Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 166

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 166
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 at par 
     3,600,000 

    Discount recognized at issuance date 
     (1,470,205)

    Amortization of discount 
     805,486 

    Balance, as of December 31, 2024 
     2,935,281 

    Amortization of discount 
     664,719 

    Principal payment 
     (3,600,000)

    Balance, as of September 30, 2025 
    $— 

Senior
Secured Convertible Note and Committed Equity Financing

On
September 15, 2025, the Company entered into a Securities Purchase Agreement with an institutional investor (the “Purchaser”),
pursuant to which the Company issued Senior Secured Convertible Notes (the “September 2025 Notes”)with an aggregate original
principal amount of $806,451 and detachable common stock purchase warrants to purchase 476,569 shares of the Company’s common stock
at an exercise price of $2.124 per share. The September 2025 Notes were issued at a 7% original issue discount, providing gross proceeds
of $750,000, and bear interest at 8% per annum.

The
September 2025 Notes are convertible at the investor’s option at any time at a conversion price equal to a 10% discount to the
five-day volume-weighted average price (VWAP) preceding conversion, subject to customary anti-dilution and price-based adjustment provisions.
The Company may, subject to certain conditions, redeem all or a portion of the Notes at 110% of the outstanding principal amount. A second
closing of $250,000 in additional September 2025 Notes and Detachable Warrants may occur upon the effectiveness of a resale registration
statement.

The
September 2025 Notes are senior secured obligations, ranking senior to all existing and future indebtedness of the Company, except for
specified subsidiaries that provide either a second-priority or no security interest. The Notes are secured by substantially all of the
Company’s assets and guaranteed by certain subsidiaries. In connection with the transaction, the Company also entered into a Registration
Rights Agreement and a Leak-Out Agreement with customary terms and conditions.

The
Company allocated the proceeds between the debt and equity components of the September 2025 Notes based on their relative fair values,
recorded a debt discount for the value of the warrants, conversion feature, and original issue discount, and recognized