Company: DGLY
Filing Date: 2025-02-21
Form Type: PRE 14A
Source: 0001493152-25-007922
Chunk: 32

Company: DIGITAL ALLY, INC.
Filing Date: 2025-02-21
Form: PRE 14A
Chunk 32
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 As a result, since the total number of shares in the Offering, including the potential issuance of the Warrant Shares, is deemed a “20% Issuance,” the Company is required to obtain the approval of its stockholders in connection with the Offering in order to comply with Nasdaq Listing Rule 5635(d). “Minimum Price” means the lower of the closing price immediately preceding the signing of the purchase agreement for the Offering or the average closing price for the five trading days immediately preceding such date, plus the value of the Warrants issued in the Offering. A “20% Issuance” is a transaction, other than a public offering, involving the sale, issuance or potential issuance by the Company of Common Stock (or securities convertible into or exercisable for Common Stock) which, alone or together with sales by officers, directors or substantial stockholders of the Company, equals 20% or more of the Common Stock or 20% or more of the voting power outstanding before the issuance.

In order to comply with Nasdaq Listing Rule 5635(d) and permit the holders to exercise the Warrants, the stockholders of the Company need to approve the issuance of the Warrants and the Warrant Shares issuable upon exercise of the Warrants together with the additional shares of our Common Stock that may become issuable upon adjustments provided for under the Warrants and the provisions of the Warrants indicated above. Until the Company obtains the Warrant Stockholder Approval in order to comply with Nasdaq Listing Rule 5635(d), the Warrants are not exercisable.

If either the Authorized Share Increase Proposal or the Reverse Stock Split Proposal are not approved at the Special
Meeting, then the Warrants may not become exercisable even if the Issuance Proposal is otherwise approved, and as a result, it may hinder
our ability to raise capital because investors may be less likely to invest in our securities that are subject to stockholder approval
in the future.

Potential Adverse Effects of the Approval of the Warrant Stockholder Approval Provisions

Following approval by the stockholders of this proposal, existing stockholders will suffer dilution in their ownership interests in the future as a result of the potential issuance of shares of Common Stock upon exercise of the Warrants. Assuming the full exercise of the Series A Warrants at a Floor Price of $0.031, and assuming the Series B Warrants are exercised on an alternative cashless exercise basis at the floor price of $0.031, we may issue an aggregate of up to approximately