What changed in this filing

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Item 9A. Controls and Procedures

2023-03-31 compared with 2022-04-15 · 2279 added, 1766 removed, 1235 unchanged (77% of the section changed)

1 unchanged sentence

Regarding the Effectiveness of Disclosure Controls and Procedures

the supervision and with the participation of our management, including our principal executive officer and principal financial officer,

we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures to provide reasonable

assurance of achieving the control objectives, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.

Based on their evaluation

as of December 31, 2021, the end of the period covered by this Annual Report on Form 10-K, our principal executive officer and principal

financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level to ensure that

the information required to be disclosed in reports filed or submitted under the Exchange Act, including this Annual Report on Form 10-K,

was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and was accumulated

and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely

decisions regarding required disclosure.

Under the supervision and with the participation of our management, including

our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation

of our disclosure controls and procedures to provide reasonable assurance of achieving the control objectives, as defined in Rules 13a-15(e)

and 15d-15(e) of the Exchange Act.

Based on their evaluation as of December 31, 2022, the end of the period covered by this Annual Report

on Form 10-K, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were

not effective as of December 31, 2022 due to the reasons described below.

In connection with the audit of our consolidated financial statements as

of December 31, 2022 and 2021, we identified a material weakness in our internal control over financial reporting related to the timely

detection of potential accounting misstatements.

The company believes that the increase in acquisition activities resulted in a temporary

gap of accounting resources during the year ended December 31, 2022.

To address these deficiencies, the Company will implement additional

procedures designed to accelerate the tempo of upwardly reporting subsidiaries and the visibility of receipt of reports by the parent

company to allow for ample opportunities for review procedures in the financial reporting process.

Report on Internal Control Over Financial Reporting

18 unchanged sentences

with the policies or procedures may deteriorate.

Securities and Exchange Commission guidance allows companies to exclude acquisitions from management’s report on internal control

over financial reporting for the first year after the acquisition.

In September 2021, we acquired TicketSmarter, LLC and Goody Tickets,

LLC (see Item 8.

Financial Statements and Supplementary Data—Note 20—TicketSmarter Acquisition).

Due to the timing of the

transaction, management has excluded TicketSmarter from our annual evaluation of internal control over financial reporting.

The preliminary

total assets, excluding goodwill and identifiable intangible assets, for TicketSmarter represent approximately 14.8% to our consolidated

assets as of December 31, 2021.

The preliminary total revenue of this acquisition represents less than 50.0% of our consolidated revenues

for the year ended December 31, 2021.

SEC guidance allows companies to exclude acquisitions from management’s report on internal control over financial reporting for

the first year after the acquisition.

During 2022, the Company completed one business acquisition and one asset acquisition within the

revenue cycle management segment.

Due to the timing of the transaction, management has excluded the transaction from our annual evaluation

of internal control over financial reporting.

The preliminary total revenue of this acquisition represents less than 10% of our consolidated

revenues for the year ended December 31, 2022.

connection with the filing of this Annual Report on Form 10-K, our management assessed the effectiveness of our internal control over

3 unchanged sentences

assessment using the framework in 2013 Internal Control – Integrated Framework , management believes that, as of December

31, 2021, our internal control over financial reporting is effective.

31, 2022, our internal control over financial reporting is not effective.

Material Weakness

In connection with the audit of

our consolidated financial statements as of December 31, 2022 and 2021, we identified a material weakness in our internal control over

financial reporting related to timely review and detection of potential accounting misstatements, which in the aggregate, constitute a

material weakness.

Remediation Activities

As part of our plan to remediate

this material weakness, we are performing a full review of our internal control procedures.

We have implemented, and plan to continue

to implement, new controls and new processes.

We have hired and plan to continue to hire additional qualified personnel and establish

more robust processes to support our internal control over financial reporting, including clearly defined roles and responsibilities.

The Company anticipates time being required to complete the implementation and to assess and ensure the sustainability of these controls.

The material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management

has concluded, through testing, that these controls are operating effectively.

in Internal Control Over Financial Reporting

are in the process of integrating our recent acquisitions, which were acquired at numerous dates throughout 2021, into our overall internal

control over financial reporting process.

Other than this integration, there

have been no changes in our internal control over financial reporting during the year ended December 31, 2021, that have materially affected,

or are reasonably likely to materially affect, our internal control over financial reporting.

We have not experienced any material

impact to our internal controls over financial reporting resulting from the fact that employees are working remotely due to the global

COVID-19 pandemic.

We are continually monitoring and assessing the impact of the global COVID-19 pandemic on our internal controls to

minimize the affect on their design and operating effectiveness.

Disclosure Regarding

Foreign Jurisdictions that Prevent Inspections.

Not applicable.

have completed the process of integrating our recent business acquisition, which was acquired at the beginning of 2022, into our

overall internal control over financial reporting process.

Other than this integration, there have been no changes in our internal

control over financial reporting during the year ended December 31, 2022, that have materially affected, or are reasonably likely to

materially affect, our internal control over financial reporting.

We are continually monitoring and assessing our internal controls

to ensure the appropriate design and operating effectiveness.

Regarding Foreign Jurisdictions that Prevent Inspections.

Executive Officers and Corporate Governance.

information required by Item 10 is incorporated

herein by reference to our definitive proxy statement, which we expect to file no later than 120 days after December 31, 2021 (our “2022

Proxy Statement”).

The names of the members of our Board of Directors and certain information

about them as of the date of this Annual Report on Form 10-K are set forth below:

of Board of Director Member (4)

President and Chief Executive Officer

Richie (1)(2)(3)

Independent Director, Chairman of the Nominating Committee and Compensation Committee and attorney

Chairman of Audit Committee

Caulfield (1)(2)(3)

of Audit Committee

of Compensation Committee

of Nominating Committee

address of each executive officer and director listed is 14001 Marshall Drive, Lenexa, Kansas 66215.

Board has determined that Messrs.

Richie, Hutchins, and Caulfield are “independent directors,” as defined by the rules and

listing standards of The Nasdaq Stock Market LLC (“Nasdaq”).

In making this determination, the Board considered the transactions

and relationships disclosed under “Certain Relationships and Related Transactions” below.

Ross has served as Chairman, President and Chief Executive Officer (“CEO”) since September 2005.

From March 1992

to June 2005, Mr.

Ross was the Chairman and President of American Noble Gas Inc.

(formerly known as Infinity Energy Resources, Inc.),

a publicly held oil and gas exploration and development company (“AMGAS”) and served as an officer and director of each of

AMGAS’s subsidiaries.

He resigned from all his positions with AMGAS in June 2005, except Chairman, but was reappointed President

in October 2006.

From 1991 until March 1992, he founded and served as President of Midwest Financial, a financial services corporation

involved in mergers, acquisitions, and financing for corporations in the Midwest.

From 1990 to 1991, Mr.

Ross was employed by Duggan

Securities, Inc., an investment banking firm in Lenexa, Kansas, where he primarily worked in corporate finance.

From 1989 to 1990, he

was employed by Stifel, Nicolaus & Co., a member of the New York Stock Exchange, where he was an investment executive.

Ross was self-employed as a business consultant.

From 1985 to 1987, Mr.

Ross was President and founder of Kansas Microwave,

Inc., which developed a radar detector product.

From 1981 to 1985, he was employed by Birdview Satellite Communications, Inc., which

manufactured and marketed home satellite television systems, initially as a salesman and later as National Sales Manager.

Ross estimates

he devoted most of his time to Digital Ally and the balance to AMGAS in 2020.

In late 2007, AMGAS sold a substantial portion of its operating

assets and has not required a substantial amount of his time since such point.

Ross holds no public company directorships other than

with the Company and AMGAS and has not held any others during the previous five years.

The Company believes that Mr.

entrepreneurial, financial, and business expertise and his experience with micro-cap public companies and his role as President and Chief

Executive Officer give him the qualifications and skills to serve as a Director.

Richie has been the Lead Independent Director of Digital Ally since September 2005.

He is also the Chairman of the Compensation

Committee and Nominating Committee and a member of the Audit Committee.

Since June 1, 1999, Mr.

Richie has been a director of AMGAS.

Additionally, until 2017, Mr.

Richie served as a member of the board of directors of Columbia Mutual Funds, (or mutual fund companies

acquired by or merged with Columbia Mutual Funds), a family of investment companies managed by Ameriprise Financial, Inc.

2015, he was of counsel to the Detroit law firm of Lewis & Munday, P.C.

From 2007 to 2014, Mr.

Richie served as a member of the board

of directors of OGE Energy Corp.

He holds no other public directorships and has not held any others during the previous five years.

Richie served as the Vice-Chairman of the Board of Trustees and Chairman of the Compensation Committee for the Henry Ford Health

System, in Detroit.

Richie was formerly Vice President of Chrysler Corporation and General Counsel for automotive legal affairs,

where he directed all legal affairs for its automotive operations from 1986 until his retirement in 1997.

Before joining Chrysler, he

was an associate with the New York law firm of White & Case (1973-1978) and served as director of the New York office of the Federal

Trade Commission (1978-1983).

Richie received a B.A.

from City College of New York, where he was valedictorian, and a J.D.

New York University School of Law, where he was awarded an Arthur Garfield Hays Civil Liberties Fellowship.

The Company believes that

Richie’s extensive experience as a lawyer and as an officer or director of public companies gives him the qualifications and

skills to serve as a Director.

Hutchins was elected a Director in December 2007.

He serves as Chairman of the Audit Committee and is the Board’s financial

Hutchins, a Certified Public Accountant, was a Principal with the accounting firm of Hutchins & Haake, LLC until his

retirement on July 1, 2021.

Hutchins currently serves as a director and the Chief Financial Officer of AMGAS, of which Mr.

the Chairman and President.

Hutchins has served as an instructor for the Becker CPA exam with the Keller Graduate School of Management

and has over 18 years of teaching experience preparing CPA candidates for the CPA exam.

He has over 40 years of public accounting experience,

including five years with Deloitte & Touche, LLP.

He has served on the boards of various non-profit groups and is a member of the

American Institute of Certified Public Accountants.

Hutchins earned his Bachelor of Business Administration degree in Accounting

at Washburn University in Topeka, Kansas.

Hutchins holds no other public company directorships and has not held any others during

the previous five years.

The Company believes that Mr.

Hutchins’ significant experience in finance and accounting gives him the

qualifications and skills to serve as a Director.

Caulfield was elected a Director in May 2016.

He is a member of the Audit Committee, Compensation Committee and Nominating

He served as Vice President – Strategic Development of the Company from June 1, 2009 to January 11, 2012.

was most recently (2012-2016) a Vice-Chairman at Teneo Holdings, LLC, a global advisory firm where he was responsible for the firm’s

investment banking relationships with a broad range of industrial companies.

From 2006 to 2009, Mr.

Caulfield served as a Managing Director

at Banc of America Securities (“BAS”), where he was responsible for the merger, acquisition, divestiture and restructuring

advisory services for a number of large public and private companies.

He was also in charge of BAS’s global investment banking

activities involving the Safety, Security, Engineering and Construction Industries.

Prior to joining BAS, Mr.

Caulfield spent six years

(2000-2006) as a Managing Director with Morgan Stanley in New York City, leading that global investment banking firm’s efforts

in the Aerospace and Defense Industries.

He was also responsible for the investment banking relationships with a number of Morgan Stanley’s

largest clients.

From 1989 to 2000, he worked at General Electric Capital Corp., where he served as a Managing Director and head of the

Corporate Finance Group.

In this capacity, he advised GE Capital and the industrial divisions of General Electric on such issues as capital

structuring, mergers and acquisitions, and private equity transactions.

Caulfield received an MBA from the Wharton School of the

University of Pennsylvania and a B.S.

Degree from the University of Minnesota.

The Company believes that Mr.

Caulfield’s significant

experience in investment banking and the public market gives him the qualifications and skills to serve as a Director.

Directors are elected annually and hold office until the next annual meeting of our stockholders or until their successors are elected

and qualified.

Officers are elected annually and serve at the discretion of the Board of Directors.

There is no family relationship between

any of our directors, director nominees and executive officers.

Board vacancies are filled by a majority vote of the Board.

of Directors and Committee Meetings

Board of Directors held four meetings and acted a number of times by unanimous consent resolutions during the fiscal year ended December

Each of our directors attended at least 75% of the meetings of the Board of Directors and the committees on which he served

in the fiscal year ended December 31, 2022.

Our directors are expected, absent exceptional circumstances, to attend all Board meetings

and meetings of committees on which they serve and are also expected to attend our annual meeting of stockholders.

All directors then

in office attended the 2022 annual meeting of stockholders.

of the Board of Directors

Board of Directors currently has four committees:

an Audit Committee, a Compensation Committee and a Nominating Committee.

Each committee

has a written charter approved by the Board of Directors outlining the principal responsibilities of the committee.

These charters are

also available on the Investor Relations page of our website.

All of our directors, other than our Chairman and Chief Executive Officer,

have met in executive sessions without management present on a regular basis in 2022 and year-to-date 2023.

Audit Committee appoints the Company’s independent auditors, reviews audit reports and plans, accounting policies, financial statements,

internal controls, audit fees, and certain other expenses and oversees our accounting and financial reporting process.

Specific responsibilities

include selecting, hiring and terminating our independent auditors;

evaluating the qualifications, independence and performance of our

independent auditors;

approving the audit and non-audit services to be performed by our auditors;

reviewing the design, implementation,

adequacy and effectiveness of our internal controls and critical accounting policies;

overseeing and monitoring the integrity of our

financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters;

reviewing any earnings announcements and other public announcements regarding our results of operations in conjunction with management

and our public auditors;

conferring with management and the independent auditors regarding the effectiveness of internal controls, financial

reporting processes and disclosure controls;

consulting with management and the independent auditors regarding Company policies governing

financial risk management;

reviewing and discussing reports from the independent auditors on critical accounting policies used by the

establishing procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by

the Company regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees

of concerns regarding questionable accounting or auditing matters;

reviewing and approving related-person transactions in accordance

with the Company’s policies and procedures with respect to related-person transactions and applicable rules;

reviewing the financial

statements to be included in our Annual Report on Form 10-K;

discussing with management and the independent auditors the results of the

annual audit and the results of quarterly reviews and any significant changes in our accounting principles;

and preparing the report

that the SEC requires in our annual proxy statement.

Audit Committee is comprised of three Directors, each of whom is independent, as defined by the rules and regulations of the SEC and

Nasdaq Rule 5605(a)(2).

The Audit Committee held four meetings during the year ended December 31, 2022.

The members of our Audit Committee

are Daniel F.

Hutchins (Chairman), Leroy C.

Richie and Michael J.

The Board of Directors determined that Mr.

Hutchins qualifies

as an “audit committee financial expert,” as defined under the applicable rules and listing standards of Nasdaq and SEC rules

and regulations and is independent as noted above.

the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by the Company’s independent registered public accounting

firm must be approved in advance by the Audit Committee to assure that such services do not impair the auditor’s independence from

Accordingly, the Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy (the “Policy”)

that sets forth the procedures and the conditions pursuant to which services to be performed by the independent auditors are to be pre-approved.

Pursuant to the Policy, certain services described in detail in the Policy may be pre-approved on an annual basis together with pre-approved

maximum fee levels for such services.

The services eligible for annual pre-approval consist of services that would be included under

the categories of Audit Fees, Audit-Related Fees and Tax Fees in the table, as well as services for limited review of actuarial reports

and calculations.

If not pre-approved on an annual basis, proposed services must otherwise be separately approved prior to being performed

by the independent registered public accounting firm.

In addition, any services that receive annual pre-approval but exceed the pre-approved

maximum fee level also will require separate approval by the Audit Committee prior to being performed.

The Audit Committee may delegate

authority to pre-approve audit and non-audit services to any member of the Audit Committee but may not delegate such authority to management.

Compensation Committee assists our Board of Directors in determining the development plans and compensation of our officers, directors

and employees.

Specific responsibilities include approving the compensation and benefits of our executive officers;

reviewing the performance

objectives and actual performance of our officers;

administering our stock option and other equity compensation plans;

and reviewing

and discussing with management the compensation discussion and analysis that the SEC requires in our future Form 10-Ks and proxy statements.

Compensation Committee is comprised of three Directors, whom the Board considers to be independent under the applicable rules and listing

standards of Nasdaq and SEC rules and regulations.

The members of our Compensation Committee are Leroy C.

Richie (Chairman) and Michael

The Compensation Committee held two meetings and acted several times by unanimous written consent resolutions during the

year ended December 31, 2022.

Ross, our Chief Executive Officer, does not participate in the determination of his own compensation

or the compensation of directors.

However, he makes recommendations to the Compensation Committee regarding the amount and form of the

compensation of the other executive officers and key employees, and he often participates in the Compensation Committee’s deliberations

about such persons’ compensation.

Heckman, our Chief Financial Officer (“CFO”), also assists the Compensation

Committee in its deliberations regarding executive officer, director and employee compensation.

No other executive officers participate

in the determination of the amount or the form of the compensation of executive officers or directors.

The Compensation Committee does

not utilize the services of an independent compensation consultant to assist in its oversight of executive and director compensation.

Nominating Committee assists our Board of Directors by identifying and recommending individuals qualified to become members of our Board

of Directors, reviewing correspondence from our stockholders, and establishing, evaluating, and overseeing our corporate governance guidelines.

Specific responsibilities include the following:

evaluating the composition, size and governance of our Board of Directors and its committees

and making recommendations regarding future planning and appointing directors to our committees;

establishing a policy for considering

stockholder nominees for election to our Board of Directors;

and evaluating and recommending candidates for election to our Board of

Nominating Committee strives for a Board composed of individuals who bring a variety of complementary skills, expertise, or background

and who, as a group, will possess the appropriate skills and experience to oversee our business.

The diversity of the members of the

Board relates to the selection of its nominees.

While the Committee considers diversity and variety of experiences and viewpoints to

be important factors, it does not believe that a director nominee should be chosen or excluded solely or largely because of race, color,

gender, national origin or sexual orientation or identity.

In selecting a director nominee for recommendation to our Board, our Nominating

Committee focuses on skills, expertise or background that would complement the existing members on the Board.

Accordingly, although diversity

may be a consideration in the Committee’s process, the Committee and the Board of Directors do not have a formal policy regarding

the consideration of diversity in identifying director nominees.

the Nominating Committee has either identified a prospective nominee or determined that an additional or replacement director is required,

the Nominating Committee may take such measures as it considers appropriate in connection with its evaluation of a director candidate,

including candidate interviews, inquiry of the person or persons making the recommendation or nomination, engagement of an outside search

firm to gather additional information, or reliance on the knowledge of the members of the Board of Directors or management.

In its evaluation

of director candidates, including the members of the Board eligible for re-election, the Nominating Committee considers a number of factors,

the current size and composition of the Board of Directors, the needs of the Board of Directors and the respective committees

of the Board, and such factors as judgment, independence, character and integrity, age, area of expertise, diversity of experience, length

of service and potential conflicts of interest.

Nominating Committee of the Board selects director nominees and recommends them to the full Board of Directors.

In relation to such nomination

process, the Nominating Committee:

the criteria for the selection of prospective directors and committee members;

the composition and size of the Board and its committees to ensure proper expertise and diversity among its members;

the performance and contributions of directors eligible for re-election;

the desired qualifications for individual directors and desired skills and characteristics for the Board;

persons who can provide needed skills and characteristics;

possible candidates for Board membership;

any potential conflicts of interests between such candidates and the Company’s interests;

information concerning the candidates with the Board and solicits input from other directors.

Nominating Committee has specified the following minimum qualifications that it believes must be met by a nominee for a position on the

the highest personal and professional ethics and integrity;

proven achievement and competence in the nominee’s field and

the ability to exercise sound business judgment;

skills that are complementary to those of the existing Board;

the ability to assist

and support management and make significant contributions to our success;

the ability to work well with the other directors;

of the person’s familiarity with the issues affecting our business;

an understanding of the fiduciary responsibilities that are

required of a member of the Board of Directors;

and the commitment of time and energy necessary to diligently carry out those responsibilities.

A candidate for director must agree to abide by our Code of Ethics and Conduct.

completing its evaluation, the Nominating Committee makes a recommendation to the full Board of Directors as to the persons who should

be nominated to the Board, and the Board of Directors determines the nominees after considering the recommendation and report of the

Nominating Committee is comprised of two Directors, whom the Board considers to be independent under the applicable rules and listing

standards of Nasdaq and SEC rules and regulations.

The Nominating Committee held one meeting during the year ended December 31, 2022.

The members of our Nominating Committee are Leroy C.

Richie (Chairman) and Michael J.

of Directors’ Role in the Oversight of Risk Management

face a variety of risks, including credit, liquidity, and operational risks.

In fulfilling its risk oversight role, our Board of Directors

focuses on the adequacy of our risk management process and overall risk management system.

Our Board of Directors believes that an effective

risk management system will (i) adequately identify the material risks that we face in a timely manner;

(ii) implement appropriate risk

management strategies that are responsive to our risk profile and specific material risk exposures;

(iii) integrate consideration of

risk and risk management into our business decision-making;

and (iv) include policies and procedures that adequately transmit necessary

information regarding material risks to senior executives and, as appropriate, to the Board or relevant committee.

Board of Directors has designated the Audit Committee to take the lead in overseeing risk management at the Board of Directors level.

Accordingly, the Audit Committee schedules time for periodic review of risk management, in addition to its other duties.

In this role,

the Audit Committee receives reports from management, independent registered public accounting firm, outside legal counsel, and other

advisors, and strives to generate serious and thoughtful attention to our risk management process and system, the nature of the material

risks we face, and the adequacy of our policies and procedures designed to respond to and mitigate these risks.

the Board of Directors has assigned the primary risk oversight to the Audit Committee, it also periodically receives information about

our risk management system and the most significant risks that we face.

This is principally accomplished through Audit Committee reports

to the Board of Directors and summary versions of the briefings provided by management and advisors to the Audit Committee.

addition to the formal compliance program, our Board of Directors and the Audit Committee encourage management to promote a corporate

culture that understands risk management and incorporates it into our overall corporate strategy and day-to-day business operations.

Our risk management structure also includes an ongoing effort to assess and analyze the most likely areas of future risk for us.

result, the Board of Directors and the Audit Committee periodically ask our executives to discuss the most likely sources of material

future risks and how we are addressing any significant potential vulnerability.

Leadership Structure

Board of Directors does not have a policy on whether the roles of Chief Executive Officer and Chairman of the Board of Directors should

be separate and, if they are to be separate, whether the Chairman of the Board should be selected from the non-employee directors or

be an employee.

Our Board of Directors believes that it should be free to make a choice from time to time in any manner that is in the

best interest of us and our stockholders.

The Board of Directors believes that Mr.

Ross’s service as both Chief Executive Officer

and Chairman of the Board is in the best interest of us and our stockholders.

Ross possesses detailed and in-depth knowledge of the

issues, opportunities and challenges we face and is thus best positioned to develop agendas, with the input of Mr.

Richie, the lead independent

director, to ensure that the Board’s time and attention are focused on the most critical matters.

His combined role enables decisive

leadership, ensures clear accountability, and enhances our ability to communicate our message and strategy clearly and consistently to

our stockholders, employees, customers, and suppliers, particularly during times of turbulent economic and industry conditions.

Board of Directors also believes that a lead independent director is part of an effective Board leadership structure.

To this end, the

Board has appointed Mr.

Richie as the lead independent director.

The independent directors meet regularly in executive sessions at which

only they are present, and the lead independent director chairs those sessions.

As the lead independent director, Mr.

Richie calls meetings

of the independent directors as needed;

sets the agenda for meetings of the independent directors;

presides at meetings of the independent

is the principal liaison on Board issues between the independent directors and the Chairman and between the independent directors

and management;

provides feedback to the Chairman and management on the quality, quantity and timeliness of information sent to the Board;

is a member of the Compensation Committee that evaluates the CEO’s performance;

and oversees the directors’ evaluation of

the Board’s overall performance.

The Nominating Committee and the Board believe that its leadership structure, which includes the

appointment of a lead independent director, is appropriate because it, among other things, provides for an independent director who gives

board member leadership and each of the directors, other than Mr.

Ross, is independent.

Our Board of Directors believes that the independent

directors provide effective oversight of management.

Communications with the Board of Directors

may communicate with the Board of Directors by writing to us as follows:

Digital Ally, Inc., attention:

Corporate Secretary, 14001 Marshall

Drive, Lenexa, Kansas 66215.

Stockholders who would like their submission directed to a member of the Board of Directors may so specify

and the communication will be forwarded as appropriate.

for Director Recommendations and Nominations

Nominating Committee will consider candidates for Board membership suggested by Board members, management and our stockholders.

of our Nominating Committee is to consider recommendations for candidates to the Board of Directors from any stockholder of record in

accordance with our Bylaws.

A director candidate recommended by our stockholders will be considered in the same manner as a nominee recommended

by a Board member, management or other sources.

In addition, a stockholder may nominate a person directly for election to the Board of

Directors at an annual meeting of stockholders, provided the stockholder meets the requirements set forth in our Bylaws.

We do not pay

a fee to any third party to identify or evaluate or assist in identifying or evaluating potential nominees.

Recommendations for Director Nominations .

Stockholder recommendations for director nominations may be submitted to the

Company at the following address:

Digital Ally, Inc., Attention:

Corporate Secretary, 14001 Marshall Drive, Lenexa, Kansas 66215.

recommendations will be forwarded to the Nominating Committee for consideration, provided that they are accompanied by sufficient information

to permit the Board to evaluate the qualifications and experience of the nominees, and they are in time for the Nominating Committee

to do an adequate evaluation of the candidate before the Annual Meeting.

The submission must be accompanied by a written consent of the

individual to stand for election if nominated by the Board of Directors and to serve if elected and to cooperate with a background check.

Nominations of Directors.

Our Bylaws provide that, in order for a stockholder to nominate a director at an annual meeting of

stockholders, the stockholder must give timely written notice to our Secretary and such notice must be received at our principal executive

offices not less than one-hundred-and-twenty (120) days before the date of our release of the proxy statement to stockholders in connection

with our previous year’s annual meeting of stockholders.

Such stockholder’s notice shall include, with respect to each person

whom the stockholder proposes to nominate for election as a director, all information relating to such nominee that is required under

the Exchange Act, including such person’s written consent to being named in the proxy statement as a nominee and serving as a director,

and cooperating with a background investigation.

In addition, the stockholder must include in such notice the name and address, as they

appear on our records, of the stockholder proposing the nomination of such person, and the name and address of the beneficial owner,

if any, on whose behalf the nomination is made, the class and number of shares of our capital stock that are owned beneficially and of

record by such stockholder of record and by the beneficial owner, if any, on whose behalf the nomination is made, and any material interest

or relationship that such stockholder of record and/or the beneficial owner, if any, on whose behalf the nomination is made may respectively

have in such business or with such nominee.

At the request of the Board of Directors, any person nominated for election as a director

shall furnish to our Secretary the information required to be set forth in a stockholder’s notice of nomination that pertains to

be timely in the case of a special meeting or if the date of the annual meeting is changed by more than thirty (30) days from such anniversary

date, a stockholder’s notice must be received at our principal executive offices no later than the close of business on the tenth

(10 th ) day following the earlier of the day on which notice of the meeting date was mailed or public disclosure of the meeting

date was made.

Compensation Committee Interlocks and Insider Participation

None of our executive officers serves, or in the past has served, as a

member of the Compensation Committee.

None of the members of our Compensation Committee is, or has ever been, an officer or employee of

of Ethics and Conduct

Board of Directors has adopted a Code of Ethics and Conduct that is applicable to all of our employees, officers and directors.

Our Code of Ethics and Conduct is intended to ensure that our employees, officers and directors act in accordance with the highest

ethical standards.

The Code of Ethics and Conduct is available on the Investor Relations page of our website at http://www.digitalally.com

and the Code of Ethics and Conduct was filed as an exhibit to our Annual Report on Form 10-KSB filed March 4, 2008.

Compensation.

information required by Item is incorporated herein by reference to our 2022 Proxy Statement.

following table presents information concerning the total compensation of the Company’s Chief Executive Officer (“CEO”),

Chief Financial Officer (“CFO”) and Chief Operating Officer (“COO”) and collectively with the CEO and the CFO,

the “Named Executive Officers”) for services rendered to the Company in all capacities for the years ended December 31, 2022

and 2021, as required by Item 402(m)(2) of Regulation S-K.

