What changed in this filing

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Item 1. Financial Statements

2023-05-15 compared with 2022-11-14 · 628 added, 764 removed, 1121 unchanged (55% of the section changed)

2 unchanged sentences

31, 2023 AND DECEMBER 31, 2022

September 30, 2022

March 31, 2023 (Unaudited)

December 31, 2022

1 unchanged sentence

Cash and cash equivalents

Accounts receivable – trade, net

Other receivables (including $ 138,384 due from related parties – September 30, 2022 and $ 158,384 – December 31, 2021, refer to Note 20)

Accounts receivable – trade, net of $ 181,761 allowance – March 31, 2023 and $ 146,964 – December 31, 2022

Other receivables, net of $ 5,000 allowance – March 31, 2023 and $ 0 – December

31, 2022 (including $ 138,384 due from related parties – March 31, 2023 and $ 138,384 – December 31, 2022, refer to Note 20)

Inventories, net

11 unchanged sentences

Debt obligations – current portion

Warrant derivative liabilities

Income taxes payable

4 unchanged sentences

Contract liabilities – long term

Lease Deposit

Total liabilities

1 unchanged sentence

Stockholders’ Equity:

Common stock, $ 0.001

par value per share;

Common stock, $ 0.001 par value per share;

200,000,000 shares authorized;

shares issued:

shares issued and outstanding – September 30, 2022 and 50,904,391

shares issued and outstanding – December 31, 2021

2,755,224 shares issued – March 31, 2023 and 2,720,170 shares issued – December 31, 2022

Additional paid in capital

7 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

THE THREE AND NINE MONTHS ENDED

THE THREE MONTHS ENDED

31, 2023 AND 2022

Three months ended

September 30,

Nine months ended

September 30,

Three months ended

Service and other

11 unchanged sentences

( 6,803,338 )

( 20,031,610 )

( 9,081,553 )

Other income (expense):

1 unchanged sentence

Interest expense

Other income (loss)

Gain on extinguishment of debt

Change in fair value of contingent consideration promissory notes

1 unchanged sentence

Change in fair value of warrant derivative liabilities

Gain on extinguishment of warrant derivative liabilities

Total other income

3 unchanged sentences

Income tax benefit

Net income (loss)

( 5,979,579 )

( 6,698,242 )

Net loss (income) attributable to noncontrolling interests of consolidated subsidiary

Net income (loss) attributable to common stockholders

Net (income) loss attributable to noncontrolling interests of consolidated subsidiary

Net loss attributable to common stockholders

$ ( 6,105,818 )

4 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Noncontrolling

THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Additional Paid In

Noncontrolling interest in consolidated

Balance, December 31, 2021

1 unchanged sentence

$ ( 68,672,206 )

$ ( 90,014,500 )

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

Repurchase and cancellation of common stock

( 2,063,674 )

( 2,063,768 )

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

Distribution to noncontrolling interest in consolidated subsidiary

( 6,600,148 )

3 unchanged sentences

$ ( 77,336,028 )

Stock-based compensation

( 5,382,487 )

Balance, June 30, 2021

$ 122,487,573

$ ( 2,157,226 )

$ ( 73,675,129 )

Issuance of common stock as consideration for acquisition

Restricted common stock grant

Stock-based compensation

Balance, September 30, 2021

$ 123,968,757

$ ( 2,157,226 )

$ ( 65,606,330 )

Balance, December 31, 2022

1 unchanged sentence

$ ( 91,980,234 )

Stock-based compensation

Restricted common stock grant

Restricted common stock forfeitures

Repurchase and cancellation of common stock

$ 127,869,342

$ ( 91,980,234 )

( 2,063,768 )

Distribution to noncontrolling interest in consolidated subsidiary

( 6,600,148 )

( 6,698,242 )

Balance, March 31, 2022

$ 124,820,428

$ ( 77,332,537 )

Stock-based compensation

Restricted common stock forfeitures

Repurchase and cancellation of common stock

( 1,849,952 )

Restricted common stock grant

Issuance due to rounding from reverse stock split

Net Income (loss)

( 6,105,818 )

2 unchanged sentences

( 6,105,818 )

Balance, June 30, 2022

( 5,979,579 )

Balance, March 31, 2023

$ 127,984,155

Issuance of common stock through warrant exchange agreement

Stock-based compensation

Net income (loss)

$ ( 98,086,052 )

$ 127,984,155

Balance, September 30,

$ ( 98,086,052 )

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Nine months ended September 30,

MONTHS ENDED MARCH 31, 2023 AND 2022

Three months ended

Cash Flows from Operating Activities:

Net income (loss)

$ ( 5,979,579 )

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

$ ( 6,698,242 )

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

Depreciation and amortization

1 unchanged sentence

Change in fair value of warrant derivative liabilities

( 6,726,638 )

( 33,274,039 )

Gain on extinguishment of warrant derivative liabilities

Provision for inventory obsolescence

Provision for doubtful accounts receivable

Gain on extinguishment of debt

Change in fair value of short-term investments

Provision for doubtful lease receivable

Change in fair value of contingent consideration promissory note

Change in operating assets and liabilities:

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

(Increase) decrease in:

1 unchanged sentence

Accounts receivable – other

( 3,426,732 )

( 1,448,044 )

( 1,767,724 )

Prepaid expenses

( 3,445,546 )

Operating lease right of use assets

( 2,445,206 )

( 2,529,277 )

Increase (decrease) in:

1 unchanged sentence

Accrued expenses

Income taxes payable

Operating lease obligations

Income taxes payable

Lease deposit

Contract liabilities

3 unchanged sentences

Cash Flows from Investing Activities:

Purchases of property, plant and equipment

( 1,947,127 )

Purchases of furniture, fixtures and equipment

( 1,774,592 )

Additions to intangible assets

Cash paid for TicketSmarter acquisition, net of cash acquired

( 8,361,808 )

Restricted cash related to TicketSmarter acquisition

Cash paid for acquisition of Medical Billing Company

( 1,153,627 )

( 1,012,552 )

Cash paid for asset acquisition of Medical Billing Company

( 2,270,000 )

Cash paid for asset acquisition from Medical Billing Company

Net cash used in investing activities

( 3,195,346 )

( 17,958,520 )

Cash Flows from Financing Activities:

2 unchanged sentences

Distribution to noncontrolling interest in consolidated subsidiary

Net proceeds from sale of common stock in registered direct offerings

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

Proceeds-Commercial Extension of Credit – Entertainment Segment

Payments on Commercial Extension of Credit – Entertainment Segment

Principal payment on contingent consideration promissory notes

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

( 2,195,658 )

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

( 11,446,676 )

5 unchanged sentences

Supplemental disclosures of non-cash investing and financing activities:

Issuance of contingent consideration promissory note for business acquired

Issuance of common stock through warrant exchange agreement

Assets acquired in business acquisitions

Liabilities assumed in the business acquisition

Goodwill acquired in business acquisitions

Common stock issued as consideration for business acquisition

Restricted common stock grant

Restricted common stock forfeitures

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

Issuance of contingent consideration promissory note for business and asset acquisitions

Assets acquired in business acquisitions

Goodwill acquired in business acquisitions

Liabilities assumed in business acquisitions

Commercial Extension of Credit repaid through accrued

revenue – Entertainment Segment

and lease liability recorded on extension of lease

Notes to the Unaudited Condensed Consolidated Financial Statements.

7 unchanged sentences

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

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

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 ”).

5 unchanged sentences

Agreement or the transactions contemplated thereby.

At 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 Merger.

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.

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.

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 19.

(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 Entertainment 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 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.

