Asfiled with the Securities and Exchange Commission on January 24, 2023

RegistrationNo. 333-              

UNITEDSTATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,D.C. 20549

FORMS-1

REGISTRATIONSTATEMENT

UNDERTHE
SECURITIES ACT OF 1933

DIGITALALLY, INC.

(Exactname of registrant as specified in its charter)

14001Marshall Drive
Lenexa, Kansas 66215
(913) 814-7774

(Address,including zip code and telephone number, including area code, of registrant’s principal executive offices)

StantonE. Ross
Chief Executive Officer
DIGITAL ALLY, Inc.
14001 Marshall Drive
Lenexa, Kansas 66215
(913) 814-7774
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copiesto:

Approximatedate of commencement of proposed sale to the public: As soon as practicable after this registration statement is declared effective.

Ifany of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under theSecurities Act of 1933, check the following box: ☒

Ifthis Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check thefollowing box and list the Securities Act registration statement number of the earlier effective registration statement for the sameoffering. ☐

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicateby check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reportingcompany, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Ifan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Theregistrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until theregistrant shall file a further amendment which specifically states that this registration statement shall thereafter become effectivein accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such dateas the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine.

Theinformation in this prospectus is not complete and may be changed. We may not sell these securities until the registration statementfiled with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is notsoliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

DIGITALALLY, INC.

Upto              Shares of Common Stock

Upto              Pre-Funded Warrants

Up to             Warrants

Weare offering on a reasonable best-efforts basis: (i)           shares of common stock ofDigital Ally, Inc. (the “Common Stock”) and (ii)           warrants (“Warrants”)to purchase shares of Common Stock at an exercise price of $           per share. The Warrantsare immediately exercisable and will expire five years from the original issuance date. We are offering the Common Stock and Warrantsat an assumed combined purchase price of $          , which is equal to the closing priceof our Common Stock on the Nasdaq Capital Market on January   , 2023. The actual public offering price will be determined betweenus, A.G.P./Alliance Global Partners (whom we refer to herein as “placement agent”) and the investors in the offering, andmay be at a discount to the current market price of our Common Stock. Therefore, the assumed combined public offering price used throughoutthis prospectus may not be indicative of the final offering price.

We are offering to certain purchasers whose purchase of CommonStock in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficiallyowning more than 4.99% of our outstanding shares of Common Stock immediately following the consummation of this offering, the opportunityto purchase, if any purchaser so chooses, Pre-Funded Warrants, in lieu of shares of Common Stock that would otherwise result in suchpurchaser’s beneficial ownership exceeding 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding shares of CommonStock. The purchase price of each Pre-Funded Warrant and accompanying Warrant is $       (which is equalto the combined public offering price per share of Common Stock and accompanying Warrant to be sold in this offering, minus $0.001,the exercise price of each Pre-Funded Warrant). The Pre-Funded Warrants are immediately exercisable and may be exercised at any timeuntil all of the Pre-Funded Warrants are exercised in full. For each Pre-Funded Warrant we sell, the number of shares of Common Stockwe are offering will be decreased on a one-for-one basis. Because we will issue a Warrant for each share of Common Stock and for eachPre-Funded Warrant sold in this offering, the number of Warrants sold in this offering will not change as a result of a change in themix of shares of Common Stock and Pre-Funded Warrants sold.

Our shares of CommonStock (or Pre-Funded Warrants in lieu thereof) and Warrants can only be purchased together in this offering, but will be issued separately.Shares of Common Stock issuable from time to time upon exercise of the Pre-Funded Warrants and Warrants are also being offered by thisprospectus. These securities are being sold in this offering to certain purchasers under a securities purchase agreement between us andthe purchasers.

Ourshares of Common Stock are listed on the Nasdaq Capital Market under the symbol “DGLY.” On January 23, 2023, the last reportedsale price of our shares of Common Stock on the Nasdaq Capital Market was $0.29 per share.

As stated above, the public offering price for our securitiesin this offering will be determined at the time of pricing, and may be at a discount to the then current market price. The assumed combinedpublic offering price used throughout this prospectus may not be indicative of the final offering price. The final public offering pricewill be determined through negotiation between us and investors based upon a number of factors, including our history and our prospects,the industry in which we operate, our past and present operating results, the previous experience of our executive officers and the generalcondition of the securities markets at the time of this offering. There is no established public trading market for the Warrants or Pre-FundedWarrants, and we do not expect markets to develop. Without an active trading market, the liquidity of the Warrants and Pre-Funded Warrantswill be limited. In addition, we do not intend to list the Warrants or Pre-Funded Warrants on the Nasdaq Capital Market, any other nationalsecurities exchange or any other trading system.

Investingin our securities involves substantial risks. Please read carefully the section entitled “Risk Factors” beginning on page8 of this prospectus, as well as the other information included or incorporated by reference in this prospectus, before buying any ofour securities.

We have retainedthe placement agent to act as our sole placement agent in connection with the securities offered by this prospectus. The placement agentis not purchasing or selling any of these securities nor is it required to sell any specific number or dollar amount of securities, buthas agreed to use its reasonable best efforts to sell the securities offered by this prospectus. We may not sell all of the securitiesin this offering. We have agreed to pay the placement agent the placement agent fees set forth in the table below.

There is no minimum number of securities or minimum aggregateamount of proceeds for this offering to close. We expect this offering to be completed not later than two business days following thecommencement of this offering and we will deliver all securities to be issued in connection with this offering delivery versus payment(“DVP”)/receipt versus payment (“RVP”) upon receipt of investor funds received by us. Accordingly, neither wenor the placement agent have made any arrangements to place investor funds in an escrow account or trust account since the placementagent will not receive investor funds in connection with the sale of the securities offered hereunder.

(1)Represents a cash fee equal to      % of the aggregate purchase price paid by investors in this offering. Wehave also agreed to reimburse the placement agent for its accountable offering-related legal expenses in an amount up to $   and pay the placement agent a non-accountable expense allowance of $    . See “Plan of Distribution”beginning on page 43 of this prospectus for a description of the compensation to be received by the placement agent.

(2)Does not include proceeds from the exercise of the Warrants and Pre-Funded Warrants in cash, if any.

Neitherthe Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passedupon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

Deliveryof the securities is expected to be made on or about                      ,2023.

SolePlacement Agent

A.G.P.

Thedate of this prospectus is             , 2023

TABLEOF CONTENTS

ABOUTTHIS PROSPECTUS

Youshould rely only on the information that we have provided or incorporated by reference in this prospectus, any related free writing prospectusthat we may authorize to be provided to you and the other information to which we refer you. We have not authorized anyone to provideyou with different or additional information. No dealer, salesperson or other person is authorized to give any information or to representanything not contained or incorporated by reference in this prospectus or any related free writing prospectus that we may authorize tobe provided to you. If anyone provides you with different or additional information, you should not rely on it. You should assume thatthe information in this prospectus or any related free writing prospectus is accurate only as of the date on the cover of the documentand that any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference,regardless of the time of delivery of this prospectus or any related free writing prospectus, or any sale of a security. Our business,financial condition, results of operations and prospects may have changed since those dates.

Weurge you to carefully read this prospectus, together with the information incorporated herein by reference as described under the heading“Where You Can Find More Information.”

Inthis prospectus, unless otherwise specified or the context requires otherwise, we use the terms “Digital Ally,” “Company,”“we,” “us” and “our” or similar references to refer to Digital Ally, Inc., a Nevada corporation,together with its consolidated subsidiaries.

INDUSTRYAND MARKET DATA

Marketdata and certain industry data and forecasts used throughout this prospectus were obtained from sources we believe to be reliable, includingmarket research databases, publicly available information, reports of governmental agencies and industry publications and surveys. Wehave relied on certain data from third-party sources, including internal surveys, industry forecasts and market research, which we believeto be reliable based on our management’s knowledge of the industry. Forecasts are particularly likely to be inaccurate, especiallyover long periods of time. In addition, we do not necessarily know what assumptions regarding general economic growth were used in preparingthe third-party forecasts we cite. Statements as to our market position are based on the most currently available data. While we arenot aware of any misstatements regarding the industry data presented in this prospectus, our estimates involve risks and uncertaintiesand are subject to change based on various factors, including those discussed under the heading “Risk Factors” in this prospectus.

RiskfactorS

Investingin our securities involves a high degree of risk. You should carefully consider the risks described below and all of the informationcontained or incorporated by reference in this prospectus, before deciding whether to purchase the securities offered hereby. Our business, financial condition,results of operations and prospects could be materially and adversely affected by these risks.

RisksRelated to This Offering and our Securities

Themarket price for our Common Stock is particularly volatile given our status as a relatively unknown company with a small and thinly tradedpublic float, and lack of profits, which could lead to wide fluctuations in the share price of our Common Stock. You may be unable tosell any shares of Common Stock that you hold at or above your purchase price, which may result in substantial losses to you.

Themarket for our Common Stock is characterized by significant price volatility when compared to the shares of larger, more establishedcompanies that trade on a national securities exchange and have large public floats, and we expect that the share price of our Common Stock will continue to be more volatile than the shares of such larger, more established companies for the indefinite future. The volatilityin the share price of our Common Stock is attributable to a number of factors. First, as noted above, our Common Stock is, compared tothe shares of such larger, more established companies, sporadically and thinly traded. The price for our shares of share price of ourCommon Stock could, for example, decline precipitously in the event that a large number of shares of our Common Stock is sold on themarket without commensurate demand. Secondly, an investment in our securities is a speculative or “risky” investment dueto our lack of profits to date. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing allor most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares of share price ofour Common Stock on the market more quickly and at greater discounts than would be the case with the stock of a larger, more establishedcompany that trades on a national securities exchange and has a large public float. Many of these factors are beyond our control andmay decrease the market price of our Common Stock regardless of our operating performance.

