What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-12-30 compared with 2024-08-16 · 610 added, 454 removed, 734 unchanged (59% of the section changed)

132 unchanged sentences

of Operations

financial information for the Company’s reportable business segments is provided for the indicated periods and as of June 30, 2024,

and June 30, 2023:

For the three months ended June 30,

For the six months ended June 30,

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

30, 2024, and September 30, 2023:

the three months ended September 30,

the nine months ended September 30,

Net Revenues:

10 unchanged sentences

Video Solutions

$ (1,400,039 )

$ (1,364,987 )

$ (2,533,242 )

$ (3,328,173 )

Revenue Cycle Management

1 unchanged sentence

Total Operating Income (Loss)

$ (3,914,221 )

$ (4,940,704 )

$ (7,553,193 )

$ (11,113,511 )

Depreciation and Amortization:

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Entertainment

Total Identifiable Assets

Identifiable Assets

net revenues reported above represent only sales to external customers.

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Results of Operations

experienced operating losses for the first half of 2024 and all quarters during 2023.

experienced operating losses for the nine months of 2024 and all quarters during 2023.

The following is a summary of our recent operating

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September 30,

Total revenue

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

a net loss of $8,953,819 on revenues of $11,145,586 for the six months ended June 30, 2024.

a net loss of $5,470,712 on revenues of $4,051,711 for the third quarter of 2024.

Sheet Arrangements

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components of revenue or expenses other than the following:

are a party to operating leases and license agreements that represent commitments for future payments (described in Note 9, “Operating

Leases,” to our condensed consolidated financial statements) and we have issued purchase orders in the ordinary course of business

that represent commitments to future payments for goods and services.

the Three Months Ended June 30, 2024 and 2023

are a party to operating leases and license agreements that represent commitments for future payments and we have issued purchase orders

in the ordinary course of business that represent commitments to future payments for goods and services.

the Three Months Ended September 30, 2024 and 2023

of Operations

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

ended June 30, 2024 and 2023, represented as a percentage of total revenues for each such quarter:

For the three months ended

ended September 30, 2024 and 2023, represented as a percentage of total revenues for each such quarter:

For the three months ended September 30,

Cost of revenue

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General and administrative expense

Goodwill and intangible asset impairment charge

Total selling, general and administrative expenses

Operating loss

Loss on accrual for legal settlement

Loss on conversion of convertible notes

Change in fair value of derivative liabilities

Gain (loss) on extinguishment of liabilities

Gain on sale of property, plant and equipment

Loss on extinguishment of debt

Other income and interest income (expense), net

Loss before income tax benefit

Income (loss) before income tax benefit

Income tax (provision)

Net loss attributable to noncontrolling interests of consolidated

Net loss attributable to common stockholders

Net loss per share information:

Net income/(loss)

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

Net income (loss) attributable to common stockholders

Net income/(loss) per share information:

by Type and by Operating Segment

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For the three months ended

September 30,

Product Revenues:

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Total Product Revenues

revenues for the three months ended June 30, 2024 and 2023 were $2,207,601 and $3,077,661 respectively, a decrease of $870,060 (28%),

revenues for the three months ended September 30, 2024 and 2023 were $803,945 and $2,095,237 respectively, a decrease of $1,291,292 (62%),

due to the following factors:

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

entertainment operating segment generated $1,586,662 in product revenues for the three months ended June 30, 2024, compared to $1,929,059

for the three months ended June 30, 2023, a decrease of $342,397 (18%).

This product revenue relates to the first Kustom 440 music

festival in 2023 that did not recur in 2024, the initial Country Stampede music festival in 2024, as well as 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 $620,939 during the three months ended June 30, 2024

compared to $1,148,602 for the three months ended June 30, 2023, a decrease of $527,663 (46%).

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 2023 due to price-cutting and competitive actions by our competitors, adverse marketplace effects related to our

patent litigation proceedings and our recent financial condition.

entertainment operating segment generated $497,700 in product revenues for the three months ended September 30, 2024, compared to

$1,118,044 for the three months ended September 30, 2023, a decrease of $620,344 (55%).

Product revenue relates to the timing of

the first Kustom 440 music festival in 2023 that did not recur in 2024, the initial Country Stampede music festival in 2024, as well

as the resale of tickets purchased for live events, including sporting events, concerts, and theatre, then sold through various platforms

to customers.

The decrease in revenues is attributable to a reduction in scope of primary ticket sales by Ticketsmarter as it focuses

on higher margin events to improve its gross margins.

Company’s video segment operating segment generated revenues totalling $306,245 during the three months ended September 30,

2024 compared to $977,193 for the three months ended September 30, 2023, a decrease of $670,948 (69%).

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 2023 due to the Company not having inventory in–stock to fulfil existing backlog orders, price-cutting

and competitive actions by our competitors and adverse marketplace effects related to our recent financial condition.

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

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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 related equipment during 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:

For the three months ended

September 30,

Service and Other Revenues:

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Total Service and Other Revenues

and other revenues for the three months ended June 30, 2024 and 2023 were $3,408,634 and $5,201,971, respectively, a decrease of $1,793,337

and other revenues for the three months ended September 30, 2024 and 2023 were $3,247,766 and $4,242,462, respectively, a decrease of

$994,696 (23%), due to the following factors:

revenues generated by the video solutions operating segment were $637,786 and $471,949 for the three months ended June 30, 2024 and

2023, respectively, an increase of $165,837 (35%).

revenues generated by the video solutions operating segment were $710,580 and $526,401 for the three months ended September 30, 2024

and 2023, respectively, an increase of $184,179 (35%).

We have experienced increased interest in our cloud solutions for law enforcement

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

contributed to our increased cloud revenues in the three months ended June 30, 2024.

We expect this trend to continue throughout

2024 as the migration from local storage to cloud storage continues in our customer base.

solutions operating segment revenues from extended warranty services were $233,031 and $221,228 for the three months ended June 30,

2024 and 2023, respectively, an increase of $11,803 (5%).

entertainment operating segment generated service revenues totaling $879,549 and $2,726,211 for the three months ended June 30, 2024

contributed to our slight increase in cloud revenues in the three months ended September 30, 2024.

We expect this trend to continue

throughout 2024 as the migration from local storage to cloud storage continues in our customer base.

solutions operating segment revenues from extended warranty services were $141,716 and $226,056 for the three months ended September

30, 2024 and 2023, respectively, a decrease of $84,340 (37%).

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 fluctuate as we look to right-size this segment and work towards profitability.

revenue cycle management operating segment generated service revenues totaling $1,564,354 and $1,724,772 for the three months ended

June 30, 2024 and 2023, respectively, a decrease of $160,418 (9%).

entertainment operating segment generated service revenues totalling $755,857 and $1,785,764 for the three months ended September

30, 2024 and 2023, respectively, a decrease of $1,029,907 (58%).

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 fluctuate as we look to right-size this segment and work towards profitability.

revenue cycle management operating segment generated service revenues totalling $1,601,792 and $1,636,543 for the three months ended

September 30, 2024 and 2023, respectively, a decrease of $34,751 (2%).

Our revenue cycle management operating segment provides revenue

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management segment to continue to present a strong revenue outlook moving forward.

revenues for the three months ended June 30, 2024 and 2023 were $5,616,235 and $8,279,632, respectively, a decrease of $2,663,397 (32%),

revenues for the three months ended September 30, 2024 and 2023 were $4,051,711 and $6,337,699, respectively, a decrease of $2,285,988

(36%), due to the reasons noted above.

of Product Revenue

cost of product revenue sold for the three months ended June 30, 2024, and 2023 was $3,419,254 and $2,219,515, respectively, an increase

cost of product revenue sold for the three months ended September 30, 2024, and 2023 was $547,562 and $2,587,750, respectively, a decrease

of $2,040,188 (79%).

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

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

30, 2024, and 2023 were 68% and 124%, respectively.

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For the three months ended

September 30,

Cost of Product Revenues:

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Total Cost of Product Revenues

increase in cost of goods sold for our video solutions segment products was primarily driven by inventory adjustments and returns as

compared to the same period in the prior year.

