What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-15 compared with 2022-11-14 · 407 added, 792 removed, 476 unchanged (72% of the section changed)

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or otherwise.

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

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

cash flows and capital needs.

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affected include, but are not limited to:

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

(2) economic and other

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

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

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

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

(4) our operation in developing markets and uncertainty

as to market acceptance of our technology and new products;

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

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

(6) our ability

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

increasing our international revenues;

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

(8) competition from larger,

more established companies with far greater economic and human resources;

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

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

a going concern;

(2) economic and other risks for our business from the effects of the COVID-19 pandemic, including the impacts on our

law-enforcement and commercial customers, suppliers and employees and on our ability to raise capital as required;

(3) our ability to

increase revenues, increase our margins and return to consistent profitability in the current economic and competitive environment;

our operation in developing markets and uncertainty as to market acceptance of our technology and new products;

(5) the availability

of funding from federal, state and local governments to facilitate the budgets of law enforcement agencies, including the timing, amount

and restrictions on such funding;

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

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

(7) our ability to produce our products in

a cost-effective manner;

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

ability to attract and retain quality employees;

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

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

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

(12) characterization of our market by new products

and rapid technological change;

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

(14) that stockholders

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

(15) defects in our

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

(16) our dependence

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

of our products;

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

as trade secrets, through other similar means;

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

(19) risks related

to our license arrangements;

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

(21) sufficient voting power by coalitions

of a few of our larger stockholders, including directors and officers, to make corporate governance decisions that could have a significant

effect on us and the other stockholders;

(22) the issuance or sale of substantial amounts of our common stock, or the perception that

such sales may occur in the future, which may have a depressive effect on the market price of our securities;

(23) potential dilution

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

(24) our additional securities available for issuance,

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

(25) the volatility of our stock price due to

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

(26) our ability to integrate and realize the

anticipated benefits from acquisitions;

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

(11) our expenditure

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

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

(13) our dependence on sales of our EVO-HD, DVM-800, DVM-250

and FirstVU products;

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

return to profitability;

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

and other significant costs;

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

on domestic and foreign manufacturers for certain of our products;

(17) our ability to protect technology through patents and to protect

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

(18) our ability to generate more recurring

cloud and service revenues;

(19) risks related to our license arrangements;

(20) the fluctuation of our operation results from quarter

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

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

(22) the issuance or sale of substantial

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

price of our securities;

(23) potential dilution from the issuance of common stock underlying outstanding options and warrants;

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

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

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

(27) our ability to maintain the listing of our

common stock on the Nasdaq Capital Market.

Trends and Recent Developments for the Company

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term of the subscription, typically 3 or 5 years.

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

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

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

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

and its majority-owned subsidiary Nobility Healthcare.

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

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

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

services to healthcare organizations throughout the country.

Our assistance consists of insurance and benefit verification, medical treatment

documentation and coding, and collections.

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

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

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

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

acquisitions completed during the first quarter of 2022, in which we assist in providing working capital and back-office services to

healthcare organizations throughout the country.

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

and coding, and collections.

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

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

revenue cycle management segment consists of our medical billing subsidiaries.

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

Entertainment

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

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

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

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

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

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

Ticketing direct expenses include

Entertainment direct expenses include

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

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of Operations

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

30, 2022, and September 30, 2021:

Three months ended September 30,

Nine months ended September 30,

financial information for the Company’s reportable business segments is provided for the three months ended March 31, 2023, and

Three Months Ended March 31,

Net Revenues:

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Revenue Cycle Management

Entertainment

Total Net Revenues

Gross Profit (Loss):

Gross Profit:

Video Solutions

Revenue Cycle Management

Entertainment

Total Gross Profit

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$ (1,658,144 )

$ (1,919,559 )

Revenue Cycle Management

(10,025,236 )

Entertainment

Total Operating Income (Loss)

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$ (6,803,338 )

$ (20,031,610 )

$ (9,081,553 )

Depreciation and Amortization:

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Revenue Cycle Management

Entertainment

Total Depreciation and Amortization

September 30,

Assets (net of eliminations):

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Revenue Cycle Management

Entertainment

Total Identifiable Assets

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Results of Operations

The following is a summary

of our recent operating results on a quarterly basis:

experienced operating losses for the first quarter of 2023 and all quarters during 2022.

The following is a summary of our recent operating

results on a quarterly basis:

For the Three Months Ended:

September 30,

Total revenue

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Operating income (loss) %

Net income (loss) attributable to common stockholders

Net income (loss)

$ (5,979,579 )

1 unchanged sentence

$ (1,919,071 )

$ (6,698,242 )

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

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(1) the timing of large individual

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

(3) production,

quality and other supply chain issues affecting our cost of goods sold;

(4) unusual increases in operating expenses, such as the timing

of trade shows and stock-based and bonus compensation;

(5) the timing of patent infringement litigation settlements (6) ongoing patent

and other litigation and related expenses respecting outstanding lawsuits;

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

the economy and our businesses;

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

and the Shield™ lines;

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

(4) unusual increases

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

(5) the timing of patent infringement

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

(7) the impact of

COVID-19 on the economy and our businesses;

and (8) the completion of corporate acquisitions.

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

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

We reported a net loss of $5,979,579 on

revenues of $7,697,190 for first quarter of 2023.

