Company: DGLY
Filing Date: 2025-02-06
Form Type: S-1/A
Source: 0001493152-25-005144
Chunk: 96

Company: DIGITAL ALLY, INC.
Filing Date: 2025-02-06
Form: S-1/A
Chunk 96
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 the Company issued warrants to purchase a total of 1,125,000 shares of Common Stock. The warrant terms provide for net cash settlement outside the control of the Company under certain circumstances in the event of tender offers. 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 consolidated statements of operations as the change in fair value of warrant derivative liabilities. Furthermore, the Company revalues the fair value of warrant derivative liability as of the date the warrant is exercised with the resulting warrant derivative liability transitioned to equity.

The Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the warrant derivative liability as of their date of issuance and as of September 30, 2024:

|                                          |     | Issuance          
 date  assumptions |             |   |     | September 30, 2024 
 assumptions        |             |   |
|:-----------------------------------------|:----|:------------------|------------:|:--|:----|:-------------------|------------:|:--|
| Volatility - range                       |     |                   |       106.0 | % |     |                    |       106.6 | % |
| Risk-free rate                           |     |                   |        3.36 | % |     |                    |        3.58 | % |
| Dividend                                 |     |                   |           0 | % |     |                    |           0 | % |
| Remaining contractual term               |     |                   |   5.0 years |   |     |                    |   3.5 years |   |
| Exercise price                           |     | $                 | 5.50 – 7.50 |   |     | $                  | 5.50 – 7.50 |   |
| Common stock issuable under the warrants |     |                   |   1,125,000 |   |     |                    |   1,125,000 |   |

| 60 |

On June 25, 2024, the Company issued warrants to purchase a total of 1,195,219 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