Digital Ally, Inc. (NASDAQ:DGLY) Jumped in a Huge Upward Correction
[[tagnumber 0]]Digital Ally, Inc. (NASDAQ:DGLY) jumped across the 10–day moving average yesterday in a major upward correction that followed the drop to a 52–week low in the preceding trading session. The company announced a $2.5 million stock repurchase program, though has DGLY secured the cash to pay for it?[[tagnumber 1]] [[tagnumber 2]][[tagnumber 3]][[tagnumber 1]] [[tagnumber 5]]DGLY closed Tuesday session with an over 22% gain at $7.46 for a share. The trading volume for the day was nearly twice the average, however, it was far from the highest trading volumes in the past six months. The chart looks bullish for today as the stock price broke through the 10–day moving average and other technical indicators give buy signals as well.[[tagnumber 1]] [[tagnumber 5]]Yesterday, DGLY announced its Board of Directors has approved a stock buy–back program allowing the company to repurchase shares of its common stock in the open market or in private transactions. The size of the program is $2.5 million and no deadline has been set.[[tagnumber 1]] [[tagnumber 5]]DGLY balance sheet as of the end of the second quarter would suggest the company has no cash to finance this program, yet as a subsequent event it looks like DGLY raised some fresh capital. At the end of July, it conducted two stock and warrant offerings – one registered and simultaneously one private placement of warrants. Total net proceeds were $11.2 million, $2.5 million of which already spent to settle some current liabilities.[[tagnumber 1]] [[tagnumber 0]][[tagnumber 12]][[tagnumber 1]] [[tagnumber 5]]Cash will be needed for working capital as well, yet with $2.5 million and at the currently low market price DGLY could offset some of the dilution caused by the recent financing actions. In the offerings, nearly 900,000 new shares were issued, but also a huge number of warrants to purchase another 1.5 million shares.[[tagnumber 1]] [[tagnumber 5]] It seems, however, the investors did not anticipate DGLY stock price would lose nearly half of its value in the course of just a few weeks. The warrants have an exercise price of $13.43, and some of them expire just a year after their issuance, thus shareholders may not see the dilution soon.[[tagnumber 1]] [[tagnumber 0]] [[tagnumber 1]]