Sheet Arrangements

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that represent commitments to future payments for goods and services.

the Three Months Ended September 30, 2022 and 2021

the Three Months Ended March 31, 2022 and 2021

of Operations

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

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

Three Months Ended

September 30,

ended March 31, 2023 and 2022, represented as a percentage of total revenues for each such quarter:

Months Ended March 31,

Cost of revenue

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Net income/(loss)

Net loss attributable to noncontrolling interests of consolidated subsidiary

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

Net income (loss) attributable to common stockholders

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operating segments generate two types of revenues:

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

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

units, disinfectants, and personal protective equipment.

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

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

ticketing segment until their sale.

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

by our entertainment segment until their sale.

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

solutions segment.

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

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

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

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The distributor retains the margin

as its compensation for its role in the transaction.

The distributor generally maintains product inventory, customer receivables

and all related risks and rewards of ownership.

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

the terms of the distribution agreement.

as compensation for its role in the transaction.

The distributor generally maintains product inventory, customer receivables and

all related risks and rewards of ownership.

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

terms of the distribution agreement.

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

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Service revenues are generally determined as a

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

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

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

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

Service sales

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

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

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

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

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

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

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

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

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

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

three months ended September 30, 2022.

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

products and, specifically, our commercial event recorder hardware (DVM-250 Plus) and in-car hardware for law enforcement (DVM-800) during

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

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

revenues by operating segment is as follows:

Three Months Ended

September 30,

Three Months Ended March

Product Revenues:

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Revenue Cycle Management

Entertainment

Total Product Revenues

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

revenues for the three months ended March 31, 2023 and 2022 were $2,453,810 and $2,410,060 respectively, an increase of $43,750 (2%),

due to the following factors:

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

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

to $-0- for the three months ended September 30, 2021.

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

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

Company’s video segment operating segment generated revenues totaling $1,348,565 during the three months ended September 30,

2022 compared to $1,356,454 for the three months ended September 30, 2021 due to slowing sales of our ThermoVu TM product

lines related to our COVID-19 response.

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

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

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

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

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

on temperature and/or facial recognition reasons.

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

display and controls access to facilities based on such results.

ThermoVu TM has been applied in schools, dental offices,

hospitals, office buildings, and other public venues.

The Company also launched its Shield™ disinfectant/sanitizer product

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

products now widely distributed.

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

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

In general, our video solutions operating segment has experienced decreased

demand on its product revenues due to price-cutting and competitive actions by our competitors, adverse marketplace effects related to

our patent litigation proceedings and our recent financial condition.

We introduced our new body-worn cameras, the FirstVu Pro and FirstVu

II, in the fourth quarter of 2021, and we continue to see increased traction with these products through the first three quarters of 2022.

The Company hopes the interest throughout the marketplace continues to grow for these new products as the market is able to review and

test these new products.

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

a hardware sale to a service fee model.

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

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

as part of a recurring monthly service fee.

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

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

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

This program has continued to gain traction,

resulting in decreased product revenues and increased service revenues.

We expect this program to continue to gain momentum, resulting

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

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

The new entertainment operating segment generated $1,260,789 in product revenues for the three months ended March 31, 2023, compared

to $1,073,830 for the three months ended March 31, 2022.

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

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

Company’s video segment operating segment generated revenues totaling $1,193,021 during the three months ended March 31, 2023

compared to $1,336,230 for the three months ended March 31, 2022.

In general, our video solutions operating segment has experienced

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

released new products with advanced features.

Additionally, our law enforcement revenues declined compared to the same period in

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

proceedings and our recent financial condition.

video solutions operating segment management has continued to focus on migrating commercial customers, from a hardware sale to a

service fee model.

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

a portion of our body-worn camera line) as we convert these customers to a service model under which we provide the hardware as part

of a recurring monthly service fee.

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

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

body worn cameras without incurring a significant upfront capital outlay.

This program has gained some traction, resulting in decreased

product revenues and increasing our service revenues.

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

revenues over a span of three to five years.

and other revenues by operating segment is as follows:

Three Months Ended

September 30,

Three Months Ended March 31,

Service and Other Revenues:

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Revenue Cycle Management

Entertainment

Total Service and Other Revenues

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

and other revenues for the three months ended March 31, 2023 and 2022 were $5,243,380 and $7,884,721, respectively, a decrease of $2,641,341

(33%), due to the following factors:

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

revenues generated by the video solutions operating segment were $422,823 and $270,925 for the three months ended March 31, 2023

and 2022, respectively, an increase of $151,898 (56%).

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

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

contributed to our increased cloud revenues in the three months ended March 31, 2023.

We expect this trend to continue throughout

2023 as the migration from local storage to cloud storage continues in our customer base.

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

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

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

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

compared to the same period in 2021.

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

solutions operating segment revenues from extended warranty services were $211,847 and $199,491 for the three months ended March

31, 2023 and 2022, respectively, an increase of $12,356 (6%).

The Company completed the acquisitions of Goody Tickets, LLC and

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

TicketSmarter collects fees on

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

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

new revenue cycle management operating segment generated service revenues totaling $2,015,112 and $560,483 for the three months ended

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

This correlates with the increase in sales of DVM-800 hardware systems

resulting in an increase in their associated extended warranty.

entertainment operating segment generated service revenues totaling $2,755,447 and $5,306,945 for the three months ended March 31,

2023 and 2022, respectively, a decrease of $2,551,498 (48%).

