What changed in this filing

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Item 1. Financial Statements

2022-05-20 compared with 2021-11-19 · 1328 added, 1192 removed, 421 unchanged (86% of the section changed)

2 unchanged sentences

31, 2022 AND DECEMBER 31, 2021

Current assets:

and cash equivalents

receivable-trade, less allowance for doubtful accounts

and $ 123,224

– September 30, 2021 and December 31, 2020, respectively

expenses and other current assets

March 31, 2022 (Unaudited)

Current assets:

Property, plant and equipment,

Goodwill and other intangible

Operating lease right of use

and Stockholders’ Equity

Current liabilities:

portion of operating lease obligations

liabilities – current

Debt obligations

derivative liabilities

taxes payable

Cash and cash equivalents

Accounts receivable – trade, net

Other receivables (including $ 158,384 due from related parties – March 31, 2022 and $ 158,384 – December 31, 2021, refer to Note 19)

Inventories, net

Prepaid expenses

Total current assets

Property, plant, and equipment, net

Goodwill and other intangible assets, net

Operating lease right of use assets, net

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

Accrued expenses

Current portion of operating lease obligations

Contract liabilities – current portion

Debt obligations – current portion

Warrant derivative liabilities

Income taxes payable

Total current liabilities

Long-term liabilities:

obligations – long term

lease obligation, long term

liabilities-long term

Debt obligations – long term

Operating lease obligation – long term

Contract liabilities – long term

Total liabilities

Commitments and contingencies

Stockholders’ Equity:

Common stock, $ 0.001

par value per share;

Common stock, $ 0.001 par value per share;

100,000,000 shares authorized;

shares issued:

– September 30, 2021 and 26,834,709

– December 31, 2020

paid in capital

stock, at cost ( 63,518 shares)

( 2,157,226 )

Noncontrolling

interest in consolidated subsidiary

49,728,357 shares issued – March 31, 2022 and 50,904,391 shares issued – December 31, 2021

Additional paid in capital

Noncontrolling interest in consolidated subsidiary

Accumulated deficit

( 77,332,537 )

( 68,670,497 )

stockholders’ equity

liabilities and stockholders’ equity

Total stockholders’ equity

Total liabilities and stockholders’ equity

Notes to the Unaudited Condensed Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF OPERATIONS

THE THREE AND NINE MONTHS ENDED

THE THREE MONTHS ENDED

31, 2022 AND 2021

Cost of revenue:

Three months ended

Service and other

Total revenue

Cost of revenue:

Selling, general and administrative

and development expense

advertising and promotional expense

and administrative expense

Service and other

Total cost of revenue

Selling, general and administrative expenses:

( 3,598,973 )

( 1,843,957 )

Research and development expense

Selling, advertising and promotional expense

General and administrative expense

Total selling, general and administrative expenses

Operating loss

( 6,803,338 )

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Interest expense

Secured convertible notes

issuance expense

Change in fair value of proceeds

investment agreement

Change in fair value of secured

convertible notes

( 1,300,252 )

Change in fair value of short-term

in fair value of warrant derivative liabilities

on extinguishment of debt

Income (loss) before income

Change in fair value of contingent consideration promissory notes

Change in fair value of short-term investments

Change in fair value of warrant derivative liabilities

Total other income

Income (loss) before income tax benefit

( 6,698,242 )

tax benefit (expense)

income (loss)

Income tax benefit

Net income (loss)

( 6,698,242 )

loss attributable to noncontrolling interests of consolidated subsidiary

income (loss) attributable to common stockholders

Net loss attributable to noncontrolling interests of consolidated subsidiary

Net income (loss) attributable to common stockholders

$ ( 6,600,148 )

Net income (loss) per share

attributable to common stockholders’ information:

Net income (loss) per share information:

Weighted average shares outstanding:

Notes to the Unaudited Condensed Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Noncontrolling

in consolidated

Stockholders’

December 31, 2019

interest in consolidated

Balance, December 31, 2020

$ 106,501,396

1 unchanged sentence

$ ( 90,014,500 )

common stock grant

of common stock for services rendered

of common stock for services rendered, shares

common stock forfeitures

of common stock through registered direct offering at $3.095 per share and accompanying warrants (net of offering expenses and placement

agent discount)

of common stock through registered direct offering at $3.095 per share and accompanying warrants (net of offering expenses and placement

agent discount) , shares

of common stock through registered direct offering at $2.80 per share and accompanying warrants (net of offering expenses and placement

agent discount)

of common stock through registered direct offering at $2.80 per share and accompanying warrants (net of offering expenses and placement

agent discount) , shares

of pre-funded common stock purchase warrants at $3.095 per share

of pre-funded common stock purchase warrants at $3.095 per share , shares

of pre-funded common stock purchase warrants at $2.80 per share

of pre-funded common stock purchase warrants at $2.80 per share , shares

of pre-funded common stock purchase warrants in connection with the registered direct offerings

of common stock purchase warrants at exercise price of $3.25 per share in connection with the registered direct offerings

of common stock upon conversion of secured convertible notes and interest

of common stock through underwritten public offering at $2.15 per share (net of offering expenses and underwriters’ discount)

of common stock upon exercise of common stock purchase warrants

of common stock upon exercise of common stock purchase warrants, shares

of common stock upon exercise of stock options

of common stock upon exercise of stock options, shares

of common stock purchase warrants in connection with issuance of secured convertible notes

of common stock as compensation for acquisition

of common stock as compensation for acquisition, shares

of common stock through underwritten public offering at $ 1.15

per share (net of offering expenses and underwriters’

of common stock purchase warrants in connection with issuance of unsecured promissory note payable

Stock-based compensation

Restricted common stock grant

Restricted common stock forfeitures

Issuance of common stock through

registered direct offering at $ 3.095 per share and accompanying warrants (net of offering expenses and placement agent discount)

Issuance of common stock through

registered direct offering at $ 2.80 per share and accompanying warrants (net of offering expenses and placement agent discount)

Exercise of pre-funded common

stock purchase warrants at $ 3.095 per share

Exercise of pre-funded common

stock purchase warrants at $ 2.80 per share

Issuance of pre-funded common

stock purchase warrants in connection with the registered direct offerings

( 1,817,548 )

March 31, 2020

Issuance of common stock purchase

warrants at exercise price of $ 3.25 per share in connection with the registered direct offerings

( 49,398,510 )

Balance, March 31, 2021

$ 122,157,360

common stock grant

common stock forfeitures

of common stock upon conversion of secured convertible notes and interest

of common stock through underwritten public offering at $ 1.65

per share (net of offering expenses and underwriters’

of common stock through underwritten public offering (net of offering expenses and underwriters’ discount)

of common stock through underwritten public offering at $ 2.15

per share (net of offering expenses and underwriters’

of common stock through underwritten public offering (net of offering expenses and underwriters’ discount)

of common stock upon exercise of common stock purchase warrants

of common stock upon exercise of stock options

of common stock purchase warrants in connection with issuance of secured convertible notes

June 30, 2020

$ ( 2,157,226 )

$ ( 68,292,642 )

common stock grant

of common stock for services rendered

September 30, 2020

Balance, December 31, 2021

$ 124,426,379

$ ( 68,670,497 )

Stock-based compensation

Restricted common stock grant

Restricted common stock forfeitures

Repurchase and cancellation

of common stock

( 1,876,034 )

December 31, 2020

( 2,061,892 )

( 2,063,768 )

to noncontrolling interest in consolidated subsidiary

( 6,600,148 )

common stock grant

common stock forfeitures

of common stock through registered direct offering at $ 3.095

per share and accompanying warrants (net of

offering expenses and placement agent discount)

of common stock through registered direct offering at $ 2.80

per share and accompanying warrants (net of

offering expenses and placement agent discount)

of pre-funded common stock purchase warrants at $ 3.095

of pre-funded common stock purchase warrants

of pre-funded common stock purchase warrants at $ 2.80

of pre-funded common stock purchase warrants

of pre-funded common stock purchase warrants in connection with the registered direct offerings

( 6,698,242 )

Balance, March 31, 2022

$ 124,820,428

of common stock purchase warrants at exercise price of $ 3.25

per share in connection with the registered

direct offerings

$ ( 77,332,537 )

Notes to the Unaudited Condensed Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

MONTHS ENDED MARCH 31, 2022 AND 2021

Three months ended

Cash Flows from Operating Activities:

Net income (loss)

$ ( 6,698,242 )

of common stock purchase warrants at exercise price in connection with the registered direct offerings

Adjustments to reconcile net income (loss) to net cash flows used in operating activities:

Depreciation and amortization

Stock-based compensation

Change in fair value of warrant derivative liabilities

( 24,552,257 )

Provision for inventory obsolescence

Provision for doubtful accounts receivable

Change in fair value of contingent consideration promissory note

Change in operating assets and liabilities (net of assets and liabilities acquired):

(Increase) decrease in:

Accounts receivable – trade

Accounts receivable – other

( 1,115,549 )

March 31, 2021

Prepaid expenses

Operating lease right of use assets

( 2,529,277 )

Increase (decrease) in:

Accounts payable

Accrued expenses

Operating lease obligations

Income taxes payable

Contract liabilities

Net cash used in operating activities

( 6,055,672 )

( 3,206,844 )

Cash Flows from Investing Activities:

Purchases of furniture, fixtures and equipment

( 1,774,592 )

June 30, 2021

Additions to intangible assets

Cash paid for acquisition of Medical Billing Company

( 1,153,627 )

Cash paid for asset acquisition from Medical

Billing Company

Net cash used in investing activities

( 3,195,346 )

of common stock through registered direct offering and accompanying warrants (net of offering expenses and placement agent discount)

of common stock through registered direct offering accompanying warrants (net of offering

expenses and placement agent discount)

of common stock as consideration for acquisition

common stock grant

September 30, 2021

Cash Flows from Financing Activities:

Repurchase and cancellation of common stock

( 2,063,768 )

