What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-15 compared with 2025-11-12 · 638 added, 1007 removed, 344 unchanged (83% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operation.

quarterly report on Form 10-Q (the “Report”) of Digital Ally, Inc.

(the “Company”, “we”, “us”,

or “our”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,

and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The words “aim,” “anticipate,”

“believe,” “continue,” “could,” “estimate,” “expect,” “feel,”

“forecast,” “intend,” “may,” “outlook,” “plan,” “potential,”

quarterly report on Form 10-Q (the “Report”) of Kustom Entertainment, Inc.

(the “Company”, “we”,

“us”, or “our”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of

1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The words “aim,”

“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”

“feel,” “forecast,” “intend,” “may,” “outlook,” “plan,” “potential,”

“predict,” “project,” “seek,” “should,” “will,” “would,” and

61 unchanged sentences

anticipated benefits from acquisitions;

(27) our ability to maintain the listing of our Common Stock on the Nasdaq Capital Market.

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

Trends and Recent Developments for the Company

May 6, 2025, the Company, acting pursuant to authority received at an annual meeting of its stockholders on December 17, 2024, filed

with the Secretary of State of the State of Nevada a certificate of amendment (the “Charter Amendment”) to its articles of

incorporation, as amended (the “Articles of Incorporation”), which effected a one-for-twenty reverse stock split (the “Reverse

Stock Split”) of all of the Company’s outstanding shares of common stock, par value $0.001 per share (the “Common Stock”).

Pursuant to the Charter Amendment, the Reverse Stock Split became effective as of 5:30 p.m.

Eastern Time on May 6, 2025.

of the Reverse Stock Split, every twenty (20) shares of Common Stock were exchanged for one (1) share of Common Stock.

The Common Stock

began trading on the Nasdaq Capital Market on a split-adjusted basis at the start of trading on May 7, 2025.

The Reverse Stock Split

did not affect the total number of shares of capital stock, including the Common Stock, that the Company is authorized to issue, which

remain as set forth pursuant to the Articles of Incorporation.

No fractional shares of Common Stock were issued in connection with the

Reverse Stock Split.

Stockholders who otherwise were entitled to receive fractional shares of Common Stock were automatically entitled

to receive an additional fraction of a share of Common Stock to round up to the next whole share, at a participant level.

Stock Split also had a proportionate effect on all other options and warrants of the Company outstanding as of the effective date of

the Reverse Stock Split.

May 22, 2025, the Company, acting pursuant to authority received at a special meeting of its stockholders on May 6, 2025, filed with

the Secretary of State of the State of Nevada a certificate of amendment (the “May 22, 2025 Charter Amendment”) to its articles

of incorporation, as amended, to effect a one (1)-for-one hundred (100) share reverse split (the “May 22, 2025 Reverse Stock Split”)

of all of the Company’s outstanding shares of Common Stock, par value $0.001 per share.

Pursuant to the May 22, 2025 Charter Amendment,

the Reverse Stock Split became effective at 5:30 p.m.

Eastern Time on May 22, 2025.

As a result of the May 22, 2025 Reverse Stock Split,

every one hundred (100) shares of Common Stock were exchanged for one (1) share of Common Stock.

The Common Stock will begin trading

on a split-adjusted basis on Nasdaq effective with the open of the market on Friday, May 23, 2025.

The May 22, 2025 Reverse Stock Split

did not affect the total number of shares of capital stock, including the Common Stock, that the Company is authorized to issue, which

remain as set forth pursuant to the Articles of Incorporation.

No fractional shares of Common Stock were issued in connection with the

May 22, 2025 Reverse Stock Split.

Stockholders who otherwise were entitled to receive fractional shares of Common Stock were automatically

entitled to receive an additional fraction of a share of Common Stock to round up to the next whole share, at a participant level.

May 22, 2025 Reverse Stock Split also had a proportionate effect on all other options and warrants of the Company outstanding as of the

effective date of the May 22, 2025 Reverse Stock Split.

All historical share and per-share amounts reflected throughout the Company’s

condensed consolidated financial statements and other financial information in this Report have been adjusted to reflect the May 22,

2025 Reverse Stock Split as if the split occurred as of the earliest period presented.

The par value per share of the Company’s

Common Stock was not affected by the May 22, 2025 Reverse Stock Split.

Notifications

previously disclosed, on December 20, 2024, the Company received notice from the Listing Qualifications Staff (the “Staff”)

of The Nasdaq Stock Market LLC (“Nasdaq”) that the bid price of its listed securities had closed at less than $1 per share

over the previous 30 consecutive business days, and, as a result, did not comply with Nasdaq Listing Rule 5550(a)(2) (the “Minimum

Bid Price Requirement”).

Therefore, in accordance with Listing Rule 5810(c)(3)(A), the Company was provided 180 calendar days,

or until June 18, 2025, to regain compliance with the Minimum Bid Price Requirement.

previously disclosed, on January 2, 2025, the Staff notified the Company that it was not in compliance with Nasdaq Listing Rule 5550(b)(1),

which requires companies listed on Nasdaq to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing (the

“Stockholders’ Equity Requirement”).

The Company reported stockholders’ equity (deficit) of ($2,448,310) in its

Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, and, as a result, did not satisfy the Stockholders’ Equity

Requirement pursuant to Listing Rule 5550(b)(1).

previously disclosed, on March 6, 2025, the Company received notice (the “March 6 Letter”) from the Staff that the Staff

had determined that as of March 5, 2025, the Company’s securities had a closing bid price of $0.10 or less for ten consecutive

trading days triggering application of Listing Rule 5810(c)(3)(A)(iii) which states in part:

if during any compliance period specified

in Rule 5810(c)(3)(A), a company’s security has a closing bid price of $0.10 or less for ten consecutive trading days, the Listing

Qualifications Department shall issue a Staff Delisting Determination under Rule 5810 with respect to that security (the “Low Priced

Stocks Rule”).

Company timely requested a hearing before the Panel to appeal the March 6 Letter and to address all outstanding matters, including compliance

with the Minimum Bid Price Requirement, the Low-Priced Stocks Rule and the Stockholders’ Equity Requirement.

While the appeal process

was pending, the suspension of trading of the Company’s Common Stock, was stayed and the Common Stock continued to trade on the

Nasdaq Capital Market until the hearing process concludes, and the Panel issues a written decision.

The Company held its hearing with

the Panel as scheduled on April 17, 2025.

May 1, 2025, the Panel rendered its decision which granted the Company’s request for continued listing on the Nasdaq Exchange.

Such decision is subject to the Company meeting and maintaining the following conditions:

or before May 2, 2025, the Company shall file Form 10-K for 2024 in compliance with Listing Rule 5250(c)(1).

or before May 20, 2025, the Company must file a public disclosure describing any transactions undertaken by the Company to increase

its equity and providing an indication of its equity following those transactions.

addition, on or before May 20, 2025, the Company must provide the Panel with an update on its fundraising plans, and updated income

projections for the next 12 months, with all underlying assumptions clearly stated.

or before June 6, 2025, the Company shall demonstrate compliance with the Minimum Bid Price Requirement.

prior to September 2, 2025, the Company becomes non-compliant with any Listing Rule, the Company will be delisted.

Company has worked diligently to regain and maintain compliance with the Minimum Bid Price Requirement and Stockholders’ Equity

Requirement as promptly as possible.

In that regard, management believes that it has achieved compliance with the Stockholders’

Equity Requirement as reported in the accompanying Statement of Stockholders’ Equity (Deficit) as of September 30, 2025.

management believes that it has achieved compliance with the Minimum Bid Price Requirement prior to June 6, 2025, as required by the

Management believes that it has met all other requirements as requested by the Panel.

There are no assurances however, that the

Company will be able to meet and maintain all such conditions required by the Panel.

October 17, 2025, the Company received notice from Nasdaq that it had regained full compliance with the Minimum Bid Price Requirement

and Stockholders’ Equity Requirement.

The Nasdaq has now placed the Company under a one-year Discretionary Panel Monitor.

the Discretionary Panel Monitor, the Company will not be permitted to request additional time to regain compliance with any deficiencies

that occur within the one-year period regarding noncompliance with the Periodic Filing or Bid Price Rules.

Such one-year period expires

on July 31, 2026 with regard to the Periodic Filing Rules and September 2, 2026 regarding the Bid Price Rules.

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

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

and mass transit markets.

We can integrate electronic, radio, computer, mechanical, and multi-media technologies to create positive solutions

to our customers’ requests.

Company changed its name from Digital Ally, Inc.

to Kustom Entertainment, Inc., reflecting the strategic shift to live entertainment

as the Company’s primary line of business.

January 8, 2026, the Company effected a 1-for-3 reverse stock split of its common stock.

Subsequently, effective April 22, 2026, the

Company effected a 1-for-5 reverse stock split to comply with the Minimum Bid Price Requirement.

All share and per-share amounts presented

in this Report have been retroactively adjusted to reflect both reverse stock splits.

of Nobility Healthcare

January 1, 2026, pursuant to a Unit Purchase Agreement, the Company completed the sale of its 51% membership interest in Nobility Healthcare,

exiting the revenue cycle management business entirely.

Total consideration stated in the Agreement was $1,450,000, consisting of (i)

$100,000 in cash paid at closing, (ii) closing credits of $209,501 related to prior advances from the Buyer and net working capital adjustments,

and (iii) a promissory note issued by the Buyer to the Seller in the principal amount of $1,140,499, recorded at an estimated fair value

of $1,117,303 on the date of disposition.

The principal amount of the note is subject to quarterly earn-out adjustments during the twelve-month

measurement period following the January 8, 2026 issue date, with the first installment payment scheduled for July 28, 2026 and the earn-out

mechanism terminating January 8, 2027.

The disposition has been accounted for as a discontinued operation, and all prior-period results

of Nobility Healthcare have been reclassified accordingly.

For the three months ended March 31, 2026, the Company recognized a loss from

discontinued operations of $(4,371,588), consisting of (i) a $(1,556,254) loss on sale, (ii) a $(2,457,415) loss on deconsolidation,

and (iii) a $(357,919) adjustment to the carrying value of the note receivable based on post-closing performance of the divested business.

See Note 22, Discontinued Operations to the condensed consolidated financial statements for additional information.

Extinguishment

of senior secured convertible notes

January 2026, the holder of the Company’s Senior Secured Convertible Notes (originally issued in September 2025 and December 2025)

converted the entire $1,070,000 aggregate outstanding principal balance into 111,608 shares of the Company’s common stock across

eight conversion tranches, fully extinguishing the notes.

In connection with the conversions, the $854,827 of remaining unamortized debt

discount was eliminated against additional paid-in capital in accordance with ASC 470-20, and the bifurcated conversion feature derivative

liability, with an aggregate fair value of $1,142,191 at the dates of conversion, was reclassified from derivative liabilities to additional

paid-in capital.

As of March 31, 2026, the Company has no outstanding convertible debt.

Solutions Operating Segment

our Video Solutions segment, we supply technology-based products utilizing our portable digital video and audio recording capabilities

for the law enforcement and security industries and for the commercial fleet and mass transit markets.

We have the ability to integrate

electronic, radio, computer, mechanical, and multi-media technologies to create positive solutions to our customers’ requests.

Our products include:

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

for law enforcement and commercial markets;

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

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

activation for both law enforcement and commercial markets;

EVO Web Portal, which is our cloud-based evidence management system for Law

enforcement and commercial market;

the EVO Fleet, FLT-250, DVM-250, and DVM-250 Plus, which are our commercial line of digital video

products that serve as “event recorders” for the commercial fleet and mass transit markets;

and FleetVu and VuLink, which

are our cloud-based evidence management systems.

We further diversified and broadened our product offerings in 2020, by introducing two

new lines of branded products:

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

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

and cleansers which are for use against viruses and bacteria.

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

the sale of Shield disinfectant and personal protective products.

This segment generates revenue through our subscription models offering

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

Revenues for product

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

term of the subscription, typically 3 or 5 years.

