What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-20 compared with 2021-11-19 · 749 added, 1205 removed, 225 unchanged (90% of the section changed)

2 unchanged sentences

(the “Company”, “we”, “us”,

or “our”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended

(the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

or “our”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,”

26 unchanged sentences

(6) our ability

to deliver our new product offerings as scheduled in 2020, such as the Shield™ disinfectant/sanitizers products and ThermoVU ®

temperature screening systems, whether such new products perform as planned or advertised and whether they will help increase

our revenues;

(7) whether we will be able to increase the sales, domestically and internationally, for our products in the future;

our ability to maintain or expand our share of the market for our products in the domestic and international markets in which we compete,

including increasing our international revenues;

(9) our ability to produce our products in a cost-effective manner;

(10) competition

from larger, more established companies with far greater economic and human resources;

(11) our ability to attract and retain quality

to deliver our new product offerings, such as the Shield™ disinfectant/sanitizers products and ThermoVU™ temperature screening

systems, whether such new products perform as planned or advertised and whether they will help increase our revenues, particularly

as the COVID-19 pandemic begins to subside;

(7) whether we will be able to increase the sales, domestically and internationally,

for our products in the future;

(8) our ability to maintain or expand our share of the market for our products in the domestic and international

markets in which we compete, including increasing our international revenues;

(9) our ability to produce our products in a cost-effective

(10) competition from larger, more established companies with far greater economic and human resources;

(11) our ability to attract

and retain quality employees;

(12) risks related to dealing with governmental entities as customers;

(13) our expenditure of significant resources in anticipation

of sales due to our lengthy sales cycle and the potential to receive no revenue in return;

(14) characterization of our market by new

products and rapid technological change;

(15) our dependence on sales of our EVO-HD, DVM-800, FirstVU HD and DVM-250 products;

stockholders may lose all or part of their investment if we are unable to compete in our markets and return to profitability;

in our products that could impair our ability to sell our products or could result in litigation and other significant costs;

dependence on key personnel;

(19) our reliance on third-party distributors and sales representatives for part of our marketing capability;

(20) our dependence on a few manufacturers and suppliers for components of our products and our dependence on domestic and foreign manufacturers

for certain of our products;

(21) our ability to protect technology through patents and to protect our proprietary technology and information,

such as trade secrets, through other similar means;

(22) our ability to generate more recurring cloud and service revenues;

related to our license arrangements;

(24) our revenues and operating results may fluctuate unexpectedly from quarter to quarter;

sufficient voting power by coalitions of a few of our larger stockholders, including directors and officers, to make corporate governance

decisions that could have a significant effect on us and the other stockholders;

(26) the sale of substantial amounts of our common stock,

par value $0.001 per share (the “Common Stock”), that may have a depressive effect on the market price of the outstanding

shares of our Common Stock;

(27) the possible issuance of Common Stock subject to options and warrants that may dilute the interest of

stockholders;

(28) our nonpayment of dividends and lack of plans to pay dividends in the future;

(29) future sale of a substantial number

of shares of our Common Stock that could depress the trading price of our Common Stock, lower our value and make it more difficult for

us to raise capital;

(30) our additional securities available for issuance, which, if issued, could adversely affect the rights of the

holders of our Common Stock;

(31) the likely high volatility of our stock price due to a number of factors, including a relatively limited

public float;

(32) whether such technology will have a significant impact on our revenues in the long-term;

and (33) indemnification

of our officers and directors.

(13) our expenditure of significant

resources in anticipation of sales due to our lengthy sales cycle and the potential to receive no revenue in return;

(14) characterization

of our market by new products and rapid technological change;

(15) our dependence on sales of our EVO-HD, DVM-800, DVM-250 and FirstVU

(16) that stockholders may lose all or part of their investment if we are unable to compete in our markets and return to profitability;

(17) defects in our products that could impair our ability to sell our products or could result in litigation and other significant costs;

(18) our dependence on key personnel;

(19) our reliance on third-party distributors and sales representatives for part of our marketing

(20) our dependence on a few manufacturers and suppliers for components of our products and our dependence on domestic and

foreign manufacturers for certain of our products;

(21) our ability to protect technology through patents and to protect our proprietary

technology and information, such as trade secrets, through other similar means;

(22) our ability to generate more recurring cloud and

service revenues;

(23) risks related to our license arrangements;

(24) the fluctuation of our operation results from quarter to

(25) sufficient voting power by coalitions of a few of our larger stockholders, including directors and officers, to make corporate

governance decisions that could have a significant effect on us and the other stockholders;

(26) the issuance or sale of substantial

amounts of our common stock, or the perception that such sales may occur in the future, which may have a depressive effect on

the market price of our securities;

(27) potential dilution from the issuance of common stock underlying outstanding

options and warrants;

(28) our additional securities available for issuance, which, if issued, could adversely affect the

rights of the holders of our common stock;

(29) the volatility of our stock price due to a number of factors, including, but

not limited to, a relatively limited public float;

and (30) our ability to integrate and realize the anticipated benefits from

acquisitions.

Trends and Recent Developments for the Company

supply technology-based products utilizing our portable digital video and audio recording capabilities for the law enforcement and security

industries and for the commercial fleet and mass transit markets.

We have the ability to integrate electronic, radio, computer, mechanical,

and multi-media technologies to create positive solutions to our customers’ requests.

Solutions Operating Segment – Within our video solutions operating segment we supply technology-based products utilizing our

portable digital video and audio recording capabilities for the law enforcement and security industries and for the commercial fleet

and mass transit markets.

We have the ability to integrate electronic, radio, computer, mechanical, and multi-media technologies to create

positive solutions to our customers’ requests.

Our products include:

the DVM-800 and DVM-800

Lite, which are in-car digital video mirror systems for law enforcement;

the FirstVU and the FirstVU HD, which are body-worn cameras;

our patented and revolutionary VuLink product, which integrates our body-worn cameras with our in-car systems by providing hands-free

automatic activation for both law enforcement and commercial markets;

the DVM-250 and DVM-250 Plus, which are our commercial line of

digital video mirrors that serve as “event recorders” for the commercial fleet and mass transit markets;

and FleetVU and

VuLink, which are our cloud-based evidence management systems.

We introduced the EVO-HD product in the second quarter of 2019 and began

full-scale deliveries in the third quarter 2019, which continued through 2020 and into 2021.

The EVO-HD is designed and built on a new

and highly advanced technology platform that will become the platform for a new family of in-car video solution products for the law

enforcement and commercial markets.

We believe that the launch of these new products will help to reinvigorate our in-car and body-worn

systems revenues while diversifying and broadening the market for our product offerings.

Additionally, we introduced two new lines of

branded products:

(1) the ThermoVu ® 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) our Shield™ disinfectants

and cleansers which are for use against viruses and bacteria.

We began offering our Shield™ disinfectants and cleansers to our

law enforcement and commercial customers late in the second quarter of 2020.

We have recently entered the revenue cycle management (“RCM”)

business late in the second quarter of 2021 with the formation of our wholly owned subsidiary, Digital Ally Healthcare, Inc.

majority-owned subsidiary Nobility Healthcare, LLC (“Nobility Healthcare”).

Nobility Healthcare, LLC completed

its first acquisition on June 30, 2021 when it acquired a private medical billing company, and a second acquisition on August

31, 2021 upon the completion of its acquisition of another private medical billing company, in which we will assist in providing

working capital and back-office services to healthcare organizations throughout the country.

Additionally, through the formation of our

wholly owned subsidiary, TicketSmarter, Inc.

(“TicketSmarter”) and its completed acquisitions of Goody Tickets, LLC

and TicketSmarter, LLC, on September 1, 2021, we have entered into the online ticketing marketplace through the online platform TicketSmarter.com.

experienced operating losses for the first, second, and third quarters of 2021 and all quarters during 2020.

The following is a summary

of our recent operating results on a quarterly basis:

profit (loss)

profit margin %

selling, general and administrative expenses

income (loss) attributable to common stockholders

the EVO-HD, DVM-800 and DVM-800 Lite, which are in-car digital

video systems for law enforcement and commercial markets;

the FirstVu body-worn camera line, consisting of the FirstVu Pro, FirstVu II,

and the FirstVu HD;

our patented and revolutionary VuLink product which integrates our body-worn cameras with our in-car systems

by providing hands-free automatic activation for both law enforcement and commercial markets;

the FLT-250, DVM-250, and DVM-250 Plus,

which are our commercial line of digital video mirrors that serve as “event recorders” for the commercial fleet and mass

transit markets;

and FleetVu and VuLink, which are our cloud-based evidence management systems.

We further diversified and broadened

our product offerings in 2020, by introducing two new lines of branded products:

(1) the ThermoVu® 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) our Shield™ disinfectants and cleansers which are for use against viruses and bacteria.

We began offering our

Shield™ disinfectants and cleansers to our law enforcement and commercial customers late in the second quarter of 2020.

Our video solutions

segment revenue encompasses video recording products and services for our law enforcement and commercial customers and the sale of

Shield disinfectant and personal protective products.

This segment generates revenues through our subscription models offering cloud

and warranty solutions, and hardware sales for video and personal protective safety products and solutions.

Revenues for product

sales are recognized upon delivery of the product, and revenues from our cloud and warranty subscription plans are deferred over the

term of the subscription, typically 3 or 5 years.

To judge the health of our

video solutions segment, we review the current active subscriptions and deferred service revenues, along with the quantity and gross

margins generated by our video solutions hardware sales.

Cycle Management Operating Segment - We have recently entered the revenue cycle management business late in the second quarter of

2021 with the formation of our wholly owned subsidiary, Digital Ally Healthcare, Inc.

and its majority-owned subsidiary Nobility Healthcare.

Nobility Healthcare completed its first acquisition on June 30, 2021, when it acquired a private medical billing company, and a second

acquisition on August 31, 2021 upon the completion of its acquisition of another private medical billing company, along with two more

acquisitions completed during the three months ended March 31, 2022, in which we assist in providing working capital and back-office

services to healthcare organizations throughout the country.

Our assistance consists of insurance and benefit verification, medical treatment

documentation and coding, and collections.

Through our expertise and experience in this field, we maximize our customers’ service

revenues collected, leafing to substantial improvements in their operating margins and cash flows.

Our revenue cycle management

segment consists of our medical billing subsidiaries.

Revenues of this segment are recognized after we perform the obligations of our

revenue cycle management services.

Our revenue cycle management services are services, performed and charged monthly, generally based

on a contractual percentage of total customer collections, for which we recognize our net service fees.

To judge the health of our

revenue cycle management segment, we review the collection success rate and collection timing.

In addition, we review the associated

costs incurred to assist our customers, and any changes in operating margins and cash flows.

Operating Segment - We have also recently entered into live entertainment and events ticketing services through the formation of

our wholly owned subsidiary, TicketSmarter and its completed acquisitions of Goody Tickets, LLC and TicketSmarter, LLC, on September

TicketSmarter provides ticket sales, partnerships, and mainly, ticket resale services through its online ticketing marketplace

for live events, TicketSmarter.com.

TicketSmarter offers tickets for over 125,000 live events through its platform, for a wide range

of events, including concerts, sporting events, theatres, and performing arts, throughout the country.

Our ticketing operating segment

consists of ticketing services provided through TicketSmarter and its online platform, TicketSmarter.com.

Revenues of this segment include

ticketing service charges generally determined as a percentage of the face value of the underlying ticket and ticket sales from our ticket

inventory which are recognized when the underlying tickets are sold.

Ticketing direct expenses include the cost of tickets purchased

for resale by the Company and held as inventory, credit card fees, ticketing platform expenses, website maintenance fees, along with

other administrative costs.

To judge the health of our

ticketing operating segment, we review the gross transaction value, which represents the total value related to a ticket sale and includes

the face value of the ticket as well as the service charge.

In addition, we review the number of visits to our websites, cost of customer

acquisition, the purchase conversion rate, the overall number of customers in our database, and the number and percentage of tickets

sold via the website and mobile app.

of Operations

financial information for the Company’s reportable business segments is provided for the three months ended March 31, 2022, and

Three Months Ended March 31,

Net Revenues:

Video Solutions

Revenue Cycle Management

Total Net Revenues

Gross Profit:

Video Solutions

Revenue Cycle Management

Total Gross Profit

Operating Income (loss):

Video Solutions

$ (1,658,144 )

Revenue Cycle Management

Total Operating Income (Loss)

$ (6,803,338 )

$ (2,865,693 )

Depreciation and Amortization:

Video Solutions

Revenue Cycle Management

Total Depreciation and Amortization

Assets (net of eliminations):

Video Solutions

Revenue Cycle Management

Total Identifiable Assets

net revenues reported above represent only sales to external customers.

Segment gross profit represents net revenues less cost of revenues.

Segment operating income (loss), which is used in management’s evaluation of segment performance, represents net revenues, less

cost of revenues, less all operating expenses.

Identifiable assets are those assets used by each segment in its operations.

assets primarily consist of cash, property, plant and equipment, accounts receivable, inventories, and other assets.

Results of Operations

experienced operating losses for the first quarter of 2022 and all quarters during 2021.

The following is a summary of our recent operating

results on a quarterly basis:

For the Three Months Ended:

September 30,

Total revenue

Gross profit margin %

Total selling, general and administrative expenses

Operating income (loss)

Operating income (loss) %

Net income (loss)

$ (6,698,242 )

$ (5,382,487 )

business is subject to substantial fluctuations on a quarterly basis as reflected in the significant variations in revenues and operating

2 unchanged sentences

(1) the timing of large individual

(2) the traction gained by products, such as the recently released EVO HD, the ThermoVU ® and the Shield™

(2) the traction gained by products, such as the recently released FirstVu Pro, FirstVu II, FLT-250, EVO HD, the ThermoVu™

and the Shield™ lines;

(3) production, quality and other supply chain issues affecting our cost of goods sold;

(4) unusual increases in operating expenses,

such as the timing of trade shows and stock-based and bonus compensation;

(5) the timing of patent infringement litigation settlements;

(5) ongoing patent and other litigation and related expenses respecting outstanding lawsuits;

and (6) most recently, the impact of COVID-19

on the economy and our business.

We reported a net income of $8,068,799 on revenues of $4,639,822 for the third quarter of 2021.

The income recognized in the third quarter 2021, first quarter 2021, and in the third quarter 2020 ended a series of quarterly losses

resulting from competitive pressures, supply chain problems, increases in inventory reserves as our current product suite ages, product

quality control issues, product warranty issues, and litigation expenses relating to patent infringement claims.

