Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 43

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 43
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 shareholder approval is obtained or certain pricing exceptions
are met.

As
consideration for the ELOC Investor’s commitment, the Company agreed to pay a 3% commitment fee, payable through a combination
of (i) shares of common stock valued based on the five-day VWAP following the effectiveness of the resale registration statement and
(ii) cash funded from up to 30% of proceeds from future financings, including drawdowns under the ELOC facility. The Company also reimbursed
the investor $30,000 for legal expenses.

The
ELOC Purchase Agreement includes customary restrictions on entering into other variable-rate transactions during its 36-month term and
prohibits the investor from engaging in short sales or hedging transactions involving the Company’s common stock. The facility
may be terminated upon the earlier of (i) the first day of the month following the 36-month anniversary of the Closing Date, (ii) the
aggregate purchase price of $25 million having been reached, or (iii) other termination events specified in the agreement. The Company
may also terminate the facility at any time after commencement upon five (5) trading days’ written notice.

As
of September 30, 2025, the Company has not received shareholder approval of the transactions, nor has the underlying Registration Statement
been declared effective and therefore the Company has not sold any shares under the ELOC facility. The Company will record the related
commitment fee and transaction costs as deferred equity issuance costs within Additional Paid-In Capital, to be amortized against proceeds
from future ELOC drawdowns at such time as the Company has received shareholder approval of the transactions and the underlying Registration
Statement has been declared effective. The Company intends to use any future proceeds from sales under the ELOC facility for general
corporate and working capital purposes.

NOTE
6. FAIR VALUE MEASUREMENT

In
accordance with ASC Topic 820 — Fair Value Measurements and Disclosures (“ASC 820”), the Company utilizes the
market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information
generated by market transactions involving identical or comparable assets, liabilities or a group of assets or liabilities, such as a
business.

ASC
820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.
The following is a brief description of those three levels:

    ●
    Level
    1 — Quoted prices in active markets for identical