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

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

TicketSmarter collects fees on transactions administered

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

We expect our

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

revenue cycle management operating segment generated service revenues totaling $1,781,590 and $1,903,957 for the three months ended

March 31, 2023 and 2022, respectively, a decrease of $122,367 (6%).

Our revenue cycle management operating segment has completed

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

September 30, 2022.

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

to healthcare organizations throughout the country.

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

revenue outlook moving forward.

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

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

of Product Revenue

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

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

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

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

Cost of products sold by operating segment is as follows:

September 30,

of Product Revenues:

Cycle Management

Cost of Product Revenues

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

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

In addition, the video solutions segment

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

increasing cost of goods sold for the period.

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

increased to 107% for the three months ended September 30, 2022 as compared to 88% for the three months ended September 30, 2021.

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

resulting in an increase to cost of product revenue of $2,001,162 for the three months ended September 30, 2022, compared to $-0- for

the three months ended September 30, 2021.

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

for the three months ended September 30, 2022.

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

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

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

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

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

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

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

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

We believe the

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

of Service Revenue

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

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

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

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

Cost of service revenues by operating segment is as follows:

September 30,

of Service Revenues:

Cycle Management

Cost of Service Revenues

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

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

Cost of service revenues as a percentage of service

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

months ended September 30, 2021.

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

completed since June 2021.

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

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

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

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

September 30, 2021.

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

ended September 30, 2022.

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

Gross profit by operating segment was as follows:

Three Months Ended

September 30,

Cycle Management

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

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

three months ended September 30, 2021.

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

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

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

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

economy in the wake of the COVID-19 pandemic and current inflationary concerns.

In addition, if revenues from the video solutions segment

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

overhead components.

We plan to continue our initiative to more efficient management of our supply chain through outsourcing production,

quantity purchases and more effective purchasing practices.

General and Administrative Expenses

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

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

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

Our selling, general and administrative expenses as a percentage of sales decreased to 84% for the three months ended September

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

The significant components of selling, general and administrative expenses are

Three months ended

September 30,

Research and development expense

Selling, advertising and promotional expense

General and administrative expense

and development expense.

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

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

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

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

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

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

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

We consider our

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

on a prudent basis and consistent with our financial resources.

advertising and promotional expenses.

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

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

Promotional and advertising expenses represent

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

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

The increase is primarily attributable to the 2022

sponsorship of NASCAR and IndyCar.

Additionally, TicketSmarter remains active in sponsorship and advertising.

and administrative expense .

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

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

The increase in general and administrative expenses in

the three months ended September 30, 2022 compared to the same period in 2021 is primarily attributable to an increase in administrative

salaries, as payroll continues to increase with the new acquisition completed by the Company’s healthcare venture during the first

half of 2022.

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

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

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

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

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

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

2022 from 78% in the same period in 2021.

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

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

The Company held significant

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

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

We incurred interest expense of

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

The increase is attributable to the contingent

earn-out notes associated with the four Nobility Healthcare acquisitions, currently at a total balance of $1,091,821 for the four notes,

with interest rates of 3.00% per annum.

in Fair Value of Short-Term Investments

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

30, 2022 and 2021, respectively.

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

of ninety (90) days or less.

in Fair Value of Contingent Consideration Promissory Notes

The Company recognized a loss

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

30, 2022 and 2021, respectively.

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

in Fair Value of Derivative Liabilities

the first quarter of 2021, the Company issued detachable warrants to purchase a total of 42,500,000 shares of Common Stock in association

with the two registered direct offerings previously described.

The underlying warrant agreement terms provide for net cash settlement

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

As such, the Company is required to treat

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

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

derivative liabilities.

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

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

The Company determined the fair value of such warrants as of

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

on Extinguishment of Warrant Derivative Liabilities

The Company recognized a gain

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

30, 2022 and 2021, respectively.

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

before Income Tax Benefit

As a result of the above results

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

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

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

loss carryforwards available.

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

as of September 30, 2022.

We had approximately $81.4 million of net operating loss carryforwards and $1.8 million of research and development

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

As a result of the above results

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

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

Income Attributable to Noncontrolling Interests of Consolidated Subsidiary

The Company owns a 51% equity

interest in its consolidated subsidiary, Nobility Healthcare.

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

49% of the income of Nobility Healthcare which is reflected in the statement of income as “net income attributable to noncontrolling

interests of consolidated subsidiary”.

We reported net loss attributable to noncontrolling interests of consolidated subsidiary

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

Loss Attributable to Common Stockholders

As a result of the above, we

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

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

and Diluted Loss per Share

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

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

For the three months ended

September 30, 2022 and 2021, all shares issuable upon conversion of convertible debt and the exercise of outstanding stock options and

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

the Nine months Ended September 30, 2022 and 2021

of Operations

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

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

Nine months Ended

September 30,

Cost of revenue

Selling, general and administrative expenses:

Research and development expense

Selling, advertising and promotional expense

General and administrative expense

Total selling, general and administrative expenses

Operating loss

Change in fair value of contingent consideration promissory notes

Change in fair value of derivative liabilities

Other income and interest income (expense), net

Income (loss) before income tax benefit

Income tax (provision)

Net income/(loss)

Net loss attributable to noncontrolling interests of consolidated subsidiary

Net income (loss) attributable to common stockholders

Net income/(loss) per share information:

revenues by operating segment is as follows:

Nine months Ended

September 30,

Product Revenues:

Video Solutions

Revenue Cycle Management

Total Product Revenues

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

(54%), due to the following factors:

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

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

$-0- for the nine months ended September 30, 2021.

