Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 61

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 61
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 27, 2025, the Company transitioned the related warrant derivative
liability totaling $530,101 to equity. The following are the assumptions used in calculating the estimated fair value of the Series A
warrants to purchase Common Stock as of transition date of June 27, 2025:

    Series A warrants transition date – June 27, 2025  assumptions 
  
    Volatility – range 
     154.71%
  
    Risk-free rate 
     3.79%
  
    Dividend 
     —%
  
    Remaining contractual term 
     4.86 years 
  
    Exercise price 
    $62.00 
  
    Common stock issuable under the warrants 
     347,796 

The
Series B warrants were issued/activated on Warrant Shareholder Approval Date of May 6, 2025 which based on the reset provisions a total
of 1,669,357 Series B were issued at a zero exercise price and their total fair value was estimated to be $5,406,408. The Series B Warrants
contain a zero-exercise price option at the holder’s election. Under the zero-exercise price option, a holder of the Series B Warrant
has the right to receive an aggregate number of shares equal to the product of (x) the aggregate number of shares of common stock that
would be issuable upon a cash exercise of the Series B Warrant and (y) three (3.0). As a result of this feature, we did not receive nor
did we expect to receive any cash proceeds from the exercise of the Series B Warrants because it is highly unlikely that a Series B Warrant
holder would elect to pay an exercise price in cash to receive one share of common stock when they could elect the alternate cashless
exercise option and pay no exercise price to receive more shares of common stock than they would receive if they did pay an exercise
price. The following are the assumptions used in calculating the estimated fair value of the Series B warrants to purchase Common Stock
which were effective and exercisable upon the Warrant Shareholder Approval Date of May 6, 2025:

    Series B warrants issuance/activation date – May 6, 2025  assumptions 
  
    Volatility – range 
     195.04%
  
    Risk-free rate 
     3.87%
  
    Dividend 
     —%
  
    Remaining contractual term 
     2.5 years