Item 1.01 Entry into a Material Definitive Agreement.

On April 17, 2020, Digital Ally, Inc., a Nevada corporation (the "Company"), entered into a securities purchase agreement (the "Purchase Agreement") with two accredited investors (the "Investors") providing for the issuance of (i) the Company's 8% Senior Secured Convertible Promissory Notes due April 16, 2021 (the "Notes") with an aggregate principal face amount of $1,666,666, which Notes are, subject to certain conditions, convertible into an aggregate of 1,650,164 shares of the Company's common stock, par value $0.001 per share (the "Common Stock"), at a price per share of $1.01 (the "Conversion Shares") and (ii) five-year warrants (the "Warrants") to purchase an aggregate of up to 1,237,624 shares of Common Stock (the "Warrant Shares" and collectively with the Notes, the Conversion Shares, and the Warrants, the "Securities") at an exercise price of $1.31, subject to customary adjustments (the "Warrants"), which Warrants are immediately exercisable upon issuance and on a cashless basis if the Warrants have not been registered 180 days after the date of issuance. The closing of the offering occurred simultaneously with the execution and delivery of the Purchase Agreement and related transaction documents, pursuant to which the Investors purchased the Securities for an aggregate purchase price of $1,500,000.

Pursuant to the Purchase Agreement, an aggregate of $500,000 in principal amount of Notes (the "Registered Notes"), and the Conversion Shares underlying the Registered Notes, were issued to the Investors in a registered direct offering (the "Registered Offering") and registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a prospectus supplement to the Company's currently effective registration statement on Form S-3 (File No. 333-225227), which was initially filed with the U.S. Securities and Exchange Commission (the "SEC") on May 25, 2018, and was declared effective on June 6, 2018 (the "Shelf Registration Statement"). The Company expects to file the prospectus supplement for the Registered Offering on or about April 20, 2020. $500,000 in original principal amount of our Notes will be issued pursuant to the Shelf Registration Statement.

Pursuant to the Purchase Agreement, the Company issued to the Investors in a concurrent private placement pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder (the "Private Placement", and together with the Registered Offering, the "Offering"), the remaining aggregate of $1,166,666 in principal amount of other Notes, the shares of Common Stock issuable from time to time upon conversion of such other Notes, the Warrants and the Warrant Shares.

The Purchase Agreement contains customary representations, warranties and agreements of the Company and the Investors and customary indemnification rights and obligations of the parties thereto. The Investors or their affiliates have previously invested in securities of the Company; the Company did not engage in general solicitation or advertising with regard to the issuance and sale of the Securities. The Investors represented that they are accredited investors and purchased the Securities for investment and not with a view to distribution.

In connection with the Purchase Agreement, the Company and its subsidiary entered into a security agreement, dated as of April 17, 2020, with the Investors (the "Security Agreement"), pursuant to which the Company and its subsidiary granted to the Investors a security interest in, among other items, the Company and its subsidiary's accounts, chattel paper, documents, equipment, general intangibles, instruments and inventory, and all proceeds, as set forth in the Security Agreement. In addition, pursuant to an intellectual property security agreement, dated as of April 17, 2020 (the "IP Security Agreement"), the Company granted to the Investors a continuing security interest in all of the Company's right, title and interest in, to and under certain of the Company's trademarks, copyrights and patents. In addition, the Company's subsidiary agreed to guarantee and act as surety for the Company's obligation to repay the Notes pursuant to a subsidiary guarantee (the "Subsidiary Guarantee").

The foregoing description of the Purchase Agreement, the Security Agreement, the IP Security Agreement, Subsidiary Guarantee, the Notes (including the Registered Notes), and the Warrants are qualified in their entirety by reference to the full text of such Purchase Agreement, Security Agreement, IP Security Agreement, Subsidiary Guarantee, Notes and Warrants, the forms of which are attached as Exhibits 10.1, 10.2, 10.3, 10.4, 4.1, 4.2 and 4.3, respectively, to this Current Report on Form 8-K (this "Form 8-K"), and which are incorporated herein in their entirety by reference. The Company is filing the opinion of its counsel, Sullivan & Worcester LP, relating to the legality of the issuance and sale of the Registered Notes and the Conversion Shares underlying the Registered Notes as Exhibit 5.1 hereto. Exhibit 5.1 is incorporated herein by reference and into the Shelf Registration Statement.

This Form 8-K contains forward-looking statements. Forward-looking statements include, but are not limited to, statements that express the Company's intentions, beliefs, expectations, strategies, predictions or any other statements related to the Company's future activities, or future events or conditions. These statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by its management. These statements are not guarantees of future performances and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks discussed in the Company's Annual Report on Form 10-K, and in other documents that the Company files from time to time with the SEC. Any forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 8-K, except as required by law.

The prospectus supplement relating to the Registered Offering will be available on the SEC's web site at http://www.sec.gov.

Item 3.02 Unregistered Sales of Equity Securities.

The applicable information set forth in Item 1.01 of this Form 8-K is incorporated by reference in this Item 3.02.

Item 9.01 Financial Statements and Exhibits.





(d) Exhibits.



Exhibit No.    Description
Exhibit 4.1      Form of Unrestricted Senior Secured Convertible Promissory Note
               due April 16, 2021.
Exhibit 4.2      Form of Restricted Senior Secured Convertible Promissory Note due
               April 16, 2021.
Exhibit 4.3      Form of Common Stock Purchase Warrant.
Exhibit 5.1      Opinion of Sullivan & Worcester LLP.
Exhibit 10.1     Form of Securities Purchase Agreement, dated as of April 17,
               2020, by and between the Company and the Investors.
Exhibit 10.2     Form of Security Agreement, dated April 17, 2020, by and among
               the Company, the Company's subsidiary and the Secured Parties.
Exhibit 10.3     Form of IP Security Agreement, dated April 17, 2020, by the
               Company, in favor of the Agent and the Secured Parties.
Exhibit 10.4     Form of Subsidiary Guarantee, dated April 17, 2020, made by the
               Company's subsidiary in favor of the Investors.

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