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

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

Company’s video segment operating segment generated revenues totaling $4,089,037 during the nine months ended September 30,

2022 compared to $4,988,364 for the nine months ended September 30, 2021 due to slowing sales of our ThermoVu TM product

lines related to our COVID-19 response.

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

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

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

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

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

on temperature and/or facial recognition reasons.

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

display and controls access to facilities based on such results.

ThermoVu TM has been applied in schools, dental office,

hospitals, office buildings, and other public venues.

The Company also launched its Shield™ disinfectant/sanitizer product

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

products now widely distributed.

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

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

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

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

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

to see increased traction with these products in the first nine months of 2022.

The Company hopes the interest throughout the marketplace

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

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

a hardware sale to a service fee model.

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

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

as part of a recurring monthly service fee.

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

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

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

This program has continued to gain traction,

resulting in decreased product revenues and increased service revenues.

We expect this program to continue to gain momentum, resulting

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

and other revenues by operating segment is as follows:

September 30,

and Other Revenues:

Cycle Management

Service and Other Revenues

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

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

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

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

We have experienced increased interest in our cloud solutions for law

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

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

We expect this trend to continue throughout

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

Video solutions operating segment revenues from extended warranty services

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

The continued

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

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

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

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

The Company completed the acquisitions of Goody Tickets, LLC

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

TicketSmarter collects fees

on transactions administered through the TicketSmarter.com platform for the buying and selling of tickets for live events throughout

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

new revenue cycle management operating segment generated service revenues totaling $6,039,807 and $560,484 for the nine months ended

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

Our revenue cycle management operating segment has completed

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

September 30, 2022.

March 31, 2022.

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

2 unchanged sentences

revenue outlook moving forward.

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

revenues for the three months ended March 31, 2023 and 2022 were $7,697,190 and $10,294,781, respectively, a decrease of $2,597,591 (25%),

due to the reasons noted above.

of Product Revenue

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

cost of product revenue sold for the three months ended March 31, 2023, and 2022 was $2,315,180 and $2,822,051, respectively, a decrease

of $520,951 (18%).

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

Overall cost of goods sold for products as a percentage of product revenues for the three months ended March 31, 2023,

and 2022 were 94% and 117%, respectively.

Cost of products sold by operating segment is as follows:

September 30,

of Product Revenues:

Cycle Management

Three Months Ended March 31,

Cost of Product Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Cost of Product Revenues

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

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

In addition, the video solutions segment

recorded valuation allowances for its older product lines and a portion of its Shield products during the first nine months of 2022,

directly increasing cost of goods sold for the period.

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

segment increased to 92% for the nine months ended September 30, 2022 as compared to 76% for the nine months ended September 30, 2021.

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

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

the nine months ended September 30, 2021.

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

for the nine months ended September 30, 2022.

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

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

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

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

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

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

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

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

We believe the

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

the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

In addition, the Video Solutions Segment recorded

valuation allowances for its older product lines and a portion of its Shield products during the first quarter of 2023.

Cost of product

sold as a percentage of product revenues for the video solutions segment decreased to 87% for the three months ended March 31, 2023 as

compared to 111% for the three months ended March 31, 2022.

decrease in entertainment operating segment cost of product sold directly correlates to the decrease in product revenues for the three

months ended March 31, 2023 compared to March 31, 2022, resulting in cost of product revenue of $1,263,506 for the three

months ended March 31, 2022, compared to $1,344,336 for the three months ended March 31, 2022.

Cost of product sold as

a percentage of product revenues for the entertainment segment was 100% for the three months ended March 31, 2023 as compared to 125% for the three months ended March 31, 2022.

We recorded $5,409,107 and $5,489,541

in reserves for obsolete and excess inventories at March 31, 2023 and December 31, 2022, respectively.

Total raw materials, component

parts, and work-in-progress were $3,934,946 and $4,512,329 at March 31, 2023 and December 31, 2022, respectively, a decrease of $577,383

Finished goods balances were $7,395,240 and $7,816,618 at March 31, 2023 and December 31, 2022, respectively, a decrease of $421,378

(5%) which was attributable to a decrease in finished goods from our entertainment segment.

The small decrease in the inventory reserve

is primarily due to the reduction in finished goods and movement of excess inventory, offset by the increase in reserve at the entertainment

We believe the reserves are appropriate given our inventory levels as of March 31, 2023.

of Service Revenue

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

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

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

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

Cost of service revenues by operating segment is as follows:

Nine months Ended

September 30,

of Service Revenues:

Cycle Management

Overall cost of service revenue

sold for the three months ended March 31, 2023, and 2022 was $3,851,298 and $5,533,111, respectively, a decrease of $1,681,813 (30%).

Overall cost of goods sold for services as a percentage of service revenues for the three months ended March 31, 2023, and 2022 were 73%

and 70%, respectively.

Cost of service revenues by operating shipment is as follows:

Three Months Ended March 31,

Cost of Service Revenues:

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

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

Cost of service revenues as a percentage of service

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

months ended September 30, 2021.

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

completed since June 2021.

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

was 58% for the nine months ended September 30, 2022.

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

increase to cost of service revenue of $11,360,849 for the nine months ended September 30, 2022, compared to $1,438,237 for the nine

months ended September 30, 2021.

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

nine months ended September 30, 2022.

