Company: DGLY
Filing Date: 2025-01-24
Form Type: S-1
Source: 0001493152-25-003451
Chunk: 210

Company: DIGITAL ALLY, INC.
Filing Date: 2025-01-24
Form: S-1
Chunk 210
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 the Warrant Exchange Agreement, using the Black-Scholes method, the fair value of the warrant derivative liability was $ 8.1million, compared to $ 9.3million at June 30, 2022, resulting in income from change in fair market value of warrant derivative liabilities of $ 1.2million during the year ended December 31, 2022. Further, the value of the issued shares of Common Stock was $ 4.5million, applied to additional paid in capital, resulting in a gain on the extinguishment of warrant derivative liabilities of $ 3.6million during the year ended December 31, 2022.

SCHEDULE OF WARRANT MODIFICATION

|                                          |     | Terms at        
 August 23, 2022 |                 |   |
|:-----------------------------------------|:----|:----------------|----------------:|:--|
| Volatility - range                       |     |                 |           103.7 | % |
| Risk-free rate                           |     |                 |     3.17 - 3.36 | % |
| Dividend                                 |     |                 |               0 | % |
| Remaining contractual term               |     |                 | 3.4 - 4.1 years |   |
| Exercise price                           |     | $               |           65.00 |   |
| Common stock issuable under the warrants |     |                 |       1,215,000 |   |

Fluctuations in the Company’s stock price are a primary driver for the changes in the derivative valuations during each reporting period. As the stock price increases for each of the related derivative instruments, the value to the holder of the instrument generally increases, therefore increasing the liability on the Company’s balance sheet. Additionally, stock price volatility is one of the significant unobservable inputs used in the fair value measurement of each of the Company’s derivative instruments. The simulated fair value of these liabilities is sensitive to changes in the Company’s expected volatility. Increases in expected volatility would generally result in higher fair value measurement. A 10% change in pricing inputs and changes in volatilities and correlation factors would not result in a material change in our Level 3 fair value.

2023 Purchase Warrants

On April 5, 2023, the Company issued warrants to purchase a total of 1,125,000shares of Common Stock. The warrant terms provide for net cash settlement outside the control of the Company under certain circumstances. As such, the Company is