Cycle Management Operating Segment – We entered the revenue cycle management business late in the second quarter of 2021 with

the formation of our wholly owned subsidiary, Digital Ally Healthcare, Inc., and its majority-owned subsidiary Nobility Healthcare.

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

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

services to healthcare organizations throughout the country.

Our assistance consists of insurance and benefit verification, medical treatment

documentation and coding, and collections.

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

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

revenue cycle management segment consists of our medical billing subsidiaries.

Revenues of this segment are recognized after we fulfil

the obligations of our revenue cycle management services.

Our revenue cycle management services are services, performed and charged monthly,

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

the EVO-HD, DVM-800 and DVM-800 Lite, which are in-car digital video systems for law enforcement and commercial

the FirstVu body-worn camera line, consisting of the FirstVu Pro, FirstVu II, and the FirstVu HD;

our patented and revolutionary

VuLink product, which integrates our body-worn cameras with our in-car systems by providing hands-free automatic activation for both

law enforcement and commercial markets;

EVO Web Portal, which is our cloud-based evidence management system for the law enforcement market;

the EVO Fleet, FLT-250, DVM-250, and DVM-250 Plus, which are our commercial line of digital video products that serve as “event

recorders” for the commercial fleet and mass transit markets;

and FleetVu, which is our cloud-based evidence management system

for commercial fleets.

from our Video Solutions segment is derived from the sale of video recording products and related services to law enforcement and commercial

customers, as well as from the sale of our Shield™ disinfectant and personal protective equipment products.

This segment generates

revenues through subscription models offering cloud and warranty solutions, and hardware sales for video and personal protective safety

products and solutions.

Revenues for product sales are recognized upon delivery of the product, and revenues from our cloud and warranty

subscription plans are deferred over the term of the subscription, typically 3 or 5 years.

Entertainment

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

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

Operating Segment

provide live entertainment and events ticketing services through our wholly owned subsidiary, TicketSmarter, Inc.

(“TicketSmarter”),

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

TicketSmarter offers tickets for over 125,000 live events throughout the country through its platform, including concerts, sporting events,

theatres, and performing arts.

We also began offering production and promotion services in relation to live music events in third-party

venues throughout the country through our Kustom Entertainment, Inc.

These services begin with the logistical matters of

an event, including artist booking and research, ticketing, staging, on-site operations, vendor sourcing, and day of production.

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

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

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

Entertainment direct expenses include

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

maintenance fees, as well as other administrative costs.

which was formed through the completed acquisitions of Goody Tickets, LLC and TicketSmarter, LLC on September 1, 2021.

Through its online

marketplace, TicketSmarter.com, TicketSmarter offers ticket sales, resale, and partnership services for over 125,000 live events nationwide,

spanning concerts, sporting events, theatre, and performing arts.

Entertainment segment encompasses all services provided through TicketSmarter and TicketSmarter.com.

Entertainment segment revenues include

ticketing service charges, generally calculated as a percentage of the face value of the underlying ticket, as well as ticket sales from

Company-held inventory, both of which are recognized upon the sale of the underlying tickets.

Direct expenses include the cost of tickets

purchased for resale and held as inventory, credit card fees, ticketing platform expenses, website maintenance, and other administrative

Sheet Arrangements

do not have any off-balance sheet debt, nor did we have any transactions, arrangements, obligations (including contingent obligations)

do not have any off-balance sheet debt, nor do we have any transactions, arrangements, obligations (including contingent obligations)

or other relationships with any unconsolidated entities or other persons that may have a material current or future effect on financial

3 unchanged sentences

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

of the Three Months Ended September 30, 2025 and 2024

of the Three Months Ended March 31, 2026 and 2025

Financial Data

financial information for the Company’s reportable business segments is provided for the three months ended September 30, 2025,

Three Months Ended September 30,

financial information for the Company’s reportable business segments is provided for the three months ended March 31, 2026, and

Months Ended March 31,

Net Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Net Revenues

Gross Profit (loss):

Video Solutions

Revenue Cycle Management

Entertainment

Total Gross Profit

Operating Income (loss):

Video Solutions

Revenue Cycle Management

Entertainment

Total Operating Income (Loss)

$ (1,121,782 )

Operating Income (Loss)

$ (1,296,987 )

1 unchanged sentence

Video Solutions

Revenue Cycle Management

Entertainment

Total Depreciation and Amortization

Depreciation and Amortization

Assets (net of eliminations):

Video Solutions

Revenue Cycle Management

Entertainment

Total Identifiable Assets

Identifiable Assets

identifiable assets as of March 31, 2025 included amounts related to the discontinued Revenue Cycle Management segment (Nobility Healthcare),

which were included in the “Corporate and other” category.

Following the disposition of Nobility Healthcare on January 8,

2026, no discontinued operations assets are included in identifiable assets as of March 31, 2026.

See Note 22, Discontinued Operations ,

for additional information.

segments recorded non-cash items affecting gross profit and operating income (loss) through the establishment of inventory reserves based

on estimates of excess and/or obsolete current and non-current inventory.

The Company recorded a reserve for excess and obsolete inventory

in the Video Solutions segment of $1,751,603 and $1,849,124, and a reserve for the Entertainment segment of $71,223 and $69,817, as of

March 31, 2026 and December 31, 2025, respectively.

segment net revenues reported above represent sales to external customers.

Segment gross profit represents net revenues less cost of

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

cost of revenues, less all operating expenses.

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

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

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

less cost of revenues, less all operating expenses.

of Operations

by Type and by Operating Segment

operating segments generate two types of revenue:

revenues primarily include video solutions operating segment hardware sales of in-car and body-worn cameras.

Additionally, product

revenues also include the sale of tickets by our entertainment operating segment that have been purchased or received through our sponsorships

and partnerships and held in inventory by our entertainment segment until their sale.

Our entertainment sector also generates product

revenue through our production of live events and concerts including our annual Country Stampede music festival.

operating segments generate two types of revenues:

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

our ThermoVu TM units, disinfectants, and personal protective equipment.

Additionally, product revenues also include the sale

of tickets by our entertainment operating segment that have been purchased or received through our sponsorships and partnerships and

held in inventory by our Entertainment Segment until their sale.

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

Solutions segment.

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

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

ticketing marketplace transactions.

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

provided to medical providers throughout the country.

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

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

marketplace transactions.

following table presents revenues by type and segment:

Three Months Ended September 30,

Months Ended March 31,

Product revenues:

5 unchanged sentences

Entertainment

Revenue cycle management

Total service and other revenues

service and other revenues

Total revenues

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

Video Solutions segment sells our products and services to customers in the following manner:

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

11 unchanged sentences

is recognized upon shipment of the repair parts and acceptance of the service or materials by the end customer.

revenue cycle management operating segment sells its services to customers in the following manner:

revenue cycle management operating segment generates service revenues through relationships with medium to large healthcare organizations,

in which the underlying service revenue is recognized upon execution of services.

Service revenues are generally determined as a

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

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

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

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

Our entertainment segment also generates product revenues from the sale of tickets, merchandise, parking and concessions at live

events that it sponsors such as the annual Country Stampede music festival.

Service sales through TicketSmarter are driven largely

in part to the usage of the TicketSmarter.com marketplace by buyers and sellers, in which the Company collects service fees for each

transaction completed through this platform

Entertainment Segment sells our products and services to customers in the following manner:

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

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

Service sales through TicketSmarter,

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

service fees for each transaction completed through this platform.

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

revenues by operating segment are as follows:

Three Months Ended September 30,

revenues by operating segment is as follows:

Months Ended March 31,

Product Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Product Revenues

revenues for the three months ended September 30, 2025 and 2024 were $664,422 and $803,945, respectively, a decrease of $139,523 (17.4%),

Product Revenues

revenues for the three months ended March 31, 2026 and 2025 were $562,226 and $721,350, respectively, a decrease of $159,124 (22.1%),

due to the following factors:

Entertainment

segment revenue was $434,793 for the three months ended September 30, 2025, compared to $497,700 for the three months ended September

30, 2024, a decrease of $62,907 (12.6%).

Segment revenue includes amounts related to the 2026 Country Stampede music festival (held

annually in late June) and the resale of tickets purchased for live events, sporting events, concerts, and theatre, which are sold

through various platforms to customers.

The decrease primarily reflects a lower volume of primary ticket sales as TicketSmarter focused

on higher-margin events to improve gross margins.

solutions segment revenue was $229,629 for the three months ended September 30, 2025, compared to $306,245 for the three months ended

September 30, 2024, a decrease of $76,616 (25.0%).

The year-over-year decline reflects continued pressure on product revenue as our

in-car and body-worn systems face increased competition from newer products with advanced features.

In addition, law-enforcement

revenue decreased due to limited on-hand inventory to fulfill backlog orders, price competition and other competitive actions, and

adverse marketplace effects related to our recent financial condition.

During the first and second quarters of 2025, we restarted

our product supply chain using proceeds from the February 2025 public equity offering, which we expect will support improved product

availability and sales during the remainder of 2025.

video solutions operating segment management continues to migrate commercial customers from upfront hardware sales to a recurring

service-fee model.

Accordingly, we expect lower commercial hardware unit sales (principally DVM-250, FLT-250, and portions of our

body-worn camera line) as customers transition to arrangements in which hardware is provided as part of a monthly subscription.

the second quarter of 2020, we launched a subscription plan for body-worn cameras and related equipment that enables law enforcement

agencies to pay a monthly fee without a significant upfront capital outlay.

The program has gained traction, contributing to a mix

shift from product to service revenue, and we expect this trend to continue, generating recurring revenues over a three- to five-year

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

Entertainment operating segment generated $336,106 in product revenues for the three months ended March 31, 2026, compared to $667,119

for the three months ended March 31, 2025.

This product revenue relates to 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 TicketSmarter’s

continued strategic focus on higher-margin events to improve its gross margins, resulting in a reduction in the scope of primary

ticket sales activity during the period.

Company’s Video Solutions operating segment generated product revenues totaling $226,120 during the three months ended March

31, 2026, compared to $54,231 for the three months ended March 31, 2025, an increase of $171,889.

The increase reflects improved

inventory availability following the replenishment of the product supply chain funded by the February 2025 public equity offering,

which enabled the Company to fulfill a portion of its previously existing backlog orders during the first quarter of 2026.

Notwithstanding

this improvement, our Video Solutions operating segment continues to experience pressure on its product revenues as our in-car and

body-worn systems face increased competition from competitors that have released new products with advanced features, together with

price-cutting and other competitive actions.

In addition, our law enforcement revenues have continued to be affected by 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 model

to a service fee model.

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

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

as part of a recurring monthly service fee.

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

body-worn cameras and related equipment that allows 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 traction, resulting in decreased product revenues

and increased service revenues.

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

of three to five years.

and other revenues by operating segment is as follows:

Three months ended

September 30,

months ended March 31,

Service and Other Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Service and Other Revenues

and other revenues for the three months ended September 30, 2025 and 2024 were $3,872,735 and $3,247,766, respectively, an increase of

Service and Other Revenues

and other revenues for the three months ended March 31, 2026 and 2025 were $3,752,010 and $2,403,363, respectively, an increase of $1,348,647

(56.1%), due to the following factors:

revenue within the video solutions segment was $668,999 for the three months ended September 30, 2025, compared to $710,580 for the

three months ended September 30, 2024, a decrease of $41,581 (5.9%).

Despite this slight decline, we continue to see increased adoption

of our cloud solutions by law enforcement customers, driven by deployments of our cloud-based EVO-HD in-car system and next-generation

body-worn camera products.

We expect this adoption to continue through 2025 as customers migrate from local to cloud storage.

warranty services revenue was $491,297 for the three months ended September 30, 2025, compared to $141,716 for the three months ended

September 30, 2024, an increase of $349,581 (246.7%).

The increase was primarily driven by a non-recurring catch-up from a single

customer that settled past-due extended warranty fees related to services provided in fourth quarter of 2024, resulting in higher

revenue recognized in the current period.

entertainment operating segment generated service revenues totaling $1,294,980 and $755,857 for the three months ended September

30, 2025 and 2024, respectively, an increase of $539,123 (71.3%).

