Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 38

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 1
Chunk 38
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 lien and continuing security interest in and to the Collateral (as defined in the senior
secured promissory notes).

The net proceeds of the private
placement on November 7, 2024 was $2,669,250 (after $330,750 deduction of costs of the offering). The Company allocated the net proceeds
from the private placement of the senior secured promissory notes and the commitment shares based upon their relative fair values as of
the date of issuance as follows:

 SCHEDULE OF ALLOCATED NET PROCEEDS FROM PRIVATE PLACEMENT OF SENIOR SECURED PROMISSORY NOTES AND COMMITMENT SHARES

    Amount 

    Allocated to the following: 

    Senior secured promissory notes 
    $2,129,795 

    Commitment shares 
     539,455 

    Total 
    $2,669,250 

    20

The Company paid the senior
secured promissory notes off in full on February 13, 2025 with funds generated by the February 2025 public equity offering (See Note 12).
Following is an analysis of the senior secured promissory notes balance:

 SCHEDULE OF SENIOR SECURED PROMISSORY NOTES BALANCE

    Amount 

    Balance, as of December 31, 2023 
    $— 

    Issuance of senior secured promissory notes, at par 
     3,600,000 

    Discount recognized at issuance date 
     (1,470,205)

    Amortization of discount 
     805,486 

    Balance, as of December 31, 2024 
     2,935,281 

    Amortization of discount 
     664,719 

    Principal payment 
     (3,600,000)

    Balance, as of June 30, 2025 
    $— 

NOTE 6. FAIR VALUE MEASUREMENT

In accordance with ASC Topic
820 — Fair Value Measurements and Disclosures (“ASC 820”), the Company utilizes the market approach to measure
fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market
transactions involving identical or comparable assets, liabilities or a group of assets or liabilities, such as a business.

ASC 820 utilizes a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a