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

Such required segment information is included in Note 19.

On December 8, 2022, the Company announced that its

Board of Directors unanimously approved a plan to pursue a separation into two independent, publicly-traded companies to optimize investment

and capital allocation, accelerate growth, and unlock shareholder value.

Specifically, the Company plans to spin off (the “Spin-off”)

its ticketing operating segment, Kustom Entertainment, Inc.

Upon completion of the Spin-off, the Company’s

stockholders will own equity in two focused and streamlined businesses.

Digital Ally, Inc.

will continue to be a provider

of video solution technology for law enforcement agencies, commercial fleets, and situational event security solutions.

Digital Ally will

also continue to provide working capital and back-office services to a variety of healthcare organizations throughout the country through

its revenue cycle management subsidiary.

For the year ending December 31, 2022, these consolidated

businesses generated approximately $ 37.0 million in annual revenues.

We believe that Digital Ally, as a stand-alone entity, will be well-positioned

to accelerate organic growth in its large and attractive end markets, benefit from favorable secular trends, and begin to apply discipline

and focus throughout the company to enhance profitability and continue to drive growth, new product development and expansion.

As an independent company, we believe that Digital

will have greater strategic focus and operational flexibility, while building on its recent momentum and emphasizing the improvement

of its profit margins and profitability.

Additionally, the Company expects to benefit from dedicated resources and management, with an

attention to brand building, innovation, and extended opportunities domestically as well as internationally.

As Digital Ally has continued

to build its portfolio of subscriptions and customers that are already in place, we believe that we can continue to maintain stable sales

through our deferred revenue model;

however, there will be an equal expectation for growth and expansion across several high-growth adjacent

Upon completion of the Spin-off, Digital Ally, Inc.

will be led by Brody J.

Green, who will serve as Chief Executive Officer.

The Company intends to continue to be listed on the NASDAQ under

its current ticker symbol, “DGLY”.

Kustom will be a multi-disciplinary entertainment

company, anchored by a premier ticketing technology business, which we believe is poised to achieve substantial scaling opportunities,

through its TicketSmarter, Inc.

subsidiary, which offers unique primary and secondary ticketing products to the market.

Additionally,

Kustom’s offerings will include a distinctive event marketing and production company, with numerous customization options for events,

festivals, and concerts, through its Kustom 440, Inc., subsidiary.

For the year ending December 31, 2022, these standalone

businesses achieved approximately $20.9 million in annual revenues.

We believe that this business can achieve above-average growth by

exploiting its relationships in the sporting and entertainment industries that are intended to support its primary ticketing-related opportunities,

along with the expectation of the full deployment of the Kustom 440 brand and its line of service offerings.

Kustom will be able to differentiate

itself through its ability to provide event services of all sizes, ranging from corporate events to multi-day festivals.

the ability to offer venue, ticketing, marketing, and production capabilities will make this company a unique and attractive option for

many partners and investors.

With the planned separation, TicketSmarter is expected

to enhance its leadership position in the national secondary ticketing marketplace, while also building a stronger position in the primary

ticketing market.

Furthermore, as Kustom 440 was formed in mid-2022, the event marketing and production business will be fully able to

execute and produce the planned events throughout 2023, as production and investments have already begun.

Kustom will be led by Stanton E.

Ross, who will serve as the President

and Chief Executive Officer.

Kustom’s shares are expected to be listed on a national exchange under a ticker symbol to be determined

and announced at a later date.

The Company may also pursue an alternative disposition

of Kustom instead of the Spin-Off.

The Spin-Off or alternative transaction is expected to be completed in the second half of 2023.

of Presentation :

5 unchanged sentences

a fair presentation have been included.

Operating results for the three and nine month periods ended September 30, 2022 are not necessarily

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

Operating results for the three month period ended March 31, 2023 are not necessarily indicative

of the results that may be expected for the year ending December 31, 2023.

balance sheet at December 31, 2022 has been derived from the audited financial statements at that date, but does not include all the

14 unchanged sentences

ability to continue as a going concern, management considered the conditions and events that could raise substantial doubt about the

Company’s ability to continue as a going concern within 12 months after the Company’s financial statements were issued (November

Company’s ability to continue as a going concern within 12 months after the Company’s financial statements were issued (May

Management considered the Company’s current financial condition and liquidity sources, including current funds available,

forecasted future cash flows and the Company’s obligations due before November 14, 2023.

forecasted future cash flows and the Company’s obligations due before May 15, 2024.

Company has experienced net losses and cash outflows from operating activities since inception.

For the nine months ended September 30,

For the three months ended March 31,

2023, the Company had a net loss attributable to common stockholders of $ 6,105,818 , net cash used in operating activities of $ 1,216,876 ,

$ 3,488,972 used in investing activities and $ 4,425,437 used in financing activities.

The 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

$ 70,645 used in investing activities and $ 615,045 provided by financing activities.

The 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.

4 unchanged sentences

The Company has also implemented a marketing and advertisement

reduction plan for its ticketing segment, which will focus on reducing and alleviating current obligations from its media marketing agreements

and place a hold on entering into any new agreements.

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

product introduction will eventually restore positive operating cash flows and profitability, although it can offer no assurances in

reduction plan for its entertainment segment, which will focus on reducing and alleviating current obligations from its media marketing

agreements and place a hold on entering into any new agreements.

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

and new product introduction will eventually restore positive operating cash flows and profitability, although it can offer no assurances

in this regard.

has evaluated the significance of the conditions described above in relation to the Company’s ability to meet its obligations and

concluded that, without additional funding, the Company will not have sufficient funds to meet its obligations within one year from the

date the condensed consolidated financial statements were issued.

pandemic/Supply Chain :

COVID-19 pandemic continues to represent an evolving and fluid situation that presents a wide range of potential impacts of varying durations

for different global geographies, including locations where the Company has offices, employees, customers, vendors and other suppliers

and business partners.

most U.S.-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, although the original effect of the COVID-19 pandemic has eased, we have continued to operate in an uncertain economic

environment that is characterized by, business slowdowns or shutdowns, labor shortages, supply chain challenges, changes in government

spending and requirements, regulatory challenges, inflationary pressures and market volatility.

continue to experience operational challenges as a result of worldwide events including the Russia-Ukraine conflict, continued uncertainty

associated with the pandemic, and volatility in global markets, which are compounded by 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.

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

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

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

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

We have incurred and may in the future incur additional

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

need to identify and develop alternative suppliers.

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

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

Our customers have experienced, and may continue

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

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

Similarly, current, and future restrictions

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

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

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

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

To date, we eased many of these modifications.

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

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

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 cash flows.

date the unaudited condensed consolidated financial statements were issued.

of Consolidation :

6 unchanged sentences

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 its global ticketing operations.

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.

The Company formed

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

It will provide primarily liability insurance

coverage to the Company for which insurance may not be currently available or economically feasible in today’s insurance marketplace.

TicketSmarter, Inc.

on September 1, 2021, upon its acquisition of Goody Tickets, LLC and TicketSmarter, LLC, to facilitate its

global entertainment operations.

The Company formed Worldwide Reinsurance Ltd.

in December 2021, which is a captive insurance

company domiciled in Bermuda.

It will provide primarily liability insurance coverage to the Company for which insurance may not be

currently available or economically feasible in today’s insurance marketplace.

The Company formed Digital Connect, Inc.

and BirdVu Jets, Inc.

BirdVu Jets, Inc.

for travel and transportation purposes in 2022.

The company formed Kustom

in 2022 to create unique entertainment experiences directly for consumers.

The company formed Kustom 440, Inc.

in 2022 to create unique

entertainment experiences directly for consumers.

