What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-31 compared with 2022-04-15 · 723 added, 1035 removed, 448 unchanged (80% of the section changed)

Discussion and Analysis of Financial Condition and Results of Operation.

discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the

Exchange Act.

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

“may,” “should,” “could,” “will,” “plan,” “future,” “continue,”

and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify

discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange

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

“should,” “could,” “will,” “plan,” “future,” “continue,” and

other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify

forward-looking statements.

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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, including fiscal 2021 and 2020;

(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 deliver our new product offerings as scheduled in 2022, and whether new products perform as planned or advertised and whether

they will help increase our revenues;

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

in the future;

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

in which we compete, including increasing our international revenues;

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 fiscal years 2022 and 2021;

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;

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 deliver our new product offerings as scheduled in 2023, and whether new

products perform as planned or advertised and whether they will help increase our revenues;

(7) whether we will be able to increase

the sales, domestically and internationally, for our products in the future;

(8) our ability to maintain or expand our share of the

market for our products in the domestic and international markets in which we compete, including increasing our international

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

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

(11) our ability to attract and

retain quality employees;

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

(13) our expenditure of significant

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

(14) characterization

of our market by new products and rapid technological change;

(15) that stockholders may lose all or part of their investment

if we are unable to compete in our markets and return to profitability;

(16) defects in our products that could impair our ability

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

(10) competition from larger, more established

companies with far greater economic and human resources;

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

related to dealing with governmental entities as customers;

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

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

(14) characterization of our market by new

products and rapid technological change;

(15) that stockholders may lose all or part of their investment if we are unable to compete

in our markets and return to profitability;

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

result in litigation and other significant costs;

(17) our dependence on key personnel;

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

(19) 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;

(20) 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 reliance on third-party

distributors and sales representatives for part of our marketing capability;

(19) 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;

our ability to protect technology through patents and to protect our proprietary technology and information, such as trade secrets,

through other similar means;

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

risks related to our license arrangements;

(23) our revenues and operating results may fluctuate unexpectedly from quarter

(24) 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;

(25) the sale of

substantial amounts of our Common Stock that may have a depressive effect on the market price of the outstanding shares of our Common

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

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

(28) future sale of a substantial number

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

us to raise capital;

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

of the holders of our Common Stock;

(30) our stock price is likely to be highly volatile due to a number of factors, including

a relatively limited public float;

(22) risks related to our

license arrangements;

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

(24) 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;

(25) the sale of substantial amounts of our Common

Stock that may have a depressive effect on the market price of the outstanding shares of our Common Stock;

(26) the possible

issuance of Common Stock subject to options and warrants that may dilute the interest of stockholders;

(27) our nonpayment of

dividends and lack of plans to pay dividends in the future;

(28) future sale of a substantial number of shares of our Common Stock

that could depress the trading price of our common stock, lower our value and make it more difficult for us to raise capital;

our additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of our Common

(30) our stock price is likely to be highly volatile due to a number of factors, including a relatively limited public float;

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

(32) whether we will be able to meet the standards for continued listing on the Nasdaq Capital Market;

and (33) indemnification

of our officers and directors.

(32) whether we will be able to meet

the standards for continued listing on the Nasdaq Capital Market;

and (33) indemnification of our officers and directors.

Trends and Recent Developments for the Company

Video Solutions Operating Segment – Within our video solutions operating

segment we supply technology-based

products utilizing our portable digital video and audio recording capabilities for the law enforcement and security industries and for

the commercial fleet and mass transit markets.

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

technologies to create positive solutions to our customers’ requests.

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

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

transit markets.

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

solutions to our customers’ requests.

Our products include:

the EVO-HD, DVM-800 and DVM-800 Lite,

which are in-car digital video systems for law enforcement and commercial markets;

the FirstVU body-worn camera line, consisting of the

FirstVu Pro, FirstVu, and the FirstVU HD;

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

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

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

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

mass transit markets;

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

We further diversified and broadened

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

(1) the ThermoVu® which is a line of self-contained

temperature monitoring stations that provides alerts and controls facility access when an individual’s temperature exceeds a pre-set

threshold and (2) our Shield™ disinfectants and cleansers which are for use against viruses and bacteria.

We began offering our

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

Revenue 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.

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

systems for law enforcement and commercial markets;

the FirstVU body-worn camera line, consisting of the FirstVu Pro, FirstVu, and the

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

automatic activation for both law enforcement and commercial markets;

the FLT-250, DVM-250, and DVM-250 Plus, which are our commercial

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

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

We further diversified and broadened our product offerings in 2020,

by introducing two new lines of branded products:

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

that provides alerts and controls facility access when an individual’s temperature exceeds a pre-set threshold and (2) our Shield™

disinfectants and cleansers which are for use against viruses and bacteria.

Cycle Management Operating Segment - We 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, in which we will assist in providing working capital and back-office services to healthcare organizations throughout

Our assistance consists of insurance and benefit verification, medical treatment documentation and coding, and collections.

Through our expertise and experience in this field, we maximize our customers’ service revenues collected, leafing to substantial

improvements in their operating margins and cash flows.

Ticketing Operating Segment

- We have also recently entered into live entertainment and events ticketing services through the formation of our wholly owned subsidiary,

TicketSmarter and its completed acquisitions of Goody Tickets, LLC and TicketSmarter, LLC, on September

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

for live events, TicketSmarter.com.

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

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

Nobility Healthcare completed its first acquisition in June 2021, when it acquired a private medical billing company, and have since

completed three additional acquisitions of private medical billing companies, in which we will assist in providing working capital and back-office services to

healthcare organizations throughout the country.

Our assistance consists of insurance and benefit verification, medical treatment

documentation and coding, and collections.

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

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

Entertainment

Operating Segment - We also entered into live entertainment and events ticketing services through the formation of our wholly owned

subsidiary, TicketSmarter and its completed acquisitions of Goody Tickets, LLC and TicketSmarter, LLC, on September 1, 2021.

TicketSmarter

provides ticket sales, partnerships, and mainly, ticket resale services through its online ticketing marketplace for live events, TicketSmarter.com.

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

events, theatres, and performing arts, throughout the country.

reportable segments are:

1) video solutions, 2) revenue cycle management, and 3) ticketing.

1) video solutions, 2) revenue cycle management, and 3) entertainment.

Solutions Operating Segment

video solutions segment revenue encompasses video

recording products and services for our law enforcement and commercial customers and the sale of Shield disinfectant and

personal protective products.

This segment generates revenues our subscription models offering cloud and warranty solutions,

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

Revenues for product sales are recognized

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

subscription, typically 3 or 5 years.

judge the health of our video solutions segment, we review the current active subscriptions and deferred service revenues,

along with the quantity and gross margins generated by our video solutions hardware sales.

video solutions segment revenue encompasses video recording products and services for our law enforcement and commercial customers and

the sale of Shield disinfectant and personal protective products.

This segment generates revenues our subscription models offering cloud

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

Revenues for product sales

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

the subscription, typically 3 or 5 years.

judge the health of our video solutions segment, we review the current active subscriptions and deferred service revenues, along with

the quantity and gross margins generated by our video solutions hardware sales.

Cycle Management Operating Segment

revenue cycle management segment consists of our medical billing subsidiaries.

Revenues of this segment are

recognized after we perform our obligations of our revenue cycle management services.

Our revenue cycle management services

are services, performed and charged monthly, generally based on a contractual percentage of total customer collections, for

which we recognize our net service fees.

Revenues of this segment are recognized after we

perform our obligations of our revenue cycle management services.

Our revenue cycle management segment is services performed and

such services are charged monthly, generally based on a contractual percentage of total customer collections, for which we recognize

our net service fees.

judge the health of our revenue cycle management segment, we review the collection success rate and collection timing.

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

In addition, we

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

Entertainment

Operating Segment

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

Revenues of this segment include ticketing service

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

which are recognized when the underlying tickets are sold.

Ticketing direct expenses include the cost of tickets purchased

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

along with other administrative costs.

judge the health of our ticketing operating segment, we review the gross transaction value, which represents the total

value related to a ticket sale and includes the face value of the ticket as well as the service charge.

In addition, we review the number

of visits to our websites, cost of customer acquisition, the purchase conversion rate, the overall number of customers in our database,

and the number and percentage of tickets sold via the website and mobile app.

of Operations

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

Revenues of this segment include ticketing service charges generally determined as a percentage of the face value of the underlying ticket

and ticket sales from our ticket inventory which are recognized when the underlying tickets are sold.

Ticketing direct expenses include

the cost of tickets purchased for resale by the Company and holds as inventory, credit card fees, ticketing platform expenses, website

maintenance fees, along with other administrative costs.

judge the health of our entertainment operating segment, we review the gross transaction value, which represents the total value related

to a ticket sale and includes the face value of the ticket as well as the service charge.

In addition, we review the number of visits

to our websites, cost of customer acquisition, the purchase conversion rate, the overall number of customers in our database, and the

number and percentage of tickets sold via the website and mobile app.

Summary Financial Data

financial information for the Company’s reportable business segments is provided for the years ended December 31, 2022, and 2021:

3 unchanged sentences

Revenue Cycle Management

Entertainment

Total Net Revenues

Gross Profit:

Gross Profit (loss):

Video Solutions

$ (1,250,277 )

Revenue Cycle Management

Entertainment

Total Gross Profit

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Video Solutions

$ (9,278,721 )

$ (4,497,196 )

Revenue Cycle Management

Entertainment

(13,443,001 )

(10,592,909 )

Total Operating Income (Loss)

$ (29,733,258 )

$ (14,760,910 )

Depreciation and Amortization:

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Revenue Cycle Management

Entertainment

Total Depreciation and Amortization

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Revenue Cycle Management

Entertainment

Total Identifiable Assets

net revenues reported above represent only sales to external customers.

Segment gross profit represents net revenues less cost of

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

less cost of revenues, less all operating expenses.

Segment gross profit represents net revenues less cost of revenues.

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

cost of revenues, less all operating expenses.

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

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

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

Results of Operations

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The following is a summary of our recent operating results on a quarterly

For the Three Months Ended:

September 30,

the Three Months Ended:

Total revenue

Gross profit margin percentage

Total selling, general and administrative expenses

Total selling, general and

administrative expenses

Operating loss

1 unchanged sentence

Net income/(loss)

$ (9,574,258 )

$ (1,919,071 )

$ (6,698,242 )

$ (5,382,487 )

Our business is subject to substantial

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(2) the traction gained

by products, such as the recently released FirstVu Pro, FirstVu II, FLT-250, EVO HD, the ThermoVu™ and the Shield™

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;

and (8) the completion of corporate acquisitions including the 2021 purchases

in the revenue cycle management and ticketing operating segments.

We reported net income

of $1,122,790 on revenues of $11,744,112 for fourth quarter 2021.

(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;

and (7) the completion of corporate acquisitions

including the recent purchases in the revenue cycle management and entertainment operating segments.

We reported net loss of $9,574,258

on revenues of $8,879,504 for the fourth quarter of 2022.

factors and trends affecting our recent performance include:

Company formed two new operating segments in 2021 and revenues

increased in the third and fourth quarters of 2021 compared to the previous quarters.

The primary reason for the revenue increase,

beginning in the third quarter of 2021 is the completion of three acquisitions, being TicketSmarter which is included in

our ticketing operating segment and two acquisitions of medical billing companies through our revenue cycle

management operating segment.

The new ticketing operating segment generated $10,709,760 in 2021 revenue since its acquisition

date of September 1, 2021, and with our revenue cycle management operating segment generating $1,630,048 in revenues

for the year ended December 31, 2021.

We expect to continue to experience improved results from our two new operating segments

and their recent acquisitions, and expect to continue acquiring new businesses particularly in our revenue cycle management

operating segment.

We are employing a roll-up strategy in our revenue cycle management operating segment and have completed two acquisitions

in 2022 and have a signed letter of intent to acquire a third in 2022.

The Company formed two new operating segments in 2021 and revenues increased

in the first through third quarters of 2022 compared to the same quarters in 2021.

The primary reason for the revenue increase in 2022

is the completion of three acquisitions in 2021, being TicketSmarter which is included in our entertainment operating segment and two

acquisitions of medical billing companies through our revenue cycle management operating segment, paired with two further acquisitions

within the revenue cycle management operating segment in the first quarter of 2022.