TicketSmarter earns fees on transactions processed through the

TicketSmarter.com platform for the purchase and resale of tickets to live events nationwide.

Period results may vary as we continue

to right-size the segment and prioritize profitability.

In the quarter, we reduced ticketing volume for events that did not meet

gross-margin thresholds while increasing emphasis on higher-margin events and expanding digital marketing activities, which together

drove higher service revenue year over year.

revenue cycle management operating segment generated service revenues totaling $1,361,163 and $1,601,792 for the three months ended

September 30, 2025 and 2024, respectively, a decrease of $240,630 (15.0%).

Our revenue cycle management operating segment provides

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

The 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

revenues for the three months ended September 30, 2025, and 2024 were $4,537,157 and $4,051,711, respectively, an increase of $485,446

revenues generated by the Video Solutions segment were $657,747 and $594,742 for the three months ended March 31, 2026 and 2025, respectively, representing an increase

of $63,005 (10.6%).

The increase reflects continued customer migration from local storage to cloud-based evidence management solutions,

sustained subscription renewal activity, and the conversion of customers from one-time hardware purchases to multi-year cloud subscription

arrangements consistent with management’s strategic shift toward a recurring-revenue service model.

Cloud revenues remain a key component

of the Video Solutions segment, with future growth dependent on new product introductions, customer conversion activity, and overall public-sector

spending trends.

from extended warranty services generated by the Video Solutions segment were $171,529 and $228,430 for the three months ended March 31, 2026 and 2025, respectively, representing a decrease of

$56,901 (24.9%).

Extended warranty services continue to provide a predictable and recurring revenue stream tied to the installed base

of video solutions hardware.

The decrease reflects lower extended warranty attachment activity tied to reduced product shipment volumes

in prior periods and the natural runoff of older multi-year warranty contracts.

Management expects extended warranty revenue to stabilize

as the installed base is refreshed through ongoing hardware shipments funded by recent capital raises.

Entertainment segment generated service revenues of $2,869,651 and $1,535,313 for the three months ended March 31, 2026 and 2025,

respectively, representing an increase of $1,334,338 (86.9%).

The increase was primarily attributable to higher transaction volumes

on the TicketSmarter platform, as well as increased activity related to ticket resale services and associated transaction fees.

TicketSmarter

earns service revenues by facilitating the buying and selling of tickets for live events, including concerts, sporting events, and

other entertainment venues, through its online marketplace.

The increase reflects continued expansion of platform usage, increased

consumer engagement, and improved monetization of ticketing transactions.

While service revenues increased significantly period over

period, management continues to focus on optimizing pricing, managing marketing spend, and improving gross margins within the Entertainment

segment, which may result in continued variability in service revenues depending on event mix, market conditions, and strategic prioritization

of profitability over top-line growth.

revenues for the three months ended March 31, 2026 and 2025 were $4,314,236 and $3,124,713, respectively, representing an increase of

$1,189,523 (38.1%), due to the reasons noted above.

of Product Revenue

cost of product revenue sold for the three months ended September 30, 2025, and 2024 was $905,190 and $547,562, respectively, an increase

cost of product revenue sold for the three months ended March 31, 2026 and 2025 was $782,248 and $675,639, respectively, an increase

of $106,609 (15.8%).

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

30, 2025, and 2024 were 179% and 155%, respectively.

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

2026 and 2025 was 139.1% and 93.7%, respectively.

Cost of products sold by operating segment is as follows:

Three Months Ended September 30,

Months Ended March 31,

Cost of Product Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Cost of Product Revenues

increase in cost of goods sold for our video solutions segment was primarily attributable to a higher component and expedite freight

costs, increased repair and refurbishment costs for returned units, and increased scrap – receiving associated with incoming inspection

failures 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 207.6% for the three months ended September 30, 2025 as compared to 51% for the three months ended September 30,

of products sold within the entertainment segment increased slightly period over period, principally due to higher variable costs (ticket

acquisition, event settlement, and payment processing).

The increase was partially offset by a continued focus on higher-margin events,

which limited cost growth as a percentage of revenue.

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

segment increased to 98.6% for the three months ended September 30, 2025 as compared to 78.40% for the three months ended September 30,

Cost of Product Revenues

increase in Video Solutions segment cost of product revenues to $401,591 for the three months ended March 31, 2026 from $64,552 for the

three months ended March 31, 2025 was primarily attributable to higher product sales volumes following the replenishment of the product

supply chain funded by the February 2025 public equity offering, which enabled the Company to fulfill a portion of its previously existing

backlog orders during the first quarter of 2026.

Cost of product revenues as a percentage of product revenues for the Video Solutions

segment increased to approximately 177.6% for the three months ended March 31, 2026 from approximately 119.0% for the three months ended

March 31, 2025, reflecting changes in inventory reserve activity and the continued impact of fixed manufacturing and overhead costs on

the segment’s product revenue base.

decrease in Entertainment segment cost of product revenues reflects lower absolute costs, with cost of product revenues decreasing to

$380,657 for the three months ended March 31, 2026 from $611,087 for the three months ended March 31, 2025.

This represents a decrease

of $230,430 (37.7%), which correlates with the decrease in Entertainment segment product revenues during the period.

Cost of product

revenues as a percentage of product revenues increased to approximately 113.3% for the three months ended March 31, 2026 compared to

approximately 91.6% for the three months ended March 31, 2025, primarily driven by changes in ticket inventory mix and write-offs of

ticket inventory sold below cost or unsold following event dates.

Company recorded a reserve for excess and obsolete inventory in the Video Solutions segment of $1,751,603 and $1,849,124 as of March

31, 2026 and December 31, 2025, respectively, representing a decrease of $97,521 (5.3%).

The decrease in the reserve balance was primarily

attributable to the disposal and utilization of inventory that had been fully reserved in prior periods, as well as continued inventory

management and lower on-hand inventory levels during the period.

The Company also recorded a reserve for excess and obsolete inventory

in the Entertainment segment of $71,223 and $69,817 as of March 31, 2026 and December 31, 2025, respectively, representing a slight increase

of $1,406 (2.0%).

The reserve relates primarily to ticket inventory, where certain items may sell below cost or become unsellable following

the related event date and therefore require write-off.

The Company evaluates inventory reserves on a regular basis, considering factors

such as historical sales activity, expected future demand, inventory aging, and realizable value.

Management believes the recorded reserves

for excess and obsolete inventories are appropriate based on inventory levels and operating conditions as of March 31, 2026.

of Service Revenue

cost of service revenue sold for the three months ended September 30, 2025, and 2024 was $2,260,392 and $1,764,175, respectively, an

increase of $496,217 (28.1%).

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

September 30, 2025, and 2024 were 58% and 54%, respectively.

Cost of service revenues by operating segment is as follows:

Three months ended

September 30,

cost of service revenues for the three months ended March 31, 2026 and 2025 was $2,927,941 and $1,315,238, respectively, representing

an increase of $1,612,703 (122.6%).

Cost of service revenues as a percentage of total service revenues increased to approximately 78.0%

for the three months ended March 31, 2026 compared to approximately 54.7% for the three months ended March 31, 2025.

Cost of service

revenues by operating segment is as follows:

months ended March 31,

Cost of Service Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Cost of Service Revenues

increase in cost of service revenues for our video solutions segment demonstrates the leverage we are enjoying as we increase our service

revenues during the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Cost of Service Revenues

as a percentage of service revenues for the video solutions segment decreased to 24.5% for the three months ended September 30, 2025

as compared to 30.3% for the three months ended September 30, 2024.

of service revenues as a percentage of service revenues for the revenue cycle management operating segment remained consistent at 62.5%

for the three months ended September 30, 2025 as compared to 58.4% for the three months ended September 30, 2024.

increase in entertainment operating segment cost of service revenues is due to management right sizing the business working towards profitability.

The entertainment segment terminated several unprofitable sponsorships which required termination payments during the three months ended

September 30, 2025, that is expected to lead to improvements in costs of service revenues during the remainder of 2025.

The entertainment

segment cost of service revenue was $1,111,577 for the three months ended September 30, 2025, compared to $559,143 for the three months

ended September 30, 2024.

Cost of service revenues as a percentage of service revenues for the entertainment segment increased to 85.8%

for the three months ended September 30, 2025 as compared to 74.0% for the three months ended September 30, 2024.

gross profit for the three months ended September 30, 2025 and 2024 was $1,371,575 and $1,739,974, respectively, a decrease of $368,399

Video Solutions segment cost of service revenues remained relatively stable, increasing slightly to $321,358 for the three months ended

March 31, 2026 from $301,968 for the three months ended March 31, 2025, an increase of $19,390 (6.4%).

Cost of service revenues as a

percentage of service revenues for the Video Solutions segment increased to approximately 36.4% for the three months ended March 31,

2026 compared to approximately 34.8% for the three months ended March 31, 2025.

The modest increase reflects higher cloud storage and

service delivery costs partially offset by stable revenue performance across the Company’s cloud-based solutions and extended warranty

increase in Entertainment segment cost of service revenues was primarily driven by higher transaction volumes and increased service activity

within the TicketSmarter platform, including payment processing, fulfillment, and other transaction-based costs.

Cost of service revenues

increased to $2,606,583 for the three months ended March 31, 2026 from $1,013,270 for the three months ended March 31, 2025, an increase

of $1,593,313 (157.2%).

Cost of service revenues as a percentage of service revenues for the Entertainment segment increased to approximately

90.8% for the three months ended March 31, 2026 compared to approximately 66.0% for the three months ended March 31, 2025.

in cost as a percentage of service revenues reflects changes in transaction mix, higher variable processing costs, and continued investments

to support platform scale.

Management is focused on right-sizing the business and improving operational efficiency to support long-term

profitability and operational stability.

gross profit for the three months ended March 31, 2026 and 2025 was $604,047 and $1,133,836, respectively, representing a decrease of

$529,789, or 46.7%.

Gross profit by operating segment was as follows:

Three months ended

September 30,

months ended March 31,

Gross Profit:

Video Solutions

Revenue Cycle Management

Entertainment

Total Gross Profit

decrease in gross profits is primarily due to lower revenue and a higher cost of sales as a percentage of revenue, particularly within

the entertainment segment’s service revenues.

Cost of sales as a percentage of total revenues increased to 69.8% for the three

months ended September 30, 2025, from 57% in the prior-year period, resulting in margin compression.

We are pursuing a multi-pronged

margin-improvement plan for the Entertainment business—focused on right-sizing, pricing discipline, and mix optimization.

decrease in gross profit reflects increases in cost of revenue that outpaced revenue growth across both the Video Solutions segment and

Entertainment segment for the three months ended March 31, 2026.

Cost of revenue as a percentage of overall revenues increased to approximately

86.0% for the three months ended March 31, 2026 compared to approximately 63.7% for the three months ended March 31, 2025, resulting

in a corresponding decline in gross margin.

This increase was driven primarily by lower product and service margins within the Entertainment

segment, including higher variable processing and fulfillment costs on the TicketSmarter platform and ticket inventory sold below cost

or written off when unsold following event dates, as well as elevated cost ratios within the Video Solutions segment reflecting inventory

reserve activity and continued pricing pressure.

During the three months ended March 31, 2026, the Company continued to implement cost-containment

and margin improvement initiatives, including workforce reductions, the completed divestiture of the Revenue Cycle Management segment,

and a continued transition toward a service and subscription-based revenue model within the Video Solutions segment.

longer-term objective is to improve gross margins through a more favorable revenue mix, increased adoption of higher-margin service offerings,

and operational efficiencies across the organization.

We plan to continue initiatives focused on more efficient management of our supply

chain, including outsourcing production where appropriate, optimizing purchase quantities, and implementing more effective purchasing

General and Administrative Expenses

general and administrative expenses were $2,493,357 and $9,122,273 for the three months ended September 30, 2025 and 2024, respectively,

a decrease of $6,628,916 (72.7%).