Value of Financial Instruments :

13 unchanged sentences

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.

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

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

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

As part of its consideration for the contract,

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

For each contract, the Company

considers the promise to transfer products, each of which is distinct, to be the identified performance obligations.

In determining the

transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which

it expects to be entitled.

As the Company’s standard payment terms are less than one year, it has elected the practical expedient

under ASC 606-10-32-18 to not assess whether a contract has a significant financing component.

The Company allocates the transaction

price to each distinct product based on its relative standalone selling price.

The product price as specified on the purchase order is

considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar

circumstances.

Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance

obligations are satisfied), which typically occurs at shipment.

Further in determining whether control has been transferred, the Company

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

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

services or replacement product.

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

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

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

generated by all segments are reported net of sales taxes.

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

In situations where sales are to a distributor, the Company has concluded that such contracts are with the distributor as in such

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

As part of its

consideration for the contract, the Company evaluates certain factors including the customers’ ability to pay (or credit

For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified

performance obligations.

In determining the transaction price, the Company evaluates whether the price is subject to refund or

adjustment to determine the net consideration to which it expects to be entitled.

As the Company’s standard payment terms are

less than one year, it has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant

financing component.

The Company allocates the transaction price to each distinct product based on its relative standalone selling

The product price as specified on the purchase order is considered the standalone selling price as it is an observable input

which depicts the price as if sold to a similar customer in similar circumstances.

Revenue is recognized when control of the product

is transferred to the customer (i.e.

when the Company’s performance obligations are satisfied), which typically occurs at

Further in determining whether control has been transferred, the Company considers if there is a present right to payment

and legal title, along with risks and rewards of ownership having transferred to the customer.

Customers do not have a right to

return the product other than for warranty reasons for which they would only receive repair services or replacement product.

Company has also elected the practical expedient under ASC 340-40-25-4 to expense commissions for product sales when incurred as the

amortization period of the commission asset the Company would have otherwise recognized is less than one year.

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

11 unchanged sentences

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

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

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

These service fees are reported as revenue monthly upon completion

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

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

a principal or agent in the transaction.

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

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

Entertainment

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

as a principal or agent in the transaction.

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

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

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

8 unchanged sentences

Revenues derived from this

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

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

As the Company does

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

Revenue is recognized on a net basis,

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

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

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

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

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

As the Company

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

Revenue is recognized on a net

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

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

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

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

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

During the three months ended September 30, 2022, the Company recognized revenue of $ 0.7 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.

During the three months ended March 31, 2023, the Company recognized revenue of $ 0.5 million related to its contract liabilities.

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

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

Such amounts consist of extended warranty contracts,

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

Total contract liabilities consist of the following:

SCHEDULE OF CONTRACT LIABILITIES

March 31, 2023

Additions/Reclass

September 30,

Recognized Revenue

Contract liabilities, current

Contract liabilities, non-current

returns and allowances aggregated $ 118,029 and $ 45,298 for the nine months ended September 30, 2022 and year ended December 31, 2021,

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.

March 31, 2022

Additions/Reclass

Recognized Revenue

Contract liabilities, current

Contract liabilities, non-current

returns and allowances aggregated $ 116,642 and $ 118,027 for the years ended March 31, 2023 and December 31, 2022, respectively.

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

The accrual is determined based upon

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

of Estimates :

16 unchanged sentences

OF SHORT TERM INVESTMENTS

September 30, 2022

March 31, 2023

Demand deposits

9 unchanged sentences

with major financial institutions.

At September 30, 2022 and December 31, 2021, the uninsured balance amounted to $ 4,459,897 and $ 29,836,142 ,

At March 31, 2023 and December 31, 2022, the uninsured balance amounted to $ 2,021,428 and $ 2,495,189 ,

respectively.

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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.

The 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 include:

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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if fair value is not available.

The Company last assessed potential impairments of its long-lived assets as of September 30, 2022 and

concluded that there was no impairment.

assets include sponsorship networks, tradenames, client agreements, deferred patent costs and license agreements.

Legal expenses incurred in

preparation of patent application have been deferred and will be amortized over the useful life of granted patents.

Costs incurred

in preparation of applications that are not granted will be charged to expense at that time.

The Company has entered into several

sublicense agreements under which it has been assigned the exclusive rights to certain licensed materials used in its products.

These sublicense agreements generally require upfront payments to obtain the exclusive rights to such material.

capitalizes the upfront payments as intangible assets and amortizes such costs over their estimated useful life on a straight-line

The Company last assessed potential impairments of its long-lived assets as of March 31, 2023 and concluded

that there was no impairment.

assets include deferred patent costs and license agreements.

Legal expenses incurred in preparation of patent application have been deferred

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

Costs incurred in preparation of applications that are not granted will

be charged to expense at that time.

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

rights to certain licensed materials used in its products.

These sublicense agreements generally require upfront payments to obtain the

exclusive rights to such material.

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

estimated useful life on a straight-line method.

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

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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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Non-controlling

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

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

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

The venture partner holds a noncontrolling interest 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

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

December 2019, the FASB issued ASU No.

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

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

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

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

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

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

The Company will continue to evaluate the effect of adopting ASU 2016-13 will have on the Company’s consolidated financial

August 2018, the FASB issued ASU No.

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

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

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

early adoption permitted.

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

results of operations,

December 2019, the FASB issued ASU No.

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

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

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

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

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

and results of operations.

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

As such, we adopted ASC 326 effective January 1, 2023.

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

financial position and results of operations.

consisted of the following at March 31, 2023 and December 31, 2022:

SCHEDULE OF INVENTORIES

September 30,

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

( 5,230,261 )

Reserve for excess and obsolete inventory – ticketing segment

Reserve for excess and obsolete inventory – entertainment segment

Total inventories

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The cost of such units

totaled $ 181,381 and $ 153,976 as of September 30, 2022 and December 31, 2021, respectively.

totaled $ 173,630 and $ 171,071 as of March 31, 2023 and December 31, 2022, respectively.

DEBT OBLIGATIONS

1 unchanged sentence

OF DEBT OBLIGATIONS

September 30,

Economic injury disaster loan (EIDL)

3 unchanged sentences

Contingent consideration promissory note – Nobility Healthcare Division Acquisition

Commercial Extension of Credit – Entertainment Segment

Debt obligations

1 unchanged sentence

Debt obligations, long-term

obligations mature as follows as of September 30, 2022:

SCHEDULE OF MATURITY OF DEBT OBLIGATIONS

September 30,

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

obligations mature as follows as of March 31, 2023:

OF MATURITY OF DEBT OBLIGATIONS

2023 (April 1, 2023 to December 31, 2023)

2027 and thereafter

Small Business Administration Notes .

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

Loan of $ 1,417,413 (the “PPP Loan”) under the Small Business Administration’s (the “SBA”) PPP Program under

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

The PPP Loan had a two -year term and bore interest

at a rate of 1.0 % per annum.

Monthly principal and interest payments were deferred for nine months after the date of disbursement and

total $ 79,851 per month thereafter.

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

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

The PPP Loan provided that it

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

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

On December 10, 2020, the Company was fully forgiven of its $ 1,417,413

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

received with the PPP Loan.

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

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Monthly principal and interest

payments are deferred for thirty months after the date of disbursement and total $ 731 per month thereafter.

payments are deferred for twenty-four months after the date of disbursement and total $ 731 per month thereafter.

Such note may be prepaid

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Quarterly principal and

interest payments are deferred for six months and are due in equal quarterly installments on the seventh business day of each quarter.

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 $ 975,000 (the “June

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consideration promissory note at its estimated fair value of $ 350,000 at the acquisition date.

Total principal payments, since its inception,

Total principal payments, since inception,

on this contingent consideration promissory note totaled $ 143,026 .

The estimated fair value of the June Contingent Note at September 30,

2022 is $ 205,865 , representing an increase in its estimated fair value of $ 20,481 as compared to its estimated fair value as of June

Therefore, the Company recorded a loss of $ 20,481 in the Consolidated Statements of Operations for the three months ended September

The Company recorded a gain of $ 27,139 in the Consolidated Statements of Operations for the nine months ended September 30,

The estimated fair value of the June Contingent Note at March 31,

2023 is $ 147,047 , representing a reduction in its estimated fair value of $ 29,409 as compared to its estimated fair value as of December

This reduction only relates to the principal payments made for the three months ended March 31, 2023.

Therefore, the Company

recorded no gain or loss in the Consolidated Statements of Operations for the three months ended March 31, 2023.

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

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contingent consideration promissory note at its estimated fair value of $ 650,000 at the acquisition date.

Principal payments, since its

Total principal payments, since

inception, on this contingent consideration promissory note totaled $ 357,779 .

The estimated fair value of the August Contingent Note

at September 30, 2022 is $ 436,449 , representing an increase in its estimated fair value of $ 79,153 as compared to is estimated fair

value as of June 30, 2022.

Therefore, the Company recorded a loss of $ 79,153 in the Consolidated Statements of Operations for the three

months ended September 30, 2022.

The Company recorded a loss of $ 14,576 in the Consolidated Statements of Operations for the nine months

ended September 30, 2022.

at March 31, 2023 is $ 324,129 , representing a reduction in its estimated fair value of $ 64,826 as compared to its estimated fair value

as of December 31, 2022.

This reduction only relates to the principal payments made for the three months ended March 31, 2023.

the Company recorded no gain or loss in the Consolidated Statements of Operations for the three months ended March 31, 2023

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

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Principal payments, since its inception, on this contingent consideration promissory note totaled $ 146,843 .

The estimated fair value of

the January Contingent Note at September 30, 2022 is $ 449,507 , representing an increase in its estimated fair value of $ 39,244 as compared

to is estimated fair value as of June 30, 2022.

Therefore, the Company recorded a loss of $ 39,244 in the Consolidated Statements of Operations

for the three months ended September 30, 2022.

The Company recorded a gain of $ 229,605 in the Consolidated Statements of Operations for

the nine months ended September 30, 2022.

The estimated fair value

of the January Contingent Note at March 31, 2023 is $ 6,926 , representing a reduction in its estimated fair value of $ 175,146 as compared

to its estimated fair value as of December 31, 2022.

Therefore, the Company recorded a gain of $ 175,146 in the Consolidated Statements

of Operations for the three months ended March 31, 2023.

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

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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.

and interest payments are deferred for seven months and is due in equal quarterly installments on the tenth business day of each quarter.

The principal amount of the February Contingent Payment Note is subject to an earn-out adjustment, being the difference between $ 440,000

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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 September 30, 2022 is $ 0 , representing no change in its estimated fair

value as compared to is estimated fair value as of June 30, 2022.

Therefore, the Company recorded a no change and a gain of $ 105,000

in the Consolidated Statements of Operations for the three and nine months ended September 30, 2022, respectively.

There were no principal

payments on this contingent consideration promissory note during the three months ended September 30, 2022.

Principal payments, since its inception, on this contingent consideration promissory note totaled $ 543 .

The estimated fair value

of the February Contingent Note at March 31, 2023 is $ 20,928 , representing an increase in its estimated fair value of $ 17,125 as compared

to its estimated fair value as of December 31, 2022.

Therefore, the Company recorded a loss of $ 17,125 in the Consolidated Statements

of Operations for the three months ended March 31, 2023.

Commercial Extension of Credit

February 23, 2023, the Company’s Entertainment segment entered into an extension of credit in the form of a loan to use in marketing

and operating its business in accordance with the Private Label Agreement previously entered into with the Lender.

The Lender agreed

to extend, subject to the conditions hereof, and Borrower agreed to take, a Loan for Principal Sum of $ 1,000,000 .

shall retain 25% of each remittance owed to Borrower under the terms of the Private Label Agreement.

Such remittances shall include regular

weekly remittances and any additional incentive payments to which the Borrower may be entitled.

The 25% withholding of the Borrower’s

applicable remittance shall be deemed a “Payment” under the terms of this Note, and Payments shall continue until the earlier

of (i) repayment of the Principal Sum, accrued Interest, and a fee of $35,000.00 or (ii) expiration of the Private Label Agreement on

December 31, 2023 .

of the three months ended March 31, 2023, the Company’s Entertainment segment had repaid $ 291,143 towards the

principal on the loan through remittances and had an outstanding balance of $ 708,857 .

FAIR VALUE MEASUREMENT

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

basis as of September 30, 2022 and December 31, 2021:

basis as of March 31, 2023 and December 31, 2022:

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

September 30, 2022

Warrant derivative liabilities

Contingent consideration promissory notes and

contingent consideration earn-out agreement

March 31, 2023

Contingent consideration promissory notes and contingent consideration earn-out agreement

Liabilities, fair value

December 31, 2022

Warrant derivative liabilities

Contingent consideration promissory notes and contingent consideration earn-out agreement

Liabilities, fair value

following table represents the change in Level 3 tier value measurements for the periods ended September 30, 2022:

following table represents the change in Level 3 tier value measurements for the three months ended March 31, 2023:

SCHEDULE OF FAIR VALUE MEASUREMENTS CHANGE IN LEVEL 3 INPUTS

Consideration

Promissory Notes

Warrant Derivative

Contingent Consideration Promissory Notes

Balance, December 31, 2022

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

Principal payments on contingent consideration promissory notes – Revenue Cycle Management Acquisitions

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

Change in fair value of warrant derivative liabilities

Balance, March 31, 2023

Principal payments on contingent consideration promissory notes – Revenue Cycle Management Acquisitions

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

Change in fair value of warrant derivative liabilities

( 5,413,618 )

Balance, June 30, 2022

Principal payments on contingent consideration promissory notes – Revenue Cycle Management Acquisitions

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

Change in fair value of warrant derivative liabilities

( 1,164,849 )

Gain on extinguishment of warrant derivative liabilities

Issuance of common stock through warrant exchange agreement

( 4,495,500 )

Balance, September 30, 2022

ACCRUED EXPENSES

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

expenses consisted of the following at March 31, 2023 and December 31, 2022:

SCHEDULE OF ACCRUED EXPENSES

September 30,

Accrued warranty expense

5 unchanged sentences

Total accrued expenses

warranty expense was comprised of the following for the nine months ended September 30, 2022:

warranty expense was comprised of the following for the three months ended March 31, 2023:

SCHEDULE OF ACCRUED WARRANTY EXPENSE

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Ending balance

effective tax rate for the three months ended September 30, 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 September 30, 2022, primarily because of the Company’s history of

operating losses.

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

effective tax rate for the three months ended March 31, 2023 and 2022 varied from the expected statutory rate due to the Company continuing

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

The Company determined that it was appropriate to continue the full

valuation allowance on net deferred tax assets as of March 31, 2023, primarily because of the Company’s history of operating losses.

Company has incurred operating losses in recent years, and it continues to be in a three-year cumulative loss position at March 31, 2023.

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

the negative evidence of our three-year cumulative loss position under the guidance provided in ASC 740.

Therefore, it determined to

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

The Company expects to continue to maintain a full valuation

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

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

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

The Company has available to it approximately $ 81.4 million

(based on its December 31, 2021 tax return) in net operating loss carryforwards to offset future taxable income as of September 30, 2022.

Therefore, it is determined

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

The Company expects to continue to maintain a full

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

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

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

The Company has available to it approximately $ 113.3

million (based on its December 31, 2022 tax return) in net operating loss carryforwards to offset future taxable income as of March 31,

PREPAID EXPENSES

expenses were the following at September 30, 2022 and December 31, 2021:

expenses were the following at March 31, 2023 and December 31, 2022:

SCHEDULE OF PREPAID EXPENSE

September 30,

Prepaid inventory

2 unchanged sentences

PROPERTY, PLANT AND EQUIPMENT

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

plant and equipment consisted of the following at March 31, 2023 and December 31, 2022:

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT

September 30,

Office furniture, fixtures and equipment

Office furniture, fixtures, equipment, and aircraft

Warehouse and production equipment

1 unchanged sentence

Building improvements

Rental equipment

accumulated depreciation and amortization

( 1,056,371 )

Net property, plant and equipment

expense for the nine months ended September 30, 2022 and September 30, 2021 was $ 381,014 and $ 177,959 , respectively, and is included

in general and administrative expenses.

Depreciation expense for the three months ended March

31, 2023 and March 31, 2022 was $ 171,631 and $ 135,438 , respectively, and is included in general and administrative expenses.

OPERATING LEASE

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

lease as of September 30, 2022, was fifty-one months .

lease as of March 31, 2023, was forty-five months .

The Company’s previous office and warehouse space lease expired in April 2020

5 unchanged sentences

The remaining lease term for the Company’s copier operating

lease as of September 30, 2022, was thirteen months .

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

lease as of March 31, 2023, was seven 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 to $ 2,774 , with a termination date of July 2024 .

lease terms include monthly payments ranging from $ 2,648 to $ 2,774 , with a termination date of July 2024 .

The Company is responsible

1 unchanged sentence

The Company took

possession of the leased facilities on September 30, 2021.

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

lease as of September 30, 2022, was twenty-two months.

possession of the leased facilities on June 30, 2021.

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

31, 2023, was sixteen months .

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

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possession of the leased facilities on September 1, 2021.

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

lease as of September 30, 2022, was six months .

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

Upon completion of this acquisition,

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

The lease terms include monthly payments

ranging from $ 7,211 to $ 7,364 , 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

The remaining lease term for the Company’s office and warehouse operating lease as of September 30, 2022 was three months .

The Company signed an eighty-four-month extension for the lease, the extension

terms include monthly payments ranging from $ 7,436 to $ 8,877 , with a termination date of March 2030 .

The remaining lease term for the

Company’s operating lease as of March 31, 2023 was eighty-four months .

September 1, 2021, the Company completed the acquisition of Goody Tickets, LLC and TicketSmarter, LLC through TicketSmarter.

Upon completion

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

The lease terms include

monthly payments ranging from $ 7,211 to $ 7,364 thereafter, with a termination date of December 2022 .

The Company is responsible for property

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

The Company took possession of

the leased facilities on September 1, 2021.

The Company signed a six-month extension for the lease, extending the remaining lease term

for the Company’s office and the remaining lease term for the Company’s operating lease as of March 31, 2023 was three months.

The Company plans to relocate the entertainment operating segment acquired operations to existing owned or leased facilities upon termination

of this operating lease.

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

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possession of the leased facilities on January 1, 2022.

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

lease as of September 30, 2022, was thirty-three months .

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

March 31, 2023, was twenty-seven months .

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

30, 2022, respectively.

weighted-average remaining lease term related to the Company’s lease liabilities as of September 30, 2022 was 3.5 years.

Total lease expense under the six operating leases was approximately $ 142,402 during the three months ended March 31, 2023.

weighted-average remaining lease term related to the Company’s lease liabilities as of March 31, 2023 was 4.8 years.

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

2 unchanged sentences

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

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

following sets forth the operating lease right of use assets and liabilities as of March 31, 2023:

SCHEDULE OF OPERATING LEASES RIGHT OF USE ASSETS AND LIABILITIES

3 unchanged sentences

Total operating lease obligations

components of lease expense were as follows for the three months ended March 31, 2023:

OF LEASE EXPENSE

Selling, general and administrative expenses

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

1 unchanged sentence

Year ending December 31:

2022 (October 1, to December 31, 2022)

2023 (April 1, to December 31, 2023)

Total undiscounted minimum future lease payments

2 unchanged sentences

GOODWILL AND OTHER INTANGIBLE ASSETS

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

assets consisted of the following at March 31, 2023 and December 31, 2022:

SCHEDULE OF INTANGIBLE ASSETS

September 30, 2022

March 31, 2023

December 31, 2022

2 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

3 unchanged sentences

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

expense for the three months ended September 30, 2022 and 2021 was $ 460,489 and $ 40,211 , respectively, and $ 1,177,759 and $ 100,069 , for

the nine months ended September 30, 2022 and 2021, respectively.

Estimated amortization for intangible assets with definite lives for

the next five years ending December 31 and thereafter is as follows:

expense for the three months ended March 31, 2023 and 2022 was $ 371,478 and $ 357,966 , respectively.

Estimated amortization for intangible

assets with definite lives for the next five years ending December 31 and thereafter is as follows:

SCHEDULE OF ESTIMATED AMORTIZATION FOR INTANGIBLE ASSETS

Year ending December 31:

2022 (October 1, to December 31, 2022)

2023 (April 1, to December 31, 2023)

2027 and thereafter

assets were the following at September 30, 2022 and December 31, 2021:

assets were the following at March 31, 2023 and December 31, 2022:

SCHEDULE OF OTHER ASSETS

September 30,

Lease receivable

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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.

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

As the COVID-19 pandemic dissipates at varying

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

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

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

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

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

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

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

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

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

We have incurred and may in the future incur additional

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

need to identify and develop alternative suppliers.

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

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

Our customers have experienced, and may continue

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

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

Similarly, current, and future restrictions

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

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

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

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

To date, we have eased many of these modifications.

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

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

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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of our prevailing, the availability of insurance, and the severity of any potential loss.

We re-evaluate and update accruals as matters

We reevaluate and update accruals as matters

progress over time.

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However, there can be no assurances as to the outcome of the dispute.

the ultimate resolutions are unknown, based on the information currently available, we do not expect that this lawsuit will individually,

or in the aggregate, have a material adverse effect to our results of operations, financial condition and cash flows.

the ultimate resolution is unknown, based on the information currently available, we do not expect that these lawsuits will individually,

or in the aggregate, have a material adverse effect to our results of operations, financial condition or cash flows.

However, the outcome

2 unchanged sentences

coverage and will not have a material adverse effect on our operating results, financial condition or cash flows.

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.”

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,

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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

the event the Company does not regain compliance with the Minimum Bid Price Requirement by January 3, 2023, the Company may be eligible

for an additional 180-calendar day grace period.

To qualify, the Company will be required to meet the continued listing requirement for

market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the

Minimum Bid Price Requirement, and will need to provide written notice to Nasdaq of its intent to regain compliance with such requirement

during such second compliance period.

the Company does not regain compliance within the allotted compliance period(s), including any extensions that may be granted by Nasdaq,

Nasdaq will provide notice that the Common Stock will be subject to delisting from the Nasdaq Capital Market.

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.

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.