The new entertainment operating segment generated

$20,871,500 in revenue in 2022, and our revenue cycle management operating segment generated $7,886,107 in revenues for 2022.

to continue to experience improved results from our two new operating segments and their recent acquisitions, along with improved results

from the video solutions segment as the recurring revenue model expands.

objective is to expand our video solutions segment’s recurring service revenue to help stabilize our revenues on a quarterly

Revenues from cloud storages have been increasing in recent quarters and reached approximately $302,634 in the fourth

quarter of 2021, an increase of $73,710 (32%) over the fourth quarter of 2020.

Overall, cloud revenues increased

to approximately $1,055,965 for the year ended December 31, 2021 compared to approximately $937,000 for the year ended

December 31, 2020 an increase of $118,965, or 13%.

We are pursuing several new market channels outside of our traditional

law enforcement and private security customers, similar to our NASCAR and event security customers, which we believe

will help expand the appeal of our products and service capabilities to new commercial markets.

If successful, we believe that these

new market channels could yield recurring service revenues for us in the future.

Revenues from cloud storages have been increasing in recent quarters and reached approximately $431,167 in the fourth quarter

of 2022, an increase of $128,533 (42%) over the fourth quarter of 2021.

Overall, cloud revenues increased to approximately $1,471,860

for the year ended December 31, 2022 compared to approximately $1,055,965 for the year ended December 31, 2021, an increase of $415,895,

We are pursuing several new market channels outside of our traditional law enforcement and private security customers, similar

to our NASCAR and event security customers, which we believe will help expand the appeal of our products and service capabilities

to new commercial markets.

If successful, we believe that these new market channels could yield recurring service revenues for us

in the future.

have a multi-year official partnership with NASCAR, naming us “A Preferred Technology Provider of NASCAR.” As part of

the relationship, we provide cameras that are mounted in the Monster Energy NASCAR Cup Series garage throughout the season,

bolstering both NASCAR’s commitment to safety at every racetrack, as well as enhancing its officiating process through technology.

Our relationship with NASCAR has yielded many new opportunities with NASCAR related sponsors.

the relationship, we provide cameras that are mounted in the Monster Energy NASCAR Cup Series garage throughout the season, bolstering

both NASCAR’s commitment to safety at every racetrack, as well as enhancing its officiating process through technology.

relationship with NASCAR has yielded many new opportunities with NASCAR related sponsors.

We believe this partnership with NASCAR

demonstrate the flexibility of our product offerings and help expand the appeal of our products and service capabilities to new commercial

We also have an affiliation with the Indy series races and, in particular, the Rahal Letterman Lanigan Racing team

which has several cars in most Indy style races.

These relationships provide us with access

to many potential customers through the various programs supported by both the NASCAR and Indy-Style car race series.

July 20, 2020, the Company and Brickell Key Investments LP (“BKI”) executed a Termination Agreement and Mutual Release

(the “Termination Agreement”).

Under the terms of the Termination Agreement, the Company made a payment in the amount

of $1,250,000 to BKI, and the parties agreed to terminate a Proceeds Investment Agreement (the “PIA”), which they previously

entered into on July 31, 2018, and to release each other from any further liability under the PIA.

As a result, any obligations under

the PIA have been extinguished and a $5,250,000 change in fair value was assessed for the year ended December 31, 2020.

demonstrates the flexibility of our product offerings and will help expand the appeal of our products and service capabilities to

new commercial markets.

We also have an affiliation with the Indy series races and, in particular, the Rahal Letterman Lanigan Racing

team which has several cars in most Indy style races.

These relationships provide us with access to many potential customers through

the various programs supported by both the NASCAR and Indy-Style car race series.

Sheet Arrangements

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December 31, 2022 and 2021, represented as a percentage of total revenues for each respective year:

Ended December 31,

Years Ended December 31,

Cost of revenue

Selling, general and administrative expenses:

Research and development

Selling, advertising and

promotional expense

and administrative expense

Total selling, general

and administrative expenses

Research and development expense

Selling, advertising and promotional expense

General and administrative expense

Total selling, general and administrative expenses

Operating loss

Change in fair value of derivative liabilities

Change in fair value of contingent consideration promissory

notes and earn-out agreements

Change in fair value of contingent consideration promissory notes and earn-out agreements

Warrant modification expense

Change in fair value of short-term investments

Change in fair value of note payable

Change in fair value of proceeds investment

Gain on extinguishment of warrant derivative liability

Gain on extinguishment of debt

Secured convertible note payable issuance expenses

income (expense) and other income, net

Gain on sale of property, plant and equipment

Interest income (expense) and other income, net

Income (loss) before income tax benefit

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Net income (loss)

Net loss attributable

to noncontrolling interests of consolidated subsidiary

Net income (loss) attributable

to common stockholders

Net loss per share information:

Net loss attributable to noncontrolling interests of consolidated subsidiary

Loss on redemption – Series A & B convertible redeemable preferred stock

Net income (loss) attributable to common stockholders

Net income (loss) per share information:

by Type and by Operating Segment

operating segments generate two types of revenues:

Product revenues primarily includes

video operating segment hardware sales of in-car and body-worn cameras, along with sales of our ThermoVu TM units, disinfectants,

and personal protective equipment.

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

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

segment until their sale.

Service and other revenues consist

of cloud and warranty services revenues from our subscription plan and storage offerings of our video solutions segment.

Our ticketing

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

We recognize service

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

marketplace transactions.

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

units, disinfectants, and personal protective equipment.

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

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

by our entertainment segment until their sale.

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

solutions segment.

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

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

ticketing marketplace transactions.

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

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following table presents revenues by type and segment:

Ended December 31,

Year Ended December 31,

Product revenues:

Video solutions

Entertainment

Total product revenues

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Video solutions

cycle management

service and other revenues

Entertainment

Revenue cycle management

Total service and other revenues

Total revenues

product offerings from our video operating segment

include the following:

in-car digital audio/video system which records in 1080P HD video and is designed for law enforcement and commercial fleet

This system includes two cameras and can use up to four external cameras for a total of four video streams.

includes integrated, patented VuLink technology, internal GPS, and an internal Wi-Fi Module.

The system includes the choice between

a Wireless Microphone Kit or the option to use the, FirstVy PRO, FirstVu II, or FirstVu HD Body Camera as the wireless microphone.

This system also includes a three-year advanced exchange warranty.

We offer a cloud storage solution to manage the recorded

evidence and charge a monthly device license fee for our cloud storage.

in-car digital audio/video system that is integrated into a rear-view mirror primarily designed for law enforcement customers.

offer local storage as well as cloud storage solutions to manage the recorded evidence.

We charge a monthly storage fee for our cloud

storage option and a one-time fee for the local storage option.

This product is being discontinued and phased out of our product

line but we are supporting existing customers with new products and repair and parts.

in-car digital audio/video system that is integrated into a rear-view mirror primarily designed for commercial fleet customers.

offer a web-based, driver management and monitoring analytics package for a monthly service fee that is available for our DVM-250

same great features of the DVM-250 in a new compact, non-mirrored form factor that allows for multiple mounting options in any vehicle

type for commercial fleets.

in-car digital audio/video system which records in 480P standard definition video that is integrated into a rear-view mirror primarily

designed for law enforcement customers.

This system can use an internal fixed focus camera or two external cameras for a total of

four video streams.

This system also includes the premium package which has additional warranty.

We offer local storage as

well as cloud storage solutions to manage the recorded evidence.

We charge a monthly storage fee for our cloud storage option and

a one-time fee for the local storage option.

in-car digital audio/video system which records in 480P standard definition video that is integrated into a rear view mirror primarily

designed for law enforcement customers.

This system can use an internal fixed focus camera or two external cameras for a total of

four video streams.

We offer local storage as well as cloud storage solutions to manage the recorded evidence.

We charge a monthly

storage fee for our cloud storage option and a one-time fee for the local storage option.

This system is replacing the DVM-100 and

DVM-400 product offerings and allows the customer to configure the system to their needs.

body-worn camera system that is light weight, one-piece unit that captures full HD video and audio, while offering industry

leading features such as live streaming, a full-color touchscreen display, an advanced image sensor with IR LEDs, proprietary

image distortion reduction, IP67 rated resisting dust & wind and is water submersible for 30 minutes at a depth of 3 feet.

It is MIL-STD-810G compliant capable of handling drops, shock, and vibration, and will function flawlessly in a wide temperature

We also offer a cloud-based evidence storage and management solution for our FirstVu Pro customers for a monthly service

body-worn camera system that is a one-piece device and offers industry leading technology such as an articulating camera

head, a full-color display, an advanced image sensor, and GPS.

It can be used by law enforcement, private and event security

and commercial customers.

We also offer a cloud-based evidence storage and management solution for our FirstVu II customers

for a monthly service fee.

body-worn digital audio/video camera system primarily designed for law enforcement customers.

We also offer a cloud-based evidence

storage and management solution for our FirstVu HD customers for a monthly service fee.

in-car device that enables an in-car digital audio/video system and a body worn digital audio/video camera system to automatically

and simultaneously start recording.

Docking Stations

with the FirstVu PRO and FirstVu II, the QuickVu docking stations provide a comprehensive and elegant solution for storing and charging

body cameras while uploading video evidence to the cloud.

QuickVu also allows for rapid reviewing of footage right from the interactive

touchscreen display.

Available in eight (8) or twenty-four (24) individual docking bays.

Docking Stations & Mini-Docks

with the FirstVu HD body-worn camera, the 12-bay docking station includes a 1TB local memory hard drive and can simultaneously

upload 4 hours of video from 12 FirstVu HD cameras within a 15-minute shift change and push configuration updates.

The Mini-Dock

is a single unit, portable smart dock that uploads video evidence to VuVault.com from a FirstVu HD body camera.

non-contact temperature-screening instrument that measures temperature through the wrist and controls entry to facilities when temperature

measurements exceed pre-determined parameters

and cleanser line, which is for use against viruses and bacteria, that is less harsh than many of the traditional products now widely

Offered in a variety of sizes and quantities.

Also offering personal protective equipment, including nitrile and vinyl

gloves, level 3 and N95 NIOSH certified face masks, as well as the electrostatic sprayer.

TicketSmarter

offers ticket to over 125,000 live events through their ticket marketplace, including sporting events, concerts, and theatre.

TicketSmarter

is the official resale partner of more than 35 collegiate conferences, 300+ universities, and hundreds of events and venues.

video operating segment sells our products

and services to customers in the following manner:

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

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

4 unchanged sentences

The distributor retains the margin

as its compensation for its role in the transaction.

The distributor generally maintains product inventory, customer receivables

and all related risks and rewards of ownership.

Revenue is recorded when the product is shipped to the distributor consistent with

the terms of the distribution agreement.

as compensation for its role in the transaction.

The distributor generally maintains product inventory, customer receivables and

all related risks and rewards of ownership.

Revenue is recorded when the product is shipped to the distributor consistent with the

terms of the distribution agreement.

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

4 unchanged sentences

Service revenues are generally determined as a

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

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

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

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

Service sales

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

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

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

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

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

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

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

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

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

COVID-19 pandemic had an impact on all of our operating segment revenue streams for the year ended December 31, 2021.

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 year.

Ticketing operating segment

revenues were also negatively impacted due to the cancellation of a number of live events and government-imposed restrictions and large

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

due to the pandemic while certain elective and routine healthcare services were reduced due to COVID-19 pandemic restrictions.

revenues for the years ended December 31, 2022 and 2021 were $10,999,892 and $9,180,287, respectively, an increase of $1,819,605 (20%),

due to the following factors:

generated by the new ticketing operating segment began with the

Company’s recent acquisition of TicketSmarter on September 1, 2021.

The new ticketing operating segment generated $2,787,237

in product revenues for the year ended December 31, 2021, compared to $-0- for the year ended December 31, 2020.

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 over $6,393,050

during the years ended December 31, 2021 compared to $8,029,457 for the year

ended December 31, 2020 due to new product lines in 2020 related to our COVID-19

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

in direct response to the increased safety precautions that organizations and individuals

are taking due to the COVID-19 pandemic.

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

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

temperature measurements exceed pre-determined parameters.