Distribution to

noncontrolling interest in consolidated subsidiary

Net proceeds from sale of common stock in registered direct offerings

Proceeds from issuance of common stock upon exercise of pre-funded warrants

Principal payment on contingent consideration promissory

Net cash provided by (used in) financing activities

( 2,195,658 )

Net increase/(decrease) in cash and cash equivalents

( 11,446,676 )

Notes to the Unaudited Condensed Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Cash Flows from Operating

income (loss)

to reconcile net income (loss) to net cash flows used in by operating activities:

and amortization

on extinguishment of debt

based compensation

in fair value of warrant derivative liabilities

for inventory obsolescence

of discount on unsecured promissory notes

Change in fair value of short-term investments

in fair value of secured convertible notes

in fair value of proceeds investment agreement

for doubtful accounts receivable

of common stock for services rendered

Debt issuance

in operating assets and liabilities:

receivable – trade

receivable – other

tax refund receivable

lease right of use assets

(decrease) in:

taxes payable

lease obligations

cash used in operating activities

Cash Flows from Investing

of property, building and equipment

to other intangible assets

to investments

paid for Nobility Healthcare Division acquisition, net of cash acquired

paid for TicketSmarter acquisition, net of cash acquired

cash related to TicketSmarter acquisition

cash used in investing activities

Cash Flows from Financing

from issuance of common stock upon exercise of pre-funded warrants

Net proceeds from sale of common stock in registered direct offerings

Proceeds from unsecured promissory note payable, related party

from unsecured promissory note payable

from promissory notes payable

from issuance of common stock upon exercise of warrants

from issuance of secured convertible notes payable

from sale of common stock in underwritten public offering

from exercise of stock options

payment on subordinated notes payable

payment on secured convertible notes

payments on unsecured promissory note payable, related party

Debt issuance

payment on proceeds investment agreement

cash provided by financing activities

Net increase in cash and

cash equivalents

and cash equivalents, beginning of period

and cash equivalents, end of period

Supplemental disclosures of

cash flow information:

payments for interest

payments for income taxes

disclosures of non-cash investing and financing activities:

of contingent consideration earn-out agreement for business acquisition

of contingent consideration promissory note for business acquisitions

Assets assumed in business acquisitions

assumed in business acquisitions

stock issued as consideration for business acquisitions

common stock grant

common stock forfeitures

exercise of common stock purchase warrants

allocated to initial measurement of warrant derivative liabilities in connection to the warrants and pre-funded warrants

of common stock upon conversion of secured convertible notes

allocated to common stock purchase warrants in connection with issuance of unsecured promissory note payable

Cash, cash equivalents, beginning of period

Cash, cash equivalents, end of period

Supplemental disclosures of cash flow information:

Cash payments for interest

Cash payments for income taxes

Supplemental disclosures of non-cash investing and financing activities:

Restricted common stock grant

Restricted common stock forfeitures

Amounts allocated to initial measurement of warrant derivative liabilities in connection to the warrants and pre-funded warrants

Issuance of contingent consideration promissory note for

business and asset acquisitions

Assets acquired in business acquisitions

Goodwill acquired in business acquisitions

Liabilities assumed in business acquisitions

Notes to the Unaudited Condensed Consolidated Financial Statements.

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of Operations :

(with its wholly-owned subsidiaries, Digital Ally International, Inc., Shield Products, LLC, Digital Ally Healthcare, LLC,

TicketSmarter, Inc., and its majority-owned subsidiary Nobility Healthcare, LLC, collectively, “Digital Ally,” “Digital,”

and the “Company”) produces digital video imaging, storage products, disinfectant and related safety products for use in

law enforcement, security and commercial applications;

also offering revenue cycle management solutions, ticket resale marketplace, and

ticketing services.

The Company’s products include, among others;

in-car digital video/audio recorders contained in a rear-view

mirror for use in law enforcement and commercial fleets;

a system that provides its law enforcement customers with audio/video surveillance

from multiple vantage points and hands-free automatic activation of body-worn cameras and in-car video systems;

a miniature digital video

system designed to be worn on an individual’s body;

and cloud storage solutions.

The Company added two new lines of branded products:

(1) the ThermoVu ® line, which is a line of self-contained temperature monitoring stations that provides alerts

and controls facility access when an individual’s temperature exceeds a pre-set threshold and (2) the Shield™ disinfectant

and cleanser line, which is for use against viruses and bacteria and which we began offering to the Company’s law enforcement and

commercial customers beginning late in the second quarter of 2020.

Both product lines are manufactured by third parties.

the Company has active research and development programs to adapt its technologies to other applications.

It can integrate electronic,

radio, computer, mechanical, and multi-media technologies to create unique solutions to address needs in a variety of other industries

and markets, including mass transit, school bus, taxicab and the military.

The Company sells its products to law enforcement agencies,

private security customers and organizations, and consumer and commercial fleet operators through direct sales domestically and third-party

distributors internationally.

Additionally, through our Digital Ally Healthcare, LLC subsidiary, the Company has expanded into the revenue

cycle management solutions field, helping provide working capital and back-office services to healthcare organizations throughout the

Lastly, through the Company’s recently formed TicketSmarter, Inc.

subsidiary, it has entered the online ticketing platform

through TicketSmarter.com, as a unique marketplace for buyers and sellers of tickets for live events throughout the country.

Company was originally incorporated in Nevada on December 13, 2000 as Vegas Petra, Inc.

was originally incorporated in Nevada on December 13, 2000 as Vegas Petra, Inc.

and had no operations until 2004.

1 unchanged sentence

entered into a Plan of Merger with Digital Ally, Inc., at which time the merged entity was renamed Digital

business of Digital Ally, Inc.

(with its wholly-owned subsidiaries, Digital Ally International, Inc., Shield Products, LLC, Digital Ally

Healthcare, LLC, TicketSmarter, Inc., Worldwide Reinsurance, Ltd., Digital Connect, Inc., and its majority-owned subsidiary Nobility

Healthcare, LLC, collectively, “Digital Ally,” “Digital,” and the “Company”) is divided into three

reportable operating segments:

1) the Video Solutions Segment, 2) the Revenue Cycle Management Segment and 3) the Ticketing Segment.

The Video Solutions Segment is our legacy business that produces digital video imaging, storage products, disinfectant and related safety

products for use in law enforcement, security and commercial applications.

This segment includes both service and product revenues through

our subscription models offering cloud and warranty solutions, and hardware sales for video and health safety solutions.

Cycle Management Segment provides working capital and back-office services to a variety of healthcare organizations throughout the country,

as a monthly service fee.

The Ticketing Segment acts as an intermediary between ticket buyers and sellers within our secondary

ticketing platform, ticketsmarter.com, and we also acquire tickets from primary sellers to then sell through various platforms.

The accounting

guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements

and requires selected information of those segments to be presented in financial statements.

Such required segment information is included

of Presentation :

condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United

States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.

Accordingly, they do

not include all the information and footnotes required by generally accepted accounting principles in the United States for complete

unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles

in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.

they do not include all the information and footnotes required by generally accepted accounting principles in the United States for complete

financial statements.

1 unchanged sentence

a fair presentation have been included.

Operating results for the three and nine month periods ended September 30, 2021 are not necessarily

indicative of the results that may be expected for the year ending December 31, 2021.

Operating results for the three-month period ended March 31, 2022 are not necessarily indicative

of the results that may be expected for the year ending December 31, 2022.

balance sheet at December 31, 2021 has been derived from the audited financial statements at that date, but does not include all the

1 unchanged sentence

further information, refer to the audited financial statements and footnotes included in the Company’s annual report on Form 10-K

for the year ended December 31, 2020, and the unaudited financial statements and footnotes included in the Company’s quarterly

report on Form 10-Q for the quarter ended September 30, 2021.

for the year ended December 31, 2021.

COVID-19 pandemic represents a fluid situation that presents a wide range of potential impacts of varying durations for different global

1 unchanged sentence

most US-based businesses, the COVID-19 pandemic and efforts to mitigate the same began to have impacts on our business in March 2020.

By that time, much of our first fiscal quarter was completed.

During the remainder of 2020 and the first quarter of 2021, the Company

observed decreases in demand from certain customers, including primarily law-enforcement and commercial customers.

However, the Company

is beginning to experience an increase in demand for the three months ended September 30, 2021, compared to the same period in 2020.

the fact that the Company’s products are sold through a variety of distribution channels, the Company expects its sales will experience

more volatility as a result of the changing and less predictable operational needs of many customers as a result of the COVID-19 pandemic.

The Company is aware that many companies, including many of its suppliers and customers, are reporting or predicting negative impacts

from COVID-19 on future operating results.

Although the Company observed significant declines in demand for its products from certain

customers during 2020 and the first quarter of 2021, the Company believes that the impact of the COVID-19 remains too fluid and unknown,

hindering the Company from determining the long-term demand for current products.

The Company also cannot be certain how demand may shift

over time as the impacts of the COVID-19 pandemic may go through several phases of varying severity and duration.

light of broader macro-economic risks and already known impacts on certain industries that use the Company’s products and services,

the Company has taken, and continue to take targeted steps to lower its operating expenses because of the COVID-19 pandemic.

continues to monitor the impacts of COVID-19 on its operations closely and this situation could change based on a significant number

of factors that are not entirely within its control and are discussed in this and other sections of this quarterly report on Form 10-Q.

The Company does not expect there to be material changes to its assets on its balance sheet or its ability to timely account for those

Further, in connection with the preparation of this quarterly report on Form 10-Q, the Company reviewed the potential impacts

of the COVID-19 pandemic on goodwill and intangible assets and have determined there to be no material impact at this time.

has also reviewed the potential impacts on future risks to the business as it relates to collections, returns and other business-related

date, travel restrictions and border closures have not materially impacted its ability to obtain inventory or manufacture or deliver

products or services to customers.

However, if such restrictions become more severe, they could negatively impact those activities in

a way that would harm the business over the long term.

Travel restrictions impacting people can restrain our ability to assist its customers

and distributors as well as impact its ability to develop new distribution channels, but at present the Company does not expect these

restrictions on personal travel to be material to our business operations or financial results.

