SCHEDULE 13G: Altium Capital Management Discloses 9.99% Passive Stake in Digital Ally, Inc.

Altium Capital Management LLC and its affiliates have disclosed a passive 9.99% beneficial ownership stake in Digital Ally, Inc., primarily through common stock and pre-funded warrants.

Summary

• Altium Capital Management LLC, Altium Healthcare Long Short Onshore Fund LP, and Altium Healthcare Long Short GP LLC (collectively, "Altium") have jointly filed a Schedule 13G.
• Altium collectively beneficially owns 12,771,943 shares of Digital Ally, Inc. common stock.
• This ownership represents 9.99% of Digital Ally, Inc.'s outstanding common stock.
• The stake comprises 6,771,943 shares of common stock and 6,000,000 shares issuable upon conversion of Pre-Funded Warrants.
• The percentage is calculated based on 89,387,480 shares of common stock outstanding as of February 11, 2025, as reported in Digital Ally's Form S-1/A.
• The Pre-Funded Warrants are subject to a "Warrant Blocker" preventing Altium from beneficially owning more than 9.99% of outstanding common stock upon exercise.
• The filing explicitly states that the securities were not acquired for the purpose of changing or influencing control of the issuer.

Sentiment

Score: 6

Explanation: The disclosure of a significant passive stake by an institutional investor like Altium Capital Management can be viewed as a positive signal, indicating institutional interest and confidence in Digital Ally, Inc. However, the passive nature and the presence of a warrant blocker limit the immediate impact.

Positives

• A significant institutional investor, Altium Capital Management, has taken a substantial passive stake, which can be viewed as a vote of confidence in Digital Ally, Inc.
• The investment includes pre-funded warrants, indicating a long-term interest in the company's potential growth.

Negatives

• The 9.99% "Warrant Blocker" limits Altium's immediate ability to increase its ownership beyond this threshold through warrant exercise, potentially capping their direct influence or further investment via this mechanism.
• The filing is a passive disclosure, meaning Altium does not intend to influence or change control, which might disappoint investors looking for activist engagement.

Risks

• The "Warrant Blocker" limits the beneficial ownership of the reporting persons to 9.99% of the outstanding common stock, meaning they cannot exercise warrants beyond this threshold.
• The filing notes that 20,000,000 Series A Warrants and 20,000,000 Series B Warrants are not included in the reported beneficial ownership and are subject to a separate 4.99% beneficial ownership limitation, indicating potential future dilution if these are exercised by other parties.

Future Outlook

The document does not contain any forward-looking statements or guidance from Digital Ally, Inc. as it is a disclosure filing by an investor regarding their passive ownership stake.

Industry Context

This filing is a disclosure of a passive ownership stake by Altium Capital Management and its affiliated funds. The document itself does not provide specific industry context for Digital Ally, Inc. or broader industry trends, focusing solely on the ownership details.

Comparison to Industry Standards

• The document does not provide information for comparison to global benchmarks or specific comparable companies, projects, or results.

Stakeholder Impact

• Shareholders: The entry of a new significant institutional investor may be viewed positively, potentially increasing liquidity and validating the company's valuation. However, the existence of warrants (even with blockers) implies potential future dilution if exercised.
• Company Management: The company now has a significant passive institutional shareholder, which may influence future strategic decisions, though Altium has stated no intent to influence control.

Next Steps

• The document does not outline any future actions, events, or milestones for Digital Ally, Inc. or the reporting persons beyond the regulatory filing itself.

Key Dates

Keywords

Digital Ally Inc., Altium Capital Management, Schedule 13G, beneficial ownership, common stock, pre-funded warrants, institutional investment, passive stake, SEC filing, equity stake