Digital Ally, Inc. announced that it has entered into a securities purchase agreement with certain institutional investors to purchase 1,400,000 shares of Series A convertible redeemable preferred stock and 100,000 shares of Series B convertible redeemable preferred stock at a purchase price of $9.50 per share, representing an original issue discount of 5% of the $10 per share stated value of each share for gross proceeds of $14,250,000 on October 13, 2022. Each share of Series A and Series B preferred stock is convertible into shares of the company's common stock at an initial conversion price of $1 per share. Shares of the Series A and Series B preferred stock are convertible at the option of the holder at any time following the company's receipt of stockholder approval of an amendment to the company articles of incorporation to increase the number of shares of common stock that the company is authorized to issue.

The holders of the Series A and Series B preferred stock agreed not to transfer, offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of their shares of preferred stock until after the receipt of stockholder approval of the increase in the company's authorized shares of common stock. The holders of the Series A and Series B preferred stock have the right to require the company to redeem their shares of preferred stock for cash at 105% of the stated value of such shares. The closing of the offering is expected to occur on or about October 19, 2022, subject to the satisfaction of customary closing conditions.

The Series A and Series B preferred stock and shares of common stock into which these preferred shares are convertible are being issued in reliance upon the exemption from the securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D as promulgated by SEC under the 1933 Act.