The decrease was primarily driven by fewer new advertising sponsorships and reductions in headcount

within selling, general and administrative functions as the Company right-sized operations across all segments.

Additionally, the prior-year

period included a goodwill and intangible asset impairment charge that did not recur, further contributing to the year-over-year decrease.

Our selling, general and administrative expenses as a percentage of sales decreased to 55% for the three months ended September 30, 2025

compared to 225% in the same period in 2024.

general and administrative expenses for the three months ended March 31, 2026 and 2025 were $1,901,034 and $2,115,886, respectively,

representing a decrease of $214,852 (10.2%).

Selling, general and administrative expenses consist primarily of research and development

expenses, selling, advertising and promotional expenses, general and administrative expenses, and goodwill and intangible asset impairment

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

For the three months ended

September 30,

Months ended March 31,

Research and development expense

Selling, advertising and promotional expense

General and administrative expense

Goodwill and intangible asset impairment charge

General and administrative

and development expense.

Our research and development expenses totaled $137,755 and $210,818 for the three months ended September

30, 2025 and 2024, respectively which represents a decrease of $73,063 (34.7%).

The decrease in research and development expense reflects

a narrower project portfolio and a reallocation of resources toward sustaining engineering and targeted enhancements, including reductions

in engineering headcount and third-party development spend.

Our research and development expenses totaled $143,089 and $84,417 for the three months ended March

31, 2026 and 2025, respectively, representing an increase of $58,672, or 69.5%.

The increase reflects continued investment in the development

of new products and enhancements to existing products within the Video Solutions segment.

Research and development activities include

engineering costs, product design, testing, and related development efforts.

advertising and promotional expenses.

Selling, advertising and promotional expense totaled $110,006 and $414,727 for the three

months ended September 30, 2025 and 2024, respectively, a decrease of $304,721 (73.5%).

Selling, advertising, and promotional expenses

decreased due to significant reductions in sales staffing and in promotional and advertising activities, undertaken to right-size these

expenses to current revenue levels.

Additionally, the decline reflects fewer new sponsorship agreements at the Company and its subsidiary,

TicketSmarter.

Selling, advertising and promotional expenses totaled $274,411 and $96,381 for the three

months ended March 31, 2026 and 2025, respectively, representing an increase of $178,030 (184.7%).

The increase in selling, advertising

and promotional expenses reflects higher marketing and promotional activity, including expenditures related to the TicketSmarter platform

and the 2026 Country Stampede music festival scheduled for June 2026.

and administrative expense .

General and administrative expenses totaled $1,483,534 and $1,935,088 for the three months ended

September 30, 2025 and 2024, respectively which represents a decrease of $1,421,132 (38.8%).

The decrease in general and administrative

expenses in the three months ended September 30, 2025 compared to the same period in 2024 is primarily attributable to a substantial

decrease in legal and professional expenses for the three months ended September 30, 2025 compared to the same period in 2024 due to

the failed merger with CloverLeaf in the 2024 period and various capital raises we have undertaken in 2024.

We also implemented decreases

in administrative salaries and reductions in headcount during the 2025 period in order to right-size our expenses across all operating

segments with our revenues.

the reasons previously stated, our operating loss was $1,121,782 and $7,382,299 for the three months ended September 30, 2025 and 2024,

respectively, an improvement in our operating loss of $6,260,517 (84.8%).

Operating loss as a percentage of revenues improved to 24.7%

in 2025 as compared to 182% in 2024.

income increased to $17,887 for the three months ended September 30, 2025, from $13,775 in 2024, which reflects our overall increase

in our cash and cash equivalent levels in 2025 compared to 2024 due to funds generated in the February 2025 public equity offering and

the net proceeds from our September 2025 senior convertible note issuance.

incurred interest expenses of $90,697 and $771,846 during the three months ended September 30, 2025 and 2024, respectively.

decrease is attributable to the Company paying off most of its interest-bearing debt in late 2024 and early 2025 including the $3.6 million

of senior secured promissory notes that were paid off with proceeds from the February 2025 public equity offering.

income (expense)

income (expense) increased to $217,136 for the three months ended September 30, 2025 from $8,920 for the comparable 2024 period, primarily

due to weather insurance proceeds that we received related to the 2025 Country Stampede music festival.

on Extinguishment of debt

March 1, 2024, the Company obtained a short-term merchant advance, which totaled $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 months ended September 30, 2024.

in Fair Value of Derivative Liabilities

change in fair value of the warrant derivative liabilities for the three months ended September 30, 2025 and 2024, respectively totaled

a gain of $839 during the three months ended September 30, 2025 as compared to a gain of $2,530,675 during the three months ended September

The Company has issued various detachable warrants in connection with capital raises during 2024 and 2025 that were required

to be treated as warrant derivative liabilities.

Warrant derivative liabilities are required to be marked-to-market at each balance sheet

date with the change in fair value recorded as a gain or loss in the Condensed Statement of Operations.

The gain recorded in the three

months ended September 30, 2025 reflects relatively minor fair value changes resulting from reduced stock price volatility and fewer

warrants outstanding during the period.

on Extinguishment of Liabilities

Company recorded a gain on the extinguishment of liabilities for the three months ended September 30, 2025 and 2024 of $13,275, and $9,385,

respectively.

The gains reflect income related to the entertainment segment’s ability to negotiate down payables and other contract

obligations during the three months ended September 30, 2025 utilizing funds generated by the closing of the February 2025 public equity

offering on February 13, 2025.

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, we reported a net loss before income tax benefit of $(963,342) and $(5,470,712) for the three months ended September

30, 2025 and 2024, respectively, an improvement of $4,507,370 (82.4%).

recorded an income tax benefit of $-0- for the three months ended September 30, 2025 and 2024, respectively.

The effective tax rate for

both 2025 and 2024 varied from the expected statutory rate due to our continuing to provide a 100% valuation allowance on net deferred

We determined that it was appropriate to continue the full valuation allowance on net deferred tax assets as of September

30, 2025 and December 31, 2024 primarily because of the recurring operating losses.

have further determined to continue providing a full valuation reserve on our net deferred tax assets as of September 30, 2025.

had approximately $159,965,000 of federal net operating loss carryforwards and $1,796,111 of research and development tax credit carryforwards

as of September 30, 2025 and December 31, 2024 available to offset future net taxable income.

Income (Loss)

a result of the above, we reported net income (loss) of $(963,342) and $(5,470,712) for the three months ended September 30, 2025 and

2024, respectively, an improvement of $4,507,370 (82.4%).

Income Attributable to Noncontrolling Interests of Consolidated Subsidiary

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

As a result, the noncontrolling shareholders or

minority interest is allocated 49% of the income/loss of Nobility Healthcare which is reflected in the condensed consolidated statement

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

net income attributable to noncontrolling interests of consolidated subsidiary of $58,525 and a net loss of $2,000,206 for the three

months ended September 30, 2025 and 2024, respectively.

Loss Attributable to Common Stockholders

a result of the above, we reported a net income (loss) of $(1,021,867) and $(3,470,506) for the three months ended September 30, 2025

and 2024, respectively, an improvement of $2,448,639 (70.6%).

and Diluted Loss per Share

basic and diluted loss per share was $0.59 and $1,817.02 for the three months ended September 30, 2025 and 2024, respectively.

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

For the three months ended September

30, 2025 and 2024, 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.

of the Nine months Ended September 30, 2025 and 2024

Financial Data

financial information for the Company’s reportable business segments is provided for the nine months ended September 30, 2025,

Nine months Ended September 30,

Net Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Net Revenues

Gross Profit (loss):

Video Solutions

Revenue Cycle Management

Entertainment

Total Gross Profit

Operating Income (loss):

Video Solutions

$ (1,909,246 )

Revenue Cycle Management

Entertainment

Total Operating Income (Loss)

$ (6,191,535 )

$ (14,935,492 )

Depreciation and Amortization:

Video Solutions

Revenue Cycle Management

Entertainment

Total Depreciation and Amortization

Assets (net of eliminations):

Video Solutions

Revenue Cycle Management

Entertainment

Total Identifiable Assets

segment net revenues reported above represent sales to external customers.

Segment gross profit represents net revenues less cost of

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

cost of revenues, less all operating expenses.

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

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

of Operations

by Type and by Operating Segment

operating segments generate two types of revenue:

revenues primarily include video solutions operating segment hardware sales of in-car and body-worn cameras.

Additionally, product

revenues also include the sale of tickets by our entertainment operating segment that have been purchased or received through our sponsorships

and partnerships and held in inventory by our entertainment segment until their sale.

Our entertainment sector also generates product

revenue through our production of live events and concerts including our annual Country Stampede music festival.

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

solutions segment.

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

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

ticketing marketplace transactions.

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

provided to medical providers throughout the country.

following table presents revenues by type and segment:

Nine months Ended September 30,

Product revenues:

Video solutions

Entertainment

Total product revenues

Service and other revenues:

Video solutions

Entertainment

Revenue cycle management

Total service and other revenues

Total revenues

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

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

through our sales force, comprised of our employees.

Revenue is recorded when the product is shipped to the end customer.

to international customers are made through independent distributors who purchase products from us at a wholesale price and sell

to the end user (typically law enforcement agencies or a commercial customer) at a retail price.

The distributor retains the margin

as compensation for its role in the transaction.

The distributor generally maintains product inventory, customer receivables and

all related risks and rewards of ownership.

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

terms of the distribution agreement.

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

is recognized upon shipment of the repair parts and acceptance of the service or materials by the end customer.

revenue cycle management operating segment sells its services to customers in the following manner:

revenue cycle management operating segment generates service revenues through relationships with medium to large healthcare organizations,

in which the underlying service revenue is recognized upon execution of services.

Service revenues are generally determined as a

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

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

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

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

Our entertainment segment also generates product revenues from the sale of tickets, merchandise, parking and concessions at live

events that it sponsors such as the annual Country Stampede music festival.

Service sales through TicketSmarter are driven largely

in part to the usage of the TicketSmarter.com marketplace by buyers and sellers, in which the Company collects service fees for each

transaction completed through this platform

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

revenues by operating segment are as follows:

Nine months Ended September 30,

Product Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Product Revenues

revenues for the nine months ended September 30, 2025 and 2024 were $3,602,202 and $4,577,392, respectively, a decrease of $975,190 (21.3%),

due to the following factors:

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

2024 acquisition of the Country Stampede Music Festival.

The entertainment operating segment generated $2,880,210 in product revenues

for the nine months ended September 30, 2025, compared to $2,929,019 for the nine months ended September 30, 2024.

This product revenue

relates to the 2025 Country Stampede music festival held by Kustom during 2025, 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 totaling $721,992 during the nine months ended September 30, 2025

compared to $1,648,373 for the nine months ended September 30, 2024.

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

2024 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.

During the first three quarters of

2025, we restarted our product supply chain using proceeds from the February 2025 public equity offering.

We expect improved product

availability to support higher video solutions product sales in the fourth quarter of 2025.

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

service fee model.

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

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

of a monthly recurring service fee.

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

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

body worn cameras without incurring a significant upfront capital outlay.

This program has gained some traction, resulting in decreased

product revenues and increasing our service revenues.

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

revenues over a span of three to five years.

and other revenues by operating segment is as follows:

Nine months ended

September 30,

Service and Other Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Service and Other Revenues

and other revenues for the nine months ended September 30, 2025 and 2024 were $11,042,258 and $10,619,905, respectively, an increase

of $422,353 (3.8%), due to the following factors:

revenues generated by the video solutions operating segment were $1,903,807 and $1,964,038 for the nine months ended September 30,

2025 and 2024, respectively, a slight decrease of $60,231 (3.1%).

We continue to experience increased interest in our cloud solutions

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

products, which contributed to our cloud revenues in the nine months ended September 30, 2025.

We expect this trend to continue for

2025 as the migration from local storage to cloud storage continues in our customer base.

solutions operating segment revenues from extended warranty services were $959,715 and $575,308 for the nine months ended September

30, 2025 and 2024, respectively, an increase of $384,407 (40%).

The increase was primarily driven by a non-recurring catch-up from

a single customer that settled past-due extended warranty fees related to services provided in fourth quarter of 2024, resulting

in higher revenue recognized in the current period.

entertainment operating segment generated service revenues totaling $3,911,068 and $3,167,208 for the nine months ended September

30, 2025 and 2024, respectively, an increase of $743,860 (23.5%).

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.

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.

The entertainment operating segment has increased

its use of Google, Facebook and other social media to generate increased ticketing revenues in the third quarter of 2025 compared

revenue cycle management operating segment generated service revenues totaling $4,144,008 and $4,600,745 for the nine months ended

September 30, 2025 and 2024, respectively, a decrease of $456,738 (9.9%).

Our revenue cycle management operating segment provides

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

The 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

revenues for the nine months ended September 30, 2025, and 2024 were $14,644,460 and $15,197,297, respectively, a slight decrease of

$552,837 (3.6%), due to the reasons noted above.

of Product Revenue

cost of product revenue sold for the nine months ended September 30, 2025, and 2024 was $5,482,693 and $5,534,209, respectively, a slight

March 31, 2026 and 2025, respectively, representing a decrease of $451,554 (23.3%).

The decrease in general and administrative expenses

in the three months ended March 31, 2026 compared to the same period in 2025 is primarily attributable to a decrease in administrative

salaries and continued reductions in headcount as the Company continues to right-size its expenses in this area relative to its revenues.

the reasons previously stated, our operating loss was $1,296,987 and $982,050 for the three months ended March 31, 2026 and 2025, respectively,

representing an increase in operating loss of $314,937 (32.1%).

Operating loss as a percentage of revenues was 30.1% in 2026 as compared

to 31.4% in 2025.

income increased to $76,806 for the three months ended March 31, 2026, from $31,975 in 2025, primarily reflecting interest accretion

on the promissory note received as partial consideration in connection with the January 2026 sale of Nobility Healthcare.

incurred interest expense of $67,450 and $792,273 during the three months ended March 31, 2026 and 2025, respectively, representing a

decrease of $724,823 (91.5%).

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

30, 2025, and 2024 were 152% and 121%, respectively.

Cost of products sold by operating segment is as follows:

Nine months Ended

September 30,

Cost of Product Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Cost of Product Revenues

decrease in cost of goods sold for our video solutions segment products is due to decrease in product sales experienced during the nine

months ended September 30, 2025 compared to 2024.

We were not able to fulfil open orders due to low inventory levels.

We have utilized

funds from the February 2025 public equity offering to ramp the supply chain which we believe will lead to improved product sales during

the remainder of 2025.

Cost of product sold as a percentage of product revenues for the video solutions segment increased to 156% for

the nine months ended September 30, 2025 as compared to 116% for the nine months ended September 30, 2024.

increase in entertainment operating segment cost of product sold directly correlates to the increased revenues and costs associated with

our annual Country Stampede Music Festival.

Cost of product sold related to the 2025 Country Stampede Music Festival totaled $2,992,052

as compared to $1,848,167 for the 2024 Festival.

Total cost of product revenues for the entertainment operating segment was $4,357,017

and $3,620,853 for the nine months ended September 30, 2025 and 2024, an increase of $736,164 (20.3%).

Cost of product sold as a percentage

of product revenues for the entertainment segment increased to 151% for the nine months ended September 30, 2025 as compared to 124%

for the nine months ended September 30, 2024.

of Service Revenue

cost of service revenue sold for the nine months ended September 30, 2025, and 2024 was $6,821,318 and $6,159,284, respectively, an increase

of $662,035 (10.7%).

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

30, 2025, and 2024 were 62% and 58%, respectively.

Cost of service revenues by operating segment is as follows:

Nine months ended

September 30,

Cost of Service Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Cost of Service Revenues

of service revenues for the video solutions segment increased slightly, reflecting higher service revenues for the nine months ended

September 30, 2025 compared to the same period in 2024.

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

segment increased to 33% for the nine months ended September 30, 2025 as compared to 34% for the nine months ended September 30, 2024.

decrease in revenue cycle management operating segment cost of service revenue is commensurate with the decline in revenues due to certain

loss generating services being eliminated during the year.

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

cycle management operating segment remained stable at 63% for the nine months ended September 30, 2025 as compared to 62% for the nine

months ended September 30, 2024.

increase in entertainment operating segment cost of service revenues is due to management right sizing the business working towards profitability.

The entertainment segment terminated several unprofitable sponsorships which required termination payments during the nine months ended

September 30, 2025, that is expected to lead to improvements in costs of service revenues during the remainder of 2025.

The entertainment

segment cost of service revenue was $3,218,978 for the nine months ended September 30, 2025, compared to $2,325,987 for the nine months

ended September 30, 2024.

Cost of service revenues as a percentage of service revenues for the entertainment segment increased to 82%

for the nine months ended September 30, 2025 as compared to 73% for the nine months ended September 30, 2024.

gross profit for the nine months ended September 30, 2025 and 2024 was $2,340,449 and $3,503,804, respectively, a decrease of $1,163,355

Gross profit by operating segment was as follows:

Nine months ended

September 30,

Gross Profit:

Video Solutions

Revenue Cycle Management

Entertainment

Total Gross Profit

decrease in gross profits is primarily due to a deterioration in our cost of sales as a percentage of sales particularly in our entertainment

segment service product and service revenues.

The primary reason is the larger negative margins generated by our 2025 Country Stampede

Music Festival as compared to the 2024 Festival.

There was an overall increase in the cost of sales as a percentage of overall revenues

to 84% for the nine months ended September 30, 2025 from 77% for the nine months ended September 30, 2024.

General and Administrative Expenses

general and administrative expenses were $8,531,984 and $18,439,296 for the nine months ended September 30, 2025 and 2024, respectively,

a decrease of $9,907,312 (53.7%).

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

into by the Company and large reductions in selling, general and administrative head count as the Company right-sized its operations

across all operating segments.

Our selling, general and administrative expenses as a percentage of sales increased to 58% for the nine

months ended September 30, 2025 compared to 121% in the same period in 2024.

The significant components of selling, general and administrative

expenses are as follows:

Nine months ended September 30,

Research and development expense

Selling, advertising and promotional expense

General and administrative expense

Goodwill and intangible asset impairment charge

and development expense.

Our research and development expenses totaled $405,983 and $1,244,060 for the nine months ended September

30, 2025 and 2024, respectively which represents a decrease of $838,077 (67.4%).

The decrease in research and development expense reflects

a narrower project portfolio and a reallocation of resources toward sustaining engineering and targeted enhancements, including reductions

in engineering headcount and third-party development spend.

advertising and promotional expenses.

Selling, advertising and promotional expense totaled $501,184 and $1,902,489 for the nine

months ended September 30, 2025 and 2024, respectively, a decrease of $1,401,305 (73.7%).

The decrease in selling, advertising and promotional

expenses is due to significant reductions in sales staffing and in promotional and advertising activities, undertaken to right-size these

expenses to current revenue levels.

Additionally, the decline reflects fewer new sponsorship agreements at the Company and its subsidiary,

TicketSmarter.

and administrative expense .

General and administrative expenses totaled $7,624,817 and $10,462,747 for the nine months ended

September 30, 2025 and 2024, respectively which represents a decrease of $2,837,930 (27.1%).

The decrease in general and administrative

expenses in the nine months ended September 30, 2025 compared to the same period in 2024 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 also attributable to a substantial decrease in legal and professional expenses for the nine months ended

September 30, 2025 compared to the same period in 2024 due to the failed merger with CloverLeaf and various capital raises we have undertaken

in the 2024 period.

the reasons previously stated, our operating loss was $6,191,535 and $14,935,492 for the nine months ended September 30, 2025 and 2024,

respectively, an improvement of $8,743,957 (58.5%).

Operating loss as a percentage of revenues improved to 42% in 2025 as compared to

income increased to $95,808 for the nine months ended September 30, 2025, from $63,064 in 2024, which reflects our overall increase in

our cash and cash equivalent levels in 2025 compared to 2024 due to funds generated in the February 2025 public equity offering and the

net proceeds from our September 2025 senior convertible note issuance.

incurred interest expenses of $960,250 and $2,505,536 during the nine months ended September 30, 2025 and 2024, respectively.

decrease is attributable to the Company paying off most of its interest-bearing debt in late 2024 and early 2025 including the $3.6 million

senior secured promissory notes that were paid off with proceeds from the February 2025 public equity offering.

The decrease is primarily attributable to the extinguishment of the senior secured promissory notes in

2025 that carried significant debt discount amortization, as well as the conversion of the 2025 Senior Secured Convertible Notes to common

stock during the three months ended March 31, 2026, which eliminated future interest expense on those instruments.

income (expense)

income (expense) increased to $252,603 for the nine months ended September 30, 2025, from $66,966 during the nine months ended September

30, 2024, which reflects weather insurance proceeds that we received in 2025 related to the 2025 Country Stampede.

on Extinguishment of debt

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

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

September 30, 2024.

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.

in Fair Value of Derivative Liabilities

change in fair value of the warrant derivative liabilities for the nine months ended September 30, 2025 and 2024, respectively totaled

a gain of $3,373,919 during the nine months ended September 30, 2025 as compared to a gain of $2,178,965 during the nine months ended

September 30, 2024.

The Company has issued various detachable warrants in connection with capital raises during 2024 and 2025 that were

required to be treated as warrant derivative liabilities.

Warrant derivative liabilities are required to be marked-to-market at each

balance sheet date with the change in fair value recorded as a gain or loss in the Condensed Statement of Operations.

The gain recorded

in the nine months ended September 30, 2025 reflects the large decline in the closing market value of our common stock at September 30,

2025 when compared to December 31, 2024 closing market values.

Company recognized no other income for the three months ended March 31, 2026, compared to $16,700 for the three months ended March 31,

2025, which related to income associated with a warehouse sublease at the corporate headquarters that ceased during 2025.

on Extinguishment of Debt - related party

Company did not recognize any gain on extinguishment of debt - related party during the three months ended March 31, 2026, compared to

a gain of $1,249,372 during the three months ended March 31, 2025.

The prior-period gain arose from the March 20, 2025 modification of

the TicketSmarter Related Party Note.

Following a subsequent modification in June 2025, management changed its estimate regarding the

capacity in which the noteholder was acting and reclassified the $1,249,372 to additional paid-in capital as a deemed capital contribution

during the three months ended June 30, 2025.

See Note 17, Related Party Transactions , for additional information.

on Extinguishment of Liabilities

Company recorded a gain on the extinguishment of liabilities for the nine months ended September 30, 2025 and 2024 of $2,243,991, and

$691,730, respectively.

The gains reflect income related to the video solutions and entertainment segment’s ability to negotiate

down payables and other contract obligations during the nine months ended September 30, 2025 utilizing funds generated by the closing

of the February 2025 public equity offering on February 13, 2025.

gain on extinguishment of liabilities was $691,730 for the nine months ended September 30, 2024, which reflects income related to the

entertainment segment’s ability to negotiate down payables and other contract obligations 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 condensed consolidated statement of operations for the nine months ended September

on disposal of intangibles

on disposal of intangibles decreased to $-0- for the nine months ended September 30, 2025, from $5,582 during the nine months ended September

on Sale of Property, Plant and Equipment

Company reported a gain on sale of property, plant and equipment of $-0- and $389,522 during the nine months ended September 30, 2025,

and 2024, respectively.

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

before Income Tax Benefit

a result of the above, we reported net loss before income tax benefit of $(1,185,464) and $(14,424,531) for the nine months ended September

30, 2025 and 2024, respectively, an improvement of $13,239,067 (91.8%).

recorded an income tax benefit of $-0- for the nine months ended September 30, 2025 and 2024, respectively.

