Company: DGLY
Filing Date: 2025-09-17
Form Type: 8-K
Source: 0001493152-25-013877
Chunk: 5

Company: DIGITAL ALLY, INC.
Filing Date: 2025-09-17
Form: 8-K
Item: Item 1.01
Chunk 5
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The
net proceeds from sales, if any, under the ELOC Purchase Agreement to the Company will depend on the frequency and prices at which the
Company sells shares of its Common Stock to the ELOC Investor. The proceeds from any sales, if any, will be used by the Company in the
manner as will be set forth in the prospectus included in any registration statement filed pursuant to a registration rights agreement.

There
are no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the ELOC
Purchase Agreement or ELOC Registration Rights Agreement, other than (i) a prohibition (with certain limited exceptions) on the Company
entering into specified “ Variable Rate Transactions” (as such term is defined in the ELOC Purchase Agreement), and (ii) a
prohibition during the ELOC Agreement Purchase Valuation Period (as defined in the ELOC Purchase Agreement), to (i) issue, enter into
any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents (as defined
in the ELOC Purchase Agreement) or (ii) file any registration statement or any amendment or supplement thereto, in each case other than
as contemplated pursuant to the ELOC Registration Rights Agreement. Such Variable Rate Transactions include, among others, the issuance
of convertible securities with a conversion or exercise price that is based upon or varies with the trading price of the Common Stock
after the date of issuance, or the Company effecting or entering into an agreement to effect an “equity line of credit,”
an “at the market offering” or other similar continuous offering with a third party, in which the Company may offer, issue
or sell Common Stock or any securities exercisable, exchangeable or convertible into Common Stock at future determined prices. Subject
to certain exceptions set forth in the ELOC Purchase Agreement such restrictions shall remain in effect for a period commencing on the
Closing Date and ending on first day of the month next following the 36-month anniversary of the Closing Date. During the term of the
ELOC Purchase Agreement, the ELOC Investor covenanted not to enter into or effect, in any manner whatsoever, directly or indirectly,
any short sales of the Common Stock or hedging transaction which establishes a net short position with respect to the Common Stock.

As
consideration for the ELOC Investor’s commitment to purchase the Purchase Shares upon the terms of and subject to satisfaction
of the conditions set forth