Holdersof the Pre-Funded Warrants and Warrants will not be entitled to any rights with respect to our Common Stock but will be subjectto all changes made with respect to our Common Stock.

Holdersof the Pre-Funded Warrants and Warrants will not be entitled to any rights with respect to our Common Stock (including, withoutlimitation, voting rights and rights to receive any dividends or other distributions on our Common Stock), but holders of the Pre-FundedWarrants and Warrants will be subject to all changes affecting our Common Stock. For example, if an amendment is proposed to ourarticles of incorporation, as amended (“Charter”), requiring stockholder approval and the record date for determiningthe stockholders of record entitled to vote on the amendment occurs prior to the relevant holder acquiring shares of our Common Stockas a result of exercise of such holder’s Pre-Funded Warrants and Warrants, such holder will not be entitled to vote on theamendment, although such holder will nevertheless be subject to any changes in the powers, preferences or special rights of our CommonStock.

Thereis no public market for the Pre-Funded Warrants or the Warrants being offered in this offering.

Thereis no established public trading market for the Pre-Funded Warrants or the Warrants being offered in this offering, and we do not expecta market to develop. In addition, we do not intend to apply to list the Pre-Funded Warrants or the Warrants on any securities exchangeor nationally recognized trading system, including Nasdaq. Without an active market, the liquidity of the Pre-Funded Warrants or theWarrants will be limited.

ThePre-Funded Warrants and the Warrants are speculative in nature.

Followingthis offering, the market value of the Pre-Funded Warrants and Warrants, if any, is uncertain and there can be no assurance thatthe market value of the Pre-Funded Warrants and Warrants will equal or exceed their imputed public offering price. In the eventthat our Common Stock price does not exceed the exercise price of the Warrants during the period when such Warrants are exercisable,such Warrants may not have any value. Furthermore, each Warrant will expire five years from its date of issuance.

Wehave been notified by The Nasdaq Stock Market LLC of our failure to comply with certain continued listing requirements and, if we areunable to regain compliance with all applicable continued listing requirements and standards of Nasdaq, our Common Stock could be delistedfrom Nasdaq. Additionally, if our Common Stock has a closing bid price of $0.10 or less for any ten consecutive trading days, our CommonStock may be subject to immediate delisting from Nasdaq.

OurCommon Stock is currently listed on Nasdaq. In order to maintain that listing, we must satisfy minimum financial and other continuedlisting requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders’equity, minimum share price, and certain corporate governance requirements. There can be no assurances that we will be able to complywith the applicable listing standards of The Nasdaq Stock Market LLC.

OnJuly 7, 2022, we received a written notification from the Listing Qualifications Department (the “Staff”) of The NasdaqStock Market LLC (“Nasdaq”) notifying us that we were not in compliance with the minimum bid price requirement forcontinued listing on Nasdaq, as set forth under Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”), becausethe closing bid price of our Common Stock was below $1.00 per share for the previous thirty (30) consecutive business days. We were granted180 calendar days, or until January 3, 2023 (the “First Compliance Period”), to regain compliance with the MinimumBid Price Requirement. In order to regain compliance, the closing bid price of our Common Stock must be at least $1 per share fora minimum of 10 consecutive business days during the First Compliance Period. The Company’s Common Stock has not regained compliancewith the Minimum Bid Price Requirement as of January 3, 2023. On December 29, 2022, the Company requested an extension of an additional180 days in which to regain compliance with the Minimum Bid Price Requirement.

OnJanuary 4, 2023, the Company received notice (the “Second Notice”) from Nasdaq indicating that, while the Company has notregained compliance with the Minimum Bid Price Requirement, Staff has determined that the Company is eligible for an additional 180-dayperiod, or until July 3, 2023 (the “Second Compliance Period”), to regain compliance. Staff’s determination was basedon (i) our meeting the continued listing requirement for market value of our publicly held shares and all other initial listing standardsfor The Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and (ii) our providing written notice to Nasdaqof our intent to cure the deficiency during the Second Compliance Period, if necessary, by effecting a reverse stock split. If at anytime during the Second Compliance Period, the closing bid price of the Company’s Common Stock is at least $1 per share for at leasta minimum of 10 consecutive business days, Nasdaq will provide the Company with written confirmation of compliance with the Minimum BidPrice Requirement and the matter will be closed. If compliance cannot be demonstrated by the end of the Second Compliance Period, Staffwill provide written notification that the Common Stock will be delisted. At that time, the Company may appeal Staff’s determinationto a hearings panel. We can give no assurance that the Company will regain or demonstrate compliance by July 3, 2023. 

Additionally,pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iii) (the “$0.10 Rule”), our Common Stock may be subject to immediate delistingfrom Nasdaq if our Common Stock has a closing bid price of $0.10 or less for any ten (10) consecutive trading days. In the event thatwe are in violation of the $0.10 Rule, Nasdaq will issue a Staff Delisting Determination with the potential opportunity for us to appealthat determination.

Therecan be no assurances that we will be able to regain compliance with the Minimum Bid Price Requirement. Nor can there be assurances thatwe will maintain compliance with the $0.10 Rule, particularly if the price of our Common Stock declines as a result of this offering.If we are unable to regain or maintain compliance with these Nasdaq requirements, our Common Stock will be delisted from Nasdaq.

Inthe event that our Common Stock is delisted from Nasdaq, as a result of our failure to comply with the Minimum Bid Price Requirementor the $0.10 Rule, or due to our failure to continue to comply with any other requirement for continued listing on Nasdaq, and is noteligible for listing on another exchange, trading in the shares of our Common Stock could be conducted in the over-the-counter marketor on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. In such event,it could become more difficult to dispose of, or obtain accurate price quotations for, our Common Stock, and it would likely be moredifficult to obtain coverage by securities analysts and the news media, which could cause the price of our Common Stock to decline further.Also, it may be difficult for us to raise additional capital if we are not listed on a national exchange.

Inthe event that our Common Stock is delisted from Nasdaq, U.S. broker-dealers may be discouraged from effecting transactions in sharesof our Common Stock because they may be considered penny stocks and thus be subject to the penny stock rules.

TheSEC has adopted a number of rules to regulate a “penny stock” that restricts transactions involving stock which is deemedto be penny stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities ExchangeAct of 1934, as amended (the “Exchange Act”). These rules may have the effect of reducing the liquidity of penny stocks.“Penny stocks” generally are equity securities with a price of less than $5.00 per share (other than securities registeredon certain national securities exchanges or traded on Nasdaq if current price and volume information with respect to transactions insuch securities is provided by the exchange or system). Our shares of Common Stock have in the past constituted, and may again in thefuture constitute, a “penny stock” within the meaning of the rules. The additional sales practice and disclosure requirementsimposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in shares of our Common Stock, whichcould severely limit the market liquidity of such shares of Common Stock and impede their sale in the secondary market.

AU.S. broker-dealer selling a penny stock to anyone other than an established customer or “accredited investor” (generally,an individual with a net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse)must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transactionprior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the “penny stock” regulationsrequire the U.S. broker-dealer to deliver, prior to any transaction involving a “penny stock”, a disclosure schedule preparedin accordance with SEC standards relating to the “penny stock” market, unless the broker-dealer or the transaction is otherwiseexempt. A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representativeand current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent priceinformation with respect to any “penny stock” held in a customer’s account and information with respect to the limitedmarket in “penny stocks”.

Youshould be aware that, according to the SEC, the market for “penny stocks” has suffered in recent years from patterns of fraudand abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related tothe promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading pressreleases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperiencedsales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumpingof the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, resulting in investor losses.Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in aposition to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within theconfines of practical limitations to prevent the described patterns from being established with respect to our securities.

Ifand when a larger trading market for our Common Stock develops, the market price of our Common Stock is still likely to be highly volatileand subject to wide fluctuations, and you may be unable to resell your shares at or above the price at which you acquired them.

Themarket price of our Common Stock may be highly volatile and could be subject to wide fluctuations in response to a number of factorsthat are beyond our control, including, but not limited to:

Inaddition, if the market for technology stocks or the stock market in general experiences loss of investor confidence, the trading priceof our Common Stock could decline for reasons unrelated to our business, financial condition or operating results. The trading priceof our shares of Common Stock might also decline in reaction to events that affect other companies in our industry, even if these eventsdo not directly affect us. Each of these factors, among others, could harm the value of your investment in our securities. In the past,following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation,if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which couldmaterially and adversely affect our business, operating results and financial condition.

Ourability to use our net operating loss carry-forwards and certain other tax attributes may be limited.

UnderSection 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change” (generallydefined as a greater than 50% change (by value) in its equity ownership over a three-year period), the corporation’s ability touse its pre-change net operating loss carry-forwards and other pre-change tax attributes (such as research tax credits) to offset itspost-change income may be limited. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership,including as a result of the completion of this offering when it is taken together with other transactions we may consummate in the succeedingthree-year period. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carry-forwards tooffset U.S. federal taxable income may be subject to limitations, which potentially could result in increased future tax liability tous.

Wedo not anticipate paying dividends on our Common Stock in the foreseeable future; you should not buy our securities if you expect dividends.

Thepayment of dividends on our Common Stock will depend on earnings, financial condition and other business and economic factors affectingus at such time as our Board may consider relevant. If we do not pay dividends, our Common Stock may be less valuable becausea return on your investment will only occur if our stock price appreciates.

Wecurrently intend to retain our future earnings to support operations and to finance expansion and, therefore, we do not anticipate payingany cash dividends on our Common Stock in the foreseeable future.

