Item 1.01. Entry into a Material Definitive Agreement.

Preferred Stock Transaction

On October 13, 2022, Digital Ally, Inc., a Nevada corporation ("the "Company"), entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain institutional investors (the "Investors"), pursuant to which the Company agreed to issue and sell, in a private placement (the "Offering"), 1,400,000 shares of the Company's Series A Convertible Redeemable Preferred Stock, par value $0.001 per share (the "Series A Preferred Stock"), and 100,000 shares of the Company's Series B Convertible Redeemable Preferred Stock, par value $0.001 per share (the "Series B Preferred Stock", and together with the Series A Preferred Stock, the "Preferred Stock"), at an offering price of $9.50 per share, representing a 5% original issue discount to the stated value of $10.00 per share, for gross aggregate proceeds of $15 million in the Offering, before the deduction of discounts, fees and offering expenses. The shares of Preferred Stock will, under certain circumstances, be convertible into shares of the Company's common stock, par value $0.001 per share (the "Common Stock"), at the option of the holders of the Preferred Stock and, in certain circumstances, by the Company. The Purchase Agreement contains customary representations, warranties and agreements by the Company and the Investors, and customary conditions to closing. The Offering closed on October 19, 2022.

The Company intends to call an annual meeting of stockholders to consider amendments (the "Amendments") to the Company's Articles of Incorporation (the "Charter"), (i) to authorize an increase in the number of shares of Common Stock that the Corporation is authorized to issue under the Charter (the "Authorized Share Increase Amendment") and (ii) to effect a reverse stock split of the outstanding shares of Common Stock by a ratio to be determined by the Board of Directors of the Company within a range to be specified in the proposal put to the stockholders for approval (the "Reverse Stock Split Amendment," together with the Authorized Share Increase Amendment, the "Amendments"). The Investors have agreed in the Purchase Agreement to not transfer, offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise)) any shares of Preferred Stock until the date on which the Authorized Share Increase Amendment becomes effective under the Nevada Revised Statutes ("Authorized Share Increase Date"), to vote the shares of the Series A Preferred Stock purchased in the Offering in favor of the Amendments and to vote the shares of the Series B Preferred Stock purchased in the Offering in a manner that "mirrors" the proportions on which the shares of Common Stock (excluding any shares of Common Stock that are not voted) and Series A Preferred Stock are voted on the Amendments.

Pursuant to the Purchase Agreement, the Company filed on October 17, 2022 certificates of designation (the "Certificates of Designation") with the Secretary of the State of Nevada designating the rights, preferences and limitations of the shares of Series A Preferred Stock and Series B Preferred Stock. The Certificate of Designation for the Series A Preferred Stock provides, in particular, that the Series A Preferred Stock will have no voting rights other than the right to vote on the Amendments on an as-if-converted-to-Common-Stock basis. The Certificate of Designation for the Series B Preferred Stock provides, in particular, that the Series B Preferred Stock will have no voting rights other than the right to vote on the Amendments and each share of Series B Preferred Stock entitles the holder thereof the right to cast 2,500 votes on the Amendments.

The holders of Preferred Stock will be entitled to dividends, on an as-if converted-to-Common-Stock basis, equal to dividends actually paid, if any, on shares of Common Stock. The Preferred Stock is convertible, at the option of the holders and, in certain circumstances, by the Company, into shares of Common Stock at a conversion price of $1.00 per share. The conversion price can be adjusted pursuant to the Certificates of Designation for stock dividends and stock splits, subsequent rights offering, pro rata distributions of dividends or other distribution of its assets, or the occurrence of a fundamental transaction (as defined in the applicable Certificate of Designation).

The holders of the Series A and Series B preferred stock have the right to require the Company to redeem their shares of the relevant series at a price per share equal to 105% of the stated value of such shares commencing (i) after the . . .

Item 3.02 Unregistered Sales of Equity Securities.

The disclosure required by this Item 3.02 and included in Item 1.01 of this Current Report is incorporated herein by reference.

Item 3.03 Material Modifications to Rights of Security Holders.

The disclosure required by this Item 3.03 and included in Item 1.01 of this Current Report is incorporated herein by reference.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The disclosure required by this Item 5.03 and included in Item 1.01 of this Current Report is incorporated herein by reference.

Item 8.01 Other Events

The Company issued a press release announcing the Offering on October 13, 2022. 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.

The following documents are filed as exhibits to this report:

Exhibit No.   Description
3.1             Form of Certificate of Designation of Series A Convertible
              Redeemable Preferred Stock
3.2             Form of Certificate of Designation of Series B Convertible
              Redeemable Preferred Stock
10.1            Form of Securities Purchase Agreement between Digital Ally, Inc.
              and the investors thereto
10.2            Form of Registration Rights Agreement by and among Digital Ally,
              Inc. and the investors named therein
99.1            Press Release of Digital Ally, Inc. announcing the pricing of the
              Offering
104           Cover Page Interactive Data File (embedded within the Inline XBRL
              document)

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