Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 56

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 1
Chunk 56
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 from the exercise
of the Series B Warrants because it is highly unlikely that a Series B Warrant holder would elect to pay an exercise price in cash to
receive one share of common stock when they could elect the alternate cashless exercise option and pay no exercise price to receive more
shares of common stock than they would receive if they did pay an exercise price.  The following are the assumptions used in calculating
the estimated fair value of the Series B warrants to purchase Common Stock which were effective and exercisable upon the Warrant Shareholder
Approval Date of May 6, 2025:

    Series B warrants issuance/activation date – May 6, 2025  assumptions 
  
    Volatility – range 
     195.04%
  
    Risk-free rate 
     3.87%
  
    Dividend 
     —%
  
    Remaining contractual term 
     2.5 years 
  
    Exercise price 
    $0.00 
  
    Common stock issuable under the warrants 
     1,669,357 

Of the 1,669,357 total Series B warrants issued on May 6, 2025 a total
of 1,669,320 warrants valued at $5,406,320 were immediately exercised by their holders and transitioned to equity during the three and
six months ended June 30, 2025. There remain 37 Series B warrants issued and outstanding at June 30, 2025 which were valued at $88.

    30

2024 Purchase Warrants

On June 25, 2024, the Company
issued Series A and prefunded warrants to purchase a total of 88,411 shares of Common Stock along with the sale of Common Stock. The Company
also issued Series B Warrants that will be issuable and exercisable at any time or times on or after the date that relevant stockholder
approval is obtained in addition to the Series A warrants that are not included in outstanding warrants until such time as relevant stockholder
approval is obtained. Both the Series A and Series B warrants have reset provisions that are activated upon the date relevant stockholder
approval is obtained. The warrant terms provide for net cash settlement outside the control of the Company under certain circumstances.
As such, the Company is required to treat these warrants as derivative liabilities which are valued at their estimated fair value at their
issuance date and at each reporting date with any subsequent changes reported in the condensed consolidated statements of operations as
the