Digital Ally (KUST) investor relations material

Executive summary

• Proxy statement seeks shareholder approval for a major acquisition, capital structure changes, and governance matters at the 2026 annual meeting.

• The company proposes to acquire TFL, LLC for $112 million (approx. $89.6M cash, $22.4M stock), with additional holdback shares contingent on EBITDA targets.

• The acquisition is structured to comply with Nasdaq rules, requiring shareholder approval for significant share issuances and potential change of control.

• A public offering of up to $150M in common stock is planned to fund the acquisition and future growth.

• The board recommends approval of all proposals, including amendments to the articles of incorporation, reverse stock split authority, and a new equity compensation plan.

Voting matters and shareholder proposals

• Proposals include electing four directors, ratifying the auditor, increasing authorized shares to 1.2 billion, approving share issuances for the acquisition, and authorizing a reverse stock split.

• Shareholders will vote on a new 2026 stock option and restricted stock plan, a non-binding say-on-pay proposal, and the frequency of future say-on-pay votes.

• Board recommends voting for all proposals and for a triennial (every 3 years) say-on-pay frequency.

Board of directors and corporate governance

• Four nominees for the board, including the CEO and three independent directors, are up for election.

• Board committees include Audit, Compensation, and Nominating/Governance, all with independent membership.

• The board has a lead independent director and encourages shareholder communication.

• The board oversees risk management, with the Audit Committee taking the lead on risk oversight.