What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-15 · 655 added, 639 removed, 613 unchanged (68% of the section changed)

1 unchanged sentence

quarterly report on Form 10-Q (the “Report”) of Digital Ally, Inc.

(the “Company”, “we”,

“us”, 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”).

“aim,” “anticipate,” “believe,” “continue,” “could,”

“estimate,” “expect,” “feel,” “forecast,” “intend,” “may,”

“outlook,” “plan,” “potential,” “predict,” “project,”

“seek,” “should,” “will,” “would,” and similar expressions intended to identify

forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking

statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are

subject to various business risks and known and unknown uncertainties, a number of which are beyond our control.

Therefore, actual

results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to

place undue reliance on such forward-looking statements.

undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future

events or otherwise.

A variety of factors could cause or contribute to such differences and could adversely impact revenues,

profitability, cash flows and capital needs.

There can be no assurance that the forward-looking statements contained in this

document will, in fact, transpire or prove to be accurate.

Factors that could cause or contribute

to our actual results differing materially from those discussed herein or for our stock price to be adversely affected include, but are

not limited to:

(1) our losses in recent years, including during fiscal 2020 and 2019;

(2) economic and other risks for our business from

the effects of the COVID-19 pandemic, including the impacts on our law-enforcement and commercial customers, suppliers and employees and

on our ability to raise capital as required;

(3) our ability to increase revenues, increase our margins and return to consistent profitability

in the current economic and competitive environment;

(4) our operation in developing markets and uncertainty as to market acceptance of

our technology and new products;

(5) the availability of funding from federal, state and local governments to facilitate the budgets of

law enforcement agencies, including the timing, amount and restrictions on such funding;

(6) 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;

(the “Company”, “we”, “us”,

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 “aim,” “anticipate,”

“believe,” “continue,” “could,” “estimate,” “expect,” “feel,”

“forecast,” “intend,” “may,” “outlook,” “plan,” “potential,”

“predict,” “project,” “seek,” “should,” “will,” “would,” and

similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying

These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate

assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control.

Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned

not to place undue reliance on such forward-looking statements.

undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events

or otherwise.

A variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability,

cash flows and capital needs.

There can be no assurance that the forward-looking statements contained in this document will, in fact,

transpire or prove to be accurate.

that could cause or contribute to our actual results differing materially from those discussed herein or for our stock price to be adversely

affected include, but are not limited to:

(1) our losses in recent years, and the substantial doubt about our ability to continue as a going concern;

(2) economic and other

risks for our business from the effects of the COVID-19 pandemic, including the impacts on our law-enforcement and commercial customers,

suppliers and employees and on our ability to raise capital as required;

(3) our ability to increase revenues, increase our margins and

return to consistent profitability in the current economic and competitive environment;

(4) our operation in developing markets and uncertainty

as to market acceptance of our technology and new products;

(5) the availability of funding from federal, state and local governments

to facilitate the budgets of law enforcement agencies, including the timing, amount and restrictions on such funding;

(6) 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;

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

(8) competition from larger, more established companies with far greater

economic and human resources;

(8) competition from larger,

more established companies with far greater economic and human resources;

(9) our ability to attract and retain quality employees;

(10) risks related to dealing with governmental

entities as customers;

(11) our expenditure of significant resources in anticipation of sales due to our lengthy sales cycle and the potential

to receive no revenue in return;

(12) characterization of our market by new products and rapid technological change;

risks related to dealing with governmental entities as customers;

(11) our expenditure of significant resources in anticipation of sales

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

(12) characterization of our market by new products

and rapid technological change;

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

(14) that stockholders

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

(15) defects in our

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

(16) our dependence

on sales of our EVO-HD, DVM-800, DVM-250 and FirstVU products;

(14) that stockholders may lose all or part of their investment if we are

unable to compete in our markets and return to profitability;

(15) defects in our products that could impair our ability to sell our products

or could result in litigation and other significant costs;

(16) 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;

(17) our ability to protect technology

through patents and to protect our proprietary technology and information, such as trade secrets, through other similar means;

ability to generate more recurring cloud and service revenues;

(19) risks related to our license arrangements;

(20) the fluctuation of

our operation results from quarter to quarter;

(21) 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;

(22) 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;

(23) potential dilution from the issuance of common stock underlying

outstanding options and warrants;

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

rights of the holders of our common stock;

(25) the volatility of our stock price due to a number of factors, including, but not limited

to, a relatively limited public float;

(26) our ability to integrate and realize the anticipated benefits from acquisitions;

ability to maintain the listing of our common stock on the Nasdaq Capital Market.

on a few manufacturers and suppliers for components of our products and our dependence on domestic and foreign manufacturers for certain

of our products;

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

as trade secrets, through other similar means;

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

(19) risks related

to our license arrangements;

(20) the fluctuation of our operation results from quarter to quarter;

(21) 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;

(22) 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;

(23) potential dilution

from the issuance of common stock underlying outstanding options and warrants;

(24) our additional securities available for issuance,

which, if issued, could adversely affect the rights of the holders of our common stock;

(25) the volatility of our stock price due to

a number of factors, including, but not limited to, a relatively limited public float;

(26) our ability to integrate and realize the

anticipated benefits from acquisitions;

(27) our ability to maintain the listing of our common stock on the Nasdaq Capital Market.

Trends and Recent Developments for the Company

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term of the subscription, typically 3 or 5 years.

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

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 aim to maximize our customers’ service revenues collected, leading to substantial improvements in their operating

margins and cash flows.

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 aim to maximize our customers’

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

revenue cycle management segment consists of our medical billing subsidiaries.

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of Operations

financial information for the Company’s reportable business segments is provided for the indicated periods and as of June 30, 2022,

and June 30, 2021:

Three months ended

Six months ended

financial information for the Company’s reportable business segments is provided for the indicated periods and as of September

30, 2022, and September 30, 2021:

Three months ended September 30,

Nine months ended September 30,

Net Revenues:

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Total Net Revenues

Gross Profit:

Gross Profit (Loss):

Video Solutions

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$ (4,327,049 )

$ (1,919,559 )

Revenue Cycle Management

(10,025,236 )

Total Operating Income (Loss)

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Total Depreciation and Amortization

September 30,

Assets (net of eliminations):

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Results of Operations

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

The following is a summary of our recent operating

results on a quarterly basis:

The following is a summary

of our recent operating results on a quarterly basis:

For the Three Months Ended:

September 30,

Total revenue

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(1) the timing of large individual

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

(7) the impact of

COVID-19 on the economy and our businesses;

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

(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 (6) ongoing patent

and other litigation and related expenses respecting outstanding lawsuits;

(7) the impact of COVID-19 and inflation related factors on

the economy and our businesses;

and (8) the completion of corporate acquisitions.

We reported a net loss of $1,065,513 on

revenues of $9,351,457 for the second quarter 2022.

We reported a net loss of $1,902,475 on revenues of

$8,484,153 for the third quarter 2022.

Sheet Arrangements

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that represent commitments to future payments for goods and services.

the Three Months Ended June 30, 2022 and 2021

the Three Months Ended September 30, 2022 and 2021

of Operations

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

ended June 30, 2022 and 2021, represented as a percentage of total revenues for each such quarter:

ended September 30, 2022 and 2021, represented as a percentage of total revenues for each such quarter:

Three Months Ended

September 30,

Cost of revenue

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Omicron variant of COVID-19 and nationwide inflationary concerns had an impact on all of our operating segment revenue streams for the

three months ended June 30, 2022.

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

three months ended September 30, 2022.

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

Ticketing operating segment revenues also continue to be negatively impacted due to the continued public caution surrounding

the COVID-19 pandemic and the impacts of inflation on consumer’s discretionary spending.