Compensation Table

and Principal Position

other compensation ($) (2)

CEO and President

Treasurer and Secretary

Represents aggregate grant date fair value pursuant to ASC Topic 718 for the respective year for stock options granted.

to Note 14 to the consolidated financial statements for a further description of the awards and the underlying assumptions utilized to

determine the amount of grant date fair value related to such grants.

Amounts included in all other compensation include the following items:

the employer contribution to the Company’s 401(k) Retirement

Savings Plan (the “401(k) Plan”) on behalf of the named executive.

We are required to provide a 100% matching contribution

for all who elect to contribute up to 3% of their compensation to the plan and a 50% matching contribution for all employees’ elective

deferral between 4% and 5%.

The employee (i) is 100% vested at all times in the employee contributions and employer matching contributions;

(ii) receives Company paid healthcare insurance;

(iii) receives Company paid contributions to health savings accounts;

and (iv) receives

Company paid life, accident and disability insurance.

See “All Other Compensation Table” below.

Stock awards include the following restricted stock granted during 2021 to Mr.

15,000 shares at $55.20 per share that vest 50%

on January 6, 2022 and 50% on January 6, 2023, subject to Mr.

Ross remaining an employee of the Company at that point in time.

Stock awards include the following restricted stock granted during 2021 to Mr.

7,500 shares at $55.20 per share that vest 50%

on January 6, 2022 and 50% on January 6, 2023, subject to Mr.

Heckman remaining an employee of the Company at that point in time.

Stock awards include the following restricted stock granted during 2021 to Mr.

2,500 shares at $25.20 per share that vest ratably

over the two-year period ending September 20, 2023.

Stock awards include the following restricted stock granted during 2022 to Mr.

17,500 shares at $21.40 per share that vest 50%

on January 7, 2023 and 50% on January 7, 2024, subject to Mr.

Ross remaining an employee of the Company at that point in time.

Stock awards include the following restricted stock granted during 2022 to Mr.

3,750 shares at $21.40 per share that on January

7, 2023, subject to Mr.

Heckman remaining an employee of the Company at that point in time.

Stock awards include the following restricted stock granted during 2022 to Mr.

5,000 shares at $21.40 per share that vest 20% annually

on the anniversary of January 7 from 2023 to 2027, subject to Mr.

Han remaining an employee of the Company at that point in time.

Han was appointed Chief Operating Officer on December 13, 2021, thus Mr.

Han’s 2021 compensation was set by management prior

to his appointment as a named executive officer of the Company.

Other Compensation Table

and Principal Position

contributions

CEO and President

Treasurer and Secretary

Our executive compensation plan is based on attracting and retaining qualified professionals who possess the skills and

leadership necessary to enable us to achieve earnings and profitability growth to satisfy its stockholders.

We must, therefore, create

incentives for these executives to achieve both our and individual performance objectives using performance-based compensation programs.

No one component is considered by itself, but all forms of the compensation package are considered in total.

Wherever possible, objective

measurements will be utilized to quantify performance, but many subjective factors still come into play when determining performance.

The main elements of its compensation package consist of base salary, stock options or restricted stock awards and

The base salary for each executive officer is reviewed and compared to the prior year, with considerations given for

increase or decrease.

The review is generally on an annual basis but may take place more often in the discretion of the Compensation

January 7, 2021, the Compensation Committee restored the annual base salaries of Stanton E.

Ross, President and Chief Executive Officer,

Heckman, Chief Financial Officer, Treasurer and Secretary, at $250,000 and $230,000, respectively for 2021.

Compensation Committee plans to review the base salaries for possible adjustments on an annual basis.

Base salary adjustments will be

based on both individual and our performances and will include both objective and subjective criteria specific to each executive’s

role and responsibility with us.

Options and Restricted Stock Awards.

The Compensation Committee determined stock option and restricted stock awards based on

numerous factors, some of which include responsibilities incumbent with the role of each executive with us, tenure with us, as well as

our performance.

The vesting period of options and restricted stock is also tied, in some instances, to our performance directly related

to certain executive’s responsibilities with us.

The Compensation Committee determined that Messrs.

Ross and Heckman were eligible

for awards of stock options or restricted stock in 2021 based on their performance.

Refer to the “Grants of Plan-Based Awards”

table below for restricted stock awards made in 2021.

The Committee also determined that Messrs.

Ross, Heckman, and Han would be eligible

in 2022 for awards of restricted stock or stock options.

The Compensation Committee determined to award bonuses to each of the executive officers in 2022 and 2021, as set forth in the

foregoing table.

Refer to the “Summary Compensation Table” above for the bonuses paid to Messrs.

Ross and Heckman in 2022

In fiscal 2022, Messrs.

Ross and Heckman were eligible for bonuses of up to $250,000 and $120,000, respectively.

awarded a partial 2022 bonus of $100,000.

The Compensation Committee reviews each executive officer’s performance on a quarterly

basis and determines what, if any, portion of the bonus he has earned and will be paid as of such point.

In July 2008, we amended and restated our 401(k) Plan.

The amended 401(k) Plan requires us to provide a 100% matching contribution

for employees who elect to contribute up to 3% of their compensation to the plan and a 50% matching contribution for employees’

elective deferrals between 4% and 5%.

We have made matching contributions for executives who elected to contribute to the 401(k) Plan

Each participant is 100% vested at all times in employee and employer matching contributions.

As of December 31, 2022, a

total of 23,120 shares of our Common Stock were held in the 401(k) Plan.

Heckman, as trustee of the 401(k) Plan, holds the voting

power as to the shares of our Common Stock held in the 401(k) Plan.

We have no profit-sharing plan in place for our employees.

we may consider adding such a plan to provide yet another level of compensation to our compensation plan.

following table presents information concerning the grants of plan-based awards to the Named Executive Officers during the year ended

December 31, 2022:

of Plan-Based Awards

shares of stock

CEO and President

Treasurer and Secretary

These restricted stock awards were made under the Digital Ally, Inc.

Stock Option and Restricted Stock Plans and vest over a two-year

period (50% on January 7, 2023 and 50% on January 7, 2024) contingent upon whether the individual is still employed by us at that point.

These restricted stock awards were made under the Digital Ally, Inc.

Stock Option and Restricted Stock Plans and vest over a one-year

period contingent upon whether the individual is still employed by us at that point.

These restricted stock awards were made under the Digital Ally, Inc.

Stock Option and Restricted Stock Plans and vest over a five-year

period (20% on each anniversary of January 7 from 2023 to 2027) contingent upon whether the individual is still employed by us at that

Stock awards noted represent the aggregate amount of grant date fair value as determined under ASC Topic 718.

Please refer to Note 14

to the consolidated financial statements that appear in our Annual Report on Form 10-K, filed with the SEC on April 15, 2022, for a further

description of the awards and the underlying assumptions utilized to determine the amount of grant date fair value related to such grants.

Termination of Employment and Change-in-Control Arrangements

do not have any employment agreements with any of our executive officers.

However, on December 23, 2008, we entered into retention agreements

with the following executive officers:

Ross and Thomas J.

In April 2018 we amended these agreements.

Agreements - Potential Payments upon Termination or Change of Control

following table sets forth for each named executive officer potential post-employment payments and payments on a change in control and

assumes that the triggering event took place on January 1, 2023 and that the amendments to the retention agreements of each person were

Agreement Compensation

retention agreements guarantee the executive officers’ specific payments and benefits upon a Change in Control of the Company.

The retention agreements also provide for specified severance benefits if, after a Change in Control of the Company occurs, the executive

officer voluntarily terminates employment for “Good Reason” or is involuntarily terminated without “Cause.”

the retention agreements, a “Change in Control” means (i) one party alone, or acting with others, has acquired or gained

control over more than 50% of the voting shares of the Company;

(ii) the Company merges or consolidates with or into another entity or

completes any other corporate reorganization, if more than 50% of the combined voting power of the surviving entity’s securities

outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not stockholders of the

Company immediately prior to such merger, consolidation or other reorganization;

(iii) a majority of the Board of Directors is replaced

and/or dismissed by the stockholders of the Company without the recommendation of or nomination by the Company’s current Board

of Directors;

(iv) the Company’s Chief Executive Officer (the “CEO”) is replaced and/or dismissed by stockholders without

the approval of the Board of Directors;

or (v) the Company sells, transfers or otherwise disposes of all or substantially all of the

consolidated assets of the Company and the Company does not own stock in the purchaser or purchasers having more than 50% of the voting

power of the entity owning all or substantially all of the consolidated assets of the Company after such purchase.

Reason” means either (i) a material adverse change in the executive’s status as an executive or other key employee of the

Company, including without limitation, a material adverse change in the executive’s position, authority, or aggregate duties or

responsibilities;

(ii) any adverse change in the executive’s base salary, target bonus or benefits;

or (iii) a request by the Company

to materially change the executive’s geographic work location.

means (i) the executive has acted in bad faith and to the detriment of the Company;

(ii) the executive has refused or failed to act in

accordance with any specific lawful and material direction or order of his or her supervisor;

(iii) the executive has exhibited, in regard

to employment, unfitness or unavailability for service, misconduct, dishonesty, habitual neglect, incompetence, or has committed an act

of embezzlement, fraud or theft with respect to the property of the Company;

(iv) the executive has abused alcohol or drugs on the job

or in a manner that affects the executive’s job performance;

and/or (v) the executive has been found guilty of or has plead nolo

contendere to the commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person.

termination for Cause, the Company shall give the executive written notice of the reason for such potential termination and provide the

executive a 30-day period to cure such conduct or act or omission alleged to provide grounds for such termination.

any Change in Control occurs and the executive continues to be employed as of the completion of such Change in Control, upon completion

of such Change in Control, as payment for the executive’s additional efforts during such Change in Control, the Company shall pay

the executive a Change in Control benefit payment equal to three months of the his base salary at the rate in effect immediately prior

to the Change in Control completion date, payable in a lump sum net of required tax withholdings.

If any Change in Control occurs, and

if, during the one-year period following the Change in Control, the Company terminates the executive’s employment without Cause

or the executive submits a resignation for Good Reason (the effective date of such termination or resignation, the “Termination

Date”), then:

Company shall pay the executive severance pay equal to 12 months of his base salary at the higher of the rate in effect immediately

prior to the Termination Date or the rate in effect immediately prior to the occurrence of the event or events constituting Good

Reason, payable on the Termination Date in a lump sum net of required tax withholdings, plus all other amounts then payable by the

Company to the executive less any amounts then due and owing from the executive to the Company;

Company shall provide continuation of the executive’s health benefits at the Company’s expense for 18 months following

the Termination Date;

executive’s outstanding employee stock options shall fully vest and be exercisable for a 90-day period following the Termination

executive is not entitled to the above severance benefits for a termination based on death or disability, resignation without Good Reason

or termination for Cause.

Following the Termination Date, the Company shall also pay the executive all reimbursements for expenses in

accordance with the Company’ policies, within ten days of submission of appropriate evidence thereof by the executive.

following table presents information concerning the outstanding equity awards for the Named Executive Officers as of December 31, 2022:

Equity Awards at Fiscal Year-End

unexercisable

CEO and President

Treasurer and Secretary

These stock option and restricted stock awards were made under the Digital Ally, Inc.

Stock Option and Restricted Stock Plans and vest

over the prescribed period contingent upon whether the individual is still employed by the Company at that point.

Market value based upon the closing market price of $4.60 on December 31, 2022.

following table presents information concerning the stock options exercised and the vesting of restricted stock awards during 2021 for

the Named Executive Officers for the year ended December 31, 2022:

Option Exercises and Restricted Stock Vested

Option Awards

Number of Shares acquired realized on exercise (#)

Value realized

on exercise ($)

Chairman, CEO and President

$ 160,500 (1)

CFO, Treasurer and Secretary

on the closing market price of our Common Stock of $21.40 on January 7, 2022, the date of vesting for 7,500 shares of Common Stock

Ross, and 3,750 shares of Common Stock for Mr.

on the closing market price of our Common Stock of $12.00 on September 20, 2022, the date of vesting for 1,250 shares of Common Stock

number of stock options and restricted stock awards that an employee, director, or consultant may receive under our Plans (defined below

under “Information Regarding Plans and Other Arrangements Not Subject to Security Holder Action”) is in the discretion of

the administrator and therefore cannot be determined in advance.

The Board of Directors’ policy in 2022 was to grant officers an

award of 17,500 restricted shares of Common Stock to our CEO/President and 3,750 restricted shares of Common Stock to our CFO/Treasurer

and each non-employee director an award of options to purchase 5,000 shares of Common Stock, all subject to vesting requirements.

following table sets forth (a) the aggregate number of shares of Common Stock subject to options granted under the Plans during the year

ended December 31, 2022 and (b) the average per share exercise price of such options.

Options and Restricted Stock Grants

Name of Individual or Group

Number of Restricted

Shares of Common

Stock Granted

Share Exercise

Ross, Chairman of the Board of Directors, CEO & President

Richie, Director

Hutchins, Director

Caulfield, Director

Heckman, Vice President, CFO, Treasurer & Secretary

All executive officers, as a group

All directors who are not executive officers, as a group

All employees who are not executive officers, as a group

non-employee directors received the stock option grants noted in the “Director Compensation” table below for their service

on the Board of Directors in 2022, including on the Audit, Nominating and Compensation Committees.

July 2021, we granted to Messrs.

Richie, Caulfield and Hutchins each options exercisable to acquire 5,000 shares of Common Stock at an

exercise price of $33.40 per share for their service on the Board of Directors until the next annual meeting of stockholders with vesting

to occur ratably through May 31, 2022, provided each person has remained a director at such dates.

compensation for the year ended December 31, 2022 was as follows:

Fees earned or paid in

Ross, Chairman of the Board of Directors (1)

a Named Executive Officer, Mr.

Ross’s compensation and option awards are fully reflected in the “Summary Compensation”

table, and elsewhere under “Executive Compensation.” He did not receive compensation, stock awards or options for his

services as a director.

Option and Restricted Stock Grants to Directors

Number of Restricted Shares of Common Stock Granted

Number of Options Granted

Average per Share Exercise Price

Ross, Chairman of the Board of Directors

Richie, Director

Hutchins, Director

Caulfield, Director

Authorized for Issuance Under Equity Compensation Plans

Board of Directors adopted the 2005 Stock Option and Restricted Stock Plan (the “2005 Plan”) on September 1, 2005.

Plan authorized us to reserve 15,625 shares of our Common Stock for issuance upon exercise of options and grant of restricted stock awards.

The 2005 Plan terminated in 2015 with 1,078 shares of Common Stock reserved for awards that are now unavailable for issuance.

Stock options

granted under the 2005 Plan that remain unexercised and outstanding as of December 31, 2022 total 284.

January 17, 2006, our Board adopted the 2006 Stock Option and Restricted Stock Plan (the “2006 Plan”).

The 2006 Plan authorizes

us to reserve 9,375 shares of Common Stock for future grants under it.

The 2006 Plan terminated in 2016 with 2,739 shares of Common Stock

reserved for awards that are now unavailable for issuance.

Stock options granted under the 2006 Plan that remain unexercised and outstanding

as of December 31, 2022 total 531.

January 24, 2007, our Board adopted the 2007 Stock Option and Restricted Stock Plan (the “2007 Plan”).

The 2007 Plan authorizes

us to reserve 9,375 shares of Common Stock for future grants under it.

The 2007 Plan terminated in 2017 with 4,733 shares of Common Stock

reserved for awards that are now unavailable for issuance.

There are no stock options granted under the 2007 Plan that remain unexercised

and outstanding as of December 31, 2022.

January 2, 2008, our Board adopted the 2008 Stock Option and Restricted Stock Plan (the “2008 Plan”).

The 2008 Plan authorizes

us to reserve 6,250 shares of Common Stock for future grants under it.

The 2008 Plan terminated in 2018 with 2,025 shares of Common Stock

reserved for awards that are now unavailable for issuance.

There are no stock options granted under the 2008 Plan that remain unexercised

and outstanding as of December 31, 2022.

March 18, 2011, our Board adopted the 2011 Stock Option and Restricted Stock Plan (the “2011 Plan”).

The 2011 Plan authorizes

us to reserve 3,125 shares of Common Stock for future grants under it.

At December 31, 2022, there were 438 shares of Common Stock reserved

for awards available for issuance under the 2011 Plan.

Stock options granted under the 2011 Plan that remain unexercised and outstanding

as of December 31, 2022 total 50.

March 22, 2013, our Board adopted the 2013 Stock Option and Restricted Stock Plan (the “2013 Plan”).

The 2013 Plan was amended

on March 28, 2014 and November 14, 2014 to increase the number of shares of Common Stock authorized and reserved for issuance under the

2013 Plan to a total of 15,000.

At December 31, 2022, there were no shares of Common Stock reserved for awards available for issuance

under the 2013 Plan.

Stock options granted under the 2013 Plan that remain unexercised and outstanding as of December 31, 2022 total

March 27, 2015, our Board of Directors adopted the 2015 Stock Option and Restricted Stock Plan (the “2015 Plan”).

Plan was amended on February 25, 2016 and May 31, 2017 to increase the number of shares of Common Stock authorized and reserved for issuance

under the 2015 Plan to a total of 62,500.

At December 31, 2022, there were no shares of Common Stock reserved for awards available for

issuance under the 2015 Plan, as amended.

Stock options granted under the 2015 Plan that remain unexercised and outstanding as of December

31, 2022 total 6,500.

April 12, 2018, our Board of Directors adopted the 2018 Stock Option and Restricted Stock Plan (the “2018 Plan”).

Plan was amended on May 21, 2019 to increase the number of shares of Common Stock authorized and reserved for issuance under the 2018

Plan to a total of 87,500.

At December 31, 2022, there were 31,275 shares of Common Stock reserved for awards available for issuance

under the 2018 Plan.

Stock options granted under the 2018 Plan that remain unexercised and outstanding as of December 31, 2022 total

Board of Directors adopted the 2020 Stock Option and Restricted Stock Plan (the “2020 Plan”) on June 30, 2020 and the Company’s

stockholders approved the 2020 Plan at the Annual Meeting held on September 9, 2020.

The Company’s stockholders approved an amendment

to the 2020 Plan at the Annual Meeting held on June 22, 2021 which increased the number of shares of Common Stock authorized and reserved

for issuance under the 2020 Plan to a total of 125,000.

At December 31, 2022, there were 12,042 shares of Common Stock reserved for awards

available for issuance under the 2020 Plan.

Stock options granted under the 2020 Plan that remain unexercised and outstanding as of December

31, 2022 total 29,000.

Board of Directors adopted the 2022 Stock Option and Restricted Stock Plan (the “2022 Plan”) on October 28, 2022 and the

Company’s stockholders approved the 2022 Plan at the Annual Meeting held on December 7, 2022.

The number of shares of Common Stock

authorized and reserved for issuance under the 2022 Plan totals 125,000.

At December 31, 2022, there were no shares of Common Stock reserved

for awards available for issuance under the 2022 Plan.

Stock options granted under the 2022 Plan that remain unexercised and outstanding

as of December 31, 2022 total 125,000.

2005 Plan, 2006 Plan, 2007 Plan, 2008 Plan, 2011 Plan, 2013 Plan, 2015 Plan, 2018 Plan, 2020 Plan, and 2022 Plan are collectively referred

to as the “Plans.”

Plans authorize us to grant (i) to the key employees incentive stock options (except for the 2007 Plan) to purchase shares of Common

Stock and non-qualified stock options to purchase shares of Common Stock and restricted stock awards, and (ii) to non-employee directors

and consultants’ non-qualified stock options and restricted stock.

The Compensation Committee of our Board (the “Compensation

Committee”) administers the Plans by making recommendations to the Board or determinations regarding the persons to whom options

or restricted stock should be granted and the amount, terms, conditions and restrictions of the awards.

Plans allow for the grant of incentive stock options (except for the 2007 Plan), non-qualified stock options and restricted stock awards.

Incentive stock options granted under the Plans must have an exercise price at least equal to 100% of the fair market value of the Common

Stock as of the date of grant.

Incentive stock options granted to any person who owns, immediately after the grant, stock possessing

more than 10% of the combined voting power of all classes of our stock, or of any parent or subsidiary corporation, must have an exercise

price at least equal to 110% of the fair market value of the Common Stock on the date of grant.

Non-statutory stock options may have

exercise prices as determined by our Compensation Committee.

Compensation Committee is also authorized to grant restricted stock awards under the Plans.

A restricted stock award is a grant of shares

of the Common Stock that is subject to restrictions on transferability, risk of forfeiture and other restrictions and that may be forfeited

in the event of certain terminations of employment or service prior to the end of a restricted period specified by the Compensation Committee.

have filed various registration statements on Form S-8 and amendments to previously filed Form S-8’s with the Securities and Exchange

Commission (the “SEC”), which registered a total of 408,750 shares of Common Stock issued or to be issued underlying the

awards under the Plans.

The following table sets forth

certain information regarding the Plans as of December 31, 2022:

Equity Compensation Plan Information

Plan category

Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)

Weighted-average exercise price of outstanding options, warrants and rights (b)

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)

Equity compensation plans approved by stockholders

Equity compensation plans not approved by stockholders

Total all plans

Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

information required by Item 12 is incorporated

herein by reference to our 2022 Proxy Statement.

about our Plans is incorporated herein by reference to Part II, Item 5 of this Annual Report on Form 10-K.

following table sets forth, as of March 31, 2023, information regarding beneficial ownership of our Common Stock for:

person, or group of affiliated persons, known by us to beneficially own more than 5% of our Common Stock;

of our executive officers;

of our directors;

of our current executive officers and directors as a group

ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if

he, she or it possesses sole or shared voting or investment power of that security, including securities that are currently exercisable

or exercisable within sixty (60) days of March 31, 2023.

Except as indicated by the footnotes below, we believe, based on the information

furnished to us, that the persons named in the table below have sole voting and investment power with respect to all shares of Common

Stock shown that they beneficially own, subject to community property laws where applicable.

Stock subject to securities currently exercisable or exercisable within sixty (60) days of March 31, 2023 are deemed to be outstanding

for computing the percentage ownership of the person holding such securities and the percentage ownership of any group of which the holder

is a member but are not deemed outstanding for computing the percentage of any other person.

otherwise indicated, the address of each beneficial owner listed in the table below is c/o Digital Ally, Inc., 14001 Marshall Drive.,

Lenexa, KS 66215.

Number of Shares of Common

Stock Beneficially Owned (1)

5% or Greater Stockholders:

Executive Officers and Directors:

Caulfield (5)

All executive officers and directors as a group (five individuals)

less than 1%.

on 2,755,170 shares of Common Stock issued and outstanding as of March 31, 2023 and, with respect only to the ownership by all executive

officers and directors as a group.

Ross’s total shares of Common Stock include 26,250 restricted shares that are subject to forfeiture to us.

Richie’s total shares of Common Stock include 16,250 shares of Common Stock to be received upon the exercise of vested options.

Hutchins’ total shares of Common Stock include 16,250 shares of Common Stock to be received upon the exercise of vested options.

Caulfield’s total shares of Common Stock include 16,250 shares of Common Stock to be received upon the exercise of vested options.

Heckman’s total shares of Common Stock include (i) 3,750 restricted shares that are subject to forfeiture to us and (ii) 23,120

shares of Common Stock held in the Company’s 401(k) Plan (on December 31, 2022) as to which Mr.

Heckman has voting power as

trustee of the 401(k) Plan.

Han’s total shares of Common Stock include (i) 10,250 restricted shares that are subject to forfeiture to us and (ii) 331

shares of Common Stock to be received upon the exercise of vested options.

Relationships and Related Transactions, and Director Independence.

information required by Item 13 is incorporated

herein by reference to our 2022 Proxy Statement.

with Managing Member of Nobility Healthcare

January 27, 2022, the Board of Directors appointed Christian J.

Hoffmann, III as a member of the Board, effective immediately.

is a principal owner and manager of Nobility, LLC which is currently the managing member of our consolidated subsidiary Nobility Healthcare,

Company has advanced a total of $158,384 in the form of a working capital loan to Nobility, LLC in order to fund capital expenditures

necessary for the initial growth of the joint venture during 2022.

The outstanding balance of the working capital loan was $138,384 as

of December 31, 2022 and the Company anticipates full repayment of this advance during the year ended December 31, 2023.

paid distributions to the noncontrolling in consolidated subsidiary totaling $15,692 and $-0-, for the years ended December 31, 2022

and 2021, respectively.

August 1, 2022, Mr.

Hoffmann resigned as a member of the Board, effective immediately.

He remains as a principal owner and manager of

Nobility, LLC.

Accountant Fees and Services.

information required by Item 14 is incorporated herein by reference to our 2022 Proxy Statement.

following table is a summary of the fees billed to us by RBSM LLP for the fiscal years ended December 31, 2022 and 2021:

Audit-related fees

All other fees

Such amount consists of fees billed for professional services rendered in connection with the audit of our annual

financial statements and review of the interim financial statements included in our quarterly reports.

It also includes services that

are normally provided by our independent registered public accounting firms in connection with statutory and regulatory filings or engagements.

Audit-Related

Consists of fees billed for assurance and related services that are reasonably related to the performance of the

audit or review of our financial statements and are not reported under “Audit Fees.” These services include employee benefit

plan audits, consents issued for certain filings with the SEC, accounting consultations in connection with acquisitions, attest services

that are not required by statute or regulation, and consultations concerning financial accounting and reporting standards.

Tax fees consist of fees billed for professional services related to tax compliance, tax advice and tax planning.

These services include assistance regarding federal, state and international tax compliance, tax audit defense, customs and duties, mergers

and acquisitions, and international tax planning.

Consists of fees for products and services other than the services reported above.

Policy of Services Performed by Independent Registered Public Accounting Firm.

The Audit Committee’s policy is to pre–approve

all audit and non–audit related services, tax services and other services.

Pre–approval is generally provided for up to one

year, and any pre–approval is detailed as to the particular service or category of services and is generally subject to a specific

The Audit Committee has delegated the pre–approval authority to its chairperson when expedition of services is necessary.

The independent registered public accounting firm and management are required to periodically report to the full Audit Committee regarding

the extent of services provided by the independent registered public accounting firm in accordance with this pre–approval and the

fees for the services performed to date.

and Financial Statement Schedules.

6 unchanged sentences

consolidated financial statements or notes in this Annual Report on Form 10-K.

Plan of Merger among Vegas Petra, Inc., a Nevada corporation, and Digital Ally, Inc., a Nevada corporation, and its stockholders, dated November 30, 2004.

Amended and Restated Articles of Incorporation of Digital Ally, Inc.

(see the Amended and Restated Articles of Incorporation included in the Plan of Merger, filed as Exhibit 2.1 hereto).

Certificate of Change of Digital Ally, Inc., dated August 24, 2012.

Certificate of Amendment of Digital Ally, Inc., dated July 27, 2018.

Certificate of Amendment to Articles of Incorporation filed with the Nevada Secretary of State on September 25, 2020.

Amended and Restated Bylaws of Digital Ally, Inc.

Amendment to Amended and Restated Bylaws of Digital Ally, Inc.

Audit Committee Charter dated September 22, 2005.

Compensation Committee Charter, dated September 22, 2005

Nominating Committee Charter dated December 27, 2007.

Corporate Governance Guidelines

Nominating and Governance Charter, Amended and Restated as of February 25, 2010.

Strategic Planning Committee Charter dated June 28, 2009.

Certificate of Change Pursuant to NRS 78.209 of Digital Ally, Inc.

and Plan of Merger.

of Incorporation.

of Amendment to Digital Ally, Inc.’s Articles of Incorporation.

of Amendment to Articles of Incorporation of Digital Ally, Inc.

Form of Common Stock Certificate.

Form of Series A-1 Warrant.

Form of Common Stock Purchase Warrant.

Form of Series A Common Stock Purchase Warrant.

Form of Series B Common Stock Purchase Warrant.

Form of Series C Common Stock Purchase Warrant.

Common Stock Purchase Warrant of Digital Ally, Inc.

Form of Common Stock Purchase Warrant

Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

Form of Common Stock Purchase Warrant (Exchange Warrant)

Form of Common Stock Purchase Warrant (Replacement Original Warrant)

Opinion of Quarles & Brady, LLP

2005 Stock Option and Restricted Stock Plan.

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Form of Stock Option Agreement (ISO and Non-Qualified) 2006 Stock Option Plan.

