<SEC-DOCUMENT>0001493152-21-020726.txt : 20210819
<SEC-HEADER>0001493152-21-020726.hdr.sgml : 20210819
<ACCEPTANCE-DATETIME>20210819172546
ACCESSION NUMBER:		0001493152-21-020726
CONFORMED SUBMISSION TYPE:	424B5
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20210819
DATE AS OF CHANGE:		20210819

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DIGITAL ALLY INC
		CENTRAL INDEX KEY:			0001342958
		STANDARD INDUSTRIAL CLASSIFICATION:	RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663]
		IRS NUMBER:				200064269
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		424B5
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-239419
		FILM NUMBER:		211191122

	BUSINESS ADDRESS:	
		STREET 1:		15612 COLLEGE BLVD.
		CITY:			LENEXA
		STATE:			KS
		ZIP:			66219
		BUSINESS PHONE:		913-232-5349

	MAIL ADDRESS:	
		STREET 1:		15612 COLLEGE BLVD.
		CITY:			LENEXA
		STATE:			KS
		ZIP:			66219
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B5
<SEQUENCE>1
<FILENAME>form424b5.htm
<TEXT>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: right">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Filed
Pursuant to Rule 424(b)(5)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Registration
No. 333-239419</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>SUPPLEMENT
NO. 1 TO</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>PROSPECTUS
SUPPLEMENT DATED JANUARY 27, 2021</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(To
Prospectus dated July 2, 2020)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>DIGITAL
ALLY, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>3,250,000
Shares of Common Stock</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Prefunded
Common Stock Purchase Warrants to purchase up to 11,050,000 Shares of Common Stock</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Common
Stock Purchase Warrants to purchase up to 6,618,460 Shares of Common Stock</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
Supplement No. 1 (&ldquo;Supplement No. 1&rdquo;) amends and supplements the prospectus supplement of Digital Ally, Inc. (the &ldquo;Company&rdquo;,
&ldquo;our&rdquo;, &ldquo;we&rdquo; and &ldquo;us&rdquo;), dated January 27, 2021 (the &ldquo;Prospectus Supplement&rdquo;) to the prospectus
dated July 2, 2020 (the &ldquo;Prospectus&rdquo;) forming a part of our registration statement on Form S-3 (File No. 333-239419) (the
&ldquo;Shelf Registration Statement&rdquo;). <FONT STYLE="background-color: white">This </FONT>Supplement No. 1 <FONT STYLE="background-color: white">is
not complete without, and should be read in conjunction with, the Prospectus Supplement and the Prospectus and any future amendments
or supplements thereto, each of which are to be delivered with this </FONT>Supplement No. 1<FONT STYLE="background-color: white">. This
</FONT>Supplement No. 1 <FONT STYLE="background-color: white">amends only those sections of the Prospectus Supplement listed in this
</FONT>Supplement No. 1<FONT STYLE="background-color: white">; all other sections of the Prospectus Supplement remain as is, subject
to any updates, as applicable, as a result of the incorporation by reference of documents filed by us </FONT>with the Securities and
Exchange Commission (&ldquo;SEC&rdquo;) under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
&ldquo;Exchange Act&rdquo;) after the date <FONT STYLE="background-color: white">of the Prospectus Supplement. Terms used, but not defined,
herein shall have the meanings ascribed to them in the Prospectus Supplement.</FONT></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
Supplement No. 1 relates only to the offering of our currently outstanding common stock purchase warrants exercisable for up to an aggregate
of 14,300,000 shares of common stock, par value $0.001 per share (&ldquo;Common Stock&rdquo;), issued to certain investors on February
1, 2021 (the &ldquo;Existing Warrants&rdquo;) in a registered direct offering that closed on February 1, 2021, and the shares of Common
Stock that are issuable from time to time upon exercise of the Existing Warrants (the &ldquo;Existing Warrant Shares&rdquo;), which Existing
Warrants and Existing Warrant Shares were offered pursuant to the Shelf Registration Statement of which the Prospectus Supplement
forms a part. As of the date of this Supplement No. 1, none of the Existing Warrants have been exercised by the holders thereof (the
&ldquo;Holders&rdquo;). We and the Holders have entered into a Warrant Exchange Agreement, dated August 19, 2021, pursuant to which we
and the Holders have agreed to exchange and cancel a portion of the Existing Warrants with respect to the right to purchase up to an
aggregate of 7,681,540 shares of Common Stock (the &ldquo;Cancelled Existing Warrants&rdquo;), resulting in the reduction in the number
of shares of Common Stock exercisable under the Existing Warrants to 6,618,460 shares (the &ldquo;Remaining Existing Warrants&rdquo;),
which Remaining Existing Warrants and Existing Warrant Shares underlying the Remaining Existing Warrants shall continue to be registered
pursuant to the Shelf Registration Statement of which the Prospectus Supplement forms a part. The reason for the cancellation of the
Cancelled Existing Warrants is to reduce the amount of the aggregate dollar value of all securities registered pursuant to the Shelf