The Company has taken steps to restrain

and monitor its operating expenses and therefore it does not expect any such impacts to materially change the relationship between costs

and revenues.

most companies, the Company has taken a range of actions with respect to how it operates to assure it complies with government restrictions

and guidelines as well as best practices to protect the health and well-being of its employees and its ability to continue operating

its business effectively.

To date, the Company has been able to operate its business effectively using these measures and to maintain

internal controls as documented and posted.

The Company also has not experienced challenges in maintaining business continuity and does

not expect to incur material expenditures to do so.

However, the impacts of COVID-19 and efforts to mitigate the same have remained unpredictable

and it remains possible that challenges may arise in the future.

actions the Company has taken so far during the COVID-19 pandemic include, but are not limited to:

all employees who can work from home to work from home;

its IT networking capability to best assure employees can work effectively outside the office;

employees who must perform essential functions in one of its offices:

employees maintain a distance of at least six feet from other employees whenever possible;

employees work in dedicated shifts to lower the risk all employees who perform similar tasks might become infected by COVID-19;

employees stay segregated from other employees in the office with whom they require no interaction;

unvaccinated employees to wear masks while they are in the office whenever possible.

Company currently believes revenue for the year ending December 31, 2021 will still be impacted due to the conditions noted.

2020, the Company implemented a COVID-19 mitigation plan designed to further reduce its operating expenses during the pandemic.

taken to date include work hour and salary reductions for senior management.

These cost reductions are in addition to the significant

restructuring actions which the Company continues to implement and develop throughout 2021.

Based on the Company’s current cash

position, its projected cash flow from operations and its cost reduction and cost containment efforts to date, the Company believes that

it will have sufficient capital and or have access to sufficient capital through public and private equity and debt offerings to sustain

operations for a period of one year following the date of this filing.

If business interruptions resulting from the COVID-19 pandemic

were to be prolonged or expanded in scope, the business, financial condition, results of operations and cash flows would be negatively

The Company will continue to actively monitor this situation and will implement actions necessary to maintain business continuity.

Since that time, the COVID-19 pandemic has dramatically impacted the global health and economic environment, including millions of confirmed

cases, business slowdowns or shutdowns, labor shortages, supply chain challenges, changes in government spending and requirements, regulatory

challenges, inflationary pressures and market volatility.

operate within the complex integrated global supply chain for both vendors and customers.

As the COVID-19 pandemic dissipates at varying

times and rates in different regions around the world, there could be a prolonged negative impact on these global supply chains.

ability to continue operations at specific facilities will be impacted by the interdependencies of the various participants of these

global supply chains, which are largely beyond our direct control.

A prolonged shut down of these global supply chains could have a material

adverse effect on our business, results of operations, cash flows and financial condition.

our suppliers have increased challenges with their workforce (including as a result of illness, absenteeism, reactions to health and

safety or government requirements), facility closures, timely access to necessary components, materials and other supplies at reasonable

prices, access to capital, and access to fundamental support services (such as shipping and transportation), they may be unable to provide

the agreed-upon goods and services in a timely, compliant and cost-effective manner.

We have incurred and may in the future incur additional

costs and delays in our business resulting from the COVID-19 pandemic, including as a result of higher prices, schedule delays or the

need to identify and develop alternative suppliers.

In some instances, we may be unable to identify and develop alternative suppliers,

incurring additional liabilities under our current contracts and hampering new ones.

Our customers have experienced, and may continue

to experience, disruptions in their operations and supply chains as a result of the COVID-19 pandemic, which can result in delayed, reduced,

or canceled orders, or collection risks, and which may adversely affect our results of operations.

Similarly, current, and future restrictions

or disruptions of transportation, such as reduced availability of air transport, port closures or delays, and increased border controls,

delays or closures, can also impact our ability to meet demand and could materially adversely affect us.

spread of COVID-19 caused us to modify our business practices (including employee travel, employee work locations, cancellation of physical

participation in meetings, events and conferences, and social distancing measures).

To date, we eased many of these modifications.

However, we may, in the future, reinstitute the same or similar changes or take further actions as may be required by government

authorities or that we determine are in the best interests of our employees, customers, partners, vendors, and suppliers.

managed to continue most of our operations, the future course of the COVID-19 pandemic is uncertain and we cannot assure that this global

pandemic, including its economic impact, will not have a material adverse impact on our business, financial position, results of operations

and/or cash flows.

of Consolidation :

accompanying financial statements include the consolidated accounts of Digital Ally, its wholly-owned subsidiaries, Digital Ally International,

Inc., Shield Products, LLC, Digital Ally Healthcare, LLC, TicketSmarter, Inc, and its majority-owned subsidiary Nobility Healthcare,

Inc., Shield Products, LLC, Digital Ally Healthcare, LLC, TicketSmarter, Inc., Worldwide Reinsurance, Ltd., Digital Connect, Inc.,

and its majority-owned subsidiary Nobility Healthcare, LLC.

All intercompany balances and transactions have been eliminated during consolidation.

4 unchanged sentences

line of temperature monitoring equipment.

The Company formed Nobility Healthcare, LLC in June 2021 to facilitate the operations

of its revenue cycle management solutions and back-office services for healthcare organizations.

Lastly, the Company formed TicketSmarter,

upon its acquisition of Goody Tickets, LLC and TicketSmarter, LLC, to facilitate the global ticketing operations.

The Company formed Nobility Healthcare, LLC in June 2021 to facilitate the operations of its

revenue cycle management solutions and back-office services for healthcare organizations.

Lastly, the Company formed TicketSmarter, Inc.

upon its acquisition of Goody Tickets, LLC and TicketSmarter, LLC, to facilitate its global ticketing operations.

formed Worldwide Reinsurance Ltd., which is a captive insurance company domiciled in Bermuda.

It will provide

primarily liability insurance coverage to the Company for which insurance may not be currently available or economically feasible in

today’s insurance marketplace.

The Company formed Digital Connect, Inc.

for travel and transportation purposes in 2022.

Value of Financial Instruments :

carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and subordinated

notes payable approximate fair value because of the short-term nature of these items.

Recognition :

8 unchanged sentences

revenue when a performance obligation is satisfied.

Company has two different revenue streams, product and service, represented through its three segments.

The Company reports all revenues

on a gross basis, other than service revenues from the Company’s ticketing and revenue cycle management segments.

generated by all segments are reported net of sales taxes.

Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with the

In situations where sales are to a distributor, the Company had concluded its contracts are with the distributor as the Company

In situation where sales are to a distributor, the Company had concluded its contracts are with the distributor as the Company

holds a contract bearing enforceable rights and obligations only with the distributor.

As part of its consideration for the contract,

As part of part of its consideration for the contract,

the Company evaluates certain factors including the customers’ ability to pay (or credit risk).

12 unchanged sentences

Revenue is recognized when control of the product is transferred to the customer (i.e.

, when the Company’s

performance obligations is satisfied), which typically occurs at shipment.

Further in determining whether control has been transferred,

the Company considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred

to the customer.

Customers do not have a right to return the product other than for warranty reasons for which they would only receive

repair services or replacement product.

The Company has also elected the practical expedient under ASC 340-40-25-4 to expense commissions

for product sales when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less

than one year.

Company sells its products and services to customers in the following manner:

sales to domestic customers are made direct to the end customer (typically a law enforcement agency or a commercial customer) through

its sales force, which is composed of its employees.

Revenue is recorded when the product is shipped to the end customer.

sales to international customers are made through independent distributors who purchase products from the Company at a wholesale

price and sell to the end user (typically law enforcement agencies or a commercial customer) at a retail price.

The distributor retains

the margin as its compensation for its role in the transaction.

The distributor generally maintains product inventory, customer receivables

and all related risks and rewards of ownership.

Accordingly, upon application of steps one through five above, revenue is recorded

when the product is shipped to the distributor consistent with the terms of the distribution agreement.

parts and services for domestic and international customers are generally handled by its inside customer service employees.

is recognized upon shipment of the repair parts and acceptance of the service or materials by the end customer.

sales through the Company’s Nobility Healthcare subsidiary are driven through relationships with medium to large healthcare

organizations, in which revenue is recognized upon execution of services.

Through the Company’s TicketSmarter subsidiary, service

sales are driven largely in part to the usage of the TicketSmarter.com marketplace by buyers and sellers, in which the Company collects

service fees for each transaction.

taxes collected on products sold are excluded from revenues and are reported as accrued expenses in the accompanying balance sheets until

payments are remitted.

and other revenue is comprised of revenues from extended warranties, repair services, cloud revenue, software revenue, revenue cycle

management services, and ticket marketplace services.

Revenue is recognized upon shipment of the product and acceptance of the service

or materials by the end customer for repair services.

Revenue for extended warranty, cloud service or other software-based products is

over the term of the contract warranty or service period.

A time-elapsed method is used to measure progress because the Company transfers

control evenly over the contractual period.

Accordingly, the fixed consideration related to these revenues is generally recognized on

a straight-line basis over the contract term, as long as the other revenue recognition criteria have been met.

with some of the Company’s customers contain multiple performance obligations that are distinct and accounted for separately.

transaction price is allocated to the separate performance obligations on a relative standalone selling price (“SSP”).

Company determined SSP for all the performance obligations using observable inputs, such as standalone sales and historical pricing.

SSP is consistent with the Company’s overall pricing objectives, taking into consideration the type of service being provided.

SSP also reflects the amount the Company would charge for the performance obligation if it were sold separately in a standalone sale.

Multiple performance obligations consist of product, software, cloud subscriptions and extended warranties.

when the Company’s performance

obligations is satisfied), which typically occurs at shipment.

Further in determining whether control has been transferred, the Company

considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the

Customers do not have a right to return the product other than for warranty reasons for which they would only receive repair

services or replacement product.

The Company has also elected the practical expedient under ASC 340-40-25-4 to expense commissions for

product sales when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than

and other revenue is comprised of revenues from extended warranties, repair services, cloud revenue and software revenue.

recognized upon shipment of the product and acceptance of the service or materials by the end customer for repair services.

extended warranty, cloud service or other software-based products is over the term of the contract warranty or service period.

