Digital Ally Announces Closing of Approximately $2.9 Million Private Placement

Rhea-AI Summary

Digital Ally has successfully closed a private placement, raising approximately $2.9 million in gross proceeds. The funds will be used for inventory purchases, artist costs for festivals, transaction costs, expanded sales, marketing, and general working capital. The private placement involved the issuance of 1,195,219 units, each priced at $2.51, consisting of one share of common stock, one Series A warrant, and one Series B warrant. The Series A warrant has a 5-year term with an exercise price of $2.51, while the Series B warrant is adjustable and exercisable based on future stock splits. Aegis Capital Corp. acted as the exclusive placement agent. The securities in this offering are exempt from registration under the Securities Act of 1933.

Positive

• Raised approximately $2.9 million in gross proceeds.
• Funds to be used for inventory, artist costs, transaction costs, sales, marketing, and working capital.
• Successful issuance of 1,195,219 units, enhancing capital structure.

Negative

• Potential dilution from the issuance of new shares and warrants.
• Dependence on obtaining stockholder approval for the exercisability of issued warrants.
• Adjustable exercise price subject to future dilutive issuances and stock splits.

Insights

Financial Analyst

Digital Ally's recent private placement of $2.9 million provides a notable financial injection, particularly relevant for retail investors. Private placements allow companies to raise capital from a select group of investors without going through the public offering process, which can be faster and less expensive.

Firstly, the use of proceeds is strategic: inventory purchases and artist costs for upcoming festivals indicate a focus on bolstering operational capabilities and expanding their market footprint. This can potentially result in higher revenues in the future, assuming the investments translate into successful ventures.

Secondly, the issuance of Series A and Series B warrants with adjustable terms upon potential future dilutions and stock splits shows a calculated approach to attract and retain investor interest. However, it's important to note the potential dilutive effect on existing shares. Investors should watch how the exercise of these warrants impacts the share price and overall capitalization structure.

Additionally, this capital raise suggests that Digital Ally needed funds for its operations, which could imply previous cash constraints. It also reflects confidence that institutional investors see value in supporting the company's strategic initiatives.

Lastly, the involvement of Aegis Capital Corp. as the exclusive placement agent adds credibility to the transaction but also introduces costs that will reduce the net proceeds available to Digital Ally. Overall, this capital infusion appears positive for short-term liquidity but requires careful monitoring for potential long-term impacts on share dilution and financial health.

Lenexa, Kansas, June 25, 2024 (GLOBE NEWSWIRE) -- Digital Ally, Inc. (NASDAQ: DGLY) (the “Company”), a leading provider of video solutions which develops, manufactures, and markets advanced video recording products and other critical safety products for law enforcement, emergency management, fleet safety and event security, today announced the closing of a private placement with certain institutional investors. The aggregate gross cash proceeds were approximately $2.9 million, before deducting fees to the placement agent and other offering expenses payable by the Company. The Company intends to use the net proceeds from the private placement for inventory purchases, artist costs for upcoming festivals, transaction cost, expanded sales, marketing and general working capital.

In connection with the private placement, the Company issued an aggregate of 1,195,219 units. Each unit was sold at an effective unit price of $2.51 per unit and consisted of one share of common stock (or one pre-funded warrant in lieu thereof), one Series A warrant exercisable for one share of common stock at an initial exercise price of $2.51 per share and one Series B warrant at an exercise price of $0.001 to purchase such number of shares of common stock as will be determined on the Reset Date (as defined in the Series B warrant). The Series A warrants and the Series B warrants are exercisable beginning on the date that Stockholder Approval (as defined in the Series A warrant) is obtained. The Series A warrants have a term of 5 years and the Series B warrants are exercisable until exercised in full. The exercise price and number of shares of common stock issuable upon exercise of the Series A warrants are subject to adjustment upon future dilutive issuances and stock splits, subject to a floor, and the exercise price and number of shares of common stock issuable upon exercise of the Series B warrants are subject to adjustment upon stock splits, subject to a floor, in each case, as described in more detail in the Current Report on Form 8-K to be filed in connection with the private placement.

The closing of the private placement occurred on June 25, 2024.

Aegis Capital Corp. acted as the Exclusive Placement Agent for the private placement.

The securities described above were sold in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Act”), and have not been registered under the Act, or applicable state securities laws. Accordingly, the securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Act and such applicable state securities laws. Pursuant to a registration rights agreement with the investor, the Company has agreed to file one or more registration statements with the Securities and Exchange Commission (the “SEC”) covering the resale of the common stock sold in the private placement and the common stock issuable upon exercise of the pre-funded warrants and the warrants sold in the private placement.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Digital Ally

Digital Ally, Inc. (NASDAQ: DGLY) specializes in the development and manufacturing of video and analytics solutions for law enforcement, emergency management, and commercial applications. With a focus on delivering reliable and innovative technology, Digital Ally empowers organizations to enhance safety, streamline operations, and mitigate risks.

For additional news and information please visit www.digitalally.com

Forward-Looking Statements:

This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the completion of the Company’s offering and the anticipated use of proceeds therefrom. These statements are based on the Company’s current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive or regulatory factors, and other risks and uncertainties, including those set forth in the Company’s filings with the SEC. The forward-looking statements in this press release speak only as of the date of this press release. The Company does not undertake any obligation to update or revise these forward-looking statements for any reason, except as required by law.

Contact Information
Stanton Ross, CEO
Tom Heckman, CFO
Digital Ally, Inc.
913-814-7774
info@digitalallyinc.com

FAQ

What is the recent private placement announced by Digital Ally?

Digital Ally has closed a private placement raising approximately $2.9 million in gross proceeds, issuing 1,195,219 units consisting of shares and warrants.

What will Digital Ally use the proceeds from the private placement for?

The proceeds will be used for inventory purchases, artist costs for festivals, transaction costs, expanded sales, marketing, and general working capital.

What is the price per unit in Digital Ally's private placement?

Each unit was priced at $2.51 and consists of one share of common stock, one Series A warrant, and one Series B warrant.

What are the terms of the Series A and Series B warrants issued by Digital Ally?

The Series A warrant has a 5-year term with an initial exercise price of $2.51, while the Series B warrant's exercise price is adjustable and based on future stock splits.

Who acted as the placement agent for Digital Ally’s private placement?

Aegis Capital Corp. acted as the exclusive placement agent for the private placement.

Are the securities from Digital Ally's private placement registered under the Securities Act?

No, the securities were sold in a private placement exempt from the registration requirements of the Securities Act of 1933.