Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 65

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 65
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5 totaled $2,406,745 which was included as a
gain in the condensed consolidated statements of operations for the nine months ended September 30, 2025.

    26

2023
Purchase Warrants

On
April 5, 2023, the Company issued warrants to purchase a total of 562 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 reporting date with any subsequent
changes reported in the condensed 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 condensed consolidated
statement of operations.

The
Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the
warrant derivative liabilities as of September 30, 2025 and as of December 31, 2024:

    December 31, 2024 assumptions  
    September 30, 2025 assumptions 
  
    Volatility – range 
     109.5% 
     151.59%
  
    Risk-free rate 
     4.38% 
     3.68%
  
    Dividend 
     —% 
     —%
  
    Remaining contractual term 
     3.3 years  
     2.5 years 
  
    Exercise price 
     11,000.00 – 15,000.00  
     11,000.00 – 15,000.00  
  
    Common stock issuable under the warrants 
     562  
     562 

NOTE
12 - STOCKHOLDERS’ EQUITY

Senior
Secured Convertible Note and Committed Equity Financing

On
September 15, 2025, the Company entered into a Securities Purchase Agreement with an institutional investor (the “Purchaser”),
pursuant to which the Company issued Senior Secured Convertible Notes with an aggregate original principal amount of $806,451 and Warrants
to purchase 476,569 shares of the Company’s common stock at an exercise price of $2.124 per share. The Notes were