The effective tax rate for

both 2025 and 2024 varied from the expected statutory rate due to our continuing to provide a 100% valuation allowance on net deferred

We determined that it was appropriate to continue the full valuation allowance on net deferred tax assets as of September

30, 2025 and December 31, 2024 primarily because of the recurring operating losses.

have further determined to continue providing a full valuation reserve on our net deferred tax assets as of September 30, 2025.

Company recorded a gain on the extinguishment of liabilities of $63,259 and $2,220,097 for the three months ended March 31, 2026 and

2025, respectively, representing a decrease of $2,156,838 (97.2%).

gain recognized during the three months ended March 31, 2026 reflects discounts received by the Company in connection with the negotiated

settlement of outstanding payables during the period.

gain recognized during the three months ended March 31, 2025 reflects income related to the Video Solutions and Entertainment segments’

ability to negotiate down payables and contract liabilities during the period, utilizing funds generated by the closing of the February

2025 public equity offering on February 13, 2025.

in Fair Value of Derivative Liabilities

change in fair value of derivative liabilities for the three months ended March 31, 2026 and 2025 totaled a loss of $289,355 during the

three months ended March 31, 2026 as compared to a gain of $2,515,891 during the three months ended March 31, 2025.

loss recognized during the three months ended March 31, 2026 consists of a $289,516 loss on the bifurcated conversion feature embedded

in the 2025 Senior Secured Convertible Notes (the “2025 Secured Notes”) issued in September 2025 and December 2025, partially

offset by a $161 gain on the Company’s 2023 warrants resulting from the decline in their fair value over the period.

conversion price of the 2025 Secured Notes was variable and did not meet the fixed-for-fixed requirement under ASC 815-40, the conversion

feature was bifurcated from the host debt instrument and accounted for as a derivative liability at fair value, with changes in fair

value recorded as a gain or loss in the condensed consolidated statement of operations.

During the three months ended March 31, 2026,

the holders of the 2025 Secured Notes elected to convert the entire $1,070,000 outstanding principal balance into 111,608 shares of the

Company’s common stock.

The $289,516 loss reflects the change in fair value of the bifurcated conversion feature through the dates

of conversion, after which the aggregate fair value of $1,142,191 was reclassified from derivative liabilities to additional paid-in

Following the conversions, no balance remains outstanding under the 2025 Secured Notes and the related bifurcated derivative

liability was fully extinguished.

gain recognized during the three months ended March 31, 2025 related primarily to the Series A and Series B detachable warrants issued

in connection with the Company’s June 2024 capital raise, the terms of which required derivative liability treatment due to net

cash settlement provisions outside the control of the Company under certain circumstances.

The holders fully exercised their Series B

warrants during the three months ended March 31, 2025, which contributed to a decline in the market value of the Company’s common

stock and a corresponding decrease in the estimated fair value of the remaining Series A warrants.

Company has also classified as derivative liabilities 184 warrants issued in 2023, which remained outstanding as of March 31, 2026 with

an aggregate fair value of $169.

These warrants are marked to market at each reporting date, with changes in fair value recorded in the

condensed consolidated statement of operations.

(loss) before Income Tax Benefit

a result of the above, we reported a loss before income tax benefit from continuing operations of $(1,513,727) for the three months ended

March 31, 2026, compared to income before income tax benefit from continuing operations of $4,259,712 for the three months ended March

31, 2025, a decrease of $5,773,439.

recorded an income tax benefit of $0 for the three months ended March 31, 2026 and 2025, respectively.

The effective tax rate for both

periods varied from the expected statutory rate due to our continuing to provide a 100% valuation allowance on net deferred tax assets.

We determined that it was appropriate to continue the full valuation allowance on net deferred tax assets as of March 31, 2026 and December

31, 2025 primarily because of the recurring operating losses.

have further determined to continue providing a full valuation reserve on our net deferred tax assets as of March 31, 2026.

had approximately $168,405,000 of federal net operating loss carryforwards and $1,685,000 of research and development tax credit carryforwards

as of September 30, 2025 and December 31, 2024 available to offset future net taxable income.

a result of the above, we reported net income (loss) of $(1,185,464) and $(14,424,531) for the nine months ended September 30, 2025 and

2024, respectively, an improvement of $13,239,067 (91.8%).

Income Attributable to Noncontrolling Interests of Consolidated Subsidiary

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

As a result, the noncontrolling shareholders or

minority interest is allocated 49% of the income/loss of Nobility Healthcare which is reflected in the condensed consolidated statement

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

net income attributable to noncontrolling interests of consolidated subsidiary of $118,133 and a net loss of $1,939,143 for the nine

months ended September 30, 2025 and 2024, respectively.

as of March 31, 2026 available to offset future net taxable income.

Loss from continuing operations

a result of the above, we reported a net loss from continuing operations of $(1,513,727) for the three months ended March 31, 2026, compared

to net income from continuing operations of $4,259,712 for the three months ended March 31, 2025, a decrease of $5,773,439.

Income (Loss) from Discontinued Operations

The Company recognized

a loss from discontinued operations of $(4,371,588) for the three months ended March 31, 2026, compared to income from discontinued operations

of $7,370 for the three months ended March 31, 2025.

The Q1 2026 loss consists of three components:

(i) a $(1,556,254) loss on sale,

calculated as the difference between the carrying value of Nobility Healthcare’s net assets and the consideration exchanged at

(ii) a $(2,457,415) loss on deconsolidation, representing the derecognition of parent-level investment basis and intercompany

balances that no longer eliminate in consolidation upon loss of control;

and (iii) a $(357,919) adjustment to the carrying value of the

note receivable based on post-closing performance of the divested business, recognized in connection with the quarterly earn-out adjustment

mechanism defined in the Unit Purchase Agreement.

See Note 22, Discontinued Operations to the condensed consolidated financial statements for additional

Income (Loss) Attributable to Noncontrolling Interests – Discontinued Operations

Company previously held a 51% equity interest in its consolidated subsidiary, Nobility Healthcare, with the remaining 49% held by third-party

venture partners.

Nobility Healthcare was sold on January 8, 2026 (effective January 1, 2026), and its results have been classified as

discontinued operations for all periods presented.

As a result, the noncontrolling interest related to Nobility Healthcare is included

within net loss from discontinued operations, and no separate noncontrolling interest is reported in continuing operations for either

As of March 31, 2026, the Company has no remaining noncontrolling interests in any consolidated subsidiary.

Loss Attributable to Common Stockholders

a result of the above, we reported a net loss of $(1,303,597) and $(12,485,388) for the nine months ended September 30, 2025 and 2024,

respectively, an improvement of $11,181,791 (89.6%).

and Diluted Loss per Share

basic and diluted loss per share was $1.40 and $7,793.63 for the nine months ended September 30, 2025 and 2024, respectively, for reasons

previously noted.

All outstanding stock options and Common Stock purchase warrants were considered antidilutive and therefore excluded

from the calculation of diluted income (loss) per share for the nine months ended September 30, 2025 and 2024.

Such potentially dilutive

securities were excluded from the computation because of their exercise price being higher than the market value of our Common Stock

and the net loss reported for 2025 and 2024.

a result of the above, we reported a net loss attributable to common stockholders of $(5,885,315) for the three months ended March 31,

2026, compared to net income attributable to common stockholders of $4,263,471 for the three months ended March 31, 2025, a decrease

of $10,148,786.

and Diluted Income/(Loss) per Share

basic and diluted loss per share from continuing operations was $(3.44) for the three months ended March 31, 2026, compared to basic

and diluted income per share from continuing operations of $2,107.72 for the three months ended March 31, 2025.

The basic and diluted

loss per share from discontinued operations was $(9.95) for the three months ended March 31, 2026, compared to basic and diluted income

per share from discontinued operations of $1.86 for the three months ended March 31, 2025, resulting in a net basic and diluted loss

per share attributable to common stockholders of $(13.39) for the three months ended March 31, 2026, compared to net basic and diluted

income per share attributable to common stockholders of $2,109.58 for the three months ended March 31, 2025.

All outstanding stock options,

common stock purchase warrants, and shares issuable upon conversion of convertible debt were considered antidilutive and therefore excluded

from the calculation of diluted loss per share for the three months ended March 31, 2026 and 2025.

All share and per-share amounts have

been retroactively adjusted to reflect the 1-for-5 reverse stock split effective April 22, 2026.

and Capital Resources

Liquidity Plan :

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

Based upon our current

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

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

We are continuously

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

however, there can be no assurance

that our capital raising initiatives will be successful.

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

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

The Company has incurred net losses and negative cash flows from operating activities since inception.

incurred an operating loss of $1,296,987 for the three months ended March 31, 2026, continued to incur negative cash flows from operations,

and had an accumulated deficit of $147,612,336 as of March 31, 2026.

These conditions raise substantial doubt about the Company’s ability

to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements.

management has implemented and continues to implement plans intended to mitigate these conditions, including (i) continued access to

the Company’s committed equity financing facility (the “ELOC”) providing up to $25,000,000 over a 36-month term, (ii) the January

8, 2026 divestiture of Nobility Healthcare, which eliminated the operating losses and working capital requirements of the Revenue Cycle

Management segment, (iii) ongoing cost-reduction initiatives, including headcount reductions and facility consolidations in the Video

Solutions segment, and (iv) continued evaluation of additional debt and equity financing alternatives.

There can be no assurance that

the Company will be successful in restoring positive cash flows and profitability, or that it will be able to raise additional financing

on terms acceptable to the Company.Notwithstanding these measures, substantial doubt about the Company’s ability to continue as a going

concern has not been alleviated as of the date of issuance of these condensed consolidated financial statements.

cash equivalents:

As of September 30, 2025, we had cash and cash equivalents with an aggregate balance of $793,360, an increase from

a balance of $454,314 at December 31, 2024.

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

the main elements of the $339,046 net increase in cash during the nine months ended September 30, 2025:

cash used in operating activities was $8,996,431 and $4,086,023 for the nine months ended September 30, 2025 and 2024, respectively,

a deterioration of $4,910,410.

The decline in operating cash flows primarily reflects the repayment of accounts payable (funded by

proceeds from our February 2025 public equity offering), higher noncash gains from changes in the fair value of warrant derivative

liabilities and from liability and debt extinguishments, which reduced noncash add-backs to operating cash flow, and unfavorable

changes in operating assets and liabilities period over period.

cash provided by (used in) investing activities was $(349,319) and $392,523 for the nine months ended September 30, 2025 and 2024,

respectively.

During the nine months ended September 30, 2025, we made expenditures for the purchase of property plant and equipment

and also for patents.

During the nine months ended September 30, 2024, we sold our building and collected $550,644 in net proceeds.

cash provided by financing activities was $9,684,796 and $3,330,482 for the nine months ended September 30, 2025 and 2024, respectively.

During 2025, we completed several financing transactions:

(i) a February 2025 public equity offering of common stock with detachable

warrants generating $14,308,300 in net cash proceeds, (ii) issuance of an unsecured promissory note providing $600,000 in net cash

proceeds, and (iii) issuance of a senior secured convertible note with detachable warrants providing $610,000 in net cash proceeds.

These were partially offset by repayments on outstanding borrowings, including senior secured promissory notes and merchant cash

net result of these activities was an increase in cash of $339,046 to $793,360 for the nine months ended September 30, 2025.

have $793,360 of cash and cash equivalents and net negative working capital of $115,393 as of September 30, 2025.

Accounts receivable

and other receivables balances represented $4,796,447 of our net working capital at September 30, 2025.

We intend to collect our outstanding

receivables on a timely basis and reduce the overall level during 2025, which would help to provide positive cash flow to support our

operations during 2025 and beyond.

Inventory represents $2,622,542 of our net working capital at September 30, 2025.

We are actively

managing the level of inventory, and our goal is to reduce such level during 2025 by our sales activities, the decrease of which should

provide additional cash flow to help support our operations during 2025 and beyond.