(4) unusual increases

in operating expenses, such as the timing of trade shows and stock-based and bonus compensation;

(5) the timing of patent infringement

litigation settlements (6) ongoing patent and other litigation and related expenses respecting outstanding lawsuits;

(7) the impact of

COVID-19 on the economy and our businesses;

and (8) the completion of corporate acquisitions.

We reported a net loss of $6,698,242

on revenues of $10,294,781 for first quarter 2022.

Sheet Arrangements

6 unchanged sentences

that represent commitments to future payments for goods and services.

the Three Months Ended September 30, 2021 and 2020

the Three Months Ended March 31, 2022 and 2021

of Operations

immediately below and discussed in more detail in the subsequent sub-sections is an analysis of our operating results for the three months

ended September 30, 2021 and 2020, represented as a percentage of total revenues for each respective year:

Selling, general

and administrative expenses:

and development expense

advertising and promotional expense

and administrative expense

immediately below and discussed in more detail in the subsequent subsections is an analysis of our operating results for the three months

ended March 31, 2022 and 2021, represented as a percentage of total revenues for each such quarter:

Three Months Ended

Cost of revenue

Selling, general and administrative expenses:

Change in fair

value of proceeds investment agreement

Change in fair

value of derivative liabilities

income and interest expense, net

Income before

income tax benefit

tax (provision)

Net loss attributable to noncontrolling interests of consolidated subsidiary

income (loss) attributable to common stockholders

Net income (loss) per share

attributable to common stockholders information:

sell our video recording products and services to law enforcement and commercial 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.

Research and development expense

Selling, advertising and promotional expense

General and administrative expense

Total selling, general and administrative expenses

Operating loss

Change in fair value of short-term investments

Change in fair value of contingent consideration promissory notes

Change in fair value of derivative liabilities

Other income and interest income (expense), net

Income (loss) before income tax benefit

Income tax (provision)

Net income/(loss)

Net loss attributable to noncontrolling interests of consolidated

Net income (loss) attributable to common stockholders

Net income/(loss) per share information:

by Type and by Operating Segment

operating segments generate two types of revenues:

revenues primarily includes video operating segment hardware sales of in-car and body-worn cameras, along with sales of our ThermoVu TM

units, disinfectants, and personal protective equipment.

Additionally, product revenues also include the sale of tickets by our

ticketing operating segment that have been purchased or received through our sponsorships and partnerships and held in inventory by our

ticketing segment until their sale.

and other revenues consist of cloud and warranty services revenues from our subscription plan and storage offerings of our video

solutions segment.

Our ticketing operating segments’ secondary ticketing marketplace revenues are included in service revenue.

We recognize service revenue from sales generated through its secondary ticketing marketplace as we collect net services fees on secondary

ticketing marketplace transactions.

Lastly, our revenue cycle management segment revenues are included in the service revenues for services

provided to medical providers throughout the country.

video operating segment sells our products and services to customers in the following manner:

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

our sales force, comprised of our 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.

to international customers are made through independent distributors who purchase products from us 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.

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 our 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 Nobility Healthcare are driven through relationships with medium to large healthcare organizations, in which

revenue is recognized upon execution of services.

Through TicketSmarter, 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.

revenue cycle management operating segment sells its services to customers in the following manner:

revenue cycle management operating segment generates service revenues through relationships with medium to large healthcare organizations,

in which the underlying service revenue is recognized upon execution of services.

Service revenues are generally determined as a

percentage of the amount of medical billings collected by the customer.

ticketing operating segment sells our products and services to customers in the following manner:

ticketing operating segment generates product revenues from the sale of tickets directly to consumers for a particular event that

the ticketing operating segment has previously purchased and held in inventory for ultimate resale to the end consumer.

Service sales

through TicketSmarter are driven largely in part by the usage of the TicketSmarter.com marketplace by buyers and sellers,

in which the Company collects service fees for each transaction completed through this platform.

may discount our prices on specific orders based upon the size of the order, the specific customer and the competitive landscape.

Nobility Healthcare offers leading-edge

revenue cycle management solutions to medium and large healthcare organizations throughout the country.

Nobility Healthcare’s

customers are spread across a wide range of practices and specialties, including radiology, oncology, orthopedics, pediatrics, internal

medicine, and cardiology.

TicketSmarter is a ticket resale

marketplace with seats offered at over 125,000 live events, with over 48 million tickets for sale through its TicketSmarter.com platform.

TicketSmarter is committed to developing meaningful relationships with conferences, teams, and charities across the country.

The COVID-19 pandemic had an

impact on all of our revenue streams in the third quarter 2021 and we expect it to adversely affect our revenues during the remainder

The COVID-19 pandemic had a negative impact generally on our legacy products and, in particular our commercial event recorder

hardware (DVM-250 Plus) and in-car hardware for law enforcement (DVM-800) during the quarter.

The COVID-19 pandemic had a positive impact

generally on our new Shield TM disinfectant/sanitizer and ThermoVU ® product lines.

for each of the third quarters of 2021 and 2020 were derived from the following sources:

months ended September 30,

ThermoVU/Shield

Cloud service

Extended warranty

Repair and service

TicketSmarter

Nobility Healthcare

credentialing and services

and other revenues

revenues for the three months ended September 30, 2021 and 2020 were $1,356,454 and $2,958,579 respectively, a decrease of $1,602,125

Omicron Variant of COVID-19 had an impact on all of our operating segment revenue streams for the three months ended March 31,

In particular, it had a negative impact generally on our video solutions operating segment legacy products and, specifically, our

commercial event recorder hardware (DVM-250 Plus) and in-car hardware for law enforcement (DVM-800) during the quarter.

operating segment revenues also continues to be negatively impacted due to the cancellation of live events and public caution surrounding

the COVID-19 pandemic.

Our revenue cycle management operating segment was also affected due to the higher level of healthcare service

utilization due to the Omicron Variant while certain elective and routine healthcare services were reduced due to COVID-19 pandemic

restrictions.

revenues for the three months ended March 31, 2022 and 2021 were $2,410,060 and $1,912,577 respectively, an increase of $497,483 (26%),

due to the following factors:

Company generated revenues totaling over $39,075 during the three months ended September 30, 2021 compared to $1,128,849 for the

same period in 2020 from its new product lines.

Late in the second quarter of 2020, the Company launched two product lines in direct

response to the increased safety precautions that organizations and individuals are taking due to the COVID-19 pandemic.

was launched as a non-contact temperature-screening instrument that measures temperature through the wrist and controls

entry to facilities when temperature measurements exceed pre-determined parameters.

ThermoVu ® has optional

features such as facial recognition to improve facility security by restricting access based on temperature and/or facial recognition

ThermoVu ® provides an instant pass/fail audible tone with its temperature display and controls access

to facilities based on such results.

We believe that it can be widely applied in schools, office buildings, subway stations, airports

and other public venues.

The Company also launched its Shield™ disinfectant/sanitizer product lines to fulfill demand by current

customers and others for a disinfectant and sanitizer that is less harsh than many of the traditional products now widely distributed.

generated by the new ticketing operating segment began with the Company’s September 2021 acquisition of TicketSmarter.

The new ticketing operating segment generated $1,073,830 in product revenues for the three months ended March 31, 2022, compared

to $-0- for the three months ended March 31, 2021.

This product revenue relates to the resale of tickets purchased for live

events, including sporting events, concerts, and theatre, then sold through various platforms to customers.

Company’s video segment operating segment generated revenues totaling $1,336,230 during the three months ended March 31, 2022

compared to $1,912,577 for the three months ended March 31, 2021 due to slowing sales of our ThermoVu TM product

lines related to our COVID-19 response.

The Company launched two product lines in direct response to the increased safety precautions

that organizations and individuals are taking due to the COVID-19 pandemic.

ThermoVu™ was launched as a non-contact temperature-screening

instrument that measures temperature through the wrist and controls entry to facilities when temperature measurements exceed pre-determined

ThermoVu™ has optional features such as facial recognition to improve facility security by restricting access based

on temperature and/or facial recognition reasons.

ThermoVu™ provides an instant pass/fail audible tone with its temperature

display and controls access to facilities based on such results.

ThermoVu TM has been applied in schools, dental office,

hospitals, office buildings, and other public venues.

The Company also launched its Shield™ disinfectant/sanitizer product

lines to fulfill demand by current customers and others for a disinfectant and sanitizer that is less harsh than many of the traditional

products now widely distributed.

The Shield™ Cleanser product line contains a cleanser with no harsh chemicals or fumes.

Company began offering the Shield™ line of disinfecting products to its first responder customers including police, fire and

paramedics late in the second quarter of 2020.

Commercial customers such as cruise lines, taxi-cab and para transit may also be good

candidates for the products.

The Company is considering enhancing the line of disinfectant products for additional related products

including hardware to efficiently and effectively dispense the disinfectants.

The Company is hopeful that its law enforcement and

commercial customers will adopt this new product offering to combat the spread of the COVID-19 virus as well as other bacteria and

general, we have experienced pressure on our revenues as our in-car and body-worn systems are facing increased competition because

our competitors have released new products with advanced features.

Additionally, our law enforcement revenues declined during

the three months ended September 30, 2021 compared to the same period in 2020,due to price-cutting and competitive actions by

our competitors, adverse marketplace effects related to our patent litigation proceedings and our recent financial condition.

introduced our EVO-HD late in the second quarter of 2019 with the goal of enhancing our product line features to meet these competitive

challenges and we started to see traction in late 2019 but sales in 2020 were hampered due to the COVID-19 pandemic.

We expect customers

and potential customers to review and test the EVO-HD prior to committing to this new product platform, all of which has been delayed

due to the COVID-19 pandemic.

We experienced continued interest in our EVO-HD, which resulted in increased revenues during

the third quarter of 2021 and believe that customers are recognizing and are attracted to its advanced features.

COVID-19 pandemic has continued to delay the shipment of certain law enforcement orders

since the first quarter of 2020 as police forces and governments deal with its impact.

addition, our salesmen were generally unable to meet with and demonstrate our products to

our law enforcement customers because of travel and other restrictions imposed by cities

and states due to the COVID-19 pandemic.

In person demonstration of our products to potential

customers is generally important in order to obtain new customers or upgrade existing customers.

Our product sales to law enforcement decreased in the third quarter of 2021 compared to the

same period in 2020, as the impact of the COVID-19 pandemic continues to impact our business.

COVID-19 pandemic impact remains relevant, as the shipment of commercial orders in the third quarter of 2021 remain slow, as cruise

lines, taxi cabs, paratransit and other commercial customers continue to deal with its impact.

In addition, our salesmen were generally

unable to meet with and demonstrate our products to our commercial customers because of travel and other restrictions imposed by

cities and states due to the COVID-19 pandemic.

In person demonstration of our products to potential customers is generally required

in order to obtain new customers or upgrade existing customers.

Our product sales to commercial customers decreased in the third

quarter of 2021 compared to the same period in 2020 due to the impact of the COVID-19 pandemic.

has been focusing on migrating customers, from a “hardware sale” to a service fee model.

Therefore, we expect a reduction

in hardware sales as we convert these customers to a service model under which we provide the hardware as part of a recurring monthly

In that respect, we introduced in the second quarter of 2020 a monthly subscription plan for our body worn cameras

and related equipment that allowed law enforcement agencies to pay a monthly service fee to obtain body worn cameras without incurring

a significant upfront capital outlay.

We have noticed significant interest and success with this program, as we experienced a vast

increase in our subscription contracts during the third quarter of 2021 compared to the same period in 2020.

We expect this

program to continue to hold traction, resulting in recurring revenues over a span of three to five years.

and other revenues for the three months ended September 30, 2021 and 2020 were $3,283,368 and $630,061, respectively, which is an increase

of $2,653,307 (421%), due to the following factors:

revenues were $264,594 and $217,535 for the three months ended September 30, 2021 and 2020, respectively, an increase of $47,059

We have experienced increased interest in our cloud solutions for law enforcement primarily due to the deployment of our new

cloud-based EVO-HD in-car system.

However, the fallout from the COVID-19 pandemic and related business shut-downs adversely

affected our commercial customers usage of cloud services and offset increases in cloud revenues.

from extended warranty services were $298,840 and $322,887 for the three months ended September 30, 2021 and 2020, respectively,

which is a decrease of $24,047 (7%).

We have many customers that have purchased extended warranty packages, primarily in our

DVM-800 premium service program.

However, the effects from the COVID-19 pandemic and related restrictions on travel adversely

affected our sales of DVM-800 hardware systems resulting in a decrease in their sales over the three months ended September 30, 2021

compared to the same period in 2020.

service revenues were $22,087 and $51,423 for the three months ended September 30, 2021 and 2020, respectively, which is a decrease

of $29,336 (57%).

Installation revenues tend to vary more than other service revenue types and are dependent on larger customer

implementations.

The decrease in installation revenues in the three months ended September 30, 2021 compared to the same period 2020

was attributable to the continued effects related to the COVID-19 pandemic.

Additionally, our newer products require less installation

services, as the products are further along in the set-up process prior to leaving the warehouse.

from building rental income were $143,827 and $-0- for the three months ended September 30, 2021 and 2020, respectively, an increase

of $143,827 (100%).

The Company completed the purchase of an office/warehouse building in May 2021, in which current tenants were

under a lease agreement.

The agreement closed August 30, 2021.

from TicketSmarter services were $2,050,679 and $-0- for the three months ended September 30, 2021 and 2020, respectively, an increase

of $2,050,679 (100%).

The Company completed the acquisitions of Goody Tickets, LLC and TicketSmarter, LLC on September 1, 2021, thus

resulting in the new revenue stream for the Company.

TicketSmarter collects fees on transactions administered through the TicketSmarter.com

platform for the buying and selling of tickets for live events throughout the country.

This increase reflects just one month of revenues

within the new wholly-owned subsidiary, presenting a strong outlook moving forward.

from Nobility Healthcare services were $560,484 and $-0- for the three months ended September 30, 2021 and 2020, respectively, an

increase of $560,484 (100%).

The Company completed the acquisitions of a private medical billing company on June 30, 2021

and another private medical billing company on August 31, 2021, thus resulting in the new revenue stream for the third

quarter of 2021 for the Company.

Nobility Healthcare provided revenue cycle management solutions and back-office services

Company is beginning to experience pressure on these product lines as the COVID-19 pandemic begins to subside.

general, our video solutions operating segment has experienced pressure on its product revenues as our in-car and body-worn systems

are facing increased competition because our competitors have released new products with advanced features.

