Company: DGLY
Filing Date: 2025-02-06
Form Type: S-1/A
Source: 0001493152-25-005144
Chunk: 97

Company: DIGITAL ALLY, INC.
Filing Date: 2025-02-06
Form: S-1/A
Chunk 97
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 reporting date with any subsequent changes reported in the 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 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 their date of issuance and as of September 30, 2024:

|                                          |     | Issuance         
 date assumptions |                 |   |     | September 30, 2024 
 assumptions        |           |   |
|:-----------------------------------------|:----|:-----------------|----------------:|:--|:----|:-------------------|----------:|:--|
| Volatility – range                       |     |                  |    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