Registration Statement by approximately $24,965,000, creating more availability thereunder. In consideration for the Holders&rsquo; agreeing
to the cancellation of the Cancelled Existing Warrants, we have agreed to issue to the Holders new unregistered common stock purchase
warrants, in reliance upon the exemption from registration under Section 4(a)(2) under the Securities Act, exercisable for up to an aggregate
of up to 7,681,540 shares of Common Stock (the &ldquo;New Warrants&rdquo;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accordingly,
this Supplement No. 1 amends and supplements the Prospectus Supplement to (i) reflect the removal and de-registration of the Cancelled
Existing Warrants and the 7,681,540 related Existing Warrant Shares from the Shelf Registration Statement and the Prospectus Supplement
which forms a part thereof, in order to create additional capacity thereunder, (ii) supplement and amend those provisions of the Prospectus
Supplement, as set forth in this Supplement No. 1, and (iii) make certain other consequential amendments. In particular, all references
in the Prospectus Supplement to the Company&rsquo;s registration of Existing Warrants to purchase up to 14,300,000 shares of Common Stock
are hereby amended and restated to reflect the registration of the Remaining Existing Warrants and Existing Warrant Shares underlying
the Remaining Existing Warrants pursuant to the Shelf Registration Statement and the Prospectus Supplement which forms a part thereof.
In addition, the expiration date of the Remaining Existing Warrants has been extended until five (5) years and thirty (30) days after
date of issuance of the New Warrants.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Common Stock is listed on The Nasdaq Capital Market (&ldquo;Nasdaq&rdquo;) under the symbol &ldquo;DGLY.&rdquo; The last reported sale
price for our Common Stock on Nasdaq on August 18, 2021 was $1.37 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of the Prospectus Supplement and continuing as of the date of this Supplement No. 1, we were and are not now subject to the
sale limitations described in General Instruction I.B.6 to Form S-3 because the &ldquo;public float&rdquo; (the market value of our Common
Stock held by non-affiliates), as of each of such dates, was greater than $75,0000,000. In the event that any time during the effectiveness
of the Registration Statement, of which this Supplement No. 1, Prospectus Supplement and Prospectus forms a part, we become subject to
such sale limitations, as a result of the public float becoming less that $75,000,000 during any applicable 12-month period, we will
not sell securities in a public primary offering with a value exceeding more than one-third of our public float.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
documents filed by the Company with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, including, but not limited
to, the Company&rsquo;s most recently filed Annual Report on Form 10-K, Quarterly Reports on 10-Q and Current Reports on Form 8-K, are
incorporated by reference into the Prospectus Supplement and this Supplement No. 1 (excluding any information not deemed &ldquo;filed&rdquo;
with the SEC), and any additional filings or documents that the Company may file with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this Supplement No. 1 are incorporated by reference into this Supplement No. 1 and the Prospectus
Supplement (excluding any information not deemed &ldquo;filed&rdquo; with the SEC). Any statement contained in a previous filing or document
filed with the SEC incorporated by reference hereby is deemed to be modified or superseded for purposes of this Supplement No. 1 to the
extent that a statement contained in this Supplement No. 1 or in a subsequent filing or document incorporated by reference herein modifies
or supersedes such statement, and any statement contained in this Supplement No. 1 and the Prospectus Supplement is deemed to be modified
or superseded for purposes of this Supplement No. 1 to the extent that a statement contained in a subsequently filed document incorporated
by reference herein modifies or supersedes such statement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>You
should read carefully this Supplement No. 1, the Prospectus Supplement, the Prospectus and the documents incorporated by reference into
this Supplement No. 1, Prospectus Supplement and Prospectus before you invest.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Our
business and an investment in our securities involve a high degree of risk. See &ldquo;Risk Factors&rdquo; beginning on page 2   of
this Supplement No. 1, page S-12 of the Prospectus Supplement, on page 11 of the Prospectus and the risk factors described in the documents
incorporated by reference into this Supplement No. 1, the Prospectus Supplement and the Prospectus for more information.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined
if this Supplement No. 1, Prospectus Supplement and Prospectus is truthful or complete. Any representation to the contrary is a criminal
offense.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Sole
Placement Agent</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><IMG SRC="form424b5_001.jpg" ALT=""></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">division