Additionally, our law

enforcement revenues declined over the prior period due to price-cutting and competitive actions by our competitors, adverse marketplace

effects related to our patent litigation proceedings and our recent financial condition.

We introduced our new body-worn cameras,

the FirstVu Pro and FirstVu II, in the fourth quarter of 2021, as we have begun to see increased traction with these products

in the first quarter of 2022.

The Company hopes the interest throughout the marketplace continues to grow for these new products

as the market is able to review and test these new products.

video solutions operating segment management has been focusing on migrating customers, and in particular commercial customers, from

a hardware sale to a service fee model.

Therefore, we expect a reduction in commercial hardware sales (principally DVM-250’s,

FLT-250’s, and our body-worn camera line) as we convert these customers to a service model under which we provide the hardware

as part of a recurring monthly service fee.

In that respect, we introduced a monthly subscription agreement plan for our body worn

cameras and related equipment during the second quarter of 2020 that allowed law enforcement agencies to pay a monthly service fee

to obtain body worn cameras without incurring a significant upfront capital outlay.

This program has continued to gain traction,

resulting in decreased product revenues and increasing our service revenues.

We expect this program to continue to hold traction,

resulting in recurring revenues over a span of three to five years.

and other revenues for the three months ended March 31, 2022 and 2021 were $7,884,721 and $623,252, respectively, an increase of $7,261,469

(1,165%), due to the following factors:

revenues generated by the video solutions operating segment were $270,925 and $241,653 for the three months ended March 31, 2022

and 2021, respectively, an increase of $29,272 (12%).

We have experienced increased interest in our cloud solutions for law enforcement

primarily due to the deployment of our cloud-based EVO-HD in-car system and our next generation body-worn camera products, which

contributed to our increased cloud revenues in the three months ended March 31, 2022.

We expect this trend to continue throughout

2022 as the migration from local storage to cloud storage continues in our customer base.

solutions operating segment revenues from extended warranty services were $199,491 and $254,692 for the three months ended March

31, 2022 and 2021, respectively, a decrease of $55,201 (22%).

We have many customers that have purchased extended warranty packages,

primarily in our DVM-800 premium service program.

However, the continued affects from the COVID-19 pandemic has adversely

affected our sales of DVM-800 hardware systems resulting in a decrease in their sales in the three months ended March 31, 2022 compared

to the same period in 2021.

new ticketing operating segment generated service revenues totaling $5,306,945 and $-0- for the three months ended March 31, 2022

and 2021, respectively, an increase of $5,306,945 (100%).

The Company completed the acquisitions of Goody Tickets, LLC and TicketSmarter,

LLC on September 1, 2021, thus resulting in the new revenue stream for the Company.

TicketSmarter collects fees on transactions administered

through the TicketSmarter.com platform for the buying and selling of tickets for live events throughout the country.

We expect our

ticketing operating segment to continue to present a strong revenue outlook moving forward.

new revenue cycle management operating segment generated service revenues totaling $1,903,957 and $-0- for the three months ended

March 31, 2022 and 2021, respectively, an increase of $1,903,957 (100%).

Our revenue cycle management operating segment has completed

four acquisitions since formation in June of 2021, thus resulting in the new service revenue stream added in the three months ended

March 31, 2022.

Our revenue cycle management operating segment provides revenue cycle management solutions and back-office services

to healthcare organizations throughout the country.

This increase reflects three months of the first acquired medical billing

company revenues and just one month of the second acquired medical billing company revenues within the new wholly-owned

subsidiary, presenting a strong outlook moving forward.

revenues for the three months ended September 30, 2021 and 2020 were $4,639,822 and $3,588,640 respectively, an increase of $1,051,182

We expect our revenue cycle management segment to continue to present

a strong revenue outlook moving forward.

revenues for the three months ended March 31, 2022 and 2021 were $10,294,781 and $2,535,829, respectively, an increase of $7,758,952

(306%), due to the reasons noted above.

of product revenue on units sold for the three months ended September 30, 2021 and 2020 was $1,197,217 and $2,177,676, respectively,

a decrease of $980,459 (45%).

The decrease in cost of goods sold for products is due to numerous factors in the period during 2020 that

were not relevant to the same period in 2021.

In the 2020 period, the Company experienced a move to its new warehouse facility, and a

significant manufacturing slow down caused by the COVID-19 pandemic causing unfavorable overhead and labor variances for production in

the second quarter of 2020, which management had decided to expense as a period cost.

For the same period in 2021, the Company did not

experience these factors, but further reduced the inventory reserve.

Additionally, the decrease in cost of product revenues correlates

directly with the decrease in revenues for the three months ended September 30, 2021 compared to the same period in 2020.

of service and other revenues for the three months ended September 30, 2021 and 2020 was $2,042,035 and $188,316, respectively, an increase

of Product Revenue

cost of product revenue sold for the three months ended March 31, 2022, and 2021 was $2,822,051 and $1,561,310, respectively, an increase

of $1,260,741 (81%).

The increase in service and other cost of goods sold is due to the expansion in service revenue streams through

the acquisitions, and in particular, the TicketSmarter acquisition, completed during the three months ended September 30, 2021,

of which would not be relevant for comparison to the same period in 2020.

Our cost of service revenues as a percentage of revenues

generated by TicketSmarter and the Nobility Healthcare are at a much higher percentage than our traditional law enforcement/commercial

TicketSmarter and the Nobility Healthcare revenues represented 45% of total revenues for the three months ended September

30, 2021 which resulted in a substantially higher cost of revenues for the three months ended September 30, 2021 compared to the 2020

cost of sales as a percentage of revenues was 70% for the three months ended September 30, 2021 compared to 66% for the three months

ended September 30, 2020.

We believe our gross margins will improve during the remainder of 2021 as we increase revenues (in particular

service and other revenues), shipping costs moderate and continue to reduce product warranty issues.

had $2,300,019 and $1,960,351 in reserves for obsolete and excess inventories at September 30, 2021 and December 31, 2020, respectively.

Total raw materials and component parts were $3,068,418 and $3,186,426 at September 30, 2021 and December 31, 2020, respectively, a decrease

Overall cost of goods sold for products as a percentage of product revenues for the three months ended March 31,

2022, and 2021 were 117.1% and 81.6%, respectively.

Cost of products sold by operating segment is as follows:

Three Months Ended March 31,

Cost of Product Revenues:

Video Solutions

Revenue Cycle Management

Total Cost of Product Revenues

decrease in cost of goods sold for our video solutions segment products is directly correlated with the decrease in product sales

for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

In addition, the Video Solutions Segment

recorded valuation allowances for its older product lines and a portion of its Shield products during the first quarter of 2022.

Cost of product sold as a percentage of product revenues for the video solutions segment increased to 110.6% for the three months ended

March 31, 2022 as compared to 81.6% for the three months ended March 31, 2021.

increase in ticketing operating segment cost of product sold is due to the acquisition of TicketSmarter in the third quarter of 2021,

resulting in an increase to cost of product revenue of $1,344,336 for the three months ended March 31, 2022, compared to $-0- for

the three months ended March 31, 2021.

Cost of product sold as a percentage of product revenues for the ticketing solutions was 125.2%

for the three months ended March 31, 2022.

The Ticketing Segment recorded an allowance for unsold and under-market tickets during

the first quarter 2022 due to event cancellations and restrictions imposed on the size and type of gatherings related to the Omicron

In addition, we provide a reserve related to Major League Baseball reducing their spring training schedule and delaying their

regular season due to the player strike in the first quarter of 2022.

We recorded $3,896,460 and $3,915,089

in reserves for obsolete and excess inventories at March 31, 2022 and December 31, 2021, respectively.

Total raw materials and component

parts were $3,839,796 and $3,062,046 at March 31, 2022 and December 31, 2021, respectively, an increase of $777,750 (25%).

Finished goods

balances were $9,462,527 and $10,512,577 at March 31, 2022 and December 31, 2021, respectively, a decrease of $1,050,050 (10%) which

was attributable to a decrease in finished goods from our newly acquired ticketing segment.

The small decrease in the inventory

reserve is primarily due to the reduction in finished goods and movement of excess inventory.

We believe the reserves are appropriate

given our inventory levels as of March 31, 2022.

of Service Revenue

cost of service revenue sold for the three months ended March 31, 2022, and 2021 was $5,553,111 and $162,637, respectively, an increase

of $5,370,474 (3,302%).

Finished goods balances were $10,827,344 and $6,974,291 at September 30, 2021 and December 31, 2020, respectively,

an increase of $3,853,053 (55%).

The slight increase in the inventory reserve is primarily due to scrapping of older version inventory

component parts that were mostly or fully reserved during the three months ended September 30, 2021.

The remaining reserve for inventory

obsolescence is generally provided for the level of component parts of the older versions of our PCB boards and the phase out of our

DVM-750, DVM-500 Plus and LaserAlly legacy products.

We believe the reserves are appropriate given our inventory levels at September

profit for the three months ended September 30, 2021 and 2020 was $1,400,570 and $1,222,648 respectively, an increase of $177,922 (15%).

The increase is commensurate with the increase in product and service revenues during the three months ended September 30, 2021 compared

to the same period in 2020.

Our goal is to improve our margins over the longer-term based on the expected margins of our recent healthcare

billing and TicketSmarter acquisitions together with our traditional video business including sales traction from our EVO-HD, DVM-800,

VuLink, FirstVU HD, and our cloud evidence storage and management offering if they gain traction in the marketplace and subject to a

normalizing economy in the wake of the COVID-19 pandemic.

In addition, if revenues from these products increase, we will seek to further

improve our margins from them through economies of scale and more efficiently utilizing fixed manufacturing overhead components.

to continue our initiative to more efficient management of our supply chain through outsourcing production, quantity purchases and more

effective purchasing practices.

Lastly, we will continue to seek to further improve our margins through sensible and advantageous acquisitions

as evidenced during the three months ended September 30, 2021.

Overall cost of goods sold for services as a percentage of service revenues for the three months ended March

31, 2022, and 2021 were 70.2% and 26.1%, respectively.

Cost of service revenues by operating shipment is as follows:

Three Months Ended March

Cost of Service Revenues:

Video Solutions

Revenue Cycle Management

Total Cost of Service Revenues

increase in cost of service revenues for our video solutions segment is commensurate with the increase in service revenues in the three

months ended March 31, 2022 compared to the three months ended March 31, 2021.

Cost of service revenues as a percentage of service revenues

for the video solutions segment increased to 39.2% for the three months ended March 31, 2022 as compared to 26.1% for the three months

ended March 31, 2021.

increase in revenue cycle management operating segment cost of service revenue is due to the four acquisitions of medical billing

companies completed since June 2021.

Cost of service revenues as a percentage of product revenues for the revenue cycle

management operating segment was 36.7% for the first three months of 2022.

increase in ticketing operating segment cost of service revenues is the due to the 2021 acquisition of TicketSmarter, resulting in an

increase to cost of service revenue of $4,062,421 for the three months ended March 31, 2022, compared to $-0- for the three months ended

March 31, 2021.

Cost of service revenues as a percentage of service revenues for the ticketing was 76.5% for the three months ended March

gross profit for the three months ended March 31, 2022 and 2021 was $1,939,619 and $811,882, respectively, an increase of $1,127,737

Gross profit by operating segment was as follows:

Gross Profit:

Video Solutions

Revenue Cycle Management

Total Gross Profit

overall increase is attributable to the large overall increase in revenues for the three months ended March 31, 2022 and an increase

in the overall cost of sales as a percentage of overall revenues to 81.1% for the three months ended March 31, 2022 from 68.0% for the

three months ended March 31, 2021.

Our goal is to improve our margins over the longer term based on the expected margins generated by

our new recent revenue cycle management and ticketing operating segments together with our video solutions operating segment and its

expected margins from our EVO-HD, DVM-800, VuLink, FirstVu Pro, FirstVu II, FirstVu HD, ThermoVu TM , Shield TM disinfectants

and our cloud evidence storage and management offering, provided that they gain traction in the marketplace and subject to a normalizing

economy in the wake of the COVID-19 pandemic.

In addition, if revenues from the video solutions segment increase, we will seek to further

improve our margins from this segment through expansion and increased efficiency utilizing fixed manufacturing overhead components.

plan to continue our initiative to more efficient management of our supply chain through outsourcing production, quantity purchases and

more effective purchasing practices.

General and Administrative Expenses

general and administrative expenses were $4,999,543 and $3,066,606 for the three months ended September 30, 2021 and 2020, respectively,

which is an increase of $1,932,938 (63%).

The significant components of selling, general and administrative expenses are as follows:

and development expense

advertising and promotional expense

fees and expense

sales, and administrative staff payroll

general and administrative expenses were $8,742,957 and $3,677,575 for the three months ended March 31, 2022 and 2021, respectively,

an increase of $5,065,382 (137.7%).

The increase was primarily attributable to the recent acquisitions completed in the third quarter

Our selling, general and administrative expenses as a percentage of sales decreased to 85% for the three months ended March

31, 2022 compared to 145% in the same period in 2021.

The significant components of selling, general and administrative expenses are

Three months ended

Research and development expense

Selling, advertising and promotional expense

General and administrative expense

and development expense.

We continue to focus on bringing new products to market, including updates and improvements to current

Our research and development expenses totaled $492,221 and $405,082 for the three months ended September 30, 2021 and 2020,

respectively, which is an increase of $87,139 (22%).

Most of our engineers are dedicated to research and development activities for new

products, primarily the ThermoVu ® , Shield TM , EVO-HD, FirstVu II and non-mirror based DVM-250 that can

be located in multiple places in a vehicle.

We expect our research and development activities will continue to trend higher in future

quarters as we continue to expand our product offerings based on our new EVO-HD product platform and as we outsource more development

We consider our research and development capabilities and new product focus to be a competitive advantage and intend to continue

to invest in this area on a prudent basis and consistent with our financial resources.

Our research and development expenses totaled $498,000 and $448,965 for the three months ended March 31, 2022 and 2021, respectively,

an increase of $49,035 (10.9%).

Most of our engineers are dedicated to research and development activities for new products, primarily

the new generation of body-worn cameras, EVO-HD and non-mirror based DVM-250 that can be located in multiple places in a vehicle.

expect our research and development activities will continue to trend higher in future quarters as we continue to expand our product

offerings based on our new body-worn camera and EVO-HD product platform and as we outsource more development projects.