Product revenues by operating

segment is as follows:

Three Months Ended June 30,

revenues by operating segment is as follows:

Three Months Ended

September 30,

Product Revenues:

2 unchanged sentences

Total Product Revenues

revenues for the three months ended June 30, 2022 and 2021 were $2,210,181 and $1,719,332 respectively, an increase of $490,849 (29%),

revenues for the three months ended September 30, 2022 and 2021 were $3,062,373 and $1,356,454 respectively, an increase of $1,705,919

(126%), due to the following factors:

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

new ticketing operating segment generated $805,939 in product revenues for the three months ended June 30, 2022, compared to $-0-

for the three months ended June 30, 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 $1,404,242 during the three months ended June 30, 2022

compared to $1,719,332 for the three months ended June 30, 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

new ticketing operating segment generated $1,713,808 in product revenues for the three months ended September 30, 2022, compared

to $-0- for the three months ended September 30, 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 $1,348,565 during the three months ended September 30,

2022 compared to $1,356,454 for the three months ended September 30, 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

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Company is beginning to experience decreased demand for these product lines as the COVID-19 pandemic begins to subside.

our video solutions operating segment has experienced decreased demand on its product revenues 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, and we have begun to see increased traction

with these products in the first and second quarters 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.

Our 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 increased service revenues.

We expect this program to continue to gain momentum,

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

Service and other revenues by

operating segment is as follows:

Three Months Ended June 30,

In general, our video solutions operating segment has experienced decreased

demand on its product revenues 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, and we continue to see increased traction with these products through the first three quarters 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 increased service revenues.

We expect this program to continue to gain momentum, resulting

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

and other revenues by operating segment is as follows:

Three Months Ended

September 30,

Service and Other Revenues:

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Total Service and Other Revenues

and other revenues for the three months ended June 30, 2022 and 2021 were $7,141,276 and $774,339, respectively, an increase of $6,366,937

and other revenues for the three months ended September 30, 2022 and 2021 were $5,421,780 and $3,283,368, respectively, an increase of

$2,138,412 (65%), due to the following factors:

revenues generated by the video solutions operating segment were $365,599 and $247,085 for the three months ended June 30, 2022 and

2021, respectively, an increase of $118,514 (48%).

revenues generated by the video solutions operating segment were $412,819 and $264,594 for the three months ended September 30, 2022

and 2021, respectively, an increase of $148,225 (56%).

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 June 30, 2022.

contributed to our increased cloud revenues in the three months ended September 30, 2022.

We expect this trend to continue throughout

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

Video solutions operating segment revenues from extended warranty services

were $163,639 and $232,614 for the three months ended June 30, 2022 and 2021, respectively, a decrease of $68,975 (30%).

continued effects from the COVID-19 pandemic have adversely affected our sales of DVM-800 hardware systems resulting in a decrease in

their sales in the three months ended June 30, 2022 compared to the same period in 2021.

new ticketing operating segment generated service revenues totaling $4,375,024 and $-0- for the three months ended June 30, 2022

solutions operating segment revenues from extended warranty services were $201,118 and $298,840 for the three months ended September

30, 2022 and 2021, respectively, a decrease of $97,722 (33%).

However, the continued effects from the COVID-19 pandemic have adversely

affected our sales of DVM-800 hardware systems resulting in a decrease in their sales in the three months ended September 30, 2022

compared to the same period in 2021.

new ticketing operating segment generated service revenues totaling $2,662,306 and $2,050,679 for the three months ended September

30, 2022 and 2021, respectively, an increase of $611,627 (30%).

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.

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

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 $2,015,112 and $560,483 for the three months ended

June 30, 2022 and 2021, respectively, an increase of $2,120,739 (100%).

September 30, 2022 and 2021, respectively, an increase of $1,454,629 (260%).

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

June 30, 2022.

September 30, 2022.

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

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revenue outlook moving forward.

revenues for the three months ended June 30, 2022 and 2021 were $9,351,458 and $2,493,671, respectively, an increase of $6,857,786 (275%),

revenues for the three months ended September 30, 2022 and 2021 were $8,484,153 and $4,639,822, respectively, an increase of $3,844,331

(83%), due to the reasons noted above.

of Product Revenue

cost of product revenue sold for the three months ended June 30, 2022,

and 2021 was $2,070,476 and $1,017,659, respectively, an increase of $1,052,817 (103%).

Overall cost of goods sold for products as a percentage

of product revenues for the three months ended June 30, 2022, and 2021 were 93.7% and 59.2%, respectively.

Cost of products sold by operating

segment is as follows:

Three Months Ended June 30,

cost of product revenue sold for the three months ended September 30, 2022, and 2021 was $3,262,457 and $1,197,217, respectively, an

increase of $2,065,240 (173%).

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

September 30, 2022, and 2021 were 93% and 70%, respectively.

Cost of products sold by operating segment is as follows:

September 30,

of Product Revenues:

Cycle Management

Cost of Product Revenues

Video Solutions

Revenue Cycle Management

Total Cost of Product Revenues

The 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 June

30, 2022 compared to the three months ended June 30, 2021.

In addition, the video solutions segment recorded valuation allowances for

its older product lines and a portion of its Shield products during the second quarter of 2022, directly increasing cost of goods sold

for the period.

Cost of product sold as a percentage of product revenues for the video solutions segment increased to 73.3% for the three

months ended June 30, 2022 as compared to 59.2% for the three months ended June 30, 2021.

The 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 $1,041,073 for the three months ended June 30, 2022, compared to $-0- for the three months ended June 30, 2021.

Cost of product sold as a percentage of product revenues for the ticketing solutions was 129.2% for the three months ended June 30, 2022.

The Ticketing Segment recorded an allowance for unsold and under-market tickets during the first quarter of 2022 due to event cancellations

and restrictions imposed on the size and type of gatherings related to the Omicron variant.

recorded $3,722,467 and $3,915,089 in reserves for obsolete and excess inventories at June 30, 2022 and December 31, 2021, respectively.

Total raw materials and component parts were $4,083,713 and $3,062,046 at June 30, 2022 and December 31, 2021, respectively, an increase

of $1,021,667 (33%).

Finished goods balances were $9,044,555 and $10,512,577 at June 30, 2022 and December 31, 2021, respectively, a

decrease of $1,468,022 (14%) which was attributable to a decrease in finished goods from our newly acquired ticketing segment.

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

the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

In addition, the video solutions segment

recorded valuation allowances for its older product lines and a portion of its Shield products during the third quarter of 2022, directly

increasing cost of goods sold for the period.

Cost of product sold as a percentage of product revenues for the video solutions segment

increased to 107% for the three months ended September 30, 2022 as compared to 88% for the three months ended September 30, 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 $2,001,162 for the three months ended September 30, 2022, compared to $-0- for

the three months ended September 30, 2021.

Cost of product sold as a percentage of product revenues for the ticketing solutions was 117%

for the three months ended September 30, 2022.

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

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

recorded $3,771,424 and $3,915,089 in reserves for obsolete and excess inventories at September 30, 2022 and December 31, 2021, respectively.

Total raw materials and component parts were $4,960,740 and $3,062,046 at September 30, 2022 and December 31, 2021, respectively, an

increase of $1,898,694 (62%).

Finished goods balances were $9,769,951 and $10,512,577 at September 30, 2022 and December 31, 2021, respectively,

a decrease of $742,626 (7%) which was attributable to a decrease in finished goods from our newly acquired ticketing segment.

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 June 30, 2022.

reserves are appropriate given our inventory levels as of September 30, 2022.

of Service Revenue

cost of service revenue sold for the three months ended June 30, 2022, and 2021 was $5,561,903 and $215,212, respectively, an increase

of $5,346,691 (2,484%).