Expenditures:

had the following material commitments for capital expenditures at September 30, 2025:

Total lease expense under the Company’s operating leases was approximately $546,797 during the nine months

ended September 30, 2025.

following sets forth the operating lease right of use assets and liabilities as of September 30, 2025:

Operating lease right of use assets, net

As of March 31, 2026, we had cash and cash equivalents of $1,224,321, compared to $757,369 as of December 31, 2025,

representing a net increase of $466,952.

The changes in cash during the three months ended March 31, 2026 resulted from the following

cash flow activities from continuing operations:

of net cash used in operating activities from continuing operations for the three months ended March 31, 2026, compared to $5,600,450

of net cash used in operating activities from continuing operations for the three months ended March 31, 2025.

Net cash used in operating

activities was primarily impacted by the Company’s net loss from continuing operations, changes in operating assets and liabilities,

and non-cash items including depreciation, amortization, change in fair value of derivative liabilities, and non-cash interest expense.

The prior-period comparative reflected significant non-cash adjustments, including a $(2,515,891) gain on change in fair value of

derivative liabilities, a $(2,220,097) gain on extinguishment of liabilities, a $(1,249,372) gain on extinguishment of debt - related

party, and $672,490 of non-cash interest expense, together with a $4,423,032 decrease in accounts payable funded by proceeds from

the February 2025 public equity offering.

Following the sale of Nobility Healthcare on January 8, 2026 (effective January 1, 2026),

no cash flows from discontinued operations are reflected in the three months ended March 31, 2026, compared to $154,311 of net cash

used in operating activities of discontinued operations during the three months ended March 31, 2025.

of net cash used in investing activities from continuing operations for the three months ended March 31, 2026, compared to $75,528

of net cash used in investing activities from continuing operations for the three months ended March 31, 2025.

Investing activities

during the three months ended March 31, 2026 consisted of capital expenditures for property, plant and equipment and purchases of

intangible assets, partially offset by $100,000 of proceeds received in connection with the Nobility Healthcare disposition.

were no cash flows from investing activities of discontinued operations during the three months ended March 31, 2026, compared to

$9,919 of net cash used in investing activities of discontinued operations during the three months ended March 31, 2025.

of net cash provided by financing activities from continuing operations for the three months ended March 31, 2026, compared to $9,148,502

of net cash provided by financing activities from continuing operations for the three months ended March 31, 2025.

Financing activities

during the three months ended March 31, 2026 primarily consisted of $1,726,662 of net proceeds from issuances of common stock under

the ELOC, partially offset by principal payments on debt obligations of $10,873.

Financing activities during the three months ended

March 31, 2025 primarily consisted of net proceeds of $14,308,300 from the February 2025 public equity offering and $600,000 of proceeds

from an unsecured promissory note, partially offset by repayments of senior secured promissory notes of $3,600,000 and merchant advances

of $1,922,750, along with other debt obligations.

No financing cash flows from discontinued operations were recognized in either

net result of these activities was an increase in cash of $466,952 for the three months ended March 31, 2026.

As of March 31, 2026, the Company had $1,224,321 of cash and cash equivalents and a net negative working capital

position of $(63,091), compared to a net negative working capital position of $(2,270,311) as of December 31, 2025 (excluding amounts

classified as held for sale in connection with the discontinued Revenue Cycle Management segment), representing an improvement of $2,207,220.

The improvement in working capital was primarily driven by proceeds from issuances of common stock under the ELOC, the conversion of the

2025 Senior Secured Convertible Notes into common stock, and the extinguishment of the associated warrant derivative liabilities upon

Accounts receivable and other receivables represented $3,654,344 of working capital at March 31, 2026.

Management intends to collect

outstanding receivables on a timely basis and reduce overall receivable balances during 2026, which is expected to provide additional

cash flow to support continuing operations.

Inventory represented $2,148,228 of working capital as of March 31, 2026.

The Company is

actively managing inventory levels, and management’s objective is to reduce inventory during 2026 through sales activities.

in inventory levels is expected to generate additional cash flow to support the Company’s continuing operations.

Commitments and Other Contractual Obligations:

lease expense under the Company’s operating leases related to continuing operations was approximately $68,596 during the three

months ended March 31, 2026.

The following sets forth the operating lease right-of-use assets and liabilities associated with continuing

operations as of March 31, 2026:

Operating lease right of use

Prepayment of rent

1 unchanged sentence

Operating lease obligations-current portion

Operating lease obligations-less current portion

Total operating lease obligations

Operating lease obligations-less

current portion

Total operating lease

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

Year ending December

2025 (October 1, 2025 through December 31, 2025)

2026 (April 1, 2026 through

December 31, 2026)

2030 and thereafter

Total undiscounted minimum future lease payments

Total undiscounted minimum future lease

Imputed interest

Total operating lease liability

obligations - We have the following outstanding debt as of September 30, 2025 which require future principal payments:

September 30, 2025

Economic injury disaster loan (EIDL)

Unsecured Promissory note – Entertainment Segment

Senior Secured Promissory Notes

Unamortized debt issuance costs

operating lease liability

the three months ended March 31, 2026, the Company incurred capital expenditures of $159,657, consisting primarily of purchases of property,

plant and equipment.

The Company does not currently have any material commitments for capital expenditures beyond normal course of business

January 2026, Kustom 440, Inc., a wholly owned subsidiary of the Company, entered into a non-cancellable artist performance agreement

for the 2026 Country Stampede music festival with aggregate payment obligations totaling $750,000.

As of March 31, 2026, the Company

had paid the initial $187,500 deposit, with remaining contractual payment obligations of $562,500 consisting of $187,500 due no later

than May 27, 2026 and $375,000 payable following the June 27, 2026 performance.

See Note 13, Commitments and Contingencies , for

additional details.

Company has also agreed to pay 4% of future Gross Proceeds raised under its Equity Line of Credit through February 14, 2028, pursuant

to a Settlement Agreement entered into with Aegis Capital Corp.

in January 2026.

The Company’s estimate with respect to the maximum

reasonably possible future obligation under this arrangement is approximately $900,000, based upon the remaining undrawn commitment of

the facility.

This obligation is strictly contingent upon the Company’s discretionary future use of the facility.

Commitments and Contingencies , for additional details.

obligations - We have the following outstanding debt related to continuing operations as of March 31, 2026, which requires future

principal payments:

Economic injury disaster loan

Unsecured Promissory note – Entertainment

Total gross principal

Unamortized debt issuance

Debt obligations

current maturities of debt obligations

Debt obligations, long-term

obligations mature on an annual basis as follows as of September 30, 2025:

September 30, 2025

2025 (July 1, 2025 to December 31, 2025)

current maturities

of debt obligations

Debt obligations,

Future principal payments on debt obligations as of March 31, 2026 are as follows:

Carrying Value

(April 1, 2026 to December 31, 2026)

2030 and thereafter

table above excludes the related party note payable to a trust affiliated with a TicketSmarter officer with a net carrying value of $411,698

as of March 31, 2026 ($0 current, $411,698 long-term).

See Note 17, Related Party Transactions , for additional details.

time to time, we are notified that we may be a party to a lawsuit or that a claim is being made against us.

It is our policy to not disclose

It is our policy not to disclose

the specifics of any claim or threatened lawsuit until the summons and complaint are actually served on us.

12 unchanged sentences

the ultimate resolution is unknown, we do not expect that these lawsuits will individually, or in the aggregate, have a material adverse

effect to our results of operations, financial condition or cash flows.

effect on our results of operations, financial condition or cash flows.

However, the outcome of any litigation is inherently uncertain

3 unchanged sentences

See Note 13, Commitments and Contingencies ,

to the condensed consolidated financial statements of this Quarterly Report on Form 10-Q for information on our litigation.

to the condensed consolidated financial statements and Part II, Item 1, “Legal Proceedings,” of this Quarterly Report on

Form 10-Q for information on our litigation.

Accounting Estimates

significant accounting policies are summarized in Note 1, “Nature of Business and Summary of Significant Accounting Policies ,”

to our condensed consolidated financial statements.

significant accounting policies are summarized in Note 1, Nature of Business and Summary of Significant Accounting Policies , to

our condensed consolidated financial statements.

While the selection and application of any accounting policy may involve some level

5 unchanged sentences

and other intangible assets;

value of assets and liabilities acquired in business combinations ;

value of warrant derivative liabilities;

Value of Warrant Derivative Liabilities and Bifurcated Embedded Derivatives;

Compensation Expense;

1 unchanged sentence

Recognition / Allowances for Doubtful Accounts.

Revenue is recognized for the shipment of products or delivery of service when

all five of the following conditions are met:

the contract with the customer;

the performance obligations in the contract;

the transaction price;

the transaction price to the performance obligations in the contract;

revenue when a performance obligation is satisfied.

is recognized for the shipment of products or delivery of service in accordance with ASC 606 by applying the following five-step model:

Identify the contract with the customer;

Identify the performance obligations in the contract;

Determine the transaction price;

Allocate the transaction price to the performance obligations in the contract;

Recognize revenue when a performance obligation is satisfied.

consider the terms and conditions of the contract and our customary business practices in identifying our contracts under ASC 606.

25 unchanged sentences

We generate all our revenue from contracts with

for our revenue cycle management segment is recorded on a net basis, as its primary source of revenue is its end-to-end service fees.

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

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

9 unchanged sentences

Payment is typically due upon delivery of the ticket.

also act as an intermediary between buyers and sellers through the online secondary marketplace.

also act as an intermediary between buyers and sellers through our online secondary marketplace.

Revenues derived from this marketplace

4 unchanged sentences

Revenue is recognized on a net basis, net of the amount due to the seller

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

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

is due at the time of sale.

review all significant, unusual, or non-standard shipments of product or delivery of services as a routine part of our accounting and

review all significant, unusual, or nonstandard shipments of product or delivery of services as a routine part of our accounting and

financial reporting process to determine compliance with these requirements.

Extended warranties are offered on selected products, and

when a customer purchases an extended warranty, the associated proceeds are treated as deferred revenue and recognized over the term

when a customer purchases an extended warranty, the associated proceeds are treated as contract liabilities and recognized over the term

of the extended warranty.

2 unchanged sentences

However, we have commercial customers and international distributors that present a greater

risk for uncollectible accounts than such law enforcement customers and we consider a specific reserve for bad debts based on their individual

circumstances.

risk for uncollectible accounts than such law enforcement customers, and we consider a specific reserve for bad debts based on their

individual circumstances.

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

1 unchanged sentence

fees charged with the transaction.

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

for bad debts based on their individual circumstances.

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

we will track historical bad debts and continue to assess appropriate reserves.

our revenue cycle management segment, our customers are mainly medium to large healthcare organizations that are charged monthly upon

the execution of our services.

Being these customers are healthcare organizations with minimal risk for uncollectible accounts;

a specific reserve for bad debts based on their individual circumstances.

As we continue to learn more about the collectability related

to this recently added segment, we will track historical bad debts and continue to assess appropriate reserves.

This leads to minimal risk for uncollectible accounts, and we consider a specific reserve for bad

debts based on individual customer circumstances.

We continue to monitor collectability trends and assess appropriate reserve levels

based on our operating history within this segment.

for Excess and Obsolete Inventory.

We record valuation reserves on our inventory for estimated excess or obsolete inventory items.

The amount of the reserve is equal to the difference between the cost of the inventory and the estimated market value based upon assumptions

about future demand and market conditions.

On a quarterly basis, management performs an analysis of the underlying inventory to identify

reserves needed for excess and obsolescence.

Management uses its best judgment to estimate appropriate reserves based on this analysis.

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

consisted of the following at September 30, 2025 and December 31, 2024:

September 30,

Raw material and component parts– video solutions segment

record valuation reserves on inventory for estimated excess or obsolete items.

The amount of the reserve represents the difference between

the cost of the inventory and its estimated net realizable value based on assumptions regarding future demand, inventory aging, and market

Management performs a detailed review of inventory balances on a quarterly basis to identify inventory that may be excess

or obsolete and uses judgment to estimate appropriate reserve levels.