We consider our

research and development capabilities and new product focus to be a competitive advantage and intend to continue to invest in this area

on a prudent basis and consistent with our financial resources.

advertising and promotional expenses.

Selling, advertising and promotional expenses totaled $1,511,682 and $789,854 for the three

months ended September 30, 2021 and 2020, respectively, which is an increase of $721,828 (91%).

The increase primarily reflects the

impact of our recent acquisition of TicketSmarter which relies heavily on digital advertising to promote the use of its ticketing services.

TicketSmarter is expected to remain very involved in digital promotional and advertising space, as it is necessary to

its recognition and customer trust, being a part of the live event and sports realm.

salaries and commissions represent the primary components of these costs and were $405,398 and $336,867 for the three months ended September

30, 2021 and 2020, respectively, which is an increase of $68,531 (20%).

The effective commission rate was 8.7% for the three months ended

September 30, 2021 compared to 9.4% for the three months ended September 30, 2020.

We reduced the number of salesmen in our law enforcement

and commercial channels beginning in the first and second quarters of 2020, which had a full effect on the third quarter 2020.

we are utilizing third-party distributors as a major component of our new Shield TM and ThermoVU ®

sales channel.

and advertising expenses totaled $1,106,284 during the three months ended September 30, 2021 compared to $452,987 during the three months

ended September 30, 2020, which is an increase of $653,297 (144%).

The increase is primarily attributable to NASCAR and IndyCar seasons

resuming in the 2021, as they were conversely suspended during the same period in 2020.

Additionally, trade shows are beginning to take

place in the third quarter of 2021, compared to the third quarter of 2020, when they were suspended as a result of the COVID-19 pandemic.

fees and expense .

Professional fees and expenses totaled $142,726 and $118,344 for the three months ended September 30, 2021

and 2020, respectively, which is an increase of $24,382 (21%).

The increase in professional fees is primarily attributable

to increased legal and broker fees associated with the Company’s numerous acquisitions during the period, paired with other current

due diligence items and opportunities the Company is exploring.

Additionally, increased board fees, audit fees, and service fees are

attributable to this increase.

sales and administrative staff payroll.

Executive, sales and administrative staff payroll expenses totaled $846,000 and $506,219

for the three months ended September 30, 2021 and 2020, respectively, which is an increase of $339,781 (67%).

reason for the increase in executive, sales and administrative staff payroll was the recent acquisitions of the medical billing companies

and TicketSmarter which occurred in 2021 and therefore had no impact on 2020 expenses.

In addition, a return to regular staff levels

compared to the same period in 2020, during which period the Company experienced a reduction in technical support staffing in response

to the COVID-19 pandemic during the third quarter of 2020, as the COVID-19 pandemic had significantly impacted the Company’s new

event security business channel in 2020 as many sporting venues were closed including those served by these service technicians.

Additionally,

this trend is expected to continue because of the acquisitions completed during the three months ended September 30, 2021, which

resulted in additional payroll expenses with expanded executive positions, sales, and administrative staff numbers compared to

Other selling, general and administrative expenses totaled $2,006,914 and $1,248,107 for the three months ended September

30, 2021 and 2020, respectively, which is an increase of $758,807 (61%).

The increase in other expenses in the three months ended

September 30, 2021 compared to the same period in 2020 is primarily attributable to the increased expenses related to the acquisitions,

and associated operating expenses, completed during three months ended September 30, 2021, that were not relevant to the same period

Additionally, an increase in travel costs as COVID-19 restrictions begin to ease, as well as substantially increased insurance

costs compared to the same period in 2020.

The increased insurance costs are primarily in general liability and related coverages which

premiums have been increased to address exposure to the COVID-19 pandemic.

the reasons stated above, our operating loss was $3,598,973 and $1,843,957 for the three months ended September 30, 2021

and 2020, respectively, an increase of $1,755,016 (95%).

Operating loss as a percentage of revenues worsened to 78%

in the three months ended September 30, 2021 from 51% in the same period in 2020.

income increased to $90,036 for the three months ended September 30, 2021 from $11,339 for the three months ended September 30,

2020, which reflected our higher cash and cash equivalent levels in the third quarter 2021 compared to the third quarter of 2020.

Company completed two registered direct offerings in the first quarter of 2021 which yielded net proceeds of approximately $66.4 million

which balances have earned increased interest income when compared to the first quarter of 2020.

Additionally, this increase is

a result of interest incurred on debt that the Company has issued, as well as interest incurred on leased products.

incurred interest expense of $5,675 and $4,940 during the three months ended September 30, 2021 and 2020, respectively.

was attributable to utilizing a portion of the net proceeds from the registered direct offerings to eliminate substantially all interest-bearing

debt balances outstanding in the three months ended September 30, 2021 as compared to the same period in 2020.

On May 12, 2020, the Company

received $150,000 in additional loan funding under the Economic Injury Disaster Loans (“EIDL”) program administered by the

Small Business Administration (“SBA”).

Under the terms of the EIDL promissory note, interest accrues on the outstanding principal

at the rate of 3.75% per annum.

The term of the EIDL promissory note is thirty years and monthly principal and interest payments are

deferred for twelve months after the date of disbursement and total $731.00 per month thereafter.

Additionally, the increase is attributable

to the contingent earn-out notes associated with the two Nobility Healthcare acquisitions, currently at a total balance of $1,000,000

between the two notes, with interest rates of 3.00% per annum.

in Fair Value of Proceeds Investment Agreement

recorded a gain representing the change in fair value of proceeds investment agreement (the “PIA”) totaling $-0- and

$2,365,000 during the three months ended September 30, 2021 and 2020, respectively.

elected to account for the PIA that we entered into with Brickell Key Investments LP (“BKI”) in July of 2018 on its

fair value basis.

Therefore, we determined the fair value of the 2018 PIA as of September 30, 2020, and June 30, 2020 to be $-0- and

$3,615,000, respectively.

The change in fair value from June 30, 2020 to September 30, 2020 was $3,615,000, which was recognized as a

gain in the Condensed Consolidated Statement of Operations for the three months ended September 30, 2020.

in Fair Value of Short-Term Investments

recognized a loss on change in fair value of short-term investments totaling $21,656 and $-0- during the three months ended September

30, 2021 and 2020, respectively.

Such short-term investments are included in cash and cash equivalents as they contain original maturities

of ninety (90) days or less.

in Fair Value of Derivative Liabilities

the first quarter of 2021, the Company issued detachable warrants to purchase a total of 42,550,000 shares of Common Stock in

association with the two registered direct offerings previously described.

The underlying warrant agreement terms provide for net cash

settlement outside the control of the Company in the event of tender offers under certain circumstances.

As such, the Company is required

to treat these warrants as derivative liabilities which are valued at their estimated fair value at their issuance date and at each reporting

date with any subsequent changes reported in the condensed consolidated statement of operations as the change in fair value of warrant

derivative liabilities.

The change in fair value of the warrant derivative liabilities from June 30, 2021 to September 30, 2021 totaled

$11,585,204 which was recognized as a gain in the third quarter of 2021.

The Company determined the fair value of such warrants

as of their issuance date, and as of September 30, 2021, to be $51,216,058 and $17,942,019, respectively.

before Income Tax Benefit

a result of the above results of operations, we reported income before income tax benefit of $8,048,936 and $527,442 for the three

months ended September 30, 2021 and 2020, respectively, an improvement of $7,521,494 (1,426%).

did not record an income tax expense related to our income for the three months ended September 30, 2021 due to our overall net operating

loss carryforwards available.

We have further determined to continue providing a full valuation reserve on our net deferred tax assets

as of September 30, 2021.

We had approximately $76,070,000 of net operating loss carryforwards and $1,795,000 of research and development

tax credit carryforwards as of September 30, 2021 available to offset future net taxable income.

a result of the above, we reported net income including noncontrolling interests of $8,048,936 and $527,442 for the three months ended

September 30, 2021 and 2020, respectively, an improvement of $7,521,494 (1,426%).

Net loss attributable to noncontrolling interests of consolidated subsidiary

The Company owns 51% of its

consolidated subsidiary, Nobility Healthcare.

As a result, the noncontrolling shareholders or minority interest is allocated 49% of the

income/loss of Nobility Healthcare which is reflected in the statement of income (loss) as “net income (loss) attributable to noncontrolling

interests of consolidated subsidiary”.

We reported net loss attributable to noncontrolling interests of consolidated subsidiary

of $19,863 and $-0- for the three months ended September 30, 2021 and 2020, respectively.

Income attributable to common stockholders

a result of the above, we reported net income of $8,068,799 and $527,442 for the three months ended September 30, 2021 and 2020,

respectively, an improvement of $7,541,357 (1,430%).

and Diluted Income per Share

and diluted income per share was $0.16 and $0.02 for the three

months ended September 30, 2021 and 2020, respectively.

Basic income per share is based upon the weighted average number of common shares

outstanding during the period.

For the three months ended September 30, 2021 and 2020, all shares issuable upon conversion of convertible

debt and the exercise of outstanding stock options and warrants were antidilutive, and, therefore, not included in the computation of

diluted income per share.

the Nine Months ended September 30, 2021 and 2020

of Operations

immediately below and discussed in more detail in the subsequent sub-sections is an analysis of our operating results for the nine months

ended September 30, 2021 and 2020, represented as a percentage of total revenues for each respective year:

Selling, general

and administrative expenses:

and development expense

advertising and promotional expense

Selling, advertising and promotional expense totaled $2,779,404 and $596,755 for the three

months ended March 31, 2022 and 2021, respectively, an increase of $2,182,649 (365.8%).

Promotional and advertising expenses represent

the primary component of these costs and totaled $2,389,063 during the three months ended March 31, 2022, compared to $197,203 during

the three months ended March 31, 2021, an increase of $2,191,860 (1,111.5%).

The increase is primarily attributable to the 2022 sponsorship

of NASCAR and IndyCar.

Additionally, TicketSmarter is very active in sponsorship and advertising, as it continues to build its

brand and gain recognition.

TicketSmarter accounted for $1,458,267 of the total promotional and advertising expense for the three

months ended March 31, 2022.

and administrative expense .

selling, general and administrative expenses

Change in fair

value of proceeds investment agreement

Change in fair

value of secured convertible notes

Change in fair

value of derivative liabilities

income and interest expense, net

Income (loss)

before income tax benefit

tax (provision)

income (loss)

Net loss attributable to noncontrolling interests of consolidated subsidiary

income (loss) attributable to common stockholders

Net income (loss) per share attributable to common sotkcholders information:

sell our video recording products and services to law enforcement and commercial 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.

Product 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

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 Nobility Healthcare are driven through relationships with medium to large healthcare organizations, in

which revenue is recognized upon execution of services.

Through TicketSmarter, 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.

may discount our prices on specific orders based upon the size of the order, the specific customer and the competitive landscape.

Healthcare offers leading-edge revenue cycle management solutions to medium and large healthcare organizations throughout the country.

Nobility Healthcare’s customers are spread across a wide range of practices and specialties, including radiology, oncology,

orthopedics, pediatrics, internal medicine, and cardiology.

TicketSmarter is a ticket resale

marketplace with seats offered at over 125,000 live events, with over 48 million tickets for sale through its TicketSmarter.com platform.

TicketSmarter is committed to developing meaningful relationships with conferences, teams, and charities across the country.

COVID-19 pandemic had an impact on all of our revenue streams during the nine months ended September 30, 2021 and we expect it to adversely

affect our revenues during the remainder of 2021.

The COVID-19 pandemic had a negative impact generally on our legacy products and, in

particular our commercial event recorder hardware (DVM-250 Plus) and in-car hardware for law enforcement (DVM-800) during the quarter.

The COVID-19 pandemic had a positive impact generally on our new Shield TM disinfectant/sanitizer and ThermoVU ®

product lines.

for each of the nine months ended September 30, 2021 and 2020 were derived from the following sources:

months ended September 30,

ThermoVU/Shield

Cloud service

Extended warranty

Repair and service

TicketSmarter

Nobility Healthcare

credentialing and services

and other revenues

revenues for the nine months ended September 30, 2021 and 2020 were $4,988,364 and $5,778,695 respectively, which is an increase

of $790,331 (14%), due to the following factors:

Company generated revenues totaling over $244,982 during the nine months ended September

30, 2021 compared to $1,182,513 for the same period in 2020 from its new product lines.

in the second quarter of 2020, the Company launched two product lines in direct response

to the increased safety precautions that organizations and individuals are taking due to

the COVID-19 pandemic.

ThermoVu ® was launched as a non-contact temperature-screening

instrument that measures temperature through the wrist and controls entry to facilities when

temperature measurements exceed pre-determined parameters.

has optional features such as facial recognition to improve facility security by restricting

access based on temperature and/or facial recognition reasons.

provides an instant pass/fail audible tone with its temperature display and controls access

to facilities based on such results.

We believe that it can be widely applied in schools,

office buildings, subway stations, airports and other public venues.

The Company also launched

its Shield™ disinfectant/sanitizer product lines to fulfill demand by current customers

and others for a disinfectant and sanitizer that is less harsh than many of the traditional

products now widely distributed.

The Shield™ Cleanser product line contains a cleanser

with no harsh chemicals or fumes.

Company began offering the Shield™ line of disinfecting products to its first responder customers including police, fire and

paramedics late in the second quarter of 2020.

Commercial customers such as cruise lines, taxi-cab and para transit may also be good

candidates for the products.

The Company is considering enhancing the line of disinfectant products for additional related products

including hardware to efficiently and effectively dispense the disinfectants.

The Company is hopeful that its law enforcement and

commercial customers will adopt this new product offering to combat the spread of the COVID-19 virus as well as other bacteria and

general, we have experienced pressure on our revenues as our in-car and body-worn systems are facing increased competition because

our competitors have released new products with advanced features.

Additionally, our law enforcement revenues declined in the

nine months ended September 30, 2021 compared to the same period of 2020, due to price-cutting and competitive actions

by our competitors, adverse marketplace effects related to our patent litigation proceedings and our recent financial condition.

We introduced our EVO-HD late in the second quarter of 2019 with the goal of enhancing our product line features to meet these competitive

challenges and we started to see traction in late 2019 but sales in 2020 were hampered due to the COVID-19 pandemic.

We expect customers

and potential customers to review and test the EVO-HD prior to committing to this new product platform, all of which has been delayed

due to the COVID-19 pandemic.