Overall cost of goods sold for services as a percentage of service revenues for the three months ended June 30,

2022, and 2021 were 77.9% and 27.8%, respectively.

cost of service revenue sold for the three months ended September 30, 2022, and 2021 was $4,626,196 and $2,042,035, respectively, an

increase of $2,584,160 (126.5%).

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

September 30, 2022, and 2021 were 85% and 62%, respectively.

Cost of service revenues by operating segment is as follows:

Three Months Ended June 30,

September 30,

of Service Revenues:

Cycle Management

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 June 30, 2022 compared to the three months ended June 30, 2021.

Cost of service revenues as a percentage of service revenues

for the video solutions segment increased to 40.5% for the three months ended June 30, 2022 as compared to 27.8% for the three months

ended June 30, 2021.

months ended September 30, 2022 compared to the three months ended September 30, 2021.

Cost of service revenues as a percentage of service

revenues for the video solutions segment increased to 42% for the three months ended September 30, 2022 as compared to 36% for the three

months ended September 30, 2021.

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

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Cost of service revenues as a percentage of service revenues for the revenue cycle management operating segment

was 54.9% for the three months ended June 30, 2022.

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

increase to cost of service revenue of $4,137,084 for the three months ended June 30, 2022, compared to $-0- for the three months

ended June 30, 2021.

Cost of service revenues as a percentage of service revenues for the ticketing segment was 94.6% for the three

months ended June 30, 2022.

gross profit for the three months ended June 30, 2022 and 2021 was $1,719,078

and $1,260,800, respectively, an increase of $458,278 (36.3%).

was 57% for the three months ended September 30, 2022.

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

to cost of service revenue of $3,161,344 for the three months ended September 30, 2022, compared to $1,438,237 for the three months ended

September 30, 2021.

Cost of service revenues as a percentage of service revenues for the ticketing segment was 119% for the three months

ended September 30, 2022.

gross profit for the three months ended September 30, 2022 and 2021 was $595,500 and $1,400,570, respectively, a decrease of $805,070

Gross profit by operating segment was as follows:

Months Ended June 30,

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 June 30, 2022 and an increase in

the overall cost of sales as a percentage of overall revenues to 81.6% for the three months ended June 30, 2022 from 49.4% for the three

months ended June 30, 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

Three Months Ended

September 30,

Cycle Management

overall decrease is attributable to the large overall increase in revenues for the three months ended September 30, 2022, offset by an increase

in the overall cost of sales as a percentage of overall revenues to 93% for the three months ended September 30, 2022 from 70% for the

three months ended September 30, 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

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General and Administrative Expenses

general and administrative expenses were $8,380,330 and $3,877,684 for

the three months ended June 30, 2022 and 2021, respectively, an increase of $4,502,646 (116.1%).

The increase was primarily attributable

to the recent acquisitions completed in the third quarter of 2021.

Our selling, general and administrative expenses as a percentage of

sales decreased to 90% for the three months ended June 30, 2022 compared to 156% in the same period in 2021.

The significant components

of selling, general and administrative expenses are as follows:

general and administrative expenses were $7,162,523 and $4,999,543 for the three months ended September 30, 2022 and 2021, respectively,

an increase of $2,162,980 (43.3%).

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 84% for the three months ended September

30, 2022 compared to 108% in the same period in 2021.

The significant components of selling, general and administrative expenses are

Three months ended

September 30,

Research and development expense

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

Our research and development expenses totaled $540,222 and $460,999 for the three months ended June 30, 2022 and 2021, respectively,

an increase of $79,223 (17.2%).

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

Our research and development expenses totaled $616,174 and $492,221 for the three months ended September 30, 2022 and 2021,

respectively, an increase of $123,953 (25.2%).

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.

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 body-worn camera and EVO-HD product platform and as we outsource more development projects.

2 unchanged sentences

on a prudent basis and consistent with our financial resources.

Selling, advertising and

promotional expenses.

Selling, advertising and promotional expense totaled $2,763,045 and $870,183 for the three months ended

June 30, 2022 and 2021, respectively, an increase of $1,892,862 (217.5%).

Promotional and advertising expenses represent the primary component

of these costs and totaled $2,361,235 during the three months ended June 30, 2022, compared to $373,968 during the three months ended

June 30, 2021, an increase of $1,987,267 (531.4%).

The increase is primarily attributable to the 2022 sponsorship of NASCAR and IndyCar.

advertising and promotional expenses.

Selling, advertising and promotional expense totaled $1,832,916 and $1,511,682 for the

three months ended September 30, 2022 and 2021, respectively, an increase of $321,234 (21.3%).

Promotional and advertising expenses represent

the primary component of these costs and totaled $1,368,996 during the three months ended September 30, 2022, compared to $1,106,284

during the three months ended September 30, 2021, an increase of $262,712 (23.7%).

The increase is primarily attributable to the 2022

sponsorship of NASCAR and IndyCar.

Additionally, TicketSmarter remains active in sponsorship and advertising.

TicketSmarter accounted for $1,394,622 of the total promotional

and advertising expense for the three months ended June 30, 2022.

General and administrative

General and administrative expenses totaled $5,077,063 and $2,546,502 for the three months ended June 30, 2022 and 2021,

respectively, an increase of $2,530,561 (99.4%).

The increase in general and administrative expenses in the three months ended June 30,

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’s healthcare venture during the first half of 2022.

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 June 30, 2022 compared to the same period in 2021, as a result of the numerous acquisitions completed by the

Company that were not relevant to the same period in 2021.

the reasons stated above, our operating loss was $6,661,252 and $2,616,884

for the three months ended June 30, 2022 and 2021, respectively, an increase of $4,044,368 (154.5%).

Operating loss as a percentage

of revenues improved to 71% in the three months ended June 30, 2022 from 105% in the same period in 2021.

income increased to $32,233 for the three months ended June 30, 2022, from $90,774 in the same period of 2021, which reflects our change

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

The Company held significant cash

and cash equivalents throughout the second quarter of 2021, allowing a full three months of interest income due to the two completed

and administrative expense .

General and administrative expenses totaled $4,713,433 and $2,995,640 for the three months ended

September 30, 2022 and 2021, respectively, an increase of $1,717,793 (57.3%).

The increase in general and administrative expenses in

the three months ended September 30, 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’s healthcare venture during the first

half of 2022.

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 September 30, 2022 compared to the same period in 2021, as a

result of the numerous acquisitions completed by the Company that were not relevant to the same period in 2021.

the reasons stated above, our operating loss was $6,567,023 and $3,598,973 for the three months ended September 30, 2022 and 2021, respectively,

an increase of $2,968,050 (82.5%).

Operating loss as a percentage of revenues improved to 77% in the three months ended September 30,

2022 from 78% in the same period in 2021.

income increased to $13,333 for the three months ended September 30, 2022, from $90,036 in the same period of 2021, which reflects our

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

The Company held significant

cash and cash equivalents throughout the third quarter of 2021, allowing a full three months of interest income due to the two completed

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

incurred interest expense of $8,501 and $1,365 during the three months

ended June 30, 2022 and 2021, respectively.

The increase is attributable to the contingent earn-out notes associated with the four Nobility

Healthcare acquisitions, currently at a total balance of $1,119,344 for the four notes, with interest rates of 3.00% per annum.

We incurred interest expense of

$14,255 and $5,675 during the three months ended September 30, 2022 and 2021, respectively.

The increase is attributable to the contingent

earn-out notes associated with the four Nobility Healthcare acquisitions, currently at a total balance of $1,091,821 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 $-0- and $1,590 during the three months ended June 30, 2022

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

30, 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.