Ourcharter documents and Nevada law could prevent a takeover that stockholders consider favorable and could also reduce the market priceof our Common Stock.

Provisionsof Nevada anti-takeover law (NRS 78.378 et seq.) could have the effect of delaying or preventing a third-party from acquiring us, evenif the acquisition arguably could benefit our stockholders. Various provisions of our by-laws may delay, defer or prevent a tender offeror takeover attempt of us that a stockholder might consider in his or her best interest. Our by-laws may be adopted, amended or repealedby the affirmative vote of the holders of at least a majority of our outstanding shares of capital stock entitled to vote for the electionof directors, and except as provided by Nevada law, our Board shall have the power to adopt, amend or repeal the bylawsby a vote of not less than a majority of our directors. The interests of these stockholders and directors may not be consistent withyour interests, and they may make changes to the by-laws that are not in line with your concerns.

Subjectto applicable Nasdaq rules regarding the issuance of 20% or more of our Common Stock, our authorized but unissued shares of Common Stockare available for our Board to issue without stockholder approval. We may use these additional shares for a variety of corporatepurposes, however, faced with an attempt to obtain control of us by means of a proxy context, tender offer, merger or other transactionour Board acting alone and without approval of our stockholders can issue large amounts of capital stock as part of a defenseto a take-over challenge.

Theexistence of the foregoing provisions and other potential anti-takeover measures could limit the price that investors might be willingto pay in the future for shares of our Common Stock. They could also deter potential acquirers of our company, thereby reducing the likelihoodthat you could receive a premium for your Common Stock in an acquisition.

Ifsecurities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if theychange their recommendations regarding our Common Stock adversely, our Common Stock price and trading volume could decline.

Thetrading market for our shares of Common Stock will be influenced by the research and reports that industry or securities analysts maypublish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regardingour Common Stock adversely, or provide more favorable relative recommendations about our competitors, our share price would likely decline.If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibilityin the financial markets, which in turn could cause our Common Stock price or trading volume to decline.

Therequirements of being a U.S. public company may strain our resources and divert management’s attention.

Asa U.S. public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act,the listing requirements of Nasdaq, and other applicable securities rules and regulations. Compliance with these rules and regulationswill increase our legal and financial compliance costs, make some activities more difficult, time-consuming, or costly, and increasedemand on our systems and resources. The Exchange Act requires, among other things, that we file annual and current reports with respectto our business and operating results.

Asa result of disclosure of information in this prospectus, and in the documents that we incorporate by reference herein and therein, aswell as in filings required of a public company, our business and financial condition is more visible, which we believe may result inthreatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operatingresults could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the timeand resources necessary to resolve them, could divert resources of our management and harm our business and operating results.

Ourmanagement will have broad discretion over the use of the net proceeds from this offering, you may not agree with how we use the proceedsand the proceeds may not be invested successfully.

Ourmanagement will have broad discretion as to the use of the net proceeds from this offering and could use them for purposes other thanthose contemplated at the time of commencement of this offering. Accordingly, you will be relying on the judgment of our management regardingthe use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceedsare being used appropriately. It is possible that, pending their use, we may invest the net proceeds in a way that does not yield a favorable,or any, return for us. The failure of our management to use such funds effectively could have a material adverse effect on our business,financial condition, operating results and cash flows.

Youmay experience immediate and substantial dilution in the net tangible book value per share of the Common Stock sold in this offeringor that may be issued upon the exercise of any Pre-Funded Warrants sold in this offering.

Ifthe price per share of our Common Stock being offered or that may be issued upon the exercise of any Pre-FundedWarrants is higher than the net tangible book value per share of our Common Stock, youwill suffer immediate and substantial dilution in the net tangible book value of the Common Stock you purchase in this offeringor the Common Stock underlying the Pre-Funded Warrants you purchase in this offering. See the section entitled “Dilution”below for a more detailed discussion of the dilution you will incur if you invest in this offering.

Thisis a best efforts offering, no minimum amount of securities is required to be sold, and we may not raise the amount of capital we believeis required for our business plans.

Theplacement agent has agreed to use its reasonable best efforts to solicit offers to purchase the securities being offered in this offering.The placement agent has no obligation to buy any of the securities from us or to arrange for the purchase or sale of any specific numberor dollar amount of the securities. There is no required minimum number of securities or amount of proceeds that must be sold as a conditionto completion of this offering. Because there is no minimum offering amount required as a condition to the closing of this offering,the actual offering amount, placement agent fees and proceeds to us are not presently determinable and may be substantially less thanthe maximum amounts set forth above. We may sell fewer than all of the securities offered hereby, which may significantly reduce theamount of proceeds received by us, and investors in this offering will not receive a refund in the event that we do not sell an amountof securities sufficient to fund for our operations as described in the “Use of Proceeds” section herein. Thus, we may notraise the amount of capital we believe is required for our operations in the short-term and may need to raise additional funds, whichmay not be available or available on terms acceptable to us.

Youmay experience future dilution as a result of future equity offerings and other issuances of our Common Stock or other securities.In addition, this offering and future equity offerings and other issuances of our Common Stock or other securities may adverselyaffect our Common Stock price.

Inorder to raise additional capital, we may in the future offer additional shares of our Common Stock or other securities convertibleinto or exchangeable for our Common Stock at prices that may not be the same as the price per Common Stock (or Pre-Funded Warrant)and Warrant in this offering. We may not be able to sell shares or other securities in any other offering at a price per share thatis equal to or greater than the price per Common Stock (or Pre-Funded Warrant) and Warrant paid by the investor in this offering,and investors purchasing shares or other securities in the future could have rights superior to existing stockholders. The price pershare at which we sell additional shares of our Common Stock or securities convertible into Common Stock in future transactionsmay be higher or lower than the price per Common Stock (or Pre-Funded Warrant) and Warrant in this offering. You may incurdilution upon exercise of any outstanding stock options, warrants or upon the issuance of shares of Common Stock under our equityincentive programs. In addition, the sale of securities in this offering and any future sales of a substantial number of shares ofour Common Stock in the public market, or the perception that such sales may occur, could adversely affect the price of our CommonStock. We cannot predict the effect, if any, that market sales of those shares of Common Stock or the availability of thoseshares for sale will have on the market price of our Common Stock.

Without obtainingadequate capital funding or improving our financial performance, we may not be able to continue as a going concern.

Our recurring losses from operationsand negative cash flows raise substantial doubt about our ability to continue as a going concern without additional capital-raising activities.As a result, we have concluded that there is substantial doubt about our ability to continue as a going concern. Failure to secure additionalfunding may require us to modify, delay, or abandon some of our planned future expansion or development, or to otherwise enact operatingcost reductions available to management, which could have a material adverse effect on our business, operating results, financial condition,and ability to achieve our intended business objectives.

RisksRelated to Our Business and Operations

Wehave incurred losses in recent years.

Wehave had net losses for several years and had an accumulated deficit of $68,670,497 at December 31, 2021, which includes our net incomeof $25,474,508 for the year ended December 31, 2021, as compared to our net loss of $2,625,881 for the year ended December 31, 2020.As of September, 2022, had an accumulated deficit of $82,261,430, which includes net losses of $9,568,134 for the nine monthsended September 30, 2022. We have included disclosure of our liquidity plan and the substantial doubt about our ability to continue asa going concern in Quarterly Report on Form 10-Q for the nine months ended September, 2022. We have implemented several initiatives intendedto 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.

Wedo not have any revolving credit facilities and it may be difficult for us to enter into one.

Wehave no revolving credit facility to fund our operating needs should it become necessary. It will be difficult to obtain an institutionalline of credit facility given our recent operating losses and the current banking environment, which may adversely affect our abilityto finance our business, grow or be profitable. Further, even if we could obtain a new credit facility, in all likelihood it would notbe on terms favorable to us.

Ifwe are unable to manage our current business activities, our prospects may be limited and our future profitability may be adversely affected.

Weexperienced operating losses each year from 2009 to 2021, as well as through the nine months ended September 30, 2022.Our revenues have been unpredictable, which poses significant burdens on us to be proactive in managing production, personnel levelsand related costs. We will need to improve our revenues, margins, 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.

Weface risks related to health epidemics and other outbreaks, which could significantly disrupt our operations and could have a materialadverse impact on us, and the recent coronavirus outbreak could materially and adversely affect our business.

TheCOVID-19 pandemic has resulted in hundreds of millions of infections and millions of deaths worldwide, as of the date of filing of theregistration statement of which this prospectus forms a part, and continues to spread across the globe, including throughout the lawenforcement and commercial fleets channels in the United States, the major market in which we operate. The COVID-19 pandemic or the outbreakof any other pandemic or epidemic 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 businessactivities 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 “essential business”, our supply chain has been and continuesto be disrupted and our customers, in particular our commercial customers, have been and continue to be significantly impacted, whichhas in turn reduced our operations and activities. Disruptive activities from COVID-19 could still include the temporary closure of ourmanufacturing facilities and those used in our supply chain processes, restrictions on the export or shipment of our products, significantcutback of ocean container delivery from Asia, business closures in impacted areas, and restrictions on our employees’ and consultants’ability to travel and to meet with customers. Additionally, the recent decline in COVID-19 infection rates due to increased vaccinationrates in the U.S. and abroad has resulted in a reduction in sales of our Shield™ and ThermoVU™ products since the first quarterof 2021, which has continued through the second quarter of 2021. Recently, variants of COVID-19 have increased infectionand hospitalization rates which may lead to higher sales as the government and health authorities consider new actions and restrictionsto combat the spread of the new variants. The extent to which COVID-19 impacts our results will depend on future developments,which are highly uncertain and cannot be predicted, including vaccination and infection rates, new information which may emerge concerningthe severity of the virus and any other 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.

