Company: DGLY
Filing Date: 2025-01-24
Form Type: S-1
Source: 0001493152-25-003451
Chunk: 258

Company: DIGITAL ALLY, INC.
Filing Date: 2025-01-24
Form: S-1
Chunk 258
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 the Effectiveness Date, or under certain other circumstances described in the Registration Rights Agreement, then the Company shall be obligated to pay, as partial liquidated damages, to each Purchaser an amount in cash equal to 2% of the original principal amount of the Notes each month until the applicable event giving rise to such payments is cured. If the Company fails to pay any partial liquidated damages in full within seven days after the date payable, the Company will pay interest thereon at a rate of 10% per annum.

The Company recognized the full warrant derivative value, with the remaining amount being allocated to the debt obligation. As the warrant derivative value exceeded the net proceeds from the issuance, the excess amount is recognized as a loss on the date of the issue date. Thus, the Company recorded a loss of $ 576,380as an interest expense on the date of issuance relating to the Notes. The following is the assumptions used in calculating the estimated grant-date fair value of the detachable warrants to purchase common stock granted in connection with the Notes:

SCHEDULE OF WARRANT TO PURCHASE COMMON STOCK GRANTED

|                                          |     | Terms at        
 April 5, 2023   
 (issuance date) |             |   |
|:-----------------------------------------|:----|:----------------|------------:|:--|
| Volatility – range                       |     |                 |       106.0 | % |
| Risk-free rate                           |     |                 |        3.36 | % |
| Dividend                                 |     |                 |           0 | % |
| Remaining contractual term               |     |                 |   5.0 years |   |
| Exercise price                           |     | $               | 5.50 – 7.50 |   |
| Common stock issuable under the warrants |     |                 |   1,125,000 |   |

| F-65 |

On June 2, 2023, the Purchasers elected to convert $ 125,000principal, at the fixed price of $ 5.00per share of common stock, 25,000shares valued at $ 119,750. The loss on conversion of convertible note into common shares, of $ 93,386, was recorded during the period.

On October 26, 2023, the Company entered into a Revolving Loan Agreement of which a portion of the net proceeds were used to repay the principal amount of the Convertible debt. The warrants associated with the convertible debt remain outstanding.