We experienced substantial increases in EVO-HD revenues during the nine months ended September 30,

2021 and believe that customers are recognizing and are attracted to its advanced features.

COVID-19 pandemic has continued to delay the shipment of certain law enforcement orders

since the first quarter of 2020 as police forces and governments deal with its impact.

addition, our salesmen were generally unable to meet with and demonstrate our products to

our law enforcement customers because of travel and other restrictions imposed by cities

and states due to the COVID-19 pandemic.

In person demonstration of our products to potential

customers is generally important in order to obtain new customers or upgrade existing customers.

Our product sales to law enforcement increased during the nine months ended September 30,

2021 compared to the same period in 2020, as the impact of the COVID-19 pandemic was at its

COVID-19 pandemic impact remains relevant, as the shipment of commercial orders during the nine months ended September 30,

2021 remain slow, as cruise lines, taxi cabs, paratransit and other commercial customers continue to deal with its impact.

our salesmen were generally unable to meet with and demonstrate our products to our commercial customers because of travel and other

restrictions imposed by cities and states due to the COVID-19 pandemic.

In person demonstration of our products to potential customers

is generally required in order to obtain new customers or upgrade existing customers.

Our product sales to commercial customers increased

in the nine months ended September 30, 2021 compared to the same period in 2020 despite the impact of the COVID-19 pandemic.

has been focusing on migrating customers, from a “hardware sale” to a service fee model.

Therefore, we expect a reduction

in hardware sales as we convert these customers to a service model under which we provide the hardware as part of a recurring monthly

In that respect, in the second quarter of 2020 we introduced a monthly subscription plan for our body worn cameras

and related equipment that allowed law enforcement agencies to pay a monthly service fee to obtain body worn cameras without incurring

a significant upfront capital outlay.

We have noticed significant interest and success with this program, as we experienced a vast

increase in our subscription contracts during the nine months ended September 30, 2021 compared to the same period in 2020.

expect this program continues to hold traction, resulting in recurring revenues over a span of three to five years

and other revenues for the nine months ended September 30, 2021 and 2020 were $4,680,959 and $1,967,881, respectively, which is an increase

of $2,713,078 (138%), due to the following factors:

revenues were $753,332 and $725,667 for the nine months ended September 30, 2021 and 2020, respectively, which is an increase of

$27,665 (4%).

We have experienced increased interest in our cloud solutions for law enforcement primarily due to the deployment of

our new cloud-based EVO-HD in-car system.

However, the fallout from the COVID-19 pandemic and related business shut-downs

affected our commercial customers usage of cloud services and offset increases in cloud revenues.

from extended warranty services were $786,147 and $990,961 for the nine months ended September 30, 2021 and 2020, respectively, which

is a decrease of $204,814 (21%).

We have many customers that have purchased extended warranty packages, primarily in our DVM-800

premium service program.

However, the affects from the COVID-19 pandemic and related restrictions on travel adversely affected our

sales of DVM-800 hardware systems resulting in a decrease in their sales over the nine months ended September 30, 2021 compared to

the same period in 2020.

service revenues were $141,618 and $137,856 for the nine months ended September 30, 2021 and 2020, respectively, an increase of $3,762

Installation revenues tend to vary more than other service revenue types and are dependent on larger customer implementations.

The slight increase in installation revenues in the nine months ended September 30, 2021 compared to the same period 2020 was attributable

to the resumption of previous projects pending install due to the effects related to the COVID-19 pandemic.

from building rental income were $290,012 and $-0- for the nine months ended September 30, 2021 and 2020, respectively, an increase

of $290,012 (100%).

The Company completed the purchase of an office/warehouse building during the nine months ended September 30,

2021, in which current tenants were under a lease agreement.

The agreement closed at the end of August 2021.

from TicketSmarter services were $2,050,679 and $-0- for the nine months ended September 30, 2021 and 2020, respectively, an increase

of $2,050,679 (100%).

The Company completed the acquisitions of Goody Tickets, LLC and TicketSmarter, LLC on September 1, 2021, thus

resulting in the new revenue stream for the Company.

TicketSmarter collects fees on transactions administered through the TicketSmarter.com

platform for the buying and selling of tickets for live events throughout the country.

This increase reflects just one month of revenues

within the new wholly-owned subsidiary, presenting a strong outlook moving forward.

from Nobility Healthcare services were $560,484 and $-0- for the nine months ended September 30, 2021 and 2020, respectively, an

increase of $560,484 (100%).

The Company completed the acquisitions of the first medical billing company on June 30, 2021

and the second medical billing company on August 31, 2021, thus resulting in the new revenue stream added in the third

quarter of 2021 for the Company.

Nobility Healthcare provided revenue cycle management solutions and back-office services

to healthcare organizations throughout the country.

This increase reflects three months of the first medical billing company

revenues and just one month of the second medical billing company revenues within the new wholly-owned subsidiary, presenting

a strong outlook moving forward.

revenues for the nine months ended September 30, 2021 and 2020 were $9,669,323 and $7,746,576, respectively, which is an increase of

$1,922,747 (25%), due to the reasons noted above.

of product revenue on units sold for the nine months ended September 30, 2021 and 2020 was $3,776,185 and $4,332,450, respectively, which

is a decrease of $556,265 (13%).

The decrease in cost of goods sold for products is due to numerous factors in the period during 2020

that were not relevant to the same period in 2021.

In the 2020 period, the Company experienced a move to its new warehouse facility,

and a significant manufacturing slow down caused by the COVID-19 pandemic causing unfavorable overhead and labor variances for production

in the second quarter of 2020, which management had decided to expense as a period cost.

For the same period in 2021, the Company did

not experience these factors, but further reduced the inventory reserve.

Additionally, the decrease in cost of product revenues correlates

directly with the decrease in revenues for the three months ended September 30, 2021 compared to the same period in 2020.

of service and other revenues for the nine months ended September 30, 2021 and 2020 was $2,419,884 and $533,690, respectively, which

is an increase of $1,886,194 (353%).

The increase in service and other cost of goods sold is due to the expansion in service revenue

streams through the acquisitions and in particular the TicketSmarter acquisition completed during the nine months ended September

30, 2021, of which would not be relevant for comparison to the same period in 2020.

Our cost of service revenues as a percentage of revenues

generated by TicketSmarter and the Nobility Healthcare are at a much higher percentage than our traditional law enforcement/commercial

TicketSmarter and the Nobility Healthcare revenues represented 28% of total revenues for the nine months ended September

30, 2021 which resulted in a substantially higher cost of revenues for the nine months ended September 30, 2021 compared to the 2020

cost of sales as a percentage of revenues was 64% for the nine months ended September 30, 2021 compared to 63% for the nine months ended

September 30, 2020.

We believe our gross margins will improve during the remainder of 2021 if we can increase revenues (in particular

service and other revenues), shipping costs moderate and continue to reduce product warranty issues.

had $2,300,019 and $1,960,351 in reserves for obsolete and excess inventories at September 30, 2021 and December 31, 2020, respectively.

Total raw materials and component parts were $3,068,418 and $3,186,426 at September 30, 2021 and December 31, 2020, respectively, a decrease

of 118,008 (4%).

Finished goods balances were $10,827,344 and $6,974,291 at September 30, 2021 and December 31, 2020, respectively,

General and administrative expenses totaled $5,465,553 and $2,631,855 for the three months ended

March 31, 2022 and 2021, respectively, an increase of $2,833,698 (107.7%).

The increase in general and administrative expenses in the

three months ended March 31, 2022 compared to the same period in 2021 is primarily attributable to an increase in administrative salaries,

as payroll continues to increase with the new acquisition completed by the Company.

General and administrative expense also increased

due to a substantial increase in depreciation and amortization, rent expenses, and legal and professional expenses for the three

months ended March 31, 2022 compared to the same period in 2021.

the reasons stated above, our operating loss was $6,803,338 and $2,865,693 for the three months ended March 31, 2022 and 2021, respectively,

an increase of $3,937,645 (137.4%).

The slight increase in the inventory reserve is primarily due to scrapping of older version inventory

component parts that were mostly or fully reserved during the three months ended September 30, 2021.

The remaining reserve for inventory

obsolescence is generally provided for the level of component parts of the older versions of our PCB boards and the phase out of our

DVM-750, DVM-500 Plus and LaserAlly legacy products.

We believe the reserves are appropriate given our inventory levels at September

profit for the nine months ended September 30, 2021 and 2020 was $3,473,254 and $2,880,436, respectively, which is an increase of $592,818

The increase is commensurate with the 25% increase in total revenues and the gross margin percentage decrease to 36% during the

nine months ended September 30, 2021, from 37% during the nine months ended September 30, 2020.

Our goal is to improve our margins over

the longer-term based on the expected margins of our recent healthcare billing and TicketSmarter acquisitions together with our traditional

video business including sales traction from our EVO-HD, DVM-800, VuLink and FirstVU HD and our cloud evidence storage and management

offering if they gain traction in the marketplace and subject to a normalizing economy in the wake of the COVID-19 pandemic.

if revenues from these products increase, we will seek to further improve our margins from them through economies of scale and more efficiently

utilizing fixed manufacturing overhead components.

We plan to continue our initiative to more efficient management of our supply chain

through outsourcing production, quantity purchases and more effective purchasing practices.

Lastly, we will continue to seek to further

improve our margins through sensible and advantageous acquisitions as evidenced during the nine months ended September 30, 2021.

General and Administrative Expenses

general and administrative expenses were $12,554,807 and $8,794,912 for the nine months ended September 30, 2021 and 2020, respectively,

which is an increase of $3,543,513 (40%).

The significant components of selling, general and administrative expenses are as follows:

and development expense

advertising and promotional expense

fees and expense

sales, and administrative staff payroll

and development expense.

We continue to focus on bringing new products to market, including updates and improvements to current

Our research and development expenses totaled $1,402,185 and $1,250,528 for the nine months ended September 30, 2021 and 2020,

respectively, which is an increase of $151,657 (12%).

Most of our engineers are dedicated to research and development activities for

new products, primarily the ThermoVu ® , Shield TM , EVO-HD, FirstVu II and non-mirror based DVM-250 that

can be located in multiple places in a vehicle.

We expect our research and development activities will continue to trend higher in future

quarters as we continue to expand our product offerings based on our new EVO-HD product platform and as we outsource more development

We consider our research and development capabilities and new product focus to be a competitive advantage and intend to continue

to invest in this area on a prudent basis and consistent with our financial resources.

advertising and promotional expenses.

Selling, advertising and promotional expense totaled $2,978,620 and $1,958,884 for the

nine months ended September 30, 2021 and 2020, respectively, which is an increase of $1,019,736 (52%).

The increase primarily reflects

the impact of our recent acquisition of TicketSmarter which relies heavily on digital advertising to promote the use of its ticketing

TicketSmarter is expected to remain very involved in digital promotional and advertising space, as it is necessary

to its recognition and customer trust, being a part of the live event and sports realm.

salaries and commissions represent the primary components of these costs and were $1,301,165 and $1,289,699 for the nine months ended

September 30, 2021 and 2020, respectively, which is a, increase of $11,466 (1%).

The effective commission rate was 13.5% for the nine

months ended September 30, 2021 compared to 16.6% for the nine months ended September 30, 2020.

Promotional and advertising expenses

totaled $1,677,455 during the nine months ended September 30, 2021 compared to $669,185 during the nine months ended September 30, 2020,

which is an increase of $1,008,270 (151%).

The increase is primarily attributable to NASCAR and IndyCar seasons resuming in the

2021, as they were conversely suspended during the same period in 2020.

Additionally, trade shows are beginning to take place in the

second quarter of 2021, compared to the second quarter of 2020, when they were suspended as a result of the COVID-19 pandemic.

fees and expense .

Professional fees and expenses totaled $1,008,290 and $701,602 for the nine months ended September 30,

2021 and 2020, respectively, which is an increase of $306,688 (44%).

The increase in professional fees is primarily attributable

to increased legal fees surrounding the two registered direct offerings during the nine months ended September 30, 2021, along with increased

legal and broker fees associated with the Company’s numerous acquisitions during the period, paired with other current due diligence

items and opportunities the Company is exploring.

Additionally, increased board fees, audit fees, and service fees attribute to this

sales and administrative staff payroll.

Executive, sales and administrative staff payroll expenses totaled $2,204,168 and $1,737,869

for the nine months ended September 30, 2021 and 2020, respectively, which is an increase of $466,299 (27%).

The primary reason

for the increase in executive, sales and administrative staff payroll was the recent acquisitions of the medical billing companies

and TicketSmarter which occurred in 2021 and therefore had no impact on 2020 expenses.

In addition, a return to regular staff levels

compared to the same period in 2020, in which the Company experienced a reduction in technical support staffing in response to the COVID-19

pandemic during the second quarter of 2020, as the COVID-19 pandemic had significantly impacted the Company’s new event security

business channel in 2020 as many sporting venues were closed including those served by these service technicians.

Additionally, this

trend is expected to continue because of the acquisitions completed during the nine months ended September 30, 2021, which resulted in

additional payroll expenses with expanded executive positions, sales, and administrative staff numbers compared to 2020.

Additionally,

the acquisitions completed during the nine months ended September 30, 2021, resulted in additional payroll expenses with expanded executive

positions, sales, and administrative staff numbers.

Other selling, general and administrative expenses totaled $4,961,544 and $1,985,198 for the nine months ended September 30,

2021 and 2020, respectively, which is an increase of $2,976,346 (150%).

The increase in other expenses in the nine months ended

September 30, 2021 compared to the same period in 2020 is primarily attributable to the increased expenses related to the acquisitions,

and associated operating expenses, completed during the nine months ended September 30, 2021, that were not relevant to the same period

Additionally, an increase in travel costs as COVID-19 restrictions begin to ease, as well as substantially increased insurance

costs compared to the same period in 2020.

The increased insurance costs are primarily in general liability and related coverages which

premiums have been increased to address exposure to the COVID-19 pandemic.

the reasons stated above, our operating loss was $9,081,553 and $5,914,476 for the nine months ended September 30, 2021 and 2020,

respectively, which is an increase of $3,167,077 (54%).

Operating loss as a percentage of revenues worsened

to 94% in the nine months ended September 30, 2021 from 76% in the same period in 2020.

income increased to $222,497 for the nine months ended September 30, 2021 from $33,208 in the same period of 2020, which reflected our

increase in cash and cash equivalent levels in the nine months ended September 30, 2021 compared to the same period in 2020.

completed two registered direct offerings in the nine months ended June 30, 2021 which yielded net proceeds of approximately $66.4 million

which balances have earned increased interest income when compared to the same period in 2020.

