What changed in this filing

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Item 1. Financial Statements

2025-08-18 compared with 2025-05-20 · 1068 added, 879 removed, 1104 unchanged (64% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

MARCH 31, 2025 AND DECEMBER 31, 2024

March 31, 2025

JUNE 30, 2025 AND DECEMBER 31, 2024

June 30, 2025

December 31, 2024

1 unchanged sentence

Cash and cash equivalents

Accounts receivable-trade, less allowance for doubtful accounts of $ 131,500 – March 31, 2025 and $ 200,668 – December 31, 2024

Subscriptions receivable, net of $ 76,403 allowance – March 31, 2025 and $ 25,000 – December 31, 2024

Accounts receivable-trade, less allowance for doubtful accounts of $ 105,669 – June 30, 2025 and $ 200,668 – December 31, 2024

Subscriptions receivable, net of $ 75,000 allowance – June 30, 2025 and $ 25,000 – December 31, 2024

Other receivables

26 unchanged sentences

Preferred stock, $ 0.001 par value per share, 10,000,000 shares authorized;

none issued or outstanding – March 31, 2025 and December 31, 2024

none issued or outstanding – June 30, 2025 and December 31, 2024

Common stock, $ 0.001 par value;

1 unchanged sentence

shares issued:

5,780,248 – March 31, 2025 and 290,559 – December 31, 2024

1,727,421 – June 30, 2025 and 3,204 – December 31, 2024

Additional paid in capital

8 unchanged sentences

Total liabilities and equity (deficit)

See Notes to Unaudited Condensed

Consolidated Financial Statements.

See Notes to Unaudited Condensed Consolidated Financial

DIGITAL ALLY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED

MARCH 31, 2025 AND 2024

FOR THE THREE AND SIX MONTHS ENDED

JUNE 30, 2025 AND 2024

For the three

months ended June 30,

Service and other

3 unchanged sentences

Total cost of revenue

Gross profit (loss)

Selling, general and administrative expenses:

5 unchanged sentences

( 4,095,073 )

( 3,914,221 )

( 5,069,753 )

( 7,553,193 )

Other income (expense):

1 unchanged sentence

Interest expense

Gain on extinguishment of debt – related party

Gain on the extinguishment of liabilities

Gain on disposal of intangibles

( 1,085,063 )

( 1,733,690 )

Other income (expense)

Loss on extinguishment of debt – related party

( 1,249,372 )

Loss on extinguishment of debt

Change in fair value of warrant derivative liabilities

Loss on sale of property, plant and equipment

Gain on extinguishment of liabilities

Gain on sale of intangibles

Gain (loss) on sale of property, plant and equipment

Total other income (expense)

Income (loss) before income tax benefit (provision)

( 1,096,330 )

Income tax expense benefit (provision)

Net income (loss)

( 1,400,626 )

Loss before income tax benefit

( 4,489,204 )

( 5,010,551 )

( 8,953,819 )

Income tax benefit

( 4,489,204 )

( 5,010,551 )

( 8,953,819 )

Net (income) attributable to noncontrolling interests of consolidated subsidiary

Net income (loss) attributable to common stockholders

Net loss attributable to common stockholders

$ ( 4,545,201 )

Net income (loss) per share attributable to common information:

$ ( 5,083,861 )

$ ( 281,730 )

$ ( 9,014,882 )

Net loss per share information:

$ ( 3,479.71 )

$ ( 6,234.36 )

$ ( 3,479.71 )

$ ( 6,234.36 )

Weighted average shares outstanding:

See Notes to Unaudited Condensed

Consolidated Financial Statements.

See Notes to Unaudited Condensed Consolidated Financial

DIGITAL ALLY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

2025 AND 2024

4 unchanged sentences

Stock-based compensation

Restricted common stock grant

Restricted common stock forfeitures

Issuance of common stock

Issuance of common stock, shares

Issuance of warrants

Sale of common stock and pre-funded warrants, net of offering costs

1 unchanged sentence

Issuance of common stock upon exercise of pre-funded warrants

Issuance of common stock upon exercise of prefunded warrants, shares

Issuance of common stock upon exercise of pre-funded warrants, shares

Fair value of pre-funded warrants issued along with sale of common stock

Transition of warrant derivative liability to equity upon exercise of pre-funded warrants

Issuance of common stock upon exercise of Series B common stock purchase warrants

Issuance of common stock upon exercise of Series B common stock purchase warrants, shares

Issuance of common stock upon exercise of June 2024 Series B common stock purchase warrants

Issuance of common stock upon exercise of June 2024 Series B common stock purchase

warrants, shares

Transition of warrant derivative liability to equity upon exercise of Series B warrants

( 3,931,020 )

( 3,943,268 )

Net income (loss)

Fair value of Series A warrants issued along with sale of common stock

Fair value of Series B warrants issued along with sale of common stock

Issuance of common stock upon exercise of February 2025 Series B common stock purchase warrants

Issuance of common stock upon exercise of February 2025 Series B common stock purchase

warrants, shares

Transition of warrant derivative liability to equity upon exercise of Series B warrants issued along with February 2025 sale of common stock

Transition of warrant derivative liability to equity of Series A warrants issued along with February 2025 sale of common stock

Restricted common stock grant

Restricted common stock forfeitures

( 3,931,020 )

2 unchanged sentences

( 121,599,801 )

Stock-based compensation

Issuance of common stock

Issuance of warrants

( 2,075,300 )

Balance, December 31, 2024

( 2,075,300 )

Net Income (loss)

( 5,083,861 )

( 5,010,551 )

Balance, June 30, 2024

$ 128,999,496

$ ( 126,683,662 )

Balance, December 31, 2024

$ 129,697,781

1 unchanged sentence

$ ( 137,512,928 )

$ ( 9,013,430 )

Stock-based compensation

5 unchanged sentences

Transition of warrant derivative liability to equity upon exercise of Series B warrants

Net income (loss)

Balance, March 31, 2025

3 unchanged sentences

( 133,249,457 )

Stock-based compensation

Fair value of Series A warrants issued along with sale of common stock

( 1,340,214 )

See Notes to Unaudited Condensed

Consolidated Financial Statements.

