Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 59

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 1
Chunk 59
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years  
     3.9
years 
  
    Exercise price 
    $5,020.00  
    $1,004.00  
     1,004.00 
  
    Common stock issuable under the warrants 
     884  
     2,989  
     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 June 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 June 30, 2025 and December 31, 2024, respectively. The change in fair value of the Series A warrant derivative liability
from December 31, 2024 to June 30, 2025 totaled $2,406,745 which was included as a gain in the condensed consolidated statements of operations
for the six months ended June 30, 2025.

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 June 30, 2025 and as of December 31, 2024:

    December 31, 2024 assumptions  
    June 30, 2025 assumptions 
  
    Volatility – range 
     109.5% 
     154.65%
  
    Risk-free rate 
     4.38% 
     3.83%
  
    Dividend 
     —% 
     —%