Additionally, this increase is a result

of interest incurred on debt that the Company has issued, as well as interest incurred on leased products.

incurred interest expense of $8,466 and $338,136 during the nine months ended September 30, 2021 and 2020, respectively.

was attributable to utilizing a portion of the net proceeds from the registered direct offerings to eliminate substantially all interest-bearing

debt balances outstanding in the nine months ended September 30, 2021 as compared to the same period in 2020.

2020, the Company received $150,000 in additional loan funding under the Economic Injury Disaster Loans (“EIDL”) program

administered by the Small Business Administration (“SBA”).

Under the terms of the EIDL promissory note, interest accrues

on the outstanding principal at the rate of 3.75% per annum.

The term of the EIDL promissory note is thirty years and monthly principal

and interest payments are deferred for twelve months after the date of disbursement and total $731.00 per month thereafter.

Additionally,

the increase is attributable to the contingent earn-out notes associated with the two Nobility Healthcare acquisitions, currently at

a total balance of $1,000,000 between the two notes, with interest rates of 3.00% per annum.

Convertible Notes Issuance Expenses

recognized secured convertible note issuance expenses of $-0- and $34,906 during the nine months ended September 30, 2021 and 2020, respectively.

elected to account for and record our $1.667 million principal amount of the 2020 Convertible Notes issued in April 2020 on a fair value

Accordingly, we were required to expense the related issuance costs to other expense in the condensed consolidated statements

of operations.

Such costs totaled $34,906 for the nine months ended September 30, 2020.

The issuance costs primarily included related

legal and accounting fees.

No similar debt issuances occurred during the nine months ended September 30, 2021.

on Extinguishment of debt

recognized a gain on extinguishment of debt totaling $10,000 and $-0- during the nine months ended September 30, 2021 and 2020, respectively.

During the nine months ended September 30, 2021 the Company was notified that its $10,000 EIDL advance received with the PPP Loan was

fully forgiven.

in Fair Value of Secured Convertible Notes

recognized a loss on change in fair value of Secured Convertible Notes totaling $-0- and $1,300,252 during the nine months ended September

30, 2021 and 2020, respectively.

elected to account for the secured convertible notes that were issued on April 17, 2020 on their fair value basis.

Therefore, we determined

the fair value of the secured convertible notes as of their issuance date of April 17, 2020 and through June 12, 2020, when they were

paid in full.

The change in fair value from their issuance date of April 17, 2020 to their pay-off date was $887,807, which was recognized

as a charge in the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2020.

elected to account for the secured convertible notes that were issued in August 2019 on their fair value basis.

Therefore, we determined

the fair value of the secured convertible notes as of their issuance date on December 31, 2019 until they were paid in full on March

The change in fair value from December 31, 2019 to their pay-off date was $412,445, which was recognized as a charge in the

Condensed Consolidated Statement of Operations for the nine months ended September 30, 2020.

in Fair Value of Proceeds Investment Agreement

recognized a gain on the change in fair value of the PIA of $-0- and $5,250,000 during the nine months ended September 30, 2021

and 2020, respectively.

elected to account for the PIA that we entered into with BKI in July of 2018 on its fair value basis.

Therefore, we determined the fair

value of the 2018 PIA as of September 30, 2020, and December 31, 2019 to be $-0- and $5,250,000, respectively.

The change in fair value

from December 31, 2019 to September 30, 2020 was $5,250,000, which was recognized as a gain in the Condensed Consolidated Statement of

Operations for the nine months ended September 30, 2020.

Operating loss as a percentage of revenues improved to 66% in the three months ended March 31, 2022

from 113% in the same period in 2021.

income increased to $71,362 for the three months ended March 31, 2022, from $41,686 in the same period of 2021, which reflects our improved

cash and cash equivalent levels in the first quarter of 2022 compared to the first quarter of 2021.

The Company held significant cash

and cash equivalents throughout the first quarter of 2022, allowing a full three months of interest income.

Compared to the completed

two registered direct offerings in the first quarter of 2021 which yielded net proceeds of approximately $66.4 million which balances

earned interest income for the latter part of the first quarter of 2021.

incurred interest expense of $17,009 and $1,428 during the three months ended March 31, 2022 and 2021, respectively.

increase is attributable to the contingent earn-out notes associated with the four Nobility Healthcare acquisitions, currently at a total

balance of $1,762,064 for the four notes, with interest rates of 3.00% per annum.

in Fair Value of Short-Term Investments

recognized a loss on change in fair value of short-term investments totaling $28,210 and $-0- during the nine months ended September

30, 2021 and 2020, respectively.

Such short-term investments are included in cash and cash equivalents as they contain original maturities

of ninety (90) days or less.

recognized a loss on change in fair value of short-term investments totaling $84,818 and $4,964 during the three months

ended March 31, 2022 and 2021, respectively.

Such short-term investments are included in cash and cash equivalents as they contain original

maturities of ninety (90) days or less.

The Company completed two registered direct offerings in the first quarter of 2021, which

yielded net proceeds of approximately $66.4 million, a portion of which was invested in short-term securities with original maturities

of 90 days or less.

in Fair Value of Contingent Consideration Promissory Notes

During 2021, the Company issued

a contingent consideration promissory note in connection with the two acquisitions made by our revenue cycle management segment

in the amount of $350,000 and $650,000.

Management’s estimate of the fair value of the $350,000 contingent promissory note

at March 31, 2022 decreased by $51,464 compared to its estimated fair value at December 31, 2021.

Management’s estimate

of the fair value of the $650,000 contingent promissory note at March 31, 2022 increased by $107,514 compared to its estimated

fair value at December 31, 2021.

Therefore, the Company recorded a net loss of $56,050 in the Consolidated Statements

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

in Fair Value of Derivative Liabilities

the nine months ended September 30, 2021, the Company issued detachable warrants to purchase a total of 42,550,000 shares of Common

Stock in association with the two registered direct offerings previously described.

The underlying warrant agreement terms provide for

net cash settlement outside the control of the Company in the event of tender offers under certain circumstances.

As such, the Company

is required to treat these warrants as derivative liabilities which are valued at their estimated fair value at their issuance date and

at each reporting date with any subsequent changes reported in the condensed consolidated statement of operations as the change in fair

value of warrant derivative liabilities.

The change in fair value of the warrant derivative liabilities from their issuance date to September

30, 2021 totaled $33,274,039 which was recognized as a gain in the period ended September 30, 2021.

The Company determined the

fair value of such warrants as of their issuance date, and as of September 30, 2021, to be $51,216,058 and $17,942,019, respectively.

During the first quarter of 2021,

the Company issued detachable warrants to purchase a total of 42,500,000 shares of Common Stock in association with the two registered

direct offerings previously described.

The underlying warrant agreement terms provide for net cash settlement outside the control of the

Company in the event of tender offers under certain circumstances.

As such, the Company is required to treat these warrants as derivative

liabilities which are valued at their estimated fair value at their issuance date and at each reporting date with any subsequent changes

reported in the condensed consolidated statement of operations as the change in fair value of warrant derivative liabilities.

in fair value of the warrant derivative liabilities from December 31, 2021, to March 31, 2022, totaled $148,171 which was recognized as

a gain in the first quarter of 2022.

The Company determined the fair value of such warrants as of December 31, 2021, and as of March 31,

2022, to be $14,846,932 and $14,698,761, respectively.

Income/(Loss)

before Income Tax Benefit

a result of the above results of operations, we reported an income/(loss) before income tax benefit of $24,388,307 and ($2,304,562)

for the nine months ended September 30, 2021 and 2020, respectively, which is an increase of $26,692,869 (1,158%).

did not record an income tax benefit related to our losses for the nine months ended September 30, 2021, due to our overall net operating

a result of the above results of operations, we reported an income/(loss) before income tax benefit of ($6,698,242) and $21,721,858 for

the three months ended March 31, 2022 and 2021, respectively, a decrease of $28,420,100 (130.8%).

did not record an income tax expense related to our income for the three months ended March 31, 2022 due to our overall net operating

loss carryforwards available.

We have further determined to continue providing a full valuation reserve on our net deferred tax assets

as of September 30, 2021.

We had approximately $76,070,000 of net operating loss carryforwards and $1,795,000 of research and development

tax credit carryforwards as of September 30, 2021 available to offset future net taxable income.

as of March 31, 2022.

We had approximately $81.4 million of net operating loss carryforwards and $1,8 million of research

and development tax credit carryforwards as of March 31, 2022 available to offset future net taxable income.

Income/(Loss)

As a result of the above,

we reported net income including noncontrolling interests of $24,388,307 and ($2,304,562) for the nine months ended September 30, 2021

and 2020, respectively, an improvement of $26,692,869 (1,158%).

Net loss attributable to noncontrolling interests of consolidated subsidiary

Company owns 51% of its consolidated subsidiary, Nobility Healthcare, LLC.

As a result, the noncontrolling shareholders or minority interest

is allocated 49% of the income/loss of Nobility Healthcare, LLC which is reflected in the statement of income (loss) as “net income

a result of the above results of operations, we reported net income/(loss) of ($6,698,242) and $21,721,858 for the three months ended

March 31, 2022 and 2021, respectively, a decrease of $28,420,100 (130.8%).

Loss Attributable to Noncontrolling Interests of Consolidated Subsidiary

We reported net income (loss) attributable to noncontrolling

interests of consolidated subsidiary of $19,863 and $-0- for the nine months ended September 30, 2021 and 2020, respectively.

Company owns a 51% equity interest in its consolidated subsidiary, Nobility Healthcare.

As a result, the noncontrolling shareholders

or minority interest is allocated 49% of the income/loss of Nobility Healthcare which is reflected in the statement of income (loss)

as “net income (loss) attributable to noncontrolling interests of consolidated subsidiary”.

We reported net loss attributable to noncontrolling interests of consolidated subsidiary of $98,094 and $-0- for the three months ended March 31, 2022 and

2021, respectively.

Income/(Loss) Attributable to Common Stockholders

a result of the above results of operations, we reported net income/(loss) of $24,408,170 and ($2,304,562) for the nine months

ended September 30, 2021 and 2020, respectively, an increase of $26,712,732 (1,159%).

a result of the above, we reported a net income/(loss) attributable to common stockholders of ($6,600,148) and $21,721,858 for

the years three months March 31, 2022 and 2021, respectively, a deterioration of $28,322,006 (130.4%).

and Diluted Income/(Loss) per Share

and diluted income/(loss) per share was $0.49 and ($0.12) for

the nine months ended September 30, 2021 and 2020, respectively.

Basic income (loss) per share is based upon the weighted average number

of common shares outstanding during the period.

For the nine months ended September 30, 2021 and 2020, all shares issuable upon conversion

of convertible debt and the exercise of outstanding stock options and warrants were antidilutive, and, therefore, not included in the

computation of diluted income (loss) per share.

basic and diluted income/(loss) per share was ($0.13) and $0.49 for the three months ended March 31, 2022 and 2021, respectively.

income (loss) per share is based upon the weighted average number of common shares outstanding during the period.

For the three months

ended March 31, 2022 and 2021, all shares issuable upon conversion of convertible debt and the exercise of outstanding stock options

and warrants were antidilutive, and, therefore, not included in the computation of diluted income (loss) per share.

and Capital Resources

4 unchanged sentences

the public and private capital markets to raise funding through the issuance of debt and equity.

The Company believes, that through

the outlets mentioned, it has the ability to generate and obtain adequate amounts of capital to meet its requirements and plans for capital

in the short-term and long-term.

In that regard, the Company had raised net proceeds of approximately $66.4 million in registered

direct offerings of Common Stock, pre-funded warrants and warrants during the nine months ended September 30, 2021.

Furthermore, the

Company has minimal interest-bearing debt at September 30, 2021 in that of $150,000 remaining due on the promissory notes

under the EIDL program, and the two acquired private medical billing companies and TicketSmarter contingent consideration promissory

notes and agreement, as more fully described in Note 3, “Debt Obligations”.

The net proceeds of the registered direct

offerings are sufficient to fund our operations during the remainder of 2021 and management believes that it now has adequate liquidity

for the foreseeable future from the recently completed registered direct offerings in 2021.

Such offerings were completed through utilization

of the Company’s shelf-registration statement on Form S-3 (File No.

In that regard, the Company had raised

net proceeds of approximately $66.4 million in registered direct offerings of common stock, pre-funded warrants and warrants during

Furthermore, the Company’s only remaining interest-bearing debt at March 31, 2022 is $150,000 remaining due on the

promissory notes under the SBA’s PPP and EIDL programs, along with the four acquired private medical billing companies’ contingent

consideration promissory notes, as more fully described in Note 3, “Debt Obligations” .

We believe that the

net proceeds from the registered direct offerings will be sufficient to fund our operations during the remainder of 2022

and management believes that it now has adequate liquidity for the foreseeable future from the recently completed registered direct offerings

Such offerings were completed through utilization of the Company’s shelf-registration statement on Form S-3 (File No.

333-239419), which was initially filed with the U.S.

and Exchange Commission (the “SEC) on June 25, 2020 and was declared effective on July 2, 2020 (the “Shelf Registration Statement”).

Securities and Exchange Commission (the “SEC) on June 25, 2020 and was declared

effective on July 2, 2020 (the “Shelf Registration Statement”).

Registration Statement on Form S-3 - The Shelf Registration Statement allows the Company to offer and sell, from time to time in

one or more offerings, any combination of our shares of Common Stock, debt securities, debt securities convertible into Common Stock

or other securities in any combination thereof, rights to purchase shares of Common Stock or other securities in any combination thereof,

warrants to purchase shares of Common Stock or other securities in any combination thereof or units consisting of Common Stock or other

securities in any combination thereof having an aggregate initial offering price not exceeding $125,000,000.

The Company utilized the

Shelf Registration Statement for two recent offerings of its securities, as more fully described in Note 12 of the notes to the Company’s

condensed consolidated financial statements, “Stockholders’ Equity”, raising approximately $66.4 million in net proceeds

during the nine months ended September 30, 2021.

one or more offerings, any combination of our shares of common stock, debt securities, debt securities convertible into common

stock or other securities in any combination thereof, rights to purchase shares of common stock or other securities in any

combination thereof, warrants to purchase shares of common stock or other securities in any combination thereof or units consisting

of common stock or other securities in any combination thereof having an aggregate initial offering price not exceeding $125,000,000.

believes that it has adequate funding to support its business operations for the foreseeable future as a result of the funds raised through

these offerings.

cash equivalents:

As of September 30, 2021, we had cash and cash equivalents with an aggregate balance of $40,743,057, which is

an increase from a balance of $4,361,758 at December 31, 2020.