Fair value of Series B warrants issued along with sale of common stock

( 5,406,408 )

Issuance of common stock upon exercise of February 2025 Series B common stock purchase warrants

Transition of warrant derivative liability to equity upon exercise of Series B warrants issued along with February 2025 sale of common stock

Transition of warrant derivative liability to equity of Series A warrants issued along with February 2025 sale of common stock

Deemed capital contribution related to modification of notes payable - related party

( 4,545,201 )

( 4,489,204 )

Net income (loss)

( 4,545,201 )

( 4,489,204 )

Balance, June 30, 2025

$ 147,083,314

$ ( 1,138,678 )

$ ( 137,794,658 )

$ 147,083,314

$ ( 1,138,678 )

$ ( 137,794,658 )

See Notes to Unaudited Condensed Consolidated Financial

DIGITAL ALLY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2025 AND 2024

SIX MONTHS ENDED JUNE 30, 2025 AND 2024

Cash Flows from Operating Activities:

Net income (loss)

$ ( 222,122 )

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

$ ( 8,953,819 )

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

Depreciation and amortization

6 unchanged sentences

( 2,230,716 )

Gain on extinguishment of debt – related party

( 1,249,372 )

Change in fair value of warrant derivative liability

( 3,373,080 )

Loss on sale of property, plant and equipment

Loss on extinguishment of debt

Loss on disposal of intangible assets

Loss on sale of property, plant and equipment

Change in operating assets and liabilities:

4 unchanged sentences

Prepaid expenses

( 1,001,093 )

Operating lease right of use assets

( 1,026,213 )

Increase (decrease) in:

6 unchanged sentences

Deferred revenue

( 1,657,812 )

Net cash used in operating activities

( 8,644,106 )

( 3,408,757 )

Cash Flows from Investing Activities:

7 unchanged sentences

Net proceeds of February 2025 public equity offering with detachable warrants

Net proceeds of June 2024 private placement equity offering with detachable warrants

Net proceeds of unsecured promissory note – entertainment segment

11 unchanged sentences

Payments on Merchant Advances – Entertainment Segment

( 1,215,000 )

Principal payment on contingent consideration promissory notes

15 unchanged sentences

Adjustments of accounts payable with the sale proceeds of property, plant and equipment

Deemed capital contribution related to modification of notes payable - related party

Fair value of warrants issued with sale of shares

Transition of warrant derivative liability to equity upon exercise of warrants

Reduction in proceeds from sale of building for loan, prepaid rent, and other accrued expenses

Issuance of common stock upon exercise of pre-funded warrants

See Notes to Unaudited Condensed

Consolidated Financial Statements.

See Notes to Unaudited Condensed Consolidated Financial

DIGITAL ALLY, INC.

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entity, the “Predecessor Registrant”).

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

Inc., a Nevada corporation (the “Registrant”), pursuant to an agreement and plan of merger, dated as of August 23, 2022 (the

“Merger Agreement”), between the Predecessor Registrant and the Registrant, with the Registrant as the surviving corporation

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

At the Effective Time, Articles of Merger were filed with the Secretary of

State of the State of Nevada, pursuant to which the Registrant was renamed “Digital Ally, Inc.” and, by operation of law,

succeeded to the assets, continued the business and assumed the rights and obligations of the Predecessor Registrant immediately prior

to the Merger.

Under the Nevada Revised Statutes, shareholder approval was not required in connection with the Merger Agreement or the

transactions contemplated thereby.

At the Effective Time, pursuant to the Merger Agreement, (i) each outstanding share of Predecessor Registrant’s

common stock, par value $ 0.001 per share (the “Predecessor Common Stock”) automatically converted into one share of common

stock, par value $ 0.001 per share, of the Registrant (“Registrant Common Stock”), (ii) each outstanding option, right or warrant

to acquire shares of Predecessor Common Stock converted into an option, right or warrant, as applicable, to acquire an equal number of

shares of Registrant Common Stock under the same terms and conditions as the original options, rights or warrants, and (iii) the directors

and executive officers of the Predecessor Registrant were appointed as directors and executive officers, as applicable, of the Registrant,

each to serve in the same capacity and for the same term as such person served with the Predecessor Registrant immediately before the

The business of the Registrant,

Digital Ally, Inc.

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

LLC (“Digital Ally Healthcare”), TicketSmarter, Inc.

(“TicketSmarter”), Worldwide Reinsurance, Ltd., Digital Connect,

Inc., BirdVu Jets, Inc., Kustom 440, Inc.

(“Kustom 440”), Kustom Entertainment, Inc., and its majority-owned subsidiary Nobility

Healthcare, LLC, collectively, “Digital Ally,” “Digital,” and the “Company”), is divided into three

reportable operating segments:

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

Video Solutions Segment is our legacy business that produces digital video imaging, storage products, disinfectant and related safety

products for use in law enforcement, security and commercial applications.

This segment includes both service and product revenues through

our subscription models offering cloud and warranty solutions, and hardware sales for video and health safety solutions.

The Revenue Cycle

Management Segment provides working capital and back-office services to a variety of healthcare organizations throughout the country,

as a monthly service fee.

The Ticketing Segment acts as an intermediary between ticket buyers and sellers within our secondary ticketing

platform, ticketsmarter.com, and we also acquire tickets from primary sellers to then sell through various platforms.

The accounting guidance

on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires

selected information of those segments to be presented in financial statements.

Such required segment information is included in Note

Reverse Stock Split

On 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.

Time on May 6, 2025.

As a result 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.

The 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 Reverse Stock Split.

The Reverse Stock Split was effective as of the time

of this filing.

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 Reverse Stock Split as if the split

occurred as of the earliest period presented.

The par value per share of the Company’s Common Stock was not affected by the

Reverse Stock Split.

The Company formed Digital Ally International, Inc.

during August 2009 to facilitate the export sales of its products.

The Company formed Nobility Healthcare, LLC (“Nobility Healthcare”) in June 2021 to facilitate the operations of its revenue

cycle management solutions and back-office services for healthcare organizations.

The Company formed TicketSmarter, Inc.

upon its acquisition

of Goody Tickets, LLC and TicketSmarter, LLC, to facilitate its global ticketing operations.

The Company formed Kustom Entertainment,

and Kustom 440, Inc.

in 2022 to create unique entertainment experiences directly for consumers.

The business of the Registrant, Digital Ally,

(with its wholly-owned subsidiaries, Digital Ally International, Inc., Digital Ally Healthcare, LLC (“Digital Ally Healthcare”),

TicketSmarter, Inc.

(“TicketSmarter”), Kustom 440, Inc.

(“Kustom 440”), Kustom Entertainment, Inc., and its majority-owned

subsidiary Nobility Healthcare, LLC, collectively, “Digital Ally,” “Digital,” and the “Company”),

is divided into three reportable operating segments:

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

Entertainment Segment.

The Video Solutions Segment is our legacy business that produces digital video imaging, storage products, security and commercial applications.

This segment includes both service and product

revenues through our subscription models offering cloud and warranty solutions, and hardware sales for video and health safety solutions.

The Revenue Cycle Management Segment provides working capital and back-office services to a variety of healthcare organizations throughout

the country, as a monthly service fee.

Our entertainment sector generates product revenue through our production of live events and concerts

including our annual Country Stampede music festival.