Ifworkers at one or more of our offices or the offices of our suppliers or manufacturers become ill or are quarantined and in either orboth events are therefore unable to work, our operations could be subject to disruption. Further, if our manufacturers become unableto obtain necessary raw materials or components, we may incur higher supply costs or our manufacturers may be required to reduce productionlevels, either of which may negatively affect our financial condition or results of operations. In addition, the capital markets havebeen disrupted and our efforts to raise necessary capital will likely be adversely impacted by COVID-19. As a result, we cannot forecastwith any certainty when the disruptions caused by such pandemic will cease to impact our business and the results of our operations.The extent to which COVID-19 affectsour results will depend on future developments that are highly uncertain and cannot be predicted, including actions to contain COVID-19or address and treat its effects, among others.

Thereare risks related to dealing with domestic governmental entities as customers.

Oneof the principal target markets for our products is the law enforcement community. In this market, the sale of products will be subjectto budget constraints of governmental agencies purchasing these products, which could result in a significant reduction in our anticipatedrevenues. Such governmental agencies have experienced budgetary pressures because of the recent recession and its impact on local sales,property and income taxes that provide funding for purchasing our products. These agencies also may experience political pressure thatdictates the way they spend money. Thus, even if an agency wants to acquire our products, it may be unable to purchase them due to budgetaryor political constraints, even if such agencies have the necessary funds, we may experience delays and relatively long sales cycles dueto their internal decision-making policies and procedures.

Thereare risks related to dealing with foreign governmental entities as customers.

Wetarget the law enforcement community in foreign countries for the sale of many of our products. While foreign countries vary, generallythe sale of our products will be subject to political and budgetary constraints of foreign governments and agencies purchasing theseproducts, which could result in a significant reduction in our anticipated revenues. Some foreign governments are experiencing budgetarypressures because of various reasons specific to them and their impact on taxes and tariffs that in many cases provide funding for purchasingour products. Law enforcement agencies within these countries also may experience political pressure that dictates the way they spendmoney. Thus, even if a foreign country or its law enforcement agencies want to acquire our products, it may be unable to purchase themdue to budgetary or political constraints. We cannot assure investors that such governmental agencies will have the necessary funds topurchase our products even though they may want to do so. Further, even if such agencies have the necessary funds, we may experiencedelays and relatively long sales cycles due to their internal decision-making policies and procedures.

Internationallaw enforcement and other agencies that may consider using our products must analyze a wide range of issues before committing to purchaseproducts like ours, including training costs, product reliability and budgetary constraints. The length of our sales cycle may rangefrom a few months to a year or more. We may incur substantial selling costs and expend significant effort in connection with the evaluationof our products by potential customers before they place an order. Initial orders by foreign governments and agencies typically are fora small number of units that are used to evaluate the products. If these potential customers do not purchase our products, we will haveexpended significant resources and receive no revenue in return. In addition, we may be selected as the vendor of choice by these foreigncustomers but never receive the funding necessary to purchase our product due to political or economic reasons.

Weare marketing our DVM-250, DVM-250 Plus event recorder and FirstVU HD products to commercial customers, which is a relatively new saleschannel for us and we may experience problems in gaining acceptance.

Theprincipal target commercial market for our event recorder products is commercial fleet operators, such as taxi cabs, limousine services,transit buses, ambulance services and a variety of delivery services, and the principal target commercial market for our disinfectant/sanitizerand temperature monitoring products are healthcare centers and direct consumer businesses such as bars and restaurants. We have beenmarketing our FirstVU HD and EVO-HD to commercial customers for approximately one year and have been marketing our Shield™ andThermoVU™ products to commercial customers for approximately the same period of time. While we have continued to try to capitalizeon the existing market for our event recorder products, the markets for these newer products have represented relatively new sales channelsfor us and we may experience difficulty gaining acceptance of such products by the targeted customers. Our sales of such products willbe subject to budget constraints of both the large and small prospective customers, which could result in a significant reduction inour anticipated revenues. Certain of such companies have experienced budgetary and financial pressures for various reasons specific tothem or the applicable industries in which they operate, which may negatively impact their ability to purchase our products. Thus, evenif prospective customers want to acquire our products, they may be unable to do so because of such factors. Further, even if such companieshave the necessary funds, we may experience delays and relatively long sales cycles due to their internal decision-making policies andprocedures.

Weare operating in a developing market and there is uncertainty as to market acceptance of our technology and products.

Themarkets for our new and enhanced products and technology are developing and rapidly evolving. They are characterized by an increasingnumber of market entrants who have developed or are developing a wide variety of products and technologies, a number of which offer certainof the features that our products offer. Because of these factors, demand and market acceptance for new products are subject to a highlevel of uncertainty. There can be no assurance that our technology and products will become widely accepted. It is also difficult topredict with any assurance the future growth rate, if any, and size of the market. If a substantial market fails to develop, developsmore slowly than expected or becomes saturated with competitors or if our products do not achieve or continue to achieve market acceptance,our business, operating results and financial condition will be materially and adversely affected.

Ourtechnology may also be marketed and licensed to device manufacturers for inclusion in the products and equipment they market and sellas an embedded solution. As with other new products and technologies designed to enhance or replace existing products or technologiesor change product designs, these potential partners may be reluctant to integrate our digital video recording technology into their systemsunless the technology and products are proven to be both reliable and available at a competitive price. Even assuming product acceptance,our potential partners may be required to redesign their systems to effectively use our digital video recording technology. The timeand costs necessary for such redesign could delay or prevent market acceptance of our technology and products. A lack of, or delay in,market acceptance of our digital video recording technology and products would adversely affect our operations. There can be no assurancethat we will be able to market our technology and products successfully or that any of our technology or products will be accepted inthe marketplace.

Weexpend significant resources in anticipation of a sale due to our lengthy sales cycle and may receive no revenue in return.

Generally,law enforcement and other agencies and commercial fleet and mass transit operators that may consider using our products must analyzea wide range of issues before committing to purchase products like ours, including training costs, product reliability and budgetaryconstraints. The length of our sales cycle may range from several months to a year or more. We may incur substantial selling costs andexpend significant effort in connection with the evaluation of our products by potential customers before they place an order. Initialorders by agencies typically are for a small number of units that are used to evaluate the products. If these potential customers donot purchase our products, we will have expended significant resources and have received no revenue in return.

Defectsin our products could impair our ability to sell our products or could result in litigation and other significant costs.

Anysignificant defects in our products may result in, among other things, delay in time-to-market, loss of market acceptance and sales ofour products, diversion of development resources, and injury to our reputation, or increased warranty costs. Because our products aretechnologically complex, they may contain defects that cannot be detected prior to shipment. These defects could harm our reputationand impair our ability to sell our products. The costs we may incur in correcting any product defects may be substantial and could decreaseour profit margins. In 2018 and 2017, we had certain product quality issues with the DVM-800 and FirstVU HD, which adversely affectedour revenues and operating results however, these issues have been successfully mitigated at this time.

Inaddition, errors, defects or other performance problems could result in financial or other damages to our customers, which could resultin litigation. Product liability litigation, even if we prevail, would be time consuming and costly to defend. Our product liabilityinsurance may not be adequate to cover claims. Our product liability insurance coverage per occurrence is $1,000,000, with a $2,000,000aggregate for our general business liability coverage and an additional $1,000,000 per occurrence. Our excess or umbrella liability coverageper occurrence and in aggregate is $5,000,000.

Productdefects can be caused by design errors, programming bugs, or defects in component parts or raw materials. This is common to every productmanufactured which is based on modern electronic and computer technology. Because of the extreme complexity of digital in-car video systems,one of the key concerns is operating software robustness. Some of the software modules are provided to us by outside vendors under licenseagreements, while other portions are developed by our own software engineers. As with any software-dependent product, “bugs”can occur, even with rigorous testing before release of the product. The software included in our digital video rear view mirror productsis designed to be “field upgradeable” so that changes or fixes can be made by the end user by downloading new software throughthe internet. We intend to incorporate this technology into any future products as well, providing a quick resolution to potential softwareissues that may arise over time.

Aswith all electronic devices, hardware issues can arise from many sources. The component electronic parts that we utilize come from manysources around the world. We attempt to mitigate the possibility of shipping defective products by fully testing sub-assemblies and thoroughlytesting assembled units before they are shipped out to our customers. Because of the nature and complexity of some of the electroniccomponents used, such as microprocessor chips, memory systems, and zoom video camera modules, it is not technically or financially realisticto attempt to test every single aspect of every single component and their potential interactions. By using components from reputableand reliable sources, and by using professional engineering, assembly, and testing methods, we seek to limit the possibility of defectsslipping through. In addition to internal testing, we now have thousands of units in the hands of law enforcement departments and inuse every day. Over the past years of field use, we have addressed a number of subtle issues and made refinements requested by the end-user.

Weare dependent on key personnel.

Oursuccess will be largely dependent upon the efforts of our executive officers, Stanton E. Ross and Thomas J. Heckman. We do not have employmentagreements with Messrs. Ross or Heckman, although we entered into retention agreements with such officers on December 23, 2008, whichwere amended in April 2018. The loss of the services of either of these individuals could have a material adverse effect on our businessand prospects. There can be no assurance that we will be able to retain the services of such individuals in the future. We have not obtainedkey-man life insurance policies on these individuals. We are also dependent to a substantial degree on our technical, research and developmentstaff. Our success will be dependent upon our ability to hire and retain additional qualified technical, research, management, marketingand financial personnel. We will compete with other companies with greater financial and other resources for such personnel. Althoughwe have not had trouble in attracting qualified personnel to date, there can be no assurance that we will be able to retain our presentpersonnel or acquire additional qualified personnel as and when needed.

Weare dependent on manufacturers and suppliers.

Wepurchase, and intend to continue to purchase, substantially all the components for our products and some entire products, from a limitednumber of manufacturers and suppliers, most of whom are located outside the United States. Our internal process is principally to assemblethe various components and subassemblies manufactured by our suppliers and test the assembled product prior to shipping to our customers.We do not intend to directly manufacture any of the equipment or parts to be used in our products. Our reliance upon outside manufacturersand suppliers, including foreign suppliers, is expected to continue, increase in scope and involves several risks, including limitedcontrol over the availability of components, and products themselves and related delivery schedules, pricing and product quality. Wemay be subject to political and social risks associated with specific regions of the world including those that may be subject to changesin tariffs that may have substantial effects on our product costs and supply chain reliability and availability. We may experience delays,additional expenses and lost sales if we are required to locate and qualify alternative manufacturers and suppliers.

Afew of the semiconductor chip components for our products are produced by a very small number of specialized manufacturers. Currently,we purchase one essential semiconductor chip from a single manufacturer who currently sources such chipsets from the Philippines, China,Taiwan and South Korea, among other countries. While we believe that there are alternative sources of supply, if, for any reason, weare precluded from obtaining such a semiconductor chip from this manufacturer, we may experience long delays in product delivery dueto the difficulty and complexity involved in producing the required component and we may also be required to pay higher costs for ourcomponents.

Whilewe do the final assembly, testing, packaging, and shipment of certain of our products in-house, a number of our component parts are manufacturedby subcontractors. These subcontractors include: raw circuit board manufacturers; circuit board assembly houses; injection plastic molders;metal parts fabricators; and other custom component providers. While we are dependent upon these subcontractors to the extent that theyare producing custom subassemblies and components necessary for manufacturing our products, we still own the designs and intellectualproperty involved. This means that the failure of any one contractor to perform may cause delays in production. However, we can mitigatepotential interruptions by maintaining “buffer stocks” of critical parts and subassemblies and by using multiple sourcesfor critical components. We also can move our subcontracting to alternate providers. Being forced to use a different subcontractor couldcause production interruptions ranging from negligible, such as a few weeks, to very costly, such as four to six months. Further, thefailure of a foreign manufacturer to deliver products to us timely, in sufficient quantities and with the requisite quality would havea material adverse impact on our business, operations and financial condition.

Theonly components that would require a complete redesign of our digital video electronics package are the chips manufactured by Texas InstrumentsIncorporated (“Texas Instruments”). While there are competitive products available, each chip has unique characteristicsthat would require extensive tailoring of product designs to use it. The Texas Instruments chip is the heart of our video processingsystem. If Texas Instruments became unwilling or unable to provide us with these chips, we would be forced to redesign our digital videoencoder and decoder systems. Such a complete redesign could take substantial time (over six months) to complete. We attempt to mitigatethe potential for interruption by maintaining continuous stocks of these chips to support several months’ worth of production.In addition, we regularly check on the end-of-life status of these parts to make sure that we will know well in advance of any decisionsby Texas Instruments to discontinue these parts. There are other semiconductors that are integral to our product design and which couldcause delays if discontinued, but not to the same scale as the Texas Instruments chips.

Althoughwe have not historically had significant supply chain issues with these manufacturers, suppliers, and subcontractors, there can be noassurance that we will be able to retain our present relationships and should we lose these manufacturers, suppliers, and subcontractors,our business would be adversely affected.

Weare uncertain of our ability to protect technology through patents.

Ourability to compete effectively will depend on our success in protecting our proprietary technology, both in the United States and abroad.We have filed for at least 50 patents for protection in the United States and certain other countries to cover certain design aspectsof our products.

Wehave been issued at least 38 patents to date by the USPTO. In addition, we have at least 12 patent applications that are still underreview by the U.S. Patent Office and, therefore, we have not yet been issued all the patents that we applied for in the United States.No assurance can be given that any patents relating to our existing technology will be issued from the United States or any foreign patentoffices, that we will receive any patents in the future based on our continued development of our technology, or that our patent protectionwithin and/or outside of the United States will be sufficient to deter others, legally or otherwise, from developing or marketing competitiveproducts utilizing our technologies.

Ifour patents were to be denied as filed, we would seek to obtain different patents for other parts of our technology. If our main patent,which relates to the placement of the in-car video system in a rear-view mirror, were to be challenged and denied, it could potentiallyallow our competitors to build very similar devices. Currently, this patent is not being challenged. However, we believe that very fewof our competitors would be capable of this because of the level of technical sophistication and level of miniaturization required. Evenif we obtain patents, there can be no assurance that they will be enforceable to prevent others from developing and marketing competitiveproducts or methods. If we bring an infringement action relating to any future patents, it may require the diversion of substantial fundsfrom our operations and may require management to expend efforts that might otherwise be devoted to our operations. Furthermore, therecan be no assurance that we will be successful in enforcing our patent rights.

Further,if any patents are issued there can be no assurance that patent infringement claims in the United States or in other countries will notbe asserted against us by a competitor or others, or if asserted, that we will be successful in defending against such claims. If oneof our products is adjudged to infringe patents of others with the likely consequence of a damage award, we may be enjoined from usingand selling such product or be required to obtain a royalty-bearing license, if available on acceptable terms. Alternatively, if a licenseis not offered, we might be required, if possible, to redesign those aspects of the product held to infringe to avoid infringement liability.Any redesign efforts we undertake might be expensive, could delay the introduction or the re-introduction of our products into certainmarkets, or may be so significant as to be impractical.

Weare uncertain of our ability to protect our proprietary technology and information.

Inaddition to seeking patent protection, we rely on trade secrets, know-how and continuing technological advancement to seek to achieveand thereafter maintain a competitive advantage. Although we have entered into or intend to enter into confidentiality and inventionagreements with our employees, consultants and advisors, no assurance can be given that such agreements will be honored or that we willbe able to effectively protect our rights to our unpatented trade secrets and know-how. Moreover, no assurance can be given that otherswill not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our tradesecrets and know-how.

Cyber-securityincidents, including data security breaches or computer viruses, could harm our business by disrupting our delivery of products or services,damaging our reputation or exposing us to liability.

Wereceive, process, and store, electronically, the data of our customers and others, much of which is confidential. Unauthorized accessto our computer systems or stored data could result in the theft, including cyber-theft, or improper disclosure of confidential information,and the deletion or modification of records could cause interruptions in our operations. These cyber-security risks increase when wetransmit information from one location to another, including over the internet or other electronic networks. Despite the security measureswe have implemented, our facilities, systems and procedures, and those of our third-party service providers, may be vulnerable to securitybreaches, acts of vandalism, software viruses, misplaced or lost data, programming or human errors or other similar events which maydisrupt our delivery of services or expose the confidential information of our customers and others. Any security breach involving themisappropriation, loss or other unauthorized disclosure or use of confidential information of our customers or others, whether by usor a third party, could subject us to civil and criminal penalties, have a negative impact on our reputation, or expose us to liabilityto our customers, third parties or government authorities. We are not aware of such breaches to date. There can be no assurance thatwe will be able to effectively handle a failure of our information systems, or that we will be able to restore our operational capacityin a timely manner to avoid disruption to our business. Any of these developments could have a material adverse effect on our business,financial condition and results of operations.

Foreigncurrency fluctuations may affect our competitiveness and sales in foreign markets.

Therelative change in currency values creates fluctuations in our product pricing for potential international customers. These changes inforeign end-user costs may result in lost orders and reduce the competitiveness of our products in certain foreign markets. These changesmay also negatively affect the financial condition of some existing or potential foreign customers and reduce or eliminate their futureorders of our products. We also import selected components which are used in the manufacturing of some of our products. Although ourpurchase orders are in the United States dollar, weakness in the United States dollar could lead to price increases for the components.

Ourrevenues and operating results may fluctuate unexpectedly from quarter to quarter, which may cause our stock price to decline.

Ourrevenues and operating results have varied significantly in the past and may continue to fluctuate significantly in the future due tovarious factors that are both in and outside our control. Thus, we believe that period-to-period comparisons of our operating resultsmay not be meaningful in the short-term, and our performance in a particular period may not be indicative of our performance in any futureperiod.

Thedigital video recording market is characterized by new products and rapid technological change.

Themarket for our digital video recording technology products is characterized by rapidly changing technology and frequent new product introductions.Our future success will depend in part on our ability to enhance our existing technologies and products and to introduce new productsand technologies to meet changing customer requirements. We are currently devoting, and intend to continue to devote, significant resourcestoward the development of new digital video recording technology and products both as stand-alone products and embedded solutions inthird party products and systems. There can be no assurance that we will successfully complete the development of these technologiesand related products in a timely fashion or that our current or future products will satisfy the needs of the digital video recordingmarket. There can also be no assurance that digital video recording products and technologies developed by others will not adverselyaffect our competitive position or render our products or technologies non-competitive or obsolete.

Themarkets for our new branded Shield™ disinfectant/sanitizer and ThermoVU™ temperature monitoring solution are characterizedby new products and rapid technological change.

Themarkets for our new branded Shield™ disinfectant/sanitizer and ThermoVU™ temperature monitoring solution products are characterizedby rapidly changing technology and frequent new product introductions given the COVID-19 pandemic. Our future success will depend inpart on our ability to enhance our existing products and to introduce new products and technologies to meet changing customer requirements.We are currently devoting, and intend to continue to devote, significant resources toward the development of new applications for ourdisinfectant/sanitizer and temperature monitoring solutions and products both as stand-alone products and embedded solutions in thirdparty products and systems. Our current development activities include, among others, electrostatic sprayer systems to more efficientlydisburse our Shield™ disinfectant/sanitizer. There can be no assurance that we will successfully complete the development of thesetechnologies and related products in a timely fashion or that our current or future products will satisfy the needs of the market. Therecan also be no assurance that the disinfectant/sanitizer and temperature monitoring products and technologies developed by others willnot adversely affect our competitive position or render our products or technologies non-competitive or obsolete.