Summarized immediately below and discussed in more detail in the subsequent

subsections are the main elements of the $36,381,299 net increase in cash during the nine months ended September 30, 2021:

$12,230,781 of

net cash used in operating activities.

Net cash used in operating activities was $12,230,781 and $10,115,605 for the nine

months ended September 30, 2021 and 2020, respectively, an increase of $2,115,176.

The increase was primarily the result of

increased inventory levels and additional working capital and operating assets for the various acquisitions completed during

the nine months ended September 30, 2021 compared to the same period of 2020.

As of March 31, 2022, we had cash and cash equivalents with an aggregate balance of $20,561,116, a decrease from

a balance of $32,007,792 at December 31, 2021.

Summarized immediately below and discussed in more detail in the subsequent subsections

are the main elements of the $11,446,676 net decrease in cash during the three months ended March 31, 2022:

of net cash used in operating activities.

cash used in operating activities was $6,055,672 and $3,206,844 for the three months ended March 31, 2022 and 2021, respectively,

an increase of $2,848,828.

The deterioration is attributable to the net loss incurred for the first quarter of 2022, the non-cash

gain attributable to the change in value of the warrant derivative liability, the usage of cash to increase accounts receivable,

prepaid expenses, and other operating assets during the three months ended March 31, 2022 compared to the same period in 2021.

of net cash used in investing activities.

Cash used in investing

activities was $17,958,520 and $889,726 for the nine months ended September 30, 2021 and 2020 respectively.

The increase was

primarily the result of the acquisitions of two acquired medical billing companies and TicketSmarter, which were closed during

the nine months ended September 30, 2021, together with the office/warehouse building purchase the Company completed during the

nine months ended September 30, 2021.

of net cash provided by financing activities.

Cash provided by

financing activities was $66,570,600 and $18,775,977 for the nine months ended September 30, 2021 and 2020, respectively.

During January 2021, we received net proceeds of $28,941,000 ($29,013,000 upon full exercise of the prefunded warrants) from the

issuance of shares of common stock, warrants and pre-funded warrants through a registered direct offering.

In addition, during February

2021, we received net proceeds of $37,447,100 ($37,557,600 upon full exercise of the prefunded warrants) from the issuance of shares

of common stock, warrants and pre-funded warrants through a registered direct offering.

net result of these activities was an increase in cash of $36,381,299 to $40,743,057 for the nine months ended September

had $40,743,057 of cash and cash equivalents and net positive working capital $34,702,688 as of September 30, 2021.

receivable balances represented $3,977,464 of our net working capital at September 30, 2021.

used in investing activities was $3,195,346 and $99,274 for the three months ended March 31, 2022 and 2021, respectively.

During the three months ended March 31, 2022, we made capital expenditures for:

(i) building improvements of the newly

purchased office and warehouse building, and transportation assets;

(ii) patent applications on our proprietary technology

utilized in our new products and included in intangible assets;

and (iii) the closing of a business and asset acquisition.

of net cash used in financing activities.

Cash used in financing activities was $2,195,658 and cash provided by financing activities

was $66,570,600 for the three months ended March 31, 2022 and 2021, respectively.

During the first three months of 2022 the

Company repurchased its common stock on the open market pursuant to the stock repurchase plan, as well as principal payments

on contingent consideration promissory notes.

During 2021, we raised substantial funds through the completion of two registered

direct offerings of our common stock.

had $20,561,116 of cash and cash equivalents and net positive working capital $19,483,613 as of March 31, 2022.

Accounts receivable and

other receivables balances represented $5,602,094 of our net working capital at March 31, 2022.

We believe we will be able

to collect our outstanding receivables on a timely basis and reduce the overall level during the remainder of 2021, which would

provide positive cash flow to support our operations in 2021.

Inventory represents $11,611,249 of our net working capital at September

30, 2021, and finished goods represented $10,827,344 of total inventory at September 30, 2021.

We are actively managing the level of

inventory and our goal is to reduce such level during the balance of 2021 by our sales activities, thereby increasing cash flow to help

support our operations during 2021.

to collect our outstanding receivables on a timely basis and reduce the overall level during the balance of 2022, which would provide

positive cash flow to support our operations during 2022.

Inventory represents $9,405,920 of our net working capital at March 31, 2022,

and finished goods represented $9,462,527 of total inventory at March 31, 2022.

We are actively managing the level of inventory and our

goal is to reduce such level during the balance of 2022 by our sales activities, the increase of which should provide additional cash

flow to help support our operations during 2022.

Expenditures:

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

office/warehouse 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.

The Company will be incurring capital expenditures to renovate the building to suit its office/warehouse needs during the balance of

Company has also completed its first medical billing company acquisition for a total purchase price of approximately $1.4 million

during the nine months ended September 30, 2021.

The medical billing company purchase price included a contingent consideration

promissory note payable to the sellers with an estimated fair value of $350,000 as of September 30, 2021.

Management expects to continue

its roll-up strategy in the RCM (medical billing services) industry during the balance of 2021 and beyond.

addition, the Company completed its second medical billing company acquisition for a total purchase price of approximately $2.9

million during the nine months ended September 30, 2021.

The second medical billing company purchase price includes a contingent

consideration promissory note payable to the sellers with an estimated fair value of $650,000 as of September 30, 2021.

Management expects

to continue its roll-up strategy in the RCM (medical billing services) industry during the balance of 2021 and beyond.

the Company completed the business acquisitions of Goody Tickets and TicketSmarter for a total purchase price of approximately $13.9

million during the nine months ended September 30, 2021.

The TicketSmarter purchase price includes a contingent consideration earn-out

payable to the sellers with an estimated fair value of $4,244,400 as of September 30, 2021.

commitments .

On 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 to $14,741 thereafter, with a termination date of December 2026.

The Company is responsible for property taxes, utilities, insurance and its proportionate share of common area costs related to its new

The Company 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 months.

Company entered into an operating lease with a third party in October 2019 for copiers used for office and warehouse purposes.

of the lease include 48 monthly payments of $1,598 with a maturity date of October 2023.

The Company has the option to purchase such

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 months.

On June 30, 2021, the Company

completed the acquisition of is first medical billing company, through its majority owned subsidiary, Nobility Healthcare.

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 to $2,774 thereafter, with a termination date of July 2024.

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 June 30, 2021.

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

30, 2021 was thirty-four months.

August 31, 2021, the Company completed the acquisition of its second acquired 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.

The lease terms include monthly payments ranging from $11,579 to $11,811 thereafter, 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

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 months.

On September 1, 2021, the Company

completed the acquisition of Goody Tickets, LLC and TicketSmarter, LLC (“TicketSmarter Acquisition”), through its wholly owned

subsidiary, TicketSmarter.

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

office space.

The lease terms include monthly payments ranging from $7,211 to $7,364 thereafter, 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 months.

expense related to the office spaces and copier operating leases was recorded on a straight-line basis over the lease term.

lease expense under the five operating leases was approximately $144,443 for the nine months ended September 30, 2021.

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

the discount rate based on its incremental borrowing rate on the information available at commencement date.

As of commencement date,

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:

lease right of use assets

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:

general and administrative expenses

We had the following material commitments for capital expenditures at March 31, 2022:

Stock Repurchase Program

- On December 6, 2021, the Board of Directors of the Company authorized the repurchase of up to $10.0 million of the Company’s

outstanding common stock under the specified terms of a share repurchase program (the “Program”).

Subsequent to March 31,

2022, the Company repurchased 1,280,387 shares of its common stock for $1,415,382, in accordance with the Program.

The Program does not

obligate the Company to acquire any specific number of shares and shares may be repurchased in privately negotiated and/or open market

transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

Lease commitments.

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

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:

Selling, general and administrative expenses

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

ending December 31:

(October 1, 2021 to December 31, 2021)

undiscounted minimum future lease payments

operating lease liability

Obligations .

– Outstanding debt obligations comprises the following:

Year ending December 31:

2022 (April 1, to December 31, 2022)

Total undiscounted minimum future lease payments

Imputed interest

Total operating lease liability

obligations – Outstanding debt obligations comprises the following:

Economic injury disaster loan (EIDL)

consideration promissory note – Nobility Healthcare Division Acquisition

Contingent consideration promissory note –

Nobility Healthcare Division Acquisition

TicketSmarter contingent

consideration earn-out

Contingent consideration promissory note – Nobility Healthcare Division Acquisition

Debt obligations

obligations mature as follows as of September 30, 2021:

(October 1, 2021 to December 31, 2021)

current maturities of debt obligations

Debt obligations, long-term

obligations mature as follows as of 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 SBA’s PPP Program under the Coronavirus Aid, Relief, and Economic Security

Act (the “CARES Act”).

The PPP Loan had a two-year term and bore interest at a rate of 1.0% per annum.

Monthly principal

and interest payments were deferred for nine months after the date of disbursement and totaled $79,851 per month thereafter.

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 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.

The Company applied

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

Additionally, the Company

was fully forgiven, during the nine months ended September 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 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% per annum.

term of such note is thirty years, though it may be payable sooner upon an event of default under such note.

Monthly principal and interest

payments are deferred for twelve months after the date of disbursement and total $731 per month thereafter.

Such note may be prepaid

in part or in full, at any time, without penalty.

The Company granted the secured party a continuing interest in and to any and all collateral,

including but not limited to tangible and intangible personal property.

Billing Company Contingent Consideration Promissory Note Payable.

June 30, 2021, Nobility Healthcare issued a Contingent Consideration Promissory Note (the “Note”) in connection with the

Stock Purchase Agreement between Nobility and a private medical billing company of $350,000.

The Note has a three-year

term and bears interest at a rate of 3.00% per annum.

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 Note is subject to an earn-out

adjustment, being the difference between the $975,000 (the “Note Projected Revenue”) and the cash basis revenue (the

“Note 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 “Note Measurement Period”)

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

If the Note Measurement Period Revenue is less than the

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

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

balance of this Note on a dollar-for-dollar basis.

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

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 Note as a result of the earn-out adjustments.

The 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 this Note at its estimated fair value of $350,000 at the acquisition date.

Management will continue to

estimate the fair value of this 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.

Billing Company Contingent Consideration Promissory Note

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

in connection with the Stock Purchase Agreement between Nobility and a private medical billing company of $650,000.

The Contingent

Note has a three-year term and bears interest at a rate of 3.00% per annum.

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 $3,000,000 (the “Contingent Note Projected

Revenue”) and the cash basis revenue (the “Contingent Note Measurement Period Revenue”) collected by the

Seller 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 “Contingent Note Measurement Period”) measured on a quarterly basis and annualized as of the

relevant period.

If the Contingent Note Measurement Period Revenue is less than the Contingent Note Projected Revenue,

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

If the Contingent

Note Measurement Period Revenue is more than the Contingent Note 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

Management has recorded this Contingent Note at its estimated fair value of $650,000 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.

TicketSmarter

Contingent Consideration Earn-Out Agreement

September 1, 2021, TicketSmarter issued a contingent consideration ern-out agreement (the “TicketSmarter Earn-Out”)

in connection with the Stock Purchase Agreement between TicketSmarter, Inc., Goody Tickets, LLC and TicketSmarter, LLC of $4,244,400.

The TicketSmarter Earn-Out, if earned, will be payable with ninety percent (90%) readily available funds and ten percent (10%)

in stock consideration.

The 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 EBITDA the “Measurement Period EBITDA”) generated

by TicketSmarter in its normal course of business, during the period from September 1, 2021 through December 31, 2021.

If the Measurement Period EBITDA is less than seventy percent (70%) of the Projected EBITDA, there will be zero contingent

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 be paid out.

If the Measurement Period EBITDA is more than the Projected EBITDA, the

full 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.

The maximum downward earn-out adjustment to the principal balance will reduce the TicketSmarter Earn-Out

balance to zero.

contingent consideration earn-out 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 TicketSmarter Earn-Out at its estimated fair value of $4,244,400 at the acquisition

Management will continue to estimate the fair value of this TicketSmarter Earn-Out at each reporting date with the change,

if any recorded as a gain or loss in the statement of operations during the relevant period.

Accounting Policies and Estimates

Accounting Estimates

significant accounting policies are summarized in Note 1, “Nature of Business and Summary of Significant Accounting Policies ,”

1 unchanged sentence

While the selection and application of any accounting policy may involve some level of subjective

judgments and estimates, we believe the following accounting policies are the most critical to our financial statements, potentially

involve the most subjective judgments in their selection and application, and are the most susceptible to uncertainties and changing

judgments and estimates, we believe the following accounting policies and estimates are the most critical to our financial statements,

potentially involve the most subjective judgments in their selection and application, and are the most susceptible to uncertainties and

changing conditions:

Recognition / Allowance for Doubtful Accounts;

for Excess and Obsolete Inventory;

Goodwill impairment

and other intangible assets;

value of warrant derivative liabilities;

Compensation Expense;

value of warrants;

value of assets and liabilities acquired in business combinations;

for Income Taxes.

29 unchanged sentences

based on the relative standalone selling price (“SSP”).

is recognized at the time the related performance obligation is satisfied by transferring the control of the promised service to a customer.

Revenue is recognized when control of the service is transferred to the customer, in an amount that reflects the consideration that we

expect to receive in exchange for our services.

We generate all our revenue from contracts with customers.

review all significant, unusual or nonstandard shipments of product or delivery of services as a routine part of our accounting and financial

reporting process to determine compliance with these requirements.

Extended warranties are offered on selected products, and when a customer

purchases an extended warranty the associated proceeds are treated as contract liability and recognized over the term of the extended

principal customers are state, local and federal law enforcement agencies, which historically have been low risks for uncollectible accounts.

However, we have commercial customers and international distributors that present a greater risk for uncollectible accounts than such

law enforcement customers and we consider a specific reserve for bad debts based on their individual circumstances.

Our historical bad

debts have been negligible, with less than $258,000 charged off as uncollectible on cumulative revenues of $246.1 million since we commenced

deliveries during 2006.