of Benchmark Investments, LLC</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
date of this Supplement No. 1 is August 19, 2021</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>RISK
FACTORS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Investing
in in our securities involves a high degree of risk. You should carefully consider and evaluate all of the information contained in this
Supplement No. 1, Prospectus Supplement, Prospectus and in the documents that we incorporate by reference into this Supplement No. 1,
Prospectus Supplement and Prospectus deciding to invest in our securities. In particular, you should carefully consider and evaluate
the risks and uncertainties described under the heading &ldquo;Risk Factors&rdquo; in this Supplement No. 1 and the Prospectus Supplement.
Any of the risks and uncertainties set forth in this Supplement No. 1, Prospectus Supplement, Prospectus and in the documents that we
incorporate by reference herein and therein, as updated by annual, quarterly and other reports and documents that we file with the SEC
and incorporate by reference into this Supplement No. 1 could materially and adversely affect our business, results of operations and
financial condition, which in turn could materially and adversely affect the value of our securities. The risks described in this Supplement
No. 1, Prospectus Supplement, Prospectus and in the documents that we incorporate by reference herein and therein are not the only ones
facing us. Additional risks not currently known to us or that we currently deem immaterial may also adversely affect us. As a result,
you could lose all or part of your investment.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Our
insiders and affiliated parties beneficially own a significant portion of our shares of Common Stock.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">As
of the date of this Supplement No. 1, our executive officers, directors, and affiliated parties beneficially own approximately 7.0% of
our shares of Common Stock, including options vested or to vest within sixty (60) days. As a result, our executive officers, directors
and affiliated parties will have significant influence to:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">elect
    or defeat the election of our directors;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">amend
    or prevent amendment of our articles of incorporation or bylaws;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">effect
    or prevent a merger, sale of assets, change of control or other corporate transaction; and</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">affect
    the outcome of any other matter submitted to the stockholders for vote.</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, any sale of a significant amount of our shares of Common Stock held by our directors and executive officers, or the possibility
of such sales, could adversely affect the market price of our Common Stock. Management&rsquo;s stock ownership may discourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent
our stockholders from realizing any gains from our Common Stock. Furthermore, the interests of this concentration of ownership may not
always coincide with our interests or the interests of other stockholders. Accordingly, these stockholders could cause us to enter into
transactions or agreements that we would not otherwise consider.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
have incurred losses in recent years.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have had net losses for several years and had an accumulated deficit of $<FONT STYLE="background-color: white">90,014,500</FONT> at December
31, 2020, which includes our net losses of $2,625,881 for the year ended December 31, 2020, as compared to $10,005,713 for the year ended
December 31, 2019. As of June 30, 2021, we had an accumulated deficit of $73,675,129, which includes net income of $16,339,371&nbsp;
for the six months ended June 30, 2021. We have implemented several initiatives intended to improve our revenues and reduce our operating
costs with a goal of restoring profitability. If we are unsuccessful in this regard, it will have a material adverse impact on our business,
prospects, operating results and financial condition.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>If
we are unable to manage our current business activities, our prospects may be limited and our future profitability may be adversely affected.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
experienced a decline in our operating results from 2009 to 2020, however we noted an improvement in operating results during the six
months ended June 30, 2021&nbsp;. Our revenues have been unpredictable, which poses significant burdens on us to be proactive in managing
production, personnel levels and related costs. We will need to improve our revenues, operations, financial and other systems to manage
our business effectively, and any failure to do so may lead to inefficiencies and redundancies which reduce our prospects to return to
profitability.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I></I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
face risks related to health epidemics and other outbreaks, which could significantly disrupt our operations and could have a material
adverse impact on us, and the recent coronavirus outbreak could materially and adversely affect our business.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">An
outbreak of a new respiratory illness caused by COVID-19 has resulted in millions of infections and hundreds of thousands of deaths worldwide,
as of the date of filing of this Supplement No. 1, and continues to spread across the globe, including throughout the law enforcement
and commercial fleets channels in the United States, the major market in which we operate. The outbreak of COVID-19 or by other epidemics
could materially and adversely affect our business, financial condition and results of operations. If COVID-19 worsens in the United
States and Asia, or in any other regions in which we have material operations or sales, our business activities originating from affected
areas, including sales, manufacturing and supply chain related activities, could be adversely affected. Although we have been deemed
by the State of Kansas to be an &ldquo;essential business&rdquo;, our supply chain has been and continues to be disrupted and our customers,
in particular our commercial customers, have been and continue to be significantly impacted, which has in turn reduced our operations
and activities. Disruptive activities from COVID-19 could still include the temporary closure of our manufacturing facilities and those
used in our supply chain processes, restrictions on the export or shipment of our products, significant cutback of ocean container delivery
from Asia, business closures in impacted areas, and restrictions on our employees&rsquo; and consultants&rsquo; ability to travel and
to meet with customers. The extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain
and cannot be predicted, including new information which may emerge concerning the severity of the virus and the actions to contain it
or treat its impact, among others. COVID-19 could also result in social, economic and labor instability in the countries in which we
or our customers and suppliers operate.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
workers at one or more of our offices or the offices of our suppliers or manufacturers become ill or are quarantined and in either or
both events are therefore unable to work, our operations could be subject to disruption. Further, if our manufacturers become unable
to obtain necessary raw materials or components, we may incur higher supply costs or our manufacturers may be required to reduce production
levels, either of which may negatively affect our financial condition or results of operations. In addition, the capital markets have
been disrupted and our efforts to raise necessary capital will likely be adversely impacted by the outbreak of COVID-19. As a result,
we cannot forecast with any certainty when the disruptions caused by such outbreak will cease to impact our business and the results
of our operations. In reviewing our consolidated financial statements for the year ended December 31, 2020 and the quarterly period ended
June 30, 2021, as well as the notes to such financial statements, which financial statements and notes are incorporated by reference
to this Supplement No. 1, the Prospectus Supplement, the Prospectus and any supplement or amendment hereto, consider the additional uncertainties
caused by the outbreak of COVID-19. The extent to which COVID-19 affects our results will depend on future developments that are highly
uncertain and cannot be predicted, including actions to contain COVID-19 or address and treat its effects, among others.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
depend on sales from our in-car video products and body-worn cameras and if these products become obsolete or not widely accepted, our
growth prospects will be diminished.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">We
derived our revenues in 2019, 2020 and to date in 2021 predominantly from sales of our in-car video systems, including the DVM-800, our
largest selling product, and the FirstVU HD body-worn camera, our second largest selling product. We expect to continue to depend on
sales of these products during 2021, although we do expect our newly launched EVO-HD in-car system to gain traction in 2021 along with
our new branded products within the Shield<SUP>TM</SUP> disinfectant and cleanser line. A decrease in the prices of, or the demand for
our in-car video products, or the failure to achieve broad market acceptance of our new product offerings, would significantly harm our
growth prospects, operating results and financial condition.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I></I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
substantially depend on our research and development activities to design new products and upgrades to existing products and if these
products are not widely accepted, or we encounter difficulties and delays in launching these new products, our growth prospects will
be diminished.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">We
have a number of active research and development projects underway that are intended to launch new products or upgrades to existing products.
We may incur substantial costs and/or delays in completion of these activities that may not result in viable products or may not be received
well by our potential customers. We incurred $448,965 and $485,748 in research and development expenses during the three months ended
March 31, 2021 and 2020, respectively, which represent a substantial expense in relation to our total revenues and net income. If we
are unsuccessful in bringing these products from the engineering prototype phase to commercial production, we could incur additional
expenses (in addition to those already spent) without receiving revenues from the new products. Also, these new products may fail to
achieve broad market acceptance and may not generate revenue to cover expenses incurred to design, develop, produce and market the new
product offerings. Substantial delays in the launch of one or more products could negatively impact our revenues and increase our costs,
which could significantly harm our growth prospects, operating results and financial condition.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
Supplement No. 1, Prospectus Supplement, Prospectus and the documents incorporated by reference herein and therein, including the sections
entitled &ldquo;Risk Factors&rdquo;, contain &ldquo;forward-looking statements&rdquo; within the meaning of Section 21(E) of the Exchange
Act and Section 27A of the Securities Act of 1933, as amended. These forward-looking statements include, without limitation: statements
regarding proposed new products or services; statements concerning litigation or other matters; statements concerning projections, predictions,
expectations, estimates or forecasts for our business, financial and operating results and future economic performance; statements of
management&rsquo;s goals and objectives; statements concerning our competitive environment, availability of resources and regulation;
trends affecting our financial condition, results of operations or future prospects; our financing plans or growth strategies; and other
similar expressions concerning matters that are not historical facts. Words such as &ldquo;may&rdquo;, &ldquo;will&rdquo;, &ldquo;should&rdquo;,
&ldquo;could&rdquo;, &ldquo;would&rdquo;, &ldquo;predicts&rdquo;, &ldquo;potential&rdquo;, &ldquo;continue&rdquo;, &ldquo;expects&rdquo;,
&ldquo;anticipates&rdquo;, &ldquo;future&rdquo;, &ldquo;intends&rdquo;, &ldquo;plans&rdquo;, &ldquo;believes&rdquo; and &ldquo;estimates,&rdquo;
and variations of such terms or similar expressions, are intended to identify such forward-looking statements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Forward-looking
statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the
times at, or by which, that performance or those results will be achieved. Forward-looking statements are based on information available
at the time they are made and/or management&rsquo;s good faith belief as of that time with respect to future events and are subject to
risks and uncertainties that could cause actual performance or results to differ materially from what is expressed in or suggested by
the forward-looking statements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Forward-looking
statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no
obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting
forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking
statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
Investors should review our subsequent reports filed with the SEC described in the sections of the Prospectus Supplement entitled &ldquo;Where
You Can Find More Information&rdquo; and &ldquo;Incorporation of Documents by Reference,&rdquo; all of which are accessible on the SEC&rsquo;s
website at <I>www.sec.gov</I>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Digital
Ally, Inc.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>3,250,000
Shares of Common Stock</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Prefunded
Common Stock Purchase Warrants to purchase up to 11,050,000 Shares of Common Stock</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Common
Stock Purchase Warrants to purchase up to 6,618,460 Shares of Common Stock</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>SUPPLEMENT
NO. 1 TO PROSPECTUS SUPPLEMENT</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Sole
Placement Agent</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><IMG SRC="form424b5_001.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">division
of Benchmark Investments, LLC</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>August
19, 2021</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>




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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
