Item 1.01 Entry into a Material Definitive Agreement.
On June 4, 2020, Digital Ally, Inc. (the "Company") consummated an underwritten
public offering (the "Offering") of 3,090,909 shares (the "Firm Shares") of
common stock, par value $0.001 per share, of the Company (the "Common Stock").
The Offering was conducted pursuant to an underwriting agreement, dated June 2,
2020 (the "Underwriting Agreement"), between the Company and Aegis Capital
Corp., as representative (the "Representative") of the underwriters (the
"Underwriters").
The Firm Shares were sold at a public offering price of $1.65 per share. The
Company has granted the Underwriters a 45-day option to purchase up to an
additional 463,636 additional shares of Common Stock at the public offering
price, less underwriting discounts and commissions, to cover over-allotments, if
any (the "Option Shares" and together with the Firm Shares, the "Shares").
The Offering was registered and the Shares were issued pursuant to the Company's
effective shelf registration statement on Form S-3 (File No. 333-225227) (the
"Registration Statement"), which was initially filed with the Securities and
Exchange Commission (the "SEC") on May 25, 2018, and was declared effective on
June 6, 2018, and the related base prospectus included in the Registration
Statement, as supplemented by the prospectus supplement dated June 2, 2020 (the
"Prospectus Supplement"). The legal opinion and consent of Sullivan and
Worcester LLP addressing the validity of the Common Stock sold in the Offering
is filed as Exhibit 5.1 hereto and is incorporated into the Registration
Statement.
The Underwriting Agreement contains customary representations, warranties and
agreements by the Company, customary conditions to closing, indemnification
obligations of the Company and the Underwriters, including for liabilities under
the Securities Act of 1933, as amended, other obligations of the parties and
termination provisions.
The Underwriters purchased the Firm Shares from the Company at a price of
$1.5345 per share, representing a seven percent (7%) discount from the public
offering price. In addition, the Company agreed to pay the Underwriters all
expenses relating to the Offering, including "road show" expenses, diligence
fees and the fees and expenses of the Underwriters' legal counsel not to exceed
$30,000.
Under the Underwriting Agreement, pursuant to a certain "lock-up" agreement and
subject to certain exclusions as set forth therein, the Company has agreed,
without first obtaining the written consent of the Representative and subject to
certain exceptions, not to, for a period of 21 days from the date of the pricing
of the Offering, (1) offer, sell or otherwise transfer or dispose of, directly
or indirectly, any shares of capital stock of the Company, or (2) file or caused
to be filed any registration statement with the SEC relating to the offering of
any shares of the Company's capital stock or any securities convertible into or
exercisable or exchangeable for shares of the Company's capital stock.
Notwithstanding the foregoing, in the event the closing price of the Common
Stock as reported on The Nasdaq Capital Market for three (3) consecutive trading
days is at least 25% above the public offering price of the Firm Shares, such
lock-up period shall be terminated.
The gross proceeds to the Company from the Offering, before deducting
underwriting discounts and commissions and other estimated Offering expenses,
and assuming the Underwriters do not exercise their option to purchase the
Option Shares, are approximately $5.1 million. The net proceeds to the Company
from the Offering, after deducting underwriting discounts and commissions, but
before deducting other expenses in connection with the Offering, and assuming
the Underwriters do not exercise their option to purchase the Option Shares, are
approximately $4.74 million.
The foregoing description of the terms of the Underwriting Agreement does not
purport to be complete and is subject to, and qualified in its entirety by
reference to the Underwriting Agreement, which is filed as Exhibit 1.1 to this
Current Report on Form 8-K, and is incorporated herein by reference.
Item 8.01 Other Events.
On June 4, 2020, in connection with the Underwriting Agreement, the Company
closed the Offering, raising gross proceeds of approximately $5.1 million,
before deducting underwriting discounts and commissions and other estimated
Offering expenses. Also on June 4, 2020, the Company issued a press release
announcing the consummation of the Offering. A copy of the press release is
attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
1.1 Underwriting Agreement, dated June 2, 2020, between the Company
and Aegis Capital Corp., as representative of the underwriters
named on Schedule 1 thereto
5.1 Opinion of Sullivan and Worcester LLP
23.1 Consent of Sullivan and Worcester LLP (included in opinion of
Sullivan and Worcester LLP filed as Exhibit 5.1)
99.1 Press Release, dated June 4, 2020
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