As of September 30, 2021, and December 31, 2020, we had provided a reserve for doubtful accounts of $123,224

and $123,224, respectively.

periodically perform a specific review of significant individual receivables outstanding for risk of loss due to uncollectability.

on such review, we consider our reserve for doubtful accounts to be adequate as of September 30, 2021.

However, should the balance due

from any significant customer ultimately become uncollectible then our allowance for bad debts will not be sufficient to cover the charge-off

and we will be required to record additional bad debt expense in our statement of operations.

for our video solutions segment is recognized at the time the related performance obligation is satisfied by transferring the control

of the promised service to a customer.

Revenue is recognized when control of the service is transferred to the customer, in an amount

that reflects the consideration that we expect to receive in exchange for our services.

We generate all our revenue from contracts with

for our revenue cycle management segment is recorded on a net basis, as its primary source of revenue is its end-to end service fees.

These service fees are reported as revenue monthly upon completion of our performance obligation to provide the agreed upon services.

for our ticketing segment is recorded on a gross or net basis based on management’s assessment of whether we are 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.

sell our 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.

We act as the principal in these transactions as we own the ticket at the time of sale, therefore

we control 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.

also act 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 we do not control the ticket

prior to the transfer, we act 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.

is due at the time of sale.

review all significant, unusual, or nonstandard shipments of product or delivery of services as a routine part of our accounting and

financial reporting process to determine compliance with these requirements.

Extended warranties are offered on selected products, and

when a customer purchases an extended warranty, the associated proceeds are treated as contract liability and recognized over the term

of the extended warranty.

our video solutions segment, our principal customers are state, local, and federal law enforcement agencies, which historically have

been low risks for uncollectible accounts.

However, we have commercial customers and international distributors that present a greater

risk for uncollectible accounts than such law enforcement customers and we consider a specific reserve for bad debts based on their individual

circumstances.

Our historical bad debts have been negligible, with less than $258,000 charged off as uncollectible on cumulative revenues

of $248.0 million since we commenced deliveries during 2006.

our ticketing segment, our customers are mainly online visitors that pay at the time of the transaction, and we collect the service fees

charged with the transaction.

Thus, leading to minimal risk for uncollectible accounts, to which we then consider a specific reserve

for bad debts based on their individual circumstances.

As we continue to learn more about the collectability related to this recent acquisition,

we will track historical bad debts and continue to assess appropriate reserves.

our revenue cycle management segment, our customers are mainly medium to large healthcare organizations that are charged monthly upon

the execution of our services.

Being these customers are healthcare organizations with minimal risk for uncollectible accounts, we consider

a specific reserve for bad debts based on their individual circumstances.

As we continue to learn more about the collectability related

to this recently added segment, we will track historical bad debts and continue to assess appropriate reserves.

for Excess and Obsolete Inventory.

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In addition, we adjust the carrying value of inventory if the current market value of that inventory is below its cost.

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

material and component parts

Work-in-process

for excess and obsolete inventory

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

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

Reserve for excess and obsolete inventory – ticketing segment

Total inventories

balance the need to maintain strategic inventory levels to ensure competitive delivery performance to our customers against the risk

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As reflected above, our inventory reserves represented

16.5% of the gross inventory balance at September 30, 2021, compared to 19.3% of the gross inventory balance at December 31, 2020.

had $2,300,019 and $1,960,351 in reserves for obsolete and excess inventories at September 30, 2021 and December 31, 2020, respectively.

Total raw materials and component parts were $3,068,418and $3,186,426 at September 30, 2021 and December 31, 2020, respectively, a decrease

of $118,008 (4%).

Finished goods balances were $10,827,344 and $6,974,291 at September 30, 2021 and December 31, 2020, respectively,

an increase of $3,853,053 (55%).

The increase in finished goods was primarily to the TicketSmarter acquisition, which increased our finished

goods inventory by $1,981,481 in ticket inventory.

Additionally, the increase can also be attributed to accumulating inventory for the

new and expanding product lines.

The slight increase in the inventory reserve is primarily due to scrapping of older version inventory

component parts that were mostly or fully reserved during the three months ended September 30, 2021.

The remaining reserve for inventory

obsolescence is generally provided for the level of component parts of the older versions of our PCB boards and the phase out of our

DVM-750, DVM-500 Plus and LaserAlly legacy products.

We believe the reserves are appropriate given our inventory levels at September

29.3% of the gross inventory balance at March 31, 2022, compared to 28.8% of the gross inventory balance at December 31, 2021.

$3,896,460 and $3,915,089 in reserves for obsolete and excess inventories at March 31, 2022 and December 31, 2021, respectively.

raw materials and component parts were $3,839,796 and $3,062,046 at March 31, 2022 and December 31, 2021, respectively, an increase of

$777,750 (25%).

Finished goods balances were $9,462,528 and $10,512,579 at March 31, 2022 and December 31, 2021, respectively,

a decrease of $1,050,051 (10%).

The decrease in finished goods was primarily attributable to a reduction in ticketing inventory

of $630,270 at March 31, 2022 compared to December 31, 2021.

The slight decrease in the inventory reserve is primarily due to the reduction

in finished goods that had a reserve placed on them prior to sale.

The remaining reserve for inventory obsolescence is generally provided

for the level of component parts of the older versions of our printed circuit boards and the phase out of our DVM-750, DVM-500 Plus and

LaserAlly legacy products.

Additionally, the Company determined a reasonable reserve for inventory held at the ticket operating segment,

in which some inventory items sell below cost or go unsold, thus having to be fully written-off following the event date.

the reserves are appropriate given our inventory levels at March 31, 2022.

actual future demand or market conditions are less favorable than those projected by management or significant engineering changes to

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reserves already established.

and other intangible assets.

When we acquire a business, we determine the fair value of the assets acquired and liabilities assumed

on the date of acquisition, which may include a significant amount of intangible assets such as customer relationships, software and

content, as well as goodwill.

When determining the fair values of the acquired intangible assets, we consider, among other factors, analyses

of historical financial performance and an estimate of the future performance of the acquired business.

The fair values of the acquired

intangible assets are primarily calculated using an income approach that relies on discounted cash flows.

This method starts with a forecast

of the expected future net cash flows for the asset and then adjusts the forecast to present value by applying a discount rate that reflects

the risk factors associated with the cash flow streams.

We consider this approach to be the most appropriate valuation technique because

the inherent value of an acquired intangible asset is its ability to generate future income.

In a typical acquisition, we engage a third-party

valuation expert to assist us with the fair value analyses for acquired intangible assets.

the fair values of acquired intangible assets requires us to exercise significant judgment.

We select reasonable estimates and assumptions

based on evaluating a number of factors, including, but not limited to, marketplace participants, consumer awareness and brand history.

Additionally, there are significant judgments inherent in discounted cash flows such as estimating the amount and timing of projected

future cash flows, the selection of discount rates, hypothetical royalty rates and contributory asset capital charges.

Specifically,

the selected discount rates are intended to reflect the risk inherent in the projected future cash flows generated by the underlying

acquired intangible assets.

an acquired intangible asset’s useful life also requires significant judgment and is based on evaluating a number of factors, including,

but not limited to, the expected use of the asset, historical client retention rates, consumer awareness and trade name history, as well

as any contractual provisions that could limit or extend an asset’s useful life.

Company’s goodwill is evaluated in accordance with FASB ASC Topic 350, which requires goodwill to be assessed for impairment at

least annually and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

addition, an impairment evaluation of our amortizable intangible assets may also be performed if events or circumstances indicate potential

Among the factors that could trigger an impairment review are current operating results that do not align with our annual

plan or historical performance;

changes in our strategic plans or the use of our assets;

restructuring charges or other changes in our

business segments;

competitive pressures and changes in the general economy or in the markets in which we operate;

and a significant

decline in our stock price and our market capitalization relative to our net book value.

performing our annual assessment of the recoverability of goodwill, we initially perform a qualitative analysis evaluating whether any

events or circumstances occurred or exist that provide evidence that it is more likely than not that the fair value of any of our reporting

units is less than the related carrying amount.

If we do not believe that it is more likely than not that the fair value of any of our

reporting units is less than the related carrying amount, then no quantitative impairment test is performed.

However, if the results

of our qualitative assessment indicate that it is more likely than not that the fair value of a reporting unit is less than its respective

carrying amount, then we perform a two-step quantitative impairment test.

the recoverability of goodwill requires judgments and assumptions regarding future trends and events.

As a result, both the precision

and reliability of our estimates are subject to uncertainty.

Among the factors that we consider in our qualitative assessment are general

economic conditions and the competitive environment;

actual and projected reporting unit financial performance;

forward-looking business

measurements;

and external market assessments.

To determine the fair values of our reporting units for a quantitative analysis, we typically

utilize detailed financial projections, which include significant variables, such as projected rates of revenue growth, profitability

and cash flows, as well as assumptions regarding discount rates, the Company’s weighted average cost of capital and other data.

most recent annual impairment test of goodwill was a qualitative analysis conducted as of December 31, 2021 that indicated no impairment.

Subsequent to completing our 2021 annual impairment test, no events or changes in circumstances were noted that required an interim goodwill

impairment test.

Note 1 — Nature of Business and Summary of Significant Accounting Policies and Note 10 — Goodwill and Other

Intangible Assets in the Notes to Consolidated Financial Statements provide additional information regarding the Company’s goodwill

and other intangible assets.

We generally provide up to a two-year parts and labor standard warranty on our products to our customers.

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quality and minimize claims.

Our warranty reserves were decreased to $14,278 as of September 30, 2021 compared to $31,845 as of December

Our warranty reserves were decreased to $10,582 as of March 31, 2022 compared to $13,742 as of December

31, 2021 as we begin to slow our warranty exposures through the roll-off of DVM-750 and DVM-800 units from warranty coverage.

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Actual experience could differ from the amounts estimated requiring adjustments to these liabilities in future periods.

Impairment - In connection with acquisitions, we apply the provisions of ASC 805, Business Combinations , using the

acquisition method of accounting.

The excess purchase price over the fair value of net tangible assets and identifiable intangible assets

acquired is recorded as goodwill.

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

time on December 31, 2021.

In accordance with ASC 350, Intangibles - Goodwill and Other , we will assess goodwill for impairment

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

impairment testing will be performed at the reporting unit level.

Goodwill is assigned to reporting units at the date the goodwill is

initially recorded.

Once goodwill has been assigned to reporting units, it no longer retains its association with a particular acquisition,

and all of the activities within a reporting unit, whether acquired or internally generated, are available to support the value of the

the changing dynamics of our medical billing and ticket marketplace customers and the uncertainties regarding the effect on our business,

there can be no assurance that the estimates and assumptions made for purposes of our goodwill impairment testing in 2021 will prove

to be accurate predictions of the future.

If our assumptions, including forecasted EBITDA of certain reporting units, are not achieved,

we may be required to record additional goodwill impairment charges in future periods, whether in connection with our next annual impairment

testing in the fourth quarter of 2021, or on an interim basis, if any such change constitutes a triggering event (as defined under ASC

350, Intangibles - Goodwill and Other ) outside of the quarter when we regularly perform our annual goodwill impairment test.

It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would

derivative liabilities.

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Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the

warrant derivative liabilities as of their date of issuance and as of September 30, 2021:

date assumptions

warrant derivative liabilities as of their date of issuance and as of March 31, 2022:

Issuance date assumptions

March 31, 2022 assumptions

Volatility - range

106.6 – 166.6 %

Risk-free rate

0.08 – 0.49 %

Remaining contractual term

0.01 – 5 years

3.8 – 4.5 years

Exercise price

Common stock issuable under

the nine months ended September 30, 2021, holders of pre-funded warrants exercised a total of 18,250,000 warrants which were fair valued

at $1,817,549 at their date of issuance and recorded as a derivative warrant liability.

On the date of exercise such pre-funded warrants

were fair valued at zero, which was transitioned to permanent equity during the nine months ended September 30, 2021.

The Company reported

the $1,817,549 change in fair value from their issuance date to their exercise date in the condensed statements of operations as the

change in fair value of warrant derivative liabilities.

$ 2.80 - 3.25

Common stock issuable under the warrants

Compensation Expense .

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stock-price volatility assumption is based on historical volatilities of the underlying stock that are obtained from public data sources

and there were no stock options granted during the nine months ended September 30, 2021.

and there were 25,000 stock options granted during the three months ended March 31, 2022.

factors change and we develop different assumptions in future periods, the compensation expense that we record in the future may differ

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losses currently recorded and the likelihood that tax positions taken in tax returns will be sustained on audit.

required by authoritative guidance, we record deferred tax assets or liabilities based on differences between financial reporting and

tax bases of assets and liabilities using currently enacted rates that will be in effect when the differences are expected to reverse.

Authoritative guidance also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that

all or some portion of the deferred tax asset will not be realized.

As of December 31, 2020, cumulative valuation allowances in the amount

of $24,595,000 were recorded in connection with the net deferred income tax assets.

As required by authoritative

guidance, we record deferred tax assets or liabilities based on differences between financial reporting and tax bases of assets and liabilities

using currently enacted rates that will be in effect when the differences are expected to reverse.

Authoritative guidance also requires

that deferred tax assets be reduced by a valuation allowance if it is more likely than not that all or some portion of the deferred tax

asset will not be realized.

As of March 31, 2022, we have fully reserved all of our deferred tax assets.

Based on a review of

our deferred tax assets and recent operating performance, we determined that our valuation allowance should be decreased by $7,615,000

to a balance of $16,980,000 to fully reserve our deferred tax assets at December 31, 2021.

We determined that it was appropriate to continue

to provide a full valuation reserve on our net deferred tax assets as of December 31, 2020 because of the overall net operating loss

carryforwards available.

to provide a full valuation reserve on our net deferred tax assets as of March 31, 2022, because of the overall net operating

loss carryforwards available.

We expect to continue to maintain a full valuation allowance until we determine that we can sustain a level

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financial reporting purposes.

We have no recorded liability as of December 31, 2020 representing uncertain tax positions.

We have no recorded liability as of March 31, 2022 representing uncertain tax positions.

have generated substantial deferred income tax assets related to our operations primarily from the charge to compensation expense taken

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has not materially affected us during the past fiscal year.

We do not believe that our business is seasonal in nature;

however, we usually

generate higher revenues during the second half of the calendar year than in the first half.

We do not believe that our Video Solutions and Revenue Cycle Management

segments business is seasonal in nature, however;

the Ticketing Segment is expected to generate higher revenues during

the second half of the calendar year than in the first half.

Quantitative and Qualitative Disclosures about Market Risk.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis