Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 55

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 1
Chunk 55
---
 – May 6, 2025  assumptions 
  
    Volatility – range 
     158.07%
  
    Risk-free rate 
     3.87%
  
    Dividend 
     —%
  
    Remaining contractual term 
     5.0 years 
  
    Exercise price 
    $62.00 
  
    Common stock issuable under the warrants 
     347,796 

On June 27, 2025, the
circumstances under which the Series A warrant terms allow for settlement outside the control of the Company were terminated and no
longer applicable. Therefore, the Company determined the fair value of the warrant liability as of that date ($530,101) and
transitioned that value to equity as the Series A warrants were no longer treated as warrant derivative liabilities. In conjunction
with change in warrant liability treatment of the Series A warrant on June 27, 2025, the Company transitioned the related warrant
derivative liability totaling $530,101 to equity. The following are the assumptions used in calculating the estimated fair value of
the Series A warrants to purchase Common Stock as of transition date of June 27, 2025:

    Series A warrants
    transition date – June 27, 2025  assumptions 
  
    Volatility – range 
     154.71%
  
    Risk-free rate 
     3.79%
  
    Dividend 
     —%
  
    Remaining contractual term 
     4.86 years 
  
    Exercise price 
    $62.00 
  
    Common stock issuable under the warrants 
     347,796 

The Series B warrants were issued/activated on Warrant Shareholder Approval
Date of May 6, 2025 which based on the reset provisions a total of 1,669,357 Series B were issued at a zero exercise price and their total
fair value was estimated to be $5,406,408. The Series B Warrants contain a zero-exercise price option at the holder’s election. 
Under the zero-exercise price option, a holder of the Series B Warrant has the right to receive an aggregate number of shares equal to
the product of (x) the aggregate number of shares of common stock that would be issuable upon a cash exercise of the Series B Warrant
and (y) three (3.0). As a result of this feature, we did not receive nor did we expect to receive any cash proceeds