Digital Ally Announces Pricing of approximately $2.9 million Private Placement

Rhea-AI Summary

Digital Ally has announced the pricing of a $2.9 million private placement involving institutional investors. The funds will be used for inventory purchases, artist costs for festivals, transaction costs, expanded sales, marketing, and general working capital. The private placement includes issuing 1,195,219 units at $2.51 per unit. Each unit consists of one share of common stock, a Series A warrant exercisable at $2.51, and a Series B warrant with an exercise price of $0.001, adjustable upon stock splits. The closing is expected around June 25, 2024, subject to customary conditions, with Aegis Capital Corp. serving as the exclusive placement agent.

Positive

• Expected gross proceeds of $2.9 million from private placement.
• Proceeds to be utilized for inventory purchases, festival artist costs, transaction costs, sales expansion, marketing, and working capital.
• Issuance of 1,195,219 units at an effective price of $2.51 per unit.

Negative

• Potential shareholder dilution due to issuance of new shares and warrants.
• Series A and Series B warrants exercisable upon stockholder approval, introducing uncertainty.

Insights

Financial Analyst

Digital Ally's recent announcement of a $2.9 million private placement could be seen as a move to bolster their liquidity and support future growth. However, private placements often result in dilution for existing shareholders due to the issuance of new shares. Given the company's plan to issue up to 1,195,219 units, each comprising common stock and warrants, it’s important to understand the potential impact on share value.

By issuing Series A and Series B warrants, Digital Ally provides investors with options to purchase more shares at pre-set prices. While this infusion of capital can be beneficial, it may also exert downward pressure on the stock price in the short term due to the impending dilution. The stock's future performance will heavily depend on how efficiently the company utilizes the net proceeds from this placement.

The intended use of these funds - covering inventory purchases, artist costs for festivals, sales, marketing and general working capital - suggests a focus on enhancing operational capabilities and market presence. If executed well, these initiatives could potentially foster revenue growth and improve market positioning.

For retail investors, it’s vital to monitor how the company progresses in these areas. Additionally, understanding the terms of the warrants and potential future adjustments due to dilutive events or stock splits is essential, as these can affect the overall value and potential return on investment.

Market Research Analyst

The private placement indicates that Digital Ally is leveraging institutional investment to fund strategic initiatives. This kind of move is often interpreted as a vote of confidence from sophisticated investors who believe in the company's long-term prospects. However, the terms of the deal, particularly the inclusion of various warrants, signal a cautious approach by the investors, possibly reflecting some uncertainty about the company's immediate future.

The issuance of Series A and Series B warrants with adjustable exercise prices highlights the flexibility built into this deal to accommodate market fluctuations. For retail investors, the key takeaway is that the company is actively seeking capital to drive growth, but this comes with the caveat of potential dilution and the need for careful monitoring of how these funds are employed.

Given the focus on expanding sales and marketing efforts, investors should watch for any significant uptick in market share or revenue as a result of these investments. Additionally, the success of their festival-related expenditures could provide a boost to brand visibility and customer engagement, which are critical metrics for assessing the effectiveness of their strategic plans.

Lenexa, Kansas, June 24, 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 pricing of a private placement with certain institutional investors. The aggregate gross cash proceeds are expected to be 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 is planning to issue an aggregate of 1,195,219 units. Each unit will be sold at an effective unit price of $2.51 per unit and will consist 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 will 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 is expected to occur on or about June 25, 2024, subject to the satisfaction of certain customary closing conditions.

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

The securities described above are being 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 total gross proceeds from Digital Ally's private placement?

The total expected gross proceeds from Digital Ally's private placement are approximately $2.9 million.

How many units will Digital Ally issue in the private placement?

Digital Ally will issue an aggregate of 1,195,219 units in the private placement.

What is the effective unit price for Digital Ally's private placement?

The effective unit price for the private placement is $2.51 per unit.

What do the units in Digital Ally's private placement consist of?

Each unit consists of one share of common stock, a Series A warrant exercisable at $2.51, and a Series B warrant with an exercise price of $0.001.

When is the closing date for Digital Ally's private placement?

The closing of the private placement is expected to occur on or about June 25, 2024, subject to customary conditions.

How will Digital Ally use the proceeds from the private placement?

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