Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 47

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 47
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 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 Series B warrants issued in
this transaction become issuable and exercisable on the date that relevant stockholder approval is obtained, if ever. Relevent stockholder approval was obtained
on December 17, 2024 which activated the Series A and B warrants. Both the Series A and Series B warrants also contain price and warrant
reset provisions that were activated upon the date of relevant stockholder approval. The reset provisions increased the number of common shares
issuable under the Series A warrant from 59,761 to 298,805 shares and the exercise price per Series A warrant was reduced from $50.20
to $10.04 per share effective December 17, 2024. In addition, the Series B warrants became effective and exercisable upon relevant stockholder approval
on December 17, 2024 which resulted in 238,339 common shares issuable under the Series B warrants with an exercise price of $0.001 per
share effective December 17, 2024. The Company recognized the full Series B warrant derivative liability value of $2,865,727 as of the
date of relevant stockholder approval when it became effective and exercisable of which $454,150 was recorded in equity and $2,411,577 was charged
as a loss in the consolidated statement of operations for the year ended December 31, 2024. The following are the assumptions used in
calculating the estimated fair value of the detachable Series B warrants to purchase Common Stock which became effective and exercisable
upon relevant stockholder approval on December 17, 2024 and on December 31, 2024:

    Series B issuance date - December 17, 2024  assumptions  
    Series B - December 31, 2024 assumptions 
  
    Volatility – range 
     105.5% 
     105.7%
  
    Risk-free rate 
     4.26% 
     4.38%
  
    Dividend 
     —% 
     —%
  
    Remaining contractual term 
     4.