Company: DGLY
Filing Date: 2025-01-24
Form Type: S-1
Source: 0001493152-25-003451
Chunk: 90

Company: DIGITAL ALLY, INC.
Filing Date: 2025-01-24
Form: S-1
Chunk 90
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     |                  |    72.1 - 101.1 | % |     |                    |     106.6 | % |
| Risk-free rate                           |     |                  |     4.25 – 5.46 | % |     |                    |      3.58 | % |
| Dividend                                 |     |                  |               0 | % |     |                    |         0 | % |
| Remaining contractual term               |     |                  | 0.1 - 5.0 years |   |     |                    | 4.7 years |   |
| Exercise price                           |     | $                |            2.51 |   |     | $                  |      2.51 |   |
| Common stock issuable under the warrants |     |                  |       1,768,227 |   |     |                    | 1,195,219 |   |

Stock-based Compensation Expense.We grant stock options to our employees and directors and such benefits provided are share-based payment awards which require us to make significant estimates related to determining the value of our share-based compensation. Our expected stock-price volatility assumption is based on historical volatilities of the underlying stock that are obtained from public data sources and there were no stock options granted during the three or nine months ended September 30, 2024.

If factors change and we develop different assumptions in future periods, the compensation expense that we record in the future may differ significantly from what we have recorded in the current period. There is a high degree of subjectivity involved when using option pricing models to estimate share-based compensation. Changes in the subjective input assumptions can materially affect our estimates of fair values of our share-based compensation. Certain share-based payment awards, such as employee stock options, may expire worthless or otherwise result in zero intrinsic value compared to the fair values originally estimated on the grant date and reported in our financial statements. Alternatively, values may be realized from these instruments that are significantly in excess of the fair values originally estimated on the grant date and reported in our financial statements. Although the fair value of employee share-based awards is determined using an established option pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. In addition, we account for forfeitures as they occur.

Accounting for Income Taxes.Accounting for income taxes requires significant estimates and judgments on the part of management. Such estimates and judgments include, but are not limited to, the effective tax rate anticipated to