2007 Stock Option and Restricted Stock Plan.

Form of Stock Option Agreement (ISO and Non-Qualified) 2007 Stock Option Plan.

Amendment to 2007 Stock Option and Restricted Stock Plan.

2008 Stock Option and Restricted Stock Plan.

Form of Stock Option Agreement (ISO and Non-Qualified) 2008 Stock Option Plan.

Forms of Restricted Stock Agreement for 2005, 2006, 2007 and 2008 Stock Option and Restricted Stock Plans.

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Amended and Restated 2015 Stock Option and Restricted Stock Plan

Common Stock Purchase Warrant

Form of Series A-1 Warrant

Form of Series A-2 Warrant

Form of Series A-3 Warrant

Form of Common Stock Purchase Warrant

Common Stock Purchase Warrant of Digital Ally, Inc.

of 2015 Stock Option and Restricted Stock Plan Restricted Stock Grant Agreement.

Digital Ally, Inc.

2018 Stock Option and Restricted Stock Plan .

of 2018 Stock Option and Restricted Stock Plan Restricted Stock Grant Agreement.

2020 Stock Option and Restricted Stock Plan.

Amendment to Digital Ally, Inc.

2020 Stock Option and Restricted Stock Plan .

Form of 2020 Stock Option and Restricted Stock Plan Restricted Stock Grant Agreement.

Digital Ally, Inc.

2022 Stock Option and Restricted Stock Plan .

Form of 2022 Stock Option and Restricted Stock Plan Restricted Stock Grant Agreement under the 2022 Stock Option and Restricted Stock Plan.

Proceeds Investment Agreement, dated as July 31, 2018, by and between Digital Ally, Inc.

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and Brickell Key Investments LP

Digital Ally, Inc.

2018 Stock Option and Restricted Stock Plan

Form of Common Stock Purchase Warrant.

Form of Wholesale Distribution Agreement, dated April 3, 2020.

Form of Placement Agency Agreement, dated January 11, 2021, by and between the Company and Kingswood Capital Markets, division of Benchmark Investments, Inc.

Form of Securities Purchase Agreement, dated as of January 11, 2021, by and between the Company and the Investors.

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Unit Purchase Agreement, dated September 2, 2021

Form of Exchange Agreement.

Form of Securities Purchase Agreement between Digital Ally, Inc.

and the investors thereto.

Form of Registration Rights Agreement by and among Digital Ally, Inc.

and the investors named therein.

Code of Ethics and Code of Conduct.

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Consent of RBSM LLP

Consent of Quarles & Brady LLP (included in Exhibit 5.1)*

Power of Attorney

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Heckman, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Instance Document **

Taxonomy Schema **

Taxonomy Calculation Linkbase **

Taxonomy Label Linkbase **

Taxonomy Presentation Linkbase **

Cover Page Interactive Data File (embedded within the Inline XBRL document)

XBRL Instance Document **

XBRL Taxonomy Schema **

XBRL Taxonomy Calculation Linkbase **

XBRL Taxonomy Label Linkbase **

XBRL Taxonomy Presentation Linkbase **

Page Interactive Data File (embedded within the Inline XBRL document)

The XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed “filed” for purposes of

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by specific reference in such filing or document.

Filed as an exhibit to

the Company’s Form SB-2, filed October 16, 2006, No.

Filed as an exhibit to

the Company’s Annual Report on Form 10KSB for the Year ended December 31, 2007.

Filed as an exhibit to

the Company’s Current Report on Form 8-K dated November 20, 2009.

Filed as an exhibit to

the Company’s Annual Report on Form 10K for the Year ended December 31, 2009.

Filed as an exhibit to

the Company’s Form 8-K filed August 30, 2012.

Filed as an exhibit to

the Company’s October 2006 Form SB-2.

Filed as an exhibit to

the Company’s Form 8-K filed July 17, 2015

Filed as an exhibit to

the Company’s Form S-8, filed October 23, 2007, No.

Filed as an exhibit to

the Company’s Annual Report on Form 10K for the Year ended December 31, 2009.

Filed as an exhibit to

the Company’s Form 8-K filed June 1, 2011.

Filed as an exhibit to

the Company’s Form S-8 filed May 23, 2016.

Filed as an exhibit to

the Company’s Form S-8 filed January 3, 2017.

Filed as an exhibit to

the Company’s Form 8-K filed August 25, 2017.

Filed as an exhibit to

the Company’s Form 8-K filed April 4, 2018.

Filed as an exhibit to

the Company’s Form 8-K filed August 2, 2018.

Filed as an exhibit to

the Company’s Registration Statement on Form S-8 filed August 20, 2018.

Filed as an Exhibit 5.1

to the October 2006 Form SB-2.

Filed as an exhibit to

the Company’s Form 8-K filed August 5, 2019.

Filed as an exhibit to

the Company’s Form 8-K filed December 10, 2007.

Filed as an exhibit to

the Company’s Registration Statement on Form S-1/A filed February 7, 2020.

Filed as an exhibit to

the Company’s Quarterly Report on Form 10-Q for the Quarter ended June 30, 2020.

Filed as an exhibit to

the Company’s Form 8-K filed April 8, 2020.

Filed as an exhibit to

the Company’s Form 8-K filed January 12, 2021.

Filed as an exhibit to

the Company’s Form 8-K filed January 28, 2021.

Filed as an exhibit

to the Company’s Annual Report on Form 10-K for the Year ended December 31, 2020.

Filed as an exhibit

to the Company’s Form 8-K filed April 16, 2021.

Filed as an exhibit

to the Company’s Form 8-K filed May 3, 2021.

Filed as an exhibit

to the Company’s Form 8-K filed June 9, 2021.

Filed as an exhibit

to the Company’s Form 8-K filed August 19, 2021.

Filed as an exhibit

to the Company’s Form 8-K filed September 9, 2021.

Filed as an exhibit to the Company’s Annual Report on Form 10KSB for the Year ended December 31, 2007.

Filed as an exhibit to the Company’s October 2006 Form SB-2.

Filed as an exhibit to the Company’s Annual Report on Form 10K for the Year ended December 31, 2009.

Filed as an exhibit to the Company’s Form 8-K filed June 1, 2011.

Filed as an exhibit to the Company’s Form S-8 filed May 23, 2016.

Filed as an exhibit to the Company’s Form 8-K filed August 25, 2017.

Filed as an exhibit to the Company’s Form 8-K filed April 4, 2018.

Filed as an exhibit to the Company’s Form 8-K filed August 2, 2018.

Filed as an exhibit to the Company’s Registration Statement on Form S-8 filed August 20, 2018.

Filed as an exhibit to the Company’s Form 8-K filed August 5, 2019.

Filed as an exhibit to the Company’s Registration Statement on Form S-8 filed November 16, 2020.

Filed as an exhibit to the Company’s Form 8-K filed January 12, 2021.

Filed as an exhibit to the Company’s Form 8-K filed January 28, 2021.

Filed as Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed April 27, 2021.

Filed as an exhibit to the Company’s Form 8-K filed May 3, 2021.

Filed as an exhibit to the Company’s Form 8-K filed June 9, 2021.

Filed as an exhibit to the Company’s Form 8-K filed August 19, 2021.

Filed as an exhibit to the Company’s Form 8-K filed September 9, 2021.

Filed as an exhibit to the Company’s Form 8-K filed August 23, 2022.

Filed as an exhibit to the Company’s Form 8-K filed October 19, 2022.

Filed as Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed October 28, 2022.

Filed as an exhibit to the Company’s Form 8-K filed 8-K filed December 8, 2022.

Filed as an exhibit to the Company’s Form 8-K filed 8-K filed February 7, 2023.

Filed as an exhibit to the Company’s Registration Statement on Form S-8 filed February 28, 2023.

financial statement schedules have been provided because the information is not required or is shown either in the financial statements

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Nevada corporation

and Chief Executive Officer

April 15, 2022

Chief Executive Officer (Principal Executive Officer)

person whose signature appears below authorizes Stanton E.

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in respect thereof, which amendments may make such changes in such Report as such attorney-in-fact may deem appropriate.

to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons

on behalf of the Registrant and in the capacities and on the dates indicated.

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on

behalf of the registrant and in the capacities and on the dates indicated.

Ross, Director and Chief Executive Officer

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Hutchins, Director

Hoffmann, III

April 15, 2022

Hoffmann, III, Director

Heckman, Chief Financial Officer, Secretary, Treasurer and

Accounting Officer

Heckman, Chief Financial Officer, Secretary, Treasurer and Principal Accounting Officer (Principal Financial Officer and Principal Accounting Officer)

AND SUBSIDIARIES

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Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2021

Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2021 and 2020

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2022 and 2021

Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021

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the Stockholders and the Board of Directors of Digital Ally, Inc.

on the Financial Statement

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of Digital Ally, Inc.

and its subsidiaries (the Company) as of December 31,

2021 and 2020, the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for each of the

years in the two year period ended December 31, 2021, and the related notes (collectively referred to as the financial statements).

our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December

31, 2021 and 2020, and the results of its operations and its cash flow for each of the years in the two year period ended December 31,

2021, in conformity with accounting principles generally accepted in the United States of America.

2022 and 2021, the related consolidated statements of operations, stockholders’ equity and cash flows for each of the years in

the two year period ended December 31, 2022, and the related notes (collectively referred to as the financial statements).

In our opinion,

the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and

2021, and the results of its operations and its cash flow for each of the years in the two year period ended December 31, 2022, in conformity

with accounting principles generally accepted in the United States of America.

Company’s Ability to Continue as a Going Concern

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note

1 to the financial statements, the Company has incurred substantial operating losses and will require additional capital to continue

as a going concern.

This raises substantial doubt about the Company’s ability to continue as a going concern.

plans regarding these matters are also described in Note 1.

The financial statements do not include any adjustments to reflect the possible

future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from

the outcome of this uncertainty.

financial statement are the responsibility of the Company’s management.

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Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated

or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters

does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

and Other Intangibles arising from the acquisition of TicketSmarter – Refer to Notes 1 and 20 to the consolidated financial

critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements

that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are

material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,

and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the

accounts or disclosures to which they relate.

Indefinite Life Intangibles and Other Intangibles Impairment Assessments – Entertainment/Ticketing Reporting Unit – Refer

to Notes 1, 8 and 22 to the consolidated financial statements

Audit Matter Description

described in Note 22 to the consolidated financial statements, the Company’s goodwill and indefinite life intangible asset balance

was $5,886,547 and $600,000, respectively as of December 31, 2022.

The Company also has amortizable identifiable intangible assets of

$5,600,000 and $600,000 which are being amortized over 5 years and 4 years, respectively, and are related to the Entertainment/Ticketing

reporting unit.

Management tests these assets annually for impairment or more frequently when potential impairment triggering events

Goodwill is tested for impairment by comparing the estimated fair value of a reporting unit to its carrying value.

uses a market approach to estimate the fair value of its reporting unit.

The key assumptions and estimates utilized in the market approach

primarily include market multiples, peer group and comparable transaction selection and selection of relevant financial matrices for

concluding the fair value of reporting unit discount rates, and future levels of revenue growth and operating margins.

principal considerations for our determination that performing procedures relating to the goodwill and intangible asset impairment assessments

of the Entertainment/Ticketing reporting unit is a critical audit matter because (i) the significant judgment used by management when

determining the fair value estimates of the reporting units;

(ii) the high degree of auditor judgment, subjectivity and effort in performing

procedures and evaluating the significant assumptions used in management’s fair value estimates;

and (iii) the audit effort involved

in the use of professionals with specialized skill and knowledge.

the Critical Audit Matter Was Addressed in the Audit

the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated

financial statements.

procedures included, among others, (i) testing management’s process for determining

the fair value estimates of the entertainment/ticketing reporting unit;

(ii) testing the

completeness and accuracy of the underlying data used in the market approach;

and (iii) evaluating

the reasonableness of the significant assumptions used by management related to market multiples,

peer group and comparable transaction selection and selection of relevant financial matrices

for concluding the fair value of reporting unit discount rates, and future levels of revenue

growth and operating margins.

management’s assumptions related to the future levels of revenue growth and operating

margins involved evaluating whether the assumptions were reasonable considering (i) current

and past performance of the reporting units;

(ii) the consistency with external market and

industry data;

and (iii) whether these assumptions were consistent with evidence obtained

in other areas of the audit.

● Professionals

with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness

of the market approach and (ii) the reasonableness of significant assumptions related to

the market multiples, peer group and comparable transaction selection and selection of relevant

financial matrices for concluding the fair value of reporting unit discount rates, and future

levels of revenue growth and operating margins.

and Other Intangibles arising from the acquisition of Healthcare Acquisition and Medical Billing Acquisitions – Refer to Notes

1, 8 and 21 to the consolidated financial statements

Audit Matter Description

disclosed in Note 1, Goodwill arises in connection with acquisitions.

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and identifiable intangible assets acquired is recorded as goodwill.

disclosed in Note 20, on September 1, 2021, the Company completed an acquisition referred to as the TicketSmarter Acquisition in

accordance with the stock purchase agreement.

The consideration included an initial payment through a combination of cash and common

In addition to the Initial Payment Amount, the Company agreed to issue an earn-out agreement to the selling stockholders in

the contingent amount of $4,244,400 that is subject to an earn-out adjustment based on actual EBITDA achieved in 2021.

gave a fair value of approximately $3,700,000 to the earn-out on the date of acquisition which is considered a contingent liability.

However, following the completion of 2021, it was determined that the actual EBITDA threshold for any earn-out adjustment to be paid

was not met, therefore, the contingent earn-out is reduced to zero resulting in a gain related to this revaluation is recorded in

the Company’s consolidated statements of operations for the year ended December 31, 2021.

Auditing the accounting for the

acquisition was complex due to the significant estimation uncertainty in determining the fair values of identified intangible

assets, which consisted of Sponsorship agreement network of $5,600,000, Trademarks of $600,000, Search engine optimization/content

of $600,000 and Goodwill of $5,675,280.

the significant judgments made by management to estimate the earn-out as well as intangible assets acquired with the TicketSmarter Acquisition,

performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions required a high degree of

auditor judgment and an increased effort, including the need to involve our fair value specialists.

disclosed in Note 21, on June 30, 2021, August 31, 2021 and January 1, 2022 the Company completed acquisitions in accordance with the

stock purchase agreement.

The consideration included an initial payment of cash.

In addition to the initial payment amount, the Company

agreed to issue an earn-out agreement to the selling stockholders in the contingent amount of $1,750,000 that is subject to an earn-out

adjustment based on difference between projected revenue and cash basis revenue collected by the Company in its normal course of business

from the clients existing on the acquisition date during the measurement period.

The Company gave a fair value of $1,750,000 to the earn-out

on the date of acquisition which is considered a contingent liability.

Auditing the accounting for the acquisition was complex due to

the significant estimation uncertainty in determining the fair values of identified intangible assets, which consisted of Client Agreements

$664,034 and Goodwill of $5,480,966.

the significant judgments made by management to estimate the intangible assets acquired, performing audit procedures to evaluate the

reasonableness of management’s estimates and assumptions required a high degree of auditor judgment and an increased effort, including

the need to involve our fair value specialists.

the Critical Audit Matter Was Addressed in the Audit

the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated

financial statements.

These procedures included, among others:

utilized personnel with specialized knowledge and skill in valuation to assist in;

a) assessing the appropriateness and relative

weighting of valuation methodology for the various intangible assets, including the With-and-Without Method, Cost to Replace, Relief

from Royalty and Monte Carlo Simulation, b) evaluating the reasonableness of the growth rates, percent of revenues lost without existing

agreements, discount rate used in the income approach, c) evaluating the reasonableness of the assumptions and estimates used in

the various valuation methodologies.

the reasonableness of management’s significant estimates and assumptions including revenue growth rates and EBITDA margins,

discount rates and futures market conditions.

the appropriateness of Multi-Period Excess Earnings Method - valuation methodology for the

client agreements – intangible asset, b) evaluating the reasonableness of the growth

rates, percent of revenues derived from acquired customers, medical loss ratio, operating

costs, contributory asset charge and discount rate used in the income approach, c) evaluating

the reasonableness of the assumptions and estimates used in the valuation methodologies.

the reasonableness of management’s significant estimates and assumptions including

revenue growth rates, percent of revenues derived from acquired customers, medical loss ratio,

operating costs, contributory asset charge and discount rates and futures market conditions.

if there have been events and circumstances that might indicate Goodwill has been impaired.

and assessed the appropriateness of adjustments to Goodwill, Other Intangibles and other Assets and Liabilities acquired based on

changes to their estimated fair values.

of Inventories – Refer to Notes 1 and 4 to the consolidated financial statements

Audit Matter Description

for the video solutions segment are held at the lower of cost or net realizable value, with cost determined by standard cost methods,

which approximate the first-in, first-out method.

Inventory costs include material, labor and manufacturing overhead.

for the ticketing segment are held at the lower of cost or net realizable value, and written-off after the event has occurred.

tickets for the ticketing segment are carried at the lower of cost or net realizable value, and fully written off at the time the event

occurs if the ticket is unsold and remaining in inventory.

Management has established inventory reserves based on estimates of excess

and/or obsolete current and non-current inventory.

Manufacturing

inventory for the video solutions segment is reviewed for obsolescence and excess quantities on a quarterly basis, based on estimated

future use of quantities on hand, which is determined based on past usage, planned changes to products and known trends in markets and

Changes in support plans or technology could have a significant impact on obsolescence.

these service parts age over the related product group’s post-production service life, the Company reduces the net carrying value

of its repairable spare part inventory on the consolidated balance sheet to account for the excess that builds over the service life.

The post-production service life of systems is generally seven to twelve years and, at the end of twelve years, the carrying value for

these parts in consolidated balance sheet is reduced to zero.

The Company also perform periodic monitoring of its installed base for

premature end of service life events and expense, through cost of sales, the remaining net carrying value of any related spare parts

inventory in the period incurred.

December 31, 2021, the Company recorded a reserve for excess and obsolete inventory in the video solutions segment of $3,353,458 and

a reserve for the ticketing segment of $561,631.

Given the judgments made by management, a high degree of subjective and complex auditor

judgment was required to evaluate the estimates and assumptions related to the reserve for excess and obsolete inventory.

the Critical Audit Matter Was Addressed in the Audit

audit procedures related to the inventory reserve for the video solutions segment included the following, among others:

We evaluated the appropriateness

and consistency of management’s methods and assumptions used in developing their estimate of the inventory reserves.

We performed analysis

over key product metrics, inventory turnover, and margins, to identify and evaluate slow-moving inventory categories, negative margins,

or other trends which may indicate a requirement to reserve.

audit procedures related to the inventory reserve for ticketing segment included the following, among others:

We evaluated the appropriateness

and consistency of management’s methods and assumptions used in developing their estimate of the inventory reserves.

We tested the reasonableness

of the reserve for events which have not occurred by analyzing historical activity prior to the acquisition and during the period

ended December 31, 2021.

Additionally, we analyzed activity subsequent to the balance sheet date for events that have already occurred

to determine the amount written down to net realizable value on the date of the event.

● Professionals

with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness

of the income approach and (ii) the reasonableness of significant assumptions.

and assessed the appropriateness of adjustments to Goodwill, Other Intangibles and other

Assets and Liabilities acquired based on changes to their estimated fair values.

have served as the Company’s auditor since 2019.

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Accounts receivable-trade, less allowance for doubtful accounts of $ 152,736 – 2022 and $ 113,234 – 2021

Other Receivables (including $ 158,384

due from related parties – 2021 and $ 500,000

– 2020, refer to Note 17)

Other receivables (including $ 138,384 due from related parties – 2022 and $ 158,384 – 2021, refer to Note 19)

Inventories, net

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Commitments and contingencies

Common stock, $ 0.001

Mezzanine equity:

Series A Convertible Redeemable Preferred stock, $ 0.001

shares issued:

Series B Convertible Redeemable Preferred stock, $ 0.001

shares issued:

Common stock, $ 0.001 par value;

200,000,000 shares authorized;

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Additional paid in capital

Treasury stock, at cost

( 2,157,225 )

Noncontrolling interest in consolidated subsidiary

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Interest expense

Change in fair value of secured convertible notes

( 1,300,252 )

Change in fair value of proceeds investment agreement

Other expense

Change in fair value of short-term investments

3 unchanged sentences

Gain on the extinguishment of debt

Secured convertible notes issuance expense

Total other income (expense)

Gain on extinguishment of warrant derivative liabilities

Gain on sale of property, plant and equipment

Total other income

Income (loss) before income tax expense (benefit)

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Net income attributable to noncontrolling interests of consolidated subsidiary

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

Net income (loss) attributable to common stockholders

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Notes to Consolidated Financial Statements.

STATEMENTS OF EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF EQUITY

ENDED DECEMBER 31, 2022 AND 2021

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Restricted common stock forfeitures

Issuance of common stock upon conversion of secured convertible notes and interest

Issuance of common stock through underwritten public offering at $ 1.15 per share (net of offering expenses and underwriters’ discount)

Issuance of common stock through underwritten public offering at $ 1.65 per share (net of offering expenses and underwriters’ discount)

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

Issuance of common stock upon exercise of common stock purchase warrants

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

Issuance of common stock upon exercise of stock options

Issuance of common stock for services rendered

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

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

placement agent discount)

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

placement agent discount), shares

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

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

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

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

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

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

Issuance of common stock as consideration for acquisition

Issuance of common stock as consideration for acquisition, shares

Repurchase and cancellation of common stock

Repurchase and cancellation of common stock, shares

Cancellation of treasury stock

Cancellation of treasury stock, shares

Issuance of common stock through

registered direct offering at $ 61.90

per share and accompanying warrants (net of

offering expenses and placement agent discount)

Issuance of common stock through

registered direct offering at $ 56.00

per share and accompanying warrants (net of

offering expenses and placement agent discount)

Exercise of pre-funded common

stock purchase warrants at $ 61.90

Exercise of pre-funded common

stock purchase warrants at $ 56.00

Issuance of pre-funded common

stock purchase warrants in connection with the registered direct offerings

( 1,817,548 )

Issuance of common stock purchase

warrants at exercise price of $ 65.00

per share in connection with the registered

direct offerings

( 49,398,510 )

Issuance of common stock as

consideration for acquisition

Repurchase and cancellation

of common stock

( 1,974,992 )

( 1,975,079 )

Cancellation of treasury stock

( 2,157,222 )

Balance, December 31, 2021

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$ ( 68,672,206 )

$ 124,476,447

$ ( 68,672,206 )

Stock-based compensation

1 unchanged sentence

Restricted common stock forfeitures

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

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

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

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

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

( 1,817,548 )

Distribution to noncontrolling

interest in consolidated subsidiary

Issuance of common stock under

rule 144 restrictions related to contemplated spin-off transaction

Repurchase and cancellation

of common stock

( 4,026,337 )

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

( 4,026,523 )

Issuance of common stock through

warrant exchange agreement

Loss on redemption of Series

A and Series B Preferred Stock

( 2,385,000 )

Issuance of common stock as consideration for acquisition

Repurchase and cancellation of common stock

Cancellation of treasury stock

( 2,385,000 )

Net income (loss)

( 19,281,691 )

( 18,873,758 )

Balance, December 31, 2022

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$ ( 91,980,234 )

$ 127,869,342

$ ( 91,980,234 )

Notes to Consolidated Financial Statements.

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$ ( 18,873,758 )

Adjustments to reconcile net income (loss) to net cash

flows used in operating activities:

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

Depreciation and amortization

Gain on sale of property, plant and equipment

Stock based compensation

Issuance of common stock for services

Amortization of debt discount

Provision for doubtful accounts receivable

Interest paid through issuance of common stock

Provision for doubtful lease receivable

Gain on extinguishment of debt

( 1,417,413 )

Secured convertible debentures issuance expense

Change in fair value of secured convertible debentures

Change in fair value of proceeds investment agreement

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

( 3,732,789 )

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

Change in fair value of warrant derivative liability

( 6,726,638 )

( 36,664,907 )

Gain of extinguishment of warrant derivative liabilities

( 3,624,794 )

Warrant modification expense

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( 1,431,080 )

( 3,197,552 )

Prepaid expenses

( 3,839,458 )

( 1,649,603 )

Income tax refund receivable

Operating lease right of use assets

( 3,048,382 )

Increase (decrease) in:

1 unchanged sentence

( 1,907,608 )

( 1,195,310 )

Accrued expenses

8 unchanged sentences

( 2,068,508 )

Additions to intangible assets

( 6,428,225 )

Proceeds from sale of property, plant and equipment

Purchases of intangible assets

( 1,189,132 )

Proceeds from sale of intangible assets

Cash paid for acquisition of Medical Billing Company

( 1,026,508 )

Cash paid for acquisition of Medical Billing Company

( 2,270,000 )

Cash paid for acquisition of Medical Billing Company

Cash paid for asset acquisition of Medical Billing Company

Cash paid for acquisition of TicketSmarter

Repayment (issuance) of notes receivable

( 8,615,514 )

Collection of notes receivable

Net cash used in investing activities

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Repurchase and cancellation of common stock

Proceeds from unsecured promissory note payable, related party

Proceeds from unsecured promissory note payable

Proceeds from PPP/EIDL Loans

Repayment of proceeds investment agreement

( 4,026,523 )

Proceeds from issuance of common stock and warrants, net of issuance costs

Proceeds from secured convertible debentures

Secured convertible debenture issuance expense

Principal payments on related party note payable

Principal payment on unsecured notes payable

Principal payment on secured convertible debentures

Proceeds from issuance of common stock upon exercise of warrants

Proceeds from exercising stock options

Net cash provided by financing activities

Net increase in cash and cash equivalents

( 1,975,079 )

Distribution to noncontrolling interest in consolidated subsidiary

Principal payment on contingent consideration promissory notes

Proceeds from issuance of Series A & B convertible redeemable preferred shares,

net of issuance costs

Redemption of Series A & B convertible redeemable

preferred shares

( 15,750,000 )

Net cash provided by (used in) financing activities

( 6,954,617 )

Net increase (decrease) in cash and cash equivalents

( 28,475,593 )

Cash, cash equivalents, beginning of year

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Restricted common stock forfeitures

Amounts allocated to common stock purchase warrants in connection with proceeds from secured convertible debentures

Issuance of common stock upon conversion of secured

convertible notes

Issuance of contingent consideration earn-out agreement

for business acquisitions

Issuance of contingent consideration promissory note for

business acquisitions

Issuance of contingent consideration earn-out agreement for business acquisitions

Issuance of contingent consideration promissory note for business acquisitions

Issuance of contingent consideration promissory note for asset acquisitions

Assets acquired in business acquisitions

Identifiable intangible assets acquired in business acquisitions

acquired in business acquisitions

Goodwill acquired in business acquisitions

Liabilities assumed in business acquisitions

ROU and lease liability recorded on extension of lease

Common stock issued as consideration for business acquisitions

Amounts allocated to initial measurement of warrant derivative

liabilities in connection to the warrants and pre-funded warrants

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

Issuance of common stock through warrant exchange agreement

Cancellation of treasury stock

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NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Business :

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

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

business of Digital Ally, Inc.

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

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

“Digital Ally,” “Digital,” and the “Company”) is divided into three reportable operating segments:

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

The Video Solutions Segment is

our legacy business that produces digital video imaging, storage products, disinfectant and related safety products for use in law enforcement,

security and commercial applications.

This segment includes both service and product revenues through our subscription models offering

cloud and warranty solutions, and hardware sales for video and health safety solutions.

The Revenue Cycle Management Segment provides

working capital and back-office services to a variety of healthcare organizations throughout the country, as a monthly service fee.

Ticketing Segment we act as an intermediary between ticket buyers and sellers within our secondary ticketing platform, ticketsmarter.com,

and we also acquire tickets from primary sellers to then sell through various platforms.

The accounting guidance on Segment Reporting

establishes standards for reporting information regarding operating segments in annual financial statements and requires selected

information of those segments to be presented in financial statements.

(such merged entity, the “Predecessor Registrant”).

August 23, 2022 (the “ Effective Time ”), the Predecessor Registrant merged with and into its wholly owned subsidiary,

DGLY Subsidiary Inc., a Nevada corporation (the “ Registrant ”), pursuant to an agreement and plan of merger, dated

as of August 23, 2022 (the “ Merger Agreement ”), between the Predecessor Registrant and the Registrant, with the Registrant

as the surviving corporation in the merger (such transaction, the “ Merger ”).