We also adjust the carrying value of inventory when its estimated

net realizable value is below cost.

consisted of the following at March 31, 2026 and December 31, 2025:

Raw material and component parts–

Video Solutions segment

Work-in-process– Video Solutions segment

Finished goods – Video Solutions segment

Finished goods – entertainment segment

Reserve for excess and obsolete inventory– video solutions segment

Reserve for excess and obsolete inventory – entertainment segment

Finished goods –

Entertainment segment

Reserve for excess and

obsolete inventory– Video Solutions segment

for excess and obsolete inventory – Entertainment segment

Total inventories

2 unchanged sentences

As reflected above, our inventory reserves represented

40% of the gross inventory balance at September 30, 2025, compared to 46% of the gross inventory balance at December 31, 2024.

$1,766,885 and $2,169,655 in reserves for obsolete and excess inventories at September 30, 2025 and December 31, 2024, 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, 2025.

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

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

reserves already established.

45.9% of the gross inventory balance at March 31, 2026, compared to 45.2% of the gross inventory balance at December 31, 2025.

$1,822,826 and $1,918,941 in reserves for obsolete and excess inventories at March 31, 2026 and December 31, 2025, respectively.

slight decrease in the inventory reserve is primarily attributable to write-offs of inventory that had been fully reserved in prior periods,

as well as continued inventory management and lower on-hand inventory levels during the period.

Additionally, the Company maintains a

reasonable reserve for inventory held at the Entertainment segment, within which some inventory items sell below cost or go unsold, thus

having to be fully written off following the event date.

We believe the reserves are appropriate given our inventory levels as of March

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

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

of the inventory reserves already established.

and other intangible assets.

When we acquire a business, we determine the fair value of the assets acquired and liabilities assumed

on the date of acquisition, which may include a significant amount of intangible assets such as customer relationships, software and

content, as well as goodwill.

When determining the fair values of the acquired intangible assets, we consider, among other factors, analyses

of historical financial performance and an estimate of the future performance of the acquired business.

The fair values of the acquired

intangible assets are primarily calculated using an income approach that relies on discounted cash flows.

This method starts with a forecast

of the expected future net cash flows for the asset and then adjusts the forecast to present value by applying a discount rate that reflects

the risk factors associated with the cash flow streams.

We consider this approach to be the most appropriate valuation technique because

the inherent value of an acquired intangible asset is its ability to generate future income.

In a typical acquisition, we engage a third-party

valuation expert to assist us with the fair value analysis for acquired intangible assets.

we acquire a business, we determine the fair value of the assets acquired and liabilities assumed on the date of acquisition, which may

include a significant amount of intangible assets such as customer relationships, software and content, as well as goodwill.

When determining

the fair values of the acquired intangible assets, we consider, among other factors, analyses of historical financial performance and

an estimate of the future performance of the acquired business.

The fair values of the acquired intangible assets are primarily calculated

using an income approach that relies on discounted cash flows.

This method starts with a forecast of the expected future net cash flows

for the asset and then adjusts the forecast to present value by applying a discount rate that reflects the risk factors associated with

the cash flow streams.

We consider this approach to be the most appropriate valuation technique because the inherent value of an acquired

intangible asset is its ability to generate future income.

In a typical acquisition, we engage a third-party valuation expert to assist

us with the fair value analyses for acquired intangible assets.

the fair values of acquired intangible assets requires us to exercise significant judgment.

27 unchanged sentences

of our qualitative assessment indicate that it is more likely than not that the fair value of a reporting unit is less than its respective

carrying amount, then we perform a two-step quantitative impairment test.

carrying amount, then we perform a quantitative impairment test.

the recoverability of goodwill requires judgments and assumptions regarding future trends and events.

10 unchanged sentences

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

performed an 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 impairment test

for our reporting units with remaining goodwill.

fair value of each reporting unit was estimated using a weighting of the income and market valuation approaches.

performed our annual goodwill and intangible asset impairment test as of December 31, 2025 on a full quantitative basis, given our prior-year

impairment history and continued operating losses across certain segments.

The Revenue Cycle Management segment (Nobility Healthcare)

was classified as discontinued operations prior to the measurement date and was excluded from the annual impairment analysis.

value of each continuing 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 20.9% 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.

The income and market approaches were equally weighted in our most recent annual impairment test,

for all of the reporting units.

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 25% 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.

held goodwill of $5,480,966 as of September 30, 2024, related to businesses within our revenue cycle management segment.

We held goodwill

of $6,112,507 as of September 30, 2024, respectively, related to businesses within our entertainment segment.

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 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,

2025 and December 31, 2024.

Historically, we recorded an assurance-type warranty liability related to hardware sold.

As we have transitioned to

a cloud-based, subscription model in which devices are typically provided as part of the service rather than sold, the volume of products

subject to an assurance-type warranty has become insignificant.

For subscription deployments, our obligations consist of maintenance/support

and service-level commitments, which are accounted for under ASC 606 as services (and any service-level credits as variable consideration),

not as assurance-type warranties.

Based on claims history and expected costs, anticipated assurance-type warranty costs are immaterial.

applied a fair value methodology to each reporting unit based on discounted cash flows, requiring significant judgments including estimation

of future cash flows, long-term revenue growth rates, and determination of our weighted average cost of capital risk-adjusted to reflect

the specific risk profile of each reporting unit.

The weighted average cost of capital used in our December 31, 2025 impairment test

ranged from 18.4% to 22.7%.

We also applied a market approach using revenue multiples of comparable publicly traded companies.

and market approaches were equally weighted for all reporting units.

consider a reporting unit’s fair value to be substantially in excess of the reporting unit’s carrying value at a 20% premium

Based on our December 31, 2025 annual impairment test, the Video Solutions segment’s fair value was substantially in

excess of its carrying value, with an indicated equity fair value of $2,580,000 compared to a carrying value of approximately $595,000.

The Video Solutions segment carries no goodwill.

The Entertainment segment was determined to be impaired.

a result of our December 31, 2025 annual impairment test, we recorded total non-cash goodwill and intangible asset impairment charges

of $2,533,667 for the year ended December 31, 2025, all attributable to the Entertainment segment.

The impairment charges consisted of

(i) a $1,428,000 goodwill impairment charge, reducing the Entertainment segment goodwill balance to $4,377,507;

(ii) a $746,667 full

write-off of the Sponsorship Agreement Network (SAN) intangible asset, which failed the ASC 360 recoverability test based on undiscounted

cash flows of $621,000 compared to the $746,667 carrying value;

(iii) a $189,000 impairment charge related to the TicketSmarter trade

name, reducing its carrying value to $210,000;

and (iv) a $170,000 impairment charge related to the Country Stampede trade name, reducing

its carrying value to $130,000.

The goodwill impairment was primarily driven by the Entertainment segment’s continued operating

losses, the fixed cost structure of festival operations, and the structural cost challenges within certain Entertainment segment revenue

of March 31, 2026, management evaluated whether any triggering events or changes in circumstances occurred during the three months ended

March 31, 2026 that would indicate the carrying value of goodwill or long-lived assets may not be recoverable.

Based on that evaluation,

no triggering events were identified and no interim impairment test was performed.

Accordingly, no goodwill or intangible asset impairment

charges were recorded for the three months ended March 31, 2026.

The Company’s remaining goodwill balance of $4,377,507 and indefinite-lived

trade name carrying values of $210,000 (TicketSmarter) and $130,000 (Country Stampede) at March 31, 2026 are unchanged from December

Historically,

the Company recorded an assurance-type warranty liability related to hardware products sold.

As the Company has continued its transition

to a cloud-based, subscription model — where devices are typically provided as part of the service arrangement rather than sold

outright — the volume of products subject to assurance-type warranties has become insignificant.

For subscription deployments,

the Company’s obligations primarily consist of maintenance, support, and service-level commitments, which are accounted for under

ASC 606 as service obligations, with any service-level credits treated as variable consideration, rather than as assurance-type warranties.

Based on historical claims experience and expected future costs, anticipated assurance-type warranty expenses are not material.

the Company’s warranty reserve was $0 as of both March 31, 2026 and December 31, 2025, reflecting the factors noted above.

derivative liabilities.

12 unchanged sentences

for Income Taxes.

Accounting for income taxes requires significant estimates and judgments on the part of management.

Such estimates

and judgments include, but are not limited to, the effective tax rate anticipated to apply to tax differences that are expected to reverse

in the future, the sufficiency of taxable income in future periods to realize the benefits of net deferred tax assets and net operating

losses currently recorded and the likelihood that tax positions taken in tax returns will be sustained on audit.

for income taxes requires significant estimates and judgments on the part of management.

Such estimates and judgments include, but are

not limited to, the effective tax rate anticipated to apply to tax differences that are expected to reverse in the future, the sufficiency

of taxable income in future periods to realize the benefits of net deferred tax assets and net operating losses currently recorded, and

the likelihood that tax positions taken in tax returns will be sustained on audit.

required by authoritative guidance, we record deferred tax assets or liabilities based on differences between financial reporting and

2 unchanged sentences

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

As of September 30, 2025 and December 31, 2024, we have fully reserved

As of March 31, 2026 and December 31, 2025, we have fully reserved

all of our deferred tax assets.

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

valuation allowance should be increased to fully reserve our deferred tax assets at September 30, 2025 and December 31, 2024.

We determined

that it was appropriate to continue to provide a full valuation reserve on our net deferred tax assets as of September 30, 2025 and December

31, 2024, because of the overall net operating loss carryforwards available.

We expect to continue to maintain a full valuation allowance

until we determine that we can sustain a level of profitability that demonstrates our ability to realize these assets.

To the extent

we determine that the realization of some or all of these benefits is more likely than not based upon expected future taxable income,

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

Such a reversal would be recorded as an income tax benefit and, for some

portion related to deductions for stock option exercises, an increase in shareholders’ equity.

We determined that it was appropriate to maintain a full valuation allowance on our net deferred tax

assets at March 31, 2026 and December 31, 2025 based on our assessment of recoverability and continued operating losses.

continue to maintain a full valuation allowance until we determine that we can sustain a level of profitability that demonstrates our

ability to realize these assets.

To the extent we determine that the realization of some or all of these benefits is more likely than

not based upon expected future taxable income, a portion or all of the valuation allowance will be reversed.

Such a reversal would be

recorded as an income tax benefit and, for some portion related to deductions for stock option exercises, an increase in shareholders’

required by authoritative guidance, we have performed a comprehensive review of our portfolio of uncertain tax positions in accordance

with recognition standards established by the FASB, an uncertain tax position represents our expected treatment of a tax position taken

in a filed tax return or planned to be taken in a future tax return, that has not been reflected in measuring income tax expense for

financial reporting purposes.

We have no recorded liability as of September 30, 2025 and December 31, 2024 representing uncertain tax

with recognition standards established by the FASB.

An uncertain tax position represents our expected treatment of a tax position taken

in a filed tax return or planned to be taken in a future tax return that has not been reflected in measuring income tax expense for financial

reporting purposes.

We have no recorded liability as of March 31, 2026 and December 31, 2025 representing uncertain tax positions.

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

14 unchanged sentences

income not be realized.

of the Company’s significant accounting estimates relate to businesses that have been classified as discontinued operations.

and liabilities of discontinued operations are measured and reported in accordance with U.S.

GAAP and are presented separately from continuing

operations in the condensed consolidated financial statements.

Management applies the same accounting policies and estimation methodologies to

discontinued operations as those applied to continuing operations, including estimates related to revenue recognition, accounts receivable

collectability, inventory valuation, impairment of long-lived assets, and contingent liabilities, where applicable.

The results of discontinued

operations are excluded from continuing operations and presented separately in the consolidated statements of operations.

and Seasonality

has not materially affected us during the past fiscal year.

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

business is seasonal in nature, however;

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

calendar year than in the first half.

We do not believe that our Video Solutions segment’s business is seasonal

in nature, however;

the Entertainment segment experiences variability in revenues across quarters, with the Country Stampede music festival

generating revenues in the second quarter and TicketSmarter platform activity driven by event scheduling throughout the year.

Quantitative and Qualitative Disclosures about Market Risk.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis