Company: DGLY
Filing Date: 2025-06-27
Form Type: 424B4
Source: 0001641172-25-016976
Chunk: 27

Company: DIGITAL ALLY, INC.
Filing Date: 2025-06-27
Form: 424B4
Chunk 27
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 bankruptcy or reorganization proceeding.

In the event a bankruptcy or reorganization proceeding is commenced by or against us, a bankruptcy court may hold that any unexercised Warrants are executory contracts that are subject to rejection by us with the approval of the bankruptcy court. As a result, holders of the Warrants may, even if we have sufficient funds, not be entitled to receive any consideration for their Warrants or may receive an amount less than they would be entitled to if they had exercised their Warrants prior to the commencement of any such bankruptcy or reorganization proceeding.

If the holders of the Series B Warrants elect to exercise such warrants using the zero exercise price option, stockholders will suffer substantial dilution.

The Series B Warrants contain
a zero exercise price provision which provides the holders the right, at their option, to receive a number of shares equal to the product
of (x) the aggregate number of shares of common stock that would be issuable upon a cash exercise of the Series B Warrant and (y) three
(3.0). As a result of this feature, we do not expect to receive any cash proceeds from the exercise of the Series B Warrants in these
circumstances because it is highly unlikely that a Series B Warrant holder will elect to pay an exercise price in cash to receive one
share of common stock at a time when they could elect the zero exercise price option to receive more shares of common stock than they
would receive if they did pay an exercise price. An exercising holder of a Series B Warrant using the “zero exercise price”
option will be issued three times the number of shares of common stock for each share of common stock issuable upon exercise of a Series
B Warrant for cash. If holders elect the “zero exercise price option”, on this basis, such exercise will result in substantial
dilution to our shareholders. Given the provisions of the Warrants, holders of the Warrants will be issued a maximum aggregate of 347,796
shares of common stock upon the exercise of all of the Series A Warrants and a maximum aggregate of 556,452 shares of common stock upon
the exercise of the Series B Warrants. However, if the holders of the Series B Warrants elect the “zero exercise price” option,
the number of shares of common stock issuable upon exercise of the Series B Warrants would increase by a factor of three, resulting in
a maximum aggregate of 1,669,356 shares of common stock upon