ThermoVu™ has optional features

such as facial recognition to improve facility security by restricting access based on temperature

and/or facial recognition reasons.

ThermoVu™ provides an instant pass/fail audible

tone with its temperature display and controls access to facilities based on such results.

ThermoVu TM has been applied in schools, dental office, hospitals,

office buildings, and other public venues.

The Company also launched its Shield™ disinfectant/sanitizer

product lines to fulfill demand by current customers and others for a disinfectant and sanitizer

that is less harsh than many of the traditional products now widely distributed.

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

Company’s video solution operating segment began offering the Shield™ line of disinfecting products to its first

responder customers including police, fire and paramedics late in the second quarter of 2020.

Commercial customers such as hospitals,

dental offices, office buildings, retail stores, and restaurants have applied these products.

The Company has enhanced the

line of disinfectant products through the newly designed Shield Electrostatic Sprayer to efficiently and effectively dispense

the disinfectants.

The Company is hopeful that its law enforcement and commercial customers will adopt this new product offering

to combat the spread of the COVID-19 virus as well as other bacteria and viruses.

The video solutions operating segment shipped seven

individual orders in excess of $100,000, for a total of approximately $986,062 in revenue for the year ended December 31, 2021, compared

to four individual orders in excess of $100,000, for a total of approximately $903,910 in revenue for the year ended December 31,

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

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

Additionally,

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

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

We introduced our EVO-HD late

in the second quarter of 2019 with the goal of enhancing our product line features to meet these competitive challenges and we started

to see traction in late 2019.

We expect customers and potential customers to review and test the EVO-HD prior to committing to this

new product platform, all of which has been delayed due to the COVID-19 pandemic.

Additionally, we introduced or new body-worn cameras,

the FirstVu Pro and FirstV II, in the fourth quarter of 2021, with the goal of shipping these products in the first quarter

We hope to see increased traction with these products into 2022 after the market is able to review and test these new products.

video solutions operating segment product shipments have been particularly impacted by the

COVID-19 pandemic because of delays in the shipment of certain law enforcement orders since the first quarter of 2020 as police

forces and governments deal with its impact.

Our product sales to law enforcement decreased for the year ended December 31, 2021

compared to the year ended December 31, 2020, as the impact of the COVID-19 pandemic continues to impact our business.

COVID-19 pandemic impact remains relevant, as the shipment of commercial orders during the year ended December 31, 2021 remain slow,

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

Our product sales

to commercial customers decreased for the year ended December 31, 2021 compared to the year ended December 31, 2020 due to

the impact of the COVID-19 pandemic.

video solutions operating segment management

has been focusing on migrating customers, and in particular commercial customers, from a hardware sale to a service

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

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 gained some traction, resulting in decreased product revenues

and increasing our service revenues.

We expect this program to continue to hold traction, resulting in recurring revenues over a

span of three to five years.

generated by the new entertainment operating segment began with the Company’s acquisition of TicketSmarter on September 1,

The new entertainment operating segment generated $5,598,803 in product revenues for the year ended December 31, 2022,

compared to $2,787,237 for the fiscal year ended December 31, 2021.

This largely relates to the Company having a full year of

activity in 2022, in comparison to just four months of activity post-acquisition in 2021.

Company’s video solutions operating segment generated product revenues totaling $5,401,089 during the year ended December 31,

2022 compared to $6,393,050 for the year ended December 31, 2021.

In general, our video solutions operating segment has experienced

pressure on its product revenues as our in-car and body-worn systems are facing increased competition because our competitors have

released new products with advanced features.

Additionally, our law enforcement revenues declined over the year ended December 31,

2022 due to price-cutting and competitive actions by our competitors, adverse marketplace effects related to our patent litigation

proceedings and our recent financial condition.

video solutions operating segment management has continued to focus on migrating 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

a portion of 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 gained some traction, resulting in decreased

product revenues and increasing our service revenues.

We expect this program to continue to hold traction, resulting in recurring

revenues over a span of three to five years.

and other revenues for the years ended December 31, 2022 and 2021 were $26,010,003 and $12,233,147, respectively, an increase of $13,776,856

2 unchanged sentences

and 2021, respectively, an increase of $415,895 (39%).

We have experienced increased interest in our cloud solutions for law

We continue to experience 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,

2 unchanged sentences

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

solutions operating segment revenues from extended

warranty services were $978,018 and $1,173,169 for the years ended December 31, 2021 and 2020, respectively, a decrease of $195,151

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

the fallout from the COVID-19 pandemic and related restrictions on travel adversely affected our sales of DVM-800 hardware systems

resulting in a decrease in their sales of 15% in the 2021 period compared to 2020.

solutions operating segment installation service

revenues were $204,701 and $180,319 for the years ended December 31, 2021 and 2020, respectively, an increase of $24,382 (14%).

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

The slight increase

in installation revenues in the years ended December 31, 2021 compared to the same period 2020 was attributable to the resumption

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

from building rental income were $290,012 and $-0- for the years ended December 31, 2021 and 2020, respectively, an increase of $290,012

The Company completed the purchase of an office/warehouse building during the years ended December 31, 2021, in which current

tenants were under existing agreements.

The agreement terminated at the end of August 2021.

new ticketing operating segment generated service

revenues totaling $7,922,523 and $-0- for the years ended December 30, 2021 and 2020, respectively, an increase of $7,922,523

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.

Video solutions operating segment revenues from extended warranty services

were $692,017 and $978,018 for the years ended December 31, 2022 and 2021, respectively, an decrease of $286,001 (29%).

This correlates

with the decrease in sales of DVM-800 hardware systems resulting in a decrease in their associated extended warranty.

new entertainment operating segment generated service revenues totaling $15,272,697 and $7,922,523 for the years ended December 31,

2022 and 2021, respectively, an increase of $7,350,174 (93%).

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

LLC in the third quarter of 2021, thus resulting in the new revenue stream for the Company during the last fourth months of 2021

and twelve months ended December 31, 2022.

TicketSmarter collects fees on transactions administered through the TicketSmarter.com

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

This increase reflects just four months of

service revenues by our ticketing operating segment, which we hope will present a strong revenue outlook moving

new revenue cycle management operating segment generated service revenues totaling

$1,630,048 and $-0- for the years ended December 31, 2021 and 2020, respectively, an increase of $1,630,048 (100%).

cycle management operating segment completed the acquisitions of its first medical billing company on June 30, 2021 and

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

ended December 31, 2021 for the Company.

Our revenue cycle management operating segment provides revenue cycle management

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

This increase reflects three months of the

first medical billing company revenues and just one month of the second medical billing company revenues within the new revenue

cycle management operating segment, which we home will present a strong revenue outlook moving forward.

This increase reflects a full twelve months

of service revenues by our entertainment operating segment, which we hope will continue to present a strong revenue outlook moving

new revenue cycle management operating segment generated service revenues totaling $7,886,107 and $1,630,048 for the years ended

December 31, 2022 and 2021, respectively, an increase of $6,256,059 (384%).

Our revenue cycle management operating segment has completed

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

December 31, 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 years ended December 31, 2022, and 2021 were $37,009,895 and $21,413,434, respectively, an increase of $15,596,461 (73%),

1 unchanged sentence

of Product Revenue

cost of product revenue sold for the years ended

December 31, 2021, and 2020 was $8,635,047 and $5,739,572, respectively, an increase of $2,895,475 (50.4%).

Overall cost of goods

sold for products as a percentage of product revenues for the years ended December 31, 2021, and 2020 were 94.1% and 71.5%,

respectively.

cost of product revenue sold for the years ended December 31, 2022, and 2021 was $14,372,115 and $8,635,047, respectively, an increase

of $5,737,068 (66%).

Overall cost of goods sold for products as a percentage of product revenues for the years ended December 31, 2022,

and 2021 were 131% and 94%, respectively.

Cost of products sold by operating segment is as follows:

3 unchanged sentences

Revenue Cycle Management

Entertainment

Total Cost of Product Revenues

increase in cost of goods sold for our video solutions segment products is due to numerous factors in cluding

higher sales of the lower margin Shield disinfectant and personal protective products during 2021 and increases in the allowance for

excess and obsolete inventory.

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

96.9% for the year ended December 31, 2021 as compared to 71.5% for the year ended December 31, 2020.

increase in ticketing operating segment cost of product sold is the due to the September 1, 2021

acquisition of TicketSmarter, resulting in an increase to cost of product revenue of $2,437,986 for the year ended December 31, 2021,

compared to $-0- for the year ended December 31, 2020.

Cost of product sold as a percentage of product revenues for the ticketing

solutions was 87.5% for the year ended December 31, 2021.

increase in cost of goods sold for our video solutions segment products is due to numerous factors including a sizeable increase in the

allowance for excess and obsolete inventory, mostly surrounding the personal protective equipment product line.

Cost of product sold

as a percentage of product revenues for the video solutions segment increased to 154% for the year ended December 31, 2022 as compared

to 97% for the year ended December 31, 2021.

The increase in

entertainment operating segment cost of product sold is due to the September 1, 2021 acquisition of TicketSmarter, resulting in a

full twelve months of cost of product revenues for the year ended December 31, 2022, and an increase to cost of product revenue of

$3,601,645 for the year ended December 31, 2022 compared to $2,437,986 for the year ended December 31, 2021.

Cost of product sold as

a percentage of product revenues for the entertainment segment increased to 108% for the year ended December 31, 2022 as compared to

87% for the year ended December 31, 2021.

recorded $5,489,541 and $3,353,458 in reserves for obsolete and excess inventories for the years ended December 31, 2022 and 2021, respectively.

Total raw materials and component parts were $4,509,165 and $3,062,046 for the years ended December 31, 2022 and 2021, respectively,

a decrease of $124,380 (4%).

an increase of $1,447,119 (47%).

Finished goods balances were $7,816,618 and $10,512,579 for the years ended December 31, 2022 and December

31, 2020, respectively, an increase of $3,538,286 (51%) which was attributable to accumulating inventory for the expanded Shield and

video solutions product lines, along with $2,102,272 in finished goods from our newly acquired ticketing segment.

The increase in the

inventory reserve is primarily due to inventory obsolescence 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, LaserAlly legacy products, and ThermoVu 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 as of

December 31, 2021.

31, 2021, respectively, a decrease of $2,695,961 (26%) which was attributable to a reduction in inventory for the video solutions product

lines and a large decrease in ticket inventory for the newly acquired entertainment segment.

The increase in the inventory reserve is

primarily due to inventory obsolescence 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, LaserAlly legacy products, ThermoVu products, and personal protective equipment.

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 as of December 31, 2022.

of Service Revenue

cost of service revenue sold for the years ended December 31, 2021, and 2020 was $7,114,612 and $712,702, respectively, an increase of

$6,401,910 (898.3%).

Overall cost of goods sold for services as a percentage of service revenues for the years ended December 31, 2021,

and 2020 were 58.2% and 28.7%, respectively.

Cost of service revenues by operating shipment is as follows:

Overall cost of service revenue

sold for the years ended December 31, 2022, and 2021 was $20,315,839 and $7,114,612, respectively, an increase of $13,201,227 (186%).

Overall cost of goods sold for services as a percentage of service revenues for the years ended December 31, 2022, and 2021 were 78% and

58%, respectively.

Cost of service revenues by operating segment is as follows:

Years Ended December 31,

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Revenue Cycle Management

Entertainment

Total Cost of Service Revenues

2 unchanged sentences

Cost of service revenues as a percentage of service revenues for

the video solutions segment increased to 32.6% for the year ended December 31, 2021 as compared to 28.7% for year ended December 31,

increase in revenue cycle management operating segment cost of service revenue is the due to the 2021 acquisitions of two medical billing

companies in late 2021 The revenue cycle management operating segment was formed in 2021 and did not exist in 2020.

Cost of service revenues

as a percentage of product revenues for the revenue cycle management operating segment was 68.0% for 2021.

increase in ticketing operating segment cost of service revenues is the due to the September 1, 2021 acquisition of TicketSmarter, resulting

in an increase to cost of service revenue of $5,131,392 for the year ended December 31, 2021, compared to $-0- for the year ended December

Cost of service revenues as a percentage of service revenues for the ticketing increased to 64.8% for the year ended December

gross profit for the years ended December 31, 2021

and 2020 was $5,663,775 and $4,062,594, respectively, an increase of $1,601,181 (39.4%).