The Entertainment Segment also acts as an intermediary between ticket buyers and

sellers within our secondary ticketing platform, Ticketsmarter.com, and we also acquire tickets from primary sellers to then sell through

various platforms.

The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments

in annual financial statements and requires selected information of those segments to be presented in financial statements.

Such required

segment information is included in Note 17.

Reverse Stock Splits

On 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”).

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

Eastern Time on May 6, 2025.

As a result 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

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.

The 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 Reverse Stock

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 Reverse Stock Split as if the split occurred as of the

earliest period presented.

The par value per share of the Company’s Common Stock was not affected by the Reverse Stock Split.

On 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

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.

The 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.

The following is a summary of the Company’s

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of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the three-month period ended March 31, 2025 are not necessarily indicative of the results that may be expected for

the year ending December 31, 2025.

Operating results for the three and six-month periods ended June 30, 2025 are not necessarily indicative of the results that may be expected

for the year ending December 31, 2025.

The balance sheet as of December

5 unchanged sentences

Basis of Consolidation :

The accompanying condensed consolidated

financial statements include the consolidated accounts of Digital Ally, its wholly-owned subsidiaries, Digital Ally International, Inc.,

Shield Products, LLC, Digital Ally Healthcare, LLC, TicketSmarter, Inc., Worldwide Reinsurance, Ltd., Digital Connect, Inc., BirdVu Jets,

Inc., Kustom 440, Inc., and its majority-owned subsidiary Nobility Healthcare, LLC.

All intercompany balances and transactions have been

eliminated during consolidation.

The Company formed Digital Ally

International, Inc.

during August 2009 to facilitate the export sales of its products.

The Company formed Shield Products, LLC in May

2020 to facilitate the sales of its Shield™ line of disinfectant/cleanser products and ThermoVu™ line of temperature monitoring

The Company formed Nobility Healthcare, LLC (“Nobility Healthcare”) in June 2021 to facilitate the operations of

its revenue cycle management solutions and back-office services for healthcare organizations.

The Company formed TicketSmarter, Inc.

its acquisition of Goody Tickets, LLC and TicketSmarter, LLC, to facilitate its global ticketing operations.

The Company formed Worldwide

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

It will provide primarily liability insurance coverage to

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

formed Kustom 440, Inc.

in 2022 to create unique entertainment experiences directly for consumers.

The accompanying condensed

consolidated financial statements include the consolidated accounts of Digital Ally, its wholly-owned subsidiaries, Digital Ally International,

Inc., Digital Ally Healthcare, LLC, TicketSmarter, Inc., Kustom Entertainment, Inc., Kustom 440, Inc., and its majority-owned subsidiary

Nobility Healthcare, LLC.

All intercompany balances and transactions have been eliminated during consolidation.

Fair Value of Financial Instruments :

33 unchanged sentences

The product price,

as specified on the purchase order, is considered the standalone selling price as it is an observable input which depicts the price as

as specified on the purchase order, is considered the stand-alone selling price as it is an observable input which depicts the price as

if sold to a similar customer in similar circumstances.

9 unchanged sentences

have otherwise recognized is less than one year.

Service and other revenue is comprised

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

Revenue is recognized upon shipment of the

product and acceptance of the service or materials by the end customer for repair services.

Revenue for extended warranty, cloud service

or other software-based products is over the term of the contract warranty or service period.

A time-elapsed method is used to measure

progress because the Company transfers control evenly over the contractual period.

Accordingly, the fixed consideration related to these

revenues is generally recognized on a straight-line basis over the contract term, as long as the other revenue recognition criteria have

The Company’s multiple performance

obligations may include future in-car or body-worn camera devices to be delivered at defined points within a multi-year contract, and

in those arrangements, the Company allocates total arrangement consideration over the life of the multi-year contract to future deliverables

Service and other revenue

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

Revenue is recognized upon shipment

of the product and acceptance of the service or materials by the end customer for repair services.

Revenue for extended warranty, cloud

service or other software-based products is over the term of the contract warranty or service period.

A time-elapsed method is used to

measure progress because the Company transfers control evenly over the contractual period.

Accordingly, the fixed consideration related

to these revenues is generally recognized on a straight-line basis over the contract term, as long as the other revenue recognition criteria

have been met.

The Company’s multiple

performance obligations may include future body-worn camera devices to be delivered at defined points within a multi-year contract,

and in those arrangements, the Company allocates total arrangement consideration over the life of the multi-year contract to future deliverables

using management’s best estimate of selling price.

Revenue Cycle Management

The Company reports revenue cycle

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

percentage of the invoice amounts collected.

The Company reports revenue

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

as a percentage of the invoice amounts collected.

These service fees are reported as monthly revenue upon completion of the Company’s

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prior to its transfer to the ticket buyer.

The Company sells tickets held

in inventory, which consists of one performance obligation, being to transfer control of an event ticket to the buyer upon confirmation

The Company sells tickets

held in inventory, which consists of one performance obligation, being to transfer control of an event ticket to the buyer upon confirmation

of the order.

4 unchanged sentences

Payment is typically due upon delivery of the ticket.

The Company also acts as an intermediary

between buyers and sellers through online secondary marketplace.

Revenues derived from this marketplace primarily consist of service fees

from ticketing operations, and consists of one primary performance obligation, which is facilitating the transaction between the buyer

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

As the Company does not control the ticket prior to the transfer,

the Company acts as an agent in these transactions.

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

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

Payment is due at

the time of sale.

Deferred revenue include payments received in advance of performance under the contract and are reported separately as current liabilities

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

Such amounts consist of extended warranty contracts, prepaid

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

During the three months ended March 31, 2025, the Company recognized revenue of $ 1,196,046 related to its deferred revenue Total deferred revenue consist of the following:

The Company also acts as an

intermediary between buyers and sellers through online secondary marketplace.

Revenues derived from this marketplace primarily consist

of service fees from ticketing operations, and consists of one primary performance obligation, which is facilitating the transaction between

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

As the Company does not control the ticket prior to the

transfer, the Company acts as an agent in these transactions.

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

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

due at the time of sale.

Deferred revenue includes payments

received in advance of performance under the contract and are reported separately as current liabilities and non-current liabilities in

the Condensed Consolidated Balance Sheets.

Such amounts consist of extended warranty contracts, prepaid cloud services and prepaid installation

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

During the six months ended June 30, 2025,

the Company recognized revenue of $ 3,406,003 related to its deferred revenue.

Total deferred revenue consists of the following:

OF DEFERRED REVENUES

March 31, 2025

June 30, 2025

Deferred revenue, current

3 unchanged sentences

Deferred revenue, non-current

Sales returns

and allowances aggregated $ 71,446 for

the three months ended March 31, 2025.

Obligations for estimated sales returns and allowances are recognized

at the time of sales on an accrual basis.

The accrual is determined based upon historical return rates adjusted for known changes in

key variables affecting these return rates.