STOCK-BASED COMPENSATION

Company recorded pre-tax compensation expense related to the grant of stock options and restricted stock issued of $ 114,848 and $ 394,749

for the three months ended September 30, 2022 and 2021, and $ 1,028,084 and $ 1,186,771 for the nine months ended September 30, 2022 and

2021, respectively.

of September 30, 2022, the Company had adopted nine separate stock option and restricted stock plans:

for the three months ended March 31, 2023 and 2022, respectively.

of March 31, 2023, the Company had adopted ten separate stock option and restricted stock plans:

(i) the 2005 Stock Option and Restricted

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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.”

Plans permit the grant of stock options or restricted stock to the Company’s employees, non-employee directors and others for up

to a total of 6,675,000 shares of common stock.

The 2005 Plan terminated during 2015 with 21,553 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

September 30, 2022 total 5,689 .

(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 1,078 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 September 30,

2022 total 10,625 .

Stock options granted under the 2005 Plan that remain unexercised and outstanding as of March 31, 2023

The 2006 Plan terminated during 2016 with 2,739 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 September 30, 2022.

The 2008 Plan terminated during 2018 with 40,499 shares not awarded or underlying options, which shares are now unavailable for issuance.

There were no stock options granted under the 2008 Plan that remain unexercised and outstanding as of September 30, 2022.

Company believes that such awards better align the interests of our employees with those of its stockholders.

Stock options granted under the 2006 Plan that remain unexercised and outstanding as of March 31, 2023 total 531 .

Plan terminated during 2017 with 4,733 shares not awarded or underlying options, which shares are now unavailable for issuance.

are no stock options granted under the 2007 Plan that remain unexercised and outstanding as of March 31, 2023.

The 2008 Plan terminated

during 2018 with 2,025 shares not awarded or underlying options, which shares are now unavailable for issuance.

There are no stock options

granted under the 2008 Plan that remain unexercised and outstanding as of March 31, 2023.

option grants.

The Board of Directors has granted stock options under the Plans.

These option awards have been granted with an

exercise price equal to the market price of the Company’s stock at the date of grant with such option awards generally vesting

based on the completion of continuous service and having ten-year contractual terms.

These option awards typically provide for accelerated

vesting if there is a change in control (as defined in the Plans).

The Company has registered all shares of common stock that are issuable

under its Plans with the SEC.

A total of 190,845 shares remained available for awards under the various Plans as of September 30, 2022.

The Company believes that such awards better align the interests of our employees with those of its stockholders.

Option awards have been granted with an exercise price equal to the market price of its stock at the date of grant with such option awards

generally vesting based on the completion of continuous service and having ten-year contractual terms.

These option awards typically

provide for accelerated vesting if there is a change in control (as defined in the Plans).

The Company has registered all shares of common

stock that are issuable under its Plans with the SEC.

A total of 137,042 shares remained available for awards under the various Plans

as of March 31, 2023.

fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model.

summary of all stock option activity under the Plans for the nine months ended September 30, 2022 is as follows:

summary of all stock option activity under the Plans for the three months ended March 31, 2023 is as follows:

SUMMARY OF STOCK OPTIONS OUTSTANDING

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Outstanding at December 31, 2022

Outstanding at September 30, 2022

Exercisable at September 30, 2022

fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model.

The total estimated grant

date fair value stock options issued during the nine months ended September 30, 2022 was $ 22,768 .

Following are certain estimates and

assumptions utilized as of the issuance date to determine the grant-date fair value of the stock options issued during 2022:

SCHEDULE OF FAIR VALUE OF STOCK OPTIONS ASSUMPTION

Volatility – range

Risk-free rate

Contractual term

Exercise price

Outstanding at March 31, 2023

Exercisable at March 31, 2023

Plans allow for the cashless exercise of stock options.

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There were no shares surrendered pursuant to cashless exercises

during the nine months ended September 30, 2022 and 2021.

aggregate intrinsic value of options outstanding was $- 0 - and $- 0 -, at September 30, 2022 and December 31, 2021, respectively.

during the three months ended March 31, 2023 and 2022.

aggregate intrinsic value of options outstanding was $- 0 - and $- 0 -, at March 31, 2023 and December 31, 2022, respectively.

The aggregate

intrinsic value of options exercisable was $- 0 - and $- 0 -, at September 30, 2022 and December 31, 2021, respectively.

of September 30, 2022, the unrecognized portion of stock compensation expense on all existing stock options was $- 0 -.

intrinsic value of options exercisable was $- 0 - and $- 0 -, at March 31, 2023 and December 31, 2022, respectively.

of March 31, 2023, the unrecognized portion of stock compensation expense on all existing stock options was $- 0 -.

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 September 30, 2022:

options under the Company’s option plans as of March 31, 2023:

SCHEDULE OF SHARES AUTHORIZED UNDER STOCK OPTION PLANS BY EXERCISE PRICE RANGE

Outstanding options

Exercisable options

Exercise price

Weighted average

contractual life

Weighted average

contractual life

$ 0.01 to $ 49.99

$ 50.00 to $ 69.99

$ 70.00 to $ 89.99

stock grants.

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and the right to receive cash dividends.

summary of all restricted stock activity under the Plans for the nine months ended September 30, 2022 is as follows:

summary of all restricted stock activity under the Plans for the three months ended March 31, 2023 is as follows:

SUMMARY OF RESTRICTED STOCK ACTIVITY

grant date fair

Number of Restricted

Nonvested balance, December 31, 2022

Nonvested balance, September 30, 2022

Nonvested balance, March 31, 2023

Company estimated the fair market value of these restricted stock grants based on the closing market price on the date of grant.

September 30, 2022, there were $ 627,217 of total unrecognized compensation costs related to all remaining non-vested restricted stock

grants, which will be amortized over the next fifty-two months in accordance with their respective vesting scale.

March 31, 2023, there were $ 559,045 of total unrecognized compensation costs related to all remaining non-vested restricted stock grants,

which will be amortized over the next fifty-eight months in accordance with their respective vesting scale.

nonvested balance of restricted stock vests as follows:

SCHEDULE OF NON-VESTED BALANCE OF RESTRICTED STOCK

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

2023 (April 1, 2023 through December 31, 2023)

COMMON STOCK PURCHASE WARRANTS

Company has issued common stock purchase warrants in conjunction with various debt and equity issuances.

The warrants are either immediately

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 1,349,178 shares of common stock at $ 2.60 to $ 3.36 per share as of September 30, 2022.

The warrants expire from February

23, 2023 through July 31, 2023 and under certain circumstances allow for cashless exercise.

The warrants are either

immediately 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 39,162

shares of common stock at $ 52.00

to $60.00 per share as of March 31, 2023.

warrants expire from April 3, 2023 through July 31, 2023 and under certain circumstances allow for cashless

January 14, 2021 and February 1, 2021, the Company issued warrants to purchase a total of 2,127,500 shares of Common Stock.

issued on January 14, 2021 consist of (i) pre-funded warrants to purchase up to 7,200,000 shares of common stock and (ii) common stock

purchase warrants (“January Warrants”) to purchase up to an aggregate of 10,000,000 shares of common stock.

issued on February 1, 2021 consist of (i) pre-funded warrants to purchase up to 11,050,000 shares

of common stock and (ii) common stock purchase warrants (“February Warrants”)

to purchase up to an aggregate of 14,300,000 shares of common stock.

The 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.

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.

August 19, 2021, the Company entered into a Warrant Exchange Agreement (the “Exchange Agreement”) with certain investors

cancelling February Warrants exercisable for an aggregate of 7,681,540 shares of common stock in consideration for its issuance of new

warrants (the “Exchange Warrants”) to such investors, exercisable for an aggregate of up to 7,681,540 shares of common stock.

