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Monster Digital Announces Change to Date of Special Meeting and Extension of Offer to Amend and Exercise Warrants

SIMI VALLEY, CA -- (Marketwired) -- 10/13/17 -- Monster Digital, Inc. ("Monster Digital" or "Monster") (NASDAQ: MSDI) announced today that it has changed the date of the Special Meeting of its Stockholders (the "Special Meeting") to Thursday November 9, 2017 at 10:00 am Pacific Time. The record date for determining those stockholders entitles to vote at the Special Meeting has not changed and will remain as the close of business on Wednesday, October 4, 2017. At the Special Meeting, Monster Digital stockholders will be asked to vote on the previously announced proposed combination of Monster Digital and Innovate Biopharmaceuticals, Inc. ("Innovate"), in addition to other matters.

As previously announced, on July 3, 2017, Monster Digital and Innovate entered into a definitive agreement (the "Merger Agreement") under which Monster Digital and Innovate will combine in a stock-for-stock transaction (the "Merger") Under the terms of the Merger Agreement, pending stockholder approval of the transaction, Monster Digital's wholly owned subsidiary, Monster Merger Sub, Inc., will merge into Innovate with Innovate surviving the merger and becoming a wholly-owned subsidiary of Monster (the "Merger"); the combined company will advance a late stage drug for celiac disease into expected Phase 3 clinical trials. Innovate believes celiac disease is a significant unmet medical need as a gluten-free diet is the only current therapy.

Subject to the terms of the Merger Agreement, at the effective time of the Merger, Innovate stockholders will receive a number of newly issued shares of Monster common stock determined using the exchange ratio described below in exchange for their shares of Innovate stock. Following the Merger, stockholders of Innovate will become the majority owners of Monster. The exchange ratio will be based on a pre-transaction valuation of $60 million for Innovate's business and $6 million for Monster's business. As a result, current Monster security holders will collectively own approximately 9% and Innovate security holders will collectively own approximately 91% of the combined company on a pro-forma basis, subject to adjustment based on Monster's net cash balance and Monster's and Innovate's capitalization at closing, but not including any dilution that may result from securities sold by Innovate for capital raising purposes prior to the closing of the Merger, which are subject to certain valuation thresholds described in the Merger Agreement. For purposes of calculating the exchange ratio, outstanding warrants and options of Monster with a per share exercise price of $5.00 or greater would be excluded from Monster's capitalization, as described in the Merger Agreement.

The Merger is subject to approval by Monster Digital stockholders and the satisfaction of other customary closing conditions and is expected to close in the fourth quarter of 2017.

In addition, Monster announced that it has amended the terms of its previously announced Offer to Amend and Exercise Warrants. Further to amended and new filings with the Securities and Exchange Commission, Monster Digital has extended the expiration date of the Offer to Amend and Exercise Warrants until 5:00 p.m. Pacific Time on Friday, November 17, 2017. Revised documentation reflecting this extension and other terms of the Offer to Amend and Exercise will be sent to holders of Monster Digital outstanding warrants as of the close of business on September 19, 2017.

Important Additional Information Filed with the SEC

This communication is being made in respect of the proposed business combination transaction between Monster Digital and Innovate. The transaction will be submitted to the stockholders of Monster Digital for their consideration. In connection with the proposed transaction, Monster Digital has filed with the SEC a definitive proxy statement of Monster Digital containing information about the proposed business combination transaction. The definitive proxy statement will be mailed to each Monster Digital stockholder entitled to vote at Monster Digital's stockholder meeting. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER DOCUMENTS RELATING TO THE TRANSACTION FILED OR TO BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT MONSTER DIGITAL, INNOVATE, THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and stockholders may obtain copies of the definitive proxy statement and all other documents filed with the SEC regarding the proposed transaction, free of charge, at the SEC's website (http://www.sec.gov). Investors may also obtain these documents, free of charge, from Monster Digital's website (www.monsterdigital.com) under the link "Investor Relations" and then under the tab "SEC Filings."

Participants in Solicitation

Monster Digital and its directors, executive officers, other members of management, and employees may be deemed to be "participants" in the solicitation of proxies from Monster Digital's stockholders in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of Monster Digital's stockholders in connection with the proposed transaction and a description of their direct and indirect interest, by security holdings or otherwise, are set forth in the proxy statement filed with the SEC in connection with the proposed transaction. Information about Monster Digital's executive officers and directors can be found in its Annual Report on Form 10-K filed with the SEC on March 31, 2017. Free copies of these documents may be obtained from Monster Digital using the contact information below.

About Innovate Biopharmaceuticals, Inc.:

Innovate is a clinical stage biotechnology company focused on developing novel autoimmune/inflammation therapeutic drugs.

Innovate's lead drug candidate, larazotide acetate (larazotide or INN-202), has successfully met its primary endpoint in an efficacy clinical trial for celiac disease. Larazotide successfully completed the End of Phase 2 Meeting with the FDA to prepare for expected Phase 3 clinical trials for larazotide in celiac disease in late 2017. In clinical studies in more than 800 patients, larazotide demonstrated a favorable safety profile comparable to placebo, due to what Innovate believes is its lack of systemic absorption from the small bowel. Larazotide has also received Fast Track designation from the FDA.

Larazotide, an oral peptide formulated into a capsule, has a mechanism of action which decreases intestinal permeability and regulates tight junctions by reducing antigen trafficking across epithelial cells in the intestines. Innovate believes that larazotide is the only drug in the clinic with this mechanism of action of reducing intestinal permeability. Increased intestinal permeability, sometimes referred to as "leaky gut," has been widely recognized in the literature as a gateway to multiple autoimmune diseases, including celiac disease, irritable bowel syndrome (IBS), inflammatory bowel diseases (IBD, Crohn's and ulcerative colitis), type 1 diabetes mellitus (T1DM), nonalcoholic steatohepatitis (NASH), chronic kidney disease (CKD) and several others.

Innovate's second therapeutic, INN-108, is entering Phase 2 clinical trials for the treatment of mild to moderate ulcerative colitis. INN-108 is a novel small molecule comprised of two active parts with anti-inflammatory and immunomodulatory properties coupled through an azo bond. To date Innovate has no reason to believe that INN-108 has any detectable systemic absorption when orally administered until it reaches the colon where the active components are released locally to reduce inflammation.

For more information, please visit http://www.innovatebiopharma.com

About Monster Digital, Inc.:

Monster Digital develops, markets and distributes Monster branded products for use in high-performance consumer electronics, mobile products and computing applications. Monster Digital designs and engineers premium action sports cameras and accessories, in addition to advanced data storage and memory products for professionals and consumers.

Monster and Monster Digital are registered trademarks of Monster Products, Inc. in the U.S. and in other countries.

For more information, please visit http://www.monsterdigital.com

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause Monster Digital's or Innovate's performance to be materially different from those of any expected future results or performance, or achievements. Forward-looking statements speak only as of the date they are made, and neither Monster Digital nor Innovate assumes any duty to update forward-looking statements. We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements including, but are not limited to, the number and percentage of Monster Digital public stockholders voting against the proposals set forth in the proxy statement; the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; the ability to obtain and/or maintain the listing of the combined company's common stock on the Nasdaq Capital Market following the Merger; changes adversely affecting the business in which Innovate is engaged; management of growth; general economic conditions, Innovate' business strategy and plans; and the results of future financing efforts. For more information, see the risk factors described in the preliminary proxy statement as well as those set forth in Monster Digital's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other filings with the SEC.

This communication is not intended to and does not constitute an offer to sell or a solicitation of an offer to sell or a solicitation of an offer to buy any of the securities of either Monster Digital or Innovate or a solicitation of any vote or approval. The aforementioned Offer to Amend and Exercise described above is made only pursuant to two separate and distinct Offers to Amend and Exercise on Schedule TO and related exhibits, including the related letters from David H. Clarke, the Election to Consent, Participate and Exercise Warrant Form, the Withdrawal Form, the Accredited Investor Questionnaire, the Forms of Amendment of the Original Warrants and other related documents, filed with the SEC. Warrant holders should read each of the separate and distinct Offers to Amend and Exercise on Schedule TO, the related letters from David H. Clarke, the Election to Consent, Participate and Exercise Warrant Form, the Withdrawal Form, the Accredited Investor Questionnaire, the Forms of Amendment of the Original Warrants and related exhibits, as they contain important information about the Offer to Amend and Exercise. Warrant holders can obtain these documents free of charge from the SEC's website at www.sec.gov, or by directing a request to the Company at 2655 First Street, Suite 250, Simi Valley, CA 93065, Attention: Chief Financial Officer, (805) 915-4775.

Contacts:
Monster Digital, Inc.
David Olert
CFO
[email protected]

Investor Relations:
Monster Digital, Inc.
Vivian Cervantes
PCG Advisory
212-554-5482
[email protected]

Innovate Biopharmaceuticals, Inc.
Kendyle Woodard
919-275-1933
[email protected]

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