Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 57

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 1
Chunk 57
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 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. Relevant 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 
     4.5 years  
     4.48 years 
  
    Exercise price 
    $0.001  
    $0.