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 Contingent Consideration Promissory Notes

the three months ended June 30, 2022, The Company recognized a gain on

the change in fair value of contingent consideration promissory notes of $542,096 and $-0- during the three months ended June 30, 2022

The Company recognized a loss

on the change in fair value of contingent consideration promissory notes of $138,877 and $-0- during the three months ended September

30, 2022 and 2021, respectively.

9 unchanged sentences

derivative liabilities.

The change in fair value of the warrant derivative liabilities from March 31, 2022, to June 30, 2022, totaled

$5,413,618 which was recognized as a gain in the second quarter of 2022.

The change in fair value of the warrant derivative liabilities from June 30, 2022, to September 30, 2022, totaled

$1,164,849 which was recognized as a gain in the third quarter of 2022.

The Company determined the fair value of such warrants as of

March 31, 2022, and as of June 30, 2022, to be $14,698,761 and $9,285,143, respectively.

June 30, 2022, and as of August 23, 2022, to be $9,285,143 and $0, respectively.

on Extinguishment of Warrant Derivative Liabilities

The Company recognized a gain

on the change in fair value of contingent consideration promissory notes of $3,624,794 and $-0- during the three months ended September

30, 2022 and 2021, respectively.

This is in connection with the Warrant Exchange Agreement executed by the Company on August 23, 2022.

before Income Tax Benefit

a result of the above results of operations, we reported a loss before

income tax benefit of $682,187 and $5,382,487 for the three months ended June 30, 2022 and 2021, respectively, an increase of $4,700,300

did not record an income tax expense related to our income for the three months ended June 30, 2022 due to our overall net operating

As a result of the above results

of operations, we reported a loss before income tax benefit of $1,919,071 and income of $8,048,936 for the three months ended September

30, 2022 and 2021, respectively, an increase of $9,968,007 (123.8%).

did not record an income tax expense related to our income for the three months ended September 30, 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 June 30, 2022.

as of September 30, 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 June 30, 2022 available to offset future net taxable income.

a result of the above results of operations, we reported a net loss of $682,187

and $5,382,487 for the three months ended June 30, 2022 and 2021, respectively, an increase of $4,700,300 (87.3%).

tax credit carryforwards as of September 30, 2022 available to offset future net taxable income.

As a result of the above results

of operations, we reported a net loss of $1,919,071 and net income of $8,048,936 for the three months ended September 30, 2022 and 2021,

respectively, an increase of $9,968,007 (123.8%).

Income Attributable to Noncontrolling Interests of Consolidated Subsidiary

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

As a result, the noncontrolling shareholders or minority interest is allocated 49% of the income of Nobility Healthcare which

is reflected in the statement of income as “net income attributable to noncontrolling interests of consolidated subsidiary”.

We reported net income attributable to noncontrolling interests of consolidated subsidiary of $383,326 and $-0- for the three months ended

June 30, 2022 and 2021, respectively.

The 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 of Nobility Healthcare which is reflected in the statement of income as “net income attributable to noncontrolling

interests of consolidated subsidiary”.

We reported net loss attributable to noncontrolling interests of consolidated subsidiary

of $16,596 and $19,863 for the three months ended September 30, 2022 and 2021, respectively.

Loss Attributable to Common Stockholders

a result of the above, we reported a net loss attributable to common stockholders

of $1,065,513 and $5,382,487 for the years three months June 30, 2022 and 2021, respectively, an increase of $4,316,974 (80.2%).

As a result of the above, we

reported a net loss attributable to common stockholders of $1,902,475 and net income of $8,068,799 for the three months September 30,

2022 and 2021, respectively, an increase of $9,971,275 (123.6%).

and Diluted Loss per Share

basic and diluted loss per share was $0.02 and $0.10 for the three months ended June 30, 2022 and 2021, respectively.

Basic loss per

share is based upon the weighted average number of common shares outstanding during the period.

For the three months ended June 30, 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 loss per share.

the Six Months Ended June 30, 2022 and 2021

basic and diluted loss per share was $0.04 and income per share was $0.16 for the three months ended September 30, 2022 and 2021, respectively.

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

For the three months ended

September 30, 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 loss per share.

the Nine months Ended September 30, 2022 and 2021

of Operations

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

ended June 30, 2022 and 2021, represented as a percentage of total revenues for each such quarter:

Six Months Ended

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

ended September 30, 2022 and 2021, represented as a percentage of total revenues for each such quarter:

Nine months Ended

September 30,

Cost of revenue

14 unchanged sentences

Net income/(loss) per share information:

Product revenues by operating

segment is as follows:

Six Months Ended June 30,

revenues by operating segment is as follows:

Nine months Ended

September 30,

Product Revenues:

2 unchanged sentences

Total Product Revenues

revenues for the six months ended June 30, 2022 and 2021 were $4,620,241 and $3,631,910 respectively, an increase of $988,331 (27%),

revenues for the nine months ended September 30, 2022 and 2021 were $7,682,614 and $4,988,364 respectively, an increase of $2,694,250

(54%), due to the following factors:

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

new ticketing operating segment generated $1,879,769 in product revenues for the six months ended June 30, 2022, compared to $-0-

for the six months ended June 30, 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 $2,740,472 during the six months ended June 30, 2022

compared to $3,631,910 for the six months ended June 30, 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

new ticketing operating segment generated $3,593,577 in product revenues for the nine months ended September 30, 2022, compared to

$-0- for the nine months ended September 30, 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 $4,089,037 during the nine months ended September 30,

2022 compared to $4,988,364 for the nine months ended September 30, 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

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

general, our video solutions operating segment has experienced decreased demand on its product revenues 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, and we have begun to see increased

traction with these products in the first six months 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.

Our 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 increased service revenues.

We expect this program to continue to gain momentum,

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

Service and other revenues by

operating segment is as follows:

Six Months Ended June 30,

general, our video solutions operating segment has experienced decreased demand on its product revenues due to price-cutting and

competitive actions by our competitors, adverse marketplace effects related to our patent litigation proceedings and our recent financial

We introduced our new body-worn cameras, the FirstVu Pro and FirstVu II, in the fourth quarter of 2021, and we have begun

to see increased traction with these products in the first nine months 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 increased service revenues.

We expect this program to continue to gain momentum, resulting

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

and other revenues by operating segment is as follows:

September 30,

and Other Revenues:

Cycle Management

Service and Other Revenues

Video Solutions

Revenue Cycle Management

Total Service and Other Revenues

and other revenues for the six months ended June 30, 2022 and 2021 were $15,025,997 and $1,397,591, respectively, an increase of $13,628,406

and other revenues for the nine months ended September 30, 2022 and 2021 were $20,447,778 and $4,680,959, respectively, an increase of

$15,766,819 (337%), due to the following factors:

revenues generated by the video solutions operating segment were $627,874 and $488,738 for the six months ended June 30, 2022 and

2021, respectively, an increase of $139,136 (28.5%).

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 six months ended June 30, 2022.

revenues generated by the video solutions operating segment were $1,012,129 and $753,332 for the nine months ended September 30,

2022 and 2021, respectively, an increase of $258,797 (34%).

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 nine months ended September 30, 2022.

We expect this trend to continue throughout

1 unchanged sentence

Video solutions operating segment revenues from extended warranty services

were $363,130 and $487,307 for the six months ended June 30, 2022 and 2021, respectively, a decrease of $124,177 (25.5%).

continued effects from the COVID-19 pandemic have adversely affected our sales of DVM-800 hardware systems resulting in a decrease in

their sales in the six months ended June 30, 2022 compared to the same period in 2021.

new ticketing operating segment generated service revenues totaling $9,681,969 and $-0- for the six months ended June 30, 2022 and

2021, respectively, an increase of $9,681,969 (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 $4,024,695 and $-0- for the six months ended June

were $601,460 and $786,147 for the nine months ended September 30, 2022 and 2021, respectively, a decrease of $184,687 (23%).