At the Effective Time, Articles of Merger

were filed with the Secretary of State of the State of Nevada, pursuant to which the Registrant was renamed “Digital Ally, Inc.”

and, by operation of law, succeeded to the assets, continued the business and assumed the rights and obligations of the Predecessor Registrant

immediately prior to the Merger.

Under the Nevada Revised Statutes, shareholder approval was not required in connection with the Merger

Agreement or the transactions contemplated thereby.

the Effective Time, pursuant to the Merger Agreement, (i) each outstanding share of Predecessor Registrant’s common stock, par

value $0.001 per share (the “ Predecessor Common Stock ”) automatically converted into one share of common stock, par

value $0.001 per share, of the Registrant (“ Registrant Common Stock ”), (ii) each outstanding option, right or warrant

to acquire shares of Predecessor Common Stock converted into an option, right or warrant, as applicable, to acquire an equal number of

shares of Registrant Common Stock under the same terms and conditions as the original options, rights or warrants, and (iii) the directors

and executive officers of the Predecessor Registrant were appointed as directors and executive officers, as applicable, of the Registrant,

each to serve in the same capacity and for the same term as such person served with the Predecessor Registrant immediately before the

business of the Registrant, Digital Ally, Inc.

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

LLC, Digital Ally Healthcare, LLC, TicketSmarter, Inc., Worldwide Reinsurance, Ltd., Digital Connect, Inc., BirdVu Jets, Inc., Kustom

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

and the “Company”), is divided into three reportable operating segments:

1) the Video Solutions Segment, 2) the Revenue Cycle

Management Segment and 3) the Ticketing Segment.

The Video Solutions Segment is our legacy business that produces digital video imaging,

storage products, disinfectant and related safety products for use in law enforcement, security and commercial applications.

includes both service and product revenues through our subscription models offering cloud and warranty solutions, and hardware sales

for video and health safety solutions.

The Revenue Cycle Management Segment provides working capital and back-office services to a variety

of healthcare organizations throughout the country, as a monthly service fee.

The Ticketing Segment acts as an intermediary between ticket

buyers and sellers within our secondary ticketing platform, ticketsmarter.com, and we also acquire tickets from primary sellers to then

sell through various platforms.

The accounting guidance on Segment Reporting establishes standards for reporting information regarding

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

Such required segment information is included in Note 23.

Company also formed Worldwide Reinsurance Ltd., during 2021 which is a captive insurance company incorporated during 2021 and domiciled

This wholly-owned subsidiary will provide primarily liability insurance coverage to the Company for which insurance may not

be currently available or economically feasible in today’s insurance marketplace.

Reverse Stock Split

February 6, 2023, the Company filed a Certificate of Amendment to its Articles of Incorporation, as amended, with the Secretary of

State of the State of Nevada to effect a 1-for-20

reverse stock split (the “Reverse Stock Split”) of the shares of its common stock.

The Reverse Stock Split was

effective as of time of filing.

No fractional shares were issued in connection with the Reverse Stock Split.

Any fractional shares

of our Common Stock that would have otherwise resulted from the Reverse Stock Split were rounded up to the nearest whole number.

connection with the Reverse Stock Split, the board of directors of the Company approved appropriate and proportional adjustments to

all outstanding securities or other rights convertible or exercisable into shares of the Company’s common stock, including, without

limitation, all preferred stock, warrants, options, and other equity compensation rights.

All historical share and per-share amounts

reflected throughout the Company’s consolidated financial statements and other financial information in this Report have been adjusted to

reflect the Reverse Stock Split as if the split occurred as of the earliest period presented.

The par value per share of the Company’s common

stock was not affected by the Reverse Stock Split.

following is a summary of the Company’s Significant Accounting Policies:

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

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

and its majority-owned

subsidiary Nobility Healthcare, LLC.

All intercompany balances and transactions have been eliminated during consolidation.

Company formed Digital Ally International, Inc.

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

Jets, Inc., Kustom 440, Inc., and its majority-owned subsidiary Nobility Healthcare, LLC.

All intercompany balances and transactions

have been eliminated during consolidation.

The Company formed Digital Ally

International, Inc.

during August 2009 to facilitate the export sales of its products.

The Company formed

Shield Products, LLC in May 2020 to facilitate the sales of its Shield™ line of disinfectant/cleanser products and ThermoVu®

line of temperature monitoring equipment.

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

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

Lastly, the Company formed TicketSmarter, Inc.

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

The Company formed Shield Products, LLC in May

2020 to facilitate the sales of its Shield™ line of disinfectant/cleanser products and ThermoVu® line of temperature monitoring

The Company formed Nobility Healthcare, LLC (“Nobility Healthcare”) in June 2021 to facilitate the operations of

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

The Company formed TicketSmarter,

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

The Company formed

Worldwide Reinsurance Ltd., which is a captive insurance company incorporated during 2021 and domiciled in Bermuda.

It will provide primarily

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

insurance marketplace.

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

It will provide primarily liability insurance coverage

to the Company for which insurance may not be currently available or economically feasible in today’s insurance marketplace.

Company formed Digital Connect, Inc.

and BirdVu Jets, Inc.

for travel and transportation purposes in 2022.

The Company formed Kustom 440,

in 2022 to create unique entertainment experiences directly for consumers.

Value of Financial Instruments :

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

The Company accounts for its secured convertible

debentures and proceeds investment agreement on a fair value basis.

Recognition :

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The Company reports all revenues

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

by all segments are reported net of sales taxes.

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

generated by all segments are reported net of sales taxes.

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

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

services or replacement product.

services or replacement products.

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

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Cycle Management

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

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

These service fees are reported as revenue monthly

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

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

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

These service fees are reported as revenue monthly upon completion

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

Entertainment

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

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of the ticket.

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

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

Revenues derived from this

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During the year ended December 31, 2022, the Company recognized revenue of $ 2.4 million related to its contract liabilities.

Contract liabilities consist of deferred revenue and include payments received

in advance of performance under the contract and are reported separately as current liabilities and non-current liabilities in the Consolidated

Balance Sheets.

Such amounts consist of extended warranty contracts, prepaid cloud services and prepaid installation services and are

generally recognized as the respective performance obligations are satisfied.

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

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

Such amounts consist of extended warranty contracts,

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

Total contract liabilities consist of the following:

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Contract liabilities, non-current

returns and allowances aggregated $ 45,298

for the years ended December 31, 2021 and 2020,

respectively.

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

is determined based upon historical return rates adjusted for known changes in key variables affecting these return rates.

returns and allowances aggregated $ 118,027 and $ 45,298 for the years ended December 31, 2022 and 2021, respectively.

Obligations for

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

The accrual is determined based upon

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

of Estimates :

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

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

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

for deferred tax assets and other legal claims and contingencies.

The results of any changes in accounting estimates are reflected in

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

Estimates and assumptions are reviewed periodically, and

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

value of warrants, options, the recognition of revenue, inventory valuation reserve, fair value of assets and liabilities acquired in

a business combination, incremental borrowing rate on leases, the valuation allowance for deferred tax assets and other legal claims

and contingencies.

The results of any changes in accounting estimates are reflected in the financial statements in the period in which

the changes become evident.

Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period

that they are determined to be necessary.

and cash equivalents :

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

The following table shows the Company’s cash and cash equivalents by significant investment category as of December 31, 2021 and

The following table shows the Company’s cash and cash equivalents by significant investment category as of

December 31, 2022 and 2021:

OF SHORT TERM INVESTMENTS

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Money market funds

Level 1 fair value estimates

are based on quoted prices in active markets for identical assets.

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

at times may be in excess of the federally insured limit of $ 250,000

The Company minimizes this risk by

placing its cash deposits with numerous major financial institutions.

At December 31, 2021 and 2020, the uninsured balance amounted to

$ 29,836,142 and

$ 3,653,192 ,

at times may be in excess of the federally insured limit of $ 250,000 per bank.

The Company minimizes this risk by placing its cash deposits

with numerous major financial institutions.

At December 31, 2022 and 2021, the uninsured balance amounted to $ 2,495,189 and $ 29,836,142 ,

respectively.

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As a result, the

Company compares the fair value of a reporting unit with its respective carrying value and recognized an impairment charge for the amount

Company compares the fair value of a reporting unit with its respective carrying value and recognizes an impairment charge for the amount

by which the carrying amount exceeded the reporting unit’s fair value.

Company determines the fair value of its reporting units using an income approach.

Under the income approach, the Company determined

fair value based on estimated discounted future cash flows of each reporting unit.

Determining the fair value of a reporting unit is

judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates and EBITDA margins,

discount rates and future market conditions, among others.

Company determines the fair value of its reporting units using the market approach.

Under the market approach, we estimate the fair

value based on multiples of comparable public companies and precedent transactions.

Significant estimates in the market approach

identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on

investment, and assessing comparable revenue and operating income multiples in estimating the fair value of the reporting unit.

and Other Intangible Assets - The Company periodically assesses potential impairments of its long-lived assets in accordance with

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that there was no impairment.

Long-lived assets such as property, plant and equipment and purchased intangible assets subject to amortization are

reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted

cash flows expected to be generated by that asset or asset group to its carrying value.

If the carrying value of the long-lived asset

or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value

exceeds its fair value.

Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market

values and third-party appraisals, as considered necessary.

assets include deferred patent costs and license agreements.

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“components”), work-in-process and finished goods.

Finished goods that are manufactured and assembled by the Company

are carried at the lower of cost or market, with cost determined by standard cost methods, which approximate the first-in, first-out

Inventories for the ticketing segment consists of tickets to live events purchased, which are held at the lower of

cost or net realizable value, and written-off after the event has occurred.

Inventory costs include material, labor and manufacturing

Event tickets for the ticketing segment are carried at the lower of cost or net realizable value, and

fully written off at the time the event occurs if the ticket is unsold and remaining in inventory.

Management has established inventory

reserves based on estimates of excess and/or obsolete current and non-current inventory.

Finished goods that are manufactured and assembled by the Company are

carried at the lower of cost or net realizable value, with cost determined by standard cost methods, which approximate the first-in,

first-out method.

Inventory costs include material, labor and manufacturing overhead.

Inventories for the entertainment segment

consists of tickets to live events purchased, which are held at lower of cost or net realizable value, and written-off after the

event has occurred.

Event tickets for the entertainment segment

are carried at lower of cost or net realizable value, and fully written off at the time the event occurs if the ticket is unsold

and remaining in inventory after the completion of the event.

Management has established inventory reserves based on estimates of excess and/or obsolete current inventory.

Manufacturing

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plant and equipment :

Property, plant and equipment

is stated at cost net of accumulated depreciation.

Additions and improvements are capitalized while ordinary maintenance and repair expenditures

are charged to expense as incurred.

Depreciation is recorded by the straight-line method over the estimated useful life of the asset,

which ranges from three to thirty years, other than the infinite useful life of land.

plant and equipment is stated at cost net of accumulated depreciation.

Additions and improvements are capitalized while ordinary maintenance

and repair expenditures are charged to expense as incurred.

Depreciation is recorded by the straight-line method over the estimated useful

life of the asset, which ranges from three to thirty years, other than the infinite useful life of land.

Amortization expense on capitalized

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property, plant and equipment, net and long-term debt and finance lease obligations on the balance sheet.

The Company had

operating leases for copiers and its office and warehouse space at December 31, 2021 but no financing leases.

The Company had operating leases

for copiers and its office and warehouse space at December 31, 2022 but no financing leases.

assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement

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recognized for short term leases.

investment agreement :

Company has elected to record its proceeds investment agreement at its fair value.

Accordingly, the proceeds investment agreement will

be marked-to-market at each reporting date with the change in fair value reported as a gain (loss) in the Consolidated Statement of Operations.

All issuance costs related to the proceeds investment agreement were expensed as incurred in the Consolidated Statement of Operations.

Convertible Notes :

Company has elected to record its senior convertible notes at its fair value.

Accordingly, the senior convertible notes will be marked-to-market

at each reporting date with the change in fair value reported as a gain (loss) in the Consolidated Statement of Operations.

costs related to the senior convertible notes were expensed as incurred in the Consolidated Statement of Operations.

assets such as property, plant and equipment and purchased intangible assets subject to amortization are reviewed for impairment

whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

If circumstances require

a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be

generated by that asset or asset group to its carrying value.

If the carrying value of the long-lived asset or asset group is not recoverable

on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value.

is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party appraisals,

as considered necessary.

Company’s video solutions segment products carry explicit product warranties that extend up to two years from the date of

The Company records a provision for estimated warranty costs based upon historical warranty loss experience and periodically

adjusts these provisions to reflect actual experience.

Company’s video solutions segment products carry explicit product warranties that extend up to two years from the date of shipment.

The Company records a provision for estimated warranty costs based upon historical warranty loss experience and periodically adjusts

these provisions to reflect actual experience.

Accrued warranty costs are included in accrued expenses.

Extended warranties are

offered on selected products and when a customer purchases an extended warranty the associated proceeds are treated as contract liabilities

and recognized over the term of the extended warranty.

Extended warranties are offered

on selected products and when a customer purchases an extended warranty the associated proceeds are treated as contract liabilities and

recognized over the term of the extended warranty.

and Handling Costs :

and handling costs video solutions segment for outbound sales orders totaled $ 79,763

for the years ended December 31, 2021 and 2020,

respectively.

and handling costs video solutions segment for outbound sales orders totaled $ 70,749 and $ 79,763 for the years ended December 31, 2022

and 2021, respectively.

Such costs are included in selling, general and administrative expenses in the Consolidated Statements of Operations.

expense video solutions segment and ticketing segments includes costs related to trade shows and conventions, promotional material

expense video solutions segment and entertainment segments includes costs related to trade shows and conventions, promotional material

and supplies, and media costs.

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The Company incurred total advertising

expense of approximately $ 4,110,032 and

$ 990,975 for

the years ended December 31, 2021 and 2020, respectively.

Such costs are included in selling, advertising and promotional expenses in

the Consolidated Statements of Operations.

expenses of approximately $ 7,668,641 and $ 4,110,032 for the years ended December 31, 2022 and 2021, respectively.

Such costs are included

in selling, advertising and promotional expenses in the Consolidated Statements of Operations.

taxes are provided for by the liability method in which deferred tax assets are recognized for deductible temporary differences and operating

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for 2019, 2020 and 2021 and to be filed for 2022 are subject to examination by the relevant taxing authorities.

With few exceptions,

as of December 31, 2021, the Company is no longer subject to Federal, state, or local examinations by tax authorities for taxable

years prior to 2018.

With a few exceptions,

as of December 31, 2022, the Company is no longer subject to Federal, state, or local examinations by tax authorities for taxable years

prior to 2019.

and Development Expenses :

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feasibility were not significant, and software development costs were expensed as incurred during 2022 and 2021.

Issuance of Debt Instruments with Detachable

Stock Purchase Warrants

Proceeds from the issuance

of a debt instrument with stock purchase warrants (detachable call options) are allocated to the two elements based on the relative fair

values of the debt instrument without the warrants and of the warrants themselves at time of issuance.

The portion of the proceeds so

allocated to the warrants are recorded as additional paid-in capital.

The remainder of the proceeds are allocated to the debt instrument

portion of the transaction.

Such issuances generally result in a discount (or, occasionally, a reduced premium) relative to the debt

instrument, which is amortized to interest expense using the effective interest rate method.

Warrant Derivative Liabilities:

In accordance with FASB ASC

815-40, Derivatives and Hedging:

Contracts in an Entities Own Equity, entities must consider whether to classify contracts that may be

settled in its own stock, such as warrants to purchase shares of Common Stock, as equity of the entity or as an asset or liability.

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

asset or a liability rather than as equity.

We have determined because the terms of the warrants issued during the first quarter of 2021,

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

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

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

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

our statement of operations.

Derivative Liabilities :

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

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

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

asset or liability.

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

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

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

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

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

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

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

losses on our statement of operations.

Compensation :

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

The Company’s three operating segments are Video Solutions, Revenue Cycle Management, and Ticketing, each of which

The Company’s three operating segments are Video Solutions, Revenue Cycle Management, and Entertainment, each of which

has specific personnel responsible for that business and reports to the CODM.

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administrative activities, is also to be reported in the segment information.

The Company’s captive insurance subsidiary provides

services to the Company’s other business segments and not to outside customers;

however, had no activity in 2021.

Therefore, its operations are eliminated in consolidation

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Shares repurchased and cancelled during the

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

period were recorded as a reduction to stockholders’ equity.

See further discussion of the Company’s share repurchase

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Non-controlling

interests in the Company’s Consolidated Financial Statements represents the interest in subsidiaries held by venture partners.

The venture partners hold noncontrolling interests in the Company’s consolidated subsidiary Nobility Healthcare, LLC.

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

of each subsidiary’s results of operations are deducted and reported as net income attributable to noncontrolling interest in the

interests in the Company’s Consolidated Financial Statements represent the interest in subsidiaries held by venture partners.

venture partners hold noncontrolling interests in the Company’s consolidated subsidiary Nobility Healthcare, LLC.

Since the Company

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

each subsidiary’s results of operations are deducted and reported as net income attributable to noncontrolling interest in the

Consolidated Statements of Operations.

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

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.

Lease Receivable

Lease receivable

are carried at the original invoice amount less the total payments received pertaining to each individual customer’s lease agreement.

These agreements range from three to five years and are removed from lease receivables upon termination of the agreement.

The Company determines if an allowance for doubtful accounts by regularly evaluating individual customer lease receivables

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

No allowance was deemed necessary

for the year ended December 31, 2022.

Notes Receivable

receivable are carried at the original note amount less an estimate made for doubtful receivables based on a review of all outstanding

notes on a quarterly basis.

The Company determines the allowance for doubtful accounts by regularly evaluating each note receivable and

considering the borrower’s financial condition, credit history, and current economic conditions.

The Company entered into a promissory

note, through its entertainment segment, as part of a co-marketing agreement, with a principal amount of $ 3,000,000 .

Principal payment,

since its inception, on this promissory note totaled $ 1,401,660 as of December 31, 2022, resulting in a remaining balance of $ 1,598,340

maturing December 31, 2023 .

Accounting Standards

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

Based on a preliminary analysis,

the Company does not expect the adoption of this new accounting standard will have a significant impact on the Company’s financial

position and results of operations.

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

2020, FASB issued ASU No.

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

financial liabilities measured using the fair value option in ASC 825, ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10):

Recognition and Measurement of Financial Assets and Financial Liabilities, issued in January 2016, requires entities to recognize the

changes in fair value of liabilities caused by a change in instrument specific credit risk (own credit risk) in other comprehensive income.

The ASU is effective for calendar-year public business entities beginning in 2018.

For all other calendar-year entities, it is effective

for annual periods beginning in 2019 and interim periods beginning in 2020.

Entities can early adopt certain provisions of the new standard,

including this provision related to financial liabilities measured under the fair value option.

We have considered this guidance and

its impact on this debt accounted for at fair value.

Based on discussions with our valuation expert and knowledge of the Company there

was no change in valuation caused by a change in the Company’s credit risk during the period ending December 31, 2020.

2018-09, Codification improvements, clarifies the accounting for a debt extinguishment when the fair value option is elected.

Upon extinguishment

an entity shall include in net income the cumulative amount of the gain or loss previously recorded in other comprehensive income for

the extinguished debt that resulted from changes in instrument-specific credit risk.

The ASU is effective for calendar-year public business

entities beginning in 2019.

For all other calendar-year entities, it is effective for annual periods beginning in 2020 and interim periods

beginning in 2021.

Early adoption is permitted for any fiscal year or interim period for which an entity’s financial statements

have not yet been issued or have not been made available to be issued.

We have considered this guidance and its impact on this debt accounted

for at fair value.

Based on discussions with our valuation expert and knowledge of the Company there was no change in valuation caused

by a change in the Company’s credit risk during the period ending December 31, 2020.

Since there is no change accounted for as

a change in Credit Risk (included in other comprehensive income/loss) there is no impact to the Company’s financial statements

from this new guidance.

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

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

August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement , to improve the effectiveness of disclosures.

The amendments remove, modify, and add certain disclosure requirements in Topic 820, “Fair Value Measurement.” The amendments

on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3

fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent

interim or annual period presented in the initial fiscal year of adoption.

All other amendments should be applied retrospectively to

all periods presented upon their effective date.

The amendments are effective for fiscal years beginning after December 15, 2019.

Company adopted this standard in the first quarter of fiscal 2020.

The impact of the adoption of ASU 2018-13 is further described in

Note 9 , “ Fair Value Measurement ,” to our consolidating financial statements.

August 2018, the FASB issued ASU No.

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

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

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

early adoption permitted.

The Company does not expect the adoption of ASU 2018-15 to have a material impact on its financial statements.

December 2019, the FASB issued ASU No.

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

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

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

We do not expect the adoption of this standard to have a significant impact on our financial position and results of operations.

Concern Matters and Management’s Plans

accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets

and the satisfaction of liabilities in the normal course of business.

The Company incurred substantial operating losses in the years

ended December 31, 2022 and December 31, 2021 primarily due to reduced gross margins caused by a combination of competitors’ introduction

of newer products with more advanced features together with significant price cutting of their products and the recent acquisitions with

much smaller margins than the video solutions segment, historically.

The Company incurred operating losses of approximately $ 29.7 million

for the year ended December 31, 2022 and $ 14.8 million during the year ended December 31, 2021 and it had an accumulated deficit of $ 92.0

million as of December 31, 2022.

In recent years the Company has accessed the public and private capital markets to raise funding through

the issuance of debt and equity.

In that regard, the Company raised approximately $ 66.6 million in the year ended December 31, 2021 through

two underwritten public offerings.

These equity raises were utilized to fund its operations and acquisitions.

Management expects to continue

this pattern until it achieves positive cash flows from operations, although it can offer no assurance in this regard.

Company will have to restore positive operating cash flows and profitability over the next year and/or raise additional capital to fund

its operational plans, meet its customary payment obligations and otherwise execute its business plan.

There can be no assurance that

it will be successful in restoring positive cash flows and profitability, or that it can raise additional financing when needed, and

obtain it on terms acceptable or favorable to the Company.

Company has increased its contract liabilities to nearly $ 8.0 million as of December 31, 2022, which results in recurring revenue

during the period of 2023 to 2026.

The Company believes that its quality control and cost cutting initiatives, expansion to non-law enforcement

sales channels and new product introduction will eventually restore positive operating cash flows and profitability, although it can

offer no assurances in this regard.

Company has significantly cut costs in its entertainment segment through the removal of several large partnerships and sponsorships.

These were not yielding the results management expected;

thus, it is not expected that these costs with significantly hinder total revenues

in 2023 and beyond.

addition to the initiatives described above, the Board of Directors is conducting a review of a full range of strategic alternatives

to best position the Company for the future including, but not limited to, the sale of all or certain assets, properties or groups of

properties or individual businesses or merger or combination with another company.

The result of this review may also include the continued

implementation of the Company’s business plan.

There can be no assurance that any additional transactions or financings will result

from this process.

on the uncertainties described above, the Company believes its business plan does not alleviate the existence of substantial doubt about

its ability to continue as a going concern within one year from the date of the issuance of these consolidated financial statements.

The accompanying consolidated financial statements do not include any adjustments related to the recoverability and classification of

asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

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receivable are presented net of an allowance for doubtful accounts.

The allowance for doubtful accounts totaled $ 113,234

as of December 31, 2021 and $ 123,224

as of December 31, 2020.

The allowance for doubtful accounts totaled $ 152,736 as of December

31, 2022 and $ 113,234 as of December 31, 2021.

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

at times may be in excess of the federally insured limit of $ 250,000

The Company minimizes this risk by

placing its cash deposits with major financial institutions.

At December 31, 2021 and 2020, the uninsured balance amounted to $ 29,836,142

and $ 3,653,192 ,

respectively.

The Company uses primarily a network of unaffiliated distributors for international sales and employee-based direct sales

force for domestic sales.

No international distributor individually exceeded 10 %

of total revenues.

One individual customer receivable balance exceeded 10 %

of total accounts receivable as of December 31, 2021 and 2020, which totaled $ 352,603

and $ 319,000

of total accounts receivable, respectively.

Company’s video solutions segment purchases finished circuit boards and other proprietary component parts from suppliers

located in the United States and on a limited basis from Asia.

Although the Company obtains certain of these components from single source

suppliers, it generally owns all tooling and management has located alternative suppliers to reduce the risk in most cases to supplier

problems that could result in significant production delays.

The Company has not historically experienced significant supply disruptions

from any of its principal vendors and does not anticipate future supply disruptions.

The Company acquires most of its components on a

purchase order basis and does not have long-term contracts with its suppliers.

at times may be in excess of the federally insured limit of $ 250,000 per bank.

The Company minimizes this risk by placing its cash deposits

with major financial institutions.

At December 31, 2022 and 2021, the uninsured balance amounted to $ 2,495,189 and $ 29,836,142 , respectively.

The Company uses primarily a network of unaffiliated distributors for international sales and an employee-based direct sales force for

domestic sales.

No international distributor individually exceeded 10 % of total revenues.

No one individual customer receivable balance

exceeded 10 % of total accounts receivable as of December 31, 2022.

Company’s video solutions segment purchases finished circuit boards and other proprietary component parts from suppliers located

in the United States and on a limited basis from Asia.

Although the Company obtains certain of these components from single source suppliers,

it generally owns all tooling and management has located alternative suppliers to reduce the risk in most cases to supplier problems

that could result in significant production delays.

The Company has not historically experienced significant supply disruptions from

any of its principal vendors and does not anticipate future supply disruptions.

The Company acquires most of its components on a purchase

order basis and does not have long-term contracts with its suppliers.

ACCOUNTS RECEIVABLE – ALLOWANCE FOR DOUBTFUL ACCOUNTS

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OF ALLOWANCE FOR DOUBTFUL ACCOUNTS

December 31, 2022

December 31, 2021

Beginning balance

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Ending balance

OTHER RECEIVABLES

Other receivables were the following at December 31, 2022 and December 31, 2021:

SCHEDULE OF OTHER

receivable increased by over $ 1.1

million at December 31, 2022 compared to December 31, 2021, primarily due to a note receivable issued by the Company during 2022.

The Company entered into a promissory note, through its entertainment segment, as part of a co-marketing agreement, with a principal

amount of $ 3,000,000 .

Principal payment, since its inception, on this promissory note totaled $ 1,401,660 as of December 31, 2022,

resulting in a remaining balance of $ 1,598,340 maturing December 31, 2023 .

Lease receivable increased by nearly $ 1.0

million primarily due to increased sales under the Company’s subscription model during 2022.

The Company determines if an allowance for doubtful accounts by regularly evaluating notes receivable and individual

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

allowance was deemed necessary for the year ended December 31, 2022.

Other receivables relate to a related party receivable further described

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

OF INVENTORIES

December 31, 2022

December 31, 2021

Raw material and component parts– video solutions segment

1 unchanged sentence

Finished goods – video solutions segment

Finished goods – ticketing segment

Finished goods – entertainment segment

Reserve for excess and obsolete inventory– video solutions segment

1 unchanged sentence

( 3,353,458 )

Reserve for excess and obsolete inventory – ticketing segment

Reserve for excess and obsolete inventory – entertainment segment

Total inventories

1 unchanged sentence

The cost of such units

totaled $ 153,976

and $ 138,263

as of December 31, 2021 and 2020, respectively.

totaled $ 171,071 and $ 153,976 as of December 31, 2022 and 2021, respectively.

PREPAID EXPENSES

4 unchanged sentences

Total prepaid expenses

expenses increased by nearly $ 7.7 million primarily due to a prepaid inventory purchases and additional prepaid expenses related to completed

acquisitions in 2021.

expenses decreased by nearly $ 1.3 million primarily due to a decline in prepaid inventory purchases and advertising expenses in 2022.

PROPERTY, PLANT AND EQUIPMENT

plant and equipment consisted of the following at

December 31, 2021 and 2020:

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

OF PROPERTY, PLANT AND EQUIPMENT

Office furniture, fixtures and equipment

Office furniture, fixtures, equipment, and aircraft

Warehouse and production equipment

4 unchanged sentences

Net property, plant and equipment

and amortization of property, plant and equipment aggregated $ 258,999

for the years ended December 31, 2021 and 2020,

respectively.

The cost and accumulated depreciation related to assets sold or retired are removed from the accounts and any gain or loss

is credited or charged to income.