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

increased to 154% for the three months ended June 30, 2024 as compared to 70% for the three months ended June 30, 2023.

increase in entertainment operating segment cost of product sold was driven by the costs of the Country Stampede music festival for the

three months ended June 30, 2024 compared to June 30, 2023, resulting in cost of product revenue of $2,460,792 for the three months ended

June 30, 2024, compared to $1,414,126 for the three months ended June 30, 2023.

Cost of product sold as a percentage of product revenues

for the entertainment segment was 155% for the three months ended June 30, 2024 as compared to 73% for the three months ended June 30,

recorded $4,135,001 and $4,542,461 in reserves for obsolete and excess inventories at June 30, 2024 and December 31, 2023, respectively.

Total raw materials, component parts, and work-in-progress were $2,630,162 and $3,065,049 at June 30, 2024 and December 31, 2023, respectively,

a decrease of $434,887 (14%).

Finished goods balances were $3,722,972 and $5,322,693 at June 30, 2024 and December 31, 2023, respectively,

a decrease of $1,599,721 (30%) 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 decrease

in reserve at the entertainment segment.

We believe the reserves are appropriate given our inventory levels as of June 30, 2024.

decrease in cost of goods sold for our video solutions segment products was primarily driven by the sale of repair inventory and components

as compared to the same period in the prior year.

We have been unable to ship backlog due to low inventory levels of finished goods.

Cost of product sold as a percentage of product revenues for the video solutions segment decreased to 51% for the three months ended

September 30, 2024 as compared to 98% for the three months ended September 30, 2023.

decrease in entertainment operating segment cost of product sold was driven by the reduction in sponsored events and primary ticket sales

as we selectively limited our events presented for the three months ended September 30, 2024 compared to September 30, 2023, resulting

in cost of product revenue of $390,226 for the three months ended September 30, 2024, compared to $1,629,763 for the three months ended

September 30, 2023.

Cost of product sold as a percentage of product revenues for the entertainment segment was 78% for the three months

ended September 30, 2024 as compared to 146% for the three months ended September 30, 2023.

of Service Revenue

cost of service revenue sold for the three months ended June 30, 2024, and 2023 was $1,954,589 and $3,323,077, respectively, a decrease

cost of service revenue sold for the three months ended September 30, 2024, and 2023 was $1,764,175 and $2,523,800, respectively, a decrease

of $759,625 (30%).

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

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

30, 2024, and 2023 were 54% and 59%, respectively.

1 unchanged sentence

For the three months ended

September 30,

Cost of Service Revenues:

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Total Cost of Service Revenues

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

months ended June 30, 2024 compared to the three months ended June 30, 2023.

Cost of service revenues as a percentage of service revenues

for the video solutions segment decreased to 35% for the three months ended June 30, 2024 as compared to 42% for the three months ended

June 30, 2023.

of service revenues as a percentage of service revenues for the revenue cycle management operating segment was 62% for the three months

ended June 30, 2024 as compared to 53% for the three months ended June 30, 2023.

decrease in cost of service revenues for our video solutions segment reflects our staffing reductions implemented during 2024 in order

to right-size our operations commensurate with our service revenues in the three months ended September 30, 2024 compared to the three

months ended September 30, 2023.

Cost of service revenues as a percentage of service revenues for the video solutions segment decreased

to 30% for the three months ended September 30, 2024 as compared to 47% for the three months ended September 30, 2023.

of service revenues as a percentage of service revenues for the revenue cycle management operating segment remained consistent at 58%

for the three months ended September 30, 2024 as compared to 62% for the three months ended September 30, 2023.

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

months ended June 30, 2024, compared to the three months ended June 30, 2023.

Cost of service revenues as a percentage of service revenues

for the entertainment segment was 74% for the three months ended June 30, 2024 as compared to 77% for the three months ended June 30,

gross profit for the three months ended June 30, 2024 and 2023 was $242,392 and $2,737,040, respectively, a decrease of $2,494,648 (91%).

months ended September 30, 2024, compared to the three months ended September 30, 2023.

Cost of service revenues as a percentage of service

revenues for the entertainment segment was 74% for the three months ended September 30, 2024 as compared to 63% for the three months

ended September 30, 2023.

gross profit for the three months ended September 30, 2024 and 2023 was $1,739,974 and $1,226,149, respectively, an increase of $513,825

Gross profit by operating segment was as follows:

For the three months ended

September 30,

Gross Profit:

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Total Gross Profit

overall decrease is attributable to the decrease in gross profit for the entertainment segment for the three months ended June 30, 2024

along with a decrease in the overall cost of sales as a percentage of overall revenues to 96% for the three months ended June 30, 2024

from 67% for the three months ended June 30, 2023.

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

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

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

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

In addition, if revenues from the

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

utilizing fixed manufacturing overhead components.

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

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

overall increase is attributable to the improvement in gross profit generated by the video solutions and entertainment segments for the

three months ended September 30, 2024 compared to 2023 along with a decrease in the overall cost of sales as a percentage of overall

revenues to 57% for the three months ended September 30, 2024 from 81% for the three months ended September 30, 2023.

Our goal is to

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

In addition, if revenues from the video solutions segment increase, we will seek to further improve our margins from this segment through

expansion and increased efficiency utilizing fixed manufacturing overhead components.

We plan to continue our initiative to more efficiently

management of our supply chain through outsourcing production, quantity purchases and more effective purchasing practices.

General and Administrative Expenses

general and administrative expenses were $4,156,613 and $7,677,744 for the three months ended June 30, 2024 and 2023, respectively, a

decrease of $3,521,131 (46%).

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

Our selling, general and administrative expenses as a percentage of sales decreased to 74% for the three months ended June 30,

general and administrative expenses were $9,122,273 and $6,374,192 for the three months ended September 30, 2024 and 2023,

respectively, an increase of $2,748,081 (43%).

The increase was primarily attributable to the goodwill and intangible asset

impairment charge recorded during the 2024 period offset by a reduction in new sponsorships being entered into by the Company.

selling, general and administrative expenses as a percentage of sales increased to 225% for the three months ended September 30,

2024 compared to 101% in the same period in 2023.

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

For the three months ended June 30,

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

For the three months ended

September 30,

Research and development expense

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General and administrative expense

Goodwill and intangible asset impairment charge

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 $545,776 and $540,276 for the three months ended June 30, 2024 and 2023, respectively.

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.

Our research and development expenses totalled $210,818 and $564,146 for the three months ended September

30, 2024 and 2023, respectively which represents a decrease of $353,328 (63%).

We have focused on controlling our expenditures on bringing

new products to market, including updates and improvements to current products in response to our decline in revenues.

The decrease in

research and development expense reflects the large cut-back in our engineering staff and research activities in order to right-size

our expenses in this area with our revenues.

advertising and promotional expenses.

Selling, advertising and promotional expense totaled $728,906 and $2,104,625 for the three

months ended June 30, 2024 and 2023, respectively, a decrease of $1,357,719 (65%).

Promotional and advertising expenses represent the

primary component of these costs and totaled $387,179 during the three months ended June 30, 2024, compared to $1,654,593 during the

three months ended June 30, 2023, a decrease of $1,267,414 (77%).

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.

Selling, advertising and promotional expense totalled $414,727 and $1,932,982 for the three

months ended September 30, 2024 and 2023, respectively, a decrease of $1,518,255 (79%).

The decrease in selling, advertising and promotional

expenses reflects the large cut-back in selling staff and promotional and advertising activities in order to right-size our expenses

in this area with our revenues.

In addition, the decrease is attributable to the reduction in new sponsorships being entered into by

the Company and its subsidiary TicketSmarter.

and administrative expense .

General and administrative expenses totaled $2,881,931 and $5,032,843 for the three months ended

June 30, 2024 and 2023, respectively.

The decrease in general and administrative expenses in the three months ended June 30, 2024 compared

to the same period in 2023 is primarily attributable to a decrease in administrative salaries and reductions in headcount.

administrative expenses also decreased due to a decline in travel expenses and legal and professional expenses for the three months ended

June 30, 2024 compared to the same period in 2023.

the reasons stated above, our operating loss was $3,914,221 and $4,940,704 for the three months ended June 30, 2024 and 2023, respectively,

an improvement of $1,026,483 (21%).

