Company: DGLY
Filing Date: 2025-02-11
Form Type: S-1/A
Source: 0001493152-25-005949
Chunk: 290

Company: DIGITAL ALLY, INC.
Filing Date: 2025-02-11
Form: S-1/A
Chunk 290
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 stock. The Company also issued Series B Warrants that will be exercisable at any time or times on or after the date Stockholder Approval is obtained. Both the Series A and Series B warrants have reset provisions that are activated upon the date Stockholder Approval is obtained. See Note 16. Subsequent Events for further information on such reset provisions. 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 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 consolidated statement of operations.

During the three and nine months ended September 30, 2024, the prefunded warrants to purchase 573,008shares of common stock were fully exercised.

| F-76 |

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

|                                          |     | Issuance         
 date assumptions |                 |   |     | September 30, 2024 
 assumptions        |           |   |
|:-----------------------------------------|:----|:-----------------|----------------:|:--|:----|:-------------------|----------:|:--|
| Volatility – range                       |     |                  |   72.1 - 101.1% |   |     |                    |     106.6 | % |
| Risk-free rate                           |     |                  |    4.25 – 5.46% |   |     |                    |      3.58 | % |
| Dividend                                 |     |                  |               0 | % |     |                    |         0 | % |
| Remaining contractual term               |     |                  | 0.1 - 5.0 years |   |     |                    | 4.7 years |   |
| Exercise price                           |     | $                |            2.51 |   |     | $                  |      2.51 |   |
| Common stock issuable under the warrants