The Company also issued warrants (the “Replacement Original Warrants”) replacing the February Warrants for the remaining

shares of common stock exercisable thereunder, representing an aggregate of 6,618,460 shares of common stock, and extended the expiration

date of the February Warrants to September 18, 2026 .

The 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.

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 cancelled 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 during 2021.

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

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.

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.

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 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 $ 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 MODIFICATION

Original terms at August 19, 2021

Modified terms at August 19, 2021

Volatility - range

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Common stock issuable under the warrants

August 23, 2022, the Company entered into a Warrant Exchange Agreement (the “Warrant Exchange Agreements”) with certain

investors (the “Investors”), pursuant to which the Company agreed to issue to the Investors an

aggregate of 6,075,000

shares of Common Stock in exchange for the cancellation by the Investors of the January Warrants, the Exchange Warrants and the

Replacement Originals Warrants.

On the date of the exchange, the Company calculated the fair value of the issuance of common shares

pursuant to the Warrant Exchange Agreements, attributing that value to common stock and additional paid in capital.

The remaining value of the warrant derivative liability was attributed

to an income from change in fair market value of warrant derivative liabilities and gain on extinguishment of warrant derivative liabilities

in the consolidated statement of operations.

On the date of the Warrant Exchange Agreement, using the Black-Scholes method, the fair value

of the warrant derivative liability was $ 8.1 million, compared to $ 9.3 million at June 30, 2022, resulting in income from change in fair

market value of warrant derivative liabilities of $ 1.2 million during the three months ended September 30, 2022.

Further, the value of

the issued shares of Common Stock was $ 4.5 million, applied to additional paid in capital, resulting in a gain on the extinguishment of

warrant derivative liabilities of $ 3.6 million during the three months ended September 30, 2022.

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

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.

On the date of the Warrant Exchange Agreement, using the

Black-Scholes method, the fair value of the warrant derivative liability was $ 8.1 million, compared to $ 9.3 million at June 30, 2022,

resulting in income from change in fair market value of warrant derivative liabilities of $ 1.2 million during the year ended December

Further, the value of the issued shares of Common Stock was $ 4.5 million, applied to additional paid in capital, resulting

in a gain on the extinguishment of warrant derivative liabilities of $ 3.6 million during the year ended December 31, 2022.

August 23, 2022

Volatility - range

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result in a material change in our Level 3 fair value.

following table summarizes information about shares issuable under warrants outstanding during the nine months ended September 30, 2022:

OF WARRANT ACTIVITY

following table summarizes information about shares issuable under warrants outstanding during the three months ended March 31, 2023:

SUMMARY OF WARRANT ACTIVITY

exercise price

1 unchanged sentence

Forfeited/cancelled

( 24,659,420 )

Vested Balance, September 30, 2022

total intrinsic value of all outstanding warrants aggregated $- 0 - as of September 30, 2022, and the weighted average remaining term is

Vested Balance, March 31, 2023

total intrinsic value of all outstanding warrants aggregated $- 0 - as of March 31, 2023, and the weighted average remaining term is four

following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable

warrants to purchase shares of common stock as of September 30, 2022:

warrants to purchase shares of common stock as of March 31, 2023:

SUMMARY OF RANGE OF EXERCISE PRICES AND WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE OF WARRANTS

2 unchanged sentences

Number of warrants

Weighted average

contractual life

STOCKHOLDERS’ EQUITY

of Restricted Stock

the nine months ended September 30, 2022, the Company cancelled 65,000 restricted shares of common stock due to forfeiture reasons.

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”).

During the nine months ended September

30, 2022, the Company repurchased 3,725,986 shares of its common stock for $ 4,026,523 , in accordance with the Program.

SCHEDULE OF STOCK REPURCHASE

December 2021

February 2022

Total all plans

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 5,460,824 shares at a cost of $ 6,001,602 through June 30, 2022.

Issuance of Restricted Common Stock

January 10, 2023, the board of directors approved the grant of 22,500 shares of common stock to officers of the Company.

will generally vest over a period of one to five years on their respective anniversary dates in January through January 2028, provided

that each grantee remains an officer or employee on such dates.

Additionally, the board of directors approved the grant of 12,500 restricted

common shares to certain new employees of the Company.

Such shares will generally vest over a period of one to two years on their respective

anniversary dates in January through January 2025, provided that each grantee remains an employee of the company on such dates.

Reverse Stock Split

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 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.

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.

Noncontrolling

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

We reported net loss attributable

to noncontrolling interests of consolidated subsidiary of $ 16,596 and a net loss of $ 19,863 for the three months ended September 30,

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

We reported net (income) loss

attributable to noncontrolling interests of consolidated subsidiary of ($ 126,239 ) and $ 98,094 for the three months ended March 31, 2023

and 2022, respectively.

NET EARNINGS (LOSS) PER SHARE

calculation of the weighted average number of shares outstanding and loss per share outstanding for the three and nine months ended September

calculation of the weighted average number of shares outstanding and loss per share outstanding for the three months ended March 31,

2023 and 2022 are as follows:

SCHEDULE OF WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING AND LOSS PER SHARE OUTSTANDING

September 30,

Nine months Ended

September 30,

Numerator for basic and diluted income per share – Net income (loss) attributable to common stockholders

OF WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING AND LOSS PER SHARE OUTSTANDING

months ended March 31,

Numerator for basic and diluted income (loss) per share – Net income (loss)

$ ( 6,105,818 )

$ ( 6,600,148 )

Denominator for basic loss per share – weighted average shares outstanding

Dilutive effect of shares issuable under stock options and warrants outstanding

Denominator for diluted loss per share – adjusted weighted average shares outstanding

Net loss per share:

Denominator for basic income (loss) per share – weighted average shares outstanding

Dilutive effect of shares issuable upon conversion of convertible debt and the exercise of stock options and warrants outstanding

Denominator for diluted income (loss) per share – adjusted weighted average shares outstanding

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 three and nine

months ended September 30, 2022 and 2021, all shares issuable upon the exercise of outstanding stock

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

For the three months

ended March 31, 2023 and 2022, 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.

DIGITAL ALLY HEALTHCARE VENTURE

47 unchanged sentences

estimated fair values at the time of the Healthcare 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 and final estimated fair value of assets acquired, and liabilities assumed in the Healthcare Acquisition

were as follows:

OF PRELIMINARY AND FINAL ESTIMATED FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES 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

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Tangible assets acquired, consisting of acquired cash, accounts receivable and right of use asset

Intangible assets acquired – Client Agreements

assets acquired – Client Agreements

Intangible assets acquired – client agreements

6 unchanged sentences

Total Healthcare Acquisition purchase price

The 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

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

September 30,

March 31, 2023

Identifiable intangible assets:

Client agreements

For 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.

adjustments primarily related to estimated identifiable intangible asset fair values of client agreements and goodwill.

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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acquisition date.

The 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 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 and final estimated fair value of assets acquired, and liabilities assumed in the Healthcare Acquisition were as follows:

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:

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Total Healthcare Acquisition purchase price

The 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

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

September 30,

March 31, 2023

Identifiable intangible assets:

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acquisition date.

The 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 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.

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:

SCHEDULE OF PRELIMINARY FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ACQUISITION

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

Final purchase

price allocation

Assets acquired:

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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

accordance 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.

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assets acquired were agreed to by both buyer and seller.

The estimated fair value of intangible assets acquired in the Medical Billing

The acquisition was structured as asset purchase and are included in the consolidated

financial statements from the acquisition date.

The preliminary estimated fair value of intangible assets acquired in the Medical Billing

Asset Acquisition were as follows:

SCHEDULE OF PRELIMINARY FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ACQUISITION

OF PRELIMINARY FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ACQUISITION

Assets acquired:

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Total acquisition purchase price

The 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

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

September 30,

Identifiable intangible assets:

9 unchanged sentences

TicketSmarter, Inc.

comprises the Company’s ticketing 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.

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

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.

Thus, in accordance with U.S.

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.

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.

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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.

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.

preliminary and final estimated fair value of assets acquired, and liabilities assumed in the TicketSmarter Acquisition were as

OF PRELIMINARY AND FINAL ESTIMATED FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED ACQUISITION

Final as allocated

The preliminary 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

purchase price allocation

September 30,

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the date of acquisition:

OF COMPONENTS OF IDENTIFIABLE INTANGIBLE ASSETS ACQUIRED AND ESTIMATED USEFUL LIVES

September 30,

intangible assets:

agreement network

engine optimization/content

SCHEDULE OF COMPONENTS

OF IDENTIFIABLE INTANGIBLE ASSETS ACCRUED AND ESTIMATED USEFUL LIVES

Amortization through

March 31, 2023

Identifiable intangible assets:

Sponsorship agreement network

Search engine optimization/content

the period from the date of the TicketSmarter Acquisition to December 31, 2021, the Company adjusted its preliminary fair value estimates

3 unchanged sentences

related to the sponsorship agreement network), the estimated fair value of the contingent earn-out agreement liability and goodwill.

There were no adjustments to the allocation of the purchase price during the three and nine months ended September 30, 2022.

There were no adjustments to the allocation of the purchase price during the three months ended March 31, 2023.

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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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.

Corporate expenses capture the Company’s corporate

administrative activities, and are also to be reported in the segment information.

administrative activities, is also to be reported in the segment information.

The Company’s captive insurance subsidiary provides

1 unchanged sentence

Therefore, its operations are eliminated in consolidation

and it is not considered a separate business segment for financial reporting purposes.

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 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 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.

5 unchanged sentences

cash, invested cash (if any), refundable income taxes (if any), and deferred income taxes.

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

30, 2022, and September 30, 2021:

financial information for the Company’s reportable business segments is provided for the indicated periods and as of March 31,

2023, and March 31, 2022:

SCHEDULE OF SEGMENT REPORTING

Three months ended

September 30,

Nine months ended

September 30,

Three Months Ended March 31,

Net Revenues:

1 unchanged sentence

Revenue Cycle Management

Entertainment

Total Net Revenues

Gross Profit (Loss):

Gross Profit:

Video Solutions

Revenue Cycle Management

Entertainment

Total Gross Profit

3 unchanged sentences

$ ( 1,658,144 )

$ ( 4,327,049 )

$ ( 1,919,559 )

Revenue Cycle Management

( 2,149,412 )

( 5,915,953 )

Entertainment

( 1,233,006 )

5 unchanged sentences

$ ( 6,803,338 )

$ ( 20,031,610 )

$ ( 9,081,553 )

Depreciation and Amortization:

1 unchanged sentence

Revenue Cycle Management

Entertainment

Total Depreciation and Amortization

2 unchanged sentences

Revenue Cycle Management

Entertainment

Total Identifiable Assets

segments recorded noncash items affecting the gross profit and operating income (loss) through the established inventory reserves based

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 $ 3,227,488 and a reserve for the ticketing segment of $ 543,936 .

in the video solutions segment of $ 5,089,903 and a reserve for the entertainment segment of $ 319,204 .

segment net revenues reported above represent sales to external customers.

6 unchanged sentences

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,

LLC is currently the managing member of Nobility Healthcare, LLC.

1 unchanged sentence

capital loan to Nobility, LLC in order to fund capital expenditures necessary for the initial growth of the joint venture during 2021.

The outstanding balance of the working capital loan was $ 138,384 as of September 30, 2022 and the Company anticipates full repayment

of this advance during the year ended December 31, 2022.

During the nine months ended September 30, 2022, the Company paid distributions

to the noncontrolling in consolidated subsidiary totaling $ 15,692 .

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 which is currently the managing member of our consolidated subsidiary Nobility Healthcare, LLC.

The outstanding balance of the working capital loan was $ 138,384 as of March 31, 2023 and the Company anticipates full repayment of this

advance during the year ended December 31, 2023.

SUBSEQUENT EVENTS

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 “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”),

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 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.

In connection with the Offering, the Company agreed to pay A.G.P./Alliance Global

Partners (the “Financial Advisor”) an aggregate cash fee equal to $ 750,000 and to reimburse the Financial Advisor for certain

of its expenses in an amount not to exceed $135,000.

Company has called an annual meeting of stockholders to consider amendments (the “Amendments”) to the Company’s Articles

of Incorporation (the “Charter”), (i) to authorize an increase in the number of shares of Common Stock that the Company is

authorized to issue under the Charter (the “Authorized Share Increase Amendment”) and (ii) to authorize the Company, in the

sole and absolute discretion of the Board of Directors, to effect a reverse stock split of the outstanding shares of Common Stock by a

ratio to be determined by the Board of Directors (the “Reverse Stock Split Amendment” and, together with the Authorized Share

Increase Amendment, the “Amendments”).

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 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 Offering, subject to the holders’

rights to convert the shares prior to such redemption.

of the Offering are being 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

Upon expiration of the redemption period, any proceeds remaining in the escrow account will be disbursed to the Company.

The Offering closed on October

April 5, 2023, Digital Ally, Inc.

(the “Company”) entered into and consummated the initial closing (the “First Closing”)

of the transactions contemplated by a Securities Purchase Agreement, dated as of April 5, 2023 (the “Purchase Agreement”),

between the Company and certain investors (the “Purchasers”).

the First Closing, the Company issued and sold to the Purchasers Senior Secured Convertible Notes in the aggregate original principal

amount of $ 3,000,000 (the “Notes”) and warrants (the “Warrants”).

The Purchase Agreement provided for a ten percent

( 10 %) original interest discount resulting in gross proceeds to the Company of $ 2,700,000 .

No interest accrues under the Notes.

are exercisable for an aggregate 1,125,000 shares comprised of 375,000 warrants at an exercise price of $ 5.50 per share of the Company’s

common stock (the “Common Stock”), 375,000 warrants at an exercise price of $ 6.50 per share of Common Stock, and 375,000

warrants at an exercise price of $ 7.50 per share of Common Stock.

to certain conditions, within 18 months from the Effectiveness Date (as defined below) and while the Notes remain outstanding, the Purchasers

have the right to require the Company to consummate a second closing of up to an additional $ 3,000,000 of Notes and Warrants on the

same terms and conditions as the First Closing, except that the Notes may be subordinate to a mortgage on the Company’s headquarters

building (the “Bank Mortgage”).

Notes are convertible into shares of Common Stock at the election of the Purchasers at any time at a fixed conversion price of $ 5.00

(the “Conversion Price”) per share of Common Stock.

The Conversion Price is subject to customary adjustments for stock dividends,

stock splits, reclassifications and the like, and subject to price-based adjustment in the event of any issuances of Common Stock, or

securities convertible, exercisable or exchangeable for, Common Stock at a price below the then-applicable Conversion Price (subject

to certain exceptions).

Subject to certain conditions, including certain equity conditions, the Company may redeem some or all of the

then outstanding principal amount of the Note for cash in an amount equal to 110 % of the outstanding principal amount of the Notes (the

“Optional Redemption Amount”).

In addition, the Purchasers may, at their option, demand repayment at the Optional Redemption

Amount upon five (5) business days’ written notice following (i) the closing by the Company of the Bank Mortgage, or (ii) a sale

by the Company of Common Stock or Common Stock equivalents.

*************************************

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements