Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 190

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 190
---
,989  
     2,989 

The
Company recognized the fair value of the Series A warrants of $1,998,074 as a warrant derivative liability as of the date of issuance.
There have been no Series A warrants exercised through September 30, 2025. The fair value of the warrant derivative liability related
to the Series A warrants was $1,853 and $2,408,598 as of September 30, 2025 and December 31, 2024, respectively. The change in fair value
of the Series A warrant derivative liability from December 31, 2024 to September 30, 2025 totaled $2,406,745 which was included as a
gain in the condensed consolidated statements of operations for the nine months ended September 30, 2025.

    26

2023
Purchase Warrants

On
April 5, 2023, the Company issued warrants to purchase a total of 562 shares 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 required to treat these warrants as
derivative liabilities which are valued at their estimated fair value at their issuance date and at each reporting date with any subsequent
changes reported in the condensed consolidated statements of operations as the change in fair value of warrant derivative liabilities.
Furthermore, the Company re-values the fair value of warrant derivative liability as of the date the warrant is exercised with the resulting
warrant derivative liability transitioned to change in fair value of warrant derivative liabilities through the condensed consolidated
statement of operations.

The
Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the
warrant derivative liabilities as of September 30, 2025 and as of December 31, 2024:

    December 31, 2024 assumptions  
    September 30, 2025 assumptions 
  
    Volatility – range 
     109.5% 
     151.59%
  
    Risk-free rate 
     4.38% 
     3.68%
  
    Dividend 
     —% 
     —%
  
    Remaining contractual term 
     3.3 years  
     2.5 years 
  
    Exercise price 
     11,000.00 – 15,000.00  
     11,000.00 – 15,000.00