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

Gross profit by operating segment was as follows:

Nine months Ended

September 30,

Cycle Management

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

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

nine months ended September 30, 2021.

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

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

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

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

economy in the wake of the COVID-19 pandemic and current inflationary concerns.

In addition, if revenues from the video solutions segment

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

overhead components.

We plan to continue our initiative to more efficient management of our supply chain through outsourcing production,

quantity purchases and more effective purchasing practices.

Video Solutions

Revenue Cycle Management

Entertainment

Total Cost of Service Revenues

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

months ended March 31, 2023 compared to the three months ended March 31, 2022.

Cost of service revenues as a percentage of service revenues

for the video solutions segment increased to 46% for the three months ended March 31, 2023 as compared to 39% for the three months ended

March 31, 2022.

of service revenues as a percentage of service revenues for the revenue cycle management operating segment was 56% for the three months

ended March 31, 2023 as compared to 63% for the three months ended March 31, 2022.

decrease in entertainment operating segment cost of service revenues is commensurate with the decrease in service revenues in the three

months ended March 31, 2023, compared to the three months ended March 31, 2022.

Cost of service revenues as a percentage of service revenues

for the entertainment segment was 91% for the three months ended March 31, 2023 as compared to 77% for the three months ended March 31,

Overall gross profit for the three

months ended March 31, 2022 and 2021 was $1,544,792 and $1,939,619, respectively, a decrease of $394,827 (20%).

Gross profit by operating

segment was as follows:

Months Ended March 31,

Gross Profit:

Video Solutions

Revenue Cycle Management

Entertainment

Total Gross Profit

overall decrease is attributable to the decrease in revenues for the three months ended March 31, 2023 and a decrease in the overall

cost of sales as a percentage of overall revenues to 80% for the three months ended March 31, 2023 from 81% for the three months ended

March 31, 2022.

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

cycle management and entertainment operating segments together with our video solutions operating segment and its expected margins from

our EVO-HD, DVM-800, VuLink, FirstVu Pro, FirstVu II, Shield TM disinfectants and our cloud evidence storage and management

offering, provided that they gain traction in the marketplace.

In addition, if revenues from the video solutions segment increase, we

will seek to further improve our margins from this segment through expansion and increased efficiency utilizing fixed manufacturing overhead

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

purchases and more effective purchasing practices.

General and Administrative Expenses

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

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

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

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

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

The significant components of selling, general and administrative expenses are

Nine months ended

September 30,

Selling, general and administrative

expenses were $7,717,598 and $8,742,957 for the three months ended March 31, 2023 and 2022, respectively, a decrease of $1,025,359 (12%).

The decrease was primarily attributable to the reduction in new sponsorships being entered into by the Company.

Our selling, general and

administrative expenses as a percentage of sales increased to 100% for the three months ended March 31, 2023 compared to 85% in the same

period in 2022.

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

Three months ended March 31,

Research and development expense

1 unchanged sentence

General and administrative expense

and development expense.

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

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

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

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

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

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

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

We consider our

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

on a prudent basis and consistent with our financial resources.

advertising and promotional expenses.

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

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

Promotional and advertising expenses represent

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

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

The increase is primarily attributable to the 2022 sponsorship

of NASCAR and IndyCar.

Additionally, TicketSmarter remains in sponsorship and advertising.

TicketSmarter accounted for $3,335,723 of

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

and administrative expense .

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

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

The increase in general and administrative expenses in the

nine months ended September 30, 2022 compared to the same period in 2021 is primarily attributable to an increase in administrative salaries,

as payroll continues to increase with the new acquisition completed by the Company’s healthcare venture during the first half of

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

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

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

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

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

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

from 94% in the same period in 2021.

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

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

The Company held significant

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

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

We incurred interest expense of

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

The increase is attributable to the contingent

earn-out notes associated with the four Nobility Healthcare acquisitions, currently at a total balance of $1,091,821 for the four notes,

with interest rates of 3.00% per annum.

Research and development

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

research and development expenses totaled $934,939 and $498,000 for the three months ended March 31, 2023 and 2022, respectively, an increase

of $436,939 (88%).

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

of body-worn cameras, EVO-HD and EVO Fleet that can be located in multiple places in a vehicle.

We expect our research and development

activities will continue to trend higher in future quarters as we continue to expand our product offerings based on our new body-worn

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

We consider our research and development capabilities

and new product focus to be a competitive advantage and intend to continue to invest in this area on a prudent basis and consistent with

our financial resources.

Selling, advertising and

promotional expenses.

Selling, advertising and promotional expense totaled $1,847,489 and $2,779,404 for the three months ended

March 31, 2023 and 2022, respectively, a decrease of $931,915 (34%).

Promotional and advertising expenses represent the primary component

of these costs and totaled $1,462,541 during the three months ended March 31, 2023, compared to $2,389,063 during the three months ended

March 31, 2022, a decrease of $926,522 (39%).

The decrease is primarily attributable to the reduction in new sponsorships being entered

into by the Company.

Additionally, TicketSmarter remains active in sponsorship and advertising, as it continues to build its brand and

gain recognition.

General and administrative

General and administrative expenses totaled $4,935,170 and $5,465,553 for the three months ended March 31, 2023 and 2022,

respectively, a decrease of $530,383 (10%).

The decrease in general and administrative expenses in the three months ended March 31, 2023

compared to the same period in 2022 is primarily attributable to a decrease in administrative salaries, as payroll begins to adjust from

the new acquisitions completed by the Company.