The Company retired fixed assets during 2021 totaling $ 391,535

all of which were fully depreciated resulting

in no gain or loss for the year ended December 31, 2021.

and amortization of property, plant and equipment aggregated $ 614,121 and $ 258,999 for the years ended December 31, 2022 and 2021, respectively.

The cost and accumulated depreciation related to assets sold or retired are removed from the accounts and any gain or loss is credited

or charged to income.

The Company retired fixed assets during 2022 totaling $ 549,104 resulting in a gain on sale of assets of $ 212,831

for the year ended December 31, 2022 on the Company’s Consolidated Statement of Operations.

The Company retired fixed assets during 2021 totaling $ 391,535 all of which

were fully depreciated resulting in no gain or loss for the year ended December 31, 2021.

GOODWILL AND OTHER INTANGIBLE ASSETS

6 unchanged sentences

Patents and trademarks (video solutions segment)

Sponsorship agreement network (ticketing segment)

SEO content (ticketing segment)

Personal seat licenses (ticketing

Sponsorship agreement network (entertainment segment)

SEO content (entertainment segment)

Personal seat licenses (entertainment

Client agreements (revenue cycle management segments)

Indefinite life intangible assets:

Goodwill (ticketing and revenue cycle management segments)

Trade name (ticketing segment)

Goodwill (entertainment and revenue cycle management segments)

Trade name (entertainment segment)

Patents and trademarks pending

(video solutions

(video solutions segment)

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

1 unchanged sentence

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

expense for the years ended December 31, 2021 and 2020 was $ 563,490

and $ 188,108 ,

respectively.

expense for the years ended December 31, 2022 and 2021 was $ 1,562,558 and $ 563,490 , respectively.

Estimated amortization for intangible

3 unchanged sentences

2027 and thereafter

assets were the following at December 31, 2022 and December 31, 2021:

SCHEDULE OF OTHER ASSETS

Lease receivable

Sponsorship network

Total other assets

DEBT OBLIGATIONS

obligations is comprised of the following:

OF SECURED CONVERTIBLE DEBENTURES AND PROCEEDS INVESTMENT AGREEMENT

OF DEBT OBLIGATIONS

Economic injury disaster loan (EIDL)

Payroll protection program loan (PPP)

Contingent consideration promissory note – Nobility Healthcare Division Acquisition

Debt obligations

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Small Business Administration Notes .

May 4, 2020, the Company issued a promissory note in connection with the receipt of the PPP Loan of $ 1,417,413

under the SBA’s PPP Program under the

The PPP Loan has a two-year term and bears interest at a rate of 1.0 %

Monthly principal and interest payments are deferred for nine months after the date of disbursement and total $ 79,850.57

per month thereafter.

The PPP Loan may be prepaid

at any time prior to maturity with no prepayment penalties.

The promissory note contains events of default and other provisions customary

for a loan of this type.

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

expenses as described in the CARES Act.

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

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

The Company applied for forgiveness of the

PPP Loan and on December 10, 2020 the Company was fully forgiven of its $ 1,417,413

Additionally, during the year

ended December 31, 2021, the Company was fully forgiven of its $ 10,000

EIDL advance received in association with

the PPP Loan.

Therefore, we recorded a gain on the extinguishment of debt totaling $ 10,000 and $ 1,417,413 in our Consolidated

Statements of Operations for the years ended December 31, 2021 and 2020, respectively.

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

5 unchanged sentences

Monthly principal and interest

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

payments began in November 2022, after being deferred for thirty months after the date of disbursement and total $ 731.00 per month thereafter.

Such note may be prepaid

2 unchanged sentences

including but not limited to tangible and intangible personal property.

Secured Convertible Notes .

April 17, 2020, the Company entered into a securities purchase agreement with several accredited investors providing for the issuance

of (i) the Company’s 8 % secured convertible notes due April 16, 2021 with a principal face amount of $ 1,666,666 , which convertible

notes are, subject to certain conditions, convertible into 1,650,164 shares of the Company’s common stock, at a price per share

of $ 1.01 (the “2020 Convertible Notes”), and (ii) five-year warrants to purchase an aggregate of 1,237,624 shares of Common

Stock at an exercise price of $ 1.31 , which warrants are immediately exercisable upon issuance and on a cashless basis if the Warrants

have not been registered 180 days after the date of issuance.

The accredited investors purchased the foregoing securities for an aggregate

cash purchase price of $ 1,500,000 .

the purchase agreement, the convertible notes and warrants contain provisions whereby the accredited investors are prohibited from exercising

their rights to convert the notes or exercise the warrants if, as a result of such conversion or exercise, such holder, together with

its affiliates, would own more than 4.99% of the total number of shares of the Company’s common stock outstanding immediately after

giving effect to such exercise.

However, the investors may increase or decrease such percentage to any other percentage not in excess

of 9.99%, provided that any increase in such percentage shall not be effective until 61 days after such notice to the Company .

Company elected to account for the secured convertible notes on the fair value basis.

Therefore, the Company determined the fair value

of the secured convertible notes and the common stock purchase warrants which yielded estimated fair values of the secured convertible

notes including their embedded derivatives and the detachable common stock purchase warrants.

The following represents the resulting

fair value as determined on April 17, 2020, the date of origination:

OF FAIR VALUE OF EMBEDDED DERIVATIVES AND WARRANTS

Secured convertible notes

Common stock purchase warrants

Gross cash proceeds

the year ended December 31, 2020, the holders of the 2020 Convertible Notes exercised their right to convert principal balances aggregating

In addition, on June 12, 2020, the

Company exercised its right to prepay in cash the remaining outstanding principal balance aggregating $ 1,000 .

There remains no outstanding 2020 Convertible notes as of December 31, 2021 or 2020 as a result of these conversions and prepayments.

the fair value basis, the Company determines the fair value of the secured convertible notes and adjusts the carrying value of the secured

convertible notes at each reporting date with the resulting charge or credit being reflected in the consolidated statement of operations.

Following is an analysis of the activity in the secured convertible notes during the years ended December 31, 2021 and

OF FAIR VALUE AND ADJUSTED CARRYING VALUE OF SECURED CONVERTIBLE NOTES

Balance at December 31, 2019

Issuance of 2020 convertible notes at fair value

Principal repaid during the period by issuance of common stock

( 1,665,666 )

Principal repaid during the period by payment of cash

Change in fair value of secured convertible note during the period

Balance at December 31, 2020

Issuance of 2020 convertible notes at fair value

Principal repaid during the period by issuance of common stock

Principal repaid during the period by payment of cash

Change in fair value of secured convertible note during

Balance at December 31, 2021

is a range of certain estimates and assumptions utilized as of the April 17, 2020 issuance date to determine the fair value of secured

convertible notes:

OF CERTAIN ESTIMATES AND ASSUMPTIONS OF FAIR VALUE OF SECURED CONVERTIBLE NOTES

Volatility – range

Risk-free rate

Contractual term

the fair value basis, legal, accounting, and miscellaneous costs directly related to the issuance of the secured convertible notes are

charged to expense as incurred.

A total of $ - 0 - and $ 34,906

of such issuance costs were charged to operations

during the years ended December 31, 2021 and 2020, respectively.

Secured Convertible Notes .

August 5, 2019, the Company, entered into a securities purchase agreement with several accredited investors providing for the issuance

of (i) the Company’s 8% secured convertible notes due August 4, 2020 with a principal face amount of $ 2,777,777 .78, which convertible

notes are, subject to certain conditions, convertible into 1,984,126 shares of the Company’s common stock, at a price per share

(ii) five -year warrants to purchase an aggregate of 571,428 shares of Common Stock at an exercise price of $ 1.8125 , which warrants

are immediately exercisable upon issuance and on a cashless basis if the Warrants have not been registered 180 days after the date of

and (iii) the issuance of shares of common stock equal to 5 % of the aggregate purchase price of the convertible notes, with

an aggregate value of $ 125,000 (the “Commitment Shares”).

The accredited investors purchased the foregoing securities for

an aggregate cash purchase price of $ 2,500,000 .

to the purchase agreement, an aggregate of $ 1,153,320 in principal amount of convertible notes (the “Registered Notes”),

the conversion shares underlying the Registered Notes and all of the Commitment Shares were issued to the accredited investors in a registered

direct offering pursuant to a prospectus supplement to the Company’s currently effective shelf registration statement on Form S-3.

Accordingly, $ 1,153,320 in original principal amount of our convertible notes were issued as Registered Notes pursuant to the shelf registration

statement and therefore freely tradable.

a related transaction and in accordance with the purchase agreement, the Company issued to the accredited investors in a concurrent private

placement pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities

Act and/or Regulation D promulgated thereunder, (1) the remaining aggregate of $ 1,624,457.78 in principal amount of convertible notes,

(2) the shares of common stock issuable from time to time upon conversion of such convertible notes, and (3) the common shares underlying

the common stock purchase warrants.

On September 5, 2019, the Company filed a Registration Statement on Form S-1 covering the securities

issued in the concurrent private placement including an aggregate of $ 1,624,457.78 in principal amount of previously non-registered convertible

notes, the shares of common stock issuable from time to time upon conversion of such non-registered convertible notes and the common

stock underlying the common stock purchase warrants.

Such Registration Statement on Form S-1 was declared effective by the Securities

and Exchange Commission on September 12, 2019.

connection with the purchase agreement, the Company and its subsidiary entered into a security agreement, dated as of August 5, 2019,

with the investors, pursuant to which the Company and its subsidiary granted a security interest in, among other items, the Company and

its subsidiary’s accounts, chattel paper, documents, equipment, general intangibles, instruments and inventory, and all proceeds,

as set forth in the security agreement.

In addition, pursuant to an intellectual property security agreement, dated as of August 5, 2019,

the Company granted a continuing security interest in all of the Company’s right, title and interest in, to and under certain of

the Company’s trademarks, copyrights and patents.

In addition, the Company’s subsidiary jointly and severally agreed to guarantee

and act as surety for the Company’s obligation to repay the convertible notes pursuant to a subsidiary guarantee.

the purchase agreement, the convertible notes and warrants contain provisions whereby the accredited investors are prohibited from exercising

their rights to convert the notes or exercise the warrants if, as a result of such conversion or exercise, such holder, together with

its affiliates, would own more than 4.99% of the total number of shares of the Company’s common stock outstanding immediately after

giving effect to such exercise.

However, the investors may increase or decrease such percentage to any other percentage not in excess

of 9.99%, provided that any increase in such percentage shall not be effective until 61 days after such notice to the Company.

Company elected to account for the secured convertible notes on the fair value basis.

Therefore, the Company determined the fair value

of the (1) secured convertible notes, (2) the Commitment Shares and (3) the common stock purchase warrants which yielded estimated fair

values of the secured convertible notes including their embedded derivatives, the Commitment Shares and the detachable common stock purchase

The following represents the resulting fair value as determined on August 5, 2019, the date of origination:

SCHEDULE OF FAIR VALUE OF EMBEDDED DERIVATIVES AND WARRANTS

convertible notes

stock issued as Commitment Shares

stock purchase warrants

cash proceeds

the fair value basis, the Company determines the fair value of the secured convertible notes and adjusts the carrying value of the secured

convertible notes at each reporting date with the resulting charge or credit being reflected in the consolidated statement of operations.

Following is an analysis of the activity in the secured convertible notes during the years ended December 31, 2021 and 2020:

SUMMARY OF FAIR VALUE AND ADJUSTED CARRYING VALUE OF SECURED CONVERTIBLE NOTES

at December 31, 2019

repaid during the period by issuance of common stock

repaid during the period by payment of cash

in fair value of secured convertible note during the period

at December 31, 2020

repaid during the period by issuance of common stock

repaid during the period by payment of cash

in fair value of secured convertible note during the period

at December 31, 2021

Proceeds Investment Agreement .

July 31, 2018, the Company entered into a Proceeds Investment Agreement (the “PIA Agreement”) with Brickell Key Investments

LP (“BKI”), pursuant to which BKI funded an aggregate of $ 500,000 (the “First Tranche”) to be used (i) to fund

the Company’s litigation proceedings relating to the infringement of certain patent assets listed in the PIA Agreement and (ii)

to repay the Company’s existing debt obligations and for certain working capital purposes set forth in the PIA Agreement.

to the PIA Agreement, BKI was granted an option to provide the Company with an additional $ 9.5 million, at BKI’s sole discretion

(the “Second Tranche”).

On August 21, 2018, BKI exercised its option on the Second Tranche for $ 9.5 million which completed

the $ 10 million funding.

to the PIA Agreement and in consideration for the $ 10 million in funding, the Company agreed to assign to BKI (i) 100% of all gross,

pre-tax monetary recoveries paid by any defendant(s) to the Company or its affiliates agreed to in a settlement or awarded in judgment

in connection with the patent assets, plus any interest paid in connection therewith by such defendant(s) (the “Patent Assets Proceeds”),

up to the minimum return (as defined in the Agreement) and (ii) if BKI has not received its minimum return by the earlier of a liquidity

event (as defined in the Agreement) and July 31, 2020, then the Company agreed to assign to BKI 100% of the Patent Asset Proceeds until

BKI has received an amount equal to the minimum return on $ 4.0 million.

to the PIA Agreement, the Company granted BKI (i) a senior security interest in the Patent Assets, the claims (as defined in the Agreement)

and the Patent Assets Proceeds until such time as the minimum return is paid, in which case, the security interest on the patent assets,

the claims and the Patent Assets Proceeds will be released, and (ii) a senior security interest in all other assets of the Company until

such time as the minimum return is paid on $ 4.0 million, in which case, the security interest on such other assets will be released.

security interest is enforceable by BKI if the Company is in default under the PIA Agreement which would occur if (i) the Company fails,

after five (5) days’ written notice, to pay any due amount payable to BKI under the PIA Agreement, (ii) the Company fails to comply

with any provision of the PIA Agreement or any other agreement or document contemplated under the PIA Agreement, (iii) the Company becomes

insolvent or insolvency proceedings are commenced (and not subsequently discharged) with respect to the Company, (iv) the Company’s

creditors commence actions against the Company (which are not subsequently discharged) that affect material assets of the Company, (v)

the Company, without BKI’s consent, incurs indebtedness other than immaterial ordinary course indebtedness up to $500,000, (vi)

the Company fails, within five (5) business days following the closing of the second tranche, to fully satisfy its obligations to certain

holders of the Company’s senior secured convertible promissory notes listed in the PIA Agreement and fails to obtain unconditional

releases from such holders as to the Company’s obligations to such holders and the security interests in the Company held by such

holders or (vii) there is an uncured non-compliance of the Company’s obligations or misrepresentations by the Company under the

PIA Agreement.

the PIA Agreement, the Company issued BKI a warrant to purchase up to 465,712 shares of the Company’s common stock, par value $ 0.001

per share (the “PIA Warrant”), at an exercise price of $ 2.60 per share provided that the holder of the PIA Warrant will be

prohibited from exercising the PIA Warrant if, as a result of such exercise, such holder, together with its affiliates, would own more

than 4.99 % of the total number of shares of the Company’s common stock outstanding immediately after giving effect to such exercise.

However, such holder may increase or decrease such percentage to any other percentage not in excess of 9.99 % , provided that any increase

in such percentage shall not be effective until 61 days after such notice to the Company.

The PIA Warrant is exercisable for five years

from the date of issuance and is exercisable on a cashless exercise basis if there is no effective registration statement.

No contractual

registration rights were given.

Company elected to account for the PIA on the fair value basis.

Therefore, the Company determined

the fair value of the PIA and PIA Warrants which yielded estimated fair values of the PIA

including their embedded derivatives and the detachable PIA Warrants as follows:

SCHEDULE OF FAIR VALUE OF EMBEDDED DERIVATIVES AND WARRANTS

Proceeds investment agreement

Common stock purchase warrants

Gross cash proceeds

Company utilized a probability weighted present value of expected patent asset proceeds for the litigation involving both Axon and WatchGuard

(see Note 12 – Commitments and Contingencies) which involved estimates of the amount and timing of the expected patent asset proceeds

from the alleged patent infringement.

The fair value of the PIA is updated for actual and estimated activity affecting the probability

weighted present value of expected patent asset proceeds at each reporting date with the change charged/credited to operations.

is a range of certain estimates and assumptions utilized as of December 31, 2019 to probability weighted present value of expected patent

asset proceeds for the litigation involving both Axon and WatchGuard:

OF CERTAIN ESTIMATES AND ASSUMPTIONS OF FAIR VALUE OF SECURED CONVERTIBLE NOTES

term to patent asset proceeds payment

years - 4 years

minimum return payable to BKI

2019, the Company settled its patent infringement litigation with WatchGuard whereby it received a lump-sum payment of $ 6.0 million as

further described in Note 12.

In accordance with the terms of the PIA, the Company remitted the $ 6.0 as a principal payment toward its

minimum return payment obligations under the PIA.

The Company recorded the receipt of the $ 6,000,000 settlement as Patent litigation

settlement income in the accompanying consolidated statement of operations.

July 20, 2020, the Company and BKI executed a Termination Agreement and Mutual Release (the “Termination Agreement”).

the terms of the Termination Agreement the parties agreed to terminate the PIA and to release each other from any further liability under

the PIA obligation.

the terms of the Termination Agreement, upon payment of $ 1,250,000 by the Company to BKI both parties agreed to terminate the PIA and

to release each other from any further liability thereunder.

Such $ 1,250,000 payment was made on July 22, 2020.

In addition to the $ 1,250,000

payment, the Company further agreed to pay BKI the following:

(a) a contingent payment in the amount of $ 2,750,000 following the closing

of an asset purchase, membership interest purchase, or similar transaction between the Company and a specified third-party (the “Purchase

Transaction”) and (b) any and all future proceeds received from Watchguard and its successors and assigns by the Company for WatchGuard’s

8,781,292 and 9,253,452.

For clarity, the Company and BKI further agreed that the payment of the contingent payment

would only be due and payable upon the closing of the specified Purchase Transaction and the relevant contingent payment portion of the

Termination Agreement, and any obligations stemming therefrom, would automatically terminate if the specified Purchase Transaction is

abandoned prior to its closing, including its failure to close within three years from the date of the Termination Agreement.

parties abandoned the Purchase Transaction during the year ended December 31, 2020 and therefore, the contingent payment obligation automatically

terminated as the specified Purchase Transaction was abandoned prior to its closing.

Furthermore, the Company does not anticipate any

future recoveries from Watchguard and its successors and assigns relative to WatchGuard’s use of U.S.

8,781,292 and

As a result, the PIA obligation was extinguished upon the payment of the $ 1,250,000 required under the Termination Agreement.

following represents activity in the PIA during the years ended December 31, 2021 and 2020:

SUMMARY OF FAIR VALUE AND ADJUSTED CARRYING VALUE OF SECURED CONVERTIBLE NOTES

Beginning balance as of January 1, 2020

Repayment of obligation

( 1,250,000 )

Change in the fair value during the period

( 5,250,000 )

Ending balance as of December 31, 2020

Beginning Balance as of January 1, 2021

Repayment of obligation

Change in fair value during the period

Ending balance as of December 31, 2021

Promissory Note Payable .

December 23, 2019, the Company, borrowed $ 300,000 under an unsecured note payable to a private, third-party lender.

The promissory note

bears interest at the rate of 8 % per annum with principal and accrued interest payable on or before its maturity date of March 31, 2020 .

The Company granted the lender warrants exercisable to purchase a total of 107,000 shares of its common stock at an exercise price of

$ 1.40 per share until December 23, 2024.

When determining the fair value of these warrants, the assumptions utilized in the Black-Scholes

model include the expected volatility of stock price of 86% , discount rate of 1.75 % , and expected dividends of 0% .

The Company allocated

$ 71,869 of the proceeds of the promissory note to additional paid-in-capital, which represented the grant date relative fair value of

the warrants issued to the lender.

The discount will be amortized to interest expense ratably over the term of the promissory note which

approximates the effective interest method.

The amortization of discount resulted in $- 0 - and $ 66,061 of the discount amortized to interest

expense during the years ended December 31, 2021 and 2020, respectively.

January 17, 2020, the Company borrowed $ 100,000 under an unsecured note payable to a private, third-party lender.

The promissory note

bore interest at the rate of 8 % per annum with principal and accrued interest payable on or before its maturity date of April 17, 2020 .

The Company granted the lender warrants exercisable to purchase a total of 35,750 shares of its common stock at an exercise price of

$ 1.40 per share until January 17, 2025.

When determining the fair value of these warrants, the assumptions utilized in the Black-Scholes

model include the expected volatility of stock price of 86% , discount rate of 2% , and expected dividends of 0% .

The Company allocated

$ 20,806 of the proceeds of the promissory note to additional paid-in-capital, which represented the grant date relative fair value of

the warrants issued to the lender.

The note was repaid in full on March 12, 2020 and the discount was amortized to interest expense through

the date of payment.

The amortization of discount resulted in $ 20,806 of the discount amortized to interest expense during the year ended

December 31, 2020.

Promissory Notes Payable – Related party

February and April 2020, the Company borrowed a total of $ 319,000 from the Company’s Chairman, CEO & President under an unsecured

promissory note bearing interest at 6 % through its May 28, 2020 maturity date.

The proceeds from the note were used for general corporate

The principal balance and related accrued interest were paid in full during the year ended December 31, 2020.

Total interest

accrued and paid on this note was $ 5,236 in 2020.

Consideration Promissory Notes

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

Contingent Note”) in connection with a stock purchase agreement between Nobility Healthcare and a private company

(the “June Seller”) of $ 350,000 .

The Contingent Note has a three -year

term and bears interest at a rate of 3.00 %

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

business day of each quarter.

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

difference between the $ 975,000

(the “June Projected Revenue”)

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

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

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

of $ 350,000 .

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

Quarterly principal and interest

payments are deferred for six months and is due in equal quarterly installments on the seventh business day of each quarter.

The principal

amount of the June Contingent Note is subject to an earn-out adjustment, being the difference between the $ 975,000 (the “June Projected

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

course of business from the clients existing on June 30, 2021, during the period from October 1, 2021 through September 30, 2022 (the

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

Measurement Period Revenue is less than the June Projected Revenue, such amount will be subtracted from the principal balance

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

If the June Measurement Period Revenue is more than the June

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

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

The maximum downward earn-out

adjustment to the principal balance will be to zero.

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

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

June Contingent Note is considered to be additional purchase price;

therefore, the estimated fair value of the contingent liability

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

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

Management has

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

at the acquisition date.

Management’s estimate

of the fair value of this June Contingent Note at December 31, 2021 to be $ 317,212

representing a reduction in its estimated

fair value of $ 32,788 .

The Company recorded a gain of $ 32,788

in the Consolidated Statements of

Operations for the year ended December 31, 2021.

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 $ 650,000 .

The August Contingent Payment Note has a three -year

term and bears interest at a rate of 3.00 %

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

business day of each quarter.

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

being the difference between the $ 3,000,000

(the “August Projected Revenue”)

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

normal course of business from the clients existing on September 1, 2021, during the period from December 1, 2021 through November 30,

2022 (the “August Measurement Period”) measured on a quarterly basis and annualized as of the relevant period.

the August Measurement Period Revenue is less than the August Projected Revenue, such amount will be subtracted from the

principal balance of this August Contingent Payment Note on a dollar-for-dollar basis.

If the August Measurement Period

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

Payment Note on a dollar-for-dollar basis.

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

a negative number.

If the June Measurement

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

Note on a dollar-for-dollar basis.

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

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

In no event will the principal balance of this

June Contingent Note become a negative number.

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

There are no limits to the increases

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

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

are no limits to the increases to the principal balance of the June Contingent Note as a result of the earn-out adjustments.

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

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

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

Principal payments, since its inception, on this contingent consideration promissory note totaled $ 113,617 .

The estimated fair value

of the June Contingent 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

The August Contingent Payment Note has a three-year term and bears interest at a rate of 3.00 % per annum.

Quarterly principal

and interest payments are deferred for six months and is due in equal quarterly installments on the seventh business day of each quarter.

The principal amount of the August Contingent Payment Note is subject to an earn-out adjustment, being the difference between the $ 3,000,000

(the “August Projected Revenue”) and the cash basis revenue (the “August Measurement Period Revenue”) collected

by the August Sellers in its normal course of business from the clients existing on September 1, 2021, during the period from December

1, 2021 through November 30, 2022 (the “August Measurement Period”) measured on a quarterly basis and annualized as of the

relevant period.

If the August Measurement Period Revenue is less than the August Projected Revenue, such amount will be subtracted from

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

If the August Measurement Period Revenue is

more than the August Projected Revenue, such amount will be added to the principal balance of this August Contingent Payment Note on

a dollar-for-dollar basis.

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

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

There are no limits to the increases to the principal

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

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

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

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

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

The January Contingent Payment Note has a two -and-a-half-year term and bears interest at a rate of 3.00 % per annum.

principal and interest payments are deferred for seven months and is due in equal quarterly installments on the tenth business day of

each quarter.

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

between $ 3,500,000 (the “January Projected Revenue”) and the cash basis revenue (the “January Measurement Period Revenue”)

collected by the January Sellers in its normal course of business from the clients existing on January 1, 2022, during the period from

April 1, 2022 through March 31, 2023 (the “January Measurement Period”) measured on a quarterly basis and annualized as of

the relevant period.

If the January Measurement Period Revenue is less than the January Projected Revenue, such amount will be subtracted

from the principal balance of this January Contingent Payment Note on a dollar-for-dollar basis.

If the January Measurement Period Revenue

is more than the January Projected Revenue, such amount will be added to the principal balance of this January Contingent Payment Note

on a dollar-for-dollar basis.

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

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

There are no limits to the increases to

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

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

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

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

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”)

of $ 105,000 .

The February Contingent Payment Note has a three-year term and bears interest at a rate of 3.00 % per annum.

Quarterly principal

and interest payments are deferred for seven months and are due in equal quarterly installments on the tenth business day of each quarter.

The principal amount of the February Contingent Payment Note is subject to an earn-out adjustment, being the difference between $ 440,000

(the “February Projected Revenue”) and the cash basis revenue (the “February Measurement Period Revenue”) collected

by the February Sellers in its normal course of business from the clients existing on February 1, 2022, during the period from May 1,

2022 through April 30, 2023 (the “February Measurement Period”) measured on a quarterly basis and annualized as of the relevant

If the February Measurement Period Revenue is less than the February Projected Revenue, such amount will be subtracted from the

principal balance of this February Contingent Payment Note on a dollar-for-dollar basis.

If the February Measurement Period Revenue is

more than the February Projected Revenue, such amount will be added to the principal balance of this February Contingent Payment Note

on a dollar-for-dollar basis.

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

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

There are no limits to the increases to

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

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

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

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

at the acquisition date.

Management will continue

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

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

Management determined that there was no change in estimated

fair value relative to this contingent consideration promissory note for the year ended December 31, 2021.

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

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.

consideration earn-out Agreement – TicketSmarter Acquisition

1 unchanged sentence

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

(“TicketSmarter”) of up to $ 4,244,400

with a fair value at acquisition of $ 3,700,000 .

The TicketSmarter Earn-Out shall be payable with

ninety percent ( 90 %)

readily available funds and ten percent ( 10 %)

in stock consideration.

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

between the $ 2,896,829

(the “Projected EBITDA”) and the

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

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

If the Measurement Period EBITDA

is less than seventy percent ( 70 %)

of the Projected EBITDA, there will be zero contingent payment.

If the Measurement Period EBITDA is between seventy percent ( 70 %)

and one hundred percent ( 100 %)

of the Projected EBITDA, then a fractional amount of the contingent payment will be paid out.

If the Measurement Period EBITDA is more

than the Projected EBITDA, the full principal balance of this TicketSmarter Earn-Out will be paid out.

In no event will the principal

balance of this TicketSmarter Earn-Out become a negative number.

The maximum downward earn-out adjustment to the earn-out balance will

be to reduce the balance to zero.

(“TicketSmarter”) of up to $ 4,244,400 with a fair value at acquisition of $ 3,700,000 .

The TicketSmarter Earn-Out shall be

payable with ninety percent ( 90 %) readily available funds and ten percent ( 10 %) in stock consideration.

The principal amount of the TicketSmarter

Earn-Out is subject to an earn-out adjustment, being the difference between the $ 2,896,829 (the “Projected EBITDA”) and the

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

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

If the Measurement Period EBITDA is less than

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

If the Measurement Period EBITDA is between seventy

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

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

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

The maximum downward earn-out

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

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

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

Management has recorded the contingent consideration earn-out at its estimated fair value of $ 3,700,000

at the acquisition date.

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

Management has recorded the contingent consideration earn-out at its estimated fair value of $ 3,700,000 at the acquisition

Management determined that the actual Measurement Period EBITDA generated by TicketSmarter was less than 70% of the Projected EBITDA

Therefore, no TicketSmarter Earn-Out payments amounts were due under the 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.

Therefore, the fair value of the contingent

consideration earn-out agreement was reduced to zero, and the resulting gain of $- 0 - and $ 3,700,000 was reported in our Consolidated

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

FAIR VALUE MEASUREMENT

13 unchanged sentences

Warrant derivative liabilities

Contingent consideration promissory notes and contingent

consideration earn-out agreement

Contingent consideration promissory notes and contingent consideration earn-out agreement

December 31, 2021

Warrant derivative liabilities

Contingent consideration promissory notes and contingent

consideration earn-out agreement

Contingent consideration promissory notes and contingent consideration earn-out agreement

following table represents the change in Level 3 tier value measurements:

1 unchanged sentence

Consideration

Promissory Notes

and Earn-Out Agreement

Warrant Derivative

Balance, December 31, 2020

Issuance of detachable warrants in the January 14, 2021 Offering

Issuance of detachable warrants in the February 1, 2021 Offering

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

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

Transition of derivative warrant liability to equity on pre-funded warrants

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

Issuance of contingent consideration earn-out agreement – Ticketing Segment Acquisition

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

Change in fair value of contingent consideration earn-out agreement –Ticketing Segment

( 3,700,000 )

Change in fair value of warrant derivative liabilities due to modification

Change in fair value of warrant derivative liabilities

( 36,664,908 )

Balance, December 31, 2021

following table represents the change in other Level 3 tier value measurements:

Balance, December 31, 2019

Issuance of secured convertible debt

Conversion of secured convertible debentures

( 1,259,074 )

( 1,665,666 )

( 2,924,740 )

Repayment of proceeds investment agreement

( 1,250,000 )

Promissory Notes and Earn-Out Agreement

December 31, 2021

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

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

in fair value of warrant derivative liabilities

( 6,726,638 )

Repayment of secured convertible notes

Change in fair value of secured convertible debentures and proceeds investment

on extinguishment of warrant derivative liabilities

( 3,624,794 )

of common stock through warrant exchange agreement

( 4,495,500 )

Balance, December 31, 2020

Balance, December 31, 2021

payments on contingent consideration promissory notes – Revenue Cycle Management Acquisitions

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

December 31, 2022

ACCRUED EXPENSES

20 unchanged sentences

Income tax provision (benefit)

reconciliation of the income tax (provision) benefit at the statutory rate of 21% for the years ended December 31, 2021, and 2020 to the

Company’s effective tax rate is as follows:

reconciliation of the income tax (provision) benefit at the statutory rate of 21% for the years ended December 31, 2022, and 2021 to

the Company’s effective tax rate is as follows:

OF RECONCILIATION OF INCOME TAX (PROVISION) BENEFIT

3 unchanged sentences

Change in valuation reserve on deferred tax assets

Forgiveness of Payroll Protection Plan loan

Termination of warrant derivative liabilities

Contingent consideration for acquisition

Income tax (provision) benefit

The effective tax rate for the

years ended December 31, 2022, and 2021 varied from the expected statutory rate due to the Company continuing to provide a 100 % valuation

allowance on net deferred tax assets.

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

tax assets as of December 31, 2022, primarily because of the current year operating losses.

components of the Company’s deferred tax assets (liabilities) as of December 31, 2022 and 2021 are as follows:

OF SIGNIFICANT COMPONENTS OF COMPANY'S DEFERRED TAX ASSETS (LIABILITIES)

OF SIGNIFICANT COMPONENTS OF DEFERRED TAX ASSETS (LIABILITIES)

Deferred tax assets:

24 unchanged sentences

Net deferred tax assets (liability)

valuation allowance on deferred tax assets totaled $ 16,980,000

and $ 24,595,000

as of December 31, 2021, and 2020, respectively.

The Company records the benefit it will derive in future accounting periods from tax losses and credits and deductible temporary differences

as “deferred tax assets.” In accordance with ASC 740, “Income Taxes,” the Company records a valuation allowance

to reduce the carrying value of our deferred tax assets if, based on all available evidence, it is more likely than not that some or

all of the deferred tax assets will not be realized.

Company generated income in 2021 but incurred operating losses 2021 and it continues to be in a three-year cumulative loss position at

valuation allowance on deferred tax assets totaled $ 34,200,000 and $ 16,980,000 as of December 31, 2022, and 2021, respectively.

records the benefit it will derive in future accounting periods from tax losses and credits and deductible temporary differences as “deferred

tax assets.” In accordance with ASC 740, “Income Taxes,” the Company records a valuation allowance to reduce the carrying

value of our deferred tax assets if, based on all available evidence, it is more likely than not that some or all of the deferred tax

assets will not be realized.

Company incurred operating losses in 2022 but generated income 2021 and it continues to be in a three-year cumulative loss position at

December 31, 2022 and 2021.

1 unchanged sentence

future profits to outweigh the negative evidence of our three-year cumulative loss position under the guidance provided in ASC 740.

it determined to decrease our valuation allowance by $ 7,615,000

but continue to fully reserve its deferred

tax assets at December 31, 2021.

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

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

To the extent the Company determines that the

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

valuation allowance will be reversed.

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

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

December 31, 2021, the Company had available approximately $ 81,385,000

of Federal net operating loss carry-forwards

available to offset future taxable income generated.

Such tax net operating loss carry-forwards expire between 2026 and 2042, with $31,956,673 of the tax net operating loss carry-forwards have an indefinite life since the enactment of the Tax Cuts and Jobs Act

the Company had research and development tax credit carry-forwards totaling $ 1,795,000

available as of December 31, 2021, which

expire between 2023 and 2038 .

it determined to increase our valuation allowance by $ 17,220,000 but continue to fully reserve its deferred tax assets at December 31,

The Company expects to continue to maintain a full valuation allowance until it determines that it can sustain a level of profitability

that demonstrates its ability to realize these assets.

To the extent the Company determines that the realization of some or all of these

benefits is more likely than not based upon expected future taxable income, a portion or all of the valuation allowance will be reversed.

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

increase in shareholders’ equity.

of December 31, 2022, the Company had available approximately $ 113,315,000

of Federal net operating loss carry-forwards available to offset future taxable income generated.

Such tax net operating loss carry-forwards

expire between 2024 and 2042, with $ 63,726,000

of the tax net operating loss carry-forwards have an indefinite

life since the enactment of the Tax Cuts and Jobs Act of 2017.

In addition, the Company had research and development tax credit carry-forwards

totaling $ 1,795,000

available as of December 31, 2022, which expire

between 2023 and 2039 .

Internal Revenue Code contains provisions under Section 382 which limit a company’s ability to utilize net operating loss carry-forwards

1 unchanged sentence

Current estimates prepared by the

Company indicate that due to ownership changes which have occurred, approximately $ 765,000

of its net operating loss and $ 175,000

of its research and development tax credit

carry-forwards are currently subject to an annual limitation of approximately $ 1,151,000

and may be further limited by additional

ownership changes which may occur in the future.

As stated above, the net operating loss and research and development credit carry-forwards

expire between 2023 and 2038 ,

allowing the Company to potentially utilize all of the limited net operating loss carry-forwards during the carry-forward period.

Company indicate that due to ownership changes which have occurred, approximately $ 765,000 of its net operating loss and $ 175,000 of

its research and development tax credit carry-forwards are currently subject to an annual limitation of approximately $ 1,151,000 and

may be further limited by additional ownership changes which may occur in the future.

As stated above, the net operating loss and research

and development credit carry-forwards expire between 2023 and 2039 , allowing the Company to potentially utilize all of the limited net

operating loss carry-forwards during the carry-forward period.

discussed in Note 1, “Summary of Significant Accounting Policies,” tax positions are evaluated in a two-step process.

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meets the more-likely-than-not recognition threshold, it is then measured to determine the amount of benefit to recognize in the financial

The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon

ultimate settlement.

Management has identified no tax positions taken that would meet or exceed these thresholds and therefore there

are no gross interest, penalties and unrecognized tax expense/benefits that are not expected to ultimately result in payment or receipt

of cash in the consolidated financial statements.

The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate

Management has identified no tax positions taken that would meet or exceed these thresholds and therefore there are no gross

interest, penalties and unrecognized tax expense/benefits that are not expected to ultimately result in payment or receipt of cash in

the consolidated financial statements.

effective tax rate for the years ended December 31, 2022, and 2021 varied from the expected statutory rate due to the Company continuing

to provide a 100 %

valuation allowance on net deferred tax assets.

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

on net deferred tax assets as of December 31, 2021, primarily because of the current year operating losses.

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

The Company determined that it was appropriate to continue the full

valuation allowance on net deferred tax assets as of December 31, 2022, primarily because of the current year operating losses.

Company’s federal and state income tax returns are closed for examination purposes by relevant statute and by examination for 2018

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OPERATING LEASE

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

assembly and warehouse location.

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

lease and monthly payment amounts resulting from such correction.

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

nine months and monthly payments ranging from $ 12,398 to

$ 14,741 thereafter,

with a termination

date of December 2026 .

The Company is

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

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.

The original lease agreement was amended on August

28, 2020 to correct the footage under lease and monthly payment amounts resulting from such correction.

The lease terms, as amended include

no base rent for the first nine months and monthly payments ranging from $ 12,398 to $ 14,741 thereafter, with a termination date of December

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 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.

of the lease include 48 monthly payments of $ 1,598 with a maturity date of October 2023 .

The Company has the option to Purchase the equipment

at maturity for its estimated fair market value at that point in time.

The remaining lease term for the Company’s copier operating

lease as of December 31, 2021 was 22 months.

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

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

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

The Company has the option to purchase such

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

The remaining lease term for the Company’s copier

operating lease as of 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

thereafter, with a termination

date of July 2024 .

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 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 31

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

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

The remaining lease

term for the Company’s office and warehouse operating lease as of December 31, 2022 was nineteen

August 31, 2021, the Company completed the acquisition of its second acquired medical billing company, through Nobility Healthcare.

Upon 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

thereafter, with a termination

date of March 2023 .

The Company is responsible

for property taxes, utilities, insurance and its proportionate share of common area costs related to this 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 15

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

through its ticketing segment.

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

TicketSmarter Inc.’s office space.

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

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.

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, 2022 was three

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.

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

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.

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

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

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The Company took

possession of the leased facilities on September 1, 2021.

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, 2021 was 12

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

Total lease expense under the five operating leases was approximately $ 266,294

and $ 349,079 , for

the years ended December 31, 2021 and 2020, respectively.

weighted-average remaining lease term related to the Company’s lease liabilities as of December 31, 2021 and 2020

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.

expense under the five operating leases was approximately $ 547,609 for the year ended December 31, 2022.

weighted-average remaining lease term related to the Company’s lease liabilities as of December 31, 2022 and December 31, 2021

was 3.3 years and 3.8 years, respectively.

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Total operating lease obligations

components of lease expense were as follows for the year ended December 31, 2021:

OF COMPONENTS OF LEASE EXPENSES

Selling, general and administrative expenses

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

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COMMITMENTS AND CONTINGENCIES

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

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

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

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

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

regulatory challenges, inflationary pressures and market volatility.

We operate within the complex

integrated global supply chain for both vendors and customers.

As the COVID-19 pandemic dissipates at varying times and rates in different

regions around the world, there could be a prolonged negative impact on these global supply chains.

Our ability to continue operations

at specific facilities will be impacted by the interdependencies of the various participants of these global supply chains, which are

largely beyond our direct control.

A prolonged shut down of these global supply chains could have a material adverse effect on our business,

results of operations, cash flows and financial condition.

If our suppliers have increased

challenges with their workforce (including as a result of illness, absenteeism, reactions to health and safety or government requirements),

facility closures, timely access to necessary components, materials and other supplies at reasonable prices, access to capital, and access

to fundamental support services (such as shipping and transportation), they may be unable to provide the agreed-upon goods and services

in a timely, compliant and cost-effective manner.

We have incurred and may in the future incur additional costs and delays in our business

resulting from the COVID-19 pandemic, including as a result of higher prices, schedule delays or the need to identify and develop alternative

In some instances, we may be unable to identify and develop alternative suppliers, incurring additional liabilities under

our current contracts and hampering new ones.

Our customers have experienced, and may continue to experience, disruptions in their operations

and supply chains as a result of the COVID-19 pandemic, which can result in delayed, reduced, or canceled orders, or collection risks,

and which may adversely affect our results of operations.

Similarly, current, and future restrictions or disruptions of transportation,

such as reduced availability of air transport, port closures or delays, and increased border controls, delays or closures, can also impact

our ability to meet demand and could materially adversely affect us.

The spread of COVID-19 caused

us to modify our business practices (including employee travel, employee work locations, cancellation of physical participation in meetings,

events and conferences, and social distancing measures), and we may take further actions as may be required by government authorities

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

Although we managed to

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

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

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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progress over time.

May 31, 2022, the Company filed a lawsuit against Culp McAuley, Inc.

(“defendant”) in the United States District Court for

the District of Kansas.

The lawsuit arises from the defendant’s multiple breaches of its obligations to the Company.

seeks monetary damages and injunctive relief based on certain conduct by the defendant.

On July 18, 2022, the defendant filed its Answer

to the Company’s Verified Complaint and included Counterclaims alleging breach of contract and seeking monetary damages.

8, 2022, the Company filed its Reply and Affirmative Defenses to the Counterclaims by, among other things, denying the allegations and

any and all liability.

We have not concluded that a material loss related to the allegations is probable, nor have we accrued a liability

related to these claims.

Although we believe a loss could be reasonably possible (as defined in ASC 450), we do not have sufficient information

to determine the amount or range of reasonably possible loss with respect to the potential damages given that the dispute is yet to enter

the discovery process.

We will continue to vigorously pursue these claims, and we continue to believe that we have valid grounds for

recovery of the disputed deliverables.

However, there can be no assurances as to the outcome of the dispute.

the ultimate resolution is unknown, based on the information currently available, we do not expect that these lawsuits will individually,

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coverage and will not have a material adverse effect on our operating results, financial condition or cash flows.

Company owns U.S.

9,253,452 (the “ ‘452 Patent’ “), which generally covers the automatic activation

and coordination of multiple recording devices in response to a triggering event, such as a law enforcement officer activating the light

bar on the vehicle.

Company filed suit on January 15, 2016 in the U.S.

District Court for the District of Kansas (Case No:

2:16-cv-02032) against Axon, alleging

willful patent infringement against Axon’s body camera product line and Signal auto-activation product.

The Company is seeking

both monetary damages and a permanent injunction against Axon for infringement of the ‘452 Patent.

December 2016 and January 2017, Axon filed two petitions for Inter Partes Review (“IPR”) against the ‘452 Patent.

The United States Patent and Trademark Office (“USPTO”) rejected both of Axon’s petitions.

Axon is now statutorily

precluded from filing any more IPR petitions against the ‘452 Patent.

District Court litigation in Kansas was temporarily stayed following the filing of the petitions for IPR.

However, on November 17, 2017,

the Federal District Court of Kansas rejected Axon’s request to maintain the stay.

With this significant ruling, the parties will

now proceed towards trial.

Since litigation has resumed, the Court has issued a claim construction order (also called a Markman Order)

where it sided with the Company on all disputes and denied Axon’s attempts to limit the scope of the claims.

Following the Markman

Order, the Court set all remaining deadlines in the case.

Fact discovery closed on October 8, 2018, and a Final Pretrial Conference

took place on January 16, 2019.

The parties filed motions for summary judgment on January 31, 2019.

June 17, 2019, the Court granted Axon’s motion for summary judgment that Axon did not infringe on the Company’s patent and

dismissed the case.

Importantly, the Court’s ruling did not find that Digital’s ‘452 Patent was invalid.

not address any other issue, such as whether Digital’s requested damages were appropriate, and it did not impact the Company’s

ability to file additional lawsuits to hold other competitors accountable for patent infringement.

This ruling solely related to an interpretation

of the claims as they relate to Axon and was unrelated to the supplemental briefing Digital recently filed on its damages claim and the

WatchGuard settlement.

Those issues are separate and the judge’s ruling on summary judgment had nothing to do with Digital’s

damages request.

The Company has filed an appeal to this ruling and has asked the appellate court to reverse this decision.

Company filed an opening appeal brief on August 26, 2019 with the U.S.

Court of Appeals for the Tenth Circuit (the “Court of Appeals”),

appealing the U.S.

District Court’s granting of Axon’s motion for summary judgment.

Axon responded by filing a responsive

brief on November 6, 2019 and we then filed a reply brief responding to Axon on November 27, 2019.

The Court of Appeals scheduled oral

arguments on our appeal of the U.S.

District Court’s summary judgment ruling on April 6, 2020.

This appeal was intended to address

the Company’s position that the U.S.

District Court incorrectly dismissed our claims against Axon.

If the Court of Appeals overturns

the ruling of the U.S.

District Court, the case will be remanded to the U.S District Court before a new judge.

On March 12, 2020, the

panel of judges for the Court of Appeals issued an order cancelling the oral arguments previously set for April 6, 2020, having determined

that the appeal will be decided solely based on the parties’ briefs.

On April 22, 2020, a three-judge panel of the United States

Court of Appeals denied our appeal and affirmed the District Court’s previous decision to grant Axon summary judgment.

2020, we filed a petition for panel rehearing requesting that we be granted a rehearing of our appeal of the U.S.

District Court’s

summary judgment ruling.

Furthermore, we requested that we be given an opportunity to make our case through oral argument in front of

the three-judge panel of the Court of Appeals, which was also denied.

The Company has abandoned its right to any further appeals.

July 7, 2022, the Company, received a written notification (the “Notice”) from the Listing Qualifications Department of The

Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was not in compliance with the minimum bid price requirement

for continued listing on the Nasdaq Capital Market, as set forth under Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”),

because the closing bid price of the Company’s common stock was below $ 1.00 per share for the previous thirty (30) consecutive

business days.

The Notice has no immediate effect on the listing of the Common Stock, which will continue to trade uninterrupted on the

Nasdaq Capital Market under the ticker “DGLY.”

to Nasdaq Listing Rule 5810(c)(3)(A), the Company has been granted 180 calendar days from the date of the Notice, or until January 3,

2023 (the “Compliance Period”), to regain compliance with the Minimum Bid Price Requirement.

If at any time during the Compliance

Period, the bid price of the Common Stock closes at or above $ 1.00 per share for a minimum of ten (10) consecutive business days, Nasdaq

will provide the Company with written confirmation of compliance with the Minimum Bid Price Requirement and the matter will be closed.

On February 23, 2023, the Company received notice from Nasdaq confirming that the Company has cured its bid price deficiency

and has fully regained compliance with the Minimum Bid Price Requirement.

The Company sponsors a 401(k) retirement savings plan for the benefit of its employees.

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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.

Each participant is 100 % vested at all times

in employee and employer matching contributions.

STOCK-BASED COMPENSATION

Company recorded pre-tax compensation expense related to the grant of stock options and restricted stock issued of $ 1,605,949

and $ 1,462,270

for the years ended December 31, 2021 and 2020,

respectively.

of December 31, 2021, the Company had adopted nine separate stock option and restricted stock plans:

(i) the 2005 Stock Option and Restricted

Stock Plan (the “2005 Plan”), (ii) the 2006 Stock Option and Restricted Stock Plan (the “2006 Plan”), (iii) the

2007 Stock Option and Restricted Stock Plan (the “2007 Plan”), (iv) the 2008 Stock Option and Restricted Stock Plan (the

“2008 Plan”), (v) the 2011 Stock Option and Restricted Stock Plan (the “2011 Plan”), (vi) the 2013 Stock Option

and Restricted Stock Plan (the “2013 Plan”), (vii) the 2015 Stock Option and Restricted Stock Plan (the “2015 Plan”),

(viii) the 2018 Stock Option and Restricted Stock Plan (the “2018 Plan”) and (ix) the 2020 Stock Option and Restricted Stock

Plan (the “2020 Plan”).

The 2005 Plan, 2006 Plan, 2007 Plan, 2008 Plan, 2011 Plan, 2013 Plan, 2015 Plan, 2018 Plan and 2020

Plan are referred to as the “Plans.”

Company recorded pre-tax compensation expense related to the grant of stock options and restricted stock issued of $ 1,282,757 and $ 1,605,949

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

of December 31, 2022, the Company had adopted ten separate stock option and restricted stock plans:

(i) the 2005 Stock Option and

Restricted Stock Plan (the “2005 Plan”), (ii) the 2006 Stock Option and Restricted Stock Plan (the “2006

Plan”), (iii) the 2007 Stock Option and Restricted Stock Plan (the “2007 Plan”), (iv) the 2008 Stock Option and

Restricted Stock Plan (the “2008 Plan”), (v) the 2011 Stock Option and Restricted Stock Plan (the “2011

Plan”), (vi) the 2013 Stock Option and Restricted Stock Plan (the “2013 Plan”), (vii) the 2015 Stock Option and

Restricted Stock Plan (the “2015 Plan”), (viii) the 2018 Stock Option and Restricted Stock Plan (the “2018

Plan”), (ix) the 2020 Stock Option and Restricted Stock Plan (the “2020 Plan”), and (x) the 2022 Stock Option and

Restricted Stock Plan (the “2022 Plan”).

The 2005 Plan, 2006 Plan, 2007 Plan, 2008 Plan, 2011 Plan, 2013 Plan, 2015

Plan, 2018 Plan, 2020 Plan and 2022 Plan are referred to as the “Plans.”

Plans permit the grant of stock options or restricted stock to its employees, non-employee directors and others for up to a total of

333,750 shares of common stock.

The 2005 Plan terminated

during 2015 with 22,053

shares not awarded or underlying options,

which shares are now unavailable for issuance.

Stock options granted under the 2005 Plan that remain unexercised and outstanding as of

December 31, 2021 total 5,689 .

The 2006 Plan terminated during 2016 with 39,974

shares not awarded or underlying options,

which shares are now unavailable for issuance.

Stock options granted under the 2006 Plan that remain unexercised and outstanding as of

December 31, 2021 total 25,625 .

The 2007 Plan terminated during 2017 with 94,651

shares not awarded or underlying options,

which shares are now unavailable for issuance.

stock options granted under the 2007 Plan that

remain unexercised and outstanding as of December 31, 2021.

The 2008 Plan terminated during 2018 with 40,499

shares not awarded or underlying options,

which shares are now unavailable for issuance.

stock options granted under the 2008 Plan that

remain unexercised and outstanding as of December 31, 2021.

Board of Directors adopted the 2020 Stock Option and Restricted Stock Plan (the “2020 Plan”) on June 30, 2020 and

the Company’s stockholders approved the 2020 Plan at the Annual Meeting held on September 9, 2020.

The Company’s stockholders

approved an amendment to the 2020 Plan at the Annual Meeting held on June 22, 2021 which increased the number of shares of

Common Stock authorized and reserved for issuance under the 2020 Plan to a total of 2,500,000 .

A total of 1,584,155

options and restricted stock have been granted

under the 2020 Plan to date.

The 2020 Plan also authorizes us to grant (i) to the key employees’ incentive stock options to purchase

shares of Common Stock and non-qualified stock options to purchase shares of Common Stock and restricted stock awards and (ii) to non-employee

The 2005 Plan terminated during 2015 with 1,078 shares not awarded or underlying options, which shares

are now unavailable for issuance.

Stock options granted under the 2005 Plan that remain unexercised and outstanding as of December 31,

2022 total 284 .

The 2006 Plan terminated during 2016 with 2,739 shares not awarded or underlying options, which shares are now unavailable

for issuance.

Stock options granted under the 2006 Plan that remain unexercised and outstanding as of December 31, 2022 total 531 .

The 2007 Plan terminated during 2017 with 4,733 shares not awarded or underlying options, which shares are now unavailable for issuance.

There are no stock options granted under the 2007 Plan that remain unexercised and outstanding as of December 31, 2022.

The 2008 Plan

terminated during 2018 with 2,025 shares not awarded or underlying options, which shares are now unavailable for issuance.

no stock options granted under the 2008 Plan that remain unexercised and outstanding as of December 31, 2022.

Board of Directors adopted the 2020 Stock Option and Restricted Stock Plan (the “2020 Plan”) on June 30, 2020 and the Company’s

stockholders approved the 2020 Plan at the Annual Meeting held on September 9, 2020.

The Company’s stockholders approved an amendment

to the 2020 Plan at the Annual Meeting held on June 22, 2021 which increased the number of shares of Common Stock authorized and reserved

for issuance under the 2020 Plan to a total of 125,000 .

A total of 112,958 options and restricted stock have been granted under the

2020 Plan to date.

The 2020 Plan also authorizes us to grant (i) to the key employees’ incentive stock options to purchase shares

of Common Stock and non-qualified stock options to purchase shares of Common Stock and restricted stock awards and (ii) to non-employee

directors and consultants non-qualified stock options and restricted stock.

Board of Directors adopted the 2022 Stock Option and Restricted Stock Plan (the “2022 Plan”) on October 28, 2022 and the

Company’s stockholders approved the 2022 Plan at the Annual Meeting held on December 7, 2022.

The number of shares of Common Stock authorized and reserved

for issuance under the 2022 Plan totals 125,000 .

The 2022 Plan also authorizes us to grant (i) to the key employees’ incentive

stock options to purchase shares of Common Stock and non-qualified stock options to purchase shares of Common Stock and restricted stock

awards and (ii) to non-employee directors and consultants non-qualified stock options and restricted stock.

Company believes that such awards better align the interests of our employees with those of its stockholders.

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The total estimated grant

date fair value stock options issued during the year ended December 31, 2021 and 2020 was $ 466,831

and $ 415,742 ,

respectively.

date fair value stock options issued during the year ended December 31, 2022 and 2021 was $ 22,768 and $ 466,831 , respectively.

Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated grant date fair

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during the years ended December 31, 2022 and 2021.

December 31, 2021 and 2020, the aggregate intrinsic value of options outstanding was approximately $- 0 - and $ 86,150 , respectively, and

the aggregate intrinsic value of options exercisable was approximately $- 0 - and $ 58,025 , respectively.

of December 31, 2021, the unrecognized portion of stock compensation expense on all existing stock options was $ 233,415

and will be recognized over the next six

December 31, 2022 and 2021, the aggregate intrinsic value of options outstanding was approximately $- 0 - and $- 0 -, respectively, and the

aggregate intrinsic value of options exercisable was approximately $- 0 - and $- 0 -, respectively.

following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable

options under the Company’s option plans as of December 31, 2022:

OF SHARES AUTHORIZED UNDER STOCK OPTION PLANS BY EXERCISE PRICE RANGE

SCHEDULE OF SHARES AUTHORIZED UNDER STOCK OPTION PLANS BY EXERCISE PRICE RANGE

Outstanding options

Exercisable options

Exercise price

contractual life

Weighted average

contractual life

$ 50.00 to $ 69.99

$ 70.00 to $ 89.99

stock grants.

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summary of all restricted stock activity under the equity compensation plans for the years ended December 31, 2022 and 2021 is as follows:

OF RESTRICTED STOCK ACTIVITY

SUMMARY OF RESTRICTED STOCK ACTIVITY

Nonvested balance, January 1, 2021

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Nonvested balance, December 31, 2022

Company estimated the fair market value of these restricted stock grants based on the closing market price on the date of grant.

December 31, 2021, there were $ 1,013,415

of total unrecognized compensation costs

related to all remaining non-vested restricted stock grants, which will be amortized over the next fifty-seven months in accordance

with their respective vesting scale.

Company estimated the fair market value of these restricted stock grants based on the closing market price on the date of the grant.

As of December 31, 2022, there were $ 500,280 of total unrecognized compensation costs related to all remaining non-vested restricted

stock grants, which will be amortized over the next forty-eight months in accordance with their respective vesting scale.

nonvested balance of restricted stock vests as follows:

OF NON-VESTED BALANCE OF RESTRICTED STOCK

SCHEDULE OF NON-VESTED BALANCE OF RESTRICTED STOCK

COMMON STOCK PURCHASE WARRANTS

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exercisable, or have a delayed initial exercise date, no more than six months from their respective issue date and allow the holders

to purchase up to 26,008,598

shares of common stock at $ 2.60

per share as of December 31, 2021.

warrants expire from February 23, 2022 through September 18, 2026 and

certain of the outstanding warrants allow for cashless exercise.

to purchase up to 67,459 shares of common stock at $ 52.00 to $ 67.20 per share as of December 31, 2022.

The warrants expire from February

23, 2023 through July 31, 2023 and certain of the outstanding warrants allow for cashless exercise.

January 14, 2021 and February 1, 2021, the Company issued warrants to purchase a total of 2,127,500 shares of Common Stock.

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Furthermore, the Company re-values the fair value of warrant derivative liability as

of the date the warrant is exercised with the resulting warrant derivative liability transitioned to change in fair value of warrant derivative liabilities through the consolidated

statement of operations.

of the date the warrant is exercised with the resulting warrant derivative liability transitioned to change in fair value of warrant

derivative liabilities through the consolidated statement of operations.

August 19, 2021, the Company entered into a Warrant Exchange Agreement (the “Exchange Agreement”) with the Investors cancelling

February Warrants exercisable for an aggregate of 384,077 shares of Common Stock in consideration for its issuance of (i) new warrants

(the “Exchange Warrants”) to the 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

(the “Exchange Warrants”) to the Investors exercisable for an aggregate of up to 384,077 shares of Common Stock.

also issued warrants (the “Replacement Original Warrants”) replacing the February Warrants for the remaining shares of Common

Stock exercisable thereunder, representing an aggregate of 330,923 shares of Common Stock, and extended the expiration date of the

February Warrants to September 18, 2026 .

The Exchange Warrants 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.

On the date of the exchange, the Company

calculated the fair value, using the Black-Scholes method, of the cancelled February Warrants and the newly issued Exchange Warrants,

the difference in fair value measurement of the respective warrants was attributed to warrant modification expense in the consolidated

The Exchange Warrants provide for an initial exercise price of $ 65.00 per share, subject to customary

adjustments thereunder, and are immediately exercisable upon issuance for cash and on a cashless basis.

On the date of the exchange,

the Company calculated the fair value, using the Black-Scholes method, of the cancelled February Warrants and the newly issued Exchange

Warrants, the difference in fair value measurement of the respective warrants was attributed to warrant modification expense in the consolidated

statement of operations.

the date of the exchange, the February Warrants and Exchange Warrants were valued at $ 11,818,644

and $ 12,114,424

using the original and modified expiry date of the warrants, respectively, using the Black-Scholes method.

The difference of $ 295,780

was accordingly recorded as a warrant modification expense in the consolidated statement of operations.

SCHEDULE OF WARRANT

the date of the exchange, the February Warrants and Exchange Warrants were valued at $ 11,818,644 and $ 12,114,424 using the original and

modified expiry date of the warrants, respectively, using the Black-Scholes method.

The difference of $ 295,780 was accordingly recorded

as a warrant modification expense in the consolidated statement of operations.

SCHEDULE OF WARRANT MODIFICATION

Original terms at August 19, 2021

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Common stock issuable under the warrants

August 23, 2022, the Company entered into Warrant Exchange Agreements (the “Warrant Exchange Agreements”) with certain

investors (the “Investors”), pursuant to which the Company agreed to issue to the Investors an aggregate of 303,750

shares of Common Stock in exchange for the cancellation by the Investors of the January Warrants, the Exchange Warrants and the

Replacement Originals Warrants.

On the date of the exchange, the Company calculated the fair value of the issuance of shares of

common stock pursuant to the Warrant Exchange Agreements, attributing that value to common stock and additional paid in capital.

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

derivative liabilities and gain on extinguishment of warrant derivative liabilities in the consolidated statement of operations.

the date of the Warrant Exchange Agreement, using the Black-Scholes method, the fair value of the warrant derivative liability was

million, compared to $ 9.3

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

million during the year ended December 31, 2022.

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

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

million during the year ended December 31, 2022.

August 23, 2022

Volatility - range

Risk-free rate

3.17 - 3.36 %

Remaining contractual term

3.4 - 4.1 years

Exercise price

Common stock issuable under the warrants

in the Company’s stock price are a primary driver for the changes in the derivative valuations during each reporting period.

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result in a material change in our Level 3 fair value.

Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the

warrant derivative liabilities as of their date of issuance and as of December 31, 2021:

SCHEDULE OF FAIR VALUE OF THE WARRANT DERIVATIVE LIABILITIES

Issuance date assumptions

December 31, 2021 assumptions

Volatility - range

Risk-free rate

Remaining contractual term

Exercise price

Common stock issuable under the warrants

the year ended December 31, 2021, holders of pre-funded warrants exercised a total of 18,250,000 warrants which were fair valued at $ 1,817,549

at their date of issuance and recorded as a derivative warrant liability.

On the date of exercise such pre-funded warrants were fair

valued at zero, which was transitioned to permanent equity during the year ended December 31, 2021.

The Company reported the $ 1,817,549

change in fair value from their issuance date to their exercise date in the statements of operations as the change in fair

value of warrant derivative liabilities.

following table summarizes information about shares issuable under warrants outstanding during the years ended December 31, 2022 and

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Vested Balance, January 1, 2021

( 2,704,583 )

Vested Balance, December 31, 2021

1 unchanged sentence

Vested Balance, January 1, 2022

( 18,250,000 )

Forfeited/cancelled

( 1,232,971 )

Vested Balance, December 31, 2022

total intrinsic value of all outstanding warrants aggregated $- 0 -

as of December 31, 2021 and 2020, and the weighted average remaining term was 50.7 and 15.8 months as of December 31, 2021

and 2020, respectively.

total intrinsic value of all outstanding warrants aggregated $- 0 - as of December 31, 2022 and 2021, and the weighted average remaining

term was 3.9 and 50.7 months as of December 31, 2022 and 2021, respectively.

following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable

warrants to purchase common shares as of December 31, 2021:

OF RANGE OF EXERCISE PRICES AND WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE OF WARRANTS

warrants to purchase shares of common stock as of December 31, 2022:

SUMMARY OF RANGE OF EXERCISE PRICES AND WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE OF WARRANTS

Outstanding and exercisable warrants

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in the Offering and certain expenses.

the placement agency agreement, the Company and its officers and directors executed lock-up agreements whereby, subject to certain expectations,

(a) the Company has agreed not to engage in the following for a period of 90 days from the date of the pricing of the Offering, (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 the Company;

(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.

pursuant to the terms of the Securities Purchase Agreement the Company has granted to the Investors, for a period of 12 months after

the closing of the Offering, the right to participate in subsequent offerings by the Company of Common Stock and Common Stock equivalents

in an amount up to 50 % of the amount of each such subsequent offering, on the same terms, conditions and price provided for in such subsequent

Company received approximately $ 28,941,000 ($ 29,013,000 upon full exercise of the prefunded warrants) in net proceeds from the Offering

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Direct Offerings

February 1, 2021, the Company consummated an registered direct offering (the “Second Offering”) of (i) 3,250,000 shares of

common stock (“Shares”), (ii) pre-funded warrants to purchase up to 11,050,000 shares of Common Stock (the “Pre-Funded

Warrants”), 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 Registered Offering (“Pre-Funded Warrants”);

common stock purchase warrants (“Warrants”) to purchase up to an aggregate of 14,300,000 shares of Common Stock (the “Warrant

Shares”), 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 Second Offering was conducted pursuant to a placement agency agreement, dated

January 28, 2021, between the Company and Kingswood Capital Markets, division of Benchmark Investments, Inc., who acted as the exclusive

placement agent in connection with the Second Offering pursuant to a placement agency agreement.

The Shares and accompanying Warrants

in the Second Offering were sold at a combined offering price of $ 2.80 per Share and accompanying Warrant and the Pre-Funded Warrants

and accompanying Warrants in the Offering were sold at a combined offering price of $ 2.79 per Pre-Funded Warrant and accompanying Warrant.

February 1, 2021, the

Company consummated an registered direct offering (the “Second Offering”) of (i) 162,500

shares of common stock (“February 2021 Shares”), (ii) pre-funded warrants to purchase up to 552,500

shares of Common Stock (the “February 2021 Pre-Funded Warrants”), 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 Registered Offering;

and (iii) common stock purchase warrants (“February 2021 Warrants”) to purchase

up to an aggregate of 715,000

shares of Common Stock (the “February 2021 Warrant Shares”), which are exercisable for a period of five

years after issuance at an initial exercise price $ 65.00

per share, subject to certain adjustments, as provided in the February 2021 Warrants.

The Second Offering was conducted

pursuant to a placement agency agreement, dated January 28, 2021, between the Company and Kingswood Capital Markets, division of

Benchmark Investments, Inc., who acted as the exclusive placement agent in connection with the Second Offering pursuant to a

placement agency agreement.

The February 2021 Shares and accompanying February 2021 Warrants in the Second Offering were sold at a

combined offering price of $ 56.00

per February 2021 Share and accompanying February 2021 Warrant and the February 2021 Pre-Funded Warrants and accompanying February

2021 Warrants in the Offering were sold at a combined offering price of $ 55.80

per February 2021 Pre-Funded Warrant and accompanying February 2021 Warrant.

securities in the Second Offering were issued pursuant to a prospectus supplement to the Company’s effective shelf registration

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sold in the Second Offering and certain expenses.

the placement agency agreement, the Company and its officers and directors executed lock-up agreements whereby, subject to certain exceptions,

(a) the Company has agreed not to engage in the following for a period of 90 days from the date of the pricing of the Offering, (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 the Company;

(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.

pursuant to the terms of the Securities Purchase Agreement the Company has granted to the Investors, for a period of 12 months after

the closing of the Second Offering, the right to participate in subsequent offerings by the Company of Common Stock and Common Stock

equivalents in an amount up to 50 % of the amount of each such subsequent offering, on the same terms, conditions and price provided for

in such subsequent offering.

Company received approximately $ 37,447,100 ($ 37,557,600 upon full exercise of the prefunded warrants) in net proceeds from the Second

12 unchanged sentences

Net proceeds of the offering

conjunction with this Offering, the Company issued prefunded Common Stock purchase warrants to purchase up to 11,050,000 Shares Common

Stock at $ 2.80 per share ($ 2.79 prefunded at closing) and Common Stock purchase warrants to purchase up to 14,300,000 shares of Common

Stock at $ 3.25 per share.

The underlying warrant terms provide for net cash settlement outside the control of the Company under certain

circumstances in the event of tender offers.

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

consolidated statements of operations as the change in fair value of warrant derivative liabilities.

Accordingly, the Company allocated

a portion of the net proceeds of this offering to warrant derivative liabilities based on their estimated fair value as follows (See

Notes 4 and 11):

conjunction with the Second Offering, the Company issued prefunded Common Stock purchase warrants to purchase up to 552,500

shares of common Stock at $ 56.00

per share ($ 55.80

prefunded at closing) and Common Stock purchase

warrants to purchase up to 715,000

shares of Common Stock at $ 65.00

The underlying warrant terms provide

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

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 consolidated statements of operations as the change in fair value

of warrant derivative liabilities.

Accordingly, the Company allocated a portion of the net proceeds of this offering to warrant derivative

liabilities based on their estimated fair value as follows (See Notes 11 and 17):

SCHEDULE OF NET PROCEEDS FROM OFFERING

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January 7, 2022, the board of directors approved the grant of 26,250 shares of common stock to officers of the Company.

will generally vest one-half on January 7, 2022, and one half on January 7, 2023, provided that each grantee remains an officer or employee

on such dates .

September 20, 2021, the board of directors approved the grant of 406,000 shares of common stock to employees of the Company.

of 26,000 shares vested immediately upon grant and the remaining 380,000 shares will generally vest in varying amounts over the next

5 years, provided that each grantee remains an employee on such vesting dates.

Cancellation of Restricted Stock

the year ended December 31, 2021, the Company cancelled 7,700

shares for various reasons.

of Common Stock as Consideration for the TicketSmarter Acquisition.

September 2, 2021, the Company issued a total of 719,738

shares of common stock as a portion of the consideration

paid for the acquisition of Goody Tickets, LLC and TicketSmarter, LLC.

See full description of this acquisition in “ Note 20.

TICKETSMARTER ACQUISITION ”.

will vest over various periods ranging from one to five years on the anniversary of the grant date, provided that each grantee remains

an officer or employee on such dates .

various dates in January 2022, the board of directors approved the grant of 9,500 shares of common stock to employees of the Company.

Most shares will generally vest in varying amounts over the next two to five years , provided that each grantee remains an employee on

such vesting dates.

of Restricted Stock

the year ended December 31, 2022, the Company cancelled 3,250 shares for various reasons.

Stock Transaction

October 13, 2022, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain

institutional investors (the “Preferred Stock Investors”), pursuant to which the Company agreed to issue and sell, in a

private placement (the “2022 Offering”), 1,400,000

shares of the Company’s Series A Convertible Redeemable Preferred Stock, par value $ 0.001

per share (the “Series A Preferred Stock”), and 100,000

shares of the Company’s Series B Convertible Redeemable Preferred Stock, par value $ 0.001

per share (the “Series B Preferred Stock”, and together with the Series A Preferred Stock, the “Preferred

Stock”), at an offering price of $ 9.50

per share, representing a 5% original issue discount to the stated value of $ 10.00

per share, for gross aggregate proceeds of $ 15

million in the 2022 Offering, before the deduction of discounts, fees and offering expenses.

The shares of Preferred Stock will,

under certain circumstances, be convertible into shares of the Company’s common stock, at the option of the holders of the

Preferred Stock and, in certain circumstances, by the Company.

connection with the 2022 Offering, the Company paid A.G.P./Alliance Global Partners (the “Financial Advisor”) an

aggregate cash fee equal to $ 750,000

and reimbursed the Financial Advisor for certain of its expenses in an amount not to exceed $135,000 .

Pursuant to the Purchase Agreement,

the Company filed on October 17, 2022 certificates of designation (the “Certificates of Designation”) with the Secretary of

the State of Nevada designating the rights, preferences and limitations of the shares of Series A Preferred Stock and Series B Preferred

The Certificate of Designation for the Series A Preferred Stock provides, in particular, that the Series A Preferred Stock will

have no voting rights other than the right to vote on the Amendments on an as-if-converted-to-Common-Stock basis.

The Certificate of Designation

for the Series B Preferred Stock provides, in particular, that the Series B Preferred Stock will have no voting rights other than the

right to vote on the Amendments and each share of Series B Preferred Stock entitles the holder thereof the right to cast 2,500 votes on

the Amendments .

The holders of Preferred Stock will be entitled to dividends, on an as-if

converted-to-Common-Stock basis, equal to dividends actually paid, if any, on shares of Common Stock.

The Preferred Stock is convertible,

at the option of the holders and, in certain circumstances, by the Company, into shares of Common Stock at a conversion price of $ 20.00

The conversion price can be adjusted pursuant to the Certificates of Designation for stock dividends and stock splits, subsequent

rights offering, pro rata distributions of dividends or other distribution of its assets, or the occurrence of a fundamental transaction

(as defined in the applicable Certificate of Designation).

holders of the Series A Preferred Stock and Series B Preferred Stock have the right to require the Company to redeem their shares of

the relevant series at a price per share equal to 105% of the stated value of such shares commencing (i) after the earlier of (1)

the receipt of stockholder approval of the Amendments and (2) sixty (60) days after the closing of the 2022 Offering and (ii) before

the date that is ninety (90) days after such closing.

The Company has the option to redeem the Series A Preferred Stock and Series B

Preferred Stock at a price per share equal to 105% of the stated value of such shares commencing after the 90th day following the

closing of the 2022 Offering, subject to the holders’ rights to convert the shares prior to such redemption .

proceeds of the 2022 Offering were held in an escrow account, along with the additional amount that would be necessary to fund the

105% redemption price until the expiration of the redemption period for the Preferred Stock, as applicable, subject to the earlier

payment to redeeming holders.

Upon expiration of the redemption period, any proceeds remaining in the escrow account will be

disbursed to the Company.

2022 Offering closed on October 19, 2022.

In December 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.

of Common Stock as Consideration for the Potential Spin-Off Transaction.

December 28, 2022, the Company issued a total of 25,000 shares of common stock as a portion of the consideration paid for the advisory

services associated with the potential spin-off transaction.

Repurchase Program

December 6, 2021, the board of directors of the Company authorized the repurchase of up to $ 10.0

million of the Company’s outstanding common stock under the specified terms of a share repurchase program (the

During 2021, the Company repurchased 1,734,838

shares of its common stock for $ 1,975,079,

in accordance with the Program.

The Program does not obligate the Company to acquire any specific number of shares and shares may be

repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the

Securities Exchange Act of 1934, as amended.

OF STOCK HOLDERS EQUITY

Purchased (1)

Shares Purchased as

Part of Publicly

Approximate Dollar Value of

Shares that May Yet Be

Purchased Under the

December 6, 2021, the board of directors of the Company authorized the repurchase of up to $ 10.0 million of the Company’s outstanding

common stock under the specified terms of a share repurchase program (the “Program”).

During the year ended December 31,

2022, the Company repurchased 186,299 shares of its common stock for $ 4,026,523 , in accordance with the Program.

SCHEDULE OF STOCK REPURCHASE

December 2021

February 2022

Total all plans

of Treasury Stock

December 31, 2021, the Company cancelled its 63,518 shares held in treasury, in addition to the repurchased shares through the Program.

Noncontrolling Interests

The Company owns a 51 % equity

interest in its consolidated subsidiary, Nobility Healthcare.

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

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

to noncontrolling interests of consolidated subsidiary”.

We reported net income (loss) attributable to noncontrolling interests

of consolidated subsidiary of $ 56,453 and $- 0 - for the years ended December 31, 2021 and 2020, respectively.

June 30, 2022, the board of directors of the Company 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 June 30, 2022.

Noncontrolling

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

As a result, the noncontrolling shareholders

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

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

We reported net income attributable

to noncontrolling interests of consolidated subsidiary of $ 407,933 and $ 56,453 for the year ended December 31, 2022 and 2021, respectively.

RELATED PARTY TRANSACTIONS

Rebel Holding, Inc.

Secured Promissory Notes

October 1, 2020, the Company advanced $ 250,000 to American Rebel Holdings, Inc.

(AREB) under a secured promissory note.

The CEO, President

and Chairman of AREB is the brother of the Company’s CEO, President and Chairman.

Such note bears interest at 8 % and is secured

by all the tangible and intangible assets of the Company that are not currently secured by other indebtedness.

The Company also received

warrants to purchase 1,250,000 shares of AREB common stock at an exercise price of $ 0.10 per share with a five-year term.

This note had

an original maturity date of January 2, 2021 ;

however, additional provisions within the note provided for an extension of the maturity

date for fourteen months due to AREB’s failure to raise $300,000 in new debt or equity financing prior to the original maturity

Upon this extension, the AREB was obligated to make equal monthly payments of principal and interest over the extended period of

October 21, 2020, the Company advanced $ 250,000 to AREB under a second secured promissory note.

Such note bears interest at 8 % and is

secured by inventory manufactured and revenue/accounts receivable derived from a specific purchase order.

The Company also received warrants

to purchase 1,250,000 shares of AREB common stock at an exercise price of $ 0.10 per share with a five-year term.

This note has a maturity

date of April 21, 2021 , subject to full repayment upon AREB closing on debt or equity financings of at least $600,000, and the receipt

of revenue from the sale of inventory sold under the specific purchase order serving as collateral .

On March 1, 2021, the Company advanced

an additional $ 117,600 to AREB on terms similar to the previously issued notes.

April 21, 2021, the parties agreed to the terms of a Debt Settlement Agreement and Mutual Release regarding the following:

(a) the secured

promissory note dated October 1, 2020;

(b) the secured promissory note dated October 21, 2020;

and (c) an advance made by the Company

on March 1, 2021.

The parties arranged for a lump sum payment aggregating $ 639,956

to liquidate all outstanding debt including accrued

interest for the two delinquent notes and the advance which lump-sum payment was made on April 21, 2021.

No gain or loss was determined

on this transaction.

Transactions with Affiliate and Member of

Board of Director

III is currently the Chief Financial Officer and General Counsel for Nobility, LLC, which is the managing member of the

Company’s majority owned subsidiary, Nobility Healthcare, LLC.

The Company has made payments to Mr.

Hoffmann and his

affiliates for legal and other services rendered totaling $ 105,926

during the year ended December 31, 2021.

Furthermore, on January 27, 2022, the Company’s Board of Directors appointed Mr.

Hoffmann to become a member of the Board until the next annual meeting of shareholders of the Company at which directors are being

with Managing Member of Nobility Healthcare

LLC, is currently the managing member of Nobility Healthcare, LLC.

The Company has advanced a total of $ 158,384

in the form of working capital loan to Nobility, LLC in order to fund capital expenditures necessary for the initial growth of the

joint venture during the year ended December 31, 2021.

The outstanding balance of working capital loan was $ 158,384 as of December

31, 2021 and the Company anticipates full repayment of this advance during the year ended

December 31, 2022.

January 27, 2022, the board of directors appointed Christian J.

Hoffmann, III as a member of the Board, effective immediately.

is a principal owner and manager of Nobility, LLC which is currently the managing member of our consolidated subsidiary Nobility Healthcare,

Company has advanced a total of $ 158,384

in the form of a working capital loan to Nobility,

LLC in order to fund capital expenditures necessary for the initial growth of the joint venture during 2022.

The outstanding balance

of the working capital loan was $ 138,384

as of December 31, 2022 and the Company anticipates

full repayment of this advance during the year ended December 31, 2023.

The Company paid distributions to the noncontrolling in consolidated

subsidiary totaling $ 15,692

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

August 1, 2022, Mr.

Hoffmann resigned as a member of the Board, effective immediately.

He remains as a principal owner and manager of

Nobility, LLC.

NET INCOME (LOSS) PER SHARE

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Year ended December 31,

Numerator for basic and diluted income (loss) per share –

Net income (loss)

Numerator for basic and diluted income (loss) per share – Net

income (loss) attributable to common stockholders

$ ( 21,666,691 )

3 unchanged sentences

Net income (loss) per share:

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

For the years ended

December 31, 2021 and 2020, all shares issuable upon conversion of convertible debt and the exercise of outstanding stock options and

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

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

years ended December 31, 2022 and 2021, all shares issuable upon conversion of convertible debt and the exercise of outstanding

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

DIGITAL ALLY HEALTHCARE VENTURE

2 unchanged sentences

(“Nobility Healthcare”).

Digital Ally Healthcare is capitalizing the venture with $ 13.5

million to support the venture’s business

strategy to make acquisitions of RCM companies.

Ally Healthcare owns 51% of the venture that entitles it to 51% of the distributable cash as defined in the venture’s operating

agreement plus a cumulative preferred return of 10% per annum on its invested capital.

Nobility will receive a management fee and 49%

of the distributable cash, subordinated to Digital Ally Healthcare’s preferred return .

Digital Ally Healthcare is capitalizing the venture with $ 13.5 million to support the venture’s

business strategy to make acquisitions of RCM companies.

Digital Ally Healthcare owns 51% of the venture that entitles it to 51% of the

distributable cash as defined in the venture’s operating agreement plus a cumulative preferred return of 10% per annum on its invested

Nobility will receive a management fee and 49% of the distributable cash, subordinated to Digital Ally Healthcare’s preferred

The venture comprises the Company’s revenue cycle management segment.

June 30, 2021, the Company’s revenue cycle management segment completed the acquisition of a private medical billing company

(the “Healthcare Acquisition”).

June 30, 2021, the Company’s revenue cycle management segment completed the acquisition of a private medical billing company (the

“Healthcare Acquisition”).

In accordance with the stock purchase agreement, the Company’s revenue cycle management

segment agreed to a non-refundable initial payment (the “Initial Payment Amount”) of $ 850,000 .

In addition to the Initial Payment Amount, the Company’s revenue cycle management segment agreed to issue a promissory note

to the stockholders of the Healthcare Acquisition in the principal amount of $ 350,000

that is subject to an earn-out adjustment.

estimate of the fair value of this Contingent Note at December 31, 2021 is $ 317,212 .

The gain associated with the adjustment in

the estimated fair value of this contingent promissory note is recorded as a gain in the Consolidated Statements

of Operations for the year ended December 31, 2021.

Lastly, the Company’s revenue cycle management segment agreed to pay

$ 162,552 representing the principal and accrued interest balance due under a promissory note issued to the selling

shareholders prior to the acquisition closing date.

The Company’s revenue cycle management segment anticipates the

estimated fair value of the contingent promissory note to be paid in full, therefore, the total aggregate purchase price was determined

to be approximately $ 1,376,509 .

Total acquisition related costs aggregated $ 164,630 ,

which was expensed as incurred.

Subsequent to the acquisition date, the Company received further information regarding the purchased

assets and assumed liabilities.

As a result, the initial allocation of the purchase price was adjusted by increasing accounts receivable

by $ 75,000 with a corresponding reduction of goodwill during the year ended December 31, 2021.

In addition to the Initial

Payment Amount, the Company’s revenue cycle management segment agreed to issue a promissory note to the stockholders of the Healthcare

Acquisition in the principal amount of $ 350,000 that is subject to an earn-out adjustment.

Management’s estimate of the fair value

of this Contingent Note at December 31, 2021 is $ 317,212 .

The gain associated with the adjustment in the estimated fair value of this

contingent promissory note is recorded as a gain in the Consolidated Statements of Operations for the year ended December 31, 2021.

the Company’s revenue cycle management segment agreed to pay $ 162,552 representing the principal and accrued interest balance due

under a promissory note issued to the selling shareholders prior to the acquisition closing date.

The Company’s revenue cycle management

segment anticipates the estimated fair value of the contingent promissory note to be paid in full, therefore, the total aggregate purchase

price was determined to be approximately $ 1,376,509 .

Total acquisition related costs aggregated $ 164,630 , which was expensed as incurred.

Subsequent to the acquisition date, the Company received further information regarding the purchased assets and assumed liabilities.

As a result, the initial allocation of the purchase price was adjusted by increasing accounts receivable by $ 75,000 with a corresponding

reduction of goodwill during the year ended December 31, 2021.

Company accounts for business combinations using the acquisition method and that the Company has early adopted the amendments of Regulation

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not required to be presented.

Under the acquisition method, the purchase price of the Healthcare Acquisition has been allocated to

the acquired tangible and identifiable intangible assets and assumed liabilities based on their estimated fair values at the time of

the Healthcare Acquisition.

This allocation involves a number of assumptions, estimates, and judgments that could materially affect the

timing or amounts recognized in our financial statements.

Our assumptions and estimates are based upon information

obtained from the management of the Company’s revenue cycle management segment.

The acquisition was structured as stock

purchase, therefore the excess purchase price over the fair value of net tangible assets acquired was recorded as goodwill, which will

not be amortized for income tax filing purposes.

The results of operations of acquired businesses are included in the consolidated

financial statements from the acquisition date.

purchase price of the Healthcare Acquisition was allocated to the tangible assets, and assumed liabilities

based on their preliminary estimated fair values at the time of the Healthcare Acquisition.

The Company expects to retain the

services of independent valuation firm to determine the fair value of these identifiable intangible assets.

Once determined, the Company

will reallocate the purchase price of the acquisition based on the results of the independent evaluation if they are materially different

from the allocations as recorded on June 30, 2021.

The preliminary estimated fair value of assets acquired and liabilities

assumed in the Healthcare Acquisition were as follows:

SCHEDULE OF PRELIMINARY FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ACQUISITION

Under the acquisition method, the purchase price of the Healthcare Acquisition has been allocated to the

acquired tangible and identifiable intangible assets and assumed liabilities based on their estimated fair values at the time of the

Healthcare Acquisition.

This allocation involves a number of assumptions, estimates, and judgments that could materially affect the timing

or amounts recognized in our financial statements.

Our assumptions and estimates are based upon information obtained from the management

of the Company’s revenue cycle management segment.

The acquisition was structured as stock purchase, therefore the excess purchase

price over the fair value of net tangible assets acquired was recorded as goodwill, which will not be amortized for income tax filing

The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition

purchase price of the Healthcare Acquisition was allocated to the tangible assets, and assumed liabilities based on their

preliminary estimated fair values at the time of the Healthcare Acquisition.

The preliminary and final estimated fair value of assets acquired and liabilities assumed

in the Healthcare Acquisition were as follows:

SCHEDULE OF PRELIMINARY

FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ACQUISITION

Purchase price allocation

June 30, 2021

June 30, 2022

Assets acquired:

Tangible assets acquired, consisting of acquired cash, accounts receivable

and right of use asset

Liabilities assumed consisting of a promissory note issued

by the selling shareholders which was paid off at closing, net of lease liability assumed

Total assets acquired and liabilities assumed

Tangible assets acquired, consisting of acquired cash, accounts receivable and right of use asset

assets acquired – Client Agreements

Intangible assets acquired – client agreements

Liabilities assumed consisting of a promissory note issued by the selling shareholders which was paid off at closing, net of lease liability assumed

Liabilities assumed pursuant to stock purchase agreement

Net assets acquired and liabilities assumed

Consideration:

Cash paid at Healthcare Acquisition date

Contingent consideration

Contingent consideration earn-out agreement

Total Healthcare Acquisition purchase price

following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives in years as of

the date of acquisition:

OF IDENTIFIABLE INTANGIBLE ASSETS ACQUIRED AND THEIR ESTIMATED USEFUL LIVES

Amortization through

Identifiable intangible assets:

Client agreements

the period from the date of the Healthcare Acquisition to June 30, 2022, the Company adjusted its preliminary fair value estimates and

estimated useful lives based upon information obtained through June 30, 2022, which resulted in adjustments to the preliminary allocation

of the purchase price.

These adjustments primarily related to estimated identifiable intangible asset fair values of client agreements

and goodwill.

the measurement period (which is the period required to obtain all necessary information that existed at the acquisition date, or to

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Obligations”.

August 31, 2021, the Company’s revenue cycle management segment completed the acquisition of another private medical

billing company (the “Medical Billing Acquisition”).

In accordance with the stock purchase agreement, Nobility Healthcare

agreed to a non-refundable initial payment (the “Initial Payment Amount”) of $ 2,270,000 .

In addition to the Initial Payment Amount, the Company’s revenue cycle management segment agreed to issue a contingent

promissory note to the stockholders of the Medical Billing Acquisition in the principal amount of $ 650,000

that is subject to an earn-out adjustment.

Company’s revenue cycle management segment anticipates the estimated fair value of the contingent promissory note to be paid in

full, therefore, the total aggregate purchase price was determined to be approximately $ 2,920,000 .

Total acquisition related costs aggregated $ 5,602 ,

which was expensed as incurred.

Company accounts for business combinations using the acquisition method and that the Company has early adopted the amendments of Regulation

S-X dated May 21, 2020 and has concluded that this acquisition was not significant.

Accordingly, the presentation of the assets acquired,

historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, are

not required to be presented.

Under the acquisition method, the purchase price of the Medical Billing Acquisition has been allocated

to the acquired tangible and identifiable intangible assets and assumed liabilities based on their estimated fair values at the time

of the Medical Billing Acquisition.

This allocation involves a number of assumptions, estimates, and judgments that could materially

affect the timing or amounts recognized in our financial statements.

The acquisition was structured as stock purchase, therefore the

excess purchase price over the fair value of net tangible assets acquired was recorded as goodwill, which will not be amortized for income

tax filing purposes.

The results of operations of acquired businesses are included in the consolidated financial statements from

the acquisition date.

purchase price of the Medical Billing Acquisition was allocated to the tangible assets, and assumed liabilities

based on their preliminary estimated fair values at the time of the Medical Billing Acquisition.

The Company expects to retain

the services of independent valuation firm to determine the fair value of these identifiable intangible assets.

Once determined, the

Company will reallocate the purchase price of the acquisition based on the results of the independent evaluation if they are materially

different from the allocations as recorded on August 31, 2021.

The preliminary estimated fair value of assets acquired, and

liabilities assumed in the Medical Billing Acquisition were as follows:

SCHEDULE OF PRELIMINARY FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ACQUISITION

August 31, 2021, the Company’s revenue cycle management segment completed the acquisition of another private medical billing company

(the “Medical Billing Acquisition”).

In accordance with the stock purchase agreement, Nobility Healthcare agreed to a non-refundable

initial payment (the “Initial Payment Amount”) of $ 2,270,000 .

In addition to the Initial Payment Amount, the Company’s

revenue cycle management segment agreed to issue a contingent promissory note to the stockholders of the Medical Billing Acquisition

in the principal amount of $ 650,000 that is subject to an earn-out adjustment.

The Company’s revenue cycle management segment anticipates

the estimated fair value of the contingent promissory note to be paid in full, therefore, the total aggregate purchase price was determined

to be approximately $ 2,920,000 .

Total acquisition related costs aggregated $ 5,602 , which was expensed as incurred.

The Company accounts for business combinations using the acquisition method

and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was

not significant.

Accordingly, the presentation of the assets acquired, historical financial statements under Rule 3-05 and related pro

forma information under Article 8 of Regulation S-X, respectively, are not required to be presented.

Under the acquisition method, the

purchase price of the Healthcare Acquisition has been allocated to the acquired tangible and identifiable intangible assets and assumed

liabilities based on their estimated fair values at the time of the Healthcare Acquisition.

This allocation involves a number of assumptions,

estimates, and judgments that could materially affect the timing or amounts recognized in our financial statements.

Our assumptions and

estimates are based upon information obtained from the management of the Company’s revenue cycle management segment.

The acquisition

was structured as stock purchase, therefore the excess purchase price over the fair value of net tangible assets acquired was recorded

as goodwill, which will not be amortized for income tax filing purposes.

The results of operations of acquired businesses are included

in the consolidated financial statements from the acquisition date.

purchase price of the Medical Billing Acquisition was allocated to the tangible assets, and assumed liabilities based on their

preliminary estimated fair values at the time of the Medical Billing Acquisition.

The preliminary and final estimated fair value of assets acquired, and liabilities

assumed in the Medical Billing Acquisition were as follows:

OF PRELIMINARY FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ACQUISITION

Preliminary As

Purchase price

Preliminary As

September 30,

Assets acquired:

Tangible assets acquired

assumed pursuant to stock purchase agreement

Identifiable intangible assets acquired – client agreements

Liabilities assumed pursuant to stock purchase agreement

Net assets acquired and liabilities assumed

Consideration:

Cash paid at Healthcare Acquisition date

Contingent consideration earn-out agreement

Total Healthcare Acquisition purchase price

following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives in years as of

the date of acquisition:

OF IDENTIFIABLE INTANGIBLE ASSET ACQUIRED AND THEIR ESTIMATED USEFUL LIVES

Amortization through

Identifiable intangible assets:

Client agreements

the period from the date of the Healthcare Acquisition to August 31, 2022, the Company adjusted its preliminary fair value estimates

and estimated useful lives based upon information obtained through August 31, 2022, which resulted in adjustments to the preliminary

allocation of the purchase price.

These adjustments primarily related to estimated identifiable intangible asset fair values of client

agreements and goodwill.

the measurement period (which is the period required to obtain all necessary information that existed at the acquisition date, or to

conclude that such information is unavailable, not to exceed one year), additional assets or liabilities may be recognized, or there

could be changes to the amounts of assets or liabilities previously recognized on a preliminary basis, if new information is obtained

about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of these

assets or liabilities as of that date.

The change in fair value of the contingent consideration is more fully described in Note 10, “Debt

Obligations”.

January 1, 2022, the Company’s revenue cycle management segment completed the acquisition of another private medical billing company

(the “Medical Billing Acquisition”).

In accordance with the stock purchase agreement, Nobility Healthcare agreed to a non-refundable

initial payment (the “Initial Payment Amount”) of $ 1,153,626 .

In addition to the Initial Payment Amount, the Company’s

revenue cycle management segment agreed to issue a contingent promissory note to the stockholders of the Medical Billing Acquisition

in the principal amount of $ 750,000 that is subject to an earn-out adjustment.

The Company’s revenue cycle management segment anticipates

the estimated fair value of the contingent promissory note to be paid in full, therefore, the total aggregate purchase price was determined

to be approximately $ 1,903,626 .

Total acquisition related costs aggregated $ 7,996 , which was expensed as incurred.

The Company accounts for

business combinations using the acquisition method and that the Company has early adopted the amendments of Regulation S-X dated May

21, 2020 and has concluded that this acquisition was not significant.

Accordingly, the presentation of the assets acquired, historical

financial statements under Rule 3-05 and related pro forma information under Article 8 of Regulation S-X, respectively, are not required

to be presented.

Under the acquisition method, the purchase price of the Healthcare Acquisition has been allocated to the acquired tangible

and identifiable intangible assets and assumed liabilities based on their estimated fair values at the time of the Healthcare Acquisition.

This allocation involves a number of assumptions, estimates, and judgments that could materially affect the timing or amounts recognized

in our financial statements.

Our assumptions and estimates are based upon information obtained from the management of the Company’s

revenue cycle management segment.

The acquisition was structured as stock purchase, therefore the excess purchase price over the fair

value of net tangible assets acquired was recorded as goodwill, which will not be amortized for income tax filing purposes.

of operations of acquired businesses are included in the consolidated financial statements from the acquisition date.

purchase price of the Medical Billing Acquisition was allocated to the tangible assets, and assumed liabilities based on their preliminary

estimated fair values at the time of the Medical Billing Acquisition.

There was no change from the preliminary estimated fair value to the final estimated fair value of assets acquired,

and liabilities assumed in the Healthcare Acquisition, those value were as follows:

OF PRELIMINARY FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ACQUISITION

Assets acquired:

Tangible assets acquired

Liabilities assumed pursuant to stock purchase agreement

Total assets acquired and liabilities assumed

1 unchanged sentence

Cash paid at acquisition date

Contingent consideration

Contingent consideration promissory note

Total acquisition purchase price

6 unchanged sentences

Obligations”.

February 1, 2022, the Company’s revenue cycle management segment completed an asset acquisition from another private medical billing

company (the “Medical Billing Asset Acquisition”).

In accordance with the asset purchase agreement, Nobility Healthcare agreed

to a non-refundable initial payment (the “Initial Payment Amount”) of $ 230,000 .

In addition to the Initial Payment Amount,

the Company’s revenue cycle management segment agreed to issue a contingent promissory note to the stockholders of the Medical

Billing Asset Acquisition in the principal amount of $ 105,000 that is subject to an earn-out adjustment.

The Company’s revenue

cycle management segment anticipates the estimated fair value of the contingent promissory note to be paid in full, therefore, the total

aggregate purchase price was determined to be approximately $ 335,000 .

Total acquisition related costs aggregated $ 10,322 , which was expensed

accordance with ASC 805, “Business Combinations”, the acquisition method of accounting is used, and recognition of the assets

acquired is at fair value as of the acquisition dates.

All acquisition costs were expensed as incurred.

The consideration paid has been

allocated to the assets acquired based on their estimated fair values at the acquisition date.

The estimate of fair values for the intangible

assets acquired were agreed to by both buyer and seller.

The estimated fair value of intangible assets acquired in the Medical Billing

Asset Acquisition were as follows:

OF PRELIMINARY FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ACQUISITION

Assets acquired:

Intangible assets acquired – client agreements

Total assets acquired and liabilities assumed

Consideration:

Cash paid at acquisition date

Contingent consideration promissory note

Total acquisition purchase price

following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives in years as of

the date of acquisition:

SCHEDULE OF IDENTIFIABLE

INTANGIBLE ASSETS ACQUIRED AND THEIR ESTIMATED USEFUL LIVES

Amortization through

Identifiable intangible assets:

Client agreements

change in fair value of the contingent consideration is more fully described in Note 10, “Debt Obligations” and will be estimated

on a quarterly basis.

TICKETSMARTER ACQUISITION

5 unchanged sentences

TicketSmarter,

comprises the Company’s ticketing business segment.

comprises the Company’s entertainment business segment.

In accordance with the stock purchase agreement, the Company agreed

to an initial payment (the “Initial Payment Amount”) of $ 9,403,600

through a combination of cash and common stock.

In addition to the Initial Payment Amount, the Company agreed to issue an earn-out agreement to the stockholders of Goody Tickets and

TicketSmarter LLC in the contingent amount of $ 4,244,400

that is subject to an earn-out adjustment based

on actual EBITDA achieved in 2021, of which the Company gave a fair value of $ 3,700,000 on the date of acquisition.

However, following

the completion of 2021, it was determined that the actual EBITDA threshold for any earn-out adjustment to be paid was not met.

in accordance with U.S.

GAAP, the fair value of the contingent earn-out is reduced to zero, and the associated gain related to this revaluation

is recorded in our Consolidated Statements of Operations for the year ended December 31, 2021.

Lastly, included in the agreement, the

Company agreed to place $ 500,000

in escrow, subject to a working capital adjustment

based on actual working capital amounts on the acquisition date as defined in the agreement, this amount was subject to disbursement

45 days following the close of the acquisition.

The parties completed the working capital adjustment resulting in the Company retaining

of the escrow amount with the $ 202,274

released to the Sellers.

The total acquisition

related costs aggregated $ 40,625 ,

which was expensed as incurred.

Company accounts for business combinations using the acquisition method and that the Company has early adopted the amendments of Regulation

S-X dated May 21, 2020 and has concluded that this acquisition was not significant.

Accordingly, the presentation of the assets acquired,

historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, are

not required to be presented.

Under the acquisition method, the purchase price of the TicketSmarter Acquisition has been allocated

to Goody Tickets’ and TicketSmarter LLC’s acquired tangible and identifiable intangible assets and assumed liabilities based

on their estimated fair values at the time of the TicketSmarter Acquisition.

This allocation involves a number of assumptions, estimates,

and judgments that could materially affect the timing or amounts recognized in our financial statements.

The TicketSmarter Acquisition

was structured as a stock purchase, however the parties agreed to coordinate the election to invoke IRS Section 338(h)(10) relative to

this transaction for tax purposes.

Therefore, the excess purchase price over the fair value of net tangible assets acquired was recorded

as goodwill, which will be amortized over 15

years for income tax filing purposes.

to an initial payment (the “Initial Payment Amount”) of $ 9,403,600 through a combination of cash and common stock.

to the Initial Payment Amount, the Company agreed to issue an earn-out agreement to the stockholders of Goody Tickets and TicketSmarter

LLC in the contingent amount of $ 4,244,400 that is subject to an earn-out adjustment based on actual EBITDA achieved in 2021, of which

the Company gave a fair value of $ 3,700,000 on the date of acquisition.

However, following the completion of 2021, it was determined

that the actual EBITDA threshold for any earn-out adjustment to be paid was not met.

Thus, in accordance with U.S.

GAAP, the fair value

of the contingent earn-out is reduced to zero, and the associated gain related to this revaluation is recorded in our Consolidated Statements

of Operations for the year ended December 31, 2021.

Lastly, included in the agreement, the Company agreed to place $ 500,000 in escrow,

subject to a working capital adjustment based on actual working capital amounts on the acquisition date as defined in the agreement,

this amount was subject to disbursement 45 days following the close of the acquisition.

The parties completed the working capital adjustment

resulting in the Company retaining $ 297,726 of the escrow amount with the $ 202,274 released to the Sellers.

The total acquisition related

costs aggregated $ 40,625 , which was expensed as incurred.

The Company accounts for business combinations using the acquisition method

and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was

not significant.

Accordingly, the presentation of the assets acquired, historical financial statements under Rule 3-05 and related pro

forma information under Article 11 of Regulation S-X, respectively, are not required to be presented.

Under the acquisition method, the

purchase price of the TicketSmarter Acquisition has been allocated to Goody Tickets’ and TicketSmarter LLC’s acquired tangible

and identifiable intangible assets and assumed liabilities based on their estimated fair values at the time of the TicketSmarter Acquisition.

This allocation involves a number of assumptions, estimates, and judgments that could materially affect the timing or amounts recognized

in our financial statements.

The TicketSmarter Acquisition was structured as a stock purchase;

however the parties agreed to coordinate

the election to invoke IRS Section 338(h)(10) relative to this transaction for tax purposes.

Therefore, the excess purchase price over

the fair value of net tangible assets acquired was recorded as goodwill, which will be amortized over 15 years for income tax filing purposes.

Likewise, the other acquired assets were stepped up to fair value and is deductible for income tax purposes.

2 unchanged sentences

purchase price of the TicketSmarter Acquisition was allocated to Goody Tickets’ and TicketSmarter LLC’s tangible assets,

goodwill, identifiable intangible assets, and assumed liabilities based on their preliminary estimated fair values at the time

of the TicketSmarter Acquisition.

The Company retained the services of an independent valuation firm to determine the fair value

of these identifiable intangible assets.

The Company will continue to evaluate the fair value of the identified intangible assets.

The preliminary estimated fair value of assets acquired, and liabilities assumed in the TicketSmarter Acquisition were as follows:

SCHEDULE OF PRELIMINARY FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED IN THE TICKET SMARTER ACQUISITION

Assets acquired:

Preliminary purchase price

goodwill, identifiable intangible assets, and assumed liabilities based on their preliminary estimated fair values at the time of the

TicketSmarter Acquisition.

The Company retained the services of an independent valuation firm to determine the fair value of these identifiable

intangible assets.

The preliminary and final estimated

fair value of assets acquired, and liabilities assumed in the TicketSmarter Acquisition were as follows:

OF PARLIAMENT AND FINAL ESTIMATED FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED ACQUISITION

Final as allocated

Purchase price allocation

Final as allocated

September 30, 2021

December 31, 2021

Assets acquired:

4 unchanged sentences

( 5,128,964 )

Liabilities assumed pursuant to stock purchase agreement

Net assets acquired and liabilities assumed

8 unchanged sentences

the date of acquisition:

SCHEDULE OF COMPONENTS OF

IDENTIFIABLE INTANGIBLE ASSETS ACQUIRED AND ESTIMATED USEFUL LIVES

Amortization through December

Estimated useful life

SCHEDULE OF COMPONENTS

OF IDENTIFIABLE INTANGIBLE ASSETS ACCRUED AND ESTIMATED USEFUL LIVES

Amortization through

December 31, 2022

Identifiable intangible assets:

6 unchanged sentences

related to the sponsorship agreement network), the estimated fair value of the contingent earn-out agreement liability and goodwill.

The primary area of the acquisition accounting that had not yet been finalized as of December 31, 2021 related to identifiable intangible

assets, which could result in a change to goodwill.

During the measurement

period (which is the period required to obtain all necessary information that existed at the acquisition date, or to conclude that such

information is unavailable, not to exceed one year), additional assets or liabilities may be recognized, or there could be changes to

the amounts of assets or liabilities previously recognized on a preliminary basis, if new information is obtained about facts and circumstances

that existed as of the acquisition date that, if known, would have resulted in the recognition of these assets or liabilities as of that

The change in fair value of the contingent consideration is more fully described in Note 8, “Debt Obligations”.

21 - SEGMENT DATA

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

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

Operating segments

are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the

chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to

allocate resources and assess performance.

The Company’s three operating segments are Video Solutions, Revenue Cycle

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

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

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

Therefore, its operations are eliminated in consolidation and is not considered a separate business segment for financial

reporting purposes.

There were no adjustments to the allocation of the purchase price during the year ended December 31, 2022.

the measurement period (which is the period required to obtain all necessary information that existed at the acquisition date, or to

conclude that such information is unavailable, not to exceed one year), additional assets or liabilities may be recognized, or there

could be changes to the amounts of assets or liabilities previously recognized on a preliminary basis, if new information is obtained

about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of these

assets or liabilities as of that date.

The change in fair value of the contingent consideration is more fully described in Note 10, “Debt

Obligations”.

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

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

Operating segments are identified

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

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

The Company’s three operating segments are Video Solutions, Revenue Cycle Management, and Entertainment, each of which

has specific personnel responsible for that business and reports to the CODM.

Corporate expenses capture the Company’s corporate

administrative activities, is also to be reported in the segment information.

The Company’s captive insurance subsidiary provides

services to the Company’s other business segments and not to outside customers.

Therefore, its operations are eliminated in consolidation

and is not considered a separate business segment for financial reporting purposes.

Video Solutions Segment encompasses our law, commercial, and shield divisions.

3 unchanged sentences

the country, as a monthly service fee.

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

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

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

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

Company’s corporate administration activities are reported in the corporate line item.

7 unchanged sentences

2022, and December 31, 2021:

OF SEGMENT REPORTING

SCHEDULE OF SEGMENT REPORTING

Years Ended December 31,

2 unchanged sentences

Revenue Cycle Management

Entertainment

Total Net Revenues

Total net revenues

Gross Profit:

Video Solutions

$ ( 1,250,277 )

Revenue Cycle Management

Entertainment

Total Gross Profit

Total gross profit

Operating Income (loss):

3 unchanged sentences

Revenue Cycle Management

Entertainment

( 7,369,241 )

( 13,443,001 )

( 10,592,909 )

Total Operating Income (Loss)

1 unchanged sentence

$ ( 14,760,910 )

Total operating income (loss)

$ ( 29,733,258 )

$ ( 14,760,910 )

Depreciation and Amortization:

1 unchanged sentence

Revenue Cycle Management

Entertainment

Total Depreciation and Amortization

Total depreciation and amortization

Assets (net of eliminations):

1 unchanged sentence

Revenue Cycle Management

Entertainment

Total Identifiable Assets

segments recorded noncash items effecting the gross profit and operating income (loss) through the established inventory reserves based

on estimates of excess and/or obsolete current and non-current inventory.

The Company recorded a reserve for excess and obsolete inventory

in the video solutions segment of $ 3,353,458 and a reserve for the ticketing segment of $ 561,631 .

The segment net revenues reported

above represent sales to external customers.

Segment gross profit represents net revenues less cost of revenues.

Segment operating income,

which is used in management’s evaluation of segment performance, represents net revenues, less cost of revenues, less all operating

segments recorded noncash items effecting the gross profit and operating income (loss) through the established inventory reserves

based on estimates of excess and/or obsolete current and non-current inventory.

The Company recorded a reserve for excess and

obsolete inventory in the video solutions segment of $ 5,230,261

and a reserve for the entertainment segment of $ 259,280 as of December 31, 2022 .

segment net revenues reported above represent sales to external customers.

Segment gross profit represents net revenues less cost of

Segment operating income, 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.

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

SUBSEQUENT EVENTS

of Third Medical Billing Company

January 1, 2022, the Company’s revenue cycle management segment completed the acquisition of 100 %

of the capital stock of a third medical billing company for a total purchase price of approximately $ 1.90

The purchase price includes approximately $ 1.15 million

in cash at closing and a $ 750,000 contingent

consideration promissory note bearing interest at 3 %

per annum subject to adjustment based on revenues achieved over an approximate 18-month period after closing, maturing

in July of 2024 .

This closely-held company provides revenue cycle management (RCM) and other services for over 180 dental

practices located throughout the United States with an annual revenue run rate of approximately $ 3.5 million.

Meeting of Shareholders

January 11, 2022, the Company held a special meeting of its stockholders (the “Special

Set forth below are the two proposals that were voted on at the Special Meeting and the results of the voting for each:

1 – To approve an amendment to the Company’s Articles of Incorporation, as amended, to increase the number of authorized

shares of the Company’s capital stock that the Company may issue from 100,000,000 shares to 300,000,000 shares, of which all 300,000,000

shares shall be classified as Common Stock (“Proposal No.

The Company’s stockholders did not approve Proposal

2 – To approve an adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies (“Proposal

The Company’s stockholders did not approve Proposal No.

of Christian J.

Hoffmann III to Board of Directors

January 27, 2022, the Board of Directors appointed Christian J.

Hoffmann, III as a member of the Board, effective immediately, to hold

office until the next meeting of shareholders of the Company at which directors are being elected or as set forth in the Company’s

Hoffmann, co-founded Nobility, LLC (“Nobility”), a medical billing and revenue cycle management company, in 2014

where he has served as the Chief Financial Officer and General Counsel.

On June 4, 2021, the Company and Nobility launched Nobility Healthcare,

LLC, a subsidiary of the Company, to provide revenue cycle management services for the healthcare industry.

During 2020 and 2021,

Hoffmann also served as an outside counsel to the Board on specific matters as requested.

as disclosed herein, there are no other arrangements

or understandings between Mr.

Hoffmann and any other persons pursuant to which he was appointed as a member of the Board.

There are also

no family relationships between any of the Company’s directors or officers and Mr.

All related party transactions

involving Mr.

Hoffmann that are reportable under Item 404(a) of Regulation S-K are disclosed in Part III, Item 13 of this Annual Report

on Form 10-K.

Hoffmann will receive standard board compensation for his service as a director.

of Fourth Medical Billing Company

February 1, 2022, the Company’s revenue cycle management segment completed the acquisition of 100 %

of the assets of a fourth medical billing company for a total purchase price of $ 335,000 .

The purchase price includes $ 230,000

in cash at closing and a $ 105,000

contingent consideration promissory note bearing

interest at 3 %

per annum subject to adjustment based on revenues achieved over an approximate 18-month period after closing, maturing in August

The acquisition provides revenue cycle management (RCM) and other services throughout the southwestern portion of

United States with an annual revenue run rate of approximately $ 440,000 .

of Intent to Acquire Medical Billing Company

March 16, 2022, the Company’s revenue cycle management segment entered a letter of intent to acquire 100 %

of the capital stock of a medical billing company located in the Southern portion of the United States for a total purchase price of

(the “Target”).

price includes $ 3.25

million in cash at closing and a $ 1,750,000

contingent consideration promissory note

bearing interest at 4 %

per annum subject to adjustment based on revenues

achieved over an approximate 24-month period after closing.

The letter of intent is subject to satisfactory completion of due

diligence procedures, review of legal, financial, tax and other matters concerning the Target’s business.

The letter of intent

is also not binding until the parties mutually agree to the terms of the underlying definitive agreements including the receipt of all

approvals and consents considered necessary by both parties.

The parties are currently negotiating the final definitive agreements and

anticipate a closing date on or around May 31, 2022.

However, there can be no assurances that the parties will complete

the acquisition of the Target and on what terms will be included in the final definitive agreements.

Issuance of Restricted Common Stock

March 23, 2022, the board of directors approved the grant of 190,000 restricted common shares to

certain new employees of the Company.

A total of 5,000 shares vested immediately upon issuance and the remainder vest over a period of

one to five years.

Such shares will generally vest over a period of one to five years on their respective anniversary dates in January

through January 2027, provided that each grantee remains an employee on such dates.

Repurchase Program

December 6, 2021, the Board of Directors of the Company authorized the repurchase of up to $ 10.0 million of the Company’s outstanding

common stock under the specified terms of a share repurchase program (the “Program”).

Subsequent to December 31, 2021, the

Company repurchased 2,163,341 shares of its common stock for $ 2,312,054 , in accordance with the Program.

The Program does not obligate

the Company to acquire any specific number of shares and shares may be repurchased in privately negotiated and/or open market transactions,

including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

January 9, 2023, the compensation committee (“the “Compensation Committee”) of the board of directors awarded

shares of restricted common stock that will vest one half on January 10, 2024 and one half on January 10, 2025 provided that he

remains an officer on such dates.

Peng Han was awarded 5,000

shares of restricted common stock that will vest 1,000

shares on January 10, 2024, January 10, 2025, January 10, 2026, January 10, 2027 and January 10, 2028 provided that he remains an

officer on such dates.

The Compensation Committee awarded employees a total of 12,500

shares of restricted common stock that will vest one half on January 10, 2024 and one half on January 10, 2025 provided that they

remain employees on such dates.

On February 6, 2023, we filed a Certificate of Amendment to the Articles

of Incorporation, as amended, with the Secretary of State of the State of Nevada to effect a 1-for-20 reverse stock split (the “Reverse Stock Split”) of the shares of our common

The Reverse Stock Split was effective as of time of filing.

No fractional shares were issued in connection

with the Reverse Stock Split.

Any fractional shares of our Common Stock that would have otherwise resulted from the Reverse Stock Split

were rounded up to the nearest whole number.

In connection with the Reverse Stock Split, our board approved appropriate and proportional

adjustments to all outstanding securities or other rights convertible or exercisable into shares of our Common Stock, including, without

limitation, all preferred stock, warrants, options, and other equity compensation rights.

All historical share and per-share amounts

reflected throughout our consolidated financial statements and other financial information in this Report have been adjusted to reflect

the Reverse Stock Split as if the split occurred as of the earliest period presented.

The par value per share of our common stock was

not affected by the Reverse Stock Split.

Nasdaq Compliance

23, 2023, the Company received notice from Nasdaq confirming that the Company has cured its bid price deficiency and has fully regained compliance

with the Minimum Bid Price Requirement.

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 9A. Controls and Procedures