Company: DGLY
Filing Date: 2025-02-11
Form Type: S-1/A
Source: 0001493152-25-005949
Chunk: 202

Company: DIGITAL ALLY, INC.
Filing Date: 2025-02-11
Form: S-1/A
Chunk 202
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 First Closing (the “Filing Date”) a registration statement covering the resale of the shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants, and to use its best efforts to cause such Registration Statement to be declared effective under the Securities Act of 1933, as amended (the “Securities Act”), as promptly as possible, but in any event no later than 45 days following the Filing Date (the “Effectiveness Date”). If the Registration Statement is not filed by the Filing Date or is not declared effective by the Effectiveness Date, or under certain other circumstances described in the Registration Rights Agreement, then the Company shall be obligated to pay, as partial liquidated damages, to each Purchaser an amount in cash equal to 2% of the original principal amount of the Notes each month until the applicable event giving rise to such payments is cured. If the Company fails to pay any partial liquidated damages in full within seven days after the date payable, the Company will pay interest thereon at a rate of 10% per annum.

The Company recognized the full warrant derivative value, with the remaining amount being allocated to the debt obligation. As the warrant derivative value exceeded the net proceeds from the issuance, the excess amount is recognized as a loss on the date of the issue date. Thus, the Company recorded a loss of $ 576,380as an interest expense on the date of issuance relating to the Convertible note. The following is the assumptions used in calculating the estimated grant-date fair value of the detachable warrants to purchase common stock granted in connection with the Convertible Note:

SCHEDULE OF WARRANT TO PURCHASE COMMON STOCK GRANTED

|                                          |     | Terms at        
 April 5, 2023   
 (issuance date) |             |   |
|:-----------------------------------------|:----|:----------------|------------:|:--|
| Volatility - range                       |     |                 |       106.0 | % |
| Risk-free rate                           |     |                 |        3.36 | % |
| Dividend                                 |     |                 |           0 | % |
| Remaining contractual term               |     |                 |   5.0 years |   |
| Exercise price                           |     | $               | 5.50 – 7.50 |   |
| Common stock issuable under the warrants |     |                 |   1,125,000 |   |

On June 2, 2023, the Purchasers