Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 145

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 145
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 of operations
for the three months ended March 31, 2025.

2023 Purchase Warrants

On April 5, 2023, the Company
issued warrants to purchase a total of 56,250 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 March 31, 2025 and as of December 31, 2024:

    December 31, 2024
                                                                                assumptions  
    March 31, 2025
                                                                                assumptions 
  
    Volatility – range 
     109.5% 
     114.3%
  
    Risk-free rate 
     4.38% 
     3.96%
  
    Dividend 
     —% 
     —%
  
    Remaining contractual term 
     3.3 years  
     3.0 years 
  
    Exercise price 
     110.00 – 150.00  
     110.00
                                            – 150.00  
  
    Common stock issuable under the warrants 
     56,250  
     56.250 

    31

NOTE 12 - STOCKHOLDERS’ EQUITY

February 2025 Public Equity Offering

On February 13,
2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp. (the
“Underwriter”) for the sale and issuance of (i) 392,500 units  at a public offering price per
unit of $3.00 with each Unit consisting of one share of Common Stock,  one Series A warrant to purchase
one share of Common Stock at an exercise price of $3.75 per share and one Series B warrant to purchase one share of