A time-elapsed

method is used to measure progress because the Company transfers control evenly over the contractual period.

Accordingly, the fixed consideration

related to these revenues is generally recognized on a straight-line basis over the contract term, as long as the other revenue recognition

criteria have been met.

Company’s multiple performance obligations may include future in-car or body-worn camera devices to be delivered at defined points

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contract to future deliverables using management’s best estimate of selling price.

Cycle Management

Company reports revenue cycle management revenues on a net basis, as its primary source of revenue is its end-to end service fees which

is generally determined as a percentage of the invoice amounts collected.

These service fees are reported as revenue monthly upon completion

of the Company’s performance obligation to provide the agreed upon service.

Company reports ticketing revenue on a gross or net basis based on management’s assessment of whether the Company is acting as

a principal or agent in the transaction.

The determination is based upon the evaluation of control over the event ticket, including the

right to sell the ticket, prior to its transfer to the ticket buyer.

Company sells tickets held in inventory, which consists of one performance obligation, being to transfer control of an event ticket to

the buyer upon confirmation of the order.

The Company acts as the principal in these transactions as the ticket is owned by the Company

at the time of sale, therefore controlling the ticket prior to transferring to the customer.

In these transactions, revenue is recorded

on a gross basis based on the value of the ticket and is recognized when an order is confirmed.

Payment is typically due upon delivery

of the ticket.

Company also acts as an intermediary between buyers and sellers through the online secondary marketplace.

Revenues derived from this

marketplace primarily consist of service fees from ticketing operations, and consists of one primary performance obligation, which is

facilitating the transaction between the buyer and seller, being satisfied at the time the order has been confirmed.

As the Company does

not control the ticket prior to the transfer, the Company acts as an agent in these transactions.

Revenue is recognized on a net basis,

net of the amount due to the seller when an order is confirmed.

The seller is then obligated to deliver the tickets to the buyer

per the seller’s listing, and payment is due at the time of sale.

liabilities consist of deferred revenue and include payments received in advance of performance under the contract and are reported separately

as current liabilities and non-current liabilities in the condensed consolidated balance sheets.

Such amounts consist of extended warranty

contracts, prepaid cloud services and prepaid installation services and are generally recognized as the respective performance obligations

are satisfied.

as current liabilities and non-current liabilities in the Consolidated Balance Sheets.

Such amounts consist of extended warranty contracts,

prepaid cloud services and prepaid installation services and are generally recognized as the respective performance obligations are satisfied.

During the three months ended March 31, 2022, the Company recognized revenue of $ 0.5 million related to its contract liabilities.

liabilities consist of deferred revenue and include payments received in advance of performance under the contract and are reported separately

as current liabilities and non-current liabilities in the Consolidated Balance Sheets.

Such amounts consist of extended warranty contracts,

prepaid cloud services and prepaid installation services and are generally recognized as the respective performance obligations are satisfied.

Total contract liabilities consist of the following:

SCHEDULE OF CONTRACT LIABILITIES

March 31, 2022

Additions/Reclass

Recognized Revenue

Contract liabilities, current

Contract liabilities, non-current

returns and allowances aggregated $ 117,376 and $ 45,298 for the years ended March 31, 2022 and December 31, 2021, respectively.

for estimated sales returns and allowances are recognized at the time of sales on an accrual basis.

The accrual is determined based upon

historical return rates adjusted for known changes in key variables affecting these return rates.

of Estimates :

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limited to determining the estimated lives of long-lived assets, determining the potential impairment of long-lived assets, the fair

value of warrants, options, proceeds investment agreement and convertible debt, the recognition of revenue, inventory valuation reserve,

the valuation allowance for deferred tax assets and other legal claims and contingencies.

The results of any changes in accounting estimates

are reflected in the financial statements in the period in which the changes become evident.

Estimates and assumptions are reviewed periodically,

and the effects of revisions are reflected in the period that they are determined to be necessary.

value of warrants, options, the recognition of revenue, inventory valuation reserve,

fair value of assets and liabilities acquired in a business combination, incremental borrowing rate on leases, the valuation allowance

for deferred tax assets and other legal claims and contingencies.

The results of any changes in accounting estimates are reflected in

the financial statements in the period in which the changes become evident.

Estimates and assumptions are reviewed periodically, and

the effects of revisions are reflected in the period that they are determined to be necessary.

and cash equivalents :

and cash equivalents include funds on hand, in bank and short-term investments with original maturities of ninety (90) days or less.

OF SHORT TERM INVESTMENTS

March 31, 2022

Demand deposits

Short-term investments

with original maturities of 90 days or less (Level 1) (1) :

Money market funds

December 31, 2021

Demand deposits

Short-term investments

with original maturities of 90 days or less (Level 1) (1) :

Money market funds

Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that

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The Company minimizes this risk by

placing its cash deposits with numerous major financial institutions.

At September 30, 2021 and December 31, 2020, the uninsured balance

amounted to $ 38,152,409 and

placing its cash deposits with major financial institutions.

At March 31, 2022 and December 31, 2021, the uninsured balance amounted

to $ 18,438,051 and

$ 29,836,142 ,

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and considering a customer’s financial condition, credit history, and current economic conditions.

One individual customer

receivable balances exceeded 10 %

of total accounts receivable as of September 30, 2021 and December 31, 2020, which totaled $ 558,729

and $ 319,000

of total accounts receivable, respectively.

receivables are written off when deemed uncollectible.

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annually as of December 31, and more frequently if events and circumstances indicate that goodwill might be impaired.

has just recently completed several acquisitions that generated goodwill that will be subject to impairment testing for the first time

on December 31, 2021.

impairment testing is performed at the reporting unit level.

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the provisions of ASC 360, Accounting for the Impairment or Disposal of Long-lived Assets .

An impairment review is performed

whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.

The Company groups

its assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of the other assets and liabilities.

An impairment review is performed whenever

events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.

The Company groups its assets

at the lowest level for which identifiable cash flows are largely independent of the cash flows of the other assets and liabilities.

The Company has determined that the lowest level for which identifiable cash flows are available is the operating segment level.

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if fair value is not available.

The Company assessed potential impairments of its long-lived assets as of December 31, 2020 and concluded

that there was no impairment.

intangible assets that have finite lives are amortized over their useful lives.

of Business :

has determined that, due to recent business acquisitions, its operations are comprised of three reportable segments:

Digital Ally, TicketSmarter, and Nobility Healthcare.

For the three and nine months ended September 30, 2021 and 2020, sales by segment

were as follows:

OF SALES BY GEOGRAPHIC AREA

TicketSmarter

Nobility Healthcare

to customers outside of the United States are denominated in U.S.

All Company assets are physically located within the United

Accounting Pronouncements :

June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13,

“Financial Instruments – Credit Losses” to improve information on credit losses for financial assets and net investment

in leases that are not accounted for at fair value through net income.

ASU 2016-13 replaces the current incurred loss impairment methodology

with a methodology that reflects expected credit losses.

In April 2019 and May 2019, the FASB issued ASU No.

2019-04, “Codification

Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”

2019-05, “Financial Instruments-Credit Losses (Topic 326):

Targeted Transition Relief” which provided additional

implementation guidance on the previously issued ASU.

In November 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit

Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which defers the effective date for public filers

that are considered small reporting companies (“SRC”) as defined by the Securities and Exchange Commission (the “SEC”)

to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Since the Company is an SRC,

implementation will not be required until January 1, 2023.

The Company will continue to evaluate the effect that adopting ASU 2016-13

will have on the Company’s consolidated financial statements.

The Company last assessed potential impairments of its long-lived assets as of March 31,

2022 and concluded that there was no impairment.

assets include deferred patent costs and license agreements.

Legal expenses incurred in preparation of patent application have been deferred

and will be amortized over the useful life of granted patents.

Costs incurred in preparation of applications that are not granted will

be charged to expense at that time.

The Company has entered into several sublicense agreements under which it has been assigned the exclusive

rights to certain licensed materials used in its products.

These sublicense agreements generally require upfront payments to obtain the

exclusive rights to such material.

The Company capitalizes the upfront payments as intangible assets and amortizes such costs over their

estimated useful life on a straight-line method.

accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial

statements and requires selected information of those segments to be presented in financial statements.

Operating segments are identified

as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision

maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess

The Company’s three

operating segments are Video Solutions, Revenue

Cycle Management, and Ticketing, each of which has specific personnel responsible for that business and reports to the CODM.

expenses capture the Company’s corporate administrative activities, and is also to be reported in the segment information.

The Company’s captive insurance subsidiary provides services to the Company’s other business segments and not to outside

however, that subsidiary had no activity in the three months ended March 31, 2022 and 2021.

its operations will be eliminated in consolidation and it is not considered a separate business segment for financial reporting

Consideration

circumstances where an acquisition involves a contingent consideration arrangement that meets the definition of a liability under the

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities

from Equity, the Company recognizes a liability equal to the fair value of the contingent payments the Company expects to make as of

the acquisition date.

The Company remeasures this liability each reporting period and records changes in the fair value through the consolidated

statement of operations.

and Cancellation of Shares

time to time, the Company’s Board of Directors (the “Board”) may authorize share repurchases of common stock.

repurchased under Board authorizations are held in treasury for general corporate purposes and cancelled when it is determined appropriate

by management.

The Company accounts for repurchases of common stock under the cost method.

Shares repurchased and cancelled during the

period were recorded as a reduction to stockholders’ (deficit) equity.

See further discussion of the Company’s share repurchase

program in Note 14 –Stockholders’ Equity.

Non-Controlling

Non-controlling interests in

the Company’s Consolidated Financial Statements represents the interest in subsidiaries held by our venture partner.

venture partner holds a noncontrolling interests in the Company’s consolidated subsidiary Nobility Healthcare, LLC.

the Company consolidates the financial statements of all wholly-owned and majority owned subsidiaries, the noncontrolling owners’

share of each subsidiary’s results of operations are deducted and reported as net income or loss attributable to noncontrolling

interest in the Consolidated Statements of Operations.