Wedepend on sales from our in-car video products and body-worn cameras and if these products become obsolete or not widely accepted, ourgrowth prospects will be diminished.

Wederived our revenues in 2020, 2021 and 2022 predominantly from sales of our in-car video systems, including the DVM-800,our largest selling product, and the FirstVu Pro body-worn camera, our second largest selling product. We expect to continue todepend on sales of these products during 2023, as well as our newly launched EVO-HD in-car system to gain traction in 2023.A decrease in the prices of, or the demand for our in-car video products, or the failure to achieve broad market acceptance of ournew product offerings, would significantly harm our growth prospects, operating results and financial condition.

Weare a party to several lawsuits both as a plaintiff and as a defendant in which we may ultimately not prevail, resulting in losses andwhich may cause our stock price to decline.

Weare involved as a plaintiff and defendant in routine litigation and administrative proceedings incidental to our business from time totime, including customer collections, vendor and employment-related matters. See “Prospectus Summary” for additional information.We believe that the likely outcome of any other pending cases and proceedings will not be material to our business or financial condition.However, there can be no assurance that we will prevail in the litigation or proceedings or that we may not have to pay damages or otherawards to the other party.

Weare vulnerable to continued global economic uncertainty and volatility in financial markets.

Ourbusiness is highly sensitive to changes in general economic conditions as a seller of capital equipment to end users in dental professionalpractices. Financial markets inside the United States and internationally have experienced extreme disruption in recent times, including,among other things, extreme volatility in security prices, severely diminished liquidity and credit availability, and declining valuationsof investments. We believe these disruptions are likely to have an ongoing adverse effect on the world economy. A continued economicdownturn and financial market disruptions could have a material adverse effect on our business, financial condition and results of operations.Also, the imposition of economic sanctions on Russia as a result of the conflict in Ukraine could prevent us from performing existingcontracts and pursuing new growth opportunities, which could adversely affect our business, financial condition and results of operations.

Wemay need to raise additional capital in the future, and if we are unable to secure adequate funds on terms acceptable to us, we couldbe unable to execute our business plan.

Evenafter this offering, we may need to raise additional funds through the issuance of equity or debt securities in the public or privatemarkets, or through a collaborative arrangement or sale of assets. Additional financing opportunities may not be available to us, orif available, may not be on favorable terms. The availability of financing opportunities will depend, in part, on market conditions,and the outlook for our business. Any future issuance of equity securities or securities convertible into equity securities could resultin substantial dilution to our stockholders, and the securities issued in such a financing could have rights, preferences or privilegessenior to those of our Common Stock. In addition, if we raise additional funds through debt financing, we could be subject todebt covenants that place limitations on our operations. We could not be able to raise additional capital on reasonable terms, or atall, or we could use capital more rapidly than anticipated. If we cannot raise the required capital when needed, we may not be able tosatisfy the demands of existing and prospective customers, we could lose revenue and market share and we may have to curtail our capitalexpenditures.

Ifwe are unable to obtain sufficient capital in the future, we could have to curtail our capital expenditures. Any curtailment of our capitalexpenditures could result in a reduction in net revenue, reduced quality of our products, increased manufacturing costs for our products,harm to our reputation, or reduced manufacturing efficiencies and could have a material adverse effect on our business, financial conditionand results of operations.

RisksRelating to the Spin-off

Ourhistorical and pro forma financial information is not necessarily representative of the results we would have achieved as a businessshould the Spin-off have had occurred, and may not be a reliable indicator of our future results.

Thehistorical financial information included or incorporated by reference in the registration statements of which this prospectus formsa part refers to the business as operated by us before the Spin-off. The historical and pro forma financial information included or incorporatedby reference herein, as applicable, is derived fromthe consolidated financial statements and accounting records of Digital Ally, Inc., with the historical financial information includingeach of our three distinct business segments and the pro forma financial information giving effect to the Spin-off as if it occurredon the dates indicates. This pro forma financial information does not necessarily reflect the financial position, results of operationsand cash flows that the Company would have achieved as a business should the Spin-off have had occurred during the periods presentedor those that we will achieve in the future primarily.

TheCompany may not achieve some or all of the expected benefits of the Spin-off, and the Spin-off may materially and adversely affect ourfinancial position, results of operations and cash flows.

TheCompany may be unable to achieve the full strategic and financial benefits expected to result from the Spin-off, or such benefits maybe delayed or not occur at all. The Spin-off is expected to provide the following benefits, among others:

TheCompany may not achieve these and other anticipated benefits for a variety of reasons, including, among others, that the Spin-off willrequire significant amounts of management’s time and effort, which may divert management’s attention from operating and growingour business.

DigitalAlly or Kustom Entertainment, Inc. may fail to perform under the transaction agreements that will be executed as part of the Spin-off.

Inconnection with the Spin-off, Digital Ally and Kustom Entertainment, Inc. will enter into a Separation Agreement and a Tax Matters Agreement.The Separation Agreement and the Tax Matters Agreement will determine the allocation of assets and liabilities between the companiesfollowing the Spin-off for those respective areas and will include any necessary indemnifications related to liabilities and obligations.Digital Ally will rely on Kustom Entertainment, Inc. to satisfy its obligations under these agreements. If Kustom Entertainment, Inc.is unable to satisfy its obligations under these agreements, including its indemnification obligations, the Company could incur operationaldifficulties or losses.

Afterthe Spin-off, certain members of management, directors and holders of Common Stock will hold stock in both Digital Ally and Kustom Entertainment,Inc., and as a result may face actual or potential conflicts of interest.

Afterthe Spin-off, certain management and directors of each of Digital Ally and Kustom Entertainment, Inc. may own both Digital Ally CommonStock and Kustom Entertainment, Inc. common stock. This ownership overlap could create, or appear to create, potential conflicts of interestwhen our management and directors and Kustom Entertainment, Inc.’s management and directors face decisions that could have differentimplications for us and Kustom Entertainment, Inc. For example, potential conflicts of interest could arise in connection with the resolutionof any dispute between Digital Ally and Kustom Entertainment, Inc. regarding the terms of the agreements governing the Spin-off and ourrelationship with Kustom Entertainment, Inc. thereafter.

Inconnection with the Spin-off, Kustom Entertainment, Inc. will indemnify Digital Ally for certain liabilities, and we will indemnify KustomEntertainment, Inc. for certain liabilities. If we are required to pay under these indemnities to Kustom Entertainment, Inc., our financialresults could be negatively impacted. The Kustom Entertainment, Inc. indemnity may not be sufficient to hold us harmless from the fullamount of liabilities for which Kustom Entertainment, Inc. will be allocated responsibility, and Kustom Entertainment, Inc. may not beable to satisfy its indemnification obligations in the future.

Anyamounts we are required to pay pursuant to these indemnification obligations and other liabilities could require us to divert cash thatwould otherwise have been used in furtherance of our operating business. Further, the indemnity from Kustom Entertainment, Inc. may notbe sufficient to protect us against the full amount of such liabilities, and Kustom Entertainment, Inc. may not be able to fully satisfyits indemnification obligations. Moreover, even if we ultimately succeed in recovering from Kustom Entertainment, Inc. any amounts forwhich we are held liable, we may be temporarily required to bear these losses ourselves. Each of these risks could have a material adverseeffect on our financial position, results of operations and cash flows.

Transferor assignment to us of some contracts and other assets may require the consent of a third party. If such consent is not given, wemay not be entitled to the benefit of such contracts, investments, and other assets in the future.

Transferor assignment of some of the contracts and other assets in connection with the Spin-off may require the consent of a third party tothe transfer or assignment. Similarly, in some circumstances, we may be the joint beneficiaries of contracts, and may need toenter into a new agreement with the third party to replicate the existing contract or assign the portion of the existing contractrelated to our business. While we anticipate that most of these contract assignments and new agreements, if needed, will be obtained prior tothe Spin-off, we may not be able to obtain all required consents or enter into all such new agreements, as applicable, until afterexecution of the Spin-off. Some parties may use the requirement of a consent to seek more favorable contractual terms from us, whichcould include our having to obtain letters of credit or other forms of credit support. If we are unable to obtain such consents orsuch credit support on commercially reasonable and satisfactory terms, we may be unable to obtain some of the benefits, assets, andcontractual commitments that are intended to be allocated to us as part of the Spin-off. In addition, where we do not intend toobtain consent from third-party counterparties based on our belief that no consent is required, the third-party counterparties maychallenge the transaction on the basis that the terms of the applicable commercial arrangements require their consent. We may incursubstantial litigation and other costs in connection with any such claims and, if we do not prevail, our ability to use these assetscould be adversely impacted.

Wecannot provide assurance that all such required third-party consents and new agreements will be procured or put in place, as applicable,prior to the execution of the Spin-off. Consequently, we may not realize certain of the benefits that are intended to be allocated tous as part of the Spin-off.

CAUTIONARYSTATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

Thisprospectus and the information incorporated by reference herein contain various forward-looking statements within the meaning of Section27A of the Securities Act of 1933, as amended and Section 21E of the Securities and Exchange Act of 1934, as amended, which representour expectations or beliefs concerning future events. Forward-looking statements include statements that are predictive in nature, whichdepend upon or refer to future events or conditions, and/or which include words such as “believes,” “plans,”“intends,” “anticipates,” “estimates,” “expects,” “may,” “will”or similar expressions. In addition, any statements concerning future financial performance, ongoing strategies or prospects, and possiblefuture actions, including any potential strategic transaction involving us, which may be provided by our management, are also forward-lookingstatements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks,uncertainties, and assumptions about our company, economic and market factors, and the industry in which we do business, among otherthings. These statements are not guarantees of future performance, and we undertake no obligation to publicly update any forward-lookingstatements, whether as a result of new information, future events, or otherwise, except as required by law. Actual events and resultsmay differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. Factors that couldcause our actual performance, future results and actions to differ materially from any forward-looking statements include, but are notlimited to, those discussed under the heading “Risk Factors” in this prospectus and in any of our filings with the SEC pursuantto Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934. The forward-looking statements in this prospectus and the informationincorporated by reference herein represent our views as of the date such statements are made. These forward-looking statements shouldnot be relied upon as representing our views as of any date subsequent to the date such statements are made.

USEOF PROCEEDS

Weestimate that the net proceeds to us from the offering will be approximately $             million,assuming a combined public offering price of $            per shareof Common Stock and accompanying Warrant, and $            per Pre-FundedWarrant and accompanying Warrant, after deducting the placement agent fees and estimated offering expenses payable by us,assuming the exercise of all Pre-Funded Warrants sold in this offering. This estimate excludes the proceeds, if any, from the exerciseof the Warrants sold in the offering. If all of the Warrants sold in the offering were exercised for cash, we would receive additionalnet proceeds of approximately $             million. We cannot predict when orif these Warrants will be exercised. It is possible that these Warrants may expire and may never be exercised.

A$0.10 increase (decrease) in the assumed public offering price of $          per shareof Common Stock and accompanying Warrant (or $          per Pre-Funded Warrantand accompanying Warrant) would increase (decrease) the net proceeds to us from this offering by approximately $          million,assuming that the number of shares of Common Stock and accompanying Warrants (and Pre-Funded Warrants and accompanying Warrants)offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the placement agent feeand estimated offering expenses payable by us.

Similarly,a one million increase (decrease) in the number of shares of Common Stock and accompanying Warrants (or Pre-Funded Warrantsand accompanying Warrants) offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the net proceedsto us by approximately $          million, assuming the combined public offeringprice of $          per share of Common Stock and accompanying Warrant (or $         per Pre-Funded Warrant and accompanying Warrant) remains the same, and after deducting estimated placement agent feesand estimated offering expenses payable by us.

Theprecise amount and timing of the application of such net proceeds will depend upon our funding requirements and the availability andcost of other funds. Our Board and management will have considerable discretion in the application of the net proceeds from this offering,and it is possible that we may allocate the proceeds differently than investors in the offering may desire or that we may fail to maximizethe return on these proceeds. You will be relying on the judgment of our management with regard to the use of proceeds from this offering,and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately.

Weintend to use the proceeds of this offering for new product development, general corporate purposes including legal and marketing matters,and other working capital purposes.

Wemay temporarily invest the net proceeds in short-term, interest-bearing instruments or other investment-grade securities.

DILUTION

Ifyou purchase securities in the offering, you will experience immediate dilution to the extent of the difference between the public offeringprice per share of Common Stock or that may be issued upon the exercise of any Pre-Funded Warrants and our net tangible book valueper share immediately after the offering. Net tangible book value per share is equal to the amount of our total tangible assets, lesstotal liabilities, divided by the number of outstanding shares of our Common Stock. As of September 30, 2022, our net tangiblebook value was approximately $29,814,570, or approximately $0.55 per share.

Proforma net tangible book value per share represents the amount of our total tangible assets as adjusted to take into account (i) net cashproceeds of approximately $15,000,000 from our private placement of Series A Convertible Redeemable Preferred Stock and Series B ConvertibleRedeemable Preferred Stock, which closed on October 19, 2022; and (ii) redemption of all shares of Series A Convertible RedeemablePreferred Stock and Series B Convertible Redeemable Preferred Stock at a price per share equal to 105% of the stated value of each suchPreferred Stock on December 7, 2022. After giving effect to these transactions, our pro forma nettangible book value per share as of September 30, 2022 would have been approximately $              per share.

Aftergiving effect to the sale of                sharesof our Common Stock and Warrants to purchase up to                 sharesof Common Stock in the offering at an assumed combined public offering price per share of Common Stock and related Warrant of $            ,and after deducting the placement agent’s fees and estimated offering expenses payable by us, the pro forma as adjusted net tangiblebook value would have been approximately $            million, or $            pershare. This represents an immediate increase in net tangible book value of $            pershare to existing stockholders and an immediate dilution of $            pershare to new investors purchasing shares of Common Stock and the Warrants in this offering.

Thefollowing table illustrates this dilution on a per-share basis (unaudited):

Thedilution information discussed above is illustrative only and will change based on the actual public offering price and other terms ofthis offering determined at pricing. A $0.10 increase or decrease in the assumed public offering price of $          pershare of Common Stock and accompanying Warrant (and $               Pre-FundedWarrant and accompanying Warrant) would increase or decrease the pro forma, as adjusted net tangible book value per shareby approximately $          , and increase or decrease the pro forma, as adjustednet tangible book value per share to investors participating in this offering by approximately $          pershare, assuming the number of shares of Common Stock (and Pre-Funded Warrants) offered by us, as set forth on the coverpage of this prospectus, remains the same, and after deducting the placement agent fee and estimated offering expenses payable byus.

The informationabove is as of January 19, 2023, and includes or excludes the following as of such date:

Tothe extent that our outstanding options or warrants are exercised or converted, as applicable, you could experience furtherdilution. To the extent that we raise additional capital through the sale of additional equity, the issuance of any of our shares ofCommon Stock could result in further dilution to our stockholders.

UNAUDITEDPRO FORMA CONDENSED FINANCIAL STATEMENTS

Theunaudited pro forma combined financial information of the Company gives effect to the Spin-off and related adjustments in accordancewith Article 8 of the SEC’s Regulation S-X. In May 2020, the SEC adopted Release No.33-10786 “Amendments to FinancialDisclosures about Acquired and Disposed Businesses,” or the Final Rule. The Final Rule was effective on January 1, 2021 andthe unaudited pro forma combined financial information herein is presented in accordance therewith.

Theunaudited pro forma combined financial information presented below have been derived from our historical combined financial statementsincluded in this prospectus. While the historical combined financial statements reflect the historical financial results of Digital Ally,Inc., these pro forma statements give effect to the separation of Kustom Entertainment, Inc. into an independent, publicly traded company.

Theunaudited pro forma combined balance sheet gives effect to the Spin-off and related transactions described below as if they hadoccurred on September 30, 2022. The unaudited pro forma adjustments to the combined statement of operations for the nine monthsended September 30, 2022 and year ended December 31, 2021 assume that the Spin-off and related transactions occurred as of January1, 2021.

Theunaudited pro forma combined statement of operations for the nine months ended September 30, 2022 and year ended December 31, 2021 andthe unaudited pro forma combined balance sheet as of September 30, 2022 have been prepared to reflect adjustments to the Company’shistorical combined financial information for the following transaction accounting and autonomous entity adjustments:

Thepro forma adjustments are based on available information and assumptions that management believes are reasonable given the informationthat is currently available. The unaudited pro forma combined financial statements are for informational purposes only and do not purportto represent what the Company’s financial position and results of operations actually would have been had the Spin-off occurred on the dates indicated, or to project the Company’s financial performance for any future period. The historicalaudited combined annual and unaudited combined interim financial statements of Digital Ally, Inc. have been derived from the consolidatedcompany’s historical accounting records and reflect certain allocations of expenses. All of the allocations and estimates in suchfinancial statements are based on assumptions that Digital Ally, Inc.’s management believes are reasonable. The historical combinedfinancial statements do not necessarily represent the financial position or results of operations of Digital Ally, Inc. had it been operatedas a standalone company during the periods or at the dates presented. As a result, autonomous entity adjustments have been reflectedin the unaudited pro forma combined financial information.

Theunaudited pro forma combined financial information should be read in conjunction with “Management’s Discussion and Analysisof Financial Condition and Results of Operations” and our historical audited combined annual and unaudited combined interim financialstatements and corresponding notes thereto incorporated by reference in this prospectus.

DIGITALALLY, INC.

UNAUDITEDPRO FORMA CONSOLIDATED BALANCE SHEET

DIGITALALLY, INC.

UNAUDITEDPRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

DIGITALALLY, INC.

UNAUDITEDPRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FORTHE YEAR ENDED DECEMBER 31, 2021

Notesto Unaudited Pro Forma Combined Financial Data

1.Basis of Presentation

Theunaudited pro forma condensed combined financial statements are based on Digital Ally, Inc.’s historical financial statementsand the newly formed Kustom Entertainment, Inc., as adjusted to give effect to the Spin-off. The unaudited pro forma combinedstatements of operations for the nine months ended September 30, 2022 and year ended December 31, 2021, respectively, give effect tothe Spin-off as if it had occurred on January 1, 2021. The unaudited pro forma combined balance sheet as of September 30, 2022,gives effect to the Spin-off as if it had occurred on January 1, 2021. Kustom Entertainment, Inc. (“Spun-off Subsidiary”) has historically operated as part ofDigital Ally, Inc. (“the Company”) and not as a standalone company. Financial statements representing the historicaloperations have been derived from the Company’s historical accounting records and are presented on a carve-out basis.All revenues and costs as well as assets and liabilities directly associated with the business activity of the Spun-off Subsidiary are includedin the financial statements. The financial statements also include allocations of certain general, administrative, sales andmarketing expenses and cost of sales from the Company. However, amounts recognized by the Spun-off Subsidiary are not necessarilyrepresentative of the amounts that would have been reflected in the financial statements had the Spun-off Subsidiary operated independently ofthe Company. The Company allocations are discussed further in Note 2. As part of the Company, the Spun-off Subsidiary has historicallybeen dependent upon the Company for a majority of its working capital and financing requirements as the Company uses acentralized approach to cash management and financing of its operations. Financial transactions relating to the Spun-off Subsidiary areaccounted for through the Company due to/from account.

2.Pro Forma Adjustments

Proforma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following correspond to thefootnotes in the above financial statements.

BalanceSheet – September 30, 2022

Statementof Operations - Nine months ended September 30, 2022

Statementof Operations - Year ended December 31, 2021

DIVIDENDPOLICY

Todate, we have not declared or paid cash dividends on our shares of Common Stock. The holders of our Common Stock will be entitled tonon-cumulative dividends on the shares of Common Stock, when and as declared by our Board in its discretion. We intend toretain all future earnings, if any, for our business and do not anticipate paying cash dividends in the foreseeable future. Any futuredetermination to pay cash dividends will be at the discretion of our Board and will be dependent upon our financial condition, resultsof operations, capital requirements, general business conditions and such other factors as our Board may deem relevant.

CAPITALIZATION

Thefollowing table sets forth our consolidated cash and cash equivalents and capitalization as of September 30, 2022:

Youshould read the following table in conjunction with the sections entitled “Use of Proceeds” and “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus and our unauditedconsolidated financial statements and related notes included in our Quarterly Report on Form 10-Q/A for the quarter ended September30, 2022, incorporated herein by reference.

Executivecompensation

Thefollowing table presents information concerning the total compensation of the Company’s Chief Executive Officer (“CEO”),Chief Financial Officer (“CFO”) and Chief Operating Officer (“COO”) and collectively with the CEO andthe CFO, the “Named Executive Officers”) for services rendered to the Company in all capacities for the years ended December31, 2022 and 2021, as required by Item 402(m)(2) of Regulation S-K.

SummaryCompensation Table

(1)Represents aggregate grant date fair value pursuant to ASC Topic 718 for the respective year for stock options granted. Please referto Note 14 to the consolidated financial statements that appear in our Annual Report on Form 10-K, filed with the SEC on April15, 2022, for a further description of the awards and the underlying assumptions utilized to determine the amount of grant date fairvalue related to such grants.

(2)Amounts included in all other compensation include the following items: the employer contribution to the Company’s 401(k) RetirementSavings Plan (the “401(k) Plan”) on behalf of the named executive. We are required to provide a 100% matching contributionfor all who elect to contribute up to 3% of their compensation to the plan and a 50% matching contribution for all employees’ electivedeferral between 4% and 5%. The employee (i) is 100% vested at all times in the employee contributions and employer matching contributions;(ii) receives Company paid healthcare insurance; (iii) receives Company paid contributions to health savings accounts; and (iv) receivesCompany paid life, accident and disability insurance. See “All Other Compensation Table” below.

(3)Stock awards include the following restricted stock granted during 2021 to Mr. Ross: 300,000 shares at $2.76 per share that vest 50%on January 6, 2022 and 50% on January 6, 2023, subject to Mr. Ross remaining an employee of the Company at that point in time.

(4)Stock awards include the following restricted stock granted during 2021 to Mr. Heckman: 150,000 shares at $2.76 per share that vest 50%on January 6, 2022 and 50% on January 6, 2023, subject to Mr. Heckman remaining an employee of the Company at that point in time.

(5)Stock awards include the following restricted stock granted during 2021 to Mr. Han: 50,000 shares at $1.26 per share that vest ratablyover the two-year period ending September 20, 2023.

(6)Stock awards include the following restricted stock granted during 2022 to Mr. Ross: 350,000 shares at $1.07 per share that vest 50%on January 7, 2023 and 50% on January 7, 2024, subject to Mr. Ross remaining an employee of the Company at that point in time.

(7)Stock awards include the following restricted stock granted during 2022 to Mr. Heckman: 75,000 shares at $1.07 per share that on January7, 2023, subject to Mr. Heckman remaining an employee of the Company at that point in time.

(8)Stock awards include the following restricted stock granted during 2022 to Mr. Han: 100,000 shares at $1.07 per share that vest 20% annuallyon the anniversary of January 7 from 2023 to 2027, subject to Mr. Han remaining an employee of the Company at that point in time.

(9)Mr. Han was appointed Chief Operating Officer on December 13, 2021, thus Mr. Han’s 2021 compensation was set by management priorto his appointment as a named executive officer of the Company.

AllOther Compensation Table

CompensationPolicy. Our executive compensation plan is based on attracting and retaining qualified professionals who possess the skills andleadership necessary to enable us to achieve earnings and profitability growth to satisfy its stockholders. We must, therefore, createincentives for these executives to achieve both our and individual performance objectives using performance-based compensation programs.No one component is considered by itself, but all forms of the compensation package are considered in total. Wherever possible, objectivemeasurements will be utilized to quantify performance, but many subjective factors still come into play when determining performance.

CompensationComponents. The main elements of its compensation package consist of base salary, stock options or restricted stock awards andbonus.

BaseSalary. The base salary for each executive officer is reviewed and compared to the prior year, with considerations given forincrease or decrease. The review is generally on an annual basis but may take place more often in the discretion of the CompensationCommittee.

OnJanuary 7, 2021, the Compensation Committee restored the annual base salaries of Stanton E. Ross, President and Chief Executive Officer,Thomas J. Heckman, Chief Financial Officer, Treasurer and Secretary, at $250,000 and $230,000, respectively for 2021.

TheCompensation Committee plans to review the base salaries for possible adjustments on an annual basis. Base salary adjustments will bebased on both individual and our performances and will include both objective and subjective criteria specific to each executive’srole and responsibility with us.

StockOptions and Restricted Stock Awards. The Compensation Committee determined stock option and restricted stock awards based onnumerous factors, some of which include responsibilities incumbent with the role of each executive with us, tenure with us, as well asour performance. The vesting period of options and restricted stock is also tied, in some instances, to our performance directly relatedto certain executive’s responsibilities with us. The Compensation Committee determined that Messrs. Ross and Heckman were eligiblefor awards of stock options or restricted stock in 2021 based on their performance. Refer to the “Grants of Plan-Based Awards”table below for restricted stock awards made in 2021. The Committee also determined that Messrs. Ross, Heckman, and Han would be eligiblein 2022 for awards of restricted stock or stock options.

Bonuses.The Compensation Committee determined to award bonuses to each of the executive officers in 2022 and 2021, as set forth in theforegoing table. Refer to the “Summary Compensation Table” above for the bonuses paid to Messrs. Ross and Heckman in 2021and 2020. In fiscal 2021, Messrs. Ross and Heckman were eligible for bonuses of up to $250,000 and $230,000, respectively. Mr. Ross wasawarded his full 2021 bonus of $250,000. The Compensation Committee reviews each executive officer’s performance on a quarterlybasis and determines what, if any, portion of the bonus he has earned and will be paid as of such point.

Other.In July 2008, we amended and restated our 401(k) Plan. The amended 401(k) Plan requires us to provide a 100% matching contributionfor employees who elect to contribute up to 3% of their compensation to the plan and a 50% matching contribution for employees’elective deferrals between 4% and 5%. We have made matching contributions for executives who elected to contribute to the 401(k) Planduring 2021. Each participant is 100% vested at all times in employee and employer matching contributions. As of December 31, 2021, atotal of 246,479 shares of our Common Stock were held in the 401(k) Plan. Mr. Heckman, as trustee of the 401(k) Plan, holds the votingpower as to the shares of our Common Stock held in the 401(k) Plan. We have no profit sharing plan in place for our employees. However,we may consider adding such a plan to provide yet another level of compensation to our compensation plan.

Thefollowing table presents information concerning the grants of plan-based awards to the Named Executive Officers during the year endedDecember 31, 2022:

Grantof Plant-Based Awards

(1)These restricted stock awards were made under the Digital Ally, Inc. Stock Option and Restricted Stock Plans and vest over a two-yearperiod (50% on January 7, 2023 and 50% on January 7, 2024) contingent upon whether the individual is still employed by us at that point.

(2)These restricted stock awards were made under the Digital Ally, Inc. Stock Option and Restricted Stock Plans and vest over a one-yearperiod contingent upon whether the individual is still employed by us at that point.

(3)These restricted stock awards were made under the Digital Ally, Inc. Stock Option and Restricted Stock Plans and vest over a five-yearperiod (20% on each anniversary of January 7 from 2023 to 2027) contingent upon whether the individual is still employed by us at thatpoint.

(4)Stock awards noted represent the aggregate amount of grant date fair value as determined under ASC Topic 718. Please refer to Note 14to the consolidated financial statements that appear in our Annual Report on Form 10-K, filed with the SEC on April 15, 2022, fora further description of the awards and the underlying assumptions utilized to determine the amount of grant date fair value relatedto such grants.

EmploymentContracts; Termination of Employment and Change-in-Control Arrangements

Wedo not have any employment agreements with any of our executive officers. However, on December 23, 2008, we entered into retention agreementswith the following executive officers: Stanton E. Ross and Thomas J. Heckman. In April 2018 we amended these agreements.

RetentionAgreements - Potential Payments upon Termination or Change of Control

Thefollowing table sets forth for each named executive officer potential post-employment payments and payments on a change in control andassumes that the triggering event took place on January 1, 2023 and that the amendments to the retention agreements of each person werein effect.

RetentionAgreement Compensation