Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 142

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 142
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907,500 

    29

During the three months ended
March 31, 2025, the pre-funded warrants to purchase 4.907,500 shares of Common Stock were fully exercised. In conjunction with the exercise
of the pre-funded warrants, the Company transitioned the related warrant derivative liability totaling $1,803 to equity as of their exercise
date. The warrant derivative liability related to the pre-funded warrants was $-0- as of March 31, 2025.

2024 Purchase Warrants

On June 25, 2024, the Company
issued Series A and prefunded warrants to purchase a total of 88,411 shares of Common Stock along with the sale of Common Stock. The
Company also issued Series B Warrants that will be issuable and exercisable at any time or times on or after the date that relevant stockholder approval
is obtained in addition to the Series A warrants that are not included in outstanding warrants until such time as relevant stockholder approval
is obtained. Both the Series A and Series B warrants have reset provisions that are activated upon the date relevant stockholder approval is obtained.
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 Series B warrants issued in
this transaction become issuable and exercisable on the date that relevant stockholder approval is obtained, if ever. Relevent stockholder approval was obtained
on December 17, 2024 which activated the Series A and B warrants. Both the Series A and Series B warrants also contain price and warrant
reset provisions that were activated upon the date of relevant stockholder approval. The reset provisions increased the number of common shares
issuable under the Series A warrant from 59,761 to 298,805 shares and the exercise price per Series A warrant was reduced from $50.20
to $10.04 per share effective December 17, 2024. In addition, the Series B warrants became effective and exercisable