Accounting Standards

2020, FASB issued ASU No.

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after December 15, 2021 with early adoption permitted for fiscal years beginning after December 15, 2020.

Management has not early-adopted

this new standard and continues to evaluate the impact of adopting ASU 2020-06 will have on its consolidated financial statements.

The adoption of this standard

did not have a significant impact on the Company’s financial position and results of operations.

2020, FASB issued ASU No.

8 unchanged sentences

2020-01 is effective for fiscal years beginning after December 15, 2020 with early adoption permitted.

The Company adopted this update for the quarter ended March 31, 2021, with no material effect on the financials.

The Company adopted this update for the quarter ended March 31, 2021.

The adoption of this standard did not have a significant impact

on the Company’s financial position and results of operations.

December 2019, the FASB issued ASU No.

3 unchanged sentences

The adoption of this standard did not have a significant impact on the Company’s financial position and results of operations.

Derivative Liabilities

accordance with FASB ASC 815-40, Derivatives and Hedging:

Contracts in an Entities Own Equity, entities must consider whether to classify

contracts that may be settled in its own stock, such as warrants to purchase shares of Common Stock, as equity of the entity or as an

asset or liability.

If an event that is not within the entity’s control could require net cash settlement, then the contract should

be classified as an asset or a liability rather than as equity.

We have determined because the terms of the warrants issued during the

first quarter of 2021, and remain outstanding, include a provision that entitles all the warrant holders to receive cash for their warrants

in the event of a qualifying cash tender offer, while only certain of the holders of the underlying shares of common stock would be entitled

to cash, our warrants should be classified as liability measured at fair value, with changes in fair value each period reported in earnings.

Volatility in the price of our common stock may result in significant changes in the value of the derivatives and resulting gains and

losses on our statement of operations.

consisted of the following at September 30, 2021 and December 31, 2020:

OF INVENTORIES

material and component parts

Work-in-process

for excess and obsolete inventory

June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses” to improve information on credit losses

for financial assets and net investment in leases that are not accounted for at fair value through net income.

ASU 2016-13 replaces the

current incurred loss impairment methodology with a methodology that reflects expected credit losses.

In April 2019 and May 2019, the

FASB issued ASU No.

2019-04, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives

and Hedging, and Topic 825, Financial Instruments” and ASU No.

2019-05, “Financial Instruments-Credit Losses (Topic 326):

Targeted Transition Relief” which provided additional implementation guidance on the previously issued ASU.

In November 2019, the

FASB issued ASU 2019-10, “Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic

842),” which defers the effective date for public filers that are considered small reporting companies (“SRC”) as defined

by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal

The Company will continue to evaluate the effect

of adopting ASU 2016-13 will have on the Company’s consolidated financial statements.

August 2018, the FASB issued ASU No.

2018-15, Intangible-Goodwill and Other Internal-Use Software (Subtopic 350-40) , or ASU 2018-15.

ASU 2018-15 updates guidance regarding accounting for implementation costs associated with a cloud computing arrangement that is a service

The amendments under ASU 2018-15 are effective for interim and annual fiscal periods beginning after December 15, 2019, with

early adoption permitted.

The adoption of this standard did not have a significant impact on the Company’s financial position

and results of operations,

December 2019, the FASB issued ASU No.

2019-12, Income Taxes - simplifying the accounting for income taxes (Topic 740), which is meant

to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, Income Taxes.

amendment also improves consistent application and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

The amendments in ASU 2019-12 are effective for public business entities

for fiscal years beginning after Dec.

The adoption of this standard did not have a significant impact on the Company’s

financial position and results of operations.

consisted of the following at March 31, 2022 and December 31, 2021:

SCHEDULE OF INVENTORIES

Raw material and component parts– video solutions segment

Work-in-process– video solutions segment

Finished goods – video solutions segment

Finished goods – ticketing segment

Reserve for excess and obsolete inventory– video solutions segment

( 3,334,829 )

( 3,353,458 )

Reserve for excess and obsolete inventory – ticketing segment

Total inventories

goods inventory includes units held by potential customers and sales agents for test and evaluation purposes.

The cost of such units

totaled $ 156,261 and

of September 30, 2021 and December 31, 2020, respectively.

totaled $ 179,273 and $ 153,976 as of March 31, 2022 and December 31, 2021, respectively.

DEBT OBLIGATIONS

obligations is comprised of the following:

OF SECURED CONVERTIBLE DEBENTURES AND PROCEEDS INVESTMENT AGREEMENT

injury disaster loan (EIDL)

Payroll protection

program loan (PPP)

consideration promissory note - Nobility Healthcare Division Acquisition

consideration promissory note – Nobility Healthcare Division Acquisition

consideration earn-out Agreement – TicketSmarter Acquisitions

OF DEBT OBLIGATIONS

Economic injury disaster loan (EIDL)

Contingent consideration promissory note – Nobility Healthcare Division Acquisition

Debt obligations

current maturities of debt obligations

obligations, long-term

obligations mature as follows as of September 30, 2021:

OF MATURITY OF DEBT OBLIGATIONS

(October 1, 2021 to December 31, 2021)

Debt obligations, long-term

obligations mature as follows as of March 31, 2022:

SCHEDULE OF MATURITY OF DEBT OBLIGATIONS

March 31, 2022

2022 (April 1, 2022 to December 31, 2022)

2027 and thereafter

Small Business Administration Notes .

May 4, 2020, the Company issued a promissory note in connection with the receipt of the Paycheck Protection Program (“PPP”)

Loan of $ 1,418,900

(the “PPP Loan”) under the Small

Business Administration’s (the “SBA”) PPP Program under the Coronavirus Aid, Relief, and Economic Security Act ( the

“CARES Act”).

The PPP Loan has a two -year

term and bears interest at a rate of 1.0 %

Monthly principal and interest payments were deferred for nine months after the date of disbursement and total $ 79,851

per month thereafter.

The PPP Loan could have

been prepaid at any time prior to maturity with no prepayment penalties.

The promissory note contained events of default and other provisions

customary for a loan of this type.

The PPP provides that the PPP Loan may be partially or wholly forgiven if the funds are used for certain

qualifying expenses as described in the CARES Act.

The Company intends to use the majority of the PPP Loan amount for qualifying expenses

and to apply for forgiveness of the PPP Loan in accordance with the terms of the CARES Act.

The Company used the majority of the PPP

Loan amount for qualifying expenses and to apply for forgiveness of the PPP Loan in accordance with the terms of the CARES Act.

applied for forgiveness of the PPP Loan and December 10, 2020, the Company was fully forgiven of its $ 1,418,900

Additionally, the Company was fully

forgiven, during the three months ended June 30, 2021, of its $ 10,000

EIDL advance received with the PPP Loan.

May 12, 2020, the Company received $ 150,000

in loan funding from the SBA under the EIDL program

administered by the SBA, which program was expanded pursuant to the recently enacted CARES Act.

The EIDL is evidenced by a secured promissory

note, dated May 8, 2020, in the original principal amount of $ 150,000

with the SBA, the lender.

May 4, 2020, the Company issued a promissory note in connection with the receipt of the Paycheck Protection Program

(“PPP”) Loan of $ 1,418,900 (the

“PPP Loan”) under the Small Business Administration’s (the “SBA”) PPP Program under the Coronavirus

Aid, Relief, and Economic Security Act (the “CARES Act”).

The PPP Loan has a two-year term and bears interest at a rate

Monthly principal and interest payments were deferred for nine months after the date of disbursement and total $ 79,851 per

month thereafter.

The PPP Loan could have been prepaid at any time prior to maturity with no prepayment penalties.

The promissory

note contained events of default and other provisions customary for a loan of this type.

The PPP Loan provides that it

may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act.

used the majority of the PPP Loan amount for qualifying expenses.

On December 10, 2020, the Company was fully forgiven of its

$ 1,418,900 PPP

Additionally, the Company was fully forgiven, during the three months ended June 30, 2021, of its $ 10,000 EIDL

advance received with the PPP Loan.

May 12, 2020, the Company received $ 150,000 in loan funding from the SBA under the EIDL program administered by the SBA, which program

was expanded pursuant to the recently enacted CARES Act.

The EIDL is evidenced by a secured promissory note, dated May 8, 2020, in the

original principal amount of $ 150,000 with the SBA, the lender.

the terms of the note issued under the EIDL program, interest accrues on the outstanding principal at the rate of 3.75 %

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Monthly principal

and interest payments are deferred for twelve months after the date of disbursement and total $ 731

and interest payments are deferred for twenty-four months after the date of disbursement and total $ 731

per month thereafter.

4 unchanged sentences

Consideration Promissory Notes

June 30, 2021, Nobility Healthcare, LLC, a subsidiary of the Company, issued a contingent consideration promissory note (the “Contingent

Note”) in connection with the Stock Purchase Agreement between Nobility and a private Company (the “Seller”)

June 30, 2021, Nobility Healthcare, a subsidiary of the Company, issued a contingent consideration promissory note (the “June Contingent

Note”) in connection with a stock purchase agreement between Nobility Healthcare and a private company (the “June Seller”)

of $ 350,000 .

The Contingent Note has a three-year term and bears interest at a rate of 3.00 %

The June Contingent Note has a three -year

term and bears interest at a rate of 3.00 %

Quarterly principal and interest payments are deferred for six months and is due in equal quarterly installments on the seventh

business day of each quarter.

The principal amount of the Contingent Note is subject to an earn-out adjustment, being the difference

between the $ 975,000

(the “Projected Revenue”) and the

cash basis revenue (the “Measurement Period Revenue”) collected by the Seller in its normal course of business from

the clients existing on June 30, 2021, during the period from October 1, 2021 through September 30, 2022 (the “Measurement Period”)

measured on a quarterly basis and annualized as of the relevant period.

If the Measurement Period Revenue is less than the Projected

Revenue, such amount will be subtracted from the principal balance of this Contingent Note on a dollar-for-dollar basis.

Measurement Period Revenue is more than the Projected Revenue, such amount will be added to the principal balance of this Contingent

Note on a dollar-for-dollar basis.

In no event will the principal balance of this Contingent Note become a negative number.

The maximum downward earn-out adjustment to the principal balance will be to zero.

There are no limits to the increases to the principal

balance of the Contingent Note as a result of the earn-out adjustments.

contingent consideration promissory note is considered to be additional purchase price;

therefore, the estimated fair value of

the contingent liability is recorded as a liability at the acquisition date and the fair value is considered part of the consideration

paid for the acquisition.

Management has recorded the contingent consideration promissory note at its estimated fair value of $ 350,000

The principal amount of the June Contingent Note is subject to an earn-out adjustment, being the difference

between $ 975,000

(the “June Projected Revenue”) and

the cash basis revenue (the “June Measurement Period Revenue”) collected by the June Seller in its normal course of business

from the clients existing on June 30, 2021, during the period from October 1, 2021 through September 30, 2022 (the “June Measurement

Period”) measured on a quarterly basis and annualized as of the relevant period.

If the June Measurement Period Revenue is less

than the June Projected Revenue, such amount will be subtracted from the principal balance of this June Contingent Note on a dollar-for-dollar

If the June Measurement Period Revenue is more than the June Projected Revenue, such amount will be added to the principal balance

of this June Contingent Note on a dollar-for-dollar basis.

In no event will the principal balance of this June Contingent Note become

a negative number.

The maximum downward earn-out adjustment to the principal balance will be a reduction to zero.

limits to the increases to the principal balance of the June Contingent Note as a result of the earn-out adjustments.

June Contingent Note is considered to be additional purchase price;

therefore, the estimated fair value of the contingent liability is

recorded as a liability at the acquisition date and the fair value is considered part of the consideration paid for the acquisition with

subsequent changes in fair value recorded as a gain or loss in the Consolidated Statements of Operations.

Management recorded the contingent

consideration promissory note at its estimated fair value of $ 350,000

at the acquisition date.

Management will continue

to estimate the fair value of this Contingent Note at each reporting date with the change, if any recorded as a gain or loss in

the statement of operations during the relevant period.

August 31, 2021, Nobility Healthcare, LLC, a subsidiary of the Company, issued a contingent consideration promissory note (the

“Contingent Payment Note”) in connection with the Stock Purchase Agreement between Nobility and a private Company

(the “Sellers”) of $ 650,000 .

The Contingent Payment Note has a three -year

Total principal payments

on this contingent consideration promissory note totaled $ 31,721

during the three months ended March 31, 2022.

The estimated fair value of the June Contingent

Note at March 31, 2022 is $ 234,027 ,

representing a reduction in its estimated

fair value of $ 51,464

as compared to its estimated fair value as of December 31, 2021.

Therefore, the Company recorded a gain of

in the Consolidated Statements of Operations for

the three months ended March 31, 2022.

August 31, 2021, Nobility Healthcare issued another contingent consideration promissory note (the “August Contingent Payment Note”)

in connection with a stock purchase agreement between Nobility Healthcare and a private company (the “August Sellers”) of

The August Contingent Payment Note has a three -year

term and bears interest at a rate of 3.00 %

1 unchanged sentence

business day of each quarter.

The principal amount of the Contingent Payment Note is subject to an earn-out adjustment, being

the difference between the $ 3,000,000

(the “Projected Revenue”) and the

cash basis revenue (the “Measurement Period Revenue”) collected by the Sellers in its normal course of business from

the clients existing on September 1, 2021, during the period from December 1, 2021 through November 30, 2022 (the “Measurement

Period”) measured on a quarterly basis and annualized as of the relevant period.

If the Measurement Period Revenue is less than

the Projected Revenue, such amount will be subtracted from the principal balance of this Contingent Payment Note on a dollar-for-dollar

If the Measurement Period Revenue is more than the Projected Revenue, such amount will be added to the principal balance of this

Contingent Payment Note on a dollar-for-dollar basis.

In no event will the principal balance of this Contingent Payment

Note become a negative number.

The maximum downward earn-out adjustment to the principal balance will be to zero.

There are no limits

to the increases to the principal balance of the Contingent Payment Note as a result of the earn-out adjustments.

contingent consideration promissory note is considered to be additional purchase price, therefore the estimated fair value of the contingent

The principal amount of the August Contingent Payment Note is subject to an earn-out adjustment, being

the difference between $ 3,000,000

(the “August Projected Revenue”)

and the cash basis revenue (the “August Measurement Period Revenue”) collected by the August Sellers in its normal course

of business from the clients existing on September 1, 2021, during the period from December 1, 2021 through November 30, 2022 (the “August

Measurement Period”) measured on a quarterly basis and annualized as of the relevant period.

If the August Measurement Period Revenue

is less than the August Projected Revenue, such amount will be subtracted from the principal balance of this August Contingent Payment

Note on a dollar-for-dollar basis.

If the August Measurement Period Revenue is more than the August Projected Revenue, such amount will

be added to the principal balance of this August Contingent Payment Note on a dollar-for-dollar basis.

In no event will the principal

balance of this August Contingent Payment Note become a negative number.

The maximum downward earn-out adjustment to the principal balance

will be a reduction to zero.

There are no limits to the increases to the principal balance of the August Contingent Payment Note

as a result of the earn-out adjustments.

August Contingent Payment Note is considered to be additional purchase price, therefore the estimated fair value of the contingent

liability is recorded as a liability at the acquisition date and the fair value is considered part of the consideration paid for the

acquisition with subsequent changes in fair value recorded as a gain or loss in the Consolidated Statements of Operations.

Management recorded the contingent consideration promissory note at its estimated fair value of $ 650,000 at

the acquisition date.

Principal payments on this contingent consideration promissory note totaled $ 84,477 during

the three months ended March 31, 2022.

The estimated

fair value of the August Contingent Note at March 31, 2022 is $ 673,037 ,

representing an increase in its estimated fair value of $ 107,514 as

compared to is estimated fair value as of December 31, 2021.

Therefore, the

Company recorded a loss of $ 107,514 in

the Consolidated Statements of Operations for the three months ended March 31, 2022.

January 1, 2022, Nobility Healthcare issued another contingent consideration promissory note (the “January Contingent Payment

Note”) in connection with a stock purchase agreement between Nobility Healthcare and a private company (the “January Sellers”)

of $ 750,000 .

The January Contingent Payment Note has a two and a half year term and bears interest at

a rate of 3.00 %

Quarterly principal and interest payments are deferred for seven months and is due in equal quarterly installments on the

tenth business day of each quarter.

The principal amount of the January Contingent Payment Note is subject to an earn-out adjustment,

being the difference between $ 3,500,000

(the “January Projected Revenue”)

and the cash basis revenue (the “January Measurement Period Revenue”) collected by the January Sellers in its normal course

of business from the clients existing on January 1, 2022, during the period from April 1, 2022 through March 31, 2023 (the “January

Measurement Period”) measured on a quarterly basis and annualized as of the relevant period.

If the January Measurement Period

Revenue is less than the January Projected Revenue, such amount will be subtracted from the principal balance of this January Contingent

Payment Note on a dollar-for-dollar basis.

If the January Measurement Period Revenue is more than the January Projected Revenue, such

amount will be added to the principal balance of this January Contingent Payment Note on a dollar-for-dollar basis.

In no event will

the principal balance of this January Contingent Payment Note become a negative number.

The maximum downward earn-out adjustment to the

principal balance will be a reduction to zero.

There are no limits to the increases to the principal balance of the January Contingent

Payment Note as a result of the earn-out adjustments.

January Contingent Payment Note is considered to be additional purchase price, therefore the estimated fair value of the contingent liability

is recorded as a liability at the acquisition date and the fair value is considered part of the consideration paid for the acquisition.

Management has recorded the contingent consideration promissory note at its estimated fair value of $ 750,000

1 unchanged sentence

Management will continue

to estimate the fair value of this Contingent Payment Note at each reporting date with the change, if any recorded as a gain or

loss in the statement of operations during the relevant period.

consideration earn-out Agreement – TicketSmarter Acquisition

September 1, 2021, TicketSmarter, Inc., a subsidiary of the Company, issued a contingent consideration earn-out agreement (the

“TicketSmarter Earn-Out”) in connection with the Stock Purchase Agreement between TicketSmarter, Inc., Goody Tickets,

LLC and TicketSmarter, LLC (“TicketSmarter”) of $ 4,244,400 .

TicketSmarter Earn-Out shall be payable with ninety percent (90%) readily available funds and ten percent (10%) in stock

consideration.

The principal amount of the TicketSmarter Earn-Out is subject to an earn-out adjustment, being the difference between

the $ 2,896,829

(the “Projected EBITDA”) and the actual

EBITA (the “Measurement Period EBITDA”) generated by TicketSmarter in its normal course of business, during the period

from September 1, 2021 through December 31, 2021 (the “Measurement Period”).

If the Measurement Period EBITDA is less

than seventy percent (70%) of the Projected EBITDA, there will be zero contingent payment.

If the Measurement Period EBITDA is between

seventy percent (70%) and one hundred percent (100%) of the Projected EBITDA, then a fractional amount of the contingent payment will

If the Measurement Period EBITDA is more than the Projected EBITDA, the full principal balance of this TicketSmarter Earn-Out

will be paid out.

In no event will the principal balance of this TicketSmarter Earn-Out become a negative number.

downward earn-out adjustment to the earn-out balance will be to reduce the balance to zero.

contingent consideration earn-out is considered to be additional purchase price, therefore the estimated fair value of the contingent

to estimate the fair value of this January Contingent Payment Note at each reporting date with the change, if any, recorded as

a gain or loss in the statement of operations during the relevant period.

Management determined that there was no change in estimated

fair value relative to this contingent consideration promissory note for the three months ended March 31, 2022.

There were no principal

payments on this contingent consideration promissory note during the three months ended March 31, 2022.

February 1, 2022, Nobility Healthcare issued another contingent consideration promissory note (the “February Contingent Payment

Note”) in connection with an asset purchase agreement between Nobility Healthcare and a private company (the “February

Sellers”) of $ 105,000 .

The February Contingent Payment Note has a three -year

term and bears interest at a rate of 3.00 %

Quarterly principal and interest payments are deferred for seven months and is due in equal quarterly installments on the

tenth business day of each quarter.

The principal amount of the February Contingent Payment Note is subject to an earn-out adjustment,

being the difference between $ 440,000

(the “February Projected Revenue”)

and the cash basis revenue (the “February Measurement Period Revenue”) collected by the February Sellers in its normal course

of business from the clients existing on February 1, 2022, during the period from May 1, 2022 through April 30, 2023 (the “February

Measurement Period”) measured on a quarterly basis and annualized as of the relevant period.

If the February Measurement Period

Revenue is less than the February Projected Revenue, such amount will be subtracted from the principal balance of this February Contingent

Payment Note on a dollar-for-dollar basis.

If the February Measurement Period Revenue is more than the February Projected Revenue, such

amount will be added to the principal balance of this February Contingent Payment Note on a dollar-for-dollar basis.

In no event will

the principal balance of this February Contingent Payment Note become a negative number.

The maximum downward earn-out adjustment to

the principal balance will be a reduction to zero.

There are no limits to the increases to the principal balance of the February

Contingent Payment Note as a result of the earn-out adjustments.

February Contingent Payment Note is considered to be additional purchase price, therefore the estimated fair value of the contingent

liability is recorded as a liability at the acquisition date and the fair value is considered part of the consideration paid for the

Management has recorded the contingent consideration earn-out at its estimated fair value of $ 4,244,400

Management has recorded the contingent consideration promissory note at its estimated fair value of $ 105,000

at the acquisition date.

Management will

continue to estimate the fair value of this TicketSmarter Note at each reporting date with the change, if any recorded as a gain or loss

in the statement of operations during the relevant period.

Management will continue

to estimate the fair value of this February Contingent Payment Note at each reporting date with the change, if any, recorded as

a gain or loss in the statement of operations during the relevant period.

Management determined that there was no change in estimated

fair value relative to this contingent consideration promissory note for the three months ended March 31, 2022.

There were no principal

payments on this contingent consideration promissory note during the three months ended March 31, 2022.

FAIR VALUE MEASUREMENT

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following table represents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring

basis as of September 30, 2021 and December 31, 2020:

OF FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS

derivative liabilities

consideration promissory notes and earn-out agreement

derivative liabilities

consideration promissory note

following table represents the change in Level 3 tier value measurements for the nine months ended September 30, 2021:

OF FAIR VALUE MEASUREMENTS CHANGE IN LEVEL 3 INPUTS

Consideration Promissory Note

Derivative Liabilities

Balance, December 31, 2020

of detachable warrants in the January 14, 2021 Offering

detachable warrants in the February 1, 2021 Offering

detachable pre-funded warrants in the January 14, 2021 Offering

detachable pre-funded warrants in the February 1, 2021 Offering

Transition of

derivative warrant liability to equity on pre-funded warrants

in fair value of warrant derivative liabilities

( 24,552,257 )

basis as of March 31, 2022 and December 31, 2021:

SCHEDULE OF FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS

March 31, 2022

contingent consideration promissory note - Nobility Healthcare Division Acquisition

in fair value of financial instruments

June 30, 2021

contingent consideration promissory note - Nobility Healthcare Division Acquisition

contingent consideration earn-out agreement - TicketSmarter Acquisition

in fair value of financial instruments

( 11,585,204 )

September 30, 2021

Warrant derivative liabilities

Contingent consideration promissory notes

December 31, 2021

Warrant derivative liabilities

Contingent consideration promissory notes and contingent consideration earn-out agreement

Liabilities, fair value

following table represents the change in Level 3 tier value measurements for the three months ended March 31, 2022:

SCHEDULE OF FAIR VALUE MEASUREMENTS CHANGE IN LEVEL 3 INPUTS

Contingent Consideration Promissory Notes

Warrant Derivative Liabilities

Balance, December 31, 2021

Issuance of contingent consideration promissory note - Revenue Cycle Management Segment Acquisition

Principal payments on contingent consideration promissory notes – Revenue Cycle

Management Acquisitions

Change in fair value of contingent consideration promissory notes - Revenue Cycle Management

Change in fair value of warrant derivative liabilities

Balance, March 31, 2022

ACCRUED EXPENSES

expenses comprised of the following at September 30, 2021 and December 31, 2020:

OF ACCRUED EXPENSES

warranty expense

Accrued litigation

Accrued sales

Accrued payroll

and related fringes

Accrued sales

returns and allowances

Accrued sales

Total accrued

warranty expense comprised of the following for the nine months ended September 30, 2021:

OF ACCRUED WARRANTY EXPENSE

Provision for

warranty expense

applied to warranty reserve

effective tax rate for the three months ended September 30, 2021 and 2020 varied from the expected statutory rate due to the Company

continuing to provide a 100 %

valuation allowance on net deferred tax assets.

The Company determined that it was appropriate to continue the full valuation allowance

on net deferred tax assets as of September 30, 2021 primarily because of the Company’s history of operating losses.

Company has incurred operating losses in recent years, and it continues to be in a three-year cumulative loss position at September 30,

expenses consisted of the following at March 31, 2022 and December 31, 2021:

SCHEDULE OF ACCRUED EXPENSES

Accrued warranty expense

Accrued litigation costs

Accrued sales commissions

Accrued payroll and related fringes

Accrued sales returns and allowances

Accrued taxes

Total accrued expenses

warranty expense was comprised of the following for the three months ended March 31, 2022:

SCHEDULE OF ACCRUED WARRANTY EXPENSE

Beginning balance

Provision for warranty expense

Charges applied to warranty reserve

Ending balance

effective tax rate for the three months ended March 31, 2022 and 2021 varied from the expected statutory rate due to the Company continuing

to provide a 100 % valuation allowance on net deferred tax assets.

The Company determined that it was appropriate to continue the full

valuation allowance on net deferred tax assets as of March 31, 2022, primarily because of the Company’s history of operating losses.

Company has incurred operating losses in recent years, and it continues to be in a three-year cumulative loss position at March 31, 2022.

Accordingly, the Company determined there was not sufficient positive evidence regarding its potential for future profits to outweigh

1 unchanged sentence

Therefore, it determined to

continue to provide a 100% valuation allowance on its net deferred tax assets.

The Company expects to continue to maintain a full valuation

allowance until it determines that it can sustain a level of profitability that demonstrates its ability to realize these assets.

the extent the Company determines that the realization of some or all of these benefits is more likely than not based upon expected future

taxable income, a portion or all of the valuation allowance will be reversed.

continue to provide a 100 %

valuation allowance on its net deferred tax assets.

The Company expects to continue to maintain a full valuation allowance until it determines

that it can sustain a level of profitability that demonstrates its ability to realize these assets.

To the extent the Company determines

that the realization of some or all of these benefits is more likely than not based upon expected future taxable income, a portion or

all of the valuation allowance will be reversed.

The Company has available to it approximately $ 81.4

million in net operating loss carryforwards to

offset future taxable income as of September 30, 2021.

million (based on its December 31, 2021

tax return) in net operating loss carryforwards to offset future taxable income as of March 31, 2022.

PREPAID EXPENSES

expenses were the following at March 31, 2022 and December 31, 2021:

SCHEDULE OF PREPAID EXPENSE

Prepaid inventory

Prepaid advertising

Total prepaid expenses

PROPERTY, PLANT AND EQUIPMENT

plant and equipment, net consists of the following:

OF PROPERTY AND EQUIPMENT, NET

Leasehold improvements

accumulated depreciation

property, plant and equipment, net

April 30, 2021 the Company closed on the purchase and sale agreement to acquire a 71,361 square feet commercial office building located

in Lenexa, Kansas which is intended to serve as the Company’s future office and warehouse needs.

The building contains approximately

30,000 square feet of office space and the remainder warehouse space .

The total purchase price was approximately $ 5.3

million, the Company funded the purchase price

with cash on hand, without the addition of external debt or other financing.

expense for the nine months ended September 30, 2021 and September 30, 2020 was $ 177,959

and $ 115,196 ,

respectively, and is included in general and administrative expenses.

OPERATING LEASES

May 13, 2020, the Company entered into an operating lease for new warehouse and office space which will serve as its new principal executive

office and primary business location.

The original lease agreement was amended on August 28, 2020 to correct the footage under lease

and monthly payment amounts resulting from such correction.

The lease terms, as amended include no base rent for the first nine months

and monthly payments ranging from $ 12,398

plant and equipment consisted of the following at March 31, 2022 and December 31, 2021:

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT

Office furniture, fixtures and equipment

Warehouse and production equipment

Demonstration and tradeshow equipment

Building improvements

Rental equipment

accumulated depreciation and amortization

Net property, plant and equipment

OPERATING LEASE

May 13, 2020, the Company entered into an operating lease for new warehouse and office space, which the Company currently utilizes

as one of its office, assembly and warehouse locations.

The original lease agreement was amended on August 28, 2020

to correct the footage under lease and monthly payment amounts resulting from such correction.

The lease terms, as amended, include

no base rent for the first nine months and monthly payments ranging from $ 12,398

thereafter, with a termination

1 unchanged sentence

The Company is responsible

for property taxes, utilities, insurance and its proportionate share of common area costs related to its new location.

The Company took

possession of the leased facilities on June 15, 2020.

for property taxes, utilities, insurance and its proportionate share of common area costs related to this location.

took possession of the leased facilities on June 15, 2020.

The remaining lease term for the Company’s office and warehouse operating

lease as of September 30, 2021 was sixty-three

lease as of March 31, 2022, was fifty-seven

The Company’s previous office and

8 unchanged sentences

to purchase the equipment at maturity for its estimated fair market value at that point in time.

The remaining lease term for the Company’s

copier operating lease as of September 30, 2021 was 25

June 30, 2021, the Company completed the acquisition of a private medical billing company, through its majority owned subsidiary, Nobility

Healthcare, LLC.

Upon completion of this acquisition, the Company became responsible for the operating lease for the Seller’s office

The remaining lease term for

the Company’s copier operating lease as of March 31, 2022, was nineteen

June 30, 2021, the Company completed the acquisition of a private medical billing company, through its revenue cycle management segment.

Upon completion of this acquisition, the Company became responsible for the operating lease for the seller’s office space.

The lease terms include monthly payments ranging from $ 2,648

thereafter, with a termination

with a termination

date of July 2024 .

4 unchanged sentences

The remaining lease term for the Company’s office and warehouse operating

lease as of September 30, 2021 was thirty-four

August 31, 2021, the Company completed the acquisition of a private medical billing company, through its majority owned subsidiary,

Nobility Healthcare, LLC.

Upon completion of this acquisition, the Company became responsible for the operating lease for the Seller’s

office space.

lease as of March 31, 2022, was twenty-eight

August 31, 2021, the Company completed the acquisition of a private medical billing company, through its revenue cycle management segment.

Upon completion of this acquisition, the Company became responsible for the operating lease for the seller’s office space.

The lease terms include monthly payments ranging from $ 11,579

thereafter, with a termination

to $ 11,811 ,

with a termination

date of March 2023 .

The Company is responsible

for property taxes, utilities, insurance and its proportionate share of common area costs related to this location.

The Company took

possession of the leased facilities on September 1, 2021.

The remaining lease term for the Company’s office and warehouse operating

lease as of September 30, 2021 was eighteen

September 1, 2021, the Company completed the acquisition of Goody Tickets, LLC and TicketSmarter, LLC (“TicketSmarter Acquisition”),

through its wholly owned subsidiary, TicketSmarter, Inc.

Upon completion of this acquisition, the Company became responsible for the

operating lease for TicketSmarter Inc.’s office space.

The lease terms include monthly payments ranging from $ 7,211

thereafter, with a termination

The Company is responsible for property

taxes, utilities, insurance and its proportionate share of common area costs related to this location.

The Company took possession of

the leased facilities on September 1, 2021.

The remaining lease term for the Company’s office and warehouse operating lease as

of March 31, 2022, was twelve

September 1, 2021, the Company completed the TicketSmarter Acquisition, in its ticketing segment.

Upon completion of this acquisition,

the Company became responsible for the operating lease for TicketSmarter Inc.’s office space.

The lease terms include monthly payments

ranging from $ 7,211

with a termination

date of December 2022 .

The Company is responsible

for property taxes, utilities, insurance and its proportionate share of common area costs related to this location.

The Company took

possession of the leased facilities on September 1, 2021.

The remaining lease term for the Company’s office and warehouse operating

lease as of September 30, 2021 was fifteen

expense related to the office spaces and copier operating leases were recorded on a straight-line basis over their respective

Total lease expense under the five operating leases was $ 144,443

for the nine months ended September 30, 2021.

The Company is responsible for

property taxes, utilities, insurance and its proportionate share of common area costs related to this location.

The Company took possession

of the leased facilities on September 1, 2021.

The remaining lease term for the Company’s office and warehouse operating lease

as of March 31, 2022 was nine

January 1, 2022, the Company completed the acquisition of a private medical billing company, through its revenue cycle management segment.

Upon completion of this acquisition, the Company became responsible for the operating lease for the seller’s office space.

The lease terms include monthly payments ranging from $ 4,233

with a termination

date of June 2025 .

The Company is responsible for property

taxes, utilities, insurance and its proportionate share of common area costs related to this location.

The Company took possession of

the leased facilities on January 1, 2022.

The remaining lease term for the Company’s office and warehouse operating lease as of

March 31, 2022, was thirty-nine

expense related to the office space and copier operating leases were recorded on a straight-line basis over their respective lease

Total lease expense under the six operating leases was approximately $ 155,072

during the three months ended March 31,

weighted-average remaining lease term related to the Company’s lease liabilities as of March 31, 2022 was 3.7 years.

discount rate implicit within the Company’s operating leases was not generally determinable and therefore the Company determined

2 unchanged sentences

the operating lease liabilities reflect a weighted average discount rate of 8 %.

following sets forth the operating lease right of use assets and liabilities as of September 30, 2021:

OF OPERATING LEASES RIGHT OF USE ASSETS AND LIABILITIES

lease right of use assets

Operating lease

obligations-Long-term portion

lease obligations-Current portion

operating lease obligations

components of lease expense were as follows for the nine months ended September 30, 2021:

OF COMPONENTS OF LEASE EXPENSES

general and administrative expenses

following sets forth the operating lease right of use assets and liabilities as of March 31, 2022:

SCHEDULE OF OPERATING LEASES RIGHT OF USE ASSETS AND LIABILITIES

Operating lease right of use assets

Operating lease obligations-current portion

Operating lease obligations-less current portion

Total operating lease obligations

components of lease expense were as follows for the three months ended March 31, 2022:

SCHEDULE OF COMPONENTS OF LEASE EXPENSES

Selling, general and administrative expenses

are the minimum lease payments for each year and in total:

OF FUTURE MINIMUM LEASE PAYMENTS

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

ending December 31:

(October 1, to December 31, 2021)

Total undiscounted

minimum future lease payments

(April 1, to December 31, 2022)

undiscounted minimum future lease payments

operating lease liability

GOODWILL AND OTHER INTANGIBLE ASSETS

and other intangible assets, net as of September 30, 2021 and December 31, 2020 are as follows:

OF GOODWILL AND OTHER INTANGIBLE ASSETS

carrying value

assets consisted of the following at March 31, 2022 and December 31, 2021:

SCHEDULE OF INTANGIBLE ASSETS

March 31, 2022

December 31, 2021

Amortized intangible assets:

and Trademarks

Unamortized intangible

and trademarks pending

Licenses (video solutions segment)

Patents and trademarks (video solutions segment)

Sponsorship agreement network (ticketing segment)

SEO content (ticketing segment)

Personal seat licenses (ticketing

Client agreement (revenue cycle management segments)

Indefinite life intangible assets:

Goodwill (ticketing and revenue cycle management segments)

Trade name (ticketing segment)

Patents and trademarks pending

(video solutions segment)

and trademarks pending will be amortized beginning at the time they are issued by the appropriate authorities.

1 unchanged sentence

patent or trademark is denied, then the amount deferred will be immediately charged to expense.

expense for the three months ended March 31, 2022 and 2021 was $ 357,966

and $ 22,631 ,

respectively.

Estimated amortization for intangible assets with definite lives for the next five years ending December 31 and thereafter

is as follows:

SCHEDULE OF ESTIMATED AMORTIZATION FOR INTANGIBLE ASSETS

Year ending December 31:

2022 (April 1, to December 31, 2022)

2026 and thereafter

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

geographies, including locations where we have offices, employees, customers, vendors and other suppliers and business partners.

most US-based businesses, the COVID-19 pandemic and efforts to mitigate the same began to impact our business in March 2020.

time, much of the Company’s first fiscal quarter was completed.

During the balance of 2020 and the first quarter of 2021,

the Company observed recent decreases in demand from certain customers, including primarily law-enforcement and commercial customers.

However, we are beginning to experience an increase in demand during the quarters ended June 30, 2021 and September 30, 2021, compared

to the same periods in 2020.

the fact that the Company’s products and services are sold through a variety of distribution channels, the Company expects sales

will experience more volatility as a result of the changing and less predictable operational needs of many customers as a result of the

COVID-19 pandemic.

The Company is aware that many companies, including many current suppliers and customers, are reporting or predicting

negative impacts from COVID-19 on future operating results.

Although the Company observed a slight increase in demand for products from

certain customers during the quarter ended September 30, 2021, the Company believes that the impact of the COVID-19 remains too fluid

and unknown, hindering the Company from determining the long-term demand for current products.

The Company also cannot be certain how

demand may shift over time as the impacts of the COVID-19 pandemic may go through several phases of varying severity and duration.

light of broader macro-economic risks and already known impacts on certain industries that use the Company’s products and services,

the Company has taken, and continues to take targeted steps to lower its operating expenses because of the COVID-19 pandemic.

continues to monitor the impacts of COVID-19 on its operations closely and this situation could change based on a significant number

of factors that are not entirely within its control and are discussed in this and other sections of this quarterly report on Form 10-Q.

The Company does not expect there to be material changes to its assets on our balance sheet or its ability to timely account for those

Further, in connection with the preparation of this quarterly report on Form 10-Q and the financial statements contained herein,

the Company reviewed the potential impacts of the COVID-19 pandemic on goodwill and intangible assets and have determined there to be

no material impact at this time.

The Company has also reviewed the potential impacts on future risks to the business as it relates to

collections, returns and other business-related items.

date, travel restrictions and border closures have not materially impacted its ability to obtain inventory or manufacture or deliver

products or services to customers.

However, if such restrictions become more severe, they could negatively impact those activities in

a way that would harm the business over the long term.

Travel restrictions impacting people can restrain its ability to assist its customers

and distributors as well as impact its ability to develop new distribution channels, but at present the Company does not expect these

restrictions on personal travel to be material to our business operations or financial results.

The Company has taken steps to restrain

and monitor its operating expenses and therefore it does not expect any such impacts to materially change the relationship between costs

and revenues.

most companies, the Company has taken a range of actions with respect to how it operates to assure it comply with government restrictions

and guidelines as well as best practices to protect the health and well-being of its employees and its ability to continue operating

its business effectively.

To date, the Company has been able to operate its business effectively using these measures and to maintain

all internal controls as documented and posted.

The Company also has not experienced challenges in maintaining business continuity and

does not expect to incur material expenditures to do so.

However, the impacts of COVID-19 and efforts to mitigate the same have remained

unpredictable and it remains possible that challenges may arise in the future.

actions we have taken so far during the COVID-19 pandemic include, but are not limited to: