Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 49

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 49
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     —%
  
    Remaining contractual term 
     0.1-5.0 years  
     4.5 years  
     4.2 years 
  
    Exercise price 
    $50.20  
    $10.04  
     10.04 
  
    Common stock issuable under the warrants 
     88,411  
     298,844  
     298,844 

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 March 31, 2025. The fair value of the warrant derivative liability related to the Series A warrants was $48,457
and $2,408,598 as of March 31, 2025 and December 31, 2024, respectively. The change in fair value of the Series A warrant derivative liability
from December 31, 2024 to March 31, 2025 totaled $2,360,141 which was included as a gain in the condensed consolidated statements of operations
for the three months ended March 31, 2025.

2023 Purchase Warrants

On April 5, 2023, the Company
issued warrants to purchase a total of 56,250 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 March 31, 2025 and as of December 31, 2024:

    December 31, 2024
                                                                                assumptions  
    March 31, 2025
                                                                                assumptions 
  
    Volatility – range 
     109.5% 
     114.3%
  
    Risk-free rate