Gross profit by operating segment was as

Cycle Management

overall increase is attributable to the large overall increase in revenues for the year ended December 31, 2021 and an increase

in the overall cost of sales as a percentage of overall revenues to 73.6% for the year ended December 31, 2021 from 61.4%

for the year ended December 31, 2020.

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, ThermoVuTM, ShieldTM

disinfectants and our cloud evidence storage and management offering, provided that they gain traction in the marketplace and

subject to a normalizing economy in the wake of the COVID-19 pandemic.

In addition, if revenues from the video solutions segment

increase, we will seek to further improve our margins from this segment through expansion and increased efficiency

utilizing fixed manufacturing overhead components.

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

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

the video solutions segment increased to 41% for the year ended December 31, 2022 as compared to 33% for the year ended December 31,

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

billing companies in late 2021 and early 2022.

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

operating segment decreased to 58% for the year ended December 31, 2022 as compared to 68% for the year ended December 31, 2021.

The increase in entertainment

operating segment cost of service revenues is due to the September 1, 2021 acquisition of TicketSmarter, resulting in an increase to cost

of service revenue to $14,563,128 for the year ended December 31, 2022, compared to $5,131,392 for the year ended December 31, 2021.

of service revenues as a percentage of service revenues for the entertainment increased to 95% for the year ended December 31, 2022 as compared to 65% for the year ended December 31, 2021.

Overall gross profit for the years

ended December 31, 2022 and 2021 was $2,321,941 and $5,663,775, respectively, a decrease of $3,341,833 (59%).

Gross profit by operating

segment was as follows:

Years Ended December 31,

Gross Profit:

Video Solutions

$ (1,250,278 )

Revenue Cycle Management

Entertainment

Total Gross Profit

overall decrease is attributable to the increase in cost of goods sold across our video and entertainment segments for the year ended

December 31, 2022, as there was an overall increase in the cost of sales as a percentage of overall revenues to 94% for the year ended

December 31, 2022 from 74% for the year ended December 31, 2021.

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

expected margins generated by our new recent revenue cycle management and entertainment operating segments together with our video solutions

operating segment and its expected margins from our EVO-HD, DVM-800, VuLink, FirstVu Pro, FirstVu II, Shield TM disinfectants

and our cloud evidence storage and management offering, provided that they gain traction in the marketplace.

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

$20,424,685 and $11,726,245 for the years ended December 31, 2021 and 2020, respectively, an increase of $8,698,440 (74.2%).

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 95% for 2021 compared to 112% in the same period in 2020.

The significant

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

Overall selling, general and administrative

expenses were $32,055,199 and $20,424,685 for the years ended December 31, 2022 and 2021, respectively, an increase of $11,630,514 (57%).

The increase was primarily attributable to the recent acquisitions completed in the first quarter of 2022 and third quarter of 2021.

selling, general and administrative expenses as a percentage of sales decreased to 87% for 2022 compared to 95% in the same period in

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

ended December 31,

Year ended December 31,

Research and development expense

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Professional fees and expense

Executive, sales, and administrative staff

Executive, sales, and administrative staff payroll

general and administrative expenses by operating segment are as follows:

3 unchanged sentences

Revenue Cycle Management

Entertainment

Total selling, general and administrative expenses

and development expense.

Our video solutions operating segment continues to focus on bringing new products to market,

including updates and improvements to current products.

Our research and development expenses totaled $1,930,784 and $1,842,800 for the

years ended December 31, 2021 and 2020, respectively, an increase of $87,984 (4.8%).

We employed 17 engineers at December 31,

2021 compared to 15 engineers at December 31, 2020, most of whom are dedicated to research and development activities for new products

and primarily the FirstVu Pro, FirstVu II, QuickVu docking stations, ThermoVu TM , Shield TM , 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 EVO-HD product platform and we continue

to outsource more development projects.

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

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

advertising and promotional expenses.

Selling, advertising and promotional expense totaled $5,717,824 and $2,607,242 for the

years ended December 31, 2021 and 2020, respectively, an increase of $3,110,582 (119.3%).

Salesman salaries and commissions for

our video solutions segment represent the primary components of these costs and were $1,605,034 and $1,616,267 for the years ended

December 31, 2021 and 2020, respectively, a slight decrease of $11,233 (1%).

The effective commission rate was 7.5% for the year ended

December 31, 2021 compared to 15.4% for the year ended December 31, 2020.

We reduced the number of salesmen in our law enforcement and

commercial channels in 2021 compared to 2020.

In addition, we are utilizing third-party distributors as a major component of our new

Shield and ThermoVu sales channel.

Lastly, our recent acquisitions require minimal salespeople, due to their specific service offerings

and platforms.

and advertising expenses totaled $4,112,790 during the year ended December 31, 2021 compared to $990,975 during the year ended December

31, 2020, an increase of $3,121,815 (315%).

The overall increase is primarily attributable to our 2021 sponsorship of NASCAR and IndyCar,

compared to the reduced expense due to the ultimate suspension of the 2020 NASCAR season during 2020, and a reduction in

attendance at trade shows as a result of the COVID-19 pandemic during 2020.

Additionally, TicketSmarter is very active in sponsorship

and advertising, as they are continuing to build a brand and gaining recognition.

TicketSmarter accounted for $1,541,670 of the total

promotional and advertising expense for the year ended December 31, 2021.

fees and expense .

Professional fees and expenses totaled $1,513,862 and $990,975 for the years ended December 31, 2021

Research and development

Our video solutions operating segment continues to focus on bringing new products to market, including updates

and improvements to current products.

Our research and development expenses totaled $2,290,293 and $1,930,784 for the years ended December

31, 2022 and 2021, respectively, an increase of $359,509 (19%).

The increase in professional fees is primarily attributable to

increased legal fees surrounding the two registered direct offerings during the year ended December 31, 2021, along with increased legal

and broker fees associated with the Company’s numerous acquisitions in 2021, paired with other current due diligence items

and opportunities the Company is exploring.

Additionally, increased board fees, audit fees, and service fees are attribute to this increase.

sales and administrative staff payroll.

Executive, sales and administrative staff payroll expenses totaled $3,288,360 and $2,449,690

for the years ended December 31, 2021 and 2020, respectively, an increase of $838,670 (34.2%).

The primary reason for the increase

in executive, sales and administrative staff payroll was the recent formation of the revenue cycle management and ticketing operating

segments and their acquisitions of the medical billing companies and TicketSmarter which occurred in 2021 and therefore had no impact

on 2020 expenses.

This increase is also due to a return to regular staff levels compared to the same period in 2020, in which

the Company experienced a reduction in technical support staffing in response to the COVID-19 pandemic during the second quarter of 2020,

as the COVID-19 pandemic had significantly impacted the Company’s new event security business channel in 2020 because many

sporting venues were closed including those served by these service technicians.

Additionally, this trend is expected to continue because

of the acquisitions completed during the year ended December 31, 2021, which resulted in additional payroll expenses with expanded executive

positions, sales, and administrative staff numbers compared to 2020.

Additionally, the acquisitions completed during the year ended December

31, 2021, resulted in additional payroll expenses with expanded executive positions, sales, and administrative staff numbers.

selling, general and administrative expenses totaled $7,973,854 and $3,835,538 for the years ended December 31, 2021 and

2020, respectively, an increase of $4,138,316 (108%).

The increase in other expenses in the year ended December 31, 2021 compared

to the same period in 2020 is primarily attributable to the increased expenses related to the two new operating segments and their

acquisitions, and associated operating expenses, completed during the year ended December 31, 2021, that were not relevant to the

year ended December 31, 2020.

Additionally, this increase is also attributable to an increase in travel costs as COVID-19

restrictions begin to ease, as well as substantially increased insurance costs compared to the same period in 2020.

The increased insurance

costs are primarily in general liability and related coverages which premiums have been increased to address the exposure to the

COVID-19 pandemic.

the reasons previously stated, our operating loss was $14,760,910 and $7,663,651 for the years ended December 31, 2021 and 2020,

respectively, an increase of $7,100,764 (93%).

Operating loss as a percentage of revenues improved to 69% in 2021 from

and Other Income

income increased to $310,200 for the year ended December 31, 2021, from $47,893 in 2020, which reflects our overall higher

cash and cash equivalent levels in 2021 compared to 2020.

The Company completed two registered direct offerings in the year ended December

31, 2021 which yielded net proceeds of approximately $66.4 million which balances have earned increased interest income when compared

to the same period in 2020.

Additionally, this increase is a result of interest incurred on debt that the Company has issued, as well

as interest incurred on leased products.

incurred interest expense of $28,600 and $342,379 during the years ended December 31, 2021 and 2020, respectively.

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

debt balances outstanding in the year ended December 31, 2021 as compared to the year ended December 31, 2020.

On May 12, 2020,

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

by the Small Business Administration (“SBA”).

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

principal at the rate of 3.75% per annum.

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

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

Additionally, the increase is attributable

to the contingent earn-out notes associated with the two Nobility Healthcare acquisitions, currently at a total balance of $967,211 for

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

in Fair Value of Secured Convertible Notes

recognized a loss on change in fair value of secured convertible notes totaling $-0- and $1,300,252 during the years ended December

31, 2021 and 2020, respectively.

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

Therefore, we determined

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

paid in full.

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

as a charge in the Consolidated Statement of Operations for the year ended December 31, 2020.

No similar changes in fair value occurred

during the year ended December 31, 2021.

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

Therefore, we determined

the fair value of the secured convertible notes as of their issuance date on December 31, 2019 until they were paid in full March 3,

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

Statement of Operations at December 31, 2020.

No similar changes in fair value occurred during the year ended December 31, 2021.

in Fair Value of Proceeds Investment Agreement

recorded a gain on the change in fair value of proceeds investment agreement of $-0- and $5,250,000 during the years ended December 31,

2021 and 2020, respectively.

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

Therefore, we determined the fair

value of the 2018 PIA as of December 30, 2021, and December 31, 2020 to be $-0- and $5,250,000, respectively.

The change in fair value

from December 21, 2019, to December 31, 2020 was $5,250,000, which was recognized as a gain in the Consolidated Statement of Operations

for the years ended December 31, 2020.

No similar changes in fair value occurred during the year ended December 31, 2021.

We employed 21 engineers at December 31, 2022 compared to 17 engineers

at December 31, 2021, most of whom are dedicated to research and development activities for new products and primarily the FirstVu Pro, FirstVu II, QuickVu docking stations, EVO-HD and non-mirror based DVM-250 that can be located in multiple places in

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

our product offerings based on our new EVO-HD product platform and we continue to outsource more development projects.

We consider our

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

a prudent basis and consistent with our financial resources.

Selling, advertising and

promotional expenses.

Selling, advertising and promotional expenses totaled $9,312,204 and $5,717,824 for the years ended December

31, 2022 and 2021, respectively, an increase of $3,594,380 (63%).

Salesman salaries and commissions for our video solutions segment represent

the primary components of these costs and were $1,643,563 and $1,605,034 for the years ended December 31, 2022 and 2021, respectively,

a slight increase of $38,529 (2%).

The effective commission rate was 4% for the year ended December 31, 2022 compared to 8% for the year

ended December 31, 2021.

We increased the number of salesmen in our law enforcement and commercial channels in 2022 compared to 2021,

thus leading to an increase in sales commissions paid during the year ended December 31, 2022.

Further, our recent acquisitions require

minimal salespeople, due to their specific service offerings and platforms.

Promotional and advertising expenses

totaled $7,668,641 during the year ended December 31, 2022 compared to $4,112,790 during the year ended December 31, 2021, an increase

of $3,555,851 (86%).

The overall increase is primarily attributable to our 2022 sponsorships within NASCAR and IndyCar, along with TicketSmarter’s

very active approach to sponsorship and advertising, as they are continuing to build a brand and gaining recognition.

TicketSmarter accounted

for $4,024,748 of the total promotional and advertising expense for the year ended December 31, 2022.

Professional fees and expense .

Professional fees and expenses totaled $3,297,895 and $1,513,862 for the years ended December 31, 2022 and 2021, respectively, an increase

of $1,784,033 (118%).