The continued

effects from the COVID-19 pandemic have adversely affected our sales of DVM-800 hardware systems resulting in a decrease in their sales

in the nine months ended September 30, 2022 compared to the same period in 2021.

new ticketing operating segment generated service revenues totaling $12,344,275 and $2,050,679 for the nine months ended September

30, 2022 and 2021, respectively, an increase of $10,293,596 (502%).

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 six months ended June

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

healthcare organizations throughout the country.

We expect our revenue cycle management segment to continue to present a strong revenue

outlook moving forward.

revenues for the six months ended June 30, 2022 and 2021 were $19,646,238 and $5,029,501, respectively, an increase of $14,616,737 (291%),

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

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 $6,039,807 and $560,484 for the nine months ended

September 30, 2022 and 2021, respectively, an increase of $5,479,324 (978%).

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 nine months ended

September 30, 2022.

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

to healthcare organizations throughout the country.

We expect our revenue cycle management segment to continue to present a strong

revenue outlook moving forward.

revenues for the nine months ended September 30, 2022 and 2021 were $28,130,392 and $9,669,323, respectively, an increase of $18,461,069

(191%), due to the reasons noted above.

of Product Revenue

Overall cost of product revenue

sold for the six months ended June 30, 2022, and 2021 was $4,892,527 and $2,578,969, respectively, an increase of $2,313,558 (89.7%).

Overall cost of goods sold for products as a percentage of product revenues for the six months ended June 30, 2022, and 2021 were 105.8%

and 71.0%, respectively.

cost of product revenue sold for the nine months ended September 30, 2022, and 2021 was $8,154,984 and $3,776,185, respectively, an increase

of $4,378,799 (116%).

Overall cost of goods sold for products as a percentage of product revenues for the nine months ended September

30, 2022, and 2021 were 106% and 76%, respectively.

Cost of products sold by operating segment is as follows:

Six Months Ended June 30,

September 30,

of Product Revenues:

Cycle Management

Cost of Product Revenues

Video Solutions

Revenue Cycle Management

Total Cost of Product Revenues

The decrease in cost of goods

sold for our video solutions segment products is directly correlated with the decrease in product sales for the six months ended June

30, 2022 compared to the six months ended June 30, 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 six months of 2022, directly increasing cost of goods sold for

Cost of product sold as a percentage of product revenues for the video solutions segment increased to 91.5% for the six months

ended June 30, 2022 as compared to 71.0% for the six months ended June 30, 2021.

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

the nine months ended September 30, 2022 compared to the nine months ended September 30, 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 nine months of 2022,

directly increasing cost of goods sold for the period.

Cost of product sold as a percentage of product revenues for the video solutions

segment increased to 92% for the nine months ended September 30, 2022 as compared to 76% for the nine months ended September 30, 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 $2,385,409 for the six months ended June 30, 2022, compared to $-0- for the six

months ended June 30, 2021.

Cost of product sold as a percentage of product revenues for the ticketing solutions was 126.9% for the six

months ended June 30, 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 variant.

recorded $3,722,467 and $3,915,089 in reserves for obsolete and excess inventories at June 30, 2022 and December 31, 2021, respectively.

Total raw materials and component parts were $4,083,713 and $3,062,046 at June 30, 2022 and December 31, 2021, respectively, an increase

of $1,021,667 (33%).

Finished goods balances were $9,044,555 and $10,512,577 at June 30, 2022 and December 31, 2021, respectively, a

decrease of $1,468,022 (14%) which was attributable to a decrease in finished goods from our newly acquired ticketing segment.

resulting in an increase to cost of product revenue of $4,386,571 for the nine months ended September 30, 2022, compared to $-0- for

the nine months ended September 30, 2021.

Cost of product sold as a percentage of product revenues for the ticketing solutions was 122%

for the nine months ended September 30, 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

recorded $3,771,424 and $3,915,089 in reserves for obsolete and excess inventories at September 30, 2022 and December 31, 2021, respectively.

Total raw materials and component parts were $4,960,740 and $3,062,046 at September 30, 2022 and December 31, 2021, respectively, an

increase of $1,898,694 (62%).

Finished goods balances were $9,769,951 and $10,512,577 at September 30, 2022 and December 31, 2021, respectively,

a decrease of $742,626 (7%) which was attributable to a decrease in finished goods from our newly acquired ticketing segment.

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 June 30, 2022.

reserves are appropriate given our inventory levels as of September 30, 2022.

of Service Revenue

cost of service revenue sold for the six months ended June 30, 2022, and 2021 was $11,095,015 and $377,849, respectively, an increase

of $10,717,166 (2,836%).

Overall cost of goods sold for services as a percentage of service revenues for the six months ended June 30,

2022, and 2021 were 73.8% and 27.0%, respectively.

cost of service revenue sold for the nine months ended September 30, 2022, and 2021 was $15,721,210 and $2,419,884, respectively, an

increase of $13,301,326 (550%).

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

September 30, 2022, and 2021 were 77% and 52%, respectively.

Cost of service revenues by operating segment is as follows:

Six Months Ended June 30,

Nine months Ended

September 30,

of Service Revenues:

Cycle Management

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 six

months ended June 30, 2022 compared to the six months ended June 30, 2021.

Cost of service revenues as a percentage of service revenues

for the video solutions segment increased to 39.8% for the six months ended June 30, 2022 as compared to 27.0% for the six months ended

June 30, 2021.

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

months ended September 30, 2022 compared to the nine months ended September 30, 2021.

Cost of service revenues as a percentage of service

revenues for the video solutions segment increased to 41% for the nine months ended September 30, 2022 as compared to 30% for the nine

months ended September 30, 2021.

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

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Cost of service revenues as a percentage of service revenues for the revenue cycle management operating segment

was 58.9% for the six months ended June 30, 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 $8,199,505 for the six months ended June 30, 2022, compared to $-0- for the six months

ended June 30, 2021.

Cost of service revenues as a percentage of service revenues for the ticketing segment was 84.7% for the six

months ended June 30, 2022.

gross profit for the six months ended June 30, 2022 and 2021 was $3,658,696

and $2,072,683, respectively, an increase of $1,586,013 (76.5%).

was 58% for the nine months ended September 30, 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 $11,360,849 for the nine months ended September 30, 2022, compared to $1,438,237 for the nine

months ended September 30, 2021.

Cost of service revenues as a percentage of service revenues for the ticketing segment was 92% for the

nine months ended September 30, 2022.

gross profit for the nine months ended September 30, 2022 and 2021 was $4,254,198 and $3,473,254, respectively, an increase of $780,944

Gross profit by operating segment was as follows:

Six Months Ended June 30,

Gross Profit:

Video Solutions

Revenue Cycle Management

Total Gross Profit

overall increase is attributable to the large overall increase in revenues

for the six months ended June 30, 2022 and an increase in the overall cost of sales as a percentage of overall revenues to 81.4% for the

six months ended June 30, 2022 from 58.8% for the six months ended June 30, 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 and current inflationary concerns.

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.

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

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

Nine months Ended

September 30,

Cycle Management

overall increase is attributable to the large overall increase in revenues for the nine months ended September 30, 2022 and an increase

in the overall cost of sales as a percentage of overall revenues to 85% for the nine months ended September 30, 2022 from 64% for the

nine months ended September 30, 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 and current inflationary concerns.

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.

We 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

Selling, general and administrative expenses were $17,123,286 and $7,555,261 for

the six months ended June 30, 2022 and 2021, respectively, an increase of $9,568,025 (126.6%).

The increase was primarily attributable

to the recent acquisitions completed in the third quarter of 2021.

Our selling, general and administrative expenses as a percentage of

sales decreased to 87% for the six months ended June 30, 2022 compared to 150% in the same period in 2021.

The significant components

of selling, general and administrative expenses are as follows:

Six months ended

general and administrative expenses were $24,285,808 and $12,554,807 for the nine months ended September 30, 2022 and 2021, respectively,

an increase of $11,731,001 (93%).

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

Our selling, general and administrative expenses as a percentage of sales decreased to 86% for the nine months ended September

30, 2022 compared to 130% in the same period in 2021.

The significant components of selling, general and administrative expenses are

Nine months ended

September 30,

Research and development expense

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

Our research and development expenses totaled $1,038,222 and $909,964 for the six months ended June 30, 2022 and 2021, respectively,

an increase of $128,258 (14.1%).

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

Our research and development expenses totaled $1,654,395 and $1,402,185 for the nine months ended September 30, 2022 and 2021,

respectively, an increase of $252,210 (18%).

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.

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 body-worn camera and EVO-HD product platform and as we outsource more development projects.

2 unchanged sentences

on a prudent basis and consistent with our financial resources.

Selling, advertising and

promotional expenses.

Selling, advertising and promotional expense totaled $5,542,448 and $1,466,938 for the six months ended

June 30, 2022 and 2021, respectively, an increase of $4,075,510 (277.8%).

Promotional and advertising expenses represent the primary component

of these costs and totaled $4,750,298 during the six months ended June 30, 2022, compared to $571,171 during the six months ended June

30, 2021, an increase of $4,179,127 (731.7%).

The increase is primarily attributable to the 2022 sponsorship of NASCAR and IndyCar.

Additionally,

TicketSmarter remains in sponsorship and advertising.

TicketSmarter accounted for $2,852,888 of the total promotional and advertising

expense for the six months ended June 30, 2022.

General and administrative

General and administrative expenses totaled $10,542,616 and $5,178,359 for the six months ended June 30, 2022 and 2021,

respectively, an increase of $5,364,258 (103.6%).

The increase in general and administrative expenses in the six months ended June 30,

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’s healthcare venture during the first half of 2022.

General and administrative

expense also increased due to a substantial increase in depreciation and amortization, rent expenses, and legal and professional expenses

for the six months ended June 30, 2022 compared to the same period in 2021, as a result of the numerous acquisitions completed by the

Company that were not relevant to the same period in 2021.

For the reasons stated above,

our operating loss was $13,464,590 and $5,482,578 for the six months ended June 30, 2022 and 2021, respectively, a decrease of $7,982,012

Operating loss as a percentage of revenues improved to 69% in the six months ended June 30, 2022 from 109% in the same period

income decreased to $103,595 for the six months ended June 30, 2022, from $132,461 in the same period of 2021, which reflects our

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

The Company held

significant cash and cash equivalents throughout the second quarter of 2021, allowing a full six months of interest income due to

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

incurred interest expense of $25,511 and $2,793 during the six months ended

June 30, 2022 and 2021, respectively.

The increase is attributable to the contingent earn-out notes associated with the four Nobility

Healthcare acquisitions, currently at a total balance of $1,119,344 for the four notes, with interest rates of 3.00% per annum.

advertising and promotional expenses.

Selling, advertising and promotional expense totaled $7,375,364 and $2,978,620 for the

nine months ended September 30, 2022 and 2021, respectively, an increase of $4,396,744 (148%).

Promotional and advertising expenses represent

the primary component of these costs and totaled $6,119,294 during the nine months ended September 30, 2022, compared to $1,677,455 during

the nine months ended September 30, 2021, an increase of $4,441,839 (265%).

The increase is primarily attributable to the 2022 sponsorship

of NASCAR and IndyCar.

Additionally, TicketSmarter remains in sponsorship and advertising.

TicketSmarter accounted for $3,335,723 of

the total promotional and advertising expense for the nine months ended September 30, 2022.

and administrative expense .

General and administrative expenses totaled $15,256,049 and $8,174,002 for the nine months ended

September 30, 2022 and 2021, respectively, an increase of $7,082,047 (87%).

The increase in general and administrative expenses in the

nine months ended September 30, 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’s healthcare venture during the first half of

General and administrative expense also increased due to a substantial increase in depreciation and amortization, rent expenses,

and legal and professional expenses for the nine months ended September 30, 2022 compared to the same period in 2021, as a result of

the numerous acquisitions completed by the Company that were not relevant to the same period in 2021.

the reasons stated above, our operating loss was $20,031,610 and $9,081,553 for the nine months ended September 30, 2022 and 2021, respectively,

a decrease of $10,950,057 (121%).

Operating loss as a percentage of revenues improved to 71% in the nine months ended September 30, 2022

from 94% in the same period in 2021.

income decreased to $116,928 for the nine months ended September 30, 2022, from $222,497 in the same period of 2021, which reflects our

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

The Company held significant

cash and cash equivalents throughout the third quarter of 2021, allowing a full nine months of interest income due to the two completed

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

We incurred interest expense of

$39,766 and $8,466 during the nine months ended September 30, 2022 and 2021, respectively.

The increase is attributable to the contingent

earn-out notes associated with the four Nobility Healthcare acquisitions, currently at a total balance of $1,091,821 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 $84,818 and $6,554 during the six months ended June 30,

recognized a loss on change in fair value of short-term investments totaling $84,818 and $28,210 during the nine months ended September

30, 2022 and 2021, respectively.

2 unchanged sentences

in Fair Value of Contingent Consideration Promissory Notes

the six months ended June 30, 2022, The Company recognized a gain on the

change in fair value of contingent consideration promissory notes of $486,046 and $-0- during the six months ended June 30, 2022 and 2021,

respectively.

The Company recognized a gain

on the change in fair value of contingent consideration promissory notes of $347,169 and $-0- during the nine months ended September 30,

2022 and 2021, respectively.

This is in connection with the four acquisitions made by our revenue cycle management segment.

8 unchanged sentences

derivative liabilities.

The change in fair value of the warrant derivative liabilities from December 31, 2021, to June 30, 2022, totaled

$5,561,789 which was recognized as a gain in the second quarter of 2022.

The Company determined the fair value of such warrants as of

December 31, 2021, and as of June 30, 2022, to be $14,846,932 and $9,285,143, respectively.

The change in fair value of the warrant derivative liabilities from December 31, 2021, to September 30, 2022,

totaled $6,726,638 which was recognized as a gain in the third quarter of 2022.

The Company determined the fair value of such warrants

as of December 31, 2021, and as of August 23, 2022, to be $14,846,932 and $0, respectively.

on Extinguishment of Warrant Derivative Liabilities

The Company recognized a gain on the change in fair value of contingent consideration promissory

notes of $3,624,794 and $-0- during the nine months ended September 30, 2022 and 2021, respectively.

This is in connection with the Warrant

Exchange Agreement executed by the Company on August 23, 2022.

Income/(Loss)

before Income Tax Benefit

a result of the above results of operations, we reported an income/(loss)

before income tax benefit of ($7,380,430) and $16,339,371 for the six months ended June 30, 2022 and 2021, respectively, a decrease of

$23,719,802 (145.2%).

did not record an income tax expense related to our income for the six months ended June 30, 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 June 30, 2022.

As a result of the above results

of operations, we reported an income/(loss) before income tax benefit of ($9,299,498) and $24,388,307 for the nine months ended September

30, 2022 and 2021, respectively, a decrease of $33,687,805 (138.1%).

did not record an income tax expense related to our income for the nine months ended September 30, 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, 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 June 30, 2022 available to offset future net taxable income.

tax credit carryforwards as of September 30, 2022 available to offset future net taxable income.

Income/(Loss)

a result of the above results of operations, we reported a net income/(loss)

of $(7,380,430) and $16,339,371 for the six months ended June 30, 2022 and 2021, respectively, a decrease of $23,719,802 (145.2%).

As a result of the above results

of operations, we reported a net income/(loss) of $(9,299,498) and $24,388,307 for the nine months ended September 30, 2022 and 2021,

respectively, a decrease of $33,687,805 (138.1%).

Income Attributable to Noncontrolling Interests of Consolidated Subsidiary

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

As a result, the noncontrolling shareholders or minority interest is allocated 49% of the income of Nobility Healthcare which

is reflected in the statement of income as “net income attributable to noncontrolling interests of consolidated subsidiary”.

We reported net income attributable to noncontrolling interests of consolidated subsidiary of $285,232 and $-0- for the six months ended

June 30, 2022 and 2021, respectively.

The 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 of Nobility Healthcare which is reflected in the statement of income as “net income attributable to noncontrolling

interests of consolidated subsidiary”.

We reported net income attributable to noncontrolling interests of consolidated subsidiary

of $268,636 and net loss of $19,863 for the nine months ended September 30, 2022 and 2021, respectively.

Income/(Loss) Attributable to Common Stockholders

a result of the above, we reported a net income/(loss) attributable to

common stockholders of ($7,665,662) and $16,339,371 for the years six months June 30, 2022 and 2021, respectively, a decrease of $24,005,033

As a result of the above, we reported

a net income/(loss) attributable to common stockholders of ($9,568,134) and $24,408,170 for the years nine months September 30, 2022 and

2021, respectively, a decrease of $33,976,304 (139.2%).

and Diluted Income/(Loss) per Share

basic and diluted loss per share was ($0.15) and $0.34 for the six months

ended June 30, 2022 and 2021, respectively.

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

during the period.

For the six months ended June 30, 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 loss per share.

basic and diluted loss per share was ($0.19) and $0.49 for the nine months ended September 30, 2022 and 2021, respectively.

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

For the nine months ended September

30, 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 loss per share.

and Capital Resources

Liquidity Plan.

The Company has historically raised capital in the form of equity and debt instruments from private and public

sources to supplement its needs for funds to support its business operational and strategic plans.

In recent years the Company has accessed

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

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 2021.

Furthermore, the Company’s only remaining interest-bearing debt at June 30, 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 2021 registered direct offerings.

However, should those funds not be sufficient,

the Company will explore numerous equity and debt instruments to obtain sufficient funds needed to support its business operations.

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.

We have experienced net losses and cash outflows from operating activities since inception.

Based upon our

current operating forecast, we anticipate that we will need to restore positive operating cash flows and/or raise additional capital

in the short-term to fund operations, meet our customary payment obligations and otherwise execute our business plan over the next

We are continuously in discussions to raise additional capital, which may include a variety of equity and debt

however, there can be no assurance that our capital raising initiatives will be successful.

Our recurring losses and

level of cash used in operations, along with uncertainties concerning our ability to raise additional capital, raise substantial

doubt about our ability to continue as a going concern.

cash equivalents:

As of June 30, 2022, we had cash and cash equivalents with an aggregate balance

of $13,454,246, 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 $18,553,546 net decrease in cash during the six months ended June 30, 2022:

As of September 30, 2022, we had cash and cash equivalents with an aggregate balance of $6,295,391, 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 $25,712,401 net decrease in cash during the nine months ended September 30, 2022:

$17,797,992 of net cash used in operating activities.

Net cash used in

operating activities was $10,932,515 and $6,149,773 for the six months ended June 30, 2022 and 2021, respectively, an increase of $4,782,742.

The decrease is attributable to the net loss incurred for the first six months of 2022, the non-cash gain attributable to the change in

value of the warrant derivative liability, and the usage of cash to increase accounts receivable, prepaid expenses, and other operating

assets during the six months ended June 30, 2022 compared to the same period in 2021.

Net cash used in operating

activities was $17,797,992 and $12,230,781 for the nine months ended September 30, 2022 and 2021, respectively, an increase of $5,567,211.

The decrease is attributable to the net loss incurred for the first nine months of 2022, the non-cash gain attributable to the change

in value of the warrant derivative liability, and the usage of cash to increase accounts receivable, prepaid expenses, and other operating

assets during the nine months ended September 30, 2022 compared to the same period in 2021.

of net cash used in investing activities.

Cash used in investing

activities was $3,361,994 and $6,506,407 for the six months ended June 30, 2022 and 2021, respectively.

During the six months ended June

30, 2022, we made capital expenditures for:

(i) building improvements of the newly purchased office and warehouse building, and transportation

(ii) patent applications on our proprietary technology utilized in our new products and included in intangible assets;

the closing of a business and asset acquisition.

Cash used in investing activities was $3,488,972 and $17,958,520 for the nine months ended

September 30, 2022 and 2021, respectively.

During the nine months ended September 30, 2022, we made capital expenditures for:

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 $4,259,037 and cash provided by financing activities was $66,570,600 for the six months ended June 30, 2022 and 2021, respectively.

During the first six months of 2022, the Company repurchased its common stock on the open market pursuant to the stock repurchase plan,

and made 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 $13,454,245 of cash and cash equivalents and net positive working capital $15,733,652 as of June 30, 2022.

Accounts receivable and

other receivables balances represented $4,965,309 of our net working capital at June 30, 2022.

We believe we will be able to collect

our outstanding receivables on a timely basis and reduce the overall level during the balance of 2022, which could provide positive cash

flow to support our operations during 2022.

Inventory represents $9,405,954 of our net working capital at June 30, 2022, and finished

goods represented $9,044,555 of total inventory at June 30, 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.

Cash used in financing activities was $4,425,437 and cash provided by financing activities

was $66,570,600 for the nine months ended September 30, 2022 and 2021, respectively.

During the first nine months of 2022, the Company

repurchased its common stock on the open market pursuant to the stock repurchase plan, and made 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 $6,295,391 of cash and cash equivalents and net positive working capital $20,745,139 as of September 30, 2022.

Accounts receivable

and other receivables balances represented $8,192,899 of our net working capital at September 30, 2022.

We believe we will be able to

collect our outstanding receivables on a timely basis and reduce the overall level during the balance of 2022, which could provide positive

cash flow to support our operations during 2022.

Inventory represents $10,963,916 of our net working capital at September 30, 2022, and

finished goods represented $9,769,951 of total inventory at September 30, 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:

had the following material commitments for capital expenditures at June 30, 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”).

During the three months

ended June 30, 2022, the Company repurchased 1,849,952 shares of its common stock for $1,962,755, in accordance with the Program.

during the six months ended June 30, 2022, the Company repurchased 3,725,986 shares of its common stock for $4,026,523, in accordance

had the following material commitments for capital expenditures at September 30, 2022:

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”).

During the nine months ended September 30, 2022, the Company repurchased 3,725,986 shares of its common stock for $4,026,523, in accordance

with the Program.

3 unchanged sentences

Lease commitments.

lease expense under the six operating leases was approximately $119,230 and $274,302, during the three and six months ended June 30, 2022,

lease expense under the six operating leases was approximately $140,967 and $415,269, during the three and nine months ended September

30, 2022, respectively.

The following sets forth the operating lease right of use assets and liabilities as of June 30, 2022:

following sets forth the operating lease right of use assets and liabilities as of June 30, 2022:

The following sets forth the operating lease right of use assets and liabilities as of September 30, 2022:

following sets forth the operating lease right of use assets and liabilities as of September 30, 2022:

Operating lease right of use assets

4 unchanged sentences

Year ending December 31:

2022 (July 1, to December 31, 2022)

2022 (October 1, to December 31, 2022)

Total undiscounted minimum future lease payments

2 unchanged sentences

obligations – Outstanding debt obligations comprises the following:

September 30,

Economic injury disaster loan (EIDL)

6 unchanged sentences

Debt obligations, long-term

obligations mature as follows as of June 30, 2022:

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

obligations mature as follows as of September 30, 2022:

September 30,

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

2027 and thereafter

62 unchanged sentences

Payment is typically due upon delivery of the ticket.

We 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.

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.

Payment is due at the time of sale.

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

10 unchanged sentences

of $256.5 million since we commenced deliveries during 2006.

For 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 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

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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 June 30, 2022 and December 31, 2021:

consisted of the following at September 30, 2022 and December 31, 2021:

September 30,

Raw material and component parts– video solutions segment

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Total inventories

balance the need to maintain strategic inventory levels to ensure competitive delivery performance to our customers against the risk

of inventory obsolescence due to changing technology and customer requirements.

As reflected above, our inventory reserves represented

28.4% of the gross inventory balance at June 30, 2022, compared to 28.8% of the gross inventory balance at December 31, 2021.

$3,722,467 and $3,915,089 in reserves for obsolete and excess inventories at June 30, 2022 and December 31, 2021, respectively.

raw materials and component parts were $4,083,713 and $3,062,046 at June 30, 2022 and December 31, 2021, respectively, an increase of

$1,021,667 (33.4%).

Finished goods balances were $9,044,555 and $10,512,579 at June 30, 2022 and December 31, 2021, respectively, a decrease

of $1,468,024 (14.0%).

The decrease in finished goods was primarily attributable to a reduction in ticketing inventory of $923,804 at

June 30, 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.

We believe the reserves

are appropriate given our inventory levels at June 30, 2022.

We balance the need to maintain

strategic inventory levels to ensure competitive delivery performance to our customers against the risk of inventory obsolescence due

to changing technology and customer requirements.

As reflected above, our inventory reserves represented 25.6% of the gross inventory

balance at September 30, 2022, compared to 28.8% of the gross inventory balance at December 31, 2021.

We had $3,771,424 and $3,915,089

in reserves for obsolete and excess inventories at September 30, 2022 and December 31, 2021, respectively.

Total raw materials and component

parts were $4,960,740 and $3,062,046 at September 30, 2022 and December 31, 2021, respectively, an increase of $1,898,694 (62.0%).

goods balances were $9,769,951 and $10,512,579 at September 30, 2022 and December 31, 2021, respectively, a decrease of $742,628 (7.1%).

The decrease in finished goods was primarily attributable to a reduction in ticketing inventory of $403,539 at September 30, 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.

We believe the reserves are appropriate given our inventory

levels at September 30, 2022.

actual future demand or market conditions are less favorable than those projected by management or there are significant engineering

changes to our products that are not anticipated and appropriately managed, additional inventory write-downs may be required in

excess of the inventory reserves already established.

changes to our products that are not anticipated and appropriately managed, additional inventory write-downs may be required in excess

of the inventory reserves already established.

and other intangible assets.

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quality and minimize claims.

Our warranty reserves were decreased to $10,582 as of June 30, 2022 compared to $13,742 as of December 31,

Our warranty reserves were decreased to $10,040 as of September 30, 2022 compared to $13,742 as of December

31, 2021 as we began to slow our warranty exposures through the roll-off of DVM-750 and DVM-800 units from warranty coverage.

Standard warranty

exposure on the DVM-800 and DVM-250plus are the responsibility of the contract manufacturers which reduced our overall warranty exposure

as these are very popular products in our line.

There is a risk that we will have higher warranty claim frequency rates and average cost

of claims than our history has indicated on our legacy mirror products on our new products for which we have limited experience.

experience could differ from the amounts estimated requiring adjustments to these liabilities in future periods.

warranty exposure on the DVM-800 and DVM-250plus are the responsibility of the contract manufacturers which reduced our overall warranty

exposure as these are very popular products in our line.

There is a risk that we will have higher warranty claim frequency rates and

average cost of claims than our history has indicated on our legacy mirror products on our new products for which we have limited experience.

Actual experience could differ from the amounts estimated requiring adjustments to these liabilities in future periods.

derivative liabilities.

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of warrant derivative liability as of the date the warrant is exercised with the resulting warrant derivative liability transitioned

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 June 30, 2022:

On August 23, 2022, the Company

entered into a Warrant Exchange Agreement (the “Warrant Exchange Agreements”) with each of the Investors, pursuant to which

the Company agreed to issue to the Investors an aggregate of 6,075,000 shares of Common Stock in exchange for the cancellation by the

Investors of the January Warrants, the Exchange Warrants and the Replacement Originals Warrants.

On the date of the exchange, the Company

calculated the fair value of the issuance of common shares pursuant to the Warrant Exchange Agreements, attributing that value to common

stock and additional paid in capital.

The remaining value of the warrant derivative liability was attributed to an income from change

in fair market value of warrant derivative liabilities and gain on extinguishment of warrant derivative liabilities in the consolidated

statement of operations.

On the date of the Warrant Exchange Agreement, the fair value of the warrant derivative liability was $8.1 million,

compared to $9.3 million at June 30, 2022, resulting in income from change in fair market value of warrant derivative liabilities of $1.2

million during the three months ended September 30, 2022.

Further, the value of the issued shares of Common Stock was $4.5 million, applied

to additional paid in capital, resulting in a gain on the extinguishment of warrant derivative liabilities of $3.6 million during the

three months ended September 30, 2022.

The 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 August 23, 2022:

Issuance date assumptions

June 30, 2022 assumptions

August 23, 2022 assumptions

Volatility - range

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Risk-free rate

0.08 – 0.49 %

Remaining contractual term

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Exercise price

$ 2.80 - 3.25

Common stock issuable under the warrants

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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 25,000 stock options granted during the six months ended June 30, 2022.

and there were 25,000 stock options granted during the nine months ended September 30, 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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all or some portion of the deferred tax asset will not be realized.

As of June 30, 2022, we have fully reserved all of our deferred tax

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 June 30, 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 of profitability that demonstrates our ability to realize these assets.

To the extent we determine that the realization

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

allowance will be reversed.

Such a reversal would be recorded as an income tax benefit and, for some portion related to deductions for

stock option exercises, an increase in shareholders’ equity.

As of September 30, 2022, we have fully reserved all of our deferred

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 September 30, 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 of profitability that demonstrates our ability to realize these assets.

To the extent we determine that the

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

valuation allowance will be reversed.

Such a reversal would be recorded as an income tax benefit and, for some portion related to deductions

for stock option exercises, an increase in shareholders’ equity.

required by authoritative guidance, we have performed a comprehensive review of our portfolio of uncertain tax positions in accordance

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financial reporting purposes.

We have no recorded liability as of June 30, 2022 representing uncertain tax positions.

We have no recorded liability as of September 30, 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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and Seasonality

As inflation in the United States

and abroad has increased and become more prominent, inflationary pressures adversely affected all of the Company’s reporting segments’

gross margins during the first six months of fiscal year 2022, and are expected to persist for the remainder of fiscal year 2022 and beyond.

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 due to the increased

sporting events throughout the country during the second half of the calendar year in comparison to the first half.

inflation in the United States and abroad has increased and become more prominent, inflationary pressures adversely affected all of the

Company’s reporting segments’ gross margins during the first nine months of fiscal year 2022, and are expected to persist

for the remainder of fiscal year 2022 and beyond.

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 due to the increased sporting events throughout the country during the second half of the calendar year in

comparison to 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