Company: DGLY
Filing Date: 2025-05-02
Form Type: 424B3
Source: 0001641172-25-008437
Chunk: 161

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-02
Form: 424B3
Chunk 161
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 $290,965 which was included as a loss in the statement of operations for the year ended December 31, 2024.

The Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the derivative liability relative to the prefunded warrants and Series A warrants as of their date of issuance and as of December 31, 2024:

|                                          |     | Issuance         
 date assumptions |             |   |     | December    
 31, 2024    
 assumptions |           |   |
|:-----------------------------------------|:----|:-----------------|------------:|:--|:----|:------------|----------:|:--|
| Volatility – range                       |     |                  |        72.1 
     - 101.1 | % |     |             |     105.7 | % |
| Risk-free rate                           |     |                  |        4.25 
      – 5.46 | % |     |             |      4.38 | % |
| Dividend                                 |     |                  |           — | % |     |             |         — | % |
| Remaining contractual term               |     |                  |         0.1 
 - 5.0 years |   |     |             |       4.5 
     years |   |
| Exercise price                           |     | $                |        2.51 |   |     | $           |     0.502 |   |
| Common stock issuable under the warrants |     |                  |   1,768,227 |   |     |             | 5,976,872 |   |

| F-42 |

The Company recognized the fair value
of the Series A warrants of $1,998,074 as a warrant derivative liability as of the date of issuance. During the year ended December 31,
2024, there were no Series A warrants exercised. The fair value of the warrant derivative liability related to the Series A warrants
was $2,408,598 as of December 31, 2024. The change in fair value of the Series A warrant derivative liability from their issuance date
through December 31, 2024 totaled $410,524 which was included as a loss in the statement of operations for the year ended December 31,
2024.

2023 Purchase Warrants

On April 5, 2023, the Company issued warrants to purchase a total of