The increase in professional fees is primarily attributable to increased legal and other fees in connection with

strategic transactions and acquisitions during the year ended December 31, 2022 paired with other current due diligence items and opportunities

the Company is exploring.

Additionally, board fees, audit fees, and service fees that also attribute to this increase.

Executive, sales and administrative staff payroll.

Executive, sales and administrative staff payroll expenses totaled $6,544,711 and $3,288,360 for the years ended December 31,

2022 and 2021, respectively, an increase of $3,256,351 (99%).

The primary reason for the increase in executive, sales and administrative

staff payroll was the recent formation of the revenue cycle management and entertainment operating segments and their acquisitions of

the medical billing companies and TicketSmarter which occurred in late 2021 and early 2022.

These recent acquisitions resulted in additional

payroll expenses with expanded executive positions, sales, and administrative staff numbers compared to 2021.

Other selling,

general and administrative expenses totaled $10,610,096 and $7,973,855 for the years ended December 31, 2022 and 2021, respectively, an

increase of $2,636,241 (33%).

The increase in other expenses in the year ended December 31, 2022 compared to the same period in 2021 is

primarily attributable to the increased expenses related to the two new operating segments and their acquisitions, and associated operating

expenses, completed during the year ended December 31, 2022, that were not relevant to the year ended December 31, 2021.

Additionally,

this increase is also attributable to an increase in travel costs and increased insurance costs, primarily in general liability and related

coverages which premiums have been increased throughout the marketplace.

Operating Loss

For the reasons previously stated,

our operating loss was $29,733,258 and $14,760,910 for the years ended December 31, 2022 and 2021, respectively, an increase of $14,972,348

Operating loss as a percentage of revenues worsened to 80% in 2022 from 69% in 2021.

Interest and Other Income

Interest income decreased to $131,025

for the year ended December 31, 2022, from $310,200 in 2021, which reflects our overall decline in our cash and cash equivalent levels

in 2022 compared to 2021.

The company has completed five acquisitions and numerous other capital expenditures since the beginning of 2021, leading to the decrease

in cash balances:

thus, leading to a decrease in interest income for the period.

Interest Expense

We incurred interest expenses

of $37,196 and $28,600 during the years ended December 31, 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 $777,840 for the four notes,

with interest rates of 3.00% per annum.

in Fair Value of Short-Term Investments

1 unchanged sentence

2022 and 2021, respectively.

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

ninety (90) days or less.

The increase reflects our overall higher cash and cash equivalent levels in 2021 compared to 2020.

completed two registered direct offerings in the year ended December 31, 2021 which yielded net proceeds of approximately $66.4 million,

a portion of which was invested in short-term securities with original maturities of 90 days or less.

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

of ninety (90) days or less.

The decrease reflects our overall lower cash and cash equivalent levels in 2022 compared to 2021.

in Fair Value of Warrant Derivative Liabilities

the year ended December 31, 2021, the Company issued detachable warrants to purchase a total of 42,550,000 shares of Common Stock in

association with the two registered direct offerings previously described.

The underlying warrant agreement terms provide for net cash

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

As such, the Company is required

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

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

derivative liabilities.

The change in fair value of the warrant derivative liabilities from their issuance date to December 31, 2021

totaled $36,664,907 which was recognized as a gain in the year ended December 31, 2021.

The Company determined the fair value

of such warrants as of their issuance date, and as of December 31, 2021, to be $51,216,058 and $14,846,932, respectively.

2021, the Company issued detachable warrants to purchase a total of 2,127,500 shares of Common Stock in association with the two registered

direct offerings previously described.

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

the Company in the event of tender offers under certain circumstances.

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

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

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

in fair value of the warrant derivative liabilities during year ended December 31, 2022 totaled $6,726,638, compared to $36,664,907

for the year ended December 31, 2021, which was recognized as a gain on the Consolidated Statements of Operations.

in Fair Value of Contingent Consideration Promissory Notes and Earn-Out Agreements

the year ended December 31, 2021, the Company issued a contingent consideration earn-out agreement in connection with the Stock Purchase

Agreement between TicketSmarter, Inc., Goody Tickets, LLC and TicketSmarter of $3,700,000.

As of December 31, 2021, Management determined

that the actual Measurement Period EBITDA generated by TicketSmarter was less than 70% of the Projected EBITDA threshold provided in

such agreement.

Therefore, no TicketSmarter earn-out payments were due under such agreement.

Therefore, the fair value of the contingent

consideration earn-out agreement was reduced to zero, and the resulting gain of $3,700,000 was reported in our Consolidated Statements

of Operations for the year ended December 31, 2021.

Additionally,

during the year ended December 31, 2021, the Company issued a contingent consideration promissory note in connection with the Stock Purchase

Agreement between our revenue cycle management segment and a private company of $350,000.

Management’s estimate of the fair value

of this contingent promissory note at December 31, 2021 is $317,211 representing a reduction in its estimated fair value of $32,789.

The Company recorded a gain of $32,789 in the Consolidated Statements of Operations for the year ended December 31, 2021.

on Extinguishment of Debt

recognized a gain on extinguishment of debt totaling $10,000 and $1,417,413 during the years ended December 31, 2021 and 2020, respectively.

During the year ended December 31, 2021 the Company was notified that its $10,000 EIDL advance received with the Payroll Protection Program

(the “PPP”) Loan was fully forgiven, thus included in “Gain on Extinguishment of Debt” in our Consolidated Statements

of Operations for the year ended December 31, 2021.

discussed in Note 8 , “Debt Obligations ,” on May 4, 2020 the Company received a $1,418,900 promissory note under

the SBA’s PPP Loan through the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

On December 10,

2020, we were informed that the Company’s SBA Loan had been forgiven, resulting in the remaining balance has been released resulting

in a gain on extinguishment of debt.

In accordance with ASC Topic No.

470, “Debt – Modifications and Extinguishments”

(Topic 470), the transactions noted above were determined to be an extinguishment of the existing debt.

As a result, we recorded a gain

on the extinguishment of debt in the amount of $1,417,413, which is included in “Gain on Extinguishment of Debt” in our Consolidated

Statements of Operations for the year ended December 31, 2020.

Convertible Notes Issuance Expenses

recognized secured convertible note issuance expenses of $-0- and $34,906 during the years ended December 31, 2021 and 2020, respectively.

elected to account for and record our $1,667,000 principal amount of secured convertible notes on April 17, 2020 on a fair value

Accordingly, we were required to expense the related issuance costs to other expense in the consolidated statements of operations.

Such costs totaled $34,906 for the year ended December 31, 2020 and primarily included related legal and accounting fees.

debt issuances occurred during the year ended December 31, 2021.

Income/(Loss)

before Income Tax Benefit

a result of the above, we reported a net income/(loss) before income tax benefit of $25,530,961 and ($2,625,881) for the years

ended December 31, 2021 and 2020, respectively, an improvement of $28,156,843 (1,072%).

During the year ended December

31, 2021, the Company issued a contingent consideration earn-out agreement in connection with the Stock Purchase Agreement between TicketSmarter,

Inc., Goody Tickets, LLC and TicketSmarter of $3,700,000.

Management determined that the actual Measurement Period EBITDA generated by

TicketSmarter was less than 70% of the Projected EBITDA threshold provided in such an agreement.

Therefore, no TicketSmarter earn-out

payments were due under such agreement.

Therefore, the fair value of the contingent consideration earn-out agreement was reduced to zero,

and the resulting gain of $3,700,000 was reported in our Consolidated Statements of Operations for the year ended December 31, 2021.

was no gain recorded for the year ended December 31, 2022.

On June 30, 2021, Nobility Healthcare, a subsidiary of the Company, issued a contingent consideration promissory

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

company (the “June Seller”) of $350,000.

Principal payments, since its

inception, on this contingent consideration promissory note totaled $113,617.

The estimated fair value of the note at December 31,

2022 is $176,456, representing a decrease in its estimated fair value of $27,139 as compared to its estimated fair value as of

December 31, 2021.

Therefore, the Company recorded a gain of $27,139 and $32,789 in the Consolidated Statements of Operations for

the years ended December 31, 2022 and December 31, 2021, respectively.

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

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

Principal payments, since its inception, on this contingent consideration promissory note totaled $292,953.

The estimated fair

value of the August Contingent Note at December 31, 2022 is $388,954, representing an increase in its estimated fair value of $31,907

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

Therefore, the Company recorded a loss of $31,907 and $-0- in the Consolidated

Statements of Operations for the years ended December 31, 2022 and December 31, 2021, respectively.

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

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

Principal payments, since its inception, on this contingent consideration promissory note totaled $120,833.

The estimated fair

value of the January Contingent Note at December 31, 2022 is $208,083, representing a decrease in its estimated fair value of $421,085

as compared to its estimated fair value as of the inception date.

Therefore, the Company recorded a gain of $421,085 and $-0- in the

Consolidated Statements of Operations for the years ended December 31, 2022 and December 31, 2021, respectively.

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

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

The estimated fair value of the February Contingent Note at December 31, 2022 is $4,346, representing a decrease in its

estimated fair value of $100,654 as compared to its estimated fair value as of the inception date.

Therefore, the Company recorded a

gain of $100,654 and $-0- in the Consolidated Statements of Operations for the years ended December 31, 2022 and December 31, 2021, respectively.

Gain on Extinguishment of Debt

We recognized a gain on extinguishment

of debt totaling $-0- and $10,000 during the years ended December 31, 2022 and 2021, respectively.

During the year ended December 31,

2021 the Company was notified that its $10,000 EIDL advance received with the Payroll Protection Program (the “PPP”) Loan

was fully forgiven, thus included in “Gain on Extinguishment of Debt” in our Consolidated Statements of Operations for the

year ended December 31, 2021, and further resulting in $-0- for the year ended December 31, 2022.

Gain on Extinguishment of Warrant Derivative Liabilities

We recognized a gain on the extinguishment

of warrant derivative liabilities of $3,624,794 and $-0- during the year ended December 31, 2022 and December 31, 2021, respectively.

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

Income/(Loss) before Income Tax Benefit

As a result of the above, we reported

a net income/(loss) before income tax benefit of ($18,873,758) and $25,530,961 for the years ended December 31, 2022 and 2021, respectively,

a decline of $44,404,719 (174%).

recorded an income tax benefit of $-0- for the years ended December 31, 2022 and 2021, respectively.

4 unchanged sentences

have further determined to continue providing a full valuation reserve on our net deferred tax assets as of December 31, 2022.

2021, we decreased our valuation reserve on deferred tax assets by $7,615,000 whereby our deferred tax assets continue

to be fully reserved due to our recent operating losses.

We had approximately $81,385,000

of federal net operating loss carryforwards and $1,795,000 of research and development tax credit carryforwards as of December 31,

2021 available to offset future net taxable income.

2022, we decreased our valuation reserve on deferred tax assets by $17,220,000 whereby our deferred tax assets continue to be fully reserved

due to our recent operating losses.

had approximately $113,315,000 of federal net operating loss carryforwards and $1,795,000 of research and development tax credit carryforwards

as of December 31, 2022 available to offset future net taxable income.

Income/(Loss)

a result of the above, we reported a net income/(loss) of $25,530,961 and ($2,625,882) for the years ended December 31,

2021 and 2020, respectively, an improvement of $28,156,843 (1,072%).

As a result of the above, we reported

a net income/(loss) of ($18,873,758) and $25,530,961 for the years ended December 31, 2022 and 2021, respectively, a decline of $44,404,719

Income Attributable to Noncontrolling Interests of Consolidated Subsidiary

6 unchanged sentences

2021, respectively.

Loss on Redemption – Series A & B

Convertible Redeemable Preferred Stock

During the year ended

December 31, 2022, the Company redeemed 1,400,000 shares of Series A & 100,000 shares of Series B Preferred Stock, for

a redemption price of $15,750,000, with a $13,365,000 carrying amount, resulting in a $2,385,000 loss on redemption.

Net Income/(Loss) Attributable to Common Stockholders

a result of the above, we reported a net income/(loss) of $25,474,508 and ($2,625,882) for the years ended December 31,

2021 and 2020, respectively, an improvement of $28,100,390 (1,070%).