General and administrative expenses also decreased due to a decline in rent expenses, and

legal and professional expenses for the three months ended March 31, 2023 compared to the same period in 2022.

For the reasons stated above,

our operating loss was $6,172,806 and $6,803,338 for the three months ended March 31, 2023 and 2022, respectively, a decrease of $630,532

Operating loss as a percentage of revenues increased to 80% in the three months ended March 31, 2023 from 66% in the same period

income decreased to $15,477 for the three months ended March 31, 2023, from $71,362 in the same period of 2022, which reflects our change

in cash and cash equivalent levels in the first quarter of 2023 compared to the first quarter of 2022.

The Company held significant cash

and cash equivalents throughout the first quarter of 2022, allowing a full three months of interest income due to the two completed registered

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

incurred interest expenses of $5,664 and $17,009 during the three months ended March 31, 2023 and 2022, respectively.

The decrease is

attributable to a reduction in the contingent earn-out notes associated with the four Nobility Healthcare acquisitions, currently at

a total balance of $499,029 for the four notes, with interest rates of 3.00% per annum.

in Fair Value of Short-Term Investments

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

recognized a loss on change in fair value of short-term investments totaling $-0- and $84,818 during the three months ended March 31,

2023 and 2022, respectively.

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

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

of ninety (90) days or less.

in Fair Value of Contingent Consideration Promissory Notes

The Company recognized a gain

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

2022 and 2021, respectively.

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

Company recognized a gain on the change in fair value of contingent consideration promissory notes of $158,021 compared to a loss of

$56,050 during the three months ended March 31, 2023 and 2022, respectively.

This is in connection with the four acquisitions made by

our revenue cycle management segment.

in Fair Value of Derivative Liabilities

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derivative liabilities.

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

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

The Company determined the fair value of such warrants

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

on Extinguishment of Warrant Derivative Liabilities

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

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

This is in connection with the Warrant

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

Income/(Loss)

There was no change in fair value of the warrant derivative liabilities from December 31, 2022 to March 31, 2023,

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

was recognized as a gain in the first quarter of 2022.

The Company determined the fair value of such warrants as of December 31, 2022,

and as of March 31, 2023, to be $-0- and $-0-, respectively.

before Income Tax Benefit

As a result of the above results

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

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

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

of operations, we reported a loss before income tax benefit of $5,979,579 and $6,698,242 for the three months ended March 31, 2023 and

2022, respectively, a decrease of $718,663 (11%).

did not record an income tax expense related to our income for the three months ended March 31, 2023 due to our overall net operating

loss carryforwards available.

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

as of September 30, 2022.

as of March 31, 2023.

We had approximately $113.3 million of net operating loss carryforwards and $1.8 million of research and development

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

Income/(Loss)

tax credit carryforwards as of March 31, 2023 available to offset future net taxable income.

As a result of the above results

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

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

Income Attributable to Noncontrolling Interests of Consolidated Subsidiary

The Company owns a 51% equity

interest in its consolidated subsidiary, Nobility Healthcare.

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

49% of the income of Nobility Healthcare which is reflected in the statement of income as “net income attributable to noncontrolling

interests of consolidated subsidiary”.

We reported net income attributable to noncontrolling interests of consolidated subsidiary

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

Income/(Loss) Attributable to Common Stockholders

of operations, we reported a net loss of $5,979,579 and $6,698,242 for the three months ended March 31, 2023 and 2022, respectively, a

decrease of $718,663 (11%).

Income/(Loss) Attributable to Noncontrolling Interests of Consolidated Subsidiary

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

As a result, the noncontrolling shareholders

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

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

We reported net income/(loss)

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

and 2022, respectively.

Loss Attributable to Common Stockholders

As a result of the above, we reported

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

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

and Diluted Income/(Loss) per Share

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

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

For the nine months ended September

30, 2022 and 2021, all shares issuable upon conversion of convertible debt and the exercise of outstanding stock options and warrants

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

a net loss attributable to common stockholders of $6,105,818 and $6,600,148 for the years three months March 31, 2023 and 2022, respectively,

a decrease of $494,330 (7%).

and Diluted Loss per Share

basic and diluted loss per share was $2.22 and $2.59 for the three months ended March 31, 2023 and 2022, respectively.

Basic loss per

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

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 loss per share.

and Capital Resources

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

Based upon our

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

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

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

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

Our recurring losses and

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

doubt about our ability to continue as a going concern.

Based upon our current

operating forecast, we anticipate that we will need to restore positive operating cash flows and/or raise additional capital in the short-term

to fund operations, meet our customary payment obligations and otherwise execute our business plan over the next 12 months.

We are continuously

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

however, there can be no assurance

that our capital raising initiatives will be successful.

Our recurring losses and level of cash used in operations, along with uncertainties

concerning our ability to raise additional capital, raise substantial doubt about our ability to continue as a going concern.

cash equivalents:

As of September 30, 2022, we had cash and cash equivalents with an aggregate balance of $6,295,391, a decrease

from a balance of $32,007,792 at December 31, 2021.

As of March 31, 2023, we had cash and cash equivalents with an aggregate balance of $2,859,723, a decrease from

a balance of $3,532,199 at December 31, 2022.

Summarized immediately below and discussed in more detail in the subsequent subsections

are the main elements of the $25,712,401 net decrease in cash during the nine months ended September 30, 2022:

are the main elements of the $672,476 net decrease in cash during the three months ended March 31, 2023:

of net cash used in operating activities.

Net cash used in operating

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

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

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

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

Net cash used in operating activities was $1,216,876 and $6,055,672 for the three months

ended March 31, 2023 and 2022, respectively, a decrease of $4,838,796.

The improvement is attributable to the non-cash gain attributable

to the change in value of the warrant derivative liability no longer being applicable to 2023, as well as the decline in the usage

of cash to increase accounts receivable, prepaid expenses, and other operating assets during the three months ended March 31, 2023

compared to the same period in 2022.

of net cash used in investing activities.

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

September 30, 2022 and 2021, respectively.

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

building improvements of the newly purchased office and warehouse building, and transportation assets;

(ii) patent applications on

our proprietary technology utilized in our new products and included in intangible assets;

and (iii) the closing of a business and

asset acquisition.

of net cash used in financing activities.

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

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

During the first nine months of 2022, the Company

repurchased its common stock on the open market pursuant to the stock repurchase plan, and made principal payments on contingent

consideration promissory notes.

During 2021, we raised substantial funds through the completion of two registered direct offerings

of our common stock.

had $6,295,391 of cash and cash equivalents and net positive working capital $20,745,139 as of September 30, 2022.

Accounts receivable

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

We believe we will be able to

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

cash flow to support our operations during 2022.

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

finished goods represented $9,769,951 of total inventory at September 30, 2022.

We are actively managing the level of inventory and our

goal is to reduce such level during the balance of 2022 by our sales activities, the increase of which should provide additional cash

flow to help support our operations during 2022.

Cash used in investing activities was $70,645 and $3,195,346 for the three months ended

March 31, 2023 and 2022, respectively.

During the three months ended March 31, 2023, we made capital expenditures for:

improvements of the newly purchased office and warehouse building;

and (ii) patent applications on our proprietary technology utilized

in our new products and included in intangible assets.

$615,045 of net cash provided by financing activities.

Cash provided by

(used in) financing activities was $615,045 and ($2,195,658) for the three months ended March 31, 2023 and 2022, respectively.

the first three months of 2023, we most notably made principal payments on contingent consideration promissory notes, received a Commercial

Extension of Credit for our Entertainment Segment and made principal payments on that extension of credit.

During the first three months

of 2022 the Company repurchased its common stock on the open market pursuant to the stock repurchase plan, as well as principal payments

on contingent consideration promissory notes.

had $2,859,723 of cash and cash equivalents and net positive working capital $3,937,426 as of March 31, 2023.

Accounts receivable and

other receivables balances represented $4,791,301 of our net working capital at March 31, 2023.

We intend to collect our outstanding

receivables on a timely basis and reduce the overall level during 2023, which would help to provide positive cash flow to support our

operations during 2023.

Inventory represents $5,921,079 of our net working capital at March 31, 2023.

We are actively managing the level

of inventory and our goal is to reduce such level during the balance of 2023 by our sales activities, the increase of which should provide

additional cash flow to help support our operations during 2023.

Expenditures:

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

Repurchase Program - On December 6, 2021, the board of directors of the Company authorized the repurchase of up to $10.0 million

of the Company’s outstanding common stock under the specified terms of a share repurchase program (the “Program”).

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

with the Program.

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.

Lease commitments.

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

30, 2022, respectively.

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

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

had the following material commitments for capital expenditures at March 31, 2023:

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

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

Operating lease right of use assets

2 unchanged sentences

Total operating lease obligations

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

Selling, general and administrative expenses

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

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

obligations – Outstanding debt obligations comprises the following:

September 30,

Economic injury disaster loan (EIDL)

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Contingent consideration promissory note – Nobility Healthcare Division Acquisition

Commercial Extension of Credit – Entertainment Segment

Debt obligations

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Debt obligations, long-term

obligations mature as follows as of September 30, 2022:

September 30,

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

obligations mature as follows as of March 31, 2023:

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

2028 and thereafter

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for Income Taxes.

Preferred Stock.

Recognition / Allowances for Doubtful Accounts.

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These service fees are reported as revenue monthly upon completion of our performance obligation to provide the agreed upon services.

for our ticketing segment is recorded on a gross or net basis based on management’s assessment of whether we are acting as a principal

or agent in the transaction.

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

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

for our entertainment segment is recorded on a gross or net basis based on management’s assessment of whether we are acting as

a principal or agent in the transaction.

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

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

sell our tickets held in inventory, which consists of one performance obligation, being to transfer control of an event ticket to the

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Revenues derived from this marketplace

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

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

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

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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.

when an order is confirmed, the seller is then obligated to deliver the tickets to the buyer per the seller’s listing.

is due at the time of sale.

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of $248.0 million since we commenced deliveries during 2006.

our ticketing segment, our customers are mainly online visitors that pay at the time of the transaction, and we collect the service fees

charged with the transaction, thus leading to minimal risk for uncollectible accounts, to which we then consider a specific reserve for

bad debts based on their individual circumstances.

our entertainment segment, our customers are mainly online visitors that pay at the time of the transaction, and we collect the service

fees charged with the transaction.

Thus, leading to minimal risk for uncollectible accounts, to which we then consider a specific reserve

for bad debts based on their individual circumstances.

As we continue to learn more about the collectability related to this recent acquisition,

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In addition, we adjust the carrying value of inventory if the current market value of that inventory is below its cost.

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

September 30,

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

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

Reserve for excess and obsolete inventory – ticketing segment

Reserve for excess and obsolete inventory – entertainment segment

Total inventories

2 unchanged sentences

to changing technology and customer requirements.

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

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

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

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

Total raw materials and component

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

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

The decrease in finished goods was primarily attributable to a reduction in ticketing inventory of $403,539 at September 30, 2022 compared

to December 31, 2021.

The slight decrease in the inventory reserve is primarily due to the reduction in finished goods that had a reserve

placed on them prior to sale.

The remaining reserve for inventory obsolescence is generally provided for the level of component parts

of the older versions of our printed circuit boards and the phase out of our DVM-750, DVM-500 Plus and LaserAlly legacy products.

Additionally,

the Company determined a reasonable reserve for inventory held at the ticket operating segment, in which some inventory items sell below

cost or go unsold, thus having to be fully written-off following the event date.

We believe the reserves are appropriate given our inventory

levels at September 30, 2022.

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

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

of the inventory reserves already established.

As reflected above, our inventory reserves represented 48% of the gross inventory balance

at March 31, 2023, compared to 45% of the gross inventory balance at December 31, 2022.

We had $5,409,107 and $5,489,541 in reserves for

obsolete and excess inventories at March 31, 2023 and December 31, 2022, respectively.

Total raw materials, component parts, and work-in-process

were $3,934,946 and $4,512,329 at March 31, 2023 and December 31, 2022, respectively, a decrease of $577,383 (13%).

Finished goods balances

were $7,395,240 and $7,816,618 at March 31, 2023 and December 31, 2022, respectively, a decrease of $421,378 (5%).

The small decrease

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

Additionally, the Company

determined a reasonable reserve for inventory held at the ticket operating segment, in which some inventory items sell below cost or go

unsold, thus having to be fully written-off following the event date.

We believe the reserves are appropriate given our inventory levels

as of March 31, 2023.

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

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

reserves already established.

and other intangible assets.

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quality and minimize claims.

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

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

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

exposure as these are very popular products in our line.

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

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

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

derivative liabilities.

On January 14, 2021 and February 1, 2021, the Company issued warrants to purchase a total of 42,550,000

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 revalues the fair value

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

On August 23, 2022, the Company

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

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

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

On the date of the exchange, the Company

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

stock and additional paid in capital.

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

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

statement of operations.

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

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

million during the three months ended September 30, 2022.

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

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

three months ended September 30, 2022.

The Company has utilized the following assumptions in its Black-Scholes option valuation model

to calculate the estimated fair value of the warrant derivative liabilities as of their date of issuance and as of August 23, 2022:

Issuance date assumptions

August 23, 2022 assumptions

Volatility - range

106.6 – 166.6

Risk-free rate

Remaining contractual term

0.01 – 5 years

3.4 – 4.1 years

Exercise price

Common stock issuable under the warrants

Our warranty reserves were increased to $19,261 as of March 31, 2023 compared to $15,694 as of December

31, 2022 due to newer products gaining a long history of claims to consider, which was slightly offset as we begin to slow our warranty

exposures through the roll-off of DVM-750 and DVM-800 units from warranty coverage.

Standard warranty exposure on the DVM-800 and DVM-250plus

are the responsibility of the contract manufacturers which reduced our overall warranty exposure as these are very popular products in

There is a risk that we will have higher warranty claim frequency rates and average cost of claims than our history has indicated

on our legacy mirror products on our new products for which we have limited experience.

Actual experience could differ from the amounts

estimated requiring adjustments to these liabilities in future periods.

Compensation Expense .

2 unchanged sentences

stock-price volatility assumption is based on historical volatilities of the underlying stock that are obtained from public data sources

and there were 25,000 stock options granted during the nine months ended September 30, 2022.

and there were no stock options granted during the three months ended March 31, 2023.

factors change and we develop different assumptions in future periods, the compensation expense that we record in the future may differ

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all or some portion of the deferred tax asset will not be realized.

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

As of March 31, 2023, we have fully reserved all of our deferred

Based on a review of our deferred tax assets and recent operating performance, we determined that our valuation allowance

should be decreased by $7,615,000 to a balance of $16,980,000 to fully reserve our deferred tax assets at December 31, 2021.

should be increased by $17,220,000 to a balance of $34,200,000 to fully reserve our deferred tax assets at December 31, 2022.

We determined

that it was appropriate to continue to provide a full valuation reserve on our net deferred tax assets as of September 30, 2022, because

that it was appropriate to continue to provide a full valuation reserve on our net deferred tax assets as of March 31, 2023, because

of the overall net operating loss carryforwards available.

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financial reporting purposes.

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

We have no recorded liability as of March 31, 2023 representing uncertain tax positions.

have generated substantial deferred income tax assets related to our operations primarily from the charge to compensation expense taken

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and Seasonality

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

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

for the remainder of fiscal year 2022 and beyond.

We do not believe that our Video Solutions and Revenue Cycle Management segments business

is seasonal in nature;

however, the Ticketing Segment is expected to generate higher revenues during the second half of the calendar

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

comparison to the first half.

has not materially affected us during the past fiscal year.

We do not believe that our Video Solutions and Revenue Cycle Management segments

business is seasonal in nature, however;

the Entertainment Segment is expected to generate higher revenues during the second half of

the calendar year than in the first half.

Quantitative and Qualitative Disclosures about Market Risk.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis