body .

84. An article, dated May 22, 2004, in the Clarion-Ledger, entitled "Electric Law

Enforcement " described the on-going debate about use of TASER' s devices :

Medical examiners in each case cited drugs, heart disease or cardiac arrestduring a struggle as the causes of death, said Steve Tuttle, vice president ofcommunications for Taser International .

The electricity generated by the devices is not enough to impact cardiactissue, Tuttle said . Most who have died after being Tasered have had drugsin their system, Tuttle said . That prompted Taser to test the devices onanimals that had been injected with drugs, he said .

Human rights group Amnesty International is calling for a comprehensive,independent medical study to show how Tasers impact drugged humans,said Ed Jackson, the group's media director.

"Taser is engaging in behavior that borders on irresponsible by telling policeofficers around the country that these devices can't kill anyone," Jacksonsaid . "In doing so, they are raising questions they can't answer."

85. An article dated June 12, 2004, in the Denver Rocky Mountain News, entitled

"Glendale Cop Cleared In Taser Death / Drug Addict Died of Cardiac Arrest After Being Shocked, "

reported :

Arapahoe County prosecutors decided Friday that a Glendale police officerwas justified in firing her Taser at least four times into a combative drugaddict who died a short time later of cardiac arrest .

Chief Deputy District Attorney Brian K . McHugh, who investigated thecase, cited in a 27-page report the coroner's previous findings that GlennLeyba suffered complete heart failure that was induced by a massive cocaineoverdose .

However, District Attorney James Peters left the door open about whetherthe use of a Taser is completely nonlethal .


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In a letter to the police chief, Peters stated his investigators reviewed theliterature concerning the effects of Taser .

"Although the weight of the current medical evidence indicates that the useof a Taser is nonlethal and does not cause injury, we have learned that thisperspective is not universal," Peters wrote . "Research and study (are)ongoing and (merit) additional evaluating and review as new informationbecomes available ." Taser International spokesman Steve Tuttle said Peterssimply was playing it safe when he speculated about whether a Taser is 100percent nonlethal . . . .

86. An article dated June 26, 2004 in the Las Vegas Review - Journal, entitled

"CORONER's INQUEST: Jurors rule Taser a factor in death ," stated :

Las Vegas police in the past nine months have armed officers with Tasersbecause the 50,000-volt stun guns are considered an alternative to lethalforce .

However, a jury at a coroner's inquest Friday ruled that the Taser an officerused seven times on a combative man under the influence of PCPcontributed to his death in February .

The Jury ruled that the death of 26-year-old William Lomax was excusable,and determined his cardiac arrest was causes by his drug use, officer ReggieRader's repeated use of the Taser and the force three security guards usedin subduing Lomax .

"The combination of the force of the knee in his back , the Taser, hisdrug use and the restraining : They all played an equal role in thisdemise ," said jury forewoman Dana Johnson, 29, a stay-at-home mother . . . .

Lomax, who was not armed, was acting erratically Feb. 20 at the EmeraldBreeze Apartments, on the 900 block of West Monroe Avenue, whensecurity guards at the complex asked whether he needed medical assistance,according to the guards' testimony .

The security guards tried to subdue Lomax because they believed he mighthurt himself or others, but they also couldn't handcuff the 5-foot, 8-inch,240-pound Lomax because he was too strong and combative, they said .

Rader arrived during the scuffle. He repeatedly warned the incoherentLomax that he was going to stun him with the Taser . He then lifted theTaser to Lomax's neck and zapped him for three seconds, Rader told the

jury .

After the electric shock wore off, Lomax became combative again . After thesecond shock from the Taser, the security officers handcuffed Lomax. But


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he continued to struggle by rolling back and forth and kicking, the securityguards said.

For a period of 20 minutes, Rader zapped Lomax a total of seven times forbetween two seconds and eight seconds each time, officer Tom Miller, aTaser training officer, told the jury based on readings taken from Rader'sTaser .

Lomax stopped breathing and his heart stopped while he was beingtransported by ambulance to the hospital . [Emphasis added . ]

87. On July 18, 2004, The Arizona Republic published an article entitled "Taser Safet y

Claim Questioned ." In that article, the Republic reported "[t]o promote the guns' safety, Tase r

officials created a special report detailing 42 cases of people who died after being shot by a Taser .

They say the stun guns were cleared each and every time. `It is not Taser International that say s

Taser is not to blame,' Taser Chief Executive Officer Rick Smith said in an April news release . `It i s

the medical examiner's opinion in every single case across the country . " '

88. The Republic reported, however, that the autopsy reports that TASER had cited for

years in support of its safety claims, had not actually been collected by the Company until Apri l

2004. Instead , the Company relied on anecdotal information from police and media accounts to

support its claims . According to the article, "[t]he company's report does not include details

suggesting a Taser could have played a role in someone's death . The report also omits published

findings of a medical examiner who concluded that electrical shocks from a Taser contribute d

directly to the death of a man in an Indiana jail . "

89. The Republic further reported that based on its "review of autopsies and interviews

with medical examiners [it] found Tasers have been linked to at least five deaths ." Specifically, the

article reported that "[m]edical examiners in three cases involving suspects who died in police

custody cited Tasers as a cause or a contributing factor in the deaths . In two other cases, Tasers



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could not be ruled out as a cause of death ." Although he had touted the coroners' finding s

previously, when confronted with the foregoing adverse findings, Defendant Rick Smith

characterized the medical examiners as "generalists who don't have the expertise needed to analyz e

deaths involving the stun gun . And they often `throw everything' into autopsy reports as a way t o

cover themselves so they can't be accused of missing something later on ." The article further

reported: "There is no penalty for a coroner to be overly broad," Smith says . "These guys deal with

the whole broad spectrum of what can go wrong in the human body . Am I going to expect that they

are going to be right 100 percent of the time? No . "

90. The Republic article further reported that at TASER's annual tactical conference, a

recurring theme was to get out the message that TASER's weapons are not lethal . The art icle stated

that according to Mark Johnson , TASER' s government affairs manager, "[d]eaths might b e

temporally associated with Tasers but are not caused by the stun guns . . . . `That's a really important

piece we have to sell to the media."' As an example of TASER 's attempt to get its message out, th e

Republic cited to the Company's description of the death of Raymond Siegler. According to the

Republic, while referencing that death, TASER underscored that Siegler did not die until a week

after he was shot by a TASER device. The Republic reported, however , that Siegler's son stated that

that was because he was in a coma for a week until the life support [was] turned off. Siegler's son

stated that Siegler went into cardiac arrest after being shot with a TASER weapon and life suppor t

was only terminated after Siegler showed "low brain-stem activity ."

91 . On July 18, 2004 , The New York Times also published a comprehensive article,

entitled "As Police Use of Tasers Soars, Questions Over Safety Emerge," that examined the safety o f

the TASER devices . According to that article, since 2001, at least 50 people had died after bein g

shocked by a TASER device. The article stated that while the Company claimed that these deaths



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resulted from drug overdoses or other factors, it has "scant evidence for that claim ." The articl e

reported that in at least two cases, local medical examiners have said that TASERs were partl y

responsible for deaths. The article further reported that the most comprehensive report of th e

TASER devices' safety was a 2002 British Government report that concluded, "'the high-powe r

Tasers cannot be classified, in the vernacular, as "safe ."' The article further reported that a 198 9

Canadian study found that stun guns induced heart attacks in pigs with pacemakers ; a 1999 study b y

the Department of Justice on a stun gun model less powerful than the M26 and X26 found that i t

might cause cardiac arrest in people with heart conditions ; and that the Food and Drug

Administration had found that other electrical devices with a charge half as powerful as the M26 can

be dangerous to the heart .

92. The New York Times article stated that the Company's research was presented to

biomedical engineers who had no financial stake in, or other connection to, TASER, and were no t

paid by the Times. The article reports that one engineer commented, "[o]verall, Taser ha s

significantly overstated the weapon's safety . . . ." Dr. John Wikswo, a Vanderbilt University

biomedical engineer reportedly stated that relatively small electric shocks can kill people whos e

hearts are weakened by disease or cocaine use, but no one knows whether the TASER device s

crosses the safety threshold for those people . "Their testing scheme has not included the possibility

that there is a subset of the population that is exquisitely sensitive . . . . That alone means they have

not done adequate testing." According to the article, Dr . Andrew Podgorski, a Canadian electrical

engineer who conducted the 1989 study stated that "he was certain that Tasers were dangerous fo r

people with pacemakers ." The article reported that Dr. Podgorski also said that more research i s

needed to determine if other people are vulnerable and that "[s]hocking a couple of pigs and dog s

doesn't prove anything ."


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93 . The Times article also quoted Dr . Raymond Ideker, an electrophysiologist and

professor in cardiology division at the University of Alabama at Birmingham, who stated, "I don' t

think there has been a definitive study saying that yes it can contribute to death or no it cannot ." The

Times reported that Dr. Ideker also stated that TASER must test more animals and vary the shock

they receive to find the gun's safety margin . The article stated that while the Company claims tha t

the tests on dogs at the University of Missouri proved that the TASER devices are safe for peopl e

who have used cocaine, it never tested animals dosed with cocaine . The Times reported that Dr .

Wikswo stated that cocaine substantially increases heart attack risk and, because TASER devices ar e

used on people who have used cocaine, that omission is a serious flaw . The article also reported that

Dr. Terrence Allen, a former Los Angeles medical examiner who examined cases in the late 1980 s

of people who died after being shocked with earlier model stun guns, stated that he was sure th e

weapons could be lethal . The article reported , "Taser is misrepresenting the medical evidence . . . ."

94. An article, dated July 22, 2004, in the Dispatch, entitled "Gilroy, Calif., police defend

safety of Taser stun guns" reported that in five TASER device-related deaths , repeated charges had

been used resulting in respiratory difficulties :

Less than a month after city police officers began carrying Tasers on theirdaily rounds, a national controversy has erupted over whether the stun gunsare capable of killing people .

According to Sunday's Arizona Republic, medical examiners found stunguns partly responsible for three deaths of arrestees : in Las Vegas inFebruary, Indiana in November and Florida in 2002 - - although a secondmedical opinion overruled the Florida finding . In two other deaths in LosAngeles (2002) and Ohio (2001), examiners' autopsy reports did not rule outstun guns as a possible, partial cause of death .

The Arizona Republic reported that in each of the five alleged Taser-relateddeaths, the subject was tased multiple times : 11 in the Florida case and seven



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in Las Vegas . In each of these, medical examiners said the repeatedshocks made it hard for the man to breathe . Each man was also high onillegal drugs, including cocaine, methamphetamine and PCP . . . . [Emphasisadded . ]

95 . In July 2004, scientific advisers to the B ritish government called the Defens e

Scientific Advisory Council's Subcommittee on the Medical Implications of Less Lethal Weapon s

("DOMILL Study") to study available literature on the M26 and other lower-powered tasers . Noting

that there was only limited experimental research available concern ing the M26, the DOMILL Study

concluded that the M26 presented a low risk of death for healthy individuals, it could pose a greater

risk for certain individuals due to "potential[] adverse electrophysiological effects of the higher

current flow in the body, particularly in subjects who may have a predisposition to cardiac

arrhythmias arising from drug use, pre-existing heart disease or genetic factors ." The study furthe r

found that "drugs such as cocaine and pre-existing heart disease may lower the threshold for cardiac

arrhythmias" and that "excited, intoxicated individuals or those with pre-existing heart disease could

be more prone to adverse effects from the M26 taser, compared to unimpaired individuals . "

96. An article, dated August 6, 2004, in AP Alert - Arizona entitled "Report : Alabama

death linked to Taser" stated as follows :

The 2002 death of an Alabama man was linked to an electrical shock from aTaser stun gun fired at him during a confrontation with police, a newspaperreported Friday.

Clever Craig Jr., 46 died of a heart attack during an episode of delirium"following electrical shock from Taser while resisting arrest," Alabamaregional medical examiner LeRoy Riddick reported in a June 28, 2002,autopsy.

Craig's death is the sixth to be linked to the stun gun by The ArizonaRepublic, which has been reviewing autopsy reports from cases in whichsomeone died following a police Taser strike .

It marks the fourth case in which a medical examiner has cited Taser as acause or a contributing factor in the death of a suspect in policy custody . In



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two other cases, medical examiners said the stun gun couldn't be ruled out asa cause of death .

97. As the number of medical examiners linking TASER device use to death grew ,

TASER mounted its own campaign to staunch the adverse publicity caused by such findings . An

art icle, dated August 25, 2004 in AP Alert - South Carolina, entitled "Company denies pressuring

coroner in stun gun-related death" reported :

The president of Arizona-based Taser International denies that the companyis pressuring a South Carolina coroner to reverse an autopsy finding in a stungun-related death .

William Teasley died Aug. 16 in a struggle with deputies at a detentioncenter in Anderson County, S .C .

County Deputy Coroner Charlie Boseman said his office and thehospital pathologist who conducted the autopsy received calls fromTaser officials asking that the stun gun be excluded from the report .

"They didn't like us making that statement in our report," Bosemantold The Arizona Republic. "They just wanted us to (cite) theunderlying medical diseases ."

Boseman, who has been with the Coroner's Office for 34 years and hasworked on hundreds of autopsies, said the cause of Teasley's death wascardiac arrhythmia due to health problems and the Taser shock .

Tom Smith, president of Scottsdale's Taser International, said "it's tooearly" to challenge the findings in Teasley's case but he denies any attemptto pressure the coroner or change the autopsy.

Taser officials called to answer any questions the coroner had about the stungun, according to Smith .

He said the company also sent representatives to South Carolina to assist inthe investigation of Teasley's death, which is being conducted by the StateLaw Enforcement Division. [Emphasis added . ]

98. An article, dated August 26, 2004, in St. Petersburg Times entitled "Tampa officers

receive taste of Taser's power," reported another case where a fatality followed the repeate d

application of the TASER device :


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Tampa police chief Steve Hogue says he's read "all there is to read" aboutTasers, gun look-alikes that hit aggressive suspects with jolts of electricityinstead of bullets .

But not everything reported about Tasers, now used thousands of lawenforcement agencies around the world, has been positive . Recent newsreports raising questions about the stun guns' safety came just as Hogue'sdepartment began arming its officers with them .

Critics say Tasers haven't been tested enough on humans, and they point topeople who have died after being shot with stun guns as proof They alsosay that because Tasers don't leave obvious marks on subjects, officers canabuse the weapons . . . .

Orange county was sued in 2002 by the family of a man who died after hisarrest, in which deputies shot him 11 times with a Taser . He stoppedbreathing after he was handcuffed and restrained facedown on astretcher.

Dennis Cassidy, a Tampa cardiologist specializing in cardiacelectrophysiology, said he's read studies on Taser - and he'd rather be shotwith a Taser than a gun .

"But to say definitively that they cause death, its unclear," he said . "And tosay definitively that they're 100 percent safe, I can't say that either . "

In St . Petersburg, police Chief Chuck Harmon has not been sold on Tasers,even as officers and their unions lobby for the weapon .

"I don't want to use a piece of equipment that ends up killing somebody,"Harmon said . "How does it work with people with heart conditions, andhow do we identify those people? There's still a lot of questions ." [Emphasisadded . ]

99. In September 2004, the British Columbia Office of the Police Complain t

Commissioner issued an inte rim report concerning TASER' s devices , entitled TASER Technology

Review & Interim Recommendations . Based on their review of the data collected on TASER us e

(the primary source of which was TASER), the authors of the repo rt recommended continued use o f


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the TASER weapons . While noting that it was believed that an electrical discharge of 70 amps wa s

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necessary to cause vent ricular fibri llation , and that the TASER M26 delivered a charge of only 2 6

amps, the authors of the report also stated :

Calculations and testing are generally done with respect to normal hearts .Many cardiologists and cardiac surgeons believe that patients with abnormalhearts such as those who had a previous heart attack, those with certainarrhythmias, those with "irritable foci" are much more prone to lethalarrhythmias than normal people . Laboratory testing sponsored by TASERInternational leads to the conclusion that the TASER is safe for use on thosewith pacemakers. Geddes "the father of the modern pacemaker" states in themedical Journal Lancet (2001 358 :687-688) :

"Further research on what cardiac effect TASER . . .would have on peoplewith Pacemakers is needed ."

100. An article dated October 14, 2004 in AP Alert - Business entitled "HL: Medica l

experts who question Taser research wary of labeling devices safe" stated as follows :

Several medical and engineering experts warn that too little is known aboutwhat happens when people who are high on drugs or have heart problemsare hit with Taser stun guns . . . .

Many medical experts hail the Taser as a preferable alternative to other

means of controlling but not killing aggressive people, such as batons,

pepper spray or guns that fire bean-bag bullets, all of which can cause

injuries .

But a number also stop short of declaring the Taser risk-free .

"I do not think that enough work has yet been done to be able to sayunequivocally the Taser never causes harm," said Dr. Raymond Ideker, whoconducts research in cardiac electrophysiology at the University of Alabamaat Birmingham . . . .

"I guess what is increasingly becoming of concern with respect to Taser is,how less-than-lethal are they?" said Alex Neve, secretary general forAmnesty International Canada. "As the number of deaths mount, thatquestion has really come into sharp focus ." [ . . . ]

Arizona-based Taser International rejects assertions there isn't enoughresearch to proclaim the Taser safe .

"I think that's rubbish," said company spokesman Steve Tuttle . "Becausethe studies indicate that the technology is safe . "



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Experts say more research is needed as to whether:

Conditions such as heart disease or a genetic predisposition makes it easierfor the Taser to induce an irregular heart rhythm that could cause death .

Electrical stimuli are more likely to cause ventricular fibrillation and suddencardiac death in someone who has taken cocaine .

The contraction causes by the Taser could damage muscle or bones .

The stun devices may affect the condition know as "excited delirium," afrenzied state characterized by violent behavior, unusual strength andendurance, severe perspiration and incoherent shouting . . . .

Leslie Geddes, professor emeritus of biomedical engineering at Indiana'sPurdue University, briefly served as a consultant to Taser, helping design astudy involving pigs . It concluded the device wasn't powerful enough toinduce cardiac arrhythmia in the animals .

Still, Geddes is not convinced the effects of the Taser will always bebenign. "If the heart is hyper-sensitive, if its sensitive to arrhythmias, itmight just trigger an arrhythmia ."

Geddes, who studied for years at Montreal's McGill University, says moreneeds to be known about what happens when someone with drugs intheir system is Tasered.

He also suggests a harder look at metabolic acidosis, a condition inwhich the ph balance of a person's body is out of kilter, a phenomenonthat may be found in drug users who wind up in conflicts with police .

Many of the Taser experiments to date "are really quite tame" becausegenerally the animals are anesthetized for ethical reasons, thereby relaxingthem and possibly skewing the effects, said John Wikswo, a professor ofbiomedical engineering, molecular physiology and biophysics at VanderbiltUniversity in Nashville, Tenn .

"The animal studies are not necessarily representative of what would happenin a human being," he said .

"If you have a person who weighs 250 pounds, is high on cocaine, is out of

control, is extraordinary agitated, has a high heart rate, I'm not sure whether

injecting a drug in a pig that's anesthetized is going to adequately reflect that

situation . . . . "



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Detailed studies, likely costing in the millions of dollars, should beconducted to further examine the effects of the Taser on the heart, said

Andrew Podgorski, an electromagnetic specialist and president of ASR

Technologies in Ottawa . . . .

In September the British government, following detailed evaluation of a 12-month trial, announced the approval of Taser for police officers trained infirearms use . . . .

However, a committee overseeing research in conjunction with the trialreaffirmed its position that "excited, intoxicated individuals or those withpre-existing heart disease could be more prone to adverse effects from theM26 Taser, compared to unimpaired individuals ." [ . . .] [Emphasis added .]

101 . In October 2004, the United States Department of Defense released the Report

Summary of the HECOE Report . The Report Summary stated :

Ventricular Fibrillation (VF) is not expected to occur in otherwise healthyadult populations, although data are too limited to evaluate probabilitiesfor potentially sensitive populations or for alternative patterns o fexposure. No cases of VF have been reported in training or field exposureconditions . [Emphasis added . ]

102 . The HECOE Report was heavily touted by the Company . A press release issued on

October 18, 2004, stated:

a Department of Defense (DoD) study by the Human Effects Center ofExcellence (HECOE) concludes that TASER technology is generallyeffective without significant risk of unintended results .

"The HECOE study is the latest chapter in a series of comprehensivemedical and scientific studies which conclude that TASER technology issafe and effective" said Rick Smith, CEO of TASER International, Inc ."This study re-affirms the life-saving value of TASER technology and isconsistent with the recent independent findings of researchers in the UnitedKingdom and Canada," stated Mr. Smith . [Emphasis added . ]

Although the Company acknowledged that the HECOE Report found that "data are too limited to

evaluate probabilities for potentially sensitive populations or for alternative patterns of exposure, "

the press release further stated "[t]he HECOE report summary concludes that TASER technology i s



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not likely the primary factor in the cause of in-custody fatalities . "

103. An article, dated November 6, 2004 in the Miami Herald, entitled "Miami Police Say

Taser Didn't Cause Death of a Broward Man" reported :

The gun's manufacturer, Taser International, says the [Taser] device is safe,though it has been criticized as unnecessarily brutal and not properly studied .

Company spokesman Steve Tuttle pointed to studies done by the U .S . AirForce, the Victoria, Canada, police department and police authorities in theUnited Kingdom recommending Tasers as a safe option for police .

Research Needed

All three studies, however, recommended further research to determinewhen the Tasers might be dangerous to use .

The Arizona Republic reviewed autopsy reports in 71 deaths following Taseruse in the United States and Canada since 1999 . It found that medicalexaminers blamed the Tasers for two of the deaths and that the devicescontributed to four others . [Emphasis added] .

104. According to the deposition testimony of Defendant Rick Smith in the Power s

Action, sometime after November 15, 2004, TASER learned that an o rthopedic surgeon, Stephen

Brown, who had been retained by the Company in that case had concluded that Powers had

sustained a compression fracture of the T7 vertebra as a result of being shocked with an M26 durin g

a training exercise .

105 . On November 26, 2004, The New York Times published an article, entitled "Claims

Over Tasers' Safety Are Challenged ." The article stated "Taser International, whose electrical gun s

are used by thousands of police departments nationwide, says that a federal study endorses the safety

of its guns, but the laboratory that conducted the research disagrees." Noting that the price o f

TASER stock had soared after the Company claimed that the HECOE Report found its weapons to

be generally safe, the Times reported that insiders took advantage of the price spike to engage in

massive insider sales. The Times further reported that "the Air Force laboratory that conducted the



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study now says that it actually found that the guns could be dangerous and that more data was

needed to evaluate their risks ." The Times reported that :

The full study remains confidential, military officials say . But last week,after the symposium on less-deadly weapons in Winston-Salem, N .C., theAir Force laboratory that conducted the study said that it had not foundTasers were safe . The guns "may cause several unintended effects, albeitwith estimated low probabilities of occurrence," the laboratory said ."Available laboratory data are too limited to adequately quantifypossible risks of ventricular fibrillation or seizures , particularly insusceptible populations ." [Emphasis added . ]

106. The article further reported that "[a]n Air Force scientist presented data at the

symposium last week showing that repeated Taser shocks caused pigs to become acidotic - a

dangerous condition in which the pH of the blood drops . A 1999 study by the Justice Departmen t

suggested that `deaths following Tasers' use may be due to acidosis .' People who have been hi t

repeatedly by Tasers should receive medical monitoring, said Dr . James Jauchem, the Air Force

scientist ." Finally, the art icle noted that Dr . Jauchem had called into question TASER's claim that

the stopping power of the X26 was because of its Shaped Pulse technology . According to the Times ,

Dr. Jauchem said the shape of the X26's electric pulse had only a minor effect on the amount o f

muscle contraction it produced .

107. A November 27, 2004 United Press International article entitled "School Officia l

Asks Police to Stop Taser," reported that the superintendent of Miami-Dade Schools, where police

zapped a 6-year-old first grader in October, requested the police department "refrain from deployin g

or discharging Tasers against elementary school students in Miami-Dade Public County schools ."

The articled also reported that on November 5, 2004, an unarmed 12-year-old, who was playing

hooky, was felled by a Miami police officer using a TASER weapon .

108. On November 30, 2004, Amnesty International released its 93 page repor t

documenting what it desc ribed as abusive practices involving TASER' s weapons and challenging


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the adequacy of the research regarding the safety of the weapons . With respect to the growing

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number of fatalities that followed use of the TASER devices by law enforcement, the report states :

Amnesty International is further concerned by the growing number offatalities involving police tasers . Since 2001, more than 70 people arereported to have died in the USA and Canada after being struck by M26 orX26 tasers, with the numbers rising each year . While coroners have tendedto attribute such deaths to other factors (such as drug intoxication), somemedical experts question whether the taser shocks may exacerbate a risk ofheart failure in cases where persons are agitated, under the influence ofdrugs, or have underlying health problems such as heart disease . In at leastfive recent cases, coroners have found the taser directly contributed to thedeath, along with other factors such as drug abuse and heart disease . Asdiscussed below, the death toll heightens Amnesty International's concernabout the safety of stun weapons and the lack of rigorous, independenttesting as to their medical effects .

This report includes a review by Amnesty International of information on 74taser-involved deaths, based on a range of sources, including autopsy reportsin 21 cases. Most of those who died were unarmed men who, whil edisplaying disturbed or combative behaviour, did not appear to present aserious threat to the lives or safety of others . Yet many were subjected toextreme levels of force, including repeated taser discharges and in somecases dangerous restraint techniques such as "hogtying" (shackling anindividual by the wrists and ankles behind their back) . The cases raiseserious concern about the overall levels of force deployed by some policeagencies as well the safety of tasers . [Footnotes omitted . ]

109. The Amnesty International Report further noted that "[m]any of the deaths involve d

individuals who had apparently high concentrations of drugs in their system or other risk factors fo r

fatal arrhythmias." The report stated that while "[d]rug intoxication, sometimes combined wit h

other factors, was overall the most common cause of death reported (although coroners' reports wer e

still pending in many of the more recent cases)," nonetheless, it believed that that :

questions remain about the role of the taser in at least some of the fatalities :whether the electro-shock could have exacerbated breathing difficultiescaused by factors such as violent exertion, drug intoxication or use of otherrestraint devices, triggering or contributing to cardiac arrest . At least 15 ofthe victims had underlying heart disease which some medical experts believemay cause more susceptibility to electro-shock. Concerns have also beenraised about the potential risk of adverse effects from taser currents in peopleunder the influence of certain drugs .


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* x

The short time lapse between taser use and cardiac or respiratory arrest insome cases also raises issues of concern, and in one case . . . the coronernoted a temporal link between the taser and cardiac arrest and said he wasunable to exclude the taser use as a possible cause . In another case . . . . thecoroner also may have indicated a link with the taser given his autopsyfinding of cause of death to be : "cardiac dysrhythmia during an episode ofexcited delirium following electrical shock" . In several cases death wasgiven simply as "sudden cardiac arrest", with no clear underlying causes

Dr. Sidsel Rogde, an independent forensic pathologist who reviewed 16autopsies for Amnesty International, also raised concern about a possiblelink between the taser and deaths, giving her opinion that it could not beruled out as a contributory factor in at least seven cases . (It should be notedthat the autopsy reports were not available to Amnesty International in threeother cases where coroners reportedly found the taser played a role in thedeaths . . . so these cases were not included in Dr Rogde's findings .) . DrRogde also questioned the findings relating to drug toxicity in someautopsies, noting that high blood concentrations post mortem may reflect aredistribution of blood during, for example, resuscitation, and do notnecessarily reflect toxic levels of drug concentration before death . Therewere also several cases in which death was attributed in the autopsy report todrug intoxication where the drug levels were not necessarily fatal . Dr Rogdestated : "In my opinion, death can be attributed to drug overdose only whenother causes are excluded ." [Footnotes omitted . ]

110. The Amnesty International Report also reported that besides the risk of ventricular

fibrillation , some medical experts believed that TASER's weapons could cause fatal acidosis . The

report described metabolic acidosis as "a condition in which the acid level within the blood is highe r

than normal . . . If metabolic acidosis becomes severe, the person may develop : weakness ;

confusion ; shock; heart problems such as arrhythmias ." The further report stated :

There has been some discussion in the medical literature of the possibleeffect of tasers on metabolic acidosis - a potentially fatal disturbance of thebody acid-base balance . Metabolic acidosis can occur in individuals who areseverely agitated and this can lead to ventricular arrhythmia, especially inthe presence of certain toxic drugs.

Taser International has suggested that the taser is not only safer than manyweapons but can actually work to prevent metabolic acidosis because it s


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instant incapacitation of the subject cuts short the duration of struggle andany dangerous build up of acid . However, one federal study suggested that"deaths following Taser use may be related to the ability of these devices tocause increased muscle activity and decreased breathing" and other studieshave suggested that further research into the effects of tasers in acidosis isrequired . . . . As noted above, in several of the cases reviewed by AmnestyInternational, the deceased continued to struggle and exhibit agitatedbehaviour, sometimes after repeated stunning .

An article on the effects of stun guns and tasers, published in the medicaljournal, the Lancet, in September 2001, addressed the risk of acidosis andventricular dysrhythmias in people in states of severe agitation or physicalaggression, particularly when under the influence of drugs such a sphencyclidine (PCP) or cocaine . The article noted :

"The taser itself may affect acid-base balance by briefly increasing skeletalmuscle activity and decreasing respiration ."

The authors reviewed one earlier study in which three people (high on drugs)went into cardiac arrest between 5-25 minutes after being hit with tasers andstated:

"By this time, taser-induced muscle contractions would no longer be present,and one would expect the individuals to be relaxing and able to breathe in away that would compensate for a metabolic acidosis . Such may not be thecase if the individuals remained agitated or were prevented frombreathing freely ." [Emphasis in original ; footnotes omitted] .

111 . As a consequence of its investigation, Amnesty International called for, inter alia, a

moratorium on the use of TASER weapons until shown to be safe in independent , comprehensive,

peer reviewed studies .

112 . A November 30, 2005 CBS News website article discussing the Amnesty International

Report quoted Dr . Kathy Glatter, an electrophysiologist and assistant professor of medicine at th e

University of California-Davis, as stating "[i]f I hit the heart or create electricity in the wrong time o :

the (beat) cycle, it could send the whole heart into an electrical tailspin . . . . "

113 . On December 5, 2004, the Miami Herald published an article in which it reported tha t

TASER stated that the "outcry after Miami-Dade police zapped two children with its stun gun

unjustified - the company says it has the science to prove its weapon is safe for use on kids ." The


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Herald reported that TASER uses a chart in its training manual that shows that its weapons deliver

an electrical shock that is well below the safety threshold that Underw riters Laboratories ("UL") has

determined to be safe for a two-year old . The article explained that TASER includes a line graph in

its literature that shows UL shock limits that will cause the heart to stop, noting that the safet y

margin was calculated for humans between 2-75 years of age , and shows that the TASER weapons

are well below that threshold . That shock limit, according to the Herald, is based on a 1939 U L

study involving electrified cattle fences .

114. The Herald reported that UL scientists questioned the application of their study to

TASER's devices : "[ i]t doesn ' t apply to that kind of product" said Walter Skuggevig , a research

engineer at UL who has done extensive study into electric shock injury . UL spokesman Paul Baker

stated that UL was not aware that its research was included in TASER's literature . He also stated ,

"[w]e certainly don't want to give the impression that we put our label on this, that we certify this .

We do not ." The article reported that UL studies assume that a single shock flows from the hands

through the feet, but that the TASER devices shock takes different routes through the bod y

depending on where the probes land .

115 . According to the Herald, TASER also reportedly stated that the "McDaniels" anima l

research it conducted showed that the devices were safe even when used on subjects with a range o f

body weight below 70 pounds . The article, however, quoted Dr . McDaniels as stating "I don' t

know that I ever envisioned the use of this thing on small children. . . . I don't think anyone

has ever tried to draw any inferences as far as use in children . . . The design of this device is fo r

bad guys." [Emphasis added. ]

116. Notably, the Herald reported that Gary Bowling, a training officer for the Putnam

County Sheriff's Office said that he left a TASER seminar thinking UL endorsed TASER . "I trus t


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UL . . . I treat that chart as gospel" the article quoted Bowling as stating . The article further reporte d

that when advised that UL had not actually endorsed the TASER devices, Bowling stated, "[t]hat

chart's misleading. I looked at that and I thought UL had tested Tasers and put that dot on the

chart ."

117. On December 7, 2004, The New York Times reported that the Department of Justice

had initiated a study of TASER's weapons in light of "new questions over their safety ." The Times

reported that Rusty York, the Police Chief of Fort Wayne, Indiana, said that a Justice Department

researcher contacted him to follow up on a local newspaper report that the city had decided to buy

TASER devices after studying since 2003 . York stated that the Justice Department researcher aske d

for information about the research . Significantly, York further stated that the researcher

"encouraged him to do more research before buying the guns ." York also stated that he had

independently decided to delay buying the TASER devices due to safety concerns . While the

Department of Justice said it neither encouraged nor discouraged the purchase of the TASER

weapons, the Times reported that it said it had initiated a study regarding the weapons' effectiveness,

financed a study at the University of Wisconsin regarding how electrical currents moved through th e

body, as well as a study at Wake Forest to examine injuries caused by TASER devices and simila r

weapons . The article further reported that Fort Wayne had received an $86,000 federal grant ,

enough to purchase 83 guns .

118 . An article, dated December 8, 2004, in the Monterey County Herald, entitled

"Officers cleared in Taser death / Police actions reasonable self-defense" reported :

Two Seaside police officers aren't to blame for the death of a 38-year-oldDel Rey Oaks man who was shot with a Taser stun gun multiple times inAugust, according to a report released Tuesday by the Monterey CountyDistrict Attorney's office .



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Dr. John Hain, who conducted the autopsy, cited the cause of death asventricular arrhythmia due to methamphetamine intoxication . The districtattorney's report also stated that the shocks from the Taser were listed ascontributing factors in Rosa's death . . . .

119 . An article, dated December 9, 2004, in the New Orleans Times Picayune entitled

"Stunned and Confused," stated as follows :

The popularity of Taser stun guns is soaring among local law enforcementagencies . In the past few years, sheriffs' offices in Jefferson, St . Tammanyand St . Bernard parishes and police departments in New Orleans an dWestwego have all purchased the devices, which use 50,000 volts ofelectricity to immobilize people temporarily .

These are powerful weapons, and they aren't risk-free. In June, JerryPickens of Bridge City died after Jefferson deputies shocked him as he stoodin his driveway amid a domestic dispute. Last week, Jefferson deputiestwice used a Taser to shock Patrick Fleming of Kenner after a traffic stop.He died two days later .

Critics have suggested that the devices may be particularly dangerous to

children and people with heart conditions - - and that the indirectconsequences of stun guns should be factored into calculations about their

safety . For example, the Jefferson Parish Coroners office concluded that Mr .

Pickens was killed not by the Taser but by his fall to the ground . Even so,

such a fall is a predictable consequence of using a stun gun on a person whois standing upright . . . .

120. An article dated, December 9, 2004, in the Monterey County Herald entitled "Taser

use must be backed by safety reviews," reported :

Believing stun guns are being fired too often, Amnesty International wantsofficers to stop using Tasers until scientific evidence shows the weaponsdon't kill . In the United States and Canada, most deaths were related toheart problems, drug overdoses or asphyxiation, coroners ruled .

Executives at Taser International, Inc. say Amnesty International's reportfails to acknowledge their product's value, and their complaint is justified .Law enforcement officers put their lives on the line every day and deservethe best available protective devices . Last year, more than 57,000 officerswere assaulted and 150 were killed in the line of duty .


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But Taser officials are on shaky ground when they claim that"independent reviews" of Taser technology by the U .S. and Britishgovernment "clearly indicate" that the Taser technology is among thesafest options available to law officers when using force is necessary .

In fact, Tasers have been subjected to very little controlled research, and thecompany has done minimal research on the health effects of its product . TheM26, its most powerful gun -- and the one used on Robert Rosa -- was testedon one pig in 1996 and five dogs in 1999 . Those studies were done by in-house researchers, not independent scientists .

"The few independent studies that have examined the Taser have found theweapon's safety is unproven at best," according to The New York Times .The most comprehensive report, by the British government, concluded "thehigh-power Tasers cannot be classed, in the vernacular, as "safe."

Tasers need further testing, and mass marketing is frighteningly premature.Instead of luring consumers, the company should focus on developing trulynonlethal weapons . . . . [Emphasis added] .

121 . On December 12, 2004, the Force Science News, the newsletter of the Force Scienc e

Research Center of the Minnesota State University-Mankato, published an article highly critical o f

the Amnesty International Report . In that article, Dr. Bill Lewinski, the Executive Director of the

Force science Research Center and advocate of use of the TASER devices acknowledged that

"`urgent rigorous, independent and impartial' research into the use and effects of electro-shoc k

weapons should be vigorously pushed forward." Lewinski, who opposed Amnesty International' s

recommended moratorium on TASER weapon use, nonetheless, stated that there was no doubt that

"really solid scientific research" is needed on human subjects, not animals "to help us bette r22

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understand when and how to use Taser devices . How do these really work? How does their

application affect blood chemistry, cell damage and intra-muscular bleeding? How do yo u

neutralize their effect after control is established? What do you do when things go wrong? We nee d

to know these and other answers . "

122. An article, dated December 26, 2004, in The Arizona Republic entitled "Officer's


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Injury Tied To Taser" published an article about the Powers Action :

The makers of Taser electric stun guns say their claims of safety are backedby more than 100,000 police officers who have been shocked during trainingsessions without suffering a single serious injury .

But a doctor working for Taser says a one-second burst from the stun gunwas responsible for fracturing the back of a Maricopa County sheriff'sdeputy in 2002 .

Powers was the first person to file a product liability lawsuit againstScottsdale's Taser International, claiming that the shock during a mandatorytraining exercise forced him into medical retirement and has left himsuffering permanent injuries .

The injury reports appear to contradict Taser's principal assertion of safetyand may undercut one of the company's most effective sales pitches . Thedoctor's memo surprises and concerns police training instructors fromMiami to Portland who have shocked their own officers during trainings andsay this could lead them to re-examine how tasers are used .

The memo also raises questions about Taser's reports to its shareholders . Inrepeated filings to the Securities and Exchange Commission, Taser says thatPowers is alleging that he "injured his shoulder" and makes no mention ofthe fracture .

Phoenix lawyers John Dillingham and Tom Wilmer, who represent Powers,say law enforcement agencies have been bombarded by safety assurancesfrom Taser and are buying thousands of stun guns in the belief they havenever causes an injury or death .

"This is not a problem with law enforcement . It's a problem with Taser,"Dillingham says . "Police officers are brainwashed into thinking that the(stun) gun is safe . They are brainwashed into taking a hit during trainingand then to use it in the field anytime they want ."

Despite Taser's repeated claim that no officer has been injured, thecompany's November report to the Securities and Exchange Commissionoutlines three additional lawsuits alleging injuries during Taser training.


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Those alleged injuries include a muscle and nerve injury; an arm andshoulder injury; and a rotator cuff injury .

Taser follows the description of each lawsuit with a line saying the case iswithout merit and has been turned over to the company's insurance carrier .

"Powers' injury is not an isolated event," Dillingham says . "If you look intoit nationwide, you will find ruptured disks, other fractures and injuries toother joints ."

Babin, a 17-year law enforcement veteran in Slidell, La ., says he heard froma dozen police officers after posting a message on a police magazine Website asking officers about injuries .

"The most common injuries . . . were dislocations or spinal fractures, whichwould be consistent with the extreme jolt you experience," he says .

Babin says he wanted to hear from other officers after finding his arms andlegs covered in bruises following a Taser shock in May.

Babin says another officer who attended his May 4 Taser training classsuffered severe chest pains . He says doctors told the officer "the extremeshock began eating away skin tissue from the area around a previoussurgery."

Babin says he still bears the scar of a Taser burn . After being shocked, he

says, he developed an autoimmune condition that left his body attacking

blood platelets . He says he was diagnosed with bone marrow disease thatcauses spontaneous bleeding and that doctors have been unable to rule out

Taser as a cause .

I really believe officers need to be made aware of the potential danger beforesubjecting (themselves) to the training," he says . . . .

Memo shocks trainers

But police training officers say they were not told about any significantofficer injuries. None contacted about Powers' case were familiar withit. And they expressed concerns over Brown's evaluation .

"I'm in disbelief," says Miami Police Sgt . Richard Gentry . "That's the firsttime I've heard anything like that . I will definitely be keeping my eyes openfor that ." [Emphasis added . ]

123. An article, dated January 4, 2005, in the San Jose Mercury News entitled "Police

Shoot, Kill Men After Calls for Help / Incidents Occur in Pacifica and Redwood City" repo rted :



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A pair of confrontations with police Sunday left two San Mateo County mendead: one in Pacifica after being stunned with a Taser, the other shot to deathin Redwood City after a Taser and other "less lethal" weapons failed t osubdue him, police said .

In both cases, relatives had called 911 seeking help and police used Taserstun guns, which deliver a 50,000-volt charge through darts . Many policeagencies have embraced Tasers as an effective and less lethal alternative tofirearms, but the weapons are generating a nationwide debate about theirsafety .

Families of both men - - 30 year-old Greg Salisbury of Pacifica, and a stillunidentified 35-year-old in Redwood City - - bitterly criticized officers'actions in the deaths, which have sparked routine investigations by thecounty district attorney's office . . . .

Samuel Walker, a professor of criminal justice at the University ofNebraska, said there is an urgent need for a national standard governing theuse of Tasers, as well as for research on their physiological impact .

"Are there particular medical conditions that pose certain risks?" he said ."we basically don't know anything, and that's a very dangerous situation . "

Amnesty International recently released a report calling on law enforcementagencies to suspend their use of Tasers, which the group links to more than70 deaths in the past four years . Taser International, a leading manufacturerof the weapons, insists that they are safe . . . .

124. On January 10, 2005, The San Francisco Chronicle published an article entitle d

"Tasers Pose Potentially Lethal Danger To Heart, Doctor Warns ." In that article, the Chronicl e

reported that "Dr. Zian Tseng, a cardiologist at the University of California, believes Tasers are

potentially dangerous because a jolt of electricity, at just the right moment in the heartbeat cycle, can

trigger ventricular fibrillation ." Noting that Dr. Tseng installs implantable electric defibrillators into

the chests of heart patients who are at risk of sudden cardiac arrest, the article stated that he uses a

precisely timed jolt to throw the hearts of his patients into ventricular fibrillation on a regular basis .

According to Dr. Tseng, "[tjhere are vulnerable periods in the cardiac cycle, when shocks can caus e

dangerous arrhythmias . . . ." The article quoted Dr. Tseng as further stating with respect to TASE R

weapons, "I think they are dangerous . . . If you are shocking someone repeatedly, it becomes a bi t



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like Russian roulette . At some point, you may hit that vulnerable period ." The article further

reported that "[c]ardiologists also know that the window in which a jolt of electricity can halt a heart

expands significantly when a patient is treated with certain drugs, or when the body is flooded with

the fear hormone, adrenaline . Patients with heart problems are also more vulnerable to th e

condition . "

125. In addition to the Powers Action, during the Class Period, 13 other lawsuits were filed

against TASER in which the plaintiffs alleged either wrongful death or personal injury in situations

in which the TASER device was used by law enforcement officers or during training exercises . One

case has been dismissed with prejudice, another case has been dismissed without prejudice and th e

remaining cases are pending .

The Design Flaws and Manufacturing Process Problem s

126. While the public debated the safety of TASER's weapons, the investing public was

unaware that the devices were plagued by design flaws and manufacturing process problems that

caused massive product returns and weapon malfunctions during the Class Period . As alleged more

fully below, in light of the safety controversy surrounding TASER's devices, these design flaw an d

product defects adversely impacted the Company's competitive position . Thus, when it wa s

announced in the fourth quarter of 2004 that competing products were being introduced, many police

departments delayed or cancelled orders for TASER's products in order to evaluate the other

devices . TASER's business has never recovered .

127. In the first quarter of 2004, TASER experienced a problem with the software in the

X26 that required the Company to suspend production . The Company, however, did not publicly

disclose the existence of the problem until in or about May 2004. In the Company's quarterly report

for the period ending March 31, 2004, filed with the SEC on May 10, 2004, TASER disclosed :


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Although the Company continued to increase production of its new TASERX26 product during the first quarter of 2004, the product experienced adefect in its data recording feature which did not affect the operation of theproduct but nevertheless required a temporary suspension of shipments forapproximately three weeks during the quarter. The resolution of thissoftware problem required the reprogramming of more than 4,000 weaponsand 15,000 battery packs at the factory and preparation for field upgrades formore than 12,000 weapons that had already been shipped in previousperiods . The cost to repair the software and upgrade the weapons in housewas expensed in the quarter through cost of goods sold . In addition, theCompany accrued approximately $41,000 of additional expense through awarranty accrual to retrofit the remaining units in the field .

In addition to the foregoing, however , TASER failed to disclose that it also was experiencing

widespread quality control and design problems that caused a massive number of product defects

throughout the Class Period .

128. CW1 is a former Company employee who is familiar with the manufacturing proces s

for the TASER weapons based on his/her employment at the Company from prior to start of the

Class Period until the fall of 2004. CW 1 stated that Defendant Tom Smith had oversight o f

TASER' s sales and marketing staff and spent a substantial po rt ion of his time traveling in

connection with his sales and marketing functions, and that Defendant Rick Smith had responsibilit y

over Product Development and Engineering . CW 1 also stated that Dave Dubay, the head of Produc t

Development, Max Nerheim, TASER's chief engineer and designer of both the M26 and X26, Milan

Cerovic, who was in charge of mechanical engineering, and Matt Carver, an assistant engineer, all

reported directly to Rick Smith . CW 1 further stated that Defendant Hanrahan served as Compan y

CFO with oversight of finance, operations and manufacturing . CW 1 stated that as Taser grew,

Hanrahan became overextended with her manufacturing responsibilities and Daniel Behrendt was

hired as the Company's CFO in or about the middle of 2004 . Hanrahan continued as Chief

Operating Officer, overseeing production and manufactu ring .

129. According to CW1 , both the M26 and X26 were beset with a range of defects due t o



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an "unstable" design of the circuit board . These problems included the failure to fire, intermitten t

firing as well as repeat uncontrolled firing (due to the failure of a component of the circuit board t o

shut off) . In addition, CW 1 stated that the software did not properly record data of the weapons '

functions, and the laser sight was not visible in sunlight .

130. CW1 stated that based on his /her experience in manufacturing electronics products,

such as digital cameras and copier printers , the TASER circuit board , which was used in both the

M26 and the X26, was in need of a complete redesign due to the inherent complexity of working

with miniaturized components that produce high voltage . CW 1 stated that the Company's chief

engineers never acknowledged that there was a design flaw with the circuit boards . CW1 also stated,

however, that most of the "smarter people" involved in the technical side of the assembly wor k

shared this view. CW 1 stated "[t]hey came from other companies that know what a good board i s

like and they knew they shouldn't have to be constantly reworking the stuff." CW 1 stated that

he/she urged both Defendants Rick Smith and Tom Smith to recruit electrical engineers to review

the circuit board design, but Max Nerheim gave short shrift to the resumes of all potential

candidates . CW I further stated that Rick Smith was too loyal to Nerheim and Milan Cerovic t o

challenge their authority regarding the design of the devices .

131 . CW 1 stated that TASER attempted to blame the circuit board problem on the vendo r

who supplied them, First Electronics in Tempe, Arizona . He/she stated that in mid-2004, a

representative of First Electronics , who was resisting TASER's demands return and refund demands ,

met with Max Nerheim and told him the problem was with TASER's circuit board design . CW1 ,

who was standing behind Nerheim at the time, overheard that conversation .

132. CW1 also stated that the X26 suffered from so ftware problems . CW1 said that six

months after the May debut of the X26, TASER experienced a tidal wave of returns from the field .



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CW 1 also stated that there were at least two or three product recalls while he/she was at TASER .

CW 1 did not recall how many devices were involved, but stated that the recalls involved th e

software programs downloaded into the law enforcement weapons which monitored six or eight

different functions : the time and date of discharge; the temperature of the day; the temperature of the

gun; how many times the trigger was pulled; and how long the trigger was depressed . CW 1 stated

"[s]tuff got out the door before they could catch the problem and so they had to recall it to get i t

back. We were rushed to get stuff out of the door, instead of doing a proper product roll-out . That' s

the way it always was . Stuff would get out before we had done full testing and we'd have to recall i t

to upgrade the software ."

133. Although CW 1 stated that he/she believed that the majority of TASER's problems

were the result of an inferior design, he/she also stated problems in the manufacturing process also

resulted in product defects . According to CWl, temporary, unskilled workers, who did not speak

English, failed to accurately record quality data, exacerbating manufacturing problems . In mid-

2003, a team from Brazil, who CW 1 believed to be either potential investors or joint ventur e

partners, visited TASER and walked the plant floor with Defendant Tom Smith and Hanrahan.

According to CW1, these individuals told the TASER executives the manufacturing facility was an

inefficient operation, primarily due to problems with "batch processing," and other issues . CW1

stated that after those individuals left, Defendant Tom Smith said "[w]e don't care . We're not going

to fix it because we don't have to deal with them ." CW 1 explained that the Smith brothers refused

to expend any capital necessary to automate the manufacturing process while he/she was employe d

at the Company.

134. CW 1 stated that at times as much as 70% of the M26s and X26s tested in-house by

TASER were defective . CW 1 stated that he/she does not know how many of these defectiv e



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weapons were actually shipped to customers because TASER failed to closely weed out bad product .

CW1 explained, however, that "[a]lthough outside defect rates were very low compared to inside, I

know that stuff just leaked out the door . We didn't really know what the real defect rate was . We

didn't keep good data on what guns [internally found to be defective] had been reworked befor e

being shipped ." CW1 further explained that the Company did not have an adequate system to trac k

how many defective devices were reworked versus how many were shipped .

135 . CW1 stated that the product returns became so numerous that in early 2004, TASER

had to build an extra room in a building across the street from the plant to store the returns, and als o

had to hire three additional employees to process those returns . CW1 stated "I would see four o r

five boxes (containing 20-30 guns each) come in regularly from this or that distributor ." CW 1

explained that the defective products usually came back to the Company several months after being

shipped because the defects were not discovered until the devices were fired .

136. CW1 stated that the design defects were routinely discussed at daily 1 :30 p .m.

production meetings attended by Hanrahan, Cerovic and others . According to CWI , Defendant Rick

Smith would frequently participate in those meetings . CW1 stated that Tom Smith also personally

participated in those meetings, albeit less frequently due to his travel schedule . According to CW1 ,

other routine discussion items during those production meetings were manufacturing cost, proces s

issues and delivery schedules . CW1 also stated that the 70 percent defect rate was openly discusse d

at the daily production meetings with the Smith brothers . CW1 stated that "[t]hey saw it themselves

in those meetings ." CW1 stated that the daily production numbers presented at these meeting s

would show, for example, that 500 guns were built in a day, but only 100 had actually made it

through the assembly line. "You had a certain percentage you had to build and they (the Smiths)

saw what fell out at the end of the day." CW1 stated that in response to the alarmingly high defect



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rates, Defendants Tom and Rick Smith were directly told at one production meeting in Septembe r

2003 "that if you keep shipping out a lot of crap, it's going to come back." According to CW 1, the

Smiths' response was, "We'll work on it ." In subsequent production meetings, when the defect rate

issue was raised , Rick Smith's only responses were "[w]e'll look into it," or "How bad is bad? "

137. When CWI was first employed by TASER, the Company was producing 100 device s

a day with 40 workers . By September 2004, TASER was producing 500 devices, primarily the X26 ,

a day during two shifts with 150 workers . CW1 stated that "[t]he quota went up every quarter. They

wanted to keep ramping it up to meet the expectations of [TASER' s shareholders ] . We were trying

to ramp up with an undeveloped product, so obviously the defect rate went up . There were a lot

more smarts in the X26 which led to more problems ; there were a lot more complications in an

unstable design ."

138. CW1 stated that soon after the debut of the X26, in May 2003, he/she overheard

conversations amongst TASER's sales staff that police departments were complaining they didn' t

like the X26 because it was not always effective and did not always fully incapacitate the subject .

Comparing the X26 to the M26, CW1 stated "[p]olice didn't like going to the new X26 because with

the M26, if a guy would drop, he would stay down . The M26 was like getting hit with a hammer ."

139. CWI also stated that it was common practice for Davidson's and several othe r

distributors to agree to take extra devices at the end of quarters when TASER was not making it s

sales numbers. CW 1 stated that "when TASER needed to meet quota, sales staff would call u p

distributors in order to make it look like people were orde ring" more than they were. CW 1 further

stated that TASER would accept returns from a distributor if the product was defective, and clearl y

labeled as such . CW 1 did state, however, that "[t]hey had to call it a defect, otherwise they couldn' t

return it, even if they call it an `unfounded defect." '


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140. CW 1 stated that he/she would frequently be told that production had to be increase d

near the end of a quarter . CW1 was particularly suspicious when there were production increases a t

the end of quarters to meet orders, only to be later told that the order was cancelled because a

distributor changed its mind, or did not have a sufficient credit line . CW 1 stated "[i]t was just funny

that we were always pressured to get these orders out, and then the order would disappear." CW 1

stated he/she also learned by looking over the shoulders of sales staff in their review of vendor data ,

that some distributors were ordering units far beyond their credit limits . He/she gave the

hypothetical example of a distributor that had a $500,000 credit line but had been approved t o

receive a $1 million order with no collateral to cover the difference . In other instances, CW 1 stated

that there were suspect sales made to distributors where multiple orders were placed even before th e

first order had been shipped . Jeff Dryer, a former sales representative for TASER's Midwestern

territory, often hinted to CW 1 that sales were not on the up and up .

141 . CWI stated that in September 2004, he/she was told by Tom Smith to expedite

production on the X26C consumer model . CW1 stated that the X26C units were made from la w

enforcement units that were returned because of software program failures . CW 1 explained that

certain functions, such as data recording regarding the number of discharges, etc ., were simply

unnecessary in the consumer version . Significantly , although TASER asse rts otherwise in

marketing material, CW 1 stated that the consumer device does not have a different pulse rate than

the X26 law enforcement version . CW1 stated that "[t]here's only certain people who knew that o n

the inside ." CW 1 explained that the casing of the consumer device is the same as the law

enforcement model, but the labels on the outside of the device were changed based on what

customer orders dictated . CW 1 stated that from a manufacturing perspective, "it was the sam e

thing." CW 1 stated that in a two-day period, TASER produced 1,000 X26C units, which CW 1



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believed were subsequently shipped to Davidson's .

142. CW2 is a former Company employee who worked at TASER from before the start o f

the Class Period until the middle of May 2004. CW2 was familiar with the manufacturing processes

for the TASER devices .

143 . CW2 stated that sometime several weeks after the May 2003 introduction of the X26 ,

the Company received approximately 6,000 M26 returns from one or more customers complaining

of defects in the circuit board . CW2 stated that he/she recalled seeing dozens of boxes of these

returns stacked up against the wall of the plant ; approximately 70 devices in a box . CW2 stated

employees were directed by Jay Pearl , Production Manager , to repo rt to work on Saturdays an d

Sundays for a period of time to take apart the weapons and remove the high-voltage boards . These

boards were then simply put in new casings with new serial numbers and sent out again without th e

flaws actually being rectified.

144. CW2 stated that the X26 had an even less stable design than the M26. He/she

attributed the problems to design defects and the positioning of the high-voltage board betwee n

electrodes at the front of the device. CW2 stated that during in-house tests of the finished units

overseen by engineer Max Nerheim, some of the X26s failed to fire consistently . CW2 stated

"[s]ometimes it would fire and wouldn't stop and, other times, if you pulled it two or three times, it

might fire just once ." CW2 stated that the repeated firing was caused by "one of the electronic part s

on the [high voltage] board [that] would fail to shut down when it was supposed to ." According to

CW2, "[y]ou didn ' t even have to press the trigger, it would just continuously run ." CW2 was also

aware some of the X26s "that were firing too rapidly , got sent out anyway . "

145. CW2 also stated that the ratio of the frequency of the "arc" on the stun guns was no t

consistent. CW2 explained that "[s]ometimes it would go really, really fast, and sometimes rea l



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slow, sometimes it wouldn't do it all and sometimes it wouldn't quit ." CW2 stated that the voltage

rates on the individual X26 units were also inconsistent, both in the low and high range . CW2 was

involved in the production of the very first X26 unit, which was initially mandated to read betwee n

97 and 150 amps (amperes) on the amp meter . Some variance was acceptable both below the low

end and above the high end, but CW2 did not recall these ranges . As the X26 moved into fuller

production, the adherence to these allowances was abandoned. CW2 said that the engineers "wer e

changing the (voltage and the ohms) allowance every week, if not daily, sometimes more than once a

day. They were changing what they would allow us to pass through . The engineers would come

out and say, `let's have it read this and this and this on the meters .' It was like, oh man, you never

knew whether something was going to pass or not ." CW2 said that Max Nerheim, who originall y

designed the X26, had a lot of employees working with him to try to troubleshoot the problems .

CW2 stated "[h]e had everybody and their brother in on it trying to tell him how to change this,

change that, do this, do that . I think he just finally gave up on it and just let them do what the y

wanted ."

146 . Despite the fact that the X26 was riddled with problems, CW2 stated that it wa s

shipped out anyway, only to be later rejected and returned by customers . CW2 stated that

occasionally, Defendants Rick and Tom Smith would walk the production floor with Jay Pearl, th e

Production Manager, and CW2 overheard Pearl describe the various defects in the X26 and tell the m

that defective units were being sent to customers . CW2 stated "I know [Jay Pearl] had conversation s

with Rick Smith and his brother [Tom Smith], and there wasn't really too awfully much of anythin g

done." In one or two instances -- sometime between Janua ry and April 2004 - CW2 observed

Defendants Rick and Tom Smith "walking up and down the isles behind Jay, and he would be tellin g

them, `We don't know what's wrong with them (the X26s) ; we're just building them and sendin g


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them out." '

147. Throughout his/her employment, CW2 observed " deliveries of cartons and cartons

and of returns -- we're talking about pallets of returns" of both the M26 and the X26 . CW2 said "I

seen a lot come back because they just flat wouldn't work ." Because CW2's work station was once

moved to a part of the plant in front of the dock doors, CW2 stated that he/she could see how much

product was being shipped : [w]e seen what went out, and we seen what come in . When you got a s

much coming back in, as you're shipping out, there's a problem . Some days we had more come

back in than we sent out ."

148. CW2 stated that he/she and others were directed by Jay Pearl to report to work on

Saturdays and Sundays to handle the product returns . CW2 stated that this involved sawing the unit s

in half and removing the high-voltage boards . The boards were retained and the device's plasti c

body would be shredded. The boards were "reworked" and installed in other devices, then shippe d

out again .

149. CW2 stated that Jay Pearl required Company workers to build 500 X26 units per day .

CW 2 stated that "[y]ou got fired if you didn' t make quota." CW2 also stated that he/she worked on

manufactu ring coils used in the X26. CW2 explained that the coils as created power for the

electrical arc in the weapon . CW2 stated that he/she and others were required to build a total of 600

coils a day. CW2 estimated , however, that 50 out of every 300-400 coils would not work . CW2

said "[t]hey would be one voltage before we put the coil on the board and we would put it on th e

board, and test the coil again, and it would be another number on the meter -- higher or lower . We'd

put it in the case, they'd fill it with epoxy and let it dry . When they tested it again, it would b e

another number yet . So there was no consistency anywhere along the way ." Despite these

disparities , CW2 said that these X26 units were completed and shipped .


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150. CW2 also stated that both the M26 and X26 had bad solder joints, which would later

cause the weapons to separate and fall apart . CW2 stated that after three to four months at TASER,

he/she went to Marci Rigoni, Director of Human Resources, to request a face-to-face meeting with

Rick Smith to discuss manufacturing problems. Rigoni refused the request . Shortly thereafter, CW2 I

spotted Rick Smith in the plant and spoke to him about the problems with the solder joints and

circuit boards . According to CW2, Rick Smith flatly instructed him/her to "just get them out ." CW2

explained that "[a]s long as they sparked, we would ship them out . "

151 . CW2 stated that the line leads, who had responsibility for testing the guns, were

supposed to record and document the failure of every gun in a log book. In addition, CW2 said that

he/she was required to report certain statistics in the same log book. CW2 stated, however, that

he/she never saw the line leads working in the log book, and was never able to locate the log boo k

on the floor. CW2 stated "[w]e could never find it to write anything in it ." CW2 said that while

Defendants continuously highlighted the strength of TASER' s quality controls and in-house testin g

in its public statements, there was a complete lack of overall quality control on the plant floor .

152 . CW2 stated that TASER held daily 1 :30 p.m. production meetings attended b y

Defendants Rick Smith and Tom Smith, Jay Pearl, Hanrahan, Max Nerheim and Ryan (a n

engineering assistant), during which the quality issues were discussed in detail . CW2 stated that

he/she often heard Pearl complain about how fed up he was with the Company's manufacturin g

problems .

153 . CW3 is a former TASER employee who was employed by the Company from p rior to

the start of the Class Period until 2005, and is familiar with TASER' s manufacturing processes .

CW3 stated that he/she also recalled that approximately 6,000 defective M26s were returned to

TASER shortly after the introduction of the X26 . CW3 also recalled that dozens of boxes of thes e



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returns, containing approximately 70 devices in each box, were stacked up in the TASER plant .

CW3 also corroborated that employees were directed by Jay Pearl to work on Saturdays an d

Sundays for a period of time to disassemble M26s to remove the high-voltage boards which were

then put in new casings with new serial numbers .

154. According to CW3, from May 2003 to December 2003 -- the first seven months of

the X26's production -- TASER had no specified limit on the unit 's frequency . CW3 stated "[t]hey

would take everything out of the door that sparks because there was such a high demand ."

According to CW3, TASER had a rush of orders for the X26 during this period and sol d

approximately 50,000-60,000 units. CW3 said "[w]e were forced to build 7,000-10,000 a month . It

was like they would just ship anything out" to meet the demand .

155. CW3, who is certified to operate an oscilloscope and tested the X26 circuit boards ,

stated that the hertz (frequency) on the X26's circuit board ranged from 19 hertz to 120 hertz during

that May to December 2003 period . After testing the circuit boards, CW3 labeled the boards with

tags detailing frequency and voltage which were dated and initialed . When a lot of 50 circuit board s

were accumulated in a plastic bin, they were sent to the order lines where one person would

assemble a trigger, another a laser sight, another a LED light, and so on . The circuit board tags were

discarded once they entered the assembly line. CW3 stated that he/she believes that TASER's ill-

trained work force did not know that they were not supposed to use the circuit boards with

frequencies in the very high ranges . CW3 stated "Most of those people . . . don't even know what a

currency is . I will tell you right now -- 80 percent of those people -- will not know what a hertz is .

They wouldn't even care . They don't even know what they're reading, they will just take the tag ou t

and throw it in the trash. I would separate good guns from the bad guns, but in the end I didn't know

what happened. The second shift would come through and they probably didn't realize what's goo d


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and what's bad ." CW3 stated that after December 2003, TASER utilized new "test boxes" that were

calibrated for the proper frequency specification . CW3 stated "[t]he high frequency rate dropped

significantly. We were getting closer to an average of between 19 and 24 hertz . "

156. CW3 stated that TASER did not provide the manufactu ring stations with assembly

manuals until November 2004 . According to CW3, the manuals contained detailed instructions fo r

the manufacture of the TASER devices, including the specification that X26's output should be a

minimum of 19 hertz and a maximum of 24 hertz . CW3 stated that he/she believed that by

November 2004, TASER had learned that 36 hertz would stop a pig's heart . CW3 stated that the

Company provided the manuals in November 2004 because of increased outside scrutiny of the stun-

gun's safety . CW3 stated. "[a]fter people started investigating, TASER moved to protect itself."

Notably, the Amnesty International Report was issued on November 30, 2004 .

157. CW3 stated that the lack of manuals prior to November 2004 on each assembly line

typified the Company's major quality control problems . CW3 stated "[n]obody had a handbook .

The line lead would usually go down the line, and show somebody how to do it and come back later

on and check out their work . The line lead could control only two people ; but you cannot control 1 3

people in a line." CW3 explained that each line consisted of 13 assembly tables, and that TASER

ran a total of 6 lines at that time . CW3 said "[t]here was no absolutely no standardized

manufactu ring process ." CW3 further stated that the Company 's use of non-English speaking

temporary workers, who had no electronics training, exacerbated the quality control problems .

158. CW3 further stated that both the M26 and X26 had bad solder joints, which would

later cause the weapons to separate and fall apart . Specifically, CW3 stated that two capacitors that

sat on the circuit board -- one white 500-voltage capacitor and one red 2,000-volt capacitor - wer e

not soldered correctly by TASER' s poorly-trained temporary workers, causing a failed connection i n



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the circuit board and leading to customer complaints . CW3 also stated that the weapons ' "spark

gap" -- a photosensitive mechanism that required a liquid crystal or an LED light in order to

function -- did not work properly, leading to the weapons' frequent failure to fire and/or a three-

second delay in discharge . CW3 also stated that he/she believed that the manufacturing defect s

caused the TASER weapons to discharge at frequencies far above those stated in the weapons '

specifications . CW3 stated that the weapons' failure rate was 200 of 300 units, and this failure rate

was consistent throughout 2003-2005 . CW3 believed the defective units were shipped to distributors

and customers in 2002 through 2003, but stated that in 2004, TASER began to withhol d

malfunctioning units .

159. CW3 stated that beginning in October 2004, TASER production slowed dow n

significantly as the Company experienced a decline in law enforcement orders .

160. CW4 is a former TASER employee who worked assembling trigger and cartridge

components from September 2004 through November 2004. CW4 stated that he/she "quit becaus e

the way they was running it and everything . They did know of problems coming through. We told

them about it, but they ignored it." CW4 stated that TASER used unskilled workers who knew littl e

or no English, as a temporary labor force . CW4 stated "[t]hey tried to have us to teach them and

they wouldn't listen to us, so that's the reason why it's so messed up. No one knew how to train

anybody. They didn't run it very well . I think at one time maybe TASER was doing pretty good ,

but then they was [sic] cutting corners every day ."

161 . CW4 stated that there were a number of quality problems on the assembly line. CW4

said that because of the faulty way workers injected silicon or epoxy in the device casing supporting

the trigger area and surrounding wires, it interfered with the path of the laser beam. CW4 stated

"[t]hey knew about it, but they didn't fix it and went ahead and sent it out ." In addition, CW4 state d


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that when workers "pushed down" the silicon injection into the body of the weapon, it would com e

apart .

162 . CW4 also stated that he/she observed " cases upon cases" of back-logged cartridges

and other components sitting in the warehouse . CW4 said that the cartridges were not supposed to

be turned over because this would affect the function of the explosive device within the cartridge .

However, CW4 noticed that the cases were o ften turned upside down and rotated by workers. CW4

said "[t]hey even had a big sign up there saying not to do that, but they was doing it anyway . "

163 . CW4 also corroborated that devices were coming back to TASER from customers by

the "caseloads ." CW4 stated that he/she and other workers were informed by several TASE R

manufacturing managers who came to the plant one day that the X26s needed to be rechecke d

because law enforcement agencies had returned them . CW4 stated that they were told that the

reason for the returns was the X26s "weren't firing on the first fire . After the second one on, it

would fire, but the very first initial firing was not firing ." CW4 stated that "t]hey had us all in the

office one time rechecking them, because they had cases of them that had came back . Oh my gosh ,

they had a whole roomful of cases up to the ceiling." CW4 estimated there were 50 cases of

returned stun guns; each case containing approximately 36 units . CW4 said "[t]hey said that the

reason we were checking them, was because the officers were saying they weren't firing on the firs t

fire." CW4 explained that everyone at TASER knew this was a serious problem because every

second to a police officer is crucial .

164. CW4 further stated that production slowed "way down" during the fourth quarter o f

2004. When CW4 first began in September 2004, he/she had a quota to assemble 150 trigge r

cartridges an hour . CW4 explained that each worker had an hourly quota and all were informed b y

Mary Phillip, the night-shift supervisor, that if they didn't hit their targets, they would be replaced .


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CW4 stated that "[t]hen all of a sudden, it just kind of died . Like within the first week that I was

working, they was yelling that we had to get this and that and everything out, and then next thing I

know, we were just doing back-up work and filling our time in because we weren't getting any

production out hardly . Everybody was all upset and up in arms because they thought they was [sic]

going to lose their jobs ." CW4 said that in September , Mary Phillip had informed the workers that a

big order was expected, but it apparently never materialized . CW4 said "[w]e never saw it . "

165. CW4 stated that in his /her second week on the job, production slowed so much that

he/she was taken off the assembly line and assigned to side tasks, such as trimming plastic molds .

CW4 stated that "[t]hey took me off of [the assembly line], because they said they was back-piled o n

it . I was then doing silly stuff; anything to keep us busy for eight hours. It wasn 't no [sic]

productive work." CW4 stated that this continued through November : "[t]hey weren't getting much

of anything out ." CW4 said that many of the temporary workers who had been expecting to mov e

into permanent positions were not hired "and they just let them go . "

166. CW5 is a former Company employee who was employed by TASER from September

2003 through March 2004. CW5 worked in production as a line lead, and was involved in building

and testing TASER cartridges and finished weapons p rior to shipment.

167. CW5 stated that "[t]here was a lot of shady stuff going on . I quit my job because of

it . A lot of times I didn't want things to be shipped out that went through anyway ." CW5 explained

that there were problems with the testing of cartridges as well as bad solder joints in the weapo n

casings. CW5 said that he/she sent a "statement" to senior management at TASER about the

problems and "they did nothing about it ." CW5 stated that "[t]hey were shipping out guns that were

poor quality to make their numbers. We got cash bonuses if we got a certain number of units out th e

door. Guns were being returned from customers with problems . Things went out that I wouldn't



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have wanted my name on . "

168 . CW5 stated there were endemic quality and other control weaknesses on the plant

floor. CW5 said that the manufacturing supervisor , Mark Walker was more concerning with rolling

joints behind his desk than overseeing the operation . CW5 said that workers complained abou t

Walker to Company management, but they were reluctant to fire him. By contrast, CW5 said that

Production Manager Jay Pearl was terminated because of the way he tried to alert upper

management to these issues, including problems with Taser testing . CW5 also stated that TASER's

employees regularly stole the law enforcement stun guns -- that were supposed to be under guard at

the plant -- and sold them to people in parking lots .

169. CW6 is a former TASER employee who worked at the Company from January 200 4

through May 2004, in Quality & Inventory Control . CW6 was responsible for testing and visuall y

inspecting finished TASER devices prior to shipment . CW6 stated that the voltage, amperage,

wattage were tested by other workers in the plant, such as line leads, as they assembled the guns .

Most of the products CW6 handled were X26 units .

170. CW6 stated that he/she and other quality control employees would conduct a fire test

of every X26 by laying the gun on a table and discharging it once or twice. CW6 stated that out of

every 100 guns, 5% to 15% would malfunction . CW6 said that sometimes they would not fire on the

first discharge and other times they would fire on the first discharge, but not the second . CW5 sai d

these guns were set aside and not shipped . CW6 attributed the problem to a glitch in the software

program that controlled and registered many of the devices' functions, including how many seconds

the weapon fired per discharge ; how many times it was fired ; and the battery energy level . CW6

stated that "I was always kind of leery about the way they worked . It seems like there were flaws in

their system , their computer chips or their computer. Sometimes they would fire, and sometimes



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they wouldn't. There were times it wouldn't repeat fire ." CW6 said that "[n]obody there could

pinpoint the problem" while he/she was at TASER . CW6 said that TASER's engineers "admitted

there was a glitch because they kept having to revise the program ."

171 . In January 2004, when CW6 first started with the Company, he/she noted tha t

customers had returned boxes of faulty X26s . CW6 said he/she saw 20 to 30 cartons of returns on

the plant floor . Then, sometime in March 2004, CW6 said that TASER received another complaint

from a police department customer . In response to the complaint and "because they were having a

lot of problems with the firings of the guns ," TASER' s plant manager, "Keith," directed CW6 and

others in quality control to unbox at least 2,000 guns that were about to be shipped and individually

fire each one of them one hundred times .

172. CW6 stated that each weapons ' performance was recorded in a quality report that was

reviewed daily by TASER engineers . CW6 stated that he /she assumed the engineers forwarded the

performance reports to Company management . CW6 stated "I'm sure they informed them on what

was going on and the owners had to make the call . "

173. CW6 said that the Company had a daily quota of shipments imposed by the plant

manager Keith . CW6 said "[ i]t was always rush, rush to get out 200-300 a day . "

174. The Company's rampant Class Pe riod quality control deficiencies resulted in the wide

distribution of defective products to distributors and customers . CW7 is a former TASER

distributor whose assigned territory was in the Northeastern United States one month before the start

of the Class Period . CW7 is also certified as a TASER Master Instructor and estimates that he/sh e

took approximately 350 hits from the M26 over a three year period. CW7 stated that he/she now ha s

a serious heart condition . CW7 stated that TASER' s quality problems were notorious. CW7

estimated that in every order of M26 units, ranging from 3 to 8 units, there was at least one devic e


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that either didn't work right out of the box or broke shortly after . CW7 said "[y[ou put the batterie s

in and it didn't light up or nothing happened when you pulled the trigger ."

175. CW7 stated that when he/she first began as a distributor, TASER's policy was t o

immediately replace any defective device with a new one off the assembly line . CW7 said that

distributors grew tired of having to deal with the defective devices, however, so they started telling

customers to ship the defective products directly back to the factory . Toward the end of CW7' s

tenure, the Company stopped immediately replacing malfunctioning devices and held onto th e

returned units to determine whether they were inherently defective or whether the customer ha d

damaged it.

176 . CW7 stated that while TASER reported the number of units it shipped every quarter

in its SEC filings, it didn't disclose the returns . CW7 said "I never saw a report of turnarounds, onl y

the number of guns that went out . What was their repair rate? How many guns did they see come

back based on the number than went out? Did they book replacements as standard sales? "

177. CW7 said that he/she had almost daily contact with the Company on training an d

distribution issues and would often complain to Jami Hill, TASER's Training Coordinator, whe n

he/she had a defective device . CW7 stated that "[t]he impression I had is that TASER wanted to get

them done and put them out there as quick as possible because the sooner you get them out the door ,

the sooner you can show them as actual sales ." CW7 said "[w]hen I first got involved with th e

Smiths, they were a private company . I still to this day think they had no idea it was going to take

off the way it did . All of a sudden , it happened to click and the Smiths happened to hit the market at

the exact right time and everybody was looking for something . . . and it was far beyond what they

were ready for ."

178. CW7 stated that In February or March 2005, the Suffolk County Police Department in


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New York ordered 50 weapons . CW7 said that he was informed by a contact at that police

department that "seven out of the box were bad from the start . They didn't even work ." He/she was

further told that another three of the devices malfunctioned during police training classes : one of th e

two probes failed to hit a metallic target and the officers got feedback from the device handles,

receiving shocks themselves. CW7 was told that these units also were sent back to TASER .

179 . The Company's endemic quality control problems may also have caused some units

to deliver charges significantly at variance with the devices' specifications . For example , The New

Times reported, in a July 18, 2004 article, that "[a]ccording to Taser, the [M26] produced 26 watts of

power, four times the power of the earlier model . A field test in 2001 by the Canadian police

showed that the M26 was even stronger, with an output of 39 watts ." [Emphasis added . ]

180. The fact that devices in the hands of customers delivered a charge 50% mor e

powerful than the weapon's specifications undercuts the Company's product safety claims . Such

devices, although appearing to operate normally, posed substantial safety risks beyond those

associated with a properly functioning device . For example, prior to working for TASER, Dr .

Stratbucker conducted an evaluation of another stun gun, the Nova XR-5000 in or about 1984.

Discussing the fact that no performance specifications were provided with the device, precluding

researchers from ensuring that the stun gun was operating correctly, Dr . Stratbucker stated :

Although unlikely , a malfunction might cause a change in the electricalcharacteristics and result in the output becoming substantially moreinjurious , even though the device appeared to function norma lly .[Emphasis added . ]

181 . Conversely, product defects could cause the devices to under-perform based on their

published specifications. For example, in all its training materials, TASER touted the fact that the

M26 has incapacitated even the most fit and motivated individuals, such as members of elite polic e

SWAT units . However, on March 30, 2005, Stuart News, in an article entitled "Nine jolts fail to


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stop suspect ," reported that Indian River County Sheriff s Deputies in Florida used a TASER device

to shock Christopher Patrick Vuras nine times because he continued to resist even after applicatio n

of the shock. While the article does not state that the TASER devices involved were defective, th e

performance of the weapons in the article's account calls into question the proper functioning of th e

devices . According to the article :

Deputies struggled with Vuras when he tried to get back into the store afterrepeatedly being told to stay outside .

During the struggle, Deputy John Gillette pressed his Taser stun gun toVuras' back and initiated a five-second jolt when Vuras allegedly resistedarrest, a Sheriff's Office report stated .

Assisting Deputy John Kane Jr . then fired his Taser's probes - two insulatedcopper wires with attached straightened fishhooks that can be deployed up to21 feet away - into Vuras' chest and administered two more five-secondshocks with little effect, the affidavit stated .

"He was told by the deputies to stay down (on the ground)," said Sgt . KentCampbell, who was the supervisor on the scene after the incident . "But(Vuras) instead grabbed the probes, pulled them out and got up . "

Gillette deployed Taser probes into Vuras two more times as he continued towalk into the store, the report stated . Both times Vuras pulled the probes outwhile he was being shocked, according to the report .

182. A spokesperson for the Indian River County Sheriff's Office identified the TASER

devices used in the struggle with Vuras as the M26 .

The Ineffectiveness of the X26' s

183 . As noted above, despite the fact that the electrical charge delivered by the X26 was 5

Watts, compared to the 26 Watt output of the M26, TASER claimed that its newest law enforcement

model had 5% greater stopping power due to its Shaped Pulse technology . The Company claimed

that by delivering shocks in two phases, the "Arc Phase" and the "Stim Phase," the X26 wa s

optimized to penetrate clothing, skin or other barriers and, by ionizing the air, create a low

impedance electrical conductor that conducts the second pulse phase into the body . TASER claimed



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that because the Stim phase only has to flow across the highly conductive arc from the Arc Phase, i t

is optimized to provide maximum incapacitation for a human target while operating at super-

efficient power levels . The X26 delivered a 5 second charge with 19 pulses per second for the first

two seconds of the cycle, dropping to 15 pulses per second for the last three seconds of the firing

cycle .

184 . The reduced number of pulses during the last three seconds of the firing cycle ,

however, allowed individuals that were incapacitated during the initial two seconds to regain som e

mobility during the final three seconds of the cycle . In other words, as originally sold, the X26

failed to deliver adequate stopping power throughout its entire five second firing cycle . As noted by

CW1, "[p]olice didn't like going to the new X26 because with the M26, if a guy would drop, h e

would stay down. The M26 was like getting hit with a hammer ."

185 . In September 2004, TASER issued a training bulletin that tacitly acknowledged

problems with the effectiveness of the X26 . In that bulletin, TASER announced that it was releasing

a software upgrade for the X26 that increased the number of pulses during the last three seconds o f

the firing cycle from 15 pulses to 19 pulses. The Company stated that this software upgrade was

based upon its receipt of reports that subjects were able to gain partial mobility while being shocke d

and were able to break the wires connecting the X26 to the barbs fired into the subject, thereb y

breaking the electrical circuit and ending the shock .

186. A January 21, 2005 article in The New York Times, which first publicly disclosed the

issues surrounding the effectiveness of the X26 and modification of the X26 software, also reported

that "[w]hile Taser claims an effectiveness rate of about 95 percent, a Pentagon study conducted by

an Air Force laboratory found that they were effective 60 percent to 86 percent of the time . The

weapons become less effective at increased distances, according to the study ." It also reported :



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In marketing material, Taser says that the X26 works as well as the M26despite its lower power output because it delivers its electric shock in aspecial wave form that enters the body more efficiently . Both guns put outmultiple pulses of electricity each second, causing muscles to tighten andloosen uncontrollably .

But Dr. James Jauchem, an Air Force scientist, reported at a conference onTasers and similar weapons in November that tests on pigs showed that theX26 electric pulse was no more effective than other pulses of the same size.

The Adverse Impact on TASER 's Busines s

187. TASER enjoyed a virtual monopoly in the conducted energy weapons marke t

following its buy-out of Tasetron . Indeed, in the Company's Form 10-K for the fiscal year ended

December 31, 2003, TASER stated "[i]n the law enforcement and corrections markets, the

ADVANCED TASER and TASER X26 no longer have a direct competitor ." That position ,

however, came to an abrupt end during the fourth quarter of 2004 . On October 21, 2004, Law

Enforcement Associates announced that it had completed the housing design for its new stun weapo n

which had a projected launch date of March 2005 . Further, on November 15, 2004, Stinger System s

announced that it had entered the projectile stun gun market with the introduction of "The Stinger . "

Both products were to compete directly with TASER's M26 and X26 weapons. The introduction of

competing products had a catastrophic effect on the Company's business during the fourth quarte r

because of the heated debate over the safety of TASER 's devices, the widespread product defects ,

and the undisclosed problems with the effectiveness of the X26 . As alleged below, during the fourth

quarter 2004, an increasing number of law enforcement agencies announced that they were delayin g

implementation of the TASER devices .

188 . For example, in February 2004, the province of Ontario, Canada approved a measure

to allow the widespread use of TASER devices for front-line supervisors in the Toronto police force .

At the time, Toronto Police Chief Julian Frantino was lobbying for approval of $1 .1 million in fund s

to purchase 539 devices . However, in September 2004, the Toronto Police Services Board chose not


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to include the TASER devices in the 2005 budget, for reasons not described in press reports . In mid-

November 2004, the Board met again to reconsider Police Chief Frantino 's request for $1 .1 million

in Tasers. Just prior to the vote, press stories highlighted the Amnesty International Report' s

assertion that TASER weapons were found to be a contributory factor in several deaths . (Canadian

Press, Nov. 16, 2004, "Toronto Police Seek More Tasers for Officers as Debate over Safet y

Continues") . In a 3-2 vote on November 18, 2004, the Toronto Police Services Board, chose to put

the $1 .1-million purchase order of the TASER devices on hold . "This decision made by the board

means it will be years into the future before our service is able to deploy the Tasers to front-lin e

sergeants," one board member said . Board chair Pam McConnell defended the decision, saying :

"Putting another 500 Tasers into the hands of 500 officers is not a minor step . I think before we tak e

that step, it's essential we find out what the true effects are and find out whether this is a safe thin g

or not a safe thing ." At the time of the vote, the Toronto force's number of Tasers was only 24 guns ,

mostly used by members of the elite Emergency Task Force . In the 3-2 vote, the board asked for a

report from the city's medical officer on the long-term effects of the TASER devices . (Associated

Press, Nov. 19, 2004, "Board Pulls Plug on Proposal to buy 500 Taser Stun Guns for Toront o

Police;" Etobicoke (Ontario, Canada) Guardian, Nov . 21, 2004, "Police Board Holds off on

Equipping Police with Tasers") .

189. According to an October 11, 2004 article in the Daily World entitled "Police to Study

Taser Usage," law enforcement agencies in the state of Louisiana revaluated their use of TASE R

devices following the recent death of a man in Lafayette . The Lafayette Police Department recalled

20 of its TASER devices from the field in the aftermath of the death, allowing only supervisors t o

continue to use them . The Police Chief of Porte Baree, LA also told a reporter: "We are in the

process of re-evaluating our usage ." That department had purchased one Taser in early 2004 .



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190. According to a November 5, 2004 Associated Press article entitled "Las Vegas Police

Adjusting Policies Guiding Taser Use," police officers were banned from using TASER guns o n

handcuffed prisoners and discouraged from applying direct multiple shocks, following a departmen t

review and two in-custody deaths . Police officials spent about four months evaluating their TASE R

policy after the death of William Lomax, 26, who was shocked repeatedly while handcuffed .

Another man, Keith Tucker, 47, died under similar circumstances . Las Vegas police began

equipping 1,310 patrol officers and supervisors with TASER devices in April 2003 .

191 . According to a November 5, 2004 article in the Boston Globe, entitled "Group Asks

End of Pepper Gun Use," a group of Boston professors, lawyers and students called for an

immediate ban on the use of "less lethal" weapons after a pepper ball gun used by police killed a

college student in October 2004 at a Red Sox game. According to a January 16, 2005 article in the

Boston Herald, entitled "Taser Stunner : Cops Divided on Gun," although the Boston Police

Department had pushed the state to legalize the law enforcement use of TASER devices in July

2004, the early November citizen protests appeared to have a chilling effect on the police

department's plans to utilize the devices : "[s]ix months after back-to-back fatal shootings by Boston

police sparked the `emergency' legalization of Tasers for law enforcers, the stun gun is drawing

more static than interest from wary cops ." As of January 16, 2005, the Boston Police Department

had no standing order with TASER and, in February 2005, announced that its plans to obtain th e

weapons were on hold pending the outcome of the continuing investigation into the October 2004

death of the college student .

192. On December 1, 2005, the Journal-Gazette, in an article entitled "Police Postpon e

Purchasing Tasers," reported that the Fort Wayne Police Department in Indiana reversed an earlier

decision to purchase 83 X26s in early 2005 due to the questions that had been raised about thei r


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safety. The Department's purchase was to have been financed with an $86,000 grant from the

Department of Justice. A December 8, 2004 article in the Fort Wayne News Sentinel, entitled "Taser

Discussion Gets Wide Notice," reported the Department of Justice "might have tried to influenc e

police in Fort Wayne or other municipalities to avoid purchasing Tasers ." According to that article,

the Justice Department, which had provided the grant money to Fort Wayne, had been in contact

with Police Chief Rusty York over the past couple of weeks . "They just encouraged due diligence

and talked about two studies they are conducting," a Fort Wayne police spokesman said .

193 . As noted above, in a December 7, 2004 article, The New York Times reported that

Police Chief Rusty York said that after outlining his department ' s research regarding the TASER

devices, a Justice Department researcher , Joyce Gammelmo, encouraged him to do more research

before buying the guns . Joseph Estey, president of the International Association of Chiefs of Police,

said his agency was working with the Justice Department to examine issues surrounding the

weapons . At the time, the Association had not taken a position on TASER . Police Chief Rusty

York told The New York Times he did not know whether the Justice Depa rtment had contacted other

police chiefs.

194. In addition to the foregoing, the emergence of competition had a substantial advers e

impact on TASER' s business in the fourth quarter of 2004. For example , Stinger Systems

("Stinger"), debuted its conducted energy weapon prototype in September 2004 at a Washington,

D.C. national law enforcement trade show . Stinger also made presentations to law enforcement

agencies around the country, in August and September 2004. In or about November 2004, Stinger

contacted the Boston Police Department and subsequently did demonstrations of its prototype for the

Boston, Wooster and Springfield Police Departments, as well as the Massachusetts State Police .

Stinger's presentations were timed to coincide with budget-setting schedules for 2005 .



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195 . In the fourth quarter of 2004, TASER had submitted contract proposals to supply its

weapons to the Massachusetts State Police and the Pennsylvania State Police . These agencies

decided to delay orders, however, to afford them the opportunity to consider alternative, competin g

products to avoid investing in TASER's technology in the event that became obsolete with th e

introduction of new-state-of-the-art products from the Company's rivals . In addition, some police

departments that were about to make purchases from TASER decided to delay that decision based o n

cost factors because Stinger's product was to be was offered at a substantially lower price than

TASER' s products. For example , the Wooster and Springfield , MA police departments specifically

delayed their first-time procurements of TASER devices that were planned for the fourth quarter o f

2004 in order to consider alternative systems .

196. As reported above, the Massachusetts legislature passed a law allowing the use of

TASER devices by law enforcement in July 2004. The Boston Police Department was prevente d

from purchasing 100 Tasers for the July 2004 Democratic National Convention, however, because o f

concerns over the safety of the gun . While TASER had hoped to eventually equip all 2,000 officers

in the department, in October 2004 the plan was put on hold after protests over the use of less-letha l

weapons stemming from the death of a college student at a Red Sox game after she was hit in the eye

from a pepper ball gun . While some police Massachusetts police departments have purchased

TASER devices for training and evaluation , after the passage of one year, the Massachusetts

distributor for TASER, Triple Nickel Tactical Supply, has not delivered any products for

deployment in the streets .

197 . All of TASER's sales in the State of New York, New York City and Long Island are

factory-direct . Since the fourth quarter of 2004, most of the State law enforcement agencies in New

York have delayed any decision about stun gun purchases in order to evaluate the Stinger weapon .


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policy limiting use of the device to emotionally-disturbed people .

198. Although some of the law enforcement decisions to delay ordering or deploying stu n

guns were disclosed during the fourth quarter of 2004, the full adverse impact of these and other

delays was not disclosed until after the end of the Class Period . As alleged more fully below, by that

time, the Individual Defendants and other Company insiders had made more than $85 million i n

fourth quarter 2004 sales of TASER stock.

The End of the Class Perio d

199. On January 6, 2005, after the market closed, TASER issued a press release entitled

"TASER International, Inc . Cooperates with SEC Informal Inquiry." The press release, in pe rtinent

part, states :

We are compiling information to assist the SEC in two areas: Companystatements regarding the safety of TASER(R) products and a recent orderreceived from Davidson's, Inc .

"We are confident our statements are supported by the safety studies of ourproducts," said Rick Smith, CEO of TASER International, Inc . "We are inthe process of compiling the information requested by the SEC and lookforward to working with them as we have with other independent entitiesinterested in the safety of TASER devices such as the United StatesDepartment of Defense, the Home Office of the United Kingdom and othergovernmental agencies in the United States and abroad . Our publicstatements about the safety of TASER devices are consistent with those ofmedical experts that we have consulted, or in the case of the Department ofDefense, were reviewed and approved prior to release by the very agenciesthat have commissioned the research ."

"Davidson's Inc. has been a distributor for TASER International since 1999.Davidson's most recent order was received and shipped in the normal courseof business in the fourth quarter of 2004 . It followed a 60-day test market forour new X26C Citizens' Defense System that included two of Davidson'sfirearms dealers . As a result, we were pleased to secure Davidson's as theexclusive distributor for this market segment with an agreement providingDavidson's the exclusive distribution rights to Federal Firearms License(FFL) dealers . Davidson's ordered an initial 1,000 TASER X26C systems,costing less than one million dollars, for distribution to their dealers with no



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right to return the product . This order was announced together with an orderfor other law enforcement products which brought the total order to $1 .5million," continued Smith .

200. Immediately, on January 7, 2005, The Wall Street Journal reported in an art icle

entitled "SEC Probes Safety Claims Made by Maker of Stun Guns" as follows :

The Securities and Exchange Commission has launched an inquiry intoclaims TASER International Inc . has made about safety studies for its stunguns.

The SEC also is looking into a $1 .5 million, end-of-year sale of stun guns byTASER to Davidson's Inc ., a Prescott, Ariz ., firearms distributor .

"We're confident that this is going to come out in our favor," TASER'spresident Tom Smith said late Thursday in announcing that it wascooperating with the SEC informal inquiry . An informal inquiry is a stepbelow a formal investigation, where regulators have subpoena power .

Mr. Smith added that the Scottsdale, Ariz., company stands by its safetystatements and the recent sale .

Shares of TASER were lower in premarket trading F riday

Recent investigations by several newspapers have raised se rious questionsabout the stun gun's safety record and about TASER' s reports toshareholders .

Although TASER has repeatedly said its stun guns have never caused adeath or serious injury, reports in the Arizona Republic have linked the stungun to 11 deaths and to several injuries involving police officers .

"We feel very confident that the statements that we've made surrounding thesafety of our products are supported with the safety studies," Mr . Smith said .However, questions about safety have already caused some policedepartments around the country to back off purchases of TASERs . Somemedical experts believe TASER shocks may exacerbate a risk of heartfailure in cases where people are agitated, under the influence of drugs orhave underlying health problems . Human-rights advocates want lawenforcement to stop using TASERs until scientific evidence can show theydon't kill .

Last week, an investment analyst raised questions about the sale of 1,000new consumer stun guns and other products to the dist ributor Davidson'sthat TASER announced on Dec. 20. "It's a deal that could maybe make aquarter," said Rob Miceli , analyst with the Scottsdale firm Gradien t


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Analytics Inc. "Any time we see something like that it bears furtherinvestigation . "

201 . The price of TASER common stock dropped from a close of $27 .62 per share o n

January 6, 2005 (prior to the disclosure of the SEC investigation) to a closing price of $22.72 per

share on January 7, 2005 (the first trading day following the disclosure of the SEC investigation) .

202. On January 8, 2005, The New York Times, published an art icle entitled "S .E.C .

Looking At Safety Data and Big Order for Taser Guns ." In that article, the Times reported that in

addition to the $1 .5 million Davidson's transaction at the end of the fourth quarter of 2004, another ,

unidentified dist ributor bought $700,000 of TASER' s products on December 30, 2004 :

An internal company document suggests . . . that Taser was struggling tomeet its sales goals at the end of 2004 . he document shows that in anothersale, a distributor bought $700,000 in Tasers and accessories on Dec. 30, thelast business day of the fourth quarter, about 3 percent of the sales that Taserexpected for the fourth quarter .

"Hope this will help out! ! ! ! !" the distributor noted in the purchase order,which was provided by a person who will profit if Taser's shares fall .

203 . On January 8, 2005, the Arizona Republic reported that the Arizona Attorney Genera l

had initiated an inquiry concerning TASER. In that art icle, entitled "Taser safety claims draw state

scrutiny," it was reported that Arizona Attorney General Terry Goddard had met with TASER

officials prior to the disclosure of the SEC investigation . A spokesperson for the Attorney General

stated "The attorney general has concerns about issues raised in media reports about Tase r

International, including questions about safety and alleged misrepresentation . . . "The Attorney

General 's Office has not opened an investigation but is continuing to gather information ."

204 . With respect to the safety controversy, that article reported :

For years, Taser maintained that its stun guns never caused a death or seriousinjury. As proof, Taser officials said no medical examiner had ever cited theweapon in an autopsy report .

But Taser did not have those autopsy reports and didn't start collecting them


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until April . Using computer searches, autopsy reports, police reports, mediareports and Taser's own records, The Republic has identified 88 deaths afterpolice Taser strikes in the United States and Canada since 1999.

Of those, 11 autopsy reports have linked deaths to the stun gun. Medicalexaminers cited Taser as a cause or contributing factor in eight deaths andcould not rule it out as a cause in three others .

The Republic has also reported that several police officers have sustainedcareer-ending injuries that they attribute to being shocked with Taser .

In reports to bolster safety claims, Taser officials have said more than

100,000 police officers have been shocked during training exercises without

suffering a serious injury .

In October, Taser issued a press release saying a Department of Defensestudy, whose full results have not yet been released, found that its guns weresafe. But The Times reported that the Air Force researchers who conductedthe study actually found that the guns could be dangerous and that more datawas needed to evaluate their risks .

205 . In a January 11, 2004 article entitled "Taser Takes Another Hit, End of Year Pus h

Questioned," the Arizona Republic reported:

Taser was one of the best-performing stocks in the country over the past twoyears. Sales soared when police departments around the country armedofficers with its electric stun guns, and the company has made millions forinvestors. But the stock has lost 36 .7 percent of its value since Jan . 1 .

Monday's decline came after additional questions were raised about Taser'send-of-year sales . The underlying concern: whether Taser pushed throughtwo large orders at the end of the year to meet its sales and earnings targets .Investors in public companies, especially hot companies such as Taser, payattention to growth rates to see if momentum is holding up or slowing. If acompany falls short, its stock usually drops .

The first involves a Dec . 20 announcement by Taser of a $1 .5 million orderfrom Davidson ' s Inc ., a longtime Prescott gun distributor. Rob Miceli, ananalyst with Gradient Analytics in Scottsdale, raised doubts about the sale ina Dec . 30 report .

Miceli couldn 't verify that Davidson 's had received the 1,000 consumer stunguns and other products in its order and noted that Taser couldn ' t book thesale for 2004 unless it was shipped by Dec. 31 .



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Davidson's Chief Executive Bryan Tucker said last week that he receivedthe guns before year's end and that there was nothing unusual about thetiming of the order. He said he needed the guns in time for a big gun show .

In a research report Monday, Miceli said new information on the saleprovides "additional evidence" that Taser violated accounting rulesregarding when a sale can be booked .

Miceli said Tucker's revelation, in interviews with reporters, that the newconsumer stun guns Davidson's bought can be converted into the police-model stun guns if they don't sell equals a right of return . Tucker describes itas a "fallback position" in case the new consumer gun "falls on its face . "

Under generally accepted accounting principles, Miceli said, the revenuefrom that sale can't be booked, or recognized, yet because Davidson's mightsend some guns back for conversion . Booking the entire amount under thisscenario is aggressive accounting, he said .

The other new information was a $700,000 purchase order, reported

Saturday by the New York Times, outlining an end-of-year sale that Taser

did not announce . A note on the Dec . 30 order says, "Hope this will helpout . "

Miceli said that purchase, combined with the Davidson's deal, accounted forabout 10 percent of Taser's expected sales for the quarter .

[Rick] Smith said Taser did not book the entire $700,000 in the fourthquarter . He said it wasn't announced because Taser normally doesn'tannounce sales to distributors . The Davidson's deal was announced becauseit involved the new consumer model . He said Taser distributors often attachnotes to orders .

"We get little notes from our distributors all the time because they're asexcited about the business as we are," he said .

206. In addition, on January 11, 2005, the Company issued a press release entitled "A n

Open Letter to Our Shareholders and Customers." In that press release, Defendant Thomas P . Smith

attempts, inter alia, to explain away the insider sales by the Individual Defendants (without mentio n

of the massive sales by other Company insiders). Significantly, the press release also states ,

"[d]uring the first half of 2005, it is possible that we may see some delays in orders as agencies tes t

and evaluate potential new entrants." With that disclosure, all the artificial inflation in the price of


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the Company's common stock was removed, as TASER closed at $14 .10 per share on January 11 ,

2005, compared to the closing price of $20 .05 per share on January 10, 2005.

Post-Class Period Events

207 . Subsequent to the end of the Class Period, TASER acknowledged that the adverse

publicity from the safety controversy surrounding its devices, as well as the advent of competition in

the conducted energy weapons market had adversely affected the Company's business . In the

Company's annual report filed with the SEC on Form 10-KSB on March 31, 2005, the Compan y

stated:

We anticipate net sales will decrease in the first half of 2005, perhapssignificantly, from the levels achieved in the third and fourth quarters of2004. We believe the principal reasons for the decrease in net sales, orthe deferral of orders , may relate to the adverse impact on customersand potential customers of the allegations of death occurring after theuse of a TASER device, adverse publicity surrounding our products oruse of our products , and potential competition which may cause ourcustomers to postpone or delay orders to allow them to evaluate othercompeting products . [Emphasis added . ]

208. In addition , as the media accounts of deaths linked to the use of TASER devices, th e

suspension of their use by various law enforcement agencies , and the debate about the weapons'

safety continued to multiply , various post -Class Pe riod disclosures underscored the falsity of

Defendants ' portrayal of the TASER weapons as safe, as well as Defendants ' materi al misstatements

concerning the research TASER touted during the Class Period .

209. On January 23, 2005, The Arizona Republic published an article entitled "TASER

Doctor's Credibility Questioned ." In that article, the Republic reported that the research of Dr .

Stratbucker, one of the authors of the PACE study, was "potentially biased" and that he may have

misled a judge about his financial relationship with TASER in the Jon Benet Ramsey case. The

article states :



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Robert Stratbucker, who helped lay the foundation for Taser's claims ofsafety, has written several medical articles on the stun gun and hasconducted studies that company officials use to promote the weapon topolice departments across the country .

But a Scottsdale research firm is raising questions about Stratbucker'sobjectivity, which calls into question the doctor's long-held position thatTaser has never caused a death or serious injury .

"In the case of Dr. Robert A . Stratbucker, in particular, the evidence of biasis extremely compelling," according to the Gradient Analytics reportobtained by The Arizona Republic .

The 14 page report focuses on an article about cardiac-safety co-written byStratbucker, published in the peer-reviewed journal Pacing and ClinicalElectrophysiology and trumpeted by Taser in news releases just over a weekago as evidence of the stun gun's safety.

In its report, Gradient questions the way the cardiac study was conductedand the "validity of the results ." It says Taser was tested in a setting that didnot match real-world circumstances. It said the study, which used asimulated device to shock pigs, does not take into account factors such asdrugs, elevated heart rates and conditions such as heart disease.

The report suggests that cash and options paid to Stratbucker and others whoconduct research on Tasers could lead to tainted results.

Taser has acknowledged giving options to Stratbucker .

Gradient criticizes Stratbucker, saying he was dismissed as an expert witnessin the Jon Benet Ramsey murder case where a Taser might have been usedas a weapon .

"He was dismissed after it was shown that he had failed to disclose hisrelationship to Taser, (that) he had previously been compensated in cash andoptions by Taser and had ignored evidence that appeared to indicate the useof a Taser in the killing," Gradient said .

Both Dr. Stratbucker and TASER vigorously denied the allegations made by Gradient .



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210 . On February 10, 2005, an article published by the Associated Press Alert - Arizona

entitled "Taser shares fall following Air Force Study," reported that the price of TASER stock fell

after a CBS report that an Air Force study had found that "multiple shocks from a Taser stun gun led

to heart damage in pigs ." According to the article, CBS reported that it obtained a study by the Air

Force that "found a jump in the enzyme Troponin-T . . . [and] high levels of blood acid, which is a

potentially life-threatening condition," after pigs were subjected to 18 shocks with a TASER device.

The article reported that TASER called the use of 18 shocks " extreme," stating that the test result s

are similar to what would result from strong physical exertion .

211 . On February 11, 2005, TASER issued a press release in which it said that the

researcher involved in the study, Dr. Jauchem, had told CBS that the slight increase in Troponin T

was "statistically insignificant ." In response, CBS did another report on the "CBS Evening New s

with Dan Rather" on February 11, 2005 . That story included an interview with Dr . Charles Rackley ,

who was described as "a respected cardiologist at Georgetown University Hospital ." When asked

"if a patient came to you with these blood levels, what would you think as a diagnosis," Dr . Rackley

responded, "Well, initial impression would be that that meant some heart muscle damage, threat o f

heart attack." Dr. Rackley continued, "The combination of acidosis as well as the heart muscl e

damage would put this patient at high risk for developing ventricular fibrillation or sudden cardiac

death."

212 . On February 16, 2005 , USA Today reported that "[t]he largest association of polic e

chiefs will issue a national bulletin within 10 days urging police departments to review the use of

stun guns because of reports that the weapons maybe related to numerous deaths ." The articl e

further reported that the International Association of Chiefs of Police and the Justice Department

would initiate a study of the more than 80 deaths linked to the stun guns "to assess the risks in usin g



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the weapons . . . . "

213. In or about February 2005, James Ruggieri, an electrical engineer who in February

made a presentation to the American Academy of Forensic Sciences in which he said Taser shock s

could cause cardiac arrest . In an art icle dated March 5, 2005, The Arizona Republic reported that

Ruggieri, a forensic engineer, "who has written safety standards for the most respected electrical

laboratories and commissions in the worlds is warning police departments that shocks from tasers

could cause delayed cardiac arrest and that injuries to officers and suspects who are zapped could be

going undetected ." The article quoted Ruggieri as telling the American Academy of Forensic

Examiners that the "[p]olice should be informed that the Taser can kill . . . ." The article notes that

Ruggieri has served as a forensic investigator for the Fairfax County Police Department in Virginia

and has consulted with the Occupational Safety and Health Administration, the Federal Aviation

Administration, and the National Transportation Safety Board on electrical accidents . The article

reported that Ruggieri said that the evidence shows that heart damage and fatal heart rhythms can

develop hours after electrical shock occurs . According to Ruggieri, suspects and police officers ,

who are routinely subjected to shocks during training "`may have unknowingly incurred permanen t

heart damage."' The article further reported that Ruggieri said that deaths following a TASER

application "have been erroneously dismissed because of a time lapse between the shock and th e

heart attack . . . . Despite the low energy output of the Taser . . . the current is enough to cause

cardiac arrhythmia ."

214. The article further states that Ruggieri said that TASER incorrectly applied electrical

concepts known as the Faraday Shield and skin effect to suggest that electrical current from a

TASER device cannot penetrate deeply enough into body tissue to harm internal organs . According

to Ruggieri, those concepts apply only to high frequency current, and are not applicable at the



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frequencies at which the TASER devices operate. While TASER argued that Ruggieri applied th e

wrong standard by using "the engineering skin effect and not the biomedical effect," the article note s

that medical dictionaries, encyclopedias and electrical journals make no distinction between

engineering and biomedical skin effects, and that the effect is calculated using a mathematical

equation that applies to the way alternating current flows on an electrical conductor .

215. Finally, according to the art icle, Ruggieri said TASER misapplied elect rical codes

and standards to suggest that its devices were safer than they really are . For example, he cites to

TASER' s use of a chart that suggests that UL has certified TASER devices as safe . The article also

reports that UL said that the graph that TASER uses does not reflect any study of the devices safety .

UL spokesman Paul Baker stated that the graph is supposed to apply to an electric fence, an d

reportedly stated "[w]e take issue with that data in relation to Taser . . . Underwriters Lab does not

agree with Taser." Baker also stated that he was surprised that TASER was still using the graph

since UL had publicly stated a month earlier that it had no bearing on the TASER weapons .

216. On March 1, 2005, the Department of Defense released the expanded summary of the

HECOE Report - the March 2005 HECOE Report . That expanded report stated :

Several key data gaps were identified in data evaluation . These gapsinclude the biological basis for TASER effects, appropriate dosimetry [theaccurate measurement of dosage], and the impact of environmental andscenario dependent variables on the induction of effects . Availableexperimental-only data are too limited to adequately quantify possiblerisks of VF or seizures, particularly in susceptible populations .Limitations in the exposure and incidence data for some infrequentevents and the need to rely on database of case reports compiled byTASER International also generate uncertainty in the results. [Emphasisadded. ]

217. In addition, despite the fact that Samuel Powers had filed suit in November 200 3

alleging that he sustained a compression fracture as a result of muscle contraction caused by the

shock from an M26, the March 2005 HECOE Report stated "[n]o reports were identified tha t



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describe bone fractures resulting from rapid induction of strong muscle contraction ." The March

2005 HECOE Report also disclosed that TASER employees had participated in the study, and that

the data analyzed was primari ly provided by TASER .

218. In a March 6, 2005 article, the Sunday Mercury in Britain, reported that Dr . Tony

Bleetman, who has spent years touting the TASER devices as safe and authored a 2001 repo rt about

TASER weapons, was paid £2000 to conduct research for TASER . The article further reported that

a UK subsidiary of TASER - ProTect Systems Ltd . - carried a photo of Dr. Bleetman on its website,

describing him as its Medical Director . While the article noted that Dr . Bleetman denied any

affiliation with Pro-Tect Systems Ltd ., it reported that a Pro-Tect Ltd. e-mail address listed for him

was a working one .12

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219. A May 11, 2005 art icle in USA Today, entitled "Fairness of Taser study in question, "

Ireported :

An adviser to a federally funded study concerning the safety of stun gunsmade by Taser International also is a paid consultant to Taser, the JusticeDepartment acknowledges . The situation is raising questions about potentialconflicts of interest in the $500,000 study, which is being done amid reportsthat dozens of people have died after being shocked with stun guns .

Robert Stratbucker, a physician from Omaha, is among four paid advisers toa two-year study that is being launched by John Webster, a professor ofbiomedical engineering at the University of Wisconsin . Webster'sapplication to the Justice Department for a research grant last fall citedStratbucker as an adviser, but it did not mention that Stratbucker is a medicalconsultant to Taser, the nation's leading seller of stun guns .

Stratbucker has worked with Taser as the Arizona company has touted itsstun guns - also known as Tasers - as non-lethal weapons that offer a safeway for police to subdue suspects . Taser, whose Web site lists Stratbucker asthe company's medical director, has cited his research in promoting its stunguns .

Stratbucker's presence is "a potential conflict of interest," said HubertWilliams, president of the Police Foundation, a think tank here that



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researches law enforcement issues and wants federal money to do its ownstun-gun study. "We wouldn't do it . "

The critics also cite Webster's written summary of his study that he filedwith Justice . He said his premise was that "Tasers do not kill," and that hehoped "to find why these people are dying, and thus save lives . "

220. In a May 13, 2005 letter to Glen A . Fine, Office of the Inspector General, U .S .

Department of Justice, Chris Ford, Research Associate for People for the Ethical Treatment o f

Animals ("PETA") wrote :

We are writing to insist that the Office of the Inspector General (OIG)investigate whether University of Wisconsin professor John Websterprovided false information to the National Institute of Justice (NIJ)submitted in a federal grant proposal (which was approved) . We also urgethe OIG and the NIJ to withhold funding for the study until this matter hasbeen thoroughly investigated .

The proposal-application number 2004-90388-WI-IJ-was submitted forthe "Less-Lethal Technologies, Fiscal Year 2004" grant solicitation by theNIJ. Webster and his partners have been granted $500,000 to assess thesafety of the Taser International Taser Energy Weapon .

As part of the proposal, Webster provided the curriculum vitae of eachresearcher and consultant working with him on the project . However, RobertA. Stratbucker and Wayne McDaniel failed to disclose their affiliation withTaser International, the company whose weapon is to be studied .

Dr. Stratbucker's curriculum vitae fails to disclose that he is the medicaldirector of Taser International . Nothing in the documentation provided statesthat he has conducted studies for Taser International concluding that Taserweapons are safe.

Mr. McDaniel's curriculum vitae also fails to disclose that he has been paidby Taser International to conduct studies and write papers for the companyconcluding that Tasers are safe . Mr. McDaniel even went so far as to omitpublications he wrote for Taser from the list of published works on hiscurriculum vitae .

We are certain that Dr . Webster was well aware of Dr . Stratbucker and Mr.McDaniel's affiliation with Taser International-Webster and Stratbuckerare colleagues who have worked together on several studies. It is ourassertion that Webster, Stratbucker, and McDaniel conspired to provide thefalse documents to the NIJ in order to hide this obvious conflict of interestand secure the grant . . . .


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221 . On May 13, 2005, The New York Times reported that Dr. Stratbucker had been

removed from the University of Wisconsin study :

A Wisconsin researcher has removed Taser International's medical directoras an adviser to a study of the safety of stun guns after critics said hisinvolvement with the manufacturer had tainted the research .

The researcher, Prof. John Webster of the University of Wisconsin,Madison, had described his two-year, $500,000 study, financed by theJustice Department, as the first to look at the safety of stun guns independentof Taser, the Arizona company that makes the weapons.

222. In a May 21, 2005 article entitled "Taser Tied to `Independent' Study that Backs Stun

Gun," The Arizona Republic reported that TASER was "deeply involved in the HECOE study that

the Company touted as `independent,' based on interviews with military officials and document s

obtained by the paper. The article also reported that "[e]-mails that military officials exchanged also

reveal for the first time that they asked Taser to tone down public statements about the study . In

addition, they urged the company to commission an independent study rather than rely on the

Defense study."

223 . The article stated that "[s]ince October, Taser officials have contended that th e

company had no involvement in the Defense study, which helped fuel a sharp rise in the company' s

stock price last year ." The article notes that following an October news release in which Defendan t

Rick Smith stated "'[t]his comprehensive independent study further supports the safety of Taser,"'

the price of the Company's stock went up 60% over the next month . The article reported that

despite the characte rization of the study as "independent," TASER officials part icipated in thre e

panels to determine the scope of the study, analyze data and review findings. According to the

article, TASER also provided the bulk of the research material used in the study. Indeed, the articl e

quotes Larry Farlow, a spokesman for the Air Force Research Laboratory in Texas that oversaw the

study as stating, "Were they (Taser) totally disconnected (from the study)? The answer is no . They



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were not disconnected . . . . . "

224. The article further stated that the Air Force conducted the study for the Defens e

Department to "assess the risks and effectiveness of Tasers so the military could decide whether t o

buy them." The article stated that Air Force researchers said the study was "not meant to be a

comprehensive review of stun-gun science or safety, and they made no findings on the device' s

safety ."

225. On July 30, 2005, The Arizona Republic, in an art icle entitled "Taser shocks ruled

cause of death," that a Chicago medical examiner ruled that shocks from a TASER device were the

primary cause of the February 2005 death of Ronald Hasse . The article stated that "[a]n autopsy

report from the Cook County Medical Examiner's Office attributed the death . . . to electrocution

from two jolts delivered by a Chicago Police officer . The autopsy said methamphetamines

contributed to Hasse's death ." Noting that it had identified 140 deaths following a police TASER

device shock since 1999, the Republic reported that coroners said that TASER weapons were a caus e

of death in four cases, a contributing factor in 10 cases, and could not be ruled out as a cause of

death in four cases . The Republic further reported that following Hasse's death, the Chicago Police

Department halted plans for an expansion of TASER device deployment .

226. The Republic also reported that a June 28, 2005 TASER training bulletin advised

police that "`repeated, prolonged and/or continuous exposures to the Taser may cause strong muscle

contractions that may impair breathing and respiration, particularly when the probes are place d

across the chest or diaphragm ." The article stated that "[i] training classes and instruction manuals ,

Taser has previously told police to use repeated shocks to control a suspect . "

227. On July 31, 2005 , The Atlanta Journal -Constitution published an article entitled,

"Company : Taser can be lethal ." The article stated :



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Multiple shocks with a Taser could impair breathing and even lead to death,

the stun gun's manufacturer says in a new warning to law enforcement

agencies .

The three-page bulletin, posted on the Taser International Inc . web site ande-mailed to the company's 19,500 certified trainers, contradicts paststatements the company has made to the public and law enforcement, as wellas its own training manual, last issued in November 2004 .

In fact, the 239-page training manual issued by the Arizona-based companycontained its own contradictions, both urging officers to use multiple shocksto subdue unruly suspects and warning against it .

"This is a much stronger emphasis than they had before," Duluth police Maj .Don Woodruff, a certified Taser Instructor, said of the new bulletin . "In thepast they just told us that if you have a guy who is not compliant, just stunhim again. There wasn't that much talk about the health effects . "

The new bulletin, beyond warning officers three times that repeated Tasershocks can impair breathing and lead to death, also describes specificinjuries that could result from multiple or prolonged use of the 50,000-voltstun gun .

It said multiple shocks could also cause strong muscle contractions thatcould cause injuries to "tissues, organs, bones, muscles, tendons, ligaments,nerves, joints and stress/compression fractures to bones ."

A major part of Taser's defense for years has been that a medical examinerhas never named the weapon as a cause of death . That changed last weekwhen a Chicago coroner named the Taser as the primary cause of a jailedprisoner's death .

228 . Maj . Woodruff s statements concerning TASER' s emphasis on the application o f

multiple shocks to gain compliance were corroborated by CW7, who was trained as a Master

Instructor for TASER. According to CW7, the Company taught its instructors to teach their student s

to apply multiple shocks to attain compliance . CW7 stated "[n]owhere in their training mate rial, is

there a stated limitation to the number of shocks . We were taught by [Hans Marrero, Taser' s

Director of Training] as instructors to turn around and teach our students if the guy doesn't compl y



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in the first pull, pull the trigger again . It was told and taught to us, that you just keep pulling th e

trigger until you gain the compliance you need."

229. CW7 further stated that he/she accompanied Defendant Rick Smith to a marketing or

training session in New York in 2003, and Smith directly advised the officers in attendance about the

usefulness of multiple shocks . "The way Rick Smith, who was there, taught it to them, and the way

all subsequent marketing materials provided to me -- which I was strictly told to adhere -- said it ,

was "`continue [to administer shocks] until you gain the compliance ." '

230. On August 2, 2005, the Associated Press reported that in the wake of the new

information about the Company's June 2005 warning of possible respiratory complications i n

connection with prolonged TASER device shock, the Gwinnett County medical examiner in Georgia

said he will re-evaluate the inconclusive autopsies of two men who died after being shocked by

TASER devices in jail .

231 . On August 20, 2005, the Associated Press reported that a number of lawsuits were

filed against TASER by police officers who sustained inju ries during TASER training . The a rticle

states :

Police officers in New Mexico and four other states have filed lawsuitsagainst Arizona-based Taser International Inc ., claiming they were seriouslyinjured after being shocked with the electronic stun gun during trainingclasses .

All of the lawsuits have been filed in the past two week including four inMaricopa County Superior Court here on behalf of officers in Florida,Kansas, New Mexico and Ohio .

The officers allege they suffered "severe and permanent" injuries includingmultiple spinal fractures, burns, a shoulder dislocation and soft-tissue

injuries .

The lawsuits challenge Taser's principal safety claim and accuse thecompany of misleading law enforcement about the extent of potentialinjuries . They also accuse company officials of concealing reports of injurie sto at least a dozen other law enforcement officers .



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In their lawsuits, the officers allege they were injured in training classesbetween August 2003 and October 2004 .

They say that Taser instructors did not reveal any medical informationsuggesting that the guns could cause injuries and they claim the companyhas ignored important research suggesting the guns could be extremelydangerous, if not fatal .

The 104-page complaints filed Aug . 5 each allege Taser was aware ofinjuries to other officers but did nothing to warn police departments,"knowing full well that such a reported serious injury would havedevastating ramifications on its safety claims and, most importantly, itsmost-effective sales tool, the law enforcement training program . "

Among the five lawsuits is one filed Thursday by Hallsville (Mo .) PoliceChief Pete Herring, who claims he suffered heart damage and two strokeswhen he volunteered to be shocked while hooked up to a cardiac monitor asa way to demonstrate the safety of Taser to his officers in April 2004 .

Herring also claims "painful, permanent and progressive" hearing and visionloss and neurological damage in addition to strokes and cardiac damage .

Materially False And Misleading Statements Issued During The Class Perio d

232. Throughout the Class Period , TASER utilized training materials that Defendants

knew, or recklessly disregarded, were materially false and misleading . For example, as noted above ,

a December 5, 2004 Miami Herald article reported that TASER uses a chart in its training manual

that shows that its weapons deliver an electrical shock that is well below the safety threshold tha t

Underw riters Laborato ries ("UL") has determined to be safe for a two-year old . The article

explained that TASER includes a line graph in its literature that shows UL shock limits that wil l

cause the heart to stop, noting that the safety margin was calculated for humans between 2-75 year s

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of age, it shows that the TASER weapons are well below that threshold .

233 . Defendants, however, knew or recklessly disregarded that the shock limit shown in

the graph was based on a 1939 UL study involving electrified cattle fences and was not appropriate

for use with respect to the TASER devices . Therefore, Defendants' use of the chart to support th e



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Company's safety claims was mate rially false and misleading . The UL study assumed that a single

shock flows from the hands through the feet, but the shocks from the TASER devices are pulsed,

cyclical and take different routes through the body depending on where the probes land.

234 . Moreover, in December 2004, the Miami Herald reported that UL scientists had

stated that the study results were not applicable to TASER devices and that UL did not certify

TASER's product . Despite UL's statements, TASER continued to use the graph in its training

materials and elsewhere. In February 2005, however, TASER was still using the graph. In a March

5, 2005 article, The Arizona Republic reported that UL spokesman Paul Baker stated that the graph i s

supposed to apply to an electric fence, and "[w]e take issue with that data in relation to Taser . . .

Underwriters Lab does not agree with Taser ." Baker also reportedly stated that he was surprised tha t

TASER was still using the graph since UL had publicly stated a month earlier that it had no bearin g

on the TASER weapons .

235. Significantly, Gary Bowling, a training officer for the Putnam County Sheriff's

Office said that he left a TASER seminar thinking UL endorsed TASER . "I trust UL . . . I treat that

chart as gospel" the Miami Herald quoted Bowling as stating . When advised that UL had not

actually endorsed the TASER devices, Bowling stated "[ t]hat chart's misleading . I looked at that

and I thought UL had tested Tasers and put that dot on the chart ." [Emphasis added .]

236. Defendants also made numerous materially false and misleading statements durin g

the Class Period concern ing the effectiveness and safety of TASER' s devices . For example, on May

29, 2003, TASER issued a press release entitled "TASER® International, Inc . Announces New

TASER X26 Full Deployments New Shaped Pulse Weapon is 60% Smaller and 5 % More Effective

than ADVANCED TASER M26 ." [Emphasis added . ]

237. Defendants knew, or recklessly disregarded, that the claim that the X26 was 5% more


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effective than the M26 was materially false and misleading . As subsequently disclosed, the X26 has I

an output of 5 Watts compared to the 26 Watt output of the M26 . TASER, however, attributed the

greater effectiveness of the X26 to its use of "Shaped Pulse" technology . According to the lea d

researcher in the HECOE study, Dr. James Jauchem, the shaped pulse of the X26 had little effect o n

muscle stimulation. Moreover, Defendants knew that after the first two seconds of the X26's fiv e

second firing cycle, the pulse rate of the weapon dropped from 19 per second to 15 per second . As a

consequence, some individuals were able to regain partial mobility during the last three seconds of

the firing cycle. Defendants tacitly acknowledged the falsity of this claim when TASER increased

the X26 pulse rate to a constant 19 pulses per second in September 2004 due to police complaints

that the device did not fully incapacitate subjects .

238. In his deposition in the Powers Action, Defendant Rick Smith acknowledged that

TASER employed a policy of responding to every adverse news story or public statement . As a

consequence of this policy, Defendants made numerous materially false and misleading statement s

concerning the safety of its products, as well as the research concerning its products, during th e

Class Period .

239. On October 1, 2003, an article in the Denver Rocky Mountain News, entitled "Taser

Eyed in Death / Glendale Police Chief Denies that Shock Cause Man to Die," stated :

A 37 year old man died Monday after a police officer zapped him with aTaser gun to control what a coroner is calling a drug-induced frenzy . . . .

But Monday ' s death - the second of its kind in Colorado - brings newscrutiny to a tool that is becoming a growing pa rt of the arsenal for cops onthe street .

The human rights group Amnesty International has called for a moratoriumon law enforcement use of Tasers until there can be more medical testing .

"No one can sit there and say definitively that the Taser didn't triggersomething that caused this person to die," said Gerald Le Melle, AmnestyInternational's deputy executive director . "This weapon has never been



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tested by an independent scientific body . You are playing with people'slives ."

Steve Tuttle, a spokesman for Taser International, which manufactures theweapon, said the weapon is a low risk alternative to deadly force .

Tuttle said the weapon has been fired thousands of times since 1999, when itwent on the market, and has been involved in 26 deaths worldwide . Theautopsies in those cases showed other causes of death, according to thecompany .

"We've never had the Taser technology directly attributed to any death, andit's never been listed as a contributing factor . It's a very safe product,"Tuttle said .

The company has tested the weapon on laboratory animals who have beengiven drugs and found no signs of dangerous heart activity, he said .[Emphasis added] .

240. Defendants knew, or recklessly disregarded, that Defendant Tuttle lacked an y

reasonable basis for his statement that TASER devices were a "very safe product ." As alleged

above, the controversy surrounding the safety of conducted energy weapons has been on-going sinc e

the 1970s, when a study by the CPSB found that far lower powered stun guns could be lethal based

on individual susceptibility. Likewise, according to The New York Times , a 1989 Canadian study

found that stun guns induced heart attacks in pigs with pacemakers ; a 1999 study by the Department

of Justice on a stun gun model less powerful than the M26 and X26 found that it might cause cardia c

arrest in people with heart conditions ; and the Food and Drug Administration had found that othe r

electrical devices with a charge half as powerful as the M26 can be dangerous to the heart .

Moreover, the most complete independent study on the effects of the conducted energy weapons at

that time was the PSDB study in September 2002. That study expressly stated "[t]he

epidemiological evidence for the safety of the M26 Advanced Taser is certainly not as robust as that

for the low-power devices . With the lack of substantial historical data of use and inadequate

experimental evidence, the high -power Tasers cannot be classed , in the vernacular , as `safe' ."



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241 . On November 7, 2003, TASER filed its quarterly report on Form 10-Q for the quarter

ended September 30, 2003 with the SEC . In that Form 10-Q, the Company stated, "[d]uring th e

third quarter of 2003, the Company produced and shipped the first TASER X26 units to the law

enforcement community . The new TASER X26 with Shaped PulseTM Technology is the nex t

generation TASER conducted energy weapon, offering greater stopping power than the

ADVANCED TASER M26 . . . . "

242 . Defendants knew, or recklessly disregarded , that the statement that the X26 offere d

greater stopping power than the M26 was materially false and misleading . As subsequently

disclosed, the X26 has an output of 5 Watts compared to the 26 Watt output of the M26 . TASER,

however, attributed the greater effectiveness of the X26 to its use of "Shaped Pulse" technology .

According to the lead researcher in the HECOE study, Dr . James Jauchem, the shaped pulse of the

X26 had little effect on muscle stimulation . Moreover, Defendants knew that after the first tw o

seconds of the X26's five second firing cycle, the pulse rate of the weapon dropped from 19 per

second to 15 per second. As a consequence, some individuals were able to regain partial mobility

during the last three seconds of the firing cycle. Defendants tacitly acknowledged the falsity of thi s

claim when TASER increased the X26 pulse rate to a constant 19 pulses per second in September

2004 due to police complaints that the device did not fully incapacitate subjects .

243. On November 12, 2003, an art icle in the Miami Herald, entitled "Davie Man i s

Subdued by Taser, Dies," stated :

A man wearing only blue swim trunks died Monday night after police inPembroke Pines used a Taser to subdue him .

Reports of a half-naked man beating on cars at Sheridan Street andNorthwest 146'h Avenue brought police to the area, just east of Interstate 75,about 7 :30 p.m. Monday .

Police identified the man late Tuesday as Kerry Kevin O'Brien, 31, of 6301Plymouth Ln ., in Davie, about a mile away from the site of the incident .


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Investigators released little information about what happened after theyarrived, citing their ongoing investigation .

Pembroke Pines Police Capt . Keith Palant said in a written statement : "In aneffort to take the subject into custody, a `Taser' was deployed ." He saidinvestigators were still gathering statements from everyone involved,including witnesses and officers .

Rescue crews, already on the scene, took the man to Memorial HospitalWest, where he was pronounced dead.

Steve Tuttle, a spokesman for Arizona-based Taser International,manufacturer, said the devices are used thousand of times each year withoutcausing permanent harm . He said he knows of no cases in which a medicalexaminer has ruled that a Taser has contributed to a death .

Tuttle said his company had performed experiments on laboratory animals inwhich they were given large doses of drugs and then shocked with a Taser .They didn't die or suffer any other heart damage. He said the results proveconclusively that drugs combined with electricity from the Taser willnot cause death .

[Broward Medical Examined Dr . Joshua] Perper said he was not so sure .Though the role of the Taser had not been determined in Monday's incident,he said he thought that in general a Taser could kill someone if that personwere already suffering from heart disease . . . . [Emphasis added] .

244. Defendants knew, or recklessly disregarded, that Defendant Tuttle's statement tha t

the experiments conducted by TASER "prove conclusively that drugs combined with electricity

from the Taser will not cause death," was materially false and misleading, and lacked any reasonabl e

basis . As alleged above , the tests conducted by TASER involved dosing animals with Ketamine, a

close chemical relative of PCP, epinephrine, and isoproterenol . The tests did not, however, involve

dosing animals with cocaine . As reported in The New York Times, Dr. John Wikswo, a Vanderbil t

University biomedical engineer stated that cocaine substantially increases hea rt attack risk and,

because TASER devices are used on people who have used cocaine, that omission is a serious flaw.



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245 . An article, dated February 10, 2004 in the Star Tribune : Newspaper of the Twin

Cities, entitled, "Taser safety questioned after man's heart attack / The guns use a small enough jol t

to be considered safe, their manufacturer says," stated :

When officers see Taser guns at trade shows, company spokesman SteveTuttle says the first question they always ask is whether a weapon thattemporarily paralyzes a person with a 50,000 volt jolt of electricity can causea heart attack .

His short answer is no. But it's a safety issue that Taser International dealswith nearly every time somebody is hurt or killed after a Taser incidentinvolving law enforcement .

While few studies have been done on their safety, Tuttle said the U.S. AirForce's Human Effects Center of Excellence will be conducting anindependent study in April on the weapon and reviewing cases in whichpeople died when it was used on them . [Emphasis added . ]

246. Defendants knew, or recklessly disregarded, that Defendant Tuttle's characterizatio n

of the HECOE study as "independent" was materially false and misleading . As alleged above ,

TASER officials part icipated in three panels to determine the scope of the study, analyze data an d

review findings . TASER also provided the bulk of the research material used in the study . Indeed,

Larry Farlow, a spokesman for the Air Force Research Laboratory in Texas that oversaw the study

stated, "Were they (Taser) totally disconnected (from the study)? The answer is no . They were no t

disconnected. . . . ." In fact , asking that TASER tone down its comments about the HECOE study,

the Air Force urged the Company to commission an independent study rather than rely on th e

Defense study .

247. On March 4, 2004, TASER filed its annual report for fiscal 2003 with the SEC on a

Form 10-K signed by Defendants Rick Smith, Tom Smith, Dr . Smith, and Hanrahan. In that Form

10-K, TASER discussed the introduction of the X26 :



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In May, 2003 we introduced the TASER X26 weapon system to our masterinstructors, at our annual tactical conference . This product incorporated allof the strengths of its predecessor, the ADVANCED TASER, but alsointroduced to the market a new "shaped pulse" technology, and a newsmaller form factor. The product design was completed, comprehensivemedical safety testing was conducted , and the first weapons beganshipping in September of 2003 .

248. Defendants knew, or recklessly disregarded, that the statement concerning th e

"comprehensive medical testing" done p rior to the introduction of the X26 was materially false and

misleading . The medical tests conducted by the Company in 1996 and 1999 did not relate

specifically to the X26 and the shaped pulse technology . Moreover, as reported by the PSDB: "no

objective scientific studies have been carried out to determine the magnitude and distribution o f

electric currents from tasers in the body ;" "[t]he manufacturer's explanations of the physiologica l

mechanisms of incapacitation through use of the taser devices are speculative ;" "[t]he effect of taser

devices on pacemakers or other implanted electrical equipment is unclear;" and "[t]he effects of

tasers on the heart have not been thoroughly investigated . . . ." Commenting on the experiment s

conducted by Stratbucker and McDaniels in 1996 and 1999, the PSDB report stated that "[t]he

experimental work previously carried out on animals was poorly designed . "

249 . In the 2003 Form 10-K section entitled "Legal Proceedings," the Company reporte d

"[i]n November 2003, Samuel Powers served a complaint against the Company in Superior Court fo r

the State of Arizona alleging that he injured his shoulder during a TASER training session ."

250. Defendants knew, or recklessly disregarded, that the statement that Samuel Power s

alleged that he had sustained "a shoulder injury" was materially false and misleading . As alleged

above , in or about May 2003, TASER was provided with a videotape of the training session an d

notified that Powers claimed that he sustained a compression fracture of the T7 vertebra as a result

of the muscle contraction caused by an M26 shock during a training session . Defendants knew ,

however, that disclosure of the magnitude of Powers injury could adversely impact the Company' s



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standing in the law enforcement community, TASER' s biggest customer market .

251 . The Form 10-K further stated that :

2003 also marked significant success in the development of new products,and on the strengthening of our intellectual property rights . In May of 2003,we introduced our newest TASER weapon, the TASER X26 . This productwas met with significant customer approval, contributing more than$8.1 million of net sales, and another $2 .5 million of orders which will shipin the first quarter of 2004 .

252. Defendants knew, or recklessly disregarded, that the statement concerning customer

approval was materially false and misleading because Defendants failed to disclose that massive

quantities of defective X26 were being returned to the Company throughout the Class Period . As

alleged above, according to former TASER employees , the returns became so numerous that TASER

eventually built a special room just to store them. Indeed, although the Company subsequently

disclosed that it had experienced a software problem in the X26 during the first quarter of 2004 that

caused TASER to suspend production of the device, it failed to disclose this problem despite the fact

that 10-K was filed in the last month of the quarter. The high product malfunction rate, among other

things, caused many police departments to delay the purchase of the TASER devices upon the

introduction of competing products in the fourth quarter of 2004 . The extraordinarily high return

rate of the X26 caused the Company to increase its warranty reserves five-fold , from $60,000 i n

fiscal 2002 to $313,000 in 2003 . It was subsequently disclosed that $312,000 of the 2003 reserves

were expended as warranty costs in the fourth quarter 2003 alone .

253 . On March 12, 2004, an a rticle in the Denver Rocky Mountain News, entitled "Taser

Safety Questioned / ACLU Seeks Curbs in Response to Death of Man Having Seizures," stated :

The American Civil Liberties Union is challenging the Glendale PoliceDepartment's training procedures as a result of the death of a man who wasrepeatedly shocked with a Taser while suffering drug-induced seizures lastfall . . . .



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[ACLU Legal Director Mark] Silverstein, in a letter earlier this month askingDenver police to curb their use of Tasers, cited several reports that raisequestions about the weapons' safety .

"The training failed to inform officers of medical evidence indicating thatelectroshock weapons may be dangerous, or even lethal, to extremelyagitated or psychotic persons ; persons suffering from high levels of drugintoxication; and persons with heart disease," Silverstein wrote .

The ACLU's challenges come at a time when police agencies across thecountry are purchasing more and more Tasers in the hope of reducingsuspect and officer fatalities . Tasers fire needle- like probes up to 21 feet .The probes are connected to a wire that delivers a 26-watt charge, causing asuspect ' s muscles to lock up for five seconds .

The manufacturer says the weapon is safe .

"We stand by the safety of our product . It does not cause death ," TaserInternational co-founder and president Tom Smith said Thursday. "We'vedone medical testing and field testing to support this . In fact, 14.6 percent ofall of our documented uses involve suspects using dangerous narcotics ."[Emphasis added.]

254. Defendant Tom Smith knew, or recklessly disregarded, that he had no reasonabl e

basis for his statement that TASER devices do not cause death . As alleged above, The Arizona

Republic reported that a medical examiner in Indiana had determined that shock from a TASER

device was a contributory cause of death of an inmate in November 2003, prior to this statement .

Indeed, as early as the 1970s, the CPSC concluded that far less powerful stun guns could be lethal

depending on individual susceptibility . Likewise, according to The New York Times, a 1989

Canadian study found that stun guns induced heart attacks in pigs with pacemakers ; a 1999 study by


might cause cardiac arrest in people with heart conditions ; and the Food and Drug Administration

had found that other electrical devices with a charge half as powerful as the M26 can be dangerous

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255. On April 6, 2004, TASER issued a press release in response to a news report on the


CBS Evening News where it was reported that approximately 40 people had died after being stunned

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by TASER' s stun guns . Rick Smith stated :

TASER energy weapon was used to restrain them, in all of those caseswhere autopsy reports are available the medical examiners have not listedthe TASER as the cause of death in even one instance . None of the medicalexaminer 's reports attributed the cause of death to the TASER energyweapon . We are always saddened with loss of a loved one for the grievingfamilies, but all of the medical testing we have done and the tens ofthousands of uses of TASER conducted energy weapons by Police haveclearly established the medical safety of this product . [Emphasis added . ]

256. Defendant Rick Smith knew, or recklessly disregarded, that his statements that none

of the medical examiners' reports have attributed the cause of death to a TASER weapon, wer e

materially false and misleading . As alleged above, The Arizona Republic reported that a medical

examiner in Indiana had determined that shock from a TASER device was a contributory cause of

death of an inmate in November 2003 .

257. In an April 7, 2004 interview on CNBC/Dow Jones Business Video, Defendant Rick

Smith was questioned about the safety of the Company's devices :

[CNBC anchor MARIA] BARTIROMO : Do we know what the cause ofdeath was, if it wasn't this Taser gun that you say wasn't declared to be theproblem ?

[RICK] SMITH : Absolutely. We've posted all those cases on our website . You can go to Taser.com and look at them in detail . The majority ofthese cases, while they're unfortunate and tragic, are drug overdoses, wherepolice were called to the scene to deal with somebody who was acting verybizarrely, usually in a psychotic rage, involving an overdose of stimulantssuch as cocaine. And police would use the Taser to subdue these people, butthat's not going to stop the blood toxicology of an ongoing drug overdose .So this is something that our law enforcement customers are very aware of.It has been part of our training for years . And the biggest issue is, frankly,one of public perception, that people try to tie a cause relationship betweenthe two . But you know, Tasers are not dangerous . I've been hit withthem six times, we've had instructors hit with them hundreds of times .


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SMITH : We do animal studies to develop the waveforms, so that they'reoptimized so that it only effects your neuromuscular controls . So it does notaffect the heartbeat, and it doesn't affect other autonomic systems within thebody. And we've - in fact, we have developed systems now where when wedo our safety testing, we can increase the electrical charge, and we run thesetests directly across the heart, so we can increase the charge until we seehow far are we from the dangerous level? And what we've found is thatthe difference is 20 to one . You have to go to 20 times more energy. Justto put that in perspective, if you take 20 times the maximum dose of aspirin,it could kill you . [Emphasis added . ]

258. Defendant Rick Smith knew, or recklessly disregarded, that his statements concerning

the cases involving fatalities following application of a TASER device shock were materially fals e

and misleading because, according to the Arizona Republic, "[t]he company's report does not include

details suggesting a Taser could have played a role in someone's death . The report also omit s

published findings of a medical examiner who concluded that electrical shocks from a Taser

contributed directly to the death of a man in an Indiana jail . "

259. Likewise, Defendant Rick Smith knew, or recklessly disregarded, that his statement

that TASER devices are not dangerous was materially false and misleading. Numerous studies had

found, or at the very least, allowed for the possibility, that TASER device shocks could be fatal in

certain susceptible groups . Moreover, the PSDB study had concluded that based on the lack o f

substantial historical data of use and inadequate experimental evidence, "the high-power Tasers

cannot be classed, in the vernacular, as `safe' . "

260. Furthermore, Defendant Rick Smith knew, or recklessly disregarded, that hi s

statement that a shock 20 times more powerful than that delivered by TASER devices was necessar y

to jeopardize the heart were materially false and misleading . As alleged above, that analysis was24

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based on standards issued by UL in 1939 in connection with an electric fence. The UL expressl y

stated that the 1939 study had no application to the TASER devices because of the manner in which

the electrical charge is transmitted by the TASER versus an electric fence.


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261 . As a further response to the growing media attention on deaths of individuals afte r

being stunned by TASER' s stun guns, Rick Smith stated the following in an Ap ri l 28 , 2004 press

release :

We continue to be amazed by the premature, unfounded, speculation in themedia concerning the unexpected, unforeseen deaths of criminal suspectswhile in police custody after use of the TASER device. In every single casethe medical examiner has attributed the direct cause of death in theautopsy reports to causes other than the TASER device . In over a decadeof use, our products have not been listed as a direct cause of death by anindependent medical examiner or coroner. [Emphasis added . ]

262 . Defendant Rick Smith knew, or recklessly disregarded, that his statements that "In

every single case the medical examiner has attributed the direct cause of death in the autopsy report s

to causes other than the TASER device," was materially false and misleading . As alleged above,

The Arizona Republic reported that a medical examiner in Indiana had determined that shock from a

TASER device was a contributory cause of death of an inmate in November 2003 .

263 . In a May 4, 2004 first quarter conference call on the FD Wire, Defendant Rick Smith

stated as follows :

Taser' s are not dangerous but they are used in very dangeroussituations . In the vast degree of cases the deaths occurred were after theTaser use and electricity does not linger in the body . If electricity wereto cause a death, the effect would be immediate . It doesn't stop theheart half an hour later . . . .

And the third area is quality control . You will see as we move through this,we have had some challenges, we've had we took the X26 to market fromconcepts to market introduction in 12 months, which was a pretty Herculeaneffort, and we've had to ramp production faster than we ever thought wewould because the market responded so affirmatively to the X26 it blewright half to our M26 sales in its first quarter . And as you can imagine,ramping production has meant we have had production yield issues andwe have had some quality issues particularly as it relates to theholstering systems where you've got breakage in the field and we'll comeback to that . But even with these handicaps so to speak, we've still turned ina record quarter across the board .


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[Defendant Tom Smith] We do also know that during the trial there weresome quality issues that were raised regarding some weapon problemsand failures during the course of the year, rest assured we are workingvery closely with the United Kingdom and we've got a feedback andaddressing those concerns from a operation standpoint. But the overallresult of the rest is extremely positive .

[Defendant Kathy Hanrahan ] As you heard from Tom and Rick, oursingle most important objective in the next s ix months is implementprocesses to control our quality . During the last 90 days we identifiedand addressed the following customer concern . The first was the X26software . Second , was holster breakage issues that you heard Rickdiscuss, and cartridge tap breaks .

During the last, I am sorry, in February we found that our software in theX26 had created some data errors during firing. This was corrected withreprogramming and we've accrued 41,000 to allow for shippingprogrammable data [packs] out to our customers .

264. Defendant Rick Smith knew, or recklessly disregarded, that his statements that

TASER devices are not dangerous, and that electricity doesn't linger in the body so death from a

TASER device would be immediate, were materially false and misleading . As alleged above ,

numerous studies had failed to conclude that TASER devices were safe . Moreover, Smith' s

statement that death from a TASER shock would be immediate was belied by an a rt icle on the

effects of stun guns and tasers, published in the medical journal, the Lancet, in September 2001 .

That article addressed the risk of acidosis and ventricular dysrhythmias in people in states of severe

agitation or physical aggression, particularly when under the influence of drugs such as

phencyclidine (PCP) or cocaine . The article stated "[t]he taser itself may affect acid-base balance b y

briefly increasing skeletal muscle activity and decreasing respiration ." Reviewing an earlier study in

which three people (high on drugs) went into cardiac arrest between 5-25 minutes after being hi t

with stun guns, the authors stated "[b]y this time, taser-induced muscle contractions would no longer25

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be present, and one would expect the individuals to be relaxing and able to breathe in a way tha t

would compensate for a metabolic acidosis . Such may not be the case if the individuals remaine d



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agitated or were prevented from breathing freely . "

265 . Furthermore, Defendants Rick Smith, Tom Smith and Hanrahan knew, or recklessly

disregarded, that their statements that the quality control issues involving the X26 were primarily

related to "holster breakage issues" was materially false and misleading because they failed t o

disclose that the X26 was plagued with circuit board flaws and manufacturing errors that caused

widespread firing malfunctions . In addition , the PSDB, which re-evaluated the TASER devices ,

including the X26, found that 7 out of 11 X26s failed during trials . The problems encountered by

the PSDB included : a) 5 second countdown with no discharge ; b) squeaking sound and smell with no

discharge; c) a pulse repetition rate of 32Hz with no slow down after 2 seconds . The PSDB also

reported that subsequently four more X26s ceased operating. During general demonstrations one

ceased functioning in such a way that the X26 clicked inside but the spark did not cross the front o f

the unit. The PSDB also found that upon removing an X26 that had been stored and unused for 2- 3

weeks the device pulsed very slowly without arcing at the front of the weapon and stopped after 2

seconds . When the safety was re-engaged it then cycled through the warranty on the display scree n

as if the battery had just been inserted . During spark gap testing one unit discharged into its ow n

flashlight . This stopped the flashlight from working and the unit no longer sparked across its front .

Also during spark gap testing one unit would count down 5 seconds but would not discharge at all .

266. In addition, these Defendants failed to disclose that the Company had been deluge d

with defective products as a consequence of its lack of adequate quality controls . As disclosed in th e

Company's Form 10-Q for the quarter ended March 31, 2004, TASER's warranty costs on a

quarterly basis ballooned from $312,934, for the quarter ended December 31, 2003, to $580,080 for

the quarter ended March 31, 2004 .

267. On May 10, 2003, the Company filed its quarterly report for the quarter ended March


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31, 2003 with the SEC on a Form 10-Q signed by Defendants Rick Smith and Hanrahan . In that

Form 10-Q, TASER stated :

Although the Company continued to increase production of its new TASERX26 product during the first quarter of 2004, the product experienced adefect in its data recording feature which did not affect the operation of theproduct but nevertheless required a temporary suspension of shipments forapproximately three weeks during the quarter . The resolution of thissoftware problem required the reprogramming of more than 4,000 weaponsand 15,000 battery packs at the factory and preparation for field upgrades formore than 12,000 weapons that had already been shipped in previousperiods .

268. Defendants knew, or recklessly disregarded, that the foregoing statements concerning

defects in the X26 were materially false and misleading because Defendants failed to disclose that ,

in addition to a software problem that did not affect the operation of the X26, TASER was

experiencing myriad product defects that prevented the devices from operating, as alleged above ,

due to circuit board flaws and manufacturing errors that prevented the weapons from firing, caused

them to constantly cycle, or caused them to not discharge .

269. In the section of the Form 10-Q entitled "Legal Proceedings," the Company reporte d

I "[ijn November 2003, Samuel Powers served a complaint against the Company in Superior Court for

the State of Arizona alleging that he injured his shoulder during a TASER training session ."



above, in or about May 2003, TASER was provided with a videotape of the training session an d

notified that Powers claimed that he sustained a compression fracture of the T7 vertebra as a result



standing in the law enforcement community , TASER's biggest customer market .

271 . On May 15, 2004, a guest editorial by Taser spokesman and Defendant Steve Tuttl e



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in Florida Today, entitled "The lowdown on Tasers, Device used by police on unruly suspects can' t

kill," besides containing false and misleading statements, explicitly stated that numerou s

applications of the Taser are often required to subdue perpetrators :

I just read Florida Today's May 6 editorial concerning a suspect involved ina noise violation who was subdued with a Taser by Melbourne Police . Ourcompany, which makes the devices, does not get involved in internal issueson the use of force .

However, I believe the public should know more details concerning the

need to apply more than one application of the Taser to safely subdue

someone . . . .

Often, even subjects that are down on the ground require multiplecycles to stop dangerous behavior. The device is designed to putsomeone on the ground, but that doesn't mean that the subject has beensubdued or handcuffed . . . .

The comment that these devices cause death is wrong . In the 45fatalities following a Taser use, none had a medical examiner list thecause of death by our technology . . . .

Despite its high voltage, the Taser ' s electrical output is too low to affectthe heart . Moreover, as one world leading cardiac expert said recently, thechances of the Taser's electrical frequency causing damage to cardiac tissueis as likely as someone receiving a cell phone call on their AM radio . . . .

Further, let's please keep in mind that the Taser technology is nonlethal .[Emphasis added] .

272. Defendants knew, or recklessly disregarded, that Defendant Tuttle lacked an y

reasonable basis for his statement that "[t]he comment that these devices causes death is wrong ." As

alleged above, The Arizona Republic reported that a medical examiner in Indiana had determined

that shock from a TASER device was a contributory cause of death of an inmate in November 2003 .

Indeed , as early as the 1970s , a CPSC concluded that far less powerful stun guns could be letha l

depending on individual susceptibility. Likewise, according to The New York Times, a 1989

Canadian study found that stun guns induced heart attacks in pigs with pacemakers ; a 1999 study by




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might cause cardiac arrest in people with heart conditions ; and the Food and Drug Administration

had found that other electrical devices with a charge half as powerful as the M26 can be dangerou s

to the heart .

273 . Defendants also knew, or recklessly disregarded, that Defendant Tuttle's statement

that "the Taser's electrical output is too low to affect the heart," was materially false and misleadin g

because it was not only contrary to the findings of the 1999 Department of Justice study and th e

FDA study, but was improperly based, in part, on the standards relating to electric fence standard s

promulgated by UL in 1939 .

274. On May 29, 2003, the Company issued a press release announcing "two significant

orders for its next generation TASER X26." The two purchasers were the Pima County Sheriffs

Department in Tucson, AZ and Charlotte-Mecklenburg Police Department in North Carolina . The

press release continued on to state that the TASER X26 is "60% smaller and lighter than the curren t

ADVANCED TASER M26 . . . . The TASER X26 uses revolutionary Shaped Pulse technology to

achieve even greater stopping power than the vaunted ADVANCED TASER M26 with the sam e

margin of safety . . . . "

275. Defendants knew, or recklessly disregarded, that the statement the X26 achieved

greater stopping power than the M26 was materially false and misleading . As subsequently

disclosed, the X26 has an output of 5 Watts compared to the 26 Watt output of the M26 . TASER,

however, attributed the greater effectiveness of the X26 to its use of "Shaped Pulse" technology .

According to the lead researcher in the HECOE study, Dr . James Jauchem, the shaped pulse of th e

X26 had little effect on muscle stimulation . Moreover, Defendants knew that after the first two

seconds of the X26's five second firing cycle, the pulse rate of the weapon dropped from 19 per

second to 15 per second . As a consequence, some individuals were able to regain partial mobilit y


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during the last three seconds of the firing cycle . Defendants tacitly acknowledged the falsity of thi s

claim when TASER increased the X26 pulse rate to a constant 19 pulses per second in September

2004 due to police complaints that the device did not fully incapacitate subjects .

276. In response to Amnesty International's request for Georgia law enforcement official s

to suspend using TASER 's stun guns, Rick Smith stated in a press release dated June 2, 2004 that

"[i]ndependent medical, law enforcement and legal experts have studied TASER devices for over 3 0

years since its inception ." Rick Smith further stated, in part :

In each and every case, independent medical examiners have determined thecause of death to be due to a variety of factors, usually heart disease, chronictoxic drug use, and protracted over-exertion during struggle with lawenforcement officers .

277. Defendant Rick Smith knew, or recklessly disregarded, that his statement that in each

and every fatality following the use of a TASER device, medical examiners have determined th e

cause of death to be due to a variety of factors, was materially false and misleading because he failed

to disclose that one of those factors was shock from a TASER device . As alleged above, The16

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Arizona Republic reported that a medical examiner in Indiana had determined that shock from a

TASER device was a contributory cause of death of an inmate in November 2003 .

278. A June 9, 2004 article by Defendant Steve Tuttle in the Atlanta Journal an d

Constitution (GA), entitled "Equal Time" stated :

Recent deaths in Georgia of suspects in custody have created an enormousamount of speculation about the safety of the Taser technology. At firstblush, there is a tendency to equate the Taser energy weapon's conductivecurrent as a lethal byproduct in these sudden and unexpected deaths.However, the fact of the matter is that our Taser technology has notbeen the cause of a single death . Period.

In more than 30 years since the first Taser was introduced, there have beenexactly zero deaths clearly caused by the Taser . This statement is supportedby independent medical examiners. Moreover, pub lished data fromesteemed medical publications and hospitals establish the safety of ourtechnology . Our own research conducted at the University of Missour i



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has shown the electrical output will not interfere with cardiac tissueeven if the suspect is under the influence of extremely dangerous

narcotics .

There has never been a single case where the Taser was named as theprimary cause of death by any of these independent medical examiners .

279. Defendants knew, or recklessly disregarded, that Defendant Tuttle lacked any

reasonable basis for his statement that "[t]he fact of the matter is that our Taser technology has not

been the cause of a single death. Period." As alleged above, The Arizona Republic reported that a

medical examiner in Indiana had determined that shock from a TASER device was a contributory

cause of death of an inmate in November 2003 . Indeed, as early as the 1970s, a CPSC conclude d

that far less powerful stun guns could be lethal depending on individual susceptibility . Likewise,

according to The New York Times, a 1989 Canadian study found that stun guns induced heart attack s

in pigs with pacemakers ; a 1999 study by the Department of Justice on a stun gun model les s

powerful than the M26 and X26 found that it might cause cardiac arrest in people with heart

conditions ; and the Food and Drug Administration had found that other electrical devices with a

charge half as powerful as the M26 can be dangerous to the heart .

280. Likewise, Defendants knew, or recklessly disregarded, that Defendant Tuttle' s

statements that published data establish the safety of TASER's technology and that the Company' s

research shows that the electrical output will not interfere with cardiac tissue even if the suspect i s

under the influence of extremely dangerous narcotics, was materially false and misleading . As

alleged above, far from "establishing" the safety of TASER's technology, numerous studies found

that the TASER could be lethal to certain susceptible populations and could pose a danger to the

heart. Further, the Company's animal studies involved dosing animals with a chemical relative o f

PCP, but did not involve administration of narcotics, such as cocaine, that were commonly

understood to pose a risk of inducing arrhythmia .



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281 . An article dated June 29, 2004, in Atlanta Journal and Constitution (GA), entitled

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"Deaths Spur Taser Debate Police Embrace Stun Guns, But a Series of Fatalities Brings Calls for

Halt to Their Use" stated as follows :

The maximum-security inmate fought through six shots of pepper spray andsprinted toward Gwinnett sheriff's Capt . Carl Sims. Sims pulled hisweapon, an electroshock gun called a Taser.

One shot, and the prisoner fell, immobilized . . . .

On June 4, about 100 people rallied at the Gwinnett County Justice andAdministration Center to protest the death of an inmate after he was shockedwith a Taser. A legal director of the American Civil Liberties Union saysTasers have been involved in too many deaths and calls for more research iflaw enforcement officers intend to keep using them . . . .

The gun's manufacturer says that, based on autopsy results, none of thedeaths has been directly caused by a Taser . . . .

"Tasers aren 't dangerous ," said Taser International spokesman SteveTuttle. "They are just used in dangerous situations ." [ . . . ]

But those who question Taser use say that not enough independent researchhas been done on humans to prove that the weapons provide the less thanlethal alternative to firearms that boosters say they do . And, althoughseveral doctors who have conducted research on Tasers say the 50,000 voltsthe gun packs shouldn't cause life-threatening injuries, they stop short ofsaying the weapons aren't strong enough to cause death . . . .

People respond differently to electric current, said Sakis Meliopoulos, aprofessor of electrical and computer engineering at Georgia Tech.Meliopoulos, who has testified as an expert witness in electrocution casesaround the country, specializes in the safety of electrical systems .

"Some people can withstand the severe pain, some people may faint, or thepain could cause additional problems," Meliopoulos said . "In a person withpre-existing conditions, who knows how the body is going to respond?" [ . . . ]

Tuttle points to a study done on pigs, financed by Taser International, thatfound that the device had no fatal impact on the heart .

Noting that the study was done on animals, Amnesty International and theACLU argue that more research is needed to determine how the guns affecthumans . [Emphasis added] .

282 . Defendants knew, or recklessly disregarded, that Defendant Tuttle's statement tha t


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Taser's aren't dangerous was materially false and misleading . As alleged above, The Arizona

Republic repo rted that a medical examiner in Indiana had determined that shock from a TASER

device was a contributory cause of death of an inmate in November 2003 . Indeed, as early as the

1970s, a CPSC concluded that far less powerful stun guns could be lethal depending on individual

susceptibility . Likewise, according to The New York Times, a 1989 Canadian study found that stun

guns induced heart attacks in pigs with pacemakers ; a 1999 study by the Department of Justice on a

stun gun model less powerful than the M26 and X26 found that it might cause cardiac arrest in

people with heart conditions ; and the Food and Drug Administration had found that other electrica l

devices with a charge half as powerful as the M26 can be dangerous to the heart . Moreover, the

PSDB study had concluded that based on the lack of substantial historical data of use and inadequate

experimental evidence, "the high-power Tasers cannot be classed, in the vernacular, as `safe' . "

283. On July 2, 2004, after a civil lawsuit was dismissed , Doug Klint, Vice President an d

General Counsel of TASER, stated in part :

TASER devices have been safely deployed for 30 years and their medicalsafety has been clearly established through scientific and medical testing,approximately 100,000 voluntary uses with no serious injury, andapproximately 40,000 field uses where no death was proximately causedby a TASER device.

284. Defendants knew, or recklessly disregarded, that Klint's statements that "no deat h

was proximately caused by a TASER device," was materially false and misleading . As alleged

above, The Arizona Republic reported that a medical examiner in Indiana had determined that shock

from a TASER device was a contributory cause of death of an inmate in November 2003 .

285 . On July 20, 2004, the Company filed an amended quarterly report for the perio d

ending March 31, 2004 with the SEC on a Form 10-QSB/A signed by Defendants Rick Smith an d

Behrendt .

286. Defendants knew, or recklessly disregarded, that the amended quarterly report wa s


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materially false and misleading for the same reasons cited in ¶¶ 268 through 270, above .

287 . In a July 23, 2004 interview on Money Gang, defendant Phillips Smith stated follows :

[Ali Velshi, CNNFN anchor] The allegation is people have died from beingstruck by a Taser and that some people don't use it .

[Phillips Smith] Well, quick answer is, no one's died from the Taser .They've tried to get the medical evidence . It's not out there. Thescientific data says it does not kill people .

288 . Defendant Dr. Smith knew, or recklessly disregarded, that his statements that no

one's died from the Taser and that scientific data says it does not kill people were materially fals e

and misleading . As alleged above , a medical examiner in Indiana determined that shock from a

TASER device was a contributory cause in the death of an inmate in November 2003 . In addition,

numerous studies indicated that electric shock from devices far less powerful than the TASER

devices may cause death, particularly in certain susceptible populations .

289. On August 16, 2004, the Company filed its quarterly report for the period ending June

30, 2004 with the SEC on a Form 10-QSB signed by Defendants Rick Smith and Behrendt . In that

Form 10-QSB , TASER stated :

[D]uring the quarter, the media have reported a number of cases wheresuspects have died in police custody in incidents involving the use of aTASER device . The Company believes that its products are safe for thei rintended use. We have completed animal tests under university-approved protocols which indicate a significant margin of productsafety. In addition, there have been approximately 100,000 uses ofTASER products on human volunteers and approximately 50,000 fielduses with an extremely low incidence of physical injury .

In two reported cases, a coroner 's inquest or a medical examiner haslisted electric shock as a contributing factor in the deaths . In these cases,toxic drug use or chronic medical problems were cited as primarycauses of death . The contribution of the TASER device to these deaths isbeing disputed by the Company and other experts . Based upon ouranalysis and expert advice, we believe these cases are similar to othersudden unexpected deaths in police custody where TASER devices arenot used.



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We do not believe there is a causal link between the use of TASER deviceand a death of a suspect other than the general stress of the physical exertionduring TASER stimulation, which is similar to athletic type exertions and iscomparable to or less than the stress of other available physical restraintprocedures . Sudden unexpected deaths in police custody are unfortunate, butwe believe the incidents to date do not indicate that a suspect on whom aTASER device has been used is any more likely to suddenly die in policecustody than a suspect on whom a TASER device has not been used .[Emphasis added. ]

290. Defendants knew, or recklessly disregarded, that the statements concerning the base s

I of the beliefs that the Company's products are safe and that the TASER devices were no t

I contributing factors in two deaths were materially false and misleading because Defendants failed to

disclose that studies, other than those cited by the Company, have indicated that TASER devices

may be lethal, particularly for certain susceptible populations . Further, Defendants failed to disclos e

that various scientists and experts had opined that other deaths had also been causally linked to the

use of TASER' s devices .

291 . In the section of the Form 10-QSB entitled "Legal Proceedings," the Compan y

I reported "[i]n November 2003, Samuel Powers served a complaint against the Company in Superior

Court for the State of Arizona alleging that he injured his shoulder during a TASER training

session ."




notified that Powers claimed that he sustained a compression fracture of the T7 vertebra as a resul t



standing in the law enforcement community , TASER's biggest customer market .

293. An article dated September 5, 2004 in Asheville-Citizen Times entitled "Stun Guns :


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Changing the Way Law Officers Handle Resisting Suspects " stated as follows :

Local law enforcement officers described the sensation as out of body,unbelievable, knee-buckling and extremely uncomfortable . No, the haven'tbeen shot . They've been "Tasered ." [ . . . ]

"The Taser has been cleared in every case," said Taser InternationalGovernment Affairs Manager Mark Johnson .

But investigations by the New York Times reveal that the company's onlytesting on the technology was done on a single pig in 1996 and five dogs in1999 . Company-paid researchers, instead of independent scientists ,conducted the studies.

"(The Taser) is a very effective tool," Asheville Police Chief Bill Hogansaid. "But if there needs to be more testing, the someone should stepforward nationally to satisfy concerns ." [ . . . ]

"There have been medical experts looking at Tasers for years now," saidJohnson, who deals with Taser International's medical safety issues ."They do not cause deaths ."

Johnson also said that reports indicate that Tasers do not have negativeeffects on people with pacemakers or other heart complications .

But independent medical examiners used by the Arizona Republic found thatTasers were linked to at least five deaths . . . .

Human rights Group Amnesty International is calling on all law enforcementagencies to stop using Tasers until more independent research is done .

"Law enforcement agencies are playing a deadly game of wait-and-see,"Amnesty International medical director Edward Jackson said. "Despitequestions, law enforcement agencies are continuing to use them." [Emphasisadded] .

294 . Defendants knew, or recklessly disregarded, that Johnson's statements that "[t]her e

have been medical experts looking at Tasers for years now" and "[t]hey do not cause deaths" wer e

materially false and misleading. As alleged above, in addition to the findings of the medica l

examiners that found TASER devices were a contributory factor in two deaths , as noted in the

August 2004 Form 10-QSB, The Arizona Republic reported that based on its "review of autopsies

and interviews with medical examiners [it] found Tasers have been linked to at least five deaths . "


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Specifically, the article reported that "[m]edical examiners in three cases involving suspects wh o

died in police custody cited Tasers as a cause or a contributing factor in the deaths . In two other

cases, Tasers could not be ruled out as a cause of death . "

295. An article dated October 14, 2004 in AP Alert - Business entitled "HL: Medical

experts who question Taser research wary of labeling devices safe" stated as follows :

Several medical and engineering experts warn that too little is known aboutwhat happens when people who are high on drugs or have heart problemsare hit with Taser stun guns . . . .

"I do not think that enough work has yet been done to be able to sayunequivocally the Taser never causes harm," said Dr . Raymond Ideker, whoconducts research in cardiac electrophysiology at the University of Alabamaat Birmingham . . . .

"I guess what is increasingly becoming of concern with respect to Taser is,how less-than-lethal are they?" said Alex Neve, secretary general forAmnesty International Canada. "As the number of deaths mount, thatquestion has really come into sharp focus ." [ . . . ]

Arizona-based Taser International rejects assertions there isn't enoughresearch to proclaim the Taser safe .

"I think that ' s rubbish ," said company spokesman Steve Tuttle ."Because the studies indicate that the technology is safe." [Emphasisadded] .

296 . Defendants knew, or recklessly disregarded, that Defendant Tuttle's statement tha t

"studies indicate that the technology is safe," was materially false and misleading . Indeed, as early a s

the 1970s, a CPSC concluded that far less powerful stun guns could be lethal depending on

individual susceptibility . Likewise, according to The New York Times, a 1989 Canadian study foun d

that stun guns induced heart attacks in pigs with pacemakers; a 1999 study by the Department o f

Justice on a stun gun model less powerful than the M26 and X26 found that it might cause cardia c

arrest in people with heart conditions ; and the Food and Drug Administration had found that other

electrical devices with a charge half as powerful as the M26 can be dangerous to the heart .



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Moreover, the PSDB study had concluded that based on the lack of substantial historical data of us e

and inadequate experimental evidence, "the high-power Tasers cannot be classed, in the vernacular ,

as `safe' ."

297. An article dated October 15, 2004, in The Canadian Press, entitled "Taser stun guns

the target of growing concern as use spreads" stated as follows :

Canada's public safety minister has joined human-rights group and somepolice officers urging a closer look at Taser stun guns . [ . . . ]

Amnesty International says the contentious devices should be suspendedpending more independent research .

As many as 60 people have died in the United States after being zapped, butTaser International stresses that not a single death has been directly orprimarily blamed on its product .

"Our studies currently show the technology is safe," said Steve Tuttle, aspokesman for the Arizona-based company . [Emphasis added] .


"our studies show the technology is safe," was materially false and misleading because Defendan t

Tuttle failed to disclose that other studies, such as those referenced in ¶ 296, above, had raised

significant questions about the safety of the Company's products .

299. An article dated October 17, 2004, in Star Tribune, entitled "Stun guns pack uncertain

risk / Available to police and public alike, they don't always live up to nonlethal billing" stated a s

follows:

The Star Tribune has documented news reports of 105 cases nationwidesince 1983 in which a person died after being shocked by police with anelectric stun weapon . Three people have died in Minnesota in the past 14months .

News accounts of 14 of the deaths nationwide cite coroners, medicalexaminers or forensic pathologists as saying the Taser may have been acontributing factor . . . .


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A spokesman for Taser International Inc., of Scottsdale, Arizona, saidthe weapons don't kill .

"We know that Tasers are used every day, and we will be involved in tragicincidents involving in-custody deaths that are very similar to in-custodydeaths that have occurred when Tasers have not been used," said Taserspokesman Steve Tuttle. "We have never been listed as a direct or primarycause of death in our company's existence ." [ . . . ]

"Our brother went right into cardiac arrest after being Tasered," saidSiegler's sister, Kelly Dietrich of Inver Grove Heights . "Do I think a Taseris safer than a gun? Yes. Do I think a Taser is perfectly safe? No . Myconcern is that Taser International is portraying this as a perfectly safeweapon." [ . . .] [Emphasis added] .


"the weapons don't kill," was materially false and misleading . While the devices had not, to that

point, been found to be the primary cause of any death , two medical examiners found that TASER

devices were a contributory factor in two deaths, as noted in the August 2004 Form 10-QSB . In

addition, The Arizona Republic reported that based on its "review of autopsies and interviews with

medical examiners [it] found Tasers have been linked to at least five deaths ." Specifically, th e

article reported that "[m]edical examiners in three cases involving suspects who died in polic e

custody cited Tasers as a cause or a contributing factor in the deaths . In two other cases, Tasers

could not be ruled out as a cause of death ."

301 . In October 2004, the United States Department of Defense released the Repor t

Summary of the HECOE Report . The HECOE Report was heavily touted by the Company . A press

release issued on October 18, 2004, stated :

a Department of Defense (DoD) study by the Human Effects Center ofExcellence (HECOE) concludes that TASER technology is generallyeffective without significant risk of unintended results .

"The HECOE study is the latest chapter in a series of comprehensivemedical and scientific studies which conclude that TASER technology i s



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safe and effective" said Rick Smith, CEO of TASER International, Inc ."This study re-affirms the life-saving value of TASER technology and isconsistent with the recent independent findings of researchers in the UnitedKingdom and Canada," stated Mr . Smith . [Emphasis added .]

302. Defendants knew, or recklessly disregarded, that the statements concerning th e

HECOE Repo rt findings were materially false and misleading. It was subsequently disclosed by The

New York Times, "the Air Force laboratory that conducted the study now says that it actually found

that the guns could be dangerous and that more data was needed to evaluate their risks ." In addition

the Times reported that after a symposium on less -deadly weapons in Winston-Salem , N.C., the Air

Force laboratory that conducted the study said that it had not found Tasers were safe . The guns "ma y

cause several unintended effects, albeit with estimated low probabilities of occurrence," the

laboratory said . "Available laboratory data are [sic] too limited to adequately quantify possible risk s

of ventricular fibrillation or seizures, particularly in susceptible populations." Further, it was

disclosed that Dr. James Jauchem, the primary Air Force researcher in the HECOE study, presented

data at that symposium that showed that repeated TASER device shocks caused pigs to become

acidotic - a dangerous condition in which the ph of the blood drops . Because a 1999 study by th e

Justice Department suggested that "deaths following Tasers' use may be due to acidosis," Dr .

Jauchem stated that people subjected to repeated shocks should receive medical monitoring .

303 . Indeed, The Arizona Republic reported that "[e]-mails that military official s

exchanged also reveal for the first time that they asked Taser to tone down public statements about

the [HECOE] study . In addition , they urged the company to commission an independent study

rather than rely on the Defense study."

304. On October 19, 2004, TASER issued a press release in which the Company upwardly

revised revenue projections for fiscal 2004:

"The third quarter is historically our slowest quarter of the year and we arepleased to be able to report such solid results . With the continued strong ne w


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business picture for the company through three consecutive quarters, wenow believe we can increase guidance on revenue growth from 150% toan increase of 175% over the prior year," stated Rick Smith, CEO ofTASER International, Inc .

305 . Defendants knew, or recklessly disregarded, that Defendant Smith's statemen t

I concerning the increase in revenue guidance lacked any reasonable basis . As stated above, both

CW3 and CW4 stated that the Company had experienced a dramatic slowdown during the thir d

quarter of 2004 . Indeed , CW4, who started to work for TASER in September 2004 stated that in

his/her second week on the job, production slowed so much that he/she was taken off the assembl y

line and assigned to side tasks , such as t rimming plastic molds . CW4 stated that "[t]hey took me off

of [the assembly line], because they said they was back-piled on it . I was then doing silly stuff;

anything to keep us busy for eight hours . It wasn 't no [sic] productive work." CW4 stated that thi s

continued through November : "[t]hey weren't getting much of anything out ." CW4 said that man y

of the temporary workers who had been expecting to move into permanent positions were not hire d

"and they just let them go . "

306 . Various TASER Defendants and spokesmen made comments in a third quarter

conference call on October 19, 2004 on FD Wire :

[Tom Smith] We have stated that the TASER in the medical testing that wehave done and in the analysis that has been done by medical experts and inlooking at the facts have shown the TASER technology to be safe .

And finally, the granddaddy of them all, in fact, Rick will talk about this inPrague there over there making presentations, the HECOE, the HumanCenter of Excellence from the Department of Defense is actually makingpresentations in Prague to the NATO countries about all the fine work theydid. This is a huge study, and their conclusions are - "analyses provided bylaw-enforcement agencies indicate that increased use of the TASER M26 ofthe X26 has decreased the overall injury rate of both police officers andsuspects in complex situations when compared to alternatives along the useof forced specter (ph) .



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[Taser General Counsel Doug Klint] "We are also involved in litigation from3 unexpected and unforeseeable deaths while in police custody . The TASERdevice was not the approximate [sic] cause of death in any of these cases . Itwas listed as a contributing factor in one case which is being contested bymedical experts and by the way was covered extensively by CBS News . Wenow have the independent HECOE study connected by the U.S.Government which concluded that the TASER device is likely not theprimary causative factor and reportedly (indiscernible). This report willplay a very important role in this litigation and will provide additionalevidence to support our motions for a summary judgment . These claims arealso covered by insurance . . . .

[Richard Smith] "And finally, independent safety tests. Certainly this isa great example of what doesn't kill you makes you stronger . In thepast six to nine months we've seen all of these allegations regarded [sic]to product safety and requests for independent tests . While withTASER we now have independent tests from the U .S. Department ofDefense, UK, Canada, Australia and other countries . And each one ofthese tests are multi hundred thousand dollars expended if not more, in somecases in the millions of dollars . Now that we have those independent tests,anybody else looking to get into the space is either going to A, violate ourpatents on our waveforms because that is specifically what has been tested orthey would have to come up with something new . Now we are veryskeptical that anyone can come up with a way to incapacitate a humansubject through an electro muscular disruption without violating one of ourpatents . We don't think that can be done . Let's assume they can . Now youhave got a new waveform that has to go forth and be tested independently byall these other agencies . And again, the impetus for them to do so, there is alot of time, cost and efforts - I remind you we've been at this for almost fouryears in the United Kingdom . [Emphasis added] .

307 . Defendants knew, or recklessly disregarded, that the statements of Defendant Rick

Smith and Doug Klint that the HECOE study was independent were mate rially false and misleading .

As alleged above , TASER officials part icipated in three panels to determine the scope of the study ,

analyze data and review findings . TASER also provided the bulk of the research material used in th e

study. Indeed, Larry Farlow, a spokesman for the Air Force Research Laboratory in Texas tha t

oversaw the study stated, "Were they (Taser) totally disconnected (from the study)? The answer i s

no. They were not disconnected . . . . . "

308 . On November 15, 2004, the Company filed its quarterly report for the period endin g


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September 30, 2004 with the SEC on a Form 10-QSB signed by Defendants Rick Smith an d

Behrendt. In the 2003 Form 10-K section entitled "Legal Proceedings," the Company reported "[i] n

November 2003, Samuel Powers served a complaint against the Company in Superior Court for the

State of Arizona alleging that he injured his shoulder during a TASER training session . "




notified that Powers claimed that he sustained a compression fracture of the T7 vertebra as a resul t

of the muscle contraction caused by an M26 shock during a training session . Defendants knew,


standing in the law enforcement community , TASER' s biggest customer market .

310. An art icle dated December 4, 2004 in PR Newswire entitled "Taser(R) International

Clarifies Issues Raised by Miami Herald Regarding Taser Safety" stated as follows :

"Our confidence in Taser technology is based on a body of overwhelmingevidence that Tasers are generally safe and effective - - not on any oneguideline or standard," said Steve Tuttle, Vice President of Communicationsat Taser International .

311 . Defendants knew, or recklessly disregarded, that Defendant Tuttle's statement wa s

materially false and misleading because there was no overwhelming body of evidence that TASER

devices were safe . In fact, while the number of deaths following application of the TASER device s

continued to mount, it was disclosed that the heavily touted HECOE study was not intended to be a

comprehensive review of the devices' safety. The Arizona Republic reported on May 21, 2005 tha t24

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the Air Force conducted the study for the Defense Department to "assess the risks and effectivenes s

of Tasers so the military could decide whether to buy them ." It further reported that Air Force

researchers said the study was "not meant to be a comprehensive review of stun-gun science or



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safety, and they made no findings on the device's safety . "

SCIENTER

312 . Each of the Individual Defendants, by virtue of their receipt of information reflecting

the improper and fraudulent behavior described above and/or their failure to review information they

had a duty to monitor, their control over TASER's materially false and misleading statements, an d

their association with the Company which made them privy to confidential proprietary informatio n

concerning the Company, were active, culpable, and primary participants in the fraudulent schem e

alleged herein . The Individual Defendants knew or recklessly disregarded the materially false an d

misleading nature of the information they caused to be disseminated to the investing public .

313 . The Individual Defendants also knew or recklessly disregarded that the misleading

statements and omissions contained in publicly disseminated statements would adversely affect th e

integrity of the market for the Company's common stock and would cause the price of th e

Company's common stock to be artificially inflated . The Individual Defendants acted knowingly or

in such reckless manner as to constitute a fraud and deceit upon Plaintiff and other members of th e

Class .

314. In addition to the foregoing and other acts alleged herein, the following facts provide

compelling evidence that the Individual Defendants acted with actual knowledge, or, at the very leas t

with recklessness and had both motive and opportunity to commit fraud .

Knowledge or Reckless Disregard by the Individual Defendant s

315 . A key element of the Individual Defendants' securities fraud is their false an d

misleading disclosures regarding the safety of TASER's devices . This was the subject of heated

debate throughout and following the Class Period . Because TASER's revenues are derived

exclusively from the sale of its stun gun devices and associated products, such as cartridge refills, th e

safety of its products was central to the business prospects of the Company .



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316. For that reason alone, as described below, the Individual Defendants must hav e

known or were reckless in not knowing everything about the studies conducted in connection wit h

stun gun safety. Consequently, the Individual Defendants knew or were reckless in not knowing that

their disclosures regarding the studies conce rning the safety of stun guns generally, and TASER' s

devices in particular, were false and misleading.

317. When the significance of the studies to the Company's core business is coupled wit h

the following additional facts, the strong inference that the Individual Defendants acted with scienter

is inescapable :

(a) The Individual Defendants, Company insiders and members of the Board soldapproximately $51 million in TASER stock during a then-undisclosed suspension ofshipments resulting from a software defect ;

(b) according to the deposition testimony of Defendant Tom Smith in the Powers Action,Rick Smith had reviewed available scientific materials as far back as 1999 ;

(c) the Individual Defendants had a specific duty to review available scientific data andstudies before representing that the scientific evidence established that the TASERdevices did not cause death ;

(d) Defendants knew that the certain of the studies that they claimed were independentwere, in fact, linked to TASER ;

(d) the Individual Defendants had a specific duty to monitor and review all availableautopsy reports, and not rely on anecdotal information from the police and media,before representing that no medical examiner had ever found that TASER's devicescaused or were the proximate cause of any death ;

(e) the Individual Defendants were on notice of the design flaws in the circuit boardsused in the Company's devices, as well as the lack of adequate quality controls in themanufacturing process ;

(f) the Individual Defendants were aware of the massive number of returns during theClass Period due to device malfunctions ;

(g) the Individual Defendants were aware of the imminent publication of the highlycritical Amnesty International Report several weeks before it was released ;

(h) orders for TASER devices were declining in the third and fourth quarter due to thesafety controversy , product quality issues, and the announcements conce rning theintroduction of two competing products ; and



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(i) the Individual Defendants and other Company insiders, some of whom engaged inlarge insider sales during an undisclosed first quarter 2004 product recall, sold morethan $81 million worth of stock in a two-week period shortly before the release of theAmnesty International Report .

The Studies and Reports

318. In a deposition taken in the Powers Action, Defendant Tom Smith testified that Rick

Smith had reviewed available scientific research concerning the health effects of electric shocks a s

far back as 1999. Moreover, Defendant Rick Smith testified in his deposition in the Powers Actio n

that part of his review was the 1987 Ordog study . That study found, among other things, that there

was a danger of respiratory failure from the continuous application of a stun gun that had

significantly less power than the M26. That study also involved the review of three fatalities

following application of a stun gun. While Dr. Ordog concluded that that the stun guns could not be

held "solely" responsible for the deaths, he did not conclude that the shocks from those weapon s

played no role in the fatalities .

319. Defendant Rick Smith knew that the assertions that scientific studies had establishe d

that the TASER devices were "safe" were false because, as he acknowledged in his deposition

testimony in the Powers Action, no peer reviewed studies showed that the M26 was "safe an d

incapable of causing significant injury . . . ." In addition, many, if not all, of the studies concerning

the health effects of stun guns were available in the public domain . Defendants, who repeatedly

represented that the "scientific evidence ," "studies," and/or "research " established that TASER

devices were safe or would not cause death, failed to reference the studies that were adverse, or eve n

equivocal in their findings . For example, the PSDB Report expressly stated that TASER could no t

be characterized in the vernacular as "safe . "

320. Moreover, Defendants knew that they had overstated the findings of the specific

studies they did reference . For example, Defendants actually participated in the HECOE study ,



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participating in three panels to determine the scope of the study, analyze data and review findings ,

and by providing the bulk of the research material used in the study. In fact, Defendant Steve Tuttle ,

TASER' s spokesman, testified in a deposition in the Powers Action , that researchers in that stud y

"left no stone unturned . They wanted everything we had." Despite the Company's role ,

Defendants' mischaracterized the findings of the study, with Defendant Rick Smith stating "[t]h e

HECOE study is the latest chapter in a series of comprehensive medical and scientific studies which

conclude that TASER technology is safe and effective ."

321 . It was subsequently reported, however, that "[e]-mails that military official s

exchanged also reveal for the first time that they asked Taser to tone down public statements abou t

the [HECOE] study. Indeed, far from concluding that "TASER technology is safe and effective,"

the HECOE study was inconclusive :

Several key data gaps were identified in data evaluation . These gaps includethe biological basis for TASER effects, appropriate dosimetry [the accuratemeasurement of dosage], and the impact of environmental and scenariodependent variables on the induction of effects . Available experimental-only data are too limited to adequately quantify possible risks of VF orseizures , particularly in susceptible populations . Limitations in theexposure and incidence data for some infrequent events and the need to relyon database of case reports compiled by TASER International also generateuncertainty in the results .

322. Furthermore, because TASER participated in that study, Defendants knew that the

HECOE study was not independent . Indeed , the Air Force specifically urged the Company t o

commission an independent study rather than rely on the HECOE study .

323 . Defendants also knew, or were reckless in disregarding, that they had no reasonabl e

basis for their statements that no medical examiner had found TASER devices to be a cause of death,

or a proximate cause of death because Defendants did not actually begin collecting autopsy report s

for review until April 2004 .

324. Defendants' knowledge that the scientific research had not established the safety o f



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the Company's devices is further evidenced by their attempts to influence ostensibly independen t

studies. As alleged above, the University of Wisconsin had solicited a grant from the Department o f

Justice to conduct a comprehensive, independent study of the safety of TASER devices . However, i t

was disclosed that Dr . Stratbucker - TASER's Medical Director , who had already concluded that

TASER devices were safe - had applied as an advisor in the study. Dr. Stratbucker, however, failed

to disclose his affiliation with TASER in any of the paperwork submitted to the Department o f

Justice during the Class Period . Upon the public disclosure of the foregoing, he was removed fro m

participation in the study.

325 . Based on deposition testimony in the Powers Action, Defendant Tuttle was aware of

the findings of the various studies cited by Defendants throughout the Class Period. Further, during

the Class Period, Defendant Tuttle had conversations with Defendant Rick Smith concerning the

safety studies . In addition, he acted as one of TASER' s liaisons with the Department of Defense i n

the HECOE Study. Thus, Tuttle had actual knowledge that TASER participated in the HECOE

Study and, therefore, that the HECOE Study was not independent . Tuttle also had actual knowledge

of Defendants' material overstatements concerning that study by virtue of his interaction with the

Department of Defense, among other things .

Design and Product Defects

326. With respect to the design flaws, CW 1 stated that the Company was informed b y

representatives of First Electronics (the manufacturer of the circuit boards used in TASER devices )

that product malfunctions were being caused by the design flaws, and not manufacturing defects, in

the circuit boards . Indeed, CW1 stated that he/she unsuccessfully urged both Defendants Rick Smit h

and Tom Smith to recruit electrical engineers to review the circuit board design due to the massive

number of malfunctioning devices .

327. Furthermore, CW1, CW2, CW3, CW4, CW5, and CW6 all stated that the qualit y


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control problems at TASER were widespread , and CW7, a former TASER distributor, stated that th e

quality problems with TASER devices were notorious . There were days when more was returned

than was shipped out, according to CW2 . In fact, the product returns became so bad that the

Company had to build additional space merely to accommodate them.

328. TASER held daily production meetings during which the quality control , design flaw

and product defect issues were repeatedly discussed . According to CWl, CW2, and CW3 ,

Defendants Rick Smith and Hanrahan regularly attended these meetings . In addition, Defendant

Tom Smith attended these meetings, albeit less frequently . CW 1 stated that during these meetings

the defect rates, which were as high as 70%, were discussed . CW 1 further stated that at one meetin g

in September 2003, both Rick and Tom Smith were warned that "if you keep shipping out a lot o f

crap, it's going to come back ."

329. Moreover, CW2 stated that occasionally, Defendants Rick and Tom Smith woul d

walk the production floor with Jay Pearl, the Production Manager, and CW2 overheard Pearl

describe the various defects in the X26 and tell them that defective units were being sent to

customers . CW2 stated "I know [Jay Pearl] had conversations with Rick Smith and his brother

[Tom Smith], and there wasn 't really too awfully much of anything done." In one or two instances

- sometime between January and April 2004 - CW2 observed the Defendants Rick and Tom Smith

"walking up and down the isles behind Jay, and he would be telling them, `We don't know what' s

wrong with them (the X26s ); we're just building them and sending them out."'

330. CW2 also stated that he/she personally spoke with Defendant Rick Smith abou t

product defects relating to solder joint and the circuit boards . According to CW2, Rick Smith's

response was "just get them out ." CW2 stated "[a]s long as they sparked, we would ship them out . "

331 . CW 1 also stated that sales staff at TASER discussed complaints that the Compan y



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had received from va rious police departments regarding the ineffectiveness of the X26. According

to CWI, the police did not like the X26 because did not always incapacitate suspects . Comparing

the X26 to the M26, CW1 stated "[p]olice didn't like going to the new X26 because with the M26, i f

a guy would drop, he would stay down . The M26 was like getting hit with a hammer . "

THE INSIDER SALE S

332. Defendants were motivated to engage in the above-described fraudulent conduct in

order to artificially inflate and/or maintain the artificially inflated price of the Company's commo n

stock . That the Individual Defendants , Company insiders, and members of TASER' s Board twice

made unusual and suspiciously-timed sales prior to the public disclosure of adverse events is highl y

probative and evidence of the Individual Defendants' scienter .

333. During the first quarter of 2004, the Company discovered a software defect effecting

approximately 31,000 units of the new X26 . This defect forced TASER to delay shipment of th e

product for almost a month and to issue the necessary software repairs to over 12,000 weapons that

were already in the field. The Company first publicly disclosed this information in or about Ma y

2004. In its 10-Q for the second quarter 2004, dated May 10, 2004 TASER stated :

Although the Company continued to increase production of its new TASERX26 product during the first quarter of 2004, the product experienced adefect in its data recording feature which did not affect the operation of theproduct but nevertheless required a temporary suspension of shipments forapproximately three weeks during the quarter . The resolution of thissoftware problem required the reprogramming of more than 4,000 weaponsand 15,000 battery packs at the factory and preparation for field upgrades formore than 12,000 weapons that had already been shipped in previousperiods . The cost to repair the software and upgrade the weapons in housewas expensed in the quarter through cost of goods sold . In addition, theCompany accrued approximately $41,000 of additional expense through awarranty accrual to retrofit the remaining units in the field .

334. Prior to that disclosure, however, but after the defect was known, Company insiders

also made large sales of their personal TASER stock . Between February 4, 2004 and February 18 ,


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2004, Company insiders sold 883,117' shares for gross proceeds of over $41 .5 million :

Defendant Sale s

Defendant Rick Smith

Shares Sold : 245,000

Defendant Tom Smith


Defendant Dr. Smith


Defendant Hanrahan


Total Shares Sold : 797,366

Kroll (Director)


McBrady (Director)

Shares Sold : 13,25 1

Total Shares Sold : 15,751

Proceeds: $11,695,000

Proceeds: $10,212,000

Proceeds: $11,962,100

Proceeds: $3,227,078

Total Proceeds : $37,096,17 8

Company Insider and Director Sale s

Proceeds: $930,750

Proceeds: $547,000

Total Proceeds : $1,477,750

335. Furthermore, during a two week period from October 28, 2004 through November 10,

2004, nine Company insiders, including the Individual Defendants, grossed over $85 .1 million from

suspiciously timed sales of their personal TASER stock holdings . These stock sales immediately

followed the announcement that the Company had upwardly revised its projected 2004 revenue

1 The February sales are shown in pre-split totals .

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growth from a 150% increase over 2003, to a 175% increase over 2003 .

336. Shortly after the announced earn ings projection , the Individual Defendants , as well a s

numerous members of the TASER Board and other Company insiders, engaged in massive insider

sales of almost 1 .7 million shares of TASER common stock . The volume of sales by the Individual

Defendants during this two week period was more than twice the number of shares sold they in th e

prior two years combined . Defendant Phillips Smith garnered over $35 .7 million, selling more than

706,000 shares; Defendant Patrick Smith collected over $15 .4 million, selling 310,000 shares ;

Defendant Thomas Smith collected over $12 .7 million, selling 260,000 shares .

337. These transactions occurred after the Individual Defendants lea rned that Amnesty

International was going to issue a highly critical report on the safety of the TASER devices in lat e

November 2004. Citing numerous incidents of fatalities and injuries reported following TASER

device use, Amnesty International recommended a moratorium on continued use of the weapons

pending comprehensive safety testing . In addition, on October 21, 2004, Law Enforcemen t

Associates announced that it had completed the housing design for its new stun weapon which had a

projected launch date of March 2005 . Further, on November 15, 2004, Stinger Systems announced

that it had entered the projectile stun gun market with the introduction of "The Stinger ." Both

products were to compete directly with TASER's M26 and X26 weapons. The Individual

Defendants knew that because of (i) the falsity of their statements concerning the TASER weapons '

safety; (ii) the undisclosed design and manufacturing defects ; and (iii) the undisclosed issue s

regarding the effectiveness of the X26, the emergence of competing products would have a

calamitous effect on the Company's sales . Indeed, according to CW3 and CW4, production at

TASER fell dramatically in the third and fourth quarters of 2004 because of the decline in orders .

338. The sales of the Individual Defendants, various members of the TASER Board, an d



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other Company insiders are shown below :

Defendant Sales Between October 28th and November 10th, 2004

Defendant Rick Smith (CEO)

Shares Sold: 310,000 Proceeds: $15,453,000

Defendant Tom Smith (President )

Shares Sold : 706,440 Proceeds: $35,767,000

Defendant Dr. Smith (Chairman)


Defendant Hanrahan (COO)


Defendant Behrendt (CFO)


Total Shares Sold : 1,452,440

Proceeds : $12,749,000

Proceeds : $7,106,645

Proceeds : $540,625

Total Proceeds : $71,616,27 0

Company Insider and Director Sales Between October 28th and November 10th 200 4

Culver (Director)


Kroll (Director)


Kerik (Director)


McBrady (Director)

Shares Sold: 29,998 Proceeds: $1,229,61 0

Total Shares Sold: 361 ,830 Total Proceeds : $13,541,90 8



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339 . Not only were the sales of the Individual Defendants, the Directors, and the Company

insiders suspiciously timed, but these sales far exceeded all other sales made by these individuals .

For example, while the Individual Defendants' total combined sales prior to the Class Period were

604,932 shares, during the two brief periods of Class Period referenced above, the Individual

Defendants sold 2,249,806 shares of their TASER stock . The unusual and suspiciously-timed Clas s

Period sales of approximately $120 million - $40 million more than the Company 2003 and 200 4

revenues - are highly probative of scienter .

LOSS CAUSATION/ECONOMIC LOS S

340. The market for TASER' s securities was open, well-developed and efficient at al l

relevant times . As a result of these materially false and misleading statements and failures t o

disclose, TASER's securities traded at artificially inflated prices during the Class Period . Plaintiff

and the other members of the Class purchased or otherwise acquired TASER stock relying upon the

integrity of the market price of TASER 's stock and market information relating to TASER, and have

been damaged thereby .

341 . During the Class Period, as detailed herein, Defendants engaged in a scheme t o

deceive the market and a course of conduct that artificially inflated TASER's stock price an d

operated as a fraud or deceit on Class Period purchasers of TASER stock by misrepresenting the

safety of the Company's products, findings of various studies, the independence of certain studies ,

the loss of business due to safety concerns, product quality deficiencies, and the introduction of

competing products . Moreover, based on their possession of undisclosed information about the

foregoing, certain Company insiders and members of the Board sold massive quantities of TASER

stock at artificially inflated prices as specified above . As a result of their purchases of TASER stock

during the Class Period, Plaintiffs and other members of the Class suffered economic loss, i.e. ,

damages under the federal securities laws .



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342 . By misrepresenting TASER 's financial results, Defendants presented a misleading

picture of TASER's business and prospects . Instead of truthfully disclosing during the Class Period

that TASER's products might pose substantial safety risks, and that the Company suffered from

widespread quality control deficiencies that jeopardized its business prospects, Defendants made

repeated material misstatements and omissions as alleged above .

343. These material misrepresentations and omissions caused and maintained the artificia l

inflation in TASER's stock price throughout the Class Period until the truth was revealed to th e

market .

344 . Defendants' false and misleading statements had the intended effect and caused

TASER stock to trade at artificially inflated levels throughout the Class Period , reaching as high as

$32.59 per share on a split-adjusted basis .

345 . On January 6, 2005, after the market closed, TASER announced that the SEC ha d

initiated an informal inquiry concerning the Company's statements concerning the safety of it s

weapons, as well as Davidson' s transaction . Then, on January 11, 2005, TASER announced that

"[d]uring the first half of 2005, it is possible that we may see some delays in orders as agencies test

and evaluate potential new entrants ." In addition, in the Company's 2004 Form 10-K, TASER stated

that orders had been canceled and delayed due to the safety concerns about its devices, as well as the

introduction of competing products . As investors and the market became aware that TASER's prior

statements were false and that the Company's business prospects were adversely affected thereby ,

the prior artificial inflation came out of TASER 's stock price , damaging investors .

346. As a direct result of Defendants ' admissions and the public revelations regarding th e

truth about TASER's statements concerning the safety of its products and the Company's busines s

prospects , TASER' s stock p rice plummeted almost 48% . This drop removed the inflation from



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TASER' s stock price, causing real economic loss to investors who had purchased the stock du ring

the Class Period. In sum, as the truth about Defendants' fraud and TASER's business performance

was revealed, the Company's stock price plummeted, the artificial inflation came out of the stoc k

and Plaintiff and other members of the Class were damaged, suffering economic losses .

347 . The decline in TASER's stock price at the end of the Class Period was a direct result

of the nature and extent of Defendants' fraud being revealed to investors and the market . The timing

and magnitude of TASER 's stock p rice decline negate any inference that the loss suffered b y

Plaintiff and other Class members was caused by changed market conditions, macroeconomic or

industry factors or Company-specific facts unrelated to the Defendants' fraudulent conduct . The

economic loss, i.e., damages, suffered by Plaintiff and other members of the Class was a direct resul t

of Defendants ' fraudulent scheme to artificially inflate TASER's stock price and the subsequent

significant decline in the value of TASER' s stock when Defendants ' prior misrepresentations and

other fraudulent conduct was revealed .

Applicability Of Presumptio nOf Reliance: Fraud-On-The-Market Doctrine

348. At all relevant times, the market for TASER's securities was efficient for th e

following reasons, among others :

a. TASER's stock met the requirements for listing, and was listed and traded onthe NASDAQ, a highly efficient and automated market ;

b. As a regulated issuer, TASER filed periodic public reports with the SEC andthe NASDAQ ;

c. TASER regularly communicated with public investors via established marketcommunication mechanisms, including through regular disseminations ofpress releases on the national circuits of major newswire services and throughother wide-ranging public disclosures, such as communications with thefinancial press and other similar reporting services ; and

d. TASER was followed by several securities analysts employed by majorbrokerage firms who wrote reports that were distributed to the sales force an d



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certain customers of their respective brokerage firms . Each of these reportswas publicly available and entered the public marketplace .

349. As a result of the foregoing, the market for TASER' s secu rities promptly digeste d

current information regarding TASER from all publicly available sources and reflected suc h

information in TASER's stock price . Under these circumstances, all purchasers of TASER's stock

during the Class Period suffered similar injury through their purchase of TASER's stock a t

artificially inflated prices and a presumption of reliance applies .

NO SAFE HARBOR

350. The statutory safe harbor provided for forward-looking statements under certai n

circumstances does not apply to any of the allegedly false statements pleaded in this Complaint .

Many of the specific statements pleaded herein were not identified as "forward-looking statements"

when made . To the extent there were any forward-looking statements, there were no meaningfu l

cautionary statements identifying important factors that could cause actual results to differ materially

from those in the purportedly forward-looking statements . Alternatively, to the extent that the

statutory safe harbor does apply to any forward-looking statements pleaded herein, Defendants are

liable for those false forward-looking statements because at the time each of those forward-looking

statements was made, the particular speaker knew that the particular forward-looking statement was

false, and/or the forward-looking statement was authorized and/or approved by an executive officer

of TASER who knew that statement was false when made .

COUNT I

Violation Of Section 10(b) OfThe Exchange Act And Rule 10b-5

Promulgated Thereunder Against All Defendants

351 . Plaintiff repeats and realleges each and every allegation contained above as if full y

set forth herein .


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352. Throughout the Class Period , TASER and the Individual Defendants carried out a

plan, scheme, and course of conduct that was intended to and did : (i) deceive the investing public ,

including Plaintiff and the other Class members, as alleged herein ; ( ii) artificially inflate and

maintain the market price of TASER' s stock ; and (iii) cause Plaintiff and the other members of th e

Class to purchase TASER' s stock at artificially inflated p rices . In furtherance of this unlawful

scheme and course of conduct, Defendants took the actions set forth herein .

353. Defendants (a) employed devices, schemes, and artifices to defraud ; (b) made untrue

statements of material fact and/or omitted to state material facts necessary to make the statement s

not misleading; and (c) engaged in acts, practices, and a course of business that operated as a frau d

and deceit upon the purchasers of the Company's stock in an effort to maintain artificially high

market prices for TASER's stock in violation of Section 10(b) of the Exchange Act and Rule I Ob-5 .

Defendants are sued either as primary participants in the wrongful and illegal conduct charged herein

or as controlling persons as alleged below.

354. In addition to the duties of full disclosure imposed on Defendants as a result of thei r

making of affirmative statements and reports, or participation in the making of affirmativ e

statements and reports to the investing public, Defendants had a duty to promptly disseminate

truthful information that would be material to investors in compliance with the integrated disclosur e

provisions of the SEC as embodied in SEC Regulation S-X (17 C .F.R. Section 210 .01 et sM.) and

Regulation S-K (17 C . F.R. Section 229 .10 et seq .) and other SEC regulations, including accurate and

truthful information with respect to the Company 's operations , financial condition, and earnings so

that the market price of the Company's stock would be based on truthful, complete, and accurat e

information .

355. TASER and the Individual Defendants, individually and in concert, directly an d


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indirectly, by the use, means or instrumentalities of interstate commerce and/or of the mails, engage d

and participated in a continuous course of conduct to conceal material, adverse information about th e

business, operations , and future prospects of TASER as specified herein .

356. Defendants employed devices , schemes and artifices to defraud, while in possession

of material , adverse, non-public information and engaged in acts, practices , and a course of conduct

as alleged herein in an effort to assure investors of TASER 's value and performance and continue d

substantial growth, which included the making of, or the participation in the making of, untrue

statements of material facts and omitting to state material facts necessary in order to make th e

statements made about TASER and its business operations and future prospects in the light of th e

circumstances under which they were made, not misleading, as set forth more particularly herein,

and engaged in transactions, practices and a course of business that operated as a fraud and decei t

upon the purchasers of TASER 's stock during the Class Pe riod.

357. The Individual Defendants' primary liability, and controlling person liability, arise s

from the following facts : (i) the Individual Defendants were high-level officers and/or directors a t

the Company du ring the Class Pe riod; (ii) the Individual Defendants were privy to and part icipate d

in the creation, development and reporting of the Company's internal budgets, plans, projection s

and/or repo rts ; and (iii) the Individual Defendants were aware of the Company's dissemination of

information to the investing public that they knew or recklessly disregarded was materially false and

misleading.

358. Defendants had actual knowledge of the misrepresentations and omissions of material

facts set forth herein, or acted with reckless disregard for the truth in that they failed to ascertain an d

to disclose such facts, even though such facts were available to them. Such Defendants' material

I misrepresentations and/or omissions were done knowingly or recklessly and for the purpose an d



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effect of concealing TASER 's operating condition and future business prospects from the investing

public and suppo rt ing the a rtificially inflated price of its stock . As demonstrated by Defendants '

I overstatements and misstatements of the Company's business, operations and earnings throughou t

the Class Period, Defendants, if they did not have actual knowledge of the misrepresentations and

omissions alleged, were reckless in failing to obtain such knowledge by deliberately refraining from

taking those steps necessary to discover whether those statements were false or misleading.

359 . As a result of the dissemination of the materially false and misleading information

and failure to disclose material facts, as set forth above, the market price of TASER's stock wa s

artificially inflated during the Class Period. In ignorance of the fact that market prices of TASER's

publicly-traded stock were artificially inflated, and relying directly or indirectly on the false and

misleading statements made by Defendants, or upon the integrity of the market in which the stock

trades, and/or on the absence of material, adverse information that was known to or recklessl y

disregarded by Defendants but not disclosed in public statements by Defendants du ring the Class

Period, Plaintiff and the other members of the Class acquired TASER stock during the Class Period

at artificially high prices and were damaged thereby .

360. At the time of said misrepresentations and omissions, Plaintiff and the other members

of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff and the other

members of the Class and the marketplace known of the true financial condition and busines s

prospects of TASER, which were not disclosed by Defendants, Plaintiff and the other members of

the Class would not have purchased or otherwise acquired their TASER stock, or, if they had

acquired such stock during the Class Period, they would not have done so at the artificially inflated

prices that they paid .

361 . By virtue of the foregoing, Defendants have violated Section 10(b) of the Exchang e



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Act and Rule lOb-5 promulgated thereunder .

362 . As a direct and proximate result of Defendants' wrongful conduct, Plaintiff and the

other members of the Class suffered damages in connection with their respective purchases and sales

I of the Company's stock during the Class Period .

COUNT II

Violation Of Section 20(a) OfThe Exchange Act Against the Individual Defendants

363 . Plaintiff repeats and realleges each and every allegation contained above as if full y

set forth herein .

364. The Individual Defendants acted as controlling persons of TASER within the

meaning of Section 20(a) of the Exchange Act as alleged herein . By virtue of their high-level

positions, and their ownership and contractual rights, participation in and/or awareness of the

Company's operations and/or intimate knowledge of the statements filed by the Company with th e

SEC and disseminated to the investing public, the Individual Defendants had the power to influence

and control and did influence and control, directly or indirectly, the decision-making of th e

Company, including the content and dissemination of the various statements that Plaintiff contends

are false and misleading . The Individual Defendants were provided with or had unlimited access to

copies of the Company's reports, press releases, public filings, and other statements alleged by

Plaintiff to be misleading prior to and/or shortly after these statements were issued and had th e

ability to prevent the issuance of the statements or cause the statements to be corrected .

365 . In particular, the Individual Defendants had direct and supervisory involvement in the

day-to-day operations of the Company and, therefore, are presumed to have had the power to control

or influence the particular transactions giving rise to the securities violations as alleged herein, an d

exercised the same.



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366 . As set forth above, TASER and the Individual Defendants each violated Sectio n

10(b) and Rule lOb-5 by their acts and omissions as alleged in this Complaint . By virtue of their

positions each as controlling persons, the Individual Defendants are liable pursuant to Section 20(a)

of the Exchange Act. As a direct and proximate result of TASER and the Individual Defendants'

wrongful conduct, Plaintiff and the other members of the Class suffered damages in connection with

their purchases of the Company's stock during the Class Period .

PRAYER FOR RELIEF

WHEREFORE, Plaintiff prays for relief and judgment, as follows :

A. Determining that this action is a proper class action under Rule 23 of theFederal Rules of Civil Procedure ;

B. Awarding compensatory damages in favor of Plaintiff and the other membersof the Class against all Defendants for all damages sustained as a result ofDefendants' wrongdoing, in an amount to be proven at trial, including interestthereon ;

C. Awarding Plaintiff and the Class their reasonable costs and expenses incurredin this action, including counsel fees and expert fees ; and

D. Such other and further relief as the Court may deem just and proper .



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JURY TRIAL DEMANDED

Plaintiff hereby demands a trial by jury .

Date: August 29, 2005

MITCHELL LAW OFFICES, P.C.Robert Mitchell (AZ 011922)Anchor Centre One, Suite 122B2210 East Camelback RoadPhoenix, Arizona 85016Tel: (602) 468-1411Fax: (602) 468-131 1

Liaison Counsel for Plaintiffand the Class

BERNSTEIN LIEBHARD & LIFSHITZ, LLP

/s/

Mel. E. LifshitzKeith M . FleischmanTimothy J . MacFal lJoseph R . Seidman, Jr. (admitted pro hac vice)Stephanie Beig eRussell M. IgerJeffrey Lerner10 East 40th StreetNew York, NY 10016Tel: (212) 779-1414Fax : (212) 779-321 8

Lead Counsel for Plaintiffand the Class


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CERTIFICATE OF SERVIC E

The undersigned certifies that a copy of the attached amended complaint was served upon

the following counsel, via regular mail, this 29th day of August, 2005 :

Counsel for Defendants :

David B. Rosenbaum, Esq .OSBORN MALEDON, P .A.2929 North Central AvenuePhoenix, AZ 8501 2

Keith E. Eggleton, Esq.WILSON SONSINI GOODRICH & ROSATI650 Page Mill RoadPalo Alto, CA 94304

/s/

JOSEPH R. SEIDMAN, JR .

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