As a result of the above, we reported a net income/(loss) of ($21,666,691)

and $25,474,508 for the years ended December 31, 2022 and 2021, respectively, a decline of $47,141,199 (185%).

and Diluted Income/(Loss) per Share

basic and diluted income/(loss) per share was $0.51 and ($0.12) for the years ended December 31, 2021 and 2020, respectively,

for the reasons previously noted.

All outstanding stock options and common stock purchase warrants were considered antidilutive and therefore

excluded from the calculation of diluted loss per share for the years ended December 31, 2021 and 2020 because all potentially dilutive

securities during 2021 had exercise prices in excess of the market value of the company’s common stock and because of the net

loss reported for 2020.

The basic and diluted income/(loss)

per share was ($8.50) and $10.14 for the years ended December 31, 2022 and 2021, respectively, for the reasons previously noted.

All outstanding

stock options and common stock purchase warrants were considered antidilutive and therefore excluded from the calculation of diluted loss

per share for the years ended December 31, 2022 and 2021 because all potentially dilutive securities during 2022 had exercise prices in

excess of the market value of the company’s common stock and because of the net loss reported for 2022.

and Capital Resources

Liquidity Plan - The Company has historically raised and continue to raise 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.

believes, that through such instruments, it has the ability to generate and obtain adequate amounts of capital to meet its requirements

and plans for capital in the short-term and long-term.

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

in registered direct offerings of Common Stock, pre-funded warrants and warrants during the year ended December 31, 2021.

Furthermore, the Company has minimal interest-bearing debt for the year ended December 31, 2021 in that of $150,000 remaining

due on the promissory notes under the EIDL program, along with the two acquired private medical billing companies’ contingent

consideration promissory notes and agreement, as more fully described in Note 8, “Debt Obligations” .

The net proceeds of the registered direct offerings are sufficient to fund our operations during 2022 and management believes that it

now has adequate liquidity for the foreseeable future from the recently completed registered direct offerings in 2021.

Such offerings

were completed through utilization of the Company’s shelf-registration statement on Form S-3 (File No.

333-239419), which was initially

filed with the SEC on June 25, 2020, and was declared effective on July 2, 2020 (the “Shelf Registration Statement”).

Registration Statement on Form S-3 - The Shelf Registration Statement allows the Company to offer and sell, from time to time in

one or more offerings, any combination of our Common Stock, debt securities, debt securities convertible into Common Stock or other securities

in any combination thereof, rights to purchase shares of Common Stock or other securities in any combination thereof, warrants to purchase

shares of Common Stock or other securities in any combination thereof or units consisting of Common Stock or other securities in any

combination thereof having an aggregate initial offering price not exceeding $125,000,000.

The Company has utilized the Shelf Registration

Statement for two recent offerings of its securities, as described as follows:

Direct Offering - On January 14, 2021, the Company, pursuant a securities purchase agreement, closed a registered direct

offering (the “January Offering”) of (i) 2,800,000 shares of Common Stock, (ii) pre-funded warrants to purchase up to

7,200,000 of Common Stock at an exercise price of $0.01 per share, issuable to investors whose

purchase of shares of Common Stock would otherwise result in such investor, together with its affiliates and certain related parties,

beneficially owning more than 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding Common Stock immediately

following the consummation of the January Offering;

and (iii) common stock purchase warrants (“January Warrants”) to

purchase up to an aggregate of 10,000,000 shares of Common Stock, which are exercisable for a period of five years after issuance

at an initial exercise price $3.25 per share, subject to certain adjustments, as provided in the January Warrants .

Offering was conducted pursuant to a placement agency agreement, dated January 11, 2021 (the “January Placement Agency Agreement”),

between the Company and Kingswood Capital Markets, division of Benchmark Investments, Inc.

(the “January Placement Agent”).

The combined offering price of each share of Common Stock and accompanying January Warrant in the January Offering was $3.095.

to the terms of the January Placement Agency Agreement, the Company agreed not to, for a period of 90 days after the date of the

January Placement Agency Agreement, with certain exceptions, unless it has obtained the prior written consent of the January

Placement Agent, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract

to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares

of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of

(ii) file or cause to be filed any registration statement with the SEC relating to the offering of any shares of capital

stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company;

(iii) complete any offering of debt securities of the Company, or (iv) enter into any swap or other arrangement that transfers to

another, in whole or in part, any of the economic consequences of ownership of capital stock of the Company.

Company received approximately $29,013,000 in net proceeds from the January Offering after deducting the discounts, commissions and

other estimated offering expenses payable by the Company.

The Company plans to use the net proceeds from the January Offering for

working capital, product development, order fulfillment and for general corporate purposes.

Direct Offering - On February 1, 2021, the Company, pursuant a securities purchase agreement closed a registered direct offering

(the “February Offering”) of (i) 3,250,000 shares of Common Stock, (ii) pre-funded warrants to purchase up to 11,050,000

of Common Stock at an exercise price of $0.01 per share, issuable to investors whose purchase

of shares of Common Stock would otherwise result in such investor, together with its affiliates and certain related parties, beneficially

owning more than 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding Common Stock immediately following

the consummation of the February Offering;

and (iii) common stock purchase warrants (“February Warrants”) to purchase

up to an aggregate of 14,300,000 shares of Common Stock, which are exercisable for a period of five years after issuance at an initial

exercise price $3.25 per share, subject to certain adjustments, as provided in the Warrants .

The February Offering was conducted

pursuant to a placement agency agreement, dated January 28, 2021 (the “February Placement Agency Agreement”), between

the Company and EF Hutton, division of Benchmark Investments, LLC (“February Placement Agent”).

The combined offering

price of each share of Common Stock and accompanying February Warrant in the February Offering was $2.80.

to the terms of the February Placement Agency Agreement, the Company has agreed not to, for a period of 90 days after the date of

the February Placement Agency Agreement, with certain exceptions, unless it has obtained the prior written consent of the February

Placement Agent, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract

to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares

of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of

(ii) file or cause to be filed any registration statement with the SEC relating to the offering of any shares of capital

stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company;

(iii) complete any offering of debt securities of the Company, or (iv) enter into any swap or other arrangement that transfers to

another, in whole or in part, any of the economic consequences of ownership of capital stock of the Company.

Company received approximately $37,447,100 in net proceeds from the February Offering after deducting the discounts, commissions

and other estimated offering expenses payable by the Company.

The Company plans to use the net proceeds from the February Offering

for working capital, product development, order fulfillment and for general corporate purposes.

August 19, 2021, the Company entered into a warrant exchange agreement (the “Exchange Agreement”) with the investors

of the February Offering (the “February Investors”) cancelling February Warrants exercisable for an aggregate of 7,681,540

shares of Common Stock in consideration for its issuance of (i) new warrants (the “Exchange Warrants”) to the February

Investors exercisable for an aggregate of up to 7,681,540 shares of Common Stock.

The Company also issued warrants (the “Replacement

Original Warrants”) replacing the February Warrants for the remaining shares of Common Stock exercisable thereunder, representing

an aggregate of 6,618,460 shares of Common Stock, and extended the expiration date of the February Warrants to September 18, 2026.

The Company also filed a supplement to the Prospectus Supplement removing the cancelled February Warrants and the shares of Common

Stock exercisable thereunder from registration under the shelf registration statement in order to provide additional availability

for the issuance of securities under the shelf registration statement.

The Exchange Warrants have a term of five years and 30 days

and provide for an initial exercise price of $3.25 per share, subject to customary adjustments thereunder, and are immediately exercisable

upon issuance for cash and on a cashless basis.

believes that it has adequate funding to support its business operations for the foreseeable future as a result of the funds raised by

the January Offering and the February Offering.

Company has increased its addressable market to expand beyond that of law and non-law enforcement customers through the recent acquisitions

completed in 2021.

Additionally, the Company continues to obtain new law and non-law enforcement contracts in 2021 and 2020, which contracts

include recurring revenue during the period from 2021 to 2025.

The Company believes that its quality control and cost cutting initiatives,

expansion to other sales channels and new product introductions will eventually restore positive operating cash flows and profitability,

although it can offer no assurances in this regard.

The extent to which our future operating results are affected by the COVID-19 pandemic

will largely depend on future developments which cannot be accurately predicted, including the duration and scope of the pandemic, governmental

and business responses to the pandemic and the impact on the global economy, our customers’ demand for our products and services,

and our ability to provide our products and services, particularly as a result of our employees working remotely and/or the closure of

certain offices and facilities.

While these factors are uncertain, we believe that the COVID-19 pandemic and/or the perception of its

effects will have a material adverse effect on our business, financial condition, results of operations and cash flows.

had warrants outstanding exercisable to purchase 26,008,598 shares of Common Stock at a weighted average exercise price $3.24

per share outstanding as of December 31, 2021.

In addition, there are Common Stock options outstanding exercisable to purchase 1,086,064

shares of Common Stock at an average price of $2.37 per share.

We could potentially use such outstanding warrants to provide near-term

liquidity if we could induce their holders to exercise their warrants by adjusting/lowering the exercise price on a temporary or permanent

basis if the exercise price was below the then market price of our Common Stock, although we can offer no assurances in this regard.

Ultimately, we must restore profitable operations and positive cash flows to provide liquidity to support our operations and, if necessary,

to raise capital on commercially reasonable terms in 2022, although we can offer no assurances in this regard.

Liquidity Plan - 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 12

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

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.

Common Stock is currently listed on The Nasdaq Capital Market.

In order to maintain our

listing, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director

independence and independent committee requirements, minimum stockholders’ equity, minimum share price, and certain corporate governance

requirements.

There can be no assurances that we will be able to comply with the applicable listing standards.

See “Nasdaq Listing”

We had $32,007,792 of

available cash and equivalents and net working capital of $33,122,288 as of December 31, 2021.

Net working capital as of December

31, 2021, included approximately $4.7 million of accounts receivable and other receivables and $9.7 million of current

In order to maintain our listing, we must satisfy minimum financial and

other continued listing requirements and standards, including those regarding director independence and independent committee requirements,

minimum stockholders’ equity, minimum share price, and certain corporate governance requirements.

There can be no assurances that

we will be able to comply with the applicable listing standards.

See “Nasdaq Listing” below.

We had $3,532,199 of available cash and equivalents and net working capital

of $11,447,313 as of December 31, 2022.

Net working capital as of December 31, 2022, included approximately $6.1 million of accounts receivable

and other receivables and $6.8 million of current inventory.

cash equivalents:

As of December 31, 2021, we had cash and cash equivalents with an aggregate balance of $32,007,792, an increase

from a balance of $4,361,758 for the year December 31, 2020.

Summarized immediately below and discussed in more detail in the

subsequent subsections are the main elements of the $27,646,034 net increase in cash during the year ended December 31, 2021:

As of December 31, 2022, we had cash and cash equivalents with an aggregate

balance of $3,532,199, a decrease from a balance of $32,007,792 for the year December 31, 2021.

Summarized immediately below and discussed

in more detail in the subsequent subsections are the main elements of the $28,475,593 net decrease in cash during the year ended December

Operating activities :

$18,580,385 of net cash used in operating activities.

Net cash used in operating activities was $17,825,108 and $13,274,715 for the years ended December 31, 2021 and 2020,

respectively, a deterioration of $4,550,393.

The deterioration is attributable to the net loss incurred for 2021, the non-cash

gain attributable to the change in value of the warrant derivative liability, the usage of cash to decrease accounts payable

and to increase accounts receivable, prepaid expenses, and other operating assets during the year ended December 31, 2021

compared to the same period in 2020.

Net cash used in operating activities was $18,580,385 and $17,825,108 for the years ended December 31, 2022 and 2021, respectively,

a deterioration of $755,277.

The deterioration is attributable to the net loss incurred for 2022, the non-cash gain attributable

to the change in value of the warrant derivative liability, increased accounts receivable and other assets during the year ended

December 31, 2022 compared to the same period in 2021.

Investing activities :

$2,940,591 of net cash used in investing activities.

Cash used in investing activities was $19,124,379 and $1,499,189 for the years ended December 31, 2021 and 2020 respectively.

in investing activities was $2,940,591 and $19,124,379 for the years ended December 31, 2022 and 2021 respectively.

incurred costs for the purchase of an aircraft for our BirdVu Jets subsidiary, further building improvements, the closing of one

business acquisition and one asset acquisition.

In 2021 we incurred costs for:

(i) the purchase of a office and warehouse building;

(ii) the build out of the new leased office

and warehouse space;

(i) the purchase of an office and warehouse building;

(ii) the build out of the new leased office and warehouse space;

(iii) the tooling of new products;

(iv) patent applications on our proprietary technology utilized in our new

products and included in intangible assets;

and (v) the closing of three acquisitions during the year ended December 31, 2021.

of net cash provided by financing

Cash provided by financing activities was $64,595,521 for the year ended December 31, 2021, compared to

cash provided by $18,775,977 for the year ended December 31, 2020.

In 2021, we closed two underwritten public offerings of our Common

Stock, which generated $66.6 million of cash and repurchased and cancelled shares of common stock of approximately $1.98

During 2020, we closed several underwritten public offerings of our Common Stock, which generated $12.8 million of cash,

we received total proceeds of $5.2 million from the exercise of common stock purchase warrants and we received a total of $1.6 million

in borrowings under the PPP and EIDL programs administered by the SBA.

In April 2020, we received net proceeds of $1,500,000 from

the issuance of the convertible notes with detachable common stock purchase warrants.

In addition, we received $419,000 in proceeds

from the issuance of unsecured promissory notes payable during the year ended December 31, 2020.

These 2020 financing cash inflows

were offset by the extinguishment of the PIA obligation and the repayment of principal on the secured convertible notes and unsecured

promissory notes.

net result of these activities was an increase in cash of $27,646,034 to $32,007,792 for the year ended December 31, 2021.

had $32,007,792 of cash and cash equivalents and net positive working capital $33,122,288 as of December 31, 2021.

Accounts receivable

and other receivable balances represented $4,748,865 of our net working capital as of December 31, 2021.

We intend to collect

our outstanding receivables on a timely basis and reduce the overall level during 2022, which would help to provide positive cash flow

to support our operations during 2022.

(iv) patent applications on our

proprietary technology utilized in our new products and included in intangible assets;

and (v) the closing of three acquisitions

during the year ended December 31, 2021, compared to only two, smaller acquisitions during the year ended December 31,

Financing activities:

$6,954,617 of

net cash used in financing activities.

Cash used in financing activities was $6,954,617 for the year ended December 31, 2022,

compared to cash provided by financing activities of $64,595,521 for the year ended December 31, 2021.

In 2022, we utilized over

$4.0 million on the stock repurchase program, $2.4 million for completion of the preferred stock transaction, as well as over $0.5

million on payments of contingent consideration promissory notes related to the revenue cycle management segment.

In 2021, we closed

two underwritten public offerings of our Common Stock, which generated $66.6 million of cash and repurchased and cancelled shares of

common stock of approximately $1.98 million.

The net result of these activities was a decrease in cash of $28,475,593

to $3,532,199 for the year ended December 31, 2022.

We had $3,532,199 of cash and

cash equivalents and net positive working capital $11,447,313 as of December 31, 2022.

Accounts receivable and other receivable balances

represented $6,120,578 of our net working capital as of December 31, 2022.

We intend to collect our outstanding receivables on a timely

basis and reduce the overall level during 2023, which would help to provide positive cash flow to support our operations during 2023.

Inventory represented $6,839,406 of our net working capital as of December 31, 2022.

and finished goods represented $10,631,618 of total current and non-current inventory.

We are actively managing the level of inventory

and our goal is to reduce such level during 2022 by our sales activities, the increase of which should provide additional cash flow to

help support our operations during 2022.

Expenditures .

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

office/warehouse building located in Lenexa, Kansas which is intended to serve as the Company’s principal office and warehouse

The building contains approximately 30,000 square feet of office space and the remainder warehouse space.

The total purchase price

was approximately $5.3 million, the Company funded the purchase price with cash on hand, without the addition of external debt or other

The Company will be incurred additional capital expenditures to renovate the building to suit its office/warehouse needs during

Company’s revenue cycle management segment completed its first medical billing company acquisition using approximately

$1.0 in cash for the portion of the purchase price during 2021.

The acquisition of the medical billing company included a

contingent consideration promissory note payable to the sellers of $350,000 at closing, which management estimated its

fair value of $317,211 as of December 31, 2021.

addition, the Company’s revenue cycle management segment completed its second medical billing company acquisition using approximately

We are actively managing the level of inventory and

our goal is to reduce such level during 2023 by our sales activities, the increase of which should provide additional cash flow to help

support our operations during 2023.

Capital Expenditures .

On December 6, 2021, the Board 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 year ended December 31, 2022, the Company repurchased

186,299 shares of its common stock for $4,026,523, in accordance with the Program.

On June 30, 2022, the Board elected

to terminate the Program, effective immediately.

The Program began in December 2021, with the Company purchasing a total of 273,041

shares at a cost of $6,001,602 through its termination on June 30, 2022.

Company’s revenue cycle management segment completed its third medical billing company acquisition using approximately $1.2 in

cash for the portion of the purchase price during 2022.

The acquisition of the medical billing company included a contingent consideration

promissory note payable to the sellers of $750,000 at closing, which management estimated its fair value of $208,083 as of December 31,

addition, the Company’s revenue cycle management segment completed its fourth medical billing asset acquisition using approximately

$230,000 in cash for a portion of the total purchase price.

The acquisition of the second medical billing company purchase price

included a contingent consideration promissory note payable to the sellers with an estimated fair value of $650,000 at closing

which remains outstanding as of December 31, 2021.

Management expects to continue its roll-up strategy in the RCM (medical billing

services) industry during the balance of 2021 and beyond.

Management of the revenue cycle management segment expects to continue its

roll-up strategy in the RCM (medical billing services) industry during 2022 and beyond.

ticketing operating segment also completed the business

acquisitions of Goody Tickets and TicketSmarter for a total purchase price of approximately $13.3 million during 2021 including

approximately $8.6 million in cash at closing.

The TicketSmarter purchase price includes a contingent consideration earn-out agreement

payable to the sellers of up to $4,244,400, which was given a fair value of $3,700,000 at acquisition, that was reduced to $-0- as of December 31, 2021 as the EBITDA thresholds

specified in the agreement were not met.

The acquisition of the fourth medical billing asset purchase price included

a contingent consideration promissory note payable to the sellers with an estimated fair value of $105,000 at closing which management

estimated its fair value of $4,346 as of December 31, 2022.

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

as its new principal executive office and primary business location prior to the April 30 purchase and sale agreement.

original lease agreement was amended on August 28, 2020 to correct the footage under lease and monthly payment amounts resulting from

such correction.

The lease terms, as amended include no base rent for the first nine months and monthly payments ranging from $12,398

to $14,741 thereafter, with a termination date of December 2026.

lease agreement was amended on August 28, 2020 to correct the footage under lease and monthly payment amounts resulting from such

The lease terms, as amended include no base rent for the first nine months and monthly payments ranging from $12,398 to

$14,741 thereafter, with a termination date of December 31, 2026.

The Company is responsible for property taxes, utilities, insurance

and its proportionate share of common area costs related to its new location.

The Company took possession of the leased facilities on

June 15, 2020.

The remaining lease term for the Company’s office and warehouse operating lease as of December 31, 2021 was sixty

The Company’s previous office and warehouse space lease expired in April 2020 and the Company paid holdover rent for

the time period until it moved to and commenced occupying the new space on June 15, 2020.

The Company took possession of the leased facilities

on June 15, 2020.

The remaining lease term for the Company’s office and warehouse operating lease as of December 31, 2022 was

forty-eight months.

Company entered into an operating lease with a third party in October 2019 for copiers used for office and warehouse purposes.

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The remaining lease term for the Company’s copier

operating lease as of December 31, 2021 was 22 months.

June 30, 2021, the Company completed the acquisition of is first medical billing company, through Nobility Healthcare.

operating lease as of December 31, 2022 was ten months.

June 30, 2021, the Company completed the acquisition of its first medical billing company, through Nobility Healthcare.

Upon completion

of this acquisition, Nobility Healthcare became responsible for the operating lease for the seller’s office space.

The lease terms include monthly payments ranging from $2,648 to $2,774 thereafter, with a termination date in July 2024.

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

Company took possession of the leased facilities on June 30, 2021.

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

operating lease as of December 31, 2021 was thirty-one months.

The lease terms

include monthly payments ranging from $2,648 to $2,774 thereafter, with a termination date in July 2024.

The Company is responsible for

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

The remaining lease term

for the Company’s office and warehouse operating lease as of December 31, 2022 was nineteen months.

August 31, 2021, the Company completed the acquisition of its second acquired medical billing company, through Nobility Healthcare.

completion of this acquisition, Nobility Healthcare became responsible for the operating lease for the seller’s office

The lease terms include monthly payments ranging from $11,579 to $11,811 thereafter, with a termination date in March 2023.

The Company is responsible for property taxes, utilities, insurance and its proportionate share of common area costs related to this

The Company took possession of the leased facilities on September 1, 2021.

The remaining lease term for the Company’s

office and warehouse operating lease as of December 31, 2021 was fifteen months.

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

lease terms include monthly payments ranging from $11,579 to $11,811 thereafter, with a termination date in March 2023.

The Company is

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

took possession of the leased facilities on September 1, 2021.

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

operating lease as of December 31, 2022 was three months.

The Company plans to relocate the revenue cycle management operating segment acquired operations to existing owned

or leased facilities upon termination of this operating lease.

September 1, 2021, the Company completed the acquisition of Goody Tickets, LLC and TicketSmarter, LLC through TicketSmarter.

Upon completion

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

The lease terms include

monthly payments ranging from $7,211 to $7,364 thereafter, with a termination date of December 2022.

The Company is responsible for property

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

The Company took possession of

the leased facilities on September 1, 2021.

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

of December 31, 2021 was twelve months.

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

lease terms include monthly payments ranging from $7,211 to $7,364 thereafter, with a termination date of December 2022.

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

The Company took possession of the leased facilities on September 1, 2021.

The Company signed a six month extension for the lease,

extending the remaining lease term for the Company’s office and the remaining lease term for the Company’s warehouse

operating lease as of December 31, 2022 was six months.

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

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

lease terms include monthly payments ranging from $4,233 to $4,626, with a termination date of June 2025.

The Company is responsible

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

The Company took

possession of the leased facilities on January 1, 2022.

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

lease as of December 31, 2022, was thirty months.

expense related to the office spaces and copier operating leases was recorded on a straight-line basis over the lease term.

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

lease right of use assets

Operating lease right of use assets

Operating lease obligations-current portion

Operating lease obligations-less

current portion

Total operating lease

Operating lease obligations-less current portion

Total operating lease obligations

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

ending December 31:

Total undiscounted minimum

future lease payments

operating lease liability

Year ending December 31:

Total undiscounted minimum future lease payments

Imputed interest

Total operating lease liability

time to time, we are notified that we may be a party to a lawsuit or that a claim is being made against us.

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contributions totaling $223,084 and $127,293 for the years ended December 31, 2022 and 2021, respectively.

Each participant is 100%

vested at all times in employee and employer matching contributions.

and Distributor Agreements.

The Company entered into an agreement that required it to make monthly payments that will be applied

to future commissions and/or consulting fees to be earned by the provider.

The agreement is with a limited liability company (“LLC”)

that is minority owned by a relative of the Company’s chief financial officer.

Under the agreement, dated January 15, 2016, and

as amended on February 13, 2017, the LLC provides consulting services for developing a new distribution channel outside of law enforcement

for its body-worn camera and related cloud storage products to customers in the United States.

The Company advanced amounts to the LLC

against commissions ranging from $5,000 to $6,000 per month plus necessary and reasonable expenses for the period through June 30, 2017,

which can be automatically extended based on the LLC achieving minimum sales quotas.

The agreement was renewed in January 2017 for a

period of three years, subject to yearly minimum sales thresholds that would allow the Company to terminate the contract if such minimums

As of December 31, 2021, the Company had advanced a total of $274,731 pursuant to this agreement which has been fully reserved

for a net advance of $-0-.

The minimum sales threshold was not met, and the Company discontinued all advances, although the contract

has not been formally terminated.

However, the exclusivity provisions of the agreement have been terminated.

June 1, 2018, the Company entered into an agreement with an individual that required it to make monthly payments that will be applied

to future commissions and/or consulting fees to be earned by the provider.

Under the agreement, the individual provides consulting services

for developing new distribution channels both inside and outside of law enforcement for its in-car and body-worn camera systems and related

cloud storage products to customers within and outside the United States.

The Company was required to advance amounts to the individual

as an advance against commissions of $7,000 per month plus necessary and reasonable expenses for the period through August 31, 2018,

which was extended to December 31, 2018, by mutual agreement of the parties at $6,000 per month.

The parties have mutually agreed to

further extend the arrangement on a monthly basis at $5,000 per month.

The Company had advanced a total of $53,332 pursuant to this agreement,

until September 2020 when the agreement was mutually terminated, thus as of December 31, 2021, the Company had advanced $-0- pursuant

to this agreement.

Accounting Policies

Each participant is 100% vested

at all times in employee and employer matching contributions.

Accounting Estimates

significant accounting policies are summarized in Note 1, “Nature of Business and Summary of Significant Accounting Policies ,”

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for Excess and Obsolete Inventory;

Goodwill and other intangible assets;

and other intangible assets;

Compensation Expense;

Fair value of warrants;

Fair value of assets and liabilities acquired in business combinations;

value of warrants;

value of assets and liabilities acquired in business combinations;

for Income Taxes;

Redeemable Preferred Stock.

Recognition / Allowances for Doubtful Accounts.

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for our revenue cycle management segment is recorded on a net basis, as its primary source of revenue is its end-to-end service fees.

These service fees are reported as revenue monthly upon completion of the our performance obligation to provide the agreed upon services.

for our ticketing segment is recorded on a gross or net basis based on management’s assessment of whether we are acting as a principal

or agent in the transaction.

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

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

These service fees are reported as revenue monthly upon completion of our performance obligation to provide the agreed upon services.

for our entertainment segment is recorded on a gross or net basis based on management’s assessment of whether we are acting as

a principal or agent in the transaction.

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

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

sell our tickets held in inventory, which consists of one performance obligation, being to transfer control of an event ticket to the

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Revenues derived from this marketplace

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

primarily consist of service fees from entertainment 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.

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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

review all significant, unusual, or nonstandard shipments of products or delivery of services as a routine part of our accounting and

financial reporting process to determine compliance with these requirements.

4 unchanged sentences

been low risks for uncollectible accounts.

However, we have commercial customers and international distributors that present a greater

risk for uncollectible accounts than such law enforcement customers and we consider a specific reserve for bad debts based on their individual

circumstances.

Our historical bad debts have been negligible, with less than $258,000 charged off as uncollectible on cumulative revenues

of $248.0 million since we commenced deliveries during 2006.

our ticketing segment, our customers are mainly online visitors that pay at the time of the transaction, and we collect the service

However, we have commercial customers and international distributors that present a

greater risk for uncollectible accounts than such law enforcement customers and we consider a specific reserve for bad debts based

on their individual circumstances.

As of December 31, 2022, our historical bad debts have been negligible, with less than $286,000

charged off as uncollectible on cumulative revenues of $256.3 million since we commenced deliveries in 2006.

our entertainment 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.

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to this recently added segment, we will track historical bad debts and continue to assess appropriate reserves.

of December 31, 2021, and 2020, we had provided a reserve for doubtful accounts of $113,234 and $123,224, respectively.

As of December 31, 2022, and 2021,

we had provided a reserve for doubtful accounts of $152,736 and $113,234, respectively.

periodically perform a specific review of significant individual receivables outstanding for risk of loss due to uncollectability.

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consisted of the following as of December 31, 2022 and 2021:

December 31, 2022

December 31, 2021

Raw material and component parts

1 unchanged sentence

Finished goods – video solutions

goods – ticketing

for excess and obsolete inventory – video solutions

Reserve for excess and obsolete inventory – ticketing

Finished goods – entertainment

Reserve for excess and obsolete inventory – video solutions

Reserve for excess and obsolete inventory – entertainment

Total inventories

2 unchanged sentences

As reflected above, our inventory reserves represented

28.8% of the gross inventory balance as of December 31, 2021, compared to 19.3% of the gross inventory balance as of

December 31, 2020.

We had $3,915,089 and $1,960,351 in reserves for obsolete and excess inventories as of December

31, 2021 and 2020, respectively.

Total raw materials and component parts were $3,062,046 and $3,186,427 as of December 31, 2021

and 2020, respectively, a decrease of $124,381 (4%).

In June 2020, the Company moved to new and smaller warehouse facilities and

during the move sorted through its entire inventory and disposed of all excess and obsolete inventory rather than moving such distressed

products to the new location which contributed to the significant decrease in the cost of raw materials and component parts.

older version inventory component parts that were mostly or fully reserved in 2020, which was the primary cause for steady levels in

total raw materials and component parts.

Finished goods balances were $10,512,577 and $6,974,291 as of December 31, 2021 and 2020,

respectively, an increase of $3,538,286 (51%).

The increase in finished goods was primarily attributable to accumulating inventory

for the new Shield and ThermoVu TM product lines, our new body-worn cameras and docking stations, along with $2,102,272 in

inventory from our Ticketing segment, acquired in September 2021.

The increase in the inventory reserve is primarily due to inventory

obsolescence 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, LaserAlly legacy products, and ThermoVu 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 as of December 31, 2021.

44.5% of the gross inventory balance as of December 31, 2022, compared to 28.8% of the gross inventory balance as of December 31, 2021.

We had $5,489,541 and $3,915,089 in reserves for obsolete and excess inventories as of December 31, 2022 and 2021, respectively.

raw materials and component parts were $4,506,709 and $3,062,046 as of December 31, 2022 and 2021, respectively, an increase of $1,444,663

Finished goods balances were $7,816,618 and $10,512,579 as of December 31, 2022 and 2021, respectively, a decrease of $2,695,961

The decrease in finished goods was primarily attributable to declining inventory for the new Shield product line, our new body-worn

cameras and docking stations, along with a decline in inventory from our entertainment segment, acquired in September 2021.

in the inventory reserve is primarily due to inventory obsolescence 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, LaserAlly legacy products, ThermoVu products, and personal protective

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 as of December 31, 2022.

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

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as any contractual provisions that could limit or extend an asset’s useful life.

Company’s goodwill is evaluated in accordance with FASB ASC Topic 350, which requires goodwill to be assessed for impairment at least

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

an impairment evaluation of our amortizable intangible assets may also be performed if events or circumstances indicate potential impairment.

Among the factors that could trigger an impairment review are current operating results that do not align with our annual plan or historical

Company’s goodwill is evaluated in accordance with FASB ASC Topic 350, which requires goodwill to be assessed for impairment at

least annually and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

addition, an impairment evaluation of our amortizable intangible assets may also be performed if events or circumstances indicate potential

Among the factors that could trigger an impairment review are current operating results that do not align with our annual

plan or historical performance;

changes in our strategic plans or the use of our assets;

restructuring charges or other changes in our business segments;

restructuring charges or other changes in our

business segments;

competitive pressures and changes in the general economy or in the markets in which we operate;

and a significant decline in our stock

price and our market capitalization relative to our net book value.

and a significant

decline in our stock price and our market capitalization relative to our net book value.

performing our annual assessment of the recoverability of goodwill, we initially perform a qualitative analysis evaluating whether any

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and cash flows, as well as assumptions regarding discount rates, the Company’s weighted average cost of capital and other data.

most recent annual impairment test of goodwill was a qualitative analysis conducted as of December 31, 2021 that indicated no

Subsequent to completing our 2021 annual impairment test, no events or changes in circumstances were noted that required

an interim goodwill impairment test.

Note 1 — Nature of Business and Summary of Significant Accounting Policies and Note 7

— Goodwill and Other Intangible Assets in the Notes to Consolidated Financial Statements provide additional information

regarding the Company’s goodwill and other intangible assets.

most recent annual impairment test of goodwill conducted as of December 31, 2022, indicated no impairment.

Subsequent to completing our 2022 annual impairment test, no events or changes in circumstances were noted that required an interim goodwill

impairment test.

Note 1 — Nature of Business and Summary of Significant Accounting Policies and Note 8 — Goodwill and Other

Intangible Assets in the Notes to Consolidated Financial Statements provide additional information regarding the Company’s goodwill

and other intangible assets.

We generally provide up to a two-year parts and labor standard warranty on our products to our customers.

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quality and minimize claims.

Our warranty reserves were decreased to $13,742 as of December 31, 2021 compared to $31,845 as of

December 31, 2020 as we begin 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

Our warranty reserves were increased to $15,694 as of December 31, 2022 compared to $13,742 as of December

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

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.

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models to estimate share-based compensation.

Changes in the subjective input assumptions can materially affect our estimates of fair

values of our share-based compensation.

Certain share-based payment awards, such as employee stock options, may expire worthless or otherwise

result in zero intrinsic value compared to the fair values originally estimated on the grant date and reported in our financial statements.

Alternatively, values may be realized from these instruments that are significantly in excess of the fair values originally estimated

on the grant date and reported in our financial statements.

Although the fair value of employee share-based awards is determined using

an established option pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market

Changes in the subjective input assumptions can materially affect our estimates of the fair

value of our share-based compensation.

Certain share-based payment awards, such as employee stock options, may expire worthlessly or

otherwise result in zero intrinsic value compared to the fair values originally estimated on the grant date and reported in our financial

Alternatively, values may be realized from these instruments that are significantly in excess of the fair values originally

estimated on the grant date and reported in our financial statements.

Although the fair value of employee share-based awards is determined

using an established option pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller

market transaction.

In addition, we account for forfeitures as they occur.

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losses currently recorded and the likelihood that tax positions taken in tax returns will be sustained on audit.

As required by authoritative

guidance, we record deferred tax assets or liabilities based on differences between financial reporting and tax bases of assets and liabilities

using currently enacted rates that will be in effect when the differences are expected to reverse.

Authoritative guidance also requires

that deferred tax assets be reduced by a valuation allowance if it is more likely than not that all or some portion of the deferred tax

asset will not be realized.

As of December 31, 2021, cumulative valuation allowances in the amount of $16,980,000 were

recorded in connection with the net deferred income tax assets.

Based on a review of our deferred tax assets and recent operating performance,

we determined that our valuation allowance should be decreased by $7,615,000 to a balance of $16,980,000 to fully

reserve our deferred tax assets at December 31, 2021.

We determined that it was appropriate to continue to provide a full valuation reserve

on our net deferred tax assets as of December 31, 2021, because of the overall net operating loss carryforwards available.

to continue to maintain a full valuation allowance until we determine that we can sustain a level of profitability that demonstrates

required by authoritative guidance, we record deferred tax assets or liabilities based on differences between financial reporting and

tax bases of assets and liabilities using currently enacted rates that will be in effect when the differences are expected to reverse.

Authoritative guidance also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that

all or some portion of the deferred tax asset will not be realized.

As of December 31, 2022, cumulative valuation allowances in the amount

of $34,200,000 were recorded in connection with the net deferred income tax assets.

Based on a review of our deferred tax assets and

recent operating performance, we determined that our valuation allowance should be increased by $17,220,000 to a balance of $34,200,000

to fully reserve our deferred tax assets at December 31, 2022.

We determined that it was appropriate to continue to provide a full valuation

reserve on our net deferred tax assets as of December 31, 2022, because of the overall net operating loss carryforwards available.

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.

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income not be realized.

Redeemable Preferred Stock.

Preferred stock may be classified as a liability, temporary

equity (i.e., mezzanine equity) or permanent equity.

In order to determine the appropriate classification, an evaluation of the cash redemption

features is required.

Where there exists an absolute right of redemption presently or in the future, the preferred stock would be

classified as a liability.

If redemption is contingently redeemable upon the occurrence of an event that is outside of the issuer’s

control, it should be classified as mezzanine equity.

The probability that the redemption event will occur is irrelevant.

If no redemption

features exist, or if a contingent redemption feature is within the Company’s control, the preferred stock would be considered equity.

and Seasonality

has not materially affected us during the past fiscal year however, we believe that it is likely to have significant impact to all

of our operating segments in 2022 and beyond.

has not materially affected us during the past fiscal year;

however, we believe that it is likely to have significant impact to all of

our operating segments in 2023 and beyond.

We do not believe that our business is seasonal in nature;

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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-K

Item 7. Management’s Discussion and Analysis