Operating loss as a percentage of revenues increased to 70% in the three months ended June 30, 2024

General and administrative expenses totalled $3,666,728 and $3,877,064 for the three months ended

September 30, 2024 and 2023, respectively.

The decrease in general and administrative expenses in the three months ended September 30,

2024 compared to the same period in 2023 is primarily attributable to a decrease in administrative salaries and reductions in headcount

in order to right-size our expenses in this area with our revenues.

The decrease in general and administrative expenses was offset by

a substantial increase legal and professional expenses for the three months ended September 30, 2024 compared to the same period in 2023

due to the failed merger with CloverLeaf and various capital raises we have undertaken.

Goodwill and intangible

asset impairment charge.

We performed an interim impairment test as of the last day of the fiscal

third quarter of 2024 as management determined that a triggering event had occurred resulting from the additional decline in

demand for our services, prolonged economic uncertainty, the fact that the split-off transaction did not occur when and as expected and

a further decrease in our stock price.

Therefore, we performed an interim impairment test as of the September 30,

2024 for our reporting units with remaining goodwill.

As a result of our September

30, 2024 interim impairment test, we concluded that the carrying amount of the revenue cycle management and entertainment

reporting units exceeded their estimated fair value.

Thus, we recorded a non-cash goodwill impairment charge of $4,322,000,

representing a portion of the goodwill balance for the revenue cycle management segment, which was included in goodwill and

intangible asset impairment charge on our Condensed Consolidated Statements of Operations for the three and nine months

ended September 30, 2024.

In addition, we recorded a non-cash goodwill impairment charge of $307,000, representing

a portion of the goodwill balance for the entertainment segment, which was included in goodwill and intangible asset impairment charge

on our Condensed Consolidated Statements of Operations for the three months ended September 30, 2024.

The goodwill impairment was

primarily driven by recent performance of the entertainment reporting unit since our annual impairment testing date,

as well as a delay in the projected timing of recovery.

During the three months ended

September 30, 2024, we concluded that the carrying amount of a trade name/trademark related to the entertainment segment exceeded

its estimated fair value and we recorded a non-cash impairment charge of $201,000, which was included in goodwill and

intangible asset impairment charge on our Condensed Consolidated Statements of Operations for the three months ended

September 30, 2024.

The charge was primarily driven by the split-off transaction not being completed when and as expected and our

recent revenue performance of the related business given a decline in demand and overall economic uncertainty.

The remaining

balance for this trade name/trademark was $699,000 as of September 30, 2024.

the reasons stated above, our operating loss was $7,382,299 and $5,148,043 for the three months ended September 30, 2024 and 2023, respectively,

an increase of $2,234,256 (43%).

Operating loss as a percentage of revenues improved to 182% in the three months ended September 30,

2024 from 81% in the same period in 2023.

income decreased to $29,933 for the three months ended June 30, 2023, from $55,730 in the same period of 2024, which reflects our change

in cash and cash equivalent levels in the second quarter of 2024 compared to the second quarter of 2023.

incurred interest expenses of $1,085,063 and $1,515,509 during the three months ended June 30, 2024 and 2023, respectively.

is attributable to the convertible note issued in the second quarter of 2023, along with a reduction in the contingent earn-out notes

associated with the four Nobility Healthcare acquisitions partially offset by merchant advances issued in 2024.

income increased slightly to $13,775 for the three months ended September 30, 2024, from $12,986 in the same period of 2024.

incurred interest expenses of $771,846 and $959,898 during the three months ended September 30, 2024 and 2023, respectively.

decrease is attributable to the pay-off of the building loan from proceeds of sale of the building and by a reduction and pay-off of the contingent earn-out notes

associated with the four Nobility Healthcare acquisitions in 2024.

income (loss)

income (loss) decreased to $8,920 for the three months ended September 30, 2024, from $25,394 during the three months ended September

30, 2023, which reflects a reduction in rental income related to a warehouse lease within the corporate headquarters that was terminated

when the building was sold.

in Fair Value of Derivative Liabilities

9 unchanged sentences

The change in fair value of the warrant derivative liabilities

from March 31, 2024, to June 30, 2024, totaled $2,818, as a result a loss was recognized in the income statement for the three months ended June 30, 2024.

on Extinguishment of debt

the second quarter of 2024, the Company refinanced its merchant advance loan and determined the refinancing of the debt should be treated

as a debt extinguishment.

As a result, the Company recorded a loss of $68,827 on the extinguishment during the three months ended June

on accrual for legal settlement

Company recognized a loss on accrual for legal settlement of $-0- and $1,792,308 during the three months ended June 30, 2024 and 2023,

respectively.

This is in connection with the ongoing lawsuit with Culp McCauley, Inc.

on conversion of convertible debt

Company recognized a loss on conversion of convertible debt of $-0- and $93,386 during the three months ended June 30, 2024 and 2023,

respectively.

This is in connection with the convertible note issued during the three months ended June 30, 2023 and the conversion from

debt to equity during the period.

income (loss)

income (loss) increased to $30,445 for the three months ended June 30, 2024, from $25,394 during the three months ended June 30, 2023,

which reflects income related to a warehouse lease within the corporate headquarters.

from July 1, 2024, to September 30, 2024, totalled $2,530,675 which was recognized as income in the third quarter of 2024.

on Extinguishment of Liabilities

the third quarter of 2024, the Company negotiated a termination of its lease on its former headquarters.

As a result, the Company recorded

a gain of $9,385 on the termination during the three months ended September 30, 2024.

Loss on Extinguishment of Debt

On March 1, 2024, the Company obtained a short-term merchant advance, which totalled $1,000,000, from a single lender

to fund operations.

The Company modified/amended the underlying loan agreement twice during the three months ended September 30, 2024.

The modifications were both deemed to be extinguishments of debt resulting in a $310,505 total loss during the three and nine months ended

September 30, 2024.

on Sale of Property, Plant and Equipment

the three months ended September 30, 2024, the Company sold its building for $5,900,000 less closing costs of $7,194.

The carrying amount

of the building on the date of sale was $5,461,623.

As a result of the sale the Company recorded a gain of $431,183 in the Consolidated

Statement of Operation during the three months ended September 30, 2024.

before Income Tax Benefit

a result of the above results of operations, we reported a loss before income tax benefit of $5,470,712, and $3,679,043 for the three

months ended June 30, 2024 and 2023, respectively, a decrease of $3,309,998 (40%).

did not record an income tax expense related to our income for the three months ended June 30, 2024 due to our overall net operating

months ended September 30, 2024 and 2023, respectively, an increase of $1,791,669 (49%).

did not record an income tax expense related to our income for the three months ended September 30, 2024 due to our overall net operating

loss carryforwards available.

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

as of June 30, 2023.

as of September 30, 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 June 30, 2024 available to offset future net taxable income.

a result of the above results of operations, we reported a net loss of $5,010,551 and $8,320,549 for the three months ended June 30,

2024 and 2023, respectively, a decrease of $3,309,998 (40%).

Income 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 of Nobility Healthcare which is reflected in the statement of income as “net

tax credit carryforwards as of September 30, 2024 available to offset future net taxable income.

a result of the above results of operations, we reported a net loss of $5,470,712, and $3,679,043 for the three months ended September

30, 2024 and 2023, respectively, an increase of $1,791,669 (49%).

Income Attributable to Noncontrolling Interests of Consolidated Subsidiary

We reported net income attributable to noncontrolling

interests of consolidated subsidiary of $73,310 and $72,755 for the three months ended June 30, 2024 and 2023, respectively.

Company owns a 51% equity interest in its consolidated, 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 (income) attributable to noncontrolling interests of consolidated

subsidiary of $2,000,206 and $(29,630) for the three months ended September 30, 2024 and 2023, respectively.

Loss Attributable to Common Stockholders

a result of the above, we reported a net loss attributable to common stockholders of $5,083,861 and $8,393,304 for the three months

June 30, 2024 and 2023, respectively, an improvement of $3,309,443 (39%).

a result of the above, we reported a net loss attributable to common stockholders of $3,470,506 and $3,708,673 for the three months September

30, 2024 and 2023, respectively, an improvement of $238,167 (6%).

and Diluted Loss per Share

basic and diluted loss per share was $1.74 and $3.01 for the three months ended June 30, 2024 and 2023, respectively.

Basic loss per

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

For the three months ended June 30, 2024

and 2023, all shares issuable upon conversion of convertible debt and the exercise of outstanding stock options and warrants were antidilutive,

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

the Six Months Ended June 30, 2024 and 2023

basic and diluted loss per share was $0.91 and $1.32 for the three months ended September 30, 2024 and 2023, respectively.

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

For the three months ended September

30, 2024 and 2023, 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, 2024 and 2023

of Operations

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

ended June 30, 2024 and 2023, represented as a percentage of total revenues for each such quarter:

For the six months ended June 30,

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, 2024 and 2023, represented as a percentage of total revenues for each such quarter:

For the nine months ended

September 30,

Cost of revenue

3 unchanged sentences

General and administrative expense

Goodwill and intangible asset impairment charge

Total selling, general and administrative expenses

4 unchanged sentences

Gain on extinguishment of liabilities

Loss on extinguishment of debt

Gain on sale of property, plant and equipment

Other income and interest income (expense), net

1 unchanged sentence

Income tax (provision)

Net income/(loss)

Net loss attributable to noncontrolling interests of consolidated subsidiary

Net loss attributable to common stockholders

Net loss per share information:

Net income (loss) attributable to common stockholders

Net income/(loss) per share information:

revenues by operating segment is as follows:

For the six months ended June 30,

For the nine months ended

September 30,

Product Revenues:

3 unchanged sentences

Total Product Revenues

revenues for the six months ended June 30, 2024 and 2023 were $3,773,447 and $5,531,469 respectively, a decrease of $1,758,022 (32%),

revenues for the nine months ended September 30, 2024 and 2023 were $4,577,392 and $7,626,706 respectively, a decrease of $3,049,314

(40%), due to the following factors:

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

new entertainment operating segment generated $2,431,320 in product revenues for the six months ended June 30, 2024, compared to

$3,189,847 for the six months ended June 30, 2023.

This product revenue relates to the first Country Stampede music festival held

by Kustom, as well as 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 $1,342,127 during the six months ended June 30, 2024

compared to $2,341,622 for the six months ended June 30, 2023.

new entertainment operating segment generated $2,929,019 in product revenues for the nine months ended September 30, 2024, compared

to $4,307,891 for the nine months ended September 30, 2023.

This product revenue relates to the first Country Stampede music festival

held by Kustom during 2024, as well as the resale of tickets purchased for live events, sporting events, concerts, and theatre, then

sold through various platforms to customers.

The decrease in revenues is attributable to a reduction in scope of primary ticket sales

by Ticketsmarter as it focuses on higher margin events to improve its gross margins.

Company’s video segment operating segment generated revenues totalling $1,648,373 during the nine months ended September 30,

2024 compared to $3,318,81 for the nine months ended September 30, 2023.

In general, our video solutions operating segment has experienced

2 unchanged sentences

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

2023 due to price-cutting and competitive actions by our competitors, adverse marketplace effects related to our patent litigation

proceedings and our recent financial condition.

2023 due to the Company not having inventory in–stock to fulfill existing backlog orders, price-cutting and competitive actions

by our competitors and adverse marketplace effects related to our recent financial condition.

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

11 unchanged sentences

and other revenues by operating segment is as follows:

For the six months ended

For the nine months ended

September 30,

Service and Other Revenues:

3 unchanged sentences

Total Service and Other Revenues

and other revenues for the six months ended June 30, 2024 and 2023 were $7,372,139 and $10,445,351, respectively, a decrease of $3,073,212

and other revenues for the nine months ended September 30, 2024 and 2023 were $10,619,905 and $14,687,813, respectively, a decrease of

$4,067,908 (28%), due to the following factors:

revenues generated by the video solutions operating segment were $1,254,275 and $894,773 for the six months ended June 30, 2024 and

2023, respectively, an increase of $359,502 (40%).

We have experienced increased interest in our cloud solutions for law enforcement

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

contributed to our increased cloud revenues in the six months ended June 30, 2023.

revenues generated by the video solutions operating segment were $1,964,038 and $1,421,174 for the nine months ended September 30,

2024 and 2023, respectively, an increase of $542,864 (38%).

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, 2023.

We expect this trend to continue throughout

2024 as the migration from local storage to cloud storage continues in our customer base.

solutions operating segment revenues from extended warranty services were $464,007 and $433,074 for the six months ended June 30,

2024 and 2023, respectively, an increase of $30,933 (7%).

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 $2,411,351 and $5,481,659 for the six months ended June 30, 2024

solutions operating segment revenues from extended warranty services were $605,723 and $659,130 for the nine months ended September

30, 2024 and 2023, respectively, a decrease of $53,407 (8%).

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 fluctuate as we look right-size this segment and work towards profitability.

revenue cycle management operating segment generated service revenues totaling $2,998,952 and $3,506,361 for the six months ended

June 30, 2024 and 2023, respectively, a decrease of $507,409 (15%).

This correlates with the decrease in product revenue during the period.

entertainment operating segment generated service revenues totalling $3,167,208 and $7,267,424 for the nine months ended September

30, 2024 and 2023, respectively, a decrease of $4,100,216 (56%).

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 fluctuate as we look right-size this segment and work towards profitability.

Our entertainment segment

has focused on cost cutting and overall improvements in gross margin rather than top line revenues which has resulted in a reduction

in revenues for ticketing events that did not meet its gross margin goals.

revenue cycle management operating segment generated service revenues totalling $4,600,745 and $5,142,904 for the nine months ended

September 30, 2024 and 2023, respectively, a decrease of $542,159 (11%).

Our revenue cycle management operating segment has completed

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

June 30, 2023.

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

to healthcare organizations throughout the country.

The slight decrease in revenue is due to refinement within one of the recent

acquisitions, as they strive to maximize profitability rather than focus on top line revenue.

revenues for the six months ended June 30, 2024 and 2023 were $11,145,586 and $15,976,820, respectively, a decrease of $4,831,234 (30%),

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

September 30, 2024 and 2023.

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

services to healthcare organizations throughout the country.

The slight decrease in revenue is due to refinement within one of the

recent acquisitions, as they strive to maximize profitability rather than focus on top line revenue.

revenues for the nine months ended September 30, 2024 and 2023 were $15,197,297 and $22,314,519, respectively, a decrease of $7,117,222

(32%), due to the reasons noted above.

of Product Revenue

cost of product revenue sold for the six months ended June 30, 2024, and 2023 was $4,986,647 and $4,520,616, respectively, an increase

of $466,031 (10%).

Overall cost of goods sold for products as a percentage of product revenues for the six months ended June 30, 2024,

and 2023 were 132% and 82%, respectively.

Overall cost of product revenue sold for the nine months ended September 30, 2024, and 2023 was $5,534,209 and $7,108,366, respectively,

a decrease of $1,574,157 (22%).

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

September 30, 2024, and 2023 were 121% and 93%, respectively.

Cost of products sold by operating segment is as follows:

For the six months ended

For the nine months ended

September 30,

Cost of Product Revenues:

4 unchanged sentences

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

the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

In addition, the video solutions segment recorded

valuation allowances for its older product lines and a portion of its Shield products during the first six months of 2023, directly increasing

cost of goods sold for the period.

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

to 131% for the six months ended June 30, 2024 as compared to 79% for the six months ended June 30, 2023.

the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

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 2023,

directly increasing cost of goods sold for the period.

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

segment remained steady at 116% for the nine months ended September 30, 2024 as compared to 110% for the nine months ended September

increase in entertainment operating segment cost of product sold was driven by the costs of the Country Stampede music festival for the

six months ended June 30, 2024 compared to June 30, 2023, resulting in cost of product revenue of $3,230,691 for the six months ended

June 30, 2024, compared to $2,677,633 for the six months ended June 30, 2023.

Cost of product sold as a percentage of product revenues

for the entertainment segment was 133% for the three months ended June 30, 2024 as compared to 84% for the six months ended June 30,

recorded $4,135,001 and $4,542,461 in reserves for obsolete and excess inventories at June 30, 2024 and December 31, 2023, respectively.

Total raw materials, component parts, and work-in-progress were $2,630,162 and $3,065,049 at June 30, 2024 and December 31, 2023, respectively,

a decrease of $434,887 (14%).

Finished goods balances were $3,722,972 and $5,322,693 at June 30, 2024 and December 31, 2023, respectively,

a decrease of $1,599,721 (30%) 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 decrease

in reserve at the entertainment segment.

We believe the reserves are appropriate given our inventory levels as of June 30, 2024.

nine months ended September 30, 2024 compared to September 30, 2023, resulting in cost of product revenue of $3,620,853 for the nine

months ended September 30, 2024, compared to $3,449,876 for the nine months ended September 30, 2023.

Cost of product sold as a percentage

of product revenues for the entertainment segment was 124% for the three months ended September 30, 2024 as compared to 80% for the nine

months ended September 30, 2023.

of Service Revenue

cost of service revenue sold for the six months ended June 30, 2024, and 2023 was $4,395,109 and $7,174,375, respectively, a decrease

of $2,779,266 (39%).

Overall cost of goods sold for services as a percentage of service revenues for the six months ended June 30, 2024,

and 2023 were 60% and 69%, respectively.

Overall cost of service revenue sold for the nine months ended September 30, 2024, and 2023 was $6,159,284 and $9,698,175, respectively,

a decrease of $3,538,891 (36%).

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

September 30, 2024, and 2023 were 58% and 66%, respectively.

Cost of service revenues by operating segment is as follows:

For the six months ended

For the nine months ended

September 30,

Cost of Service Revenues:

3 unchanged sentences

Total Cost of Service Revenues

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

months ended June 30, 2024 compared to the six months ended June 30, 2023.

Cost of service revenues as a percentage of service revenues

for the video solutions segment decreased to 35% for the six months ended June 30, 2024 as compared to 44% for the six months ended June

decrease 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, 2024 compared to the nine months ended September 30, 2023.

Cost of service revenues as a percentage of service

revenues for the video solutions segment decreased to 34% for the nine months ended September 30, 2024 as compared to 45% for the nine

months ended September 30, 2023.

The improved cost of service revenues as a percentage of service revenues reflects the results of cost

cutting efforts and head-count reductions implemented in 2024 to improve our operating results.

revenue cycle management operating segment cost of service revenue was consistent with the prior period.

Cost of service revenues as

a percentage of service revenues for the revenue cycle management operating segment was 65% for the six months ended June 30, 2024 as

compared to 55% for the six months ended June 30, 2023.

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

months ended June 30, 2024 compared to the six months ended June 30, 2023.

Cost of service revenues as a percentage of service revenues

for the entertainment operating segment was 73% for the six months ended June 30, 2024 as compared to 84% for the six months ended June

gross profit for the six months ended June 30, 2024 and 2023 was $1,763,830 and $4,281,829, respectively, a decrease of $2,517,999 (59%).

a percentage of service revenues for the revenue cycle management operating segment was 62% for the nine months ended September 30, 2024

as compared to 57% for the nine months ended September 30, 2023.

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

months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Cost of service revenues as a percentage of service

revenues for the entertainment operating segment was 73% for the nine months ended September 30, 2024 as compared to 79% for the nine

months ended September 30, 2023.

gross profit for the nine months ended September 30, 2024 and 2023 was $3,503,804 and $5,507,978, respectively, a decrease of $2,004,174

Gross profit by operating segment was as follows:

For the six months ended

For the nine months ended

September 30,

Gross Profit:

3 unchanged sentences

Total Gross Profit

overall decrease is attributable to the overall decrease in revenues for the six months ended June 30, 2024 and an increase in the overall

cost of sales as a percentage of overall revenues to 84% for the six months ended June 30, 2024 from 73% for the six months ended June

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, ShieldTM disinfectants and our cloud evidence storage and management offering, provided

that they gain traction in the marketplace.

In addition, if revenues from the video solutions segment increase, we will seek to further

improve our margins from this segment through expansion and increased efficiency utilizing fixed manufacturing overhead components.

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

more effective purchasing practices.

overall decrease is attributable to the overall decrease in revenues for the nine months ended September 30, 2024 and an increase in

the overall cost of sales as a percentage of overall revenues to 77% for the nine months ended September 30, 2024 from 75% for the nine

months ended September 30, 2023.

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, ShieldTM disinfectants and our cloud evidence storage and

management offering, provided that they gain traction in the marketplace.

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

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

overhead components.

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

quantity purchases and more effective purchasing practices.

General and Administrative Expenses

general and administrative expenses were $9,317,023 and $15,395,340 for the six months ended June 30, 2024 and 2023, respectively, a

decrease of $6,078,317 (39%).

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

Our selling, general and administrative expenses as a percentage of sales decreased to 84% for the six months ended June 30,

2024 compared to 96% in the same period in 2023.

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

For the six months ended

Selling, general and administrative

expenses were $18,439,296 and $21,769,532 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $3,330,236

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

and intangible asset impairment charge.

Our selling, general and administrative expenses as a percentage of sales increased to 121% for

the nine months ended September 30, 2024 compared to 98% in the same period in 2023.

The significant components of selling, general and

administrative expenses are as follows:

For the nine months ended

September 30,

Research and development expense

1 unchanged sentence

General and administrative expense

Goodwill and intangible asset impairment charge

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 $1,033,242 and $1,475,215 for the six months ended June 30, 2024 and 2023, respectively,

a decrease of $441,973 (30%).

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.

Our research and development expenses totalled $1,244,060 and $2,039,361 for the nine months ended September

30, 2024 and 2023, respectively which represents a decrease of $795,301 (39%).

We have focused on controlling our expenditures on bringing

new products to market, including updates and improvements to current products in response to our decline in revenues.

The decrease in

research and development expense reflects the large cut-back in our engineering staff and research activities in order to right-size

our expenses in this area with our revenues.

advertising and promotional expenses.

Selling, advertising and promotional expense totaled $1,487,762 and $3,952,115 for the

six months ended June 30, 2024 and 2023, respectively, a decrease of $2,464,353 (62%).

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.

Selling, advertising and promotional expense totalled $1,902,489 and $5,885,097 for the

nine months ended September 30, 2024 and 2023, respectively, a decrease of $3,982,608 (68%).

The decrease in selling, advertising and

promotional expenses reflects the large cut-back in selling staff and promotional and advertising activities in order to right-size our

expenses in this area with our revenues.

In addition, the decrease is attributable to the reduction in new sponsorships being entered

into by the Company and its subsidiary TicketSmarter.

and administrative expense .

General and administrative expenses totaled $6,796,019 and $9,968,010 for the six months ended June

30, 2024 and 2023, respectively, a decrease of $3,171,991 (32%).

The decrease in general and administrative expenses in the six months

ended June 30, 2024 compared to the same period in 2023 is primarily attributable to a decrease in administrative salaries and headcount.

General and administrative expenses also decreased due to a decline in rent expenses, and legal and professional expenses for the six

months ended June 30, 2024 compared to the same period in 2023.

the reasons stated above, our operating loss was $7,553,193 and $11,113,511 for the six months ended June 30, 2024 and 2023, respectively,

an improvement of $3,560,318 (32%).

Operating loss as a percentage of revenues changed to 68% in the six months ended June 30, 2024 from

70% in the same period in 2023.

income decreased to $49,289 for the six months ended June 30, 2024, from $71,085 in the same period of 2023, which reflects our change

in cash and cash equivalent levels in the second quarter of 2024 compared to the second quarter of 2023.

The Company held significant

cash and cash equivalents throughout the second quarter of 2023, allowing a full six months of interest income.

incurred interest expense of $1,733,690 and $1,521,049 during the six months ended June 30, 2024 and 2023, respectively.

is attributable additional debt issued in the second half of 2023 and 2024 partially offset by the convertible note entered into in the

second quarter of 2023, and the contingent earn-out notes associated with the four Nobility Healthcare acquisitions.

General and administrative expenses totalled $10,462,747 and $13,845,074 for the nine months ended

September 30, 2024 and 2023, respectively.

The decrease in general and administrative expenses in the three months ended September 30,

2024 compared to the same period in 2023 is primarily attributable to a decrease in administrative salaries and reductions in headcount

in order to right-size our expenses in this area with our revenues.

The decrease in general and administrative expenses was offset by

a substantial increase legal and professional expenses for the nine months ended September 30, 2024 compared to the same period in 2023

due to the failed merger with CloverLeaf and various capital raises we have undertaken.

Goodwill and intangible

asset impairment charge.

We performed an interim impairment test as of the last day of the fiscal

third quarter of 2024 as management determined that a triggering event had occurred resulting from the additional decline in

demand for our services, prolonged economic uncertainty, the fact that the split-off transaction did not occur when and as expected and

a further decrease in our stock price.

Therefore, we performed an interim impairment test as of the September 30,

2024 for our reporting units with remaining goodwill.

As a result of our September

30, 2024 interim impairment test, we concluded that the carrying amount of the revenue cycle management and entertainment

reporting units exceeded their estimated fair value.

Thus, we recorded a non-cash goodwill impairment charge of $4,322,000,

representing a portion of the goodwill balance for the revenue cycle management segment, which was included in goodwill and

intangible asset impairment charge on our Condensed Consolidated Statements of Operations for the three and nine months

ended September 30, 2024.

In addition, we recorded a non-cash goodwill impairment charge of $307,000, representing

a portion of the goodwill balance for the entertainment segment, which was included in goodwill and intangible asset impairment charge

on our Condensed Consolidated Statements of Operations for the nine months ended September 30, 2024.

The goodwill impairment was

primarily driven by recent performance of the entertainment reporting unit since our annual impairment testing date,

as well as a delay in the projected timing of recovery.

the three months ended September 30, 2024, we concluded that the carrying amount of a trade name/trademark related to the

entertainment segment exceeded its estimated fair value and we recorded a non-cash impairment charge of $201,000,

which was included in goodwill and intangible asset impairment charge on our Condensed Consolidated

Statements of Operations for the nine months ended September 30, 2024.

The charge was primarily driven by

the split-off transaction not being completed when and as expected and our recent revenue performance of the related

business given a decline in demand and overall economic uncertainty.

The remaining balance for this trade name/trademark was

$699,000 as of September 30, 2024.

For the reasons stated above,

our operating loss was $14,935,492 and $16,261,554 for the nine months ended September 30, 2024 and 2023, respectively, an improvement

of $1,326,062 (8%).

Operating loss as a percentage of revenues changed to 98% in the nine months ended September 30, 2024 from 73% in

the same period in 2023.

income decreased to $63,064 for the nine months ended September 30, 2024, from $84,071 in the same period of 2023, which reflects our

change in cash and cash equivalent levels during the nine months ended September 30, 2024 compared to the same period in 2023.

held higher levels of cash and cash equivalents during the nine months ended September 30, 2023.

incurred interest expense of $2,505,536 and $2,480,947 during the nine months ended September 30, 2024 and 2023, respectively.

increase is attributable additional debt issued in late 2023 and during the nine months ended September 30, 2024 partially offset by

the conversion of the convertible notes entered into in the second quarter of 2023, the payoff of the building debt upon sale of the

building and the pay-off of the contingent earn-out notes associated with the four Nobility Healthcare acquisitions.

income (expense)

income (expense) decreased to $66,966 for the nine months ended September 30, 2024, from $76,180 during the nine months ended September

30, 2023, which reflects income related to a warehouse lease within the corporate headquarters which ceased in 2024 upon the sale of

the building.

in Fair Value of Derivative Liabilities

9 unchanged sentences

The change in fair value of the warrant derivative liabilities

from December 31, 2023, to June 30, 2024, totaled $351,710 which was recognized as expense in the second quarter of 2024.

from December 31, 2023, to September 30, 2024, totalled $2,178,965 which was recognized as income during the nine months ended September

on Extinguishment of Liabilities

the second quarter of 2024, the Company recorded a gain on the extinguishment of liabilities for the six months ended June 30,

2024 of $682,345, which reflects income related to the video segment’s ability to negotiate down payables and contract

liabilities during the period.

on Extinguishment of debt

the second quarter of 2024, the Company refinanced its merchant advance loan and determined the refinancing of the debt should be treated

as a debt extinguishment.

As a result, the Company recorded a loss of $68,827 on the extinguishment during the six months ended June

on sale of fixed asset

Company recorded a loss on sale of fixed assets of $41,661 and $-0- for the six months ended June 30, 2024 and 2023.

Company recorded a gain on the extinguishment of liabilities for the nine months ended September 30, 2024 of $682,345, which

reflects income related to the video segment’s ability to negotiate down payables and contract liabilities during the period.

In addition, the Company negotiated a termination of its lease on its former headquarters which resulted in a gain of $9,385 on the

termination during the nine months ended September 30, 2024.

gain on extinguishment of liabilities was $507,304 for the nine months ended September 30, 2023, which reflects income related to the

entertainment segment’s ability to negotiate down payables and contract liabilities during the period.

The Company utilized funds

from the related party note payable to resolve numerous outstanding payables at a discounted rate, the discount received was recognized

as a gain on extinguishment of liabilities in the statement of operations for the nine months ended September 30, 2023.

Loss on Extinguishment of Debt

On March 1, 2024, the Company obtained a short-term merchant advance for its entertainment segment, which totalled

$1,000,000, from a single lender to fund operations.

The Company modified/amended the underlying loan agreement twice during the nine

months ended September 30, 2024.

The modifications were both deemed to be extinguishments of debt resulting in a $310,505 total loss during

the three and nine months ended September 30, 2024.

During the nine months ended September 30, 2024, the Company refinanced its merchant advance loan for its video segment

and determined the refinancing of the debt should be treated as a debt extinguishment.

As a result, the Company recorded a loss of $68,827

on the extinguishment during the nine months ended September 30, 2024.

on Sale of Property, Plant and Equipment

the nine months ended September 30, 2024, the Company sold its building for $5,900,000 less closing costs of $7,194.

The carrying amount

of the building on the date of sale was $5,461,623.

As a result of the sale the Company recorded a gain of $431,183 in the Consolidated

Statement of Operation during the nine months ended September 30, 2024.

This amount was offset by a separate loss on sale of fixed assets

of $41,661 for the nine months ended September 30, 2024.

on accrual for legal settlement

Company recognized a loss on accrual for legal settlement of $-0- and $1,792,308 during the six months ended June 30, 2024 and 2023,

Company recognized a loss on accrual for legal settlement of $-0- and $1,792,308 during the nine months ended September 30, 2024 and

2023, respectively.

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on conversion of convertible debt

Company recognized a loss on conversion of convertible debt of $-0- and $93,386 during the six months ended June 30, 2024 and 2023, respectively.

This is in connection with the convertible note issued during the six months ended June 30, 2023 and the conversion from debt to equity

during the period.

income increased to $58,046 for the six months ended June 30, 2024, from $50,786 during the six months ended June 30, 2023, which reflects

income related to a warehouse lease within the corporate headquarters.

Company recognized a loss on conversion of convertible debt of $-0- and $93,386 during the nine months ended September 30, 2024 and 2023,

respectively.

This is in connection with the convertible note issued during the nine months ended September 30, 2023 and the conversion

from debt to equity during the period.

in Fair Value of Contingent Consideration Promissory Notes

the nine months ended September 30, 2023, The Company recognized a gain on the change in fair value of contingent consideration promissory

notes of $177,909.

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

There was no similar

transaction during the nine months ended September 30, 2024.

before Income Tax Benefit

a result of the above results of operations, we reported a loss before income tax benefit of $8,953,819 and $14,300,128 for the six

months ended June 30, 2024 and 2023, respectively, an improvement of $5,346,309 (37%).

did not record an income tax expense related to our income for the six months ended June 30, 2024 due to our overall net operating loss

carryforwards available.

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

of June 30, 2024.

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

tax credit carryforwards as of June 30, 2024 available to offset future net taxable income.

a result of the above results of operations, we reported a net loss of $8,953,819 and $14,300,128 for the six months ended June

As a result of the above results

of operations, we reported a loss before income tax benefit of $14,424,531 and $17,979,171 for the nine months ended September 30, 2024

and 2023, respectively, an improvement of $3,554,640 (20%).

Income 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 of Nobility Healthcare which is reflected in the statement of income as “net

did not record an income tax expense related to our income for the nine months ended September 30, 2024 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, 2024.

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, 2024 available to offset future net taxable income.

As a result of the above results

of operations, we reported a net loss of $14,424,531 and $17,979,171 for the nine months ended September 30, 2024 and 2023, respectively,

an improvement of $3,554,640 (20%).

Income Attributable to Noncontrolling Interests of Consolidated Subsidiary

We reported net income attributable to noncontrolling

interests of consolidated subsidiary of $61,063 and $198,994 for the six months ended June 30, 2024 and 2023, respectively.

The Company owns a 51% equity

interest in its consolidated subsidiary, Nobility Healthcare.

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

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

interests of consolidated subsidiary”.

We reported net loss (income) attributable to noncontrolling interests of consolidated subsidiary

of $1,939,143 and $228,624 for the nine months ended September 30, 2024 and 2023, respectively.

Loss Attributable to Common Stockholders

a result of the above, we reported a net loss attributable to common stockholders of $9,014,882 and $14,499,122 for the six months June

30, 2024 and 2023, respectively, an improvement of $5,484,240 (38%).

As a result of the above, we reported

a net loss attributable to common stockholders of $12,485,388 and $18,207,795 for the nine months September 30, 2024 and 2023, respectively,

an improvement of $5,722,407 (31%).

and Diluted Loss per Share

basic and diluted loss per share was $3.12 and $5.24 for the six months ended June 30, 2024 and 2023, respectively.

Basic loss per share

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

For the six months ended June 30, 2024 and

2023, all shares issuable upon conversion of convertible debt and the exercise of outstanding stock options and warrants were antidilutive,

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

basic and diluted loss per share was $3.90 and $6.55 for the nine months ended September 30, 2024 and 2023, respectively.

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

For the nine months ended September

30, 2024 and 2023, 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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cash equivalents:

As of June 30, 2024, we had cash, cash equivalents and restricted cash with an aggregate balance of $614,713,

a decrease from a balance of $778,149 at December 31, 2023.

Summarized immediately below and discussed in more detail in the

subsequent subsections are the main elements of the $163,436 net decrease in cash during the six months ended June 30,

As of September 30, 2024, we had cash and cash equivalents with an aggregate balance of $415,131, a decrease from

a balance of $778,149 (including restricted cash) at December 31, 2023.

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

the main elements of the $363,018 net decrease in cash during the nine months ended September 30, 2024:

of net cash used in operating activities.

Net cash used in operating activities was $3,408,757 and $3,109,986 for the six months

ended June 30, 2024 and 2023, respectively, an increase of $298,771.

The increase is attributable to the net loss and the usage of

cash for operating assets during the six months ended June 30, 2024 compared to the same period in 2023.

Net cash used in operating activities was $4,086,023 and $5,842,158 for the nine months

ended September 30, 2024 and 2023, respectively, a decrease of $1,756,136.

The decrease is attributable to the improved net loss and

the usage of cash for operating assets and liabilities during the nine months ended September 30, 2024 compared to the same period

of net cash provided by investing activities.

Cash provided by investing activities was $36,504 compared to cash used in investing

activities of $126,946 for the six months ended June 30, 2024 and 2023, respectively.

During the six months ended June 30, 2024, we

made expenditures for:

(i) the acquisition of Country Stampede;

and (ii) received proceeds from the sale of our aircraft.

expenditures were partially offset by acquisitions of certain intangibles and property, plant and equipment.

Cash provided by (used in) investing activities was $392,523 and $(197,241) for the nine

months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, we made expenditures or received

cash for the following:

(i) sold our corporate headquarters building for $5,900,000 and received net cash of $425,653 after paying off

the building loan and various other deductions (ii) the acquisition of Country Stampede;

and (iii) received proceeds from the sale of

our aircraft.

net cash provided by financing activities.

Cash provided by financing activities was $3,208,817 and $2,628,614 for the six months

ended June 30, 2024 and 2023, respectively.

During the first six months of 2024, we most notably refinanced a loan resulting in proceeds

of $1,144,000, obtained an additional merchant advance providing proceeds of $915,000 and issued common stock with detachable warrants

resulting in $2,194,742 in net cash proceeds.

The cash proceeds were partially offset by payments on outstanding loans.

had $614,713 of cash and cash equivalents, including restricted cash of $97,600 and net negative working capital of $13,431,836 as of June 30, 2024.

Accounts receivable and

other receivables balances represented $4,889,038 of our net working capital at June 30, 2024.

We intend to collect our outstanding receivables

on a timely basis and reduce the overall level during 2024, which would help to provide positive cash flow to support our operations

Inventory represents $2,218,133 of our net working capital at June 30, 2024.

We are actively managing the level of inventory

and our goal is to reduce such level during the balance of 2024 by our sales activities, the increase of which should provide additional

cash flow to help support our operations during 2024.

Cash provided by financing activities was $3,330,482 and $4,715,031 for the nine months

ended September 30, 2024 and 2023, respectively.

During the first nine months of 2024, we most notably refinanced a loan resulting in

proceeds of $1,144,000, obtained an additional merchant advance providing proceeds of $1,308,837, obtained $1,175,000 in new commercial

extension of credits and issued common stock with detachable warrants resulting in $2,194,745 in net cash proceeds.

The cash proceeds

were partially offset by payments on outstanding loans including the payments on merchant advances.

had $415,131 of cash and cash equivalents and net negative working capital of $13,181,861 as of September 30, 2024.

Accounts receivable

and other receivables balances represented $5,253,535 of our net working capital at September 30, 2024.

We intend to collect our outstanding

receivables on a timely basis and reduce the overall level during 2024, which would help to provide positive cash flow to support our

operations during 2024.

Inventory represents $2,325,118 of our net working capital at September 30, 2024.

We are actively managing the

level of inventory and our goal is to reduce such level during the balance of 2024 by our sales activities, the increase of which should

provide additional cash flow to help support our operations during 2024.

Expenditures:

had the following material commitments for capital expenditures at June 30, 2024:

had the following material commitments for capital expenditures at September 30, 2024:

Total lease expense under the five operating leases was approximately $160,751 and $360,934, during the three and

six months ended June 30, 2024, respectively.

following sets forth the operating lease right of use assets and liabilities as of June 30, 2024:

nine months ended September 30, 2024, respectively.

following sets forth the operating lease right of use assets and liabilities as of September 30, 2024:

Operating lease right of use assets

2 unchanged sentences

Total operating lease obligations

components of lease expense were as follows for the six months ended June 30, 2024:

components of lease expense were as follows for the nine months ended September 30, 2024:

Selling, general and administrative expenses

1 unchanged sentence

Year ending December 31:

2024 (July 1, to December 31, 2024)

2024 (October 1, to December 31, 2024)

Total undiscounted minimum future lease payments

2 unchanged sentences

obligations – Outstanding debt obligations comprises the following:

June 30, 2024

September 30, 2024

December 31, 2023

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Debt obligations, long-term

obligations mature as follows as of June 30, 2024:

June 30, 2024

2024 (July 1, 2024 to December 31, 2024)

obligations mature on an annual basis as follows as of September 30, 2024:

September 30, 2024

2024 (October 1, 2024 to December 31, 2024)

2028 and thereafter

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circumstances.

Our historical bad debts have been negligible, with less than $258,000 charged off as uncollectible on cumulative revenues

of $253.6 million since we commenced deliveries during 2006.

Our historical bad debts have been negligible since we commenced deliveries during 2006.

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

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

consisted of the following at June 30, 2024 and December 31, 2023:

consisted of the following at September 30, 2024 and December 31, 2023:

September 30,

Raw material and component parts– video solutions segment

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As reflected above, our inventory reserves represented

65% of the gross inventory balance at June 30, 2024, compared to 54% of the gross inventory balance at December 31, 2023.

We had $4,135,001

and $4,542,461 in reserves for obsolete and excess inventories at June 30, 2024 and December 31, 2023, respectively.

Total raw materials,

component parts, and work-in-process were $2,630,162 and $3,065,049 at June 30, 2024 and December 31, 2023, respectively, a decrease

of $434,887 (14%).

Finished goods balances were $3,722,972 and $5,322,693 at June 30, 2024 and December 31, 2023, respectively, a decrease

of $1,599,721 (30%).

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

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 June 30, 2024.

65% of the gross inventory balance at September 30, 2024, compared to 54% of the gross inventory balance at December 31, 2023.

$4,222,990 and $4,542,461 in reserves for obsolete and excess inventories at September 30, 2024 and December 31, 2023, respectively.

The 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 September 30, 2024.

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

58 unchanged sentences

and cash flows, as well as assumptions regarding discount rates, the Company’s weighted average cost of capital and other data.

most recent annual impairment test of goodwill was a qualitative analysis conducted as of December 31, 2023 that indicated no impairment.

Subsequent to completing our 2023 annual impairment test, no events or changes in circumstances were noted that required an interim goodwill

impairment test.

Note 1 — Nature of Business and Summary of Significant Accounting Policies and Note 10 — Goodwill and Other

Intangible Assets in the Notes to Consolidated Financial Statements provide additional information regarding the Company’s goodwill

and other intangible assets.

We performed an interim impairment test as of the last

day of the fiscal third quarter of 2024 as management determined that a triggering event had occurred resulting from

the additional decline in demand for our services, prolonged economic uncertainty, the fact that the split-off transaction did not occur

when and as expected and a further decrease in our stock price.

Therefore, we performed an interim impairment test as of the

September 30, 2024 for our reporting units with remaining goodwill.

The fair value of each reporting

unit was estimated using a weighting of the income and market valuation approaches.

The income approach applied a fair value methodology

to each reporting unit based on discounted cash flows.

This analysis requires significant judgments, including estimation of future cash

flows, which is dependent on internally-developed forecasts of revenue and profitability, estimation of the long-term rate of growth for

our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital,

which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested.

The weighted average cost of capital used

in our most recent impairment test ranged from 21% to 32.5%.

We also applied a market approach, which develops a value correlation based

on the market capitalization of similar publicly traded companies, referred to as a multiple, to apply to the operating results of the

reporting units.

The primary market multiples used are revenue and earnings before interest, taxes, depreciation, and amortization.

income and market approaches were equally weighted in our most recent annual impairment test, for all of the reporting units.

The combined fair values for all

reporting units were then reconciled to our aggregate market value of our shares of common stock on the date of valuation, while considering

a reasonable control premium.

We consider a reporting unit’s fair value to be substantially in excess of the reporting unit’s

carrying value at a 20% premium or greater.

Based on our most recent impairment test, the video solutions reporting unit’s fair

value was substantially in excess of its carrying value, while the revenue cycle management and entertainment segments were determined

to be impaired.

We held goodwill of $5,480,966

as of September 30, 2024 and December 31, 2023, related to businesses within our revenue cycle management segment.

We held goodwill of

$6,112,507 and $5,886,548 as of September 30, 2024 and December 31, 2023, respectively, related to businesses within our entertainment

As a result of our September 30, 2024 interim impairment test, we concluded that the carrying amount of the revenue cycle management

and the entertainment reporting units exceeded its estimated fair values.

Thus, we recorded a non-cash goodwill impairment charge of $4,322,000,

related to the goodwill carrying balance for the revenue cycle management segment, and a non-cash goodwill impairment charge of $307,000,

related to the goodwill carrying balance for the entertainment segment, both of which was included in goodwill and intangible asset impairment

charge on our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024.

The goodwill impairment

was primarily driven by recent performance of the revenue cycle management and entertainment reporting units since our annual impairment

testing date, as well as a delay in the projected timing of recovery.

The remaining balance for the goodwill carrying balance related

to businesses within our revenue cycle management segment and entertainment segment was $1,158,966 and $5,805,507, respectively as of

September 30, 2024.

We held indefinite-lived trade

names/trademarks of $900,000 and $600,000 as of September 30, 2024 and December 31, 2023, respectively, related to businesses within our

entertainment segment.

During the three months ended

September 30, 2024, we concluded that the carrying amount of a trade name/trademark related to the entertainment segment exceeded its

estimated fair value and we recorded a non-cash impairment charge of $201,000, which was included in goodwill and intangible asset impairment

charge on our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024.

The charge was primarily

driven by the split-off transaction not being completed when and as expected and our recent revenue and operating performance of the related

business given a decline in demand and overall economic uncertainty.

The remaining balance for this trade name/trademark was $699,000

as of September 30, 2024.

We generally provide up to a two-year parts and labor standard warranty on our products to our customers.

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quality and minimize claims.

Our warranty reserves were decreased to $11,615 as of June 30, 2024 compared to $17,699 as of December 31,

2023 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 our

Our warranty reserves were decreased to $11,615 as of September 30, 2024 compared to $17,699 as of December

31, 2023 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

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

25, 2024, the Company issued Series A and pre-funded warrants to purchase a total of 1,768,227 shares of Common Stock along with the sale

of common stock.

The Company also issued Series B Warrants that will be exercisable at any time or times on or after the date Stockholder

Approval is obtained.

The warrant terms provide for net cash settlement outside the control of the Company 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 consolidated statements of operations as the change

in fair value of warrant derivative liabilities.

Furthermore, the Company re-values the fair value of warrant derivative liability as

of the date the warrant is exercised with the resulting warrant derivative liability transitioned to change in fair value of warrant derivative

liabilities through the consolidated statement of operations.

has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the warrant

derivative liabilities as of their date of issuance and as of June 30, 2024:

date assumptions

contractual term

Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the

warrant derivative liability as of their date of issuance and as of September 30, 2024:

September 30, 2024

Volatility - range

Risk-free rate

Remaining contractual term

Exercise price

issuable under the warrants

The following table summarizes

information about shares issuable under warrants outstanding during the six months ended June 30, 2024:

$ 5.50 – 7.50

Common stock issuable under the warrants

June 25, 2024, the Company issued warrants to purchase a total of 1,195,219 shares of Common Stock.

The warrant terms provide for net

cash settlement outside the control of the Company 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 consolidated statements of operations as the change in fair value of warrant derivative liabilities.

the Company re-values the fair value of warrant derivative liability as of the date the warrant is exercised with the resulting warrant

derivative liability transitioned to change in fair value of warrant derivative liabilities through the consolidated statement of operations.

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 September 30, 2024:

September 30, 2024

Volatility – range

72.1 - 101.1 %

Risk-free rate

4.25 – 5.46 %

Remaining contractual term

0.1 - 5.0 years

Exercise price

Vested Balance,

December 31, 2023

Forfeited/cancelled

Balance, June 30, 2024

Common stock issuable under the warrants

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 no stock options granted during the three or six months ended June 30, 2024.

and there were no stock options granted during the three or nine months ended September 30, 2024.

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

21 unchanged sentences

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

As of June 30, 2023, we have fully reserved all of our deferred tax

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

be increased by $17,220,000 to a balance of $34,200,000 to fully reserve our deferred tax assets at December 31, 2023.

As of September 30, 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 increased by $17,220,000 to a balance of $34,200,000 to fully reserve our deferred tax assets at December 31, 2023.

We determined

that it was appropriate to continue to provide a full valuation reserve on our net deferred tax assets as of June 30, 2024, because of

the overall net operating loss carryforwards available.

that it was appropriate to continue to provide a full valuation reserve on our net deferred tax assets as of September 30, 2024, because

of the overall net operating loss carryforwards available.

We expect to continue to maintain a full valuation allowance until we determine

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financial reporting purposes.

We have no recorded liability as of June 30, 2024 representing uncertain tax positions.

We have no recorded liability as of September 30, 2024 representing uncertain tax positions.

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

22 unchanged sentences

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