Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 141

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 141
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 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 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 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 pre-funded
warrants were all exercised within days of their issuance therefore their total fair value was estimated to be $1,803 at the time of
their exercise which remained the same as their fair value as of the date of issuance. The following are the assumptions used in
calculating the estimated fair value of the pre-funded warrants to purchase Common Stock which were effective and exercisable upon
issuance on February 13, 2025:

 SCHEDULE OF WARRANT MODIFICATION

    Pre funded warrants issuance date – February 13, 2025  assumptions 
  
    Volatility – range 
     110.1%
  
    Risk-free rate 
     4.27%
  
    Dividend 
     —%
  
    Remaining contractual term 
     0.03 years 
  
    Exercise price 
    $0.001 
  
    Common stock issuable under the warrants 
     4,