Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 172

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 8
Chunk 172
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.8 years 

2025 Purchase Warrants

On February 13, 2025, the
Company issued pre-funded units, each consisting of one-prefunded warrant (to purchase a total of 49,075 shares of Common Stock), one
Series A warrant and one Series B warrant along with the sale of units, each consisting of one share of Common Stock, one Series A warrant
and one Series B warrant. The Series A and Series B warrants were exercisable only upon receipt of stockholder approval to approve each
of (i) certain terms in the Series A warrants and Series B warrants and the issuance of the shares of Common Stock issuable upon the exercise
of such warrants, as may be required by the applicable rules and regulations of The Nasdaq Stock Market LLC and (ii) if necessary, a proposal
to amend the Company’s Articles of Incorporation, as amended, to increase the authorized share capital of the Company to an amount
sufficient to cover the shares of Common Stock issuable upon the exercise of the Series A warrants and Series B warrants. The Series A
Warrants were exercisable commencing upon the date of public notice of the Stockholder Approval (the “Warrant Stockholder Approval
Date”) until five years after the Warrant Stockholder Approval Date, and the Series B Warrants were exercisable commencing upon
the Warrant Stockholder Approval Date until two and one-half years after the Warrant Stockholder Approval Date. Both the Series A and
Series B warrants contain reset provisions that are activated upon the date Stockholder Approval is obtained. The Company’s Shareholders
approved the issuance of the Series A and B warrants at a Special Meeting of Shareholders on May 6, 2025 which serves as the Warrant Stockholder
Approval Date. The Series A and B warrant terms provide for net cash settlement outside the control of the Company under certain circumstances.
As such, the Company is required to treat the Series A and B warrants as derivative liabilities until such time as the circumstances which
allow for settlement outside the control of the Company are terminated or no longer applicable. Warrant derivative liabilities treatment
of the Series A and B warrants to be valued at their estimated fair value at their issuance/activation 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