Sales returns and allowances

aggregated $ 289,195 for the six months ended June 30, 2025.

Obligations for estimated sales returns and allowances are recognized at the

time of sales on an accrual basis.

The accrual is determined based upon historical return rates adjusted for known changes in key variables

affecting these return rates.

Use of Estimates :

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Cash and cash equivalents :

Cash and cash equivalents include

funds on hand, in bank and short-term investments with original maturities of ninety (90) days or less.

The Company maintains its cash

and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of

the federally insured limit of $ 250,000 per bank.

The Company minimizes this risk by placing its cash deposits with major financial institutions.

At March 31, 2025 and December 31, 2024, the uninsured balance amounted to $ 3,009,668 and $- 0 -, respectively.

Cash and cash equivalents

include funds on hand, in bank and short-term investments with original maturities of ninety (90) days or less.

The Company maintains its

cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess

of the federally insured limit of $ 250,000 per bank.

The Company minimizes this risk by placing its cash deposits with major financial

institutions.

At June 30, 2025 and December 31, 2024, the uninsured balance amounted to $- 0 -.

Restricted Cash :

Restricted cash of $- 0 - and

was included in other assets as of March 31, 2025 and 2024, respectively.

$ 97,600 was included in other assets as of June 30, 2025 and 2024, respectively.

Restricted cash consists of bank deposits that collateralize

1 unchanged sentence

Such debt obligation was paid off as of December 31, 2024.

The following table provides a reconciliation of cash

and cash equivalents in the condensed consolidated balance sheets to cash, cash equivalents and restricted cash in the condensed consolidated

statements of cash flows:

The following table provides a reconciliation

of cash and cash equivalents in the condensed consolidated balance sheets to cash, cash equivalents and restricted cash in the condensed

consolidated statements of cash flows:

SCHEDULE OF RECONCILIATION OF CASH AND CASH EQUIVALENTS

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and more frequently if events and circumstances indicate that goodwill might be impaired.

Goodwill impairment testing is

performed at the reporting unit level.

Goodwill impairment testing

is performed at the reporting unit level.

Goodwill is assigned to reporting units at the date the goodwill is initially recorded.

Once goodwill

has been assigned to reporting units, it no longer retains its association with a particular acquisition, and all of the activities within

a reporting unit, whether acquired or internally generated, are available to support the value of the goodwill.

goodwill has been assigned to reporting units, it no longer retains its association with a particular acquisition, and all of the activities

within a reporting unit, whether acquired or internally generated, are available to support the value of the goodwill.

Traditionally, goodwill impairment

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the reporting unit’s fair value.

The Company determines the fair

value of its reporting units using a weighting of the income and market valuation approaches.

The income approach applies a fair value

methodology to each reporting unit based on discounted cash flows.

The Company determines the

fair value of its reporting units using a weighting of the income and market valuation approaches.

The income approach applies a fair

value methodology to each reporting unit based on discounted cash flows.

This analysis requires significant judgments, including estimation

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for which identifiable cash flows are available is the operating segment level.

Factors considered by the Company

include, but are not limited to, significant underperformance relative to historical or projected operating results;

significant changes

in the manner of use of the acquired assets or the strategy for the overall business;

and significant negative industry or economic trends.

When the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of the above indicators of

impairment, the Company estimates the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition.

If the sum of the expected future undiscounted cash flows and eventual disposition is less than the carrying amount of the asset, the

Company recognizes an impairment loss.

An impairment loss is reflected as the amount by which the carrying amount of the asset exceeds

the fair value of the asset, based on the fair value if available, or discounted cash flows, if fair value is not available.

assessed potential impairments of its long-lived assets as of an interim date of September 30, 2024 and concluded that there was an impairment

which was recorded during the year ended December 31, 2024.

Subsequent to completing our 2023 annual impairment test, no events or changes

in circumstances were noted that required an interim goodwill impairment test until the fiscal third quarter of 2024, when events occurred

that we considered triggering events.

During the third fiscal quarter

of 2024, management determined that triggering events had occurred resulting from the additional decline in demand for our services, prolonged

economic uncertainty, the split-off transaction did not occur when and as expected and a further decrease in our stock price.

we performed an interim impairment test as of September 30, 2024.

Factors considered by the

Company include, but are not limited to, significant underperformance relative to historical or projected operating results;

changes in the manner of use of the acquired assets or the strategy for the overall business;

and significant negative industry or economic

When the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of the above indicators

of impairment, the Company estimates the future undiscounted cash flows expected to result from the use of the asset and its eventual

If the sum of the expected future undiscounted cash flows and eventual disposition is less than the carrying amount of the

asset, the Company recognizes an impairment loss.

An impairment loss is reflected as the amount by which the carrying amount of the asset

exceeds the fair value of the asset, based on the fair value if available, or discounted cash flows, if fair value is not available.

Company assessed potential impairments of its long-lived assets as of an interim date of September 30, 2024 and concluded that there was

an impairment which was recorded during the year ended December 31, 2024.

After completing our 2023 annual impairment test, no

events or changes in circumstances were noted that required an interim goodwill impairment test until the fiscal third quarter of 2024,

when events occurred that we considered triggering events.

During the third fiscal

quarter of 2024, management determined that triggering events had occurred resulting from the additional decline in demand for our

services, prolonged economic uncertainty, the split-off transaction did not occur when and as expected and a further decrease in our

Therefore, we performed an interim impairment test as of September 30, 2024.

Refer to Note 4.

Goodwill and Other Intangible Assets for additional

details on the interim impairment test, valuation methodologies, and inputs used in the fair value measurements.

The Company also assessed

potential impairments of its long-lived assets as of December 31, 2024 and concluded that there was no additional impairment as compared

to its September 30, 2024 interim assessment.

Subsequent to completing our annual impairment test as of December 31, 2024, no events or

changes in circumstances were noted that triggered the requirement for an interim goodwill impairment test for the fiscal first quarter

Intangible assets include deferred

patent costs, license agreements, trademarks and trade names.

Legal expenses incurred in preparation of patent application have been deferred

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

Costs incurred in preparation of applications that are not granted will

be charged to expense at that time.

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

rights to certain licensed materials used in its products.

These sublicense agreements generally require upfront payments to obtain exclusive

rights to such material.

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

useful life on a straight-line method.

Fair value of assets and liabilities acquired in

business combinations :

The Company allocates the amount

it pays for each acquisition to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, including

identifiable intangible assets which arise from a contractual or legal right or are separable from goodwill.

The Company bases the fair

value of identifiable intangible assets acquired in a business combination on detailed valuations that use information and assumptions

Goodwill and Other

Intangible Assets for additional details on the interim impairment test, valuation methodologies, and inputs used in the fair value

measurements.

The Company also assessed potential impairments of its long-lived assets as of December 31, 2024 and concluded that

there was no additional impairment as compared to its September 30, 2024 interim assessment.

After completing our annual impairment

test as of December 31, 2024, no events or changes in circumstances were noted that triggered the requirement for an interim

goodwill impairment test for the fiscal first and second quarters of 2025.

Intangible assets include

deferred patent costs, license agreements, trademarks and trade names.

Legal expenses incurred in preparation of patent application have

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

Costs incurred in preparation of applications that are not

granted will be charged to expense at that time.

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

the exclusive rights to certain licensed materials used in its products.

These sublicense agreements generally require upfront payments

to obtain exclusive rights to such material.

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

over their estimated useful life on a straight-line method.

Fair value of assets and liabilities acquired

in business combinations :

The Company allocates the

amount it pays for each acquisition to the assets acquired and liabilities assumed based on their fair values at the date of acquisition,

including identifiable intangible assets which arise from a contractual or legal right or are separable from goodwill.

The Company bases

the fair value of identifiable intangible assets acquired in a business combination on detailed valuations that use information and assumptions

provided by management to valuation specialists, which consider management’s best estimates of inputs and assumptions that a market

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815-40, Derivatives and Hedging:

Contracts in an Entities Own Equity, entities must consider whether to classify contracts that may be settled

in its own stock, such as warrants to purchase shares of Common Stock, as equity of the entity or as an asset or liability.

that is not within the entity’s control could require net cash settlement, then the contract should be classified as an asset or

a liability rather than as equity.

We have determined that because the terms of the various warrants issued and remain outstanding, include

a provision that entitles all the warrant holders to receive cash for their warrants in the event of a qualifying cash tender offer, while

only certain of the holders of the underlying shares of Common Stock would be entitled to cash, our warrants should be classified as liability

measured at fair value, with changes in fair value each period reported in earnings.

Volatility in the price of our Common Stock may result

in significant changes in the value of the derivatives and resulting gains and losses on our condensed consolidated statement of operations.

Contracts in an Entities Own Equity, entities must consider whether to classify contracts that may be

settled in its own stock, such as warrants to purchase shares of Common Stock, as equity of the entity or as an asset or liability.

an event that is not within the entity’s control could require net cash settlement, then the contract should be classified as an

asset or a liability rather than as equity.

We have determined that because the terms of the various warrants issued and remain outstanding,

include a provision that entitles all the warrant holders to receive cash for their warrants in the event of a qualifying cash tender

offer, while only certain of the holders of the underlying shares of Common Stock would be entitled to cash, our warrants should be classified

as liability measured at fair value, with changes in fair value each period reported in earnings.

Volatility in the price of our Common

Stock may result in significant changes in the value of the derivatives and resulting gains and losses on our condensed consolidated statement

of operations.

Segment Reporting

The accounting guidance on Segment

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

information of those segments to be presented in the condensed consolidated financial statements.

Operating segments are identified as

components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision

The accounting guidance on

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

selected information of those segments to be presented in the condensed consolidated financial statements.

Operating segments are identified

as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision

maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess

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Non-Controlling Interests

Non-controlling interests in the

Company’s Condensed Consolidated Financial Statements represent the interest in subsidiaries held by venture partners.

partners hold noncontrolling interests in the Company’s consolidated subsidiary Nobility Healthcare, LLC.

Since the Company consolidates

the financial statements of all wholly-owned and majority owned subsidiaries, the noncontrolling owners’ share of each subsidiary’s

results of operations are deducted and reported as net income attributable to noncontrolling interest in the Condensed Consolidated Statements

of Operations.

Non-controlling interests

in the Company’s Condensed Consolidated Financial Statements represent the interest in subsidiaries held by venture partners.

venture partners hold noncontrolling interests in the Company’s consolidated subsidiary Nobility Healthcare, LLC.

Since the Company

consolidates the financial statements of all wholly-owned and majority owned subsidiaries, the noncontrolling owners’ share of each

subsidiary’s results of operations are deducted and reported as net income attributable to noncontrolling interest in the Condensed

Consolidated Statements of Operations.

New Accounting Standards

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financial statements.

ASU 2024-04, Induced Conversions

of Convertible Debt Instruments, clarifies the requirement for determining whether certain settlements of convertible debt instruments

should be accounted for as induced conversions or extinguishments.

This ASU is effective for annual periods beginning after December 15,

Early adoption is permitted and can be applied either on a prospective basis or retrospective basis.

The Company is currently evaluating

the impact of this ASU to the Company’s consolidated financial statements, however the Company does not anticipate this guidance

having a material impact to the condensed consolidated financial statements.

The other recent accounting pronouncements

issued by the Financial Accounting Standards Board (“FASB”) are not expected to have a significant impact on the Company’s

consolidated financial statements and related disclosures.

Going Concern Matters and Management’s Plans

The accompanying condensed consolidated

financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of

liabilities in the normal course of business.

The Company incurred substantial operating losses in the years ended December 31, 2024 and

2023 primarily due to reduced gross margins caused by a combination of competitors’ introduction of newer products with more advanced

features together with significant price cutting of their products and the recent acquisitions with much smaller margins than the video

solutions segment, historically.

ASU 2024-04, Induced

Conversions of Convertible Debt Instruments, clarifies the requirement for determining whether certain settlements of

convertible debt instruments should be accounted for as induced conversions or extinguishments.

This ASU is effective for annual

periods beginning after December 15, 2025.

Early adoption is permitted and can be applied either on a prospective basis or

retrospective basis.

The Company is currently evaluating the impact of this ASU to the Company’s condensed consolidated

financial statements, however the Company does not anticipate this guidance having a material impact to the condensed consolidated

financial statements.

The other recent accounting

pronouncements issued by the Financial Accounting Standards Board (“FASB”) are not expected to have a significant impact on

the Company’s consolidated financial statements and related disclosures.

Going Concern Matters and Management’s

The accompanying condensed

consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction

of liabilities in the normal course of business.

The Company incurred substantial operating losses in the years ended December 31, 2024

and year to date June 30, 2025 primarily due to reduced gross margins caused by a combination of competitors’ introduction of newer products with more

advanced features together with significant price cutting of their products and the recent acquisitions with much smaller margins than

the video solutions segment, historically.

The Company incurred operating losses of approximately $ 15.2 million for the year ended December

31, 2024 and $ 974,680 during the three months ended March 31, 2025 and it had an accumulated deficit of $ 133.2 million as of March 31,

31, 2024 and $ 5.1 million during the six months ended June 30, 2025 and it had an accumulated deficit of $ 137.8 million as of June 30,

These matters raise substantial doubt about Company’s ability to continue as a going concern.

In recent years the

Company has accessed the public and private capital markets to raise funding through the issuance of debt and equity.

regard, the Company raised approximately $ 14.3

million during the three months ended March 31, 2025 and $ 4.9

million in the year ended December 31, 2024 through a private placement transaction and two underwritten public offerings.

February 2025, the Company raised net proceeds of approximately $ 14.3

million through an underwritten public offering which has provided adequate levels of liquidity for the Company to execute its

business plans.

These equity raises were utilized to fund the repayment of debt obligations, payment of accounts payable and its

Management expects this pattern to continue until it achieves positive cash flow from operations on a consistent basis,

although it can offer no assurance in this regard.

In recent years the Company

has accessed the public and private capital markets to raise funding through the issuance of debt and equity.

In that regard, the Company

raised approximately $ 14.3 million during the six months ended June 30, 2025 and $ 4.9 million in the year ended December 31, 2024 through

a private placement transaction and two underwritten public offerings.

During February 2025, the Company raised net proceeds of approximately

$ 14.3 million through an underwritten public offering which has provided adequate levels of liquidity for the Company to execute its business

These equity raises were utilized to fund the repayment of debt obligations, payment of accounts payable and its operations.

expects this pattern to continue until it achieves positive cash flow from operations on a consistent basis, although it can offer no

assurance in this regard.

The Company will have to restore

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to the Company.

the three months ended March 31, 2025 the Company completed a program to reduce costs and expenditures and raised its short and long-term

liquidity position through the completion of the February 2025 public equity offering.

In that regard, the Company has significantly

cut costs in its entertainment segment through the removal of several large partnerships and sponsorships.

These partnerships and sponsorships

did not yield the results management expected;

thus, it is not expected that these costs will significantly hinder total revenues in

2025 and beyond.

In addition, the Company has significantly cut costs in its video segment through the reduction in headcount and relocating

to smaller and less costly facilities after completing the sale of its warehouse/office building.

The Company has increased its

deferred revenue to nearly $ 9.9 million as of March 31, 2025, which results in recurring revenue during the period of 2025 to 2027.

During the six months ended

June 30, 2025 the Company completed a program to reduce costs and expenditures and raised its short and long-term liquidity position through

the completion of the February 2025 public equity offering.

In that regard, the Company has significantly cut costs in its entertainment

segment through the removal of several large partnerships and sponsorships.

These partnerships and sponsorships did not yield the results

management expected;

thus, it is not expected that these costs will significantly hinder total revenues in 2025 and beyond.

the Company has significantly cut costs in its video segment through the reduction in headcount and relocating to smaller and less costly

facilities after completing the sale of its warehouse/office building.

The Company has increased

its deferred revenue to nearly $ 8.9 million as of June 30, 2025, which results in recurring revenue during the period of 2025 to 2028.

The Company believes that its quality control and cost-cutting initiatives, expansion to non-law enforcement sales channels and new product

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

As a result of the Company’s implementation of cost cutting measures and liquidity generated by the recent

public equity offerings, the Company has significantly improved its financial position.

During the three months ended March 31, 2025,

the Company generated $$ 4,267,082 of net income, improved its working capital position to a positive balance of $ 3,385,051 and improved

its stockholders equity to a positive balance of $ 11,569,375 .

These represent improvements from the negative working capital position

of $ 19,377,507 and stockholders’ deficit balance of $ 9,013,430 reported at December 31, 2024.

uncertainties described above and the corrective actions implemented by management, the Company believes its business plan including the implementation of corrective actions mitigates the existence of substantial doubt about

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

The accompanying condensed consolidated financial statements do not include any adjustments related to the

recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company

be unable to continue as a going concern.

Inventories consisted of the following

at March 31, 2025 and December 31, 2024:

As a result of the

Company’s implementation of cost-cutting measures and liquidity generated by the recent public equity offerings, the Company

has significantly improved its financial position.

During the six months ended June 30, 2025, the Company incurred a net loss of $ 222,122 , improved its working capital position to a positive balance of $ 119,506 and improved its stockholders’ equity to a

positive balance of $ 8,151,705 .

These represent improvements from the negative working capital position of $ 19,377,507 and

stockholders’ deficit balance of $ 9,013,430 reported at December 31, 2024.

Based on the uncertainties

described above and the corrective actions implemented by management, the Company believes its business plan including the implementation

of corrective actions mitigates the existence of substantial doubt about its ability to continue as a going concern within one year from

the date of the issuance of these condensed consolidated financial statements.

The accompanying condensed consolidated financial statements

do not include any adjustments related to the recoverability and classification of asset amounts or the classification of liabilities

that might be necessary should the Company be unable to continue as a going concern.

Inventories consisted of the

following at June 30, 2025 and December 31, 2024:

SCHEDULE OF INVENTORIES

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PREPAID EXPENSES

Prepaid expenses were the following

at March 31, 2025 and December 31, 2024:

Prepaid expenses were the

following at June 30, 2025 and December 31, 2024:

SCHEDULE OF PREPAID EXPENSE

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Prepaid commissions

Prepaid common stock offering

Total prepaid expenses

GOODWILL AND OTHER INTANGIBLE ASSETS

Intangible assets consisted of the following as of

March 31, 2025 and December 31, 2024:

Intangible assets consisted of the following as

of June 30, 2025 and December 31, 2024:

SCHEDULE OF INTANGIBLE ASSETS

March 31, 2025

June 30, 2025

Accumulated amortization

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denied, then the amount deferred will be immediately charged to expense.

Amortization for the three months

ended March 31, 2025 and 2024 was $ 365,193 and $ 388,278 , respectively.

Estimated amortization for intangible assets with definite lives

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

Amortization for the three

months ended June 30, 2025 and 2024 was $ 409,550 and $ 346,889 , respectively, and $ 774,743 and $ 735,167 for the six months ended June 30,

2025 and 2024, respectively.

Estimated amortization for intangible assets with definite lives for the next five years ending December

31 and thereafter is as follows:

SCHEDULE OF ESTIMATED AMORTIZATION FOR INTANGIBLE ASSETS

Year ending December 31:

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

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

2030 and thereafter

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as of December 31, 2024, no events or changes in circumstances were noted that triggered the requirement for an interim goodwill impairment

test for the fiscal first quarter of 2025.

test for the fiscal first and second quarters of 2025.

The fair value of each reporting

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

The combined fair values for all

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

The combined fair values for

all reporting units were then reconciled to our aggregate market value of our shares of Common Stock on the date of valuation, while considering

a reasonable control premium.

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

The combined fair values for all

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

The combined fair values for

all reporting units were then reconciled to our aggregate market value of our shares of Common Stock on the date of valuation, while considering

a reasonable control premium.

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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

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 March 31, 2025 and December 31, 2024.

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

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.

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 was $ 1,158,966

and within the entertainment segment was $ 5,805,507 , as of June 30, 2025 and December 31, 2024.

Indefinite-lived intangible assets

We held indefinite-lived trade

names/trademarks of $ 699,000 as of March 31, 2025 and December 31, 2024, respectively, related to businesses within our entertainment

As a result of our interim impairment

test as of the last day of the fiscal third quarter of 2024 management concluded that the carrying amount of a trade name/trademark related

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

in goodwill and intangible asset impairment charge on our Condensed Consolidated Statements of Operations for the year ended December

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

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

The remaining balance for

this trade name/trademark was $ 699,000 as of March 31, 2025 and December 31, 2024.

names/trademarks of $ 699,000 as of June 30, 2025 and December 31, 2024, respectively, related to businesses within our entertainment segment.

As a result of our interim

impairment test as of the last day of the fiscal third quarter of 2024 management concluded that the carrying amount of a trade name/trademark

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

was included in goodwill and intangible asset impairment charge on our Condensed Consolidated Statements of Operations for the year ended

December 31, 2024.

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

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

The remaining balance

for this trade name/trademark was $ 699,000 as of June 30, 2025 and December 31, 2024.

DEBT OBLIGATIONS

Debt obligations is comprised of the following:

Debt obligations are comprised of the following:

SCHEDULE OF DEBT OBLIGATIONS

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Debt obligations, long-term

Debt obligations mature on an annual basis as follows

as of March 31, 2025:

Debt obligations mature on an annual basis as

follows as of June 30, 2025:

SCHEDULE OF MATURITY OF DEBT OBLIGATIONS

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

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

2029 and thereafter

2020 Small Business Administration Notes .

On May 12, 2020, the Company received

$ 150,000 in loan funding from the SBA under the Economic Injury Disaster Loan (“EIDL”) program administered by the SBA, which

program was expanded pursuant to the recently enacted CARES Act.

The EIDL is evidenced by a secured promissory note, dated May 8, 2020,

in the original principal amount of $ 150,000 with the SBA, the lender.

Under the terms of the note issued

under the EIDL program, interest accrues on the outstanding principal at the rate of 3.75 % per annum.

The term of such note is thirty

years, though it may be payable sooner upon an event of default under such note.

Monthly principal and interest payments began in November

2022, after being deferred for thirty months after the date of disbursement and total $ 731 per month thereafter.

Such note may be prepaid

in part or in full, at any time, without penalty.

The Company granted the SBA a continuing interest in and to any and all collateral,

including but not limited to tangible and intangible personal property.

On May 12, 2020, the Company

received $150,000 in loan funding from the SBA under the Economic Injury Disaster Loan (“EIDL”) program administered by the

SBA, which program was expanded pursuant to the recently enacted CARES Act.

The EIDL is evidenced by a secured promissory note, dated

May 8, 2020, in the original principal amount of $ 150,000 with the SBA, the lender.

Under the terms of the note

issued under the EIDL program, interest accrues on the outstanding principal at the rate of 3.75 % per annum.

The term of such note is

thirty years, though it may be payable sooner upon an event of default under such note.

Monthly principal and interest payments began

in November 2022, after being deferred for thirty months after the date of disbursement and total $ 731 per month thereafter.

may be prepaid in part or in full, at any time, without penalty.

The Company granted the SBA a continuing interest in and to any and all

collateral, including but not limited to tangible and intangible personal property.

Unsecured Promissory Note

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of 10.0 % per annum, compounded monthly.

Payments of principal and interest were originally due on May 5, 2025 .

The parties agreed to extend

the term for payments of principal and interest until June 4, 2025.

Payments of principal and interest were originally due on May 5, 2025 , however the parties agreed

to extend the term for payments of principal and interest to begin July 1, 2025.

2024 Commercial Extension of Credit

On January 22, 2024, the Company’s

Entertainment segment entered into an extension of credit in the form of a loan to use in marketing and operating its business in accordance

Entertainment segment entered an extension of credit in the form of a loan to use in marketing and operating its business in accordance

with the Ticket Solution Agreement.

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The Company paid the remaining balance in full during

the three months ended March 31, 2025.

The outstanding balance as of March 31, 2025 and December 31, 2024 was $- 0 - and $ 100,000 , respectively.

the six months ended June 30, 2025.

The outstanding balance as of June 30, 2025 and December 31, 2024 was $- 0 - and $ 100,000 , respectively.

Merchant Cash Advances – Video Solutions

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ended December 31, 2024 of $ 68,827 .

As of December 31, 2024 the outstanding

principal balance was $ 1,922,750 which was paid in full during the three months ended March 31, 2025.

The remaining balance is $- 0 - as

of March 31, 2025.

Securities Purchase Agreement and Senior Secured

Promissory Notes

As of December 31, 2024 the

outstanding principal balance was $ 1,922,750 which was paid in full during the six months ended June 30, 2025.

The remaining balance is

$- 0 - as of June 30, 2025.

Securities Purchase Agreement and Senior

Secured Promissory Notes

On November 6, 2024, the Company

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statement effective at all times until no Purchaser owns any Commitment Shares.

Furthermore, pursuant to the SPA,

the Company was required to complete the following:

(i) the Company’s board of directors shall approve an amendment to the Company’s

bylaws setting the quorum required for a special meeting of stockholders to one-third of all stockholders entitled to vote at such special

meeting and (ii) the Company shall file with the SEC a preliminary proxy statement on Schedule 14A announcing a meeting of stockholders

for the purpose of approving the Series A and Series B warrants issued by the Company on June 25, 2024.

Furthermore, pursuant to the

SPA, the Company was required to complete the following:

(i) the Company’s board of directors shall approve an amendment to the

Company’s bylaws setting the quorum required for a special meeting of stockholders to one-third of all stockholders entitled to

vote at such special meeting and (ii) the Company shall file with the SEC a preliminary proxy statement on Schedule 14A announcing a meeting

of stockholders for the purpose of approving the Series A and Series B warrants issued by the Company on June 25, 2024.

The senior secured promissory

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without the requirement for any notice or demand or other action by the Purchaser or any other person.

If the Company engages in one

or more subsequent financings while the senior secured promissory notes are outstanding, the Company will be required to use at least

If the Company engages in

one or more subsequent financings while the senior secured promissory notes are outstanding, the Company will be required to use at least

100 % of the gross proceeds of such financing to redeem all or any portion of the senior secured promissory notes outstanding.

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Commitment shares

The Company paid the senior secured

promissory notes off in full on February 13, 2025 with funds generated by the February 2025 public equity offering (See Note 12).

is an analysis of the senior secured promissory notes balance:

The Company paid the senior

secured promissory notes off in full on February 13, 2025 with funds generated by the February 2025 public equity offering (See Note 12).

Following is an analysis of the senior secured promissory notes balance:

SCHEDULE OF SENIOR SECURED PROMISSORY NOTES BALANCE

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( 3,600,000 )

Balance, as of March 31, 2025

Balance, as of June 30, 2025

FAIR VALUE MEASUREMENT

In accordance with ASC Topic

— Fair Value Measurements and Disclosures (“ASC 820”), the Company utilizes the market approach to measure fair

value for its financial assets and liabilities.

The market approach uses prices and other relevant information generated by market transactions

involving identical or comparable assets, liabilities or a group of assets or liabilities, such as a business.

820 — Fair Value Measurements and Disclosures (“ASC 820”), the Company utilizes the market approach to measure

fair value for its financial assets and liabilities.

The market approach uses prices and other relevant information generated by market

transactions involving identical or comparable assets, liabilities or a group of assets or liabilities, such as a business.

ASC 820 utilizes a fair value

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The following table represents

the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2025

the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2025

and December 31, 2024:

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

March 31, 2025

June 30, 2025

Warrant derivative liabilities

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The following table represents the change in Level

3 tier value measurements for the three months ended March 31, 2025:

3 tier value measurements for the six months ended June 30, 2025:

SCHEDULE OF FAIR VALUE MEASUREMENTS CHANGE IN LEVEL 3 INPUTS

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Issuance of pre-funded warrant derivative liabilities in February 2025 public equity offering

Issuance/Activation of Series A Warrants issued in connection with the February 2025 public equity offering

Issuance/Activation of Series B Warrants issued in connection with the February 2025 public equity offering

Transition of warrant derivative liability to equity due to exercise of pre-funded warrant derivative liabilities in February 2025 public equity offering

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( 1,989,806 )

Transition of warrant derivative liability to equity due to exercise of Series B common stock purchase warrants issued in February 2025 Public Equity Offering

( 5,406,320 )

Transition of warrant derivative liability to equity due to elimination of net cash settlement provisions relative to the Series A common stock purchase warrants issued in February 2025 Public Equity Offering

Change in fair value of warrant derivative liabilities

( 3,373,080 )

Balance, March 31, 2025

Balance, June 30, 2025

ACCRUED EXPENSES

Accrued expenses consisted of

the following at March 31, 2025 and December 31, 2024:

Accrued expenses consisted

of the following at June 30, 2025 and December 31, 2024:

SCHEDULE OF ACCRUED EXPENSES

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Total accrued expenses

The effective tax rate for the

three months ended March 31, 2025, and 2024 varied from the expected statutory rate due to the Company continuing to provide a 100 % valuation

allowance on net deferred tax assets.

The Company determined that it was appropriate to continue the full valuation allowance on net deferred

tax assets as of March 31, 2025, primarily because of the recent operating losses.

The effective tax rate for

the three and six months ended June 30, 2025, and 2024 varied from the expected statutory rate due to the Company continuing to provide

a 100 % valuation allowance on net deferred tax assets.

The Company determined that it was appropriate to continue the full valuation allowance

on net deferred tax assets as of June 30, 2025, primarily because of the recent operating losses.

The Company incurred operating

losses in recent years and it continues to be in a three-year cumulative loss position at March 31, 2025.

losses in recent years, and it continues to be in a three-year cumulative loss position at June 30, 2025.

Accordingly, the Company determined

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Therefore, it determined to fully reserve its deferred tax assets at

March 31, 2025.

June 30, 2025.

The Company expects to continue to maintain a full valuation allowance until it determines that it can sustain a level

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exercises, an increase in shareholders’ equity.

As of March 31, 2025, the Company

As of June 30, 2025, the Company

had the following estimated Federal net operating loss carry-forwards available to offset future taxable income:

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$ 156,019,000

Such tax net operating loss carry-forwards

expire between 2025 and 2043 relative to Federal net operating loss carry-forwards generated in tax years 2017 and prior.

operating loss carry-forwards generated in tax years 2018 and after cannot be carried back to prior years and have an indefinite life

since the enactment of the Tax Cuts and Jobs Act of 2017.

Such tax net operating loss

carry-forwards expire between 2025 and 2043 relative to Federal net operating loss carry-forwards generated in tax years 2017 and prior.

Federal net operating loss carry-forwards generated in tax years 2018 and after cannot be carried back to prior years and have an indefinite

life since the enactment of the Tax Cuts and Jobs Act of 2017.

The Tax Cuts and Jobs Act of 2017 further provides for an annual limitation

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In addition, the Company had research and development tax credit carry-forwards totaling

$ 1,742,000 available as of March 31, 2025, which expire between 2025 and 2040.

$ 1,742,000 available as of June 30, 2025, which expire between 2025 and 2040.

The Company’s 2022 federal

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COMMITMENTS AND CONTINGENCIES

From 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 the specifics of any claim

or threatened lawsuit until the summons and complaint are actually served on us.

After carefully assessing the claim, and assuming we

determine that we are not at fault or we disagree with the damages or relief demanded, we vigorously defend any lawsuit filed against

From 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 not to disclose the specifics

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

After carefully assessing the claim, and

assuming we determine that we are not at fault or we disagree with the damage or relief demanded, we vigorously defend any lawsuit filed

We record a liability when losses are deemed probable and reasonably estimable.

When losses are deemed reasonably possible but not

probable, we determine whether it is possible to provide an estimate of the amount of the loss or range of possible losses for the claim,

if material for disclosure.

In evaluating matters for accrual and disclosure purposes, we take into consideration factors such as our

historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood of our prevailing,

When losses are deemed reasonably possible

but not probable, we determine whether it is possible to provide an estimate of the amount of the loss or range of possible losses for

the claim, if material for disclosure.

In evaluating matters for accrual and disclosure purposes, we take into consideration factors such

as our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood of our prevailing,

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

We reevaluate and update accruals as matters progress over time.

On May 31, 2022, the Company filed

a lawsuit against Culp McAuley, Inc.

(“Culp McAuley”) and four individuals (Brandon Culp, Campbell McAuley, Mark Depew and

Larry Roberts) (collectively the “defendants”) in the United States District Court for the District of Kansas, seeking monetary

damages and injunctive relief based on certain conduct by the defendants.

On July 18, 2022, Culp McAuley filed its Answer to the Company’s

Verified Complaint and included Counterclaims alleging breach of contract and seeking monetary damages.

On August 8, 2022, the Company

filed its Reply and Affirmative Defenses to the Counterclaims by, among other things, denying the allegations and any and all liability.

On December 20, 2022, the Company

filed a motion for leave to file a second amended complaint to add additional claims against the defendants to avoid fraudulent transfers,

to pierce the corporate veil of Culp McAuley, and for remedies related to the claims for fraudulent transfers and piercing the corporate

On December 22, 2022, the Court issued an Order granting the Company’s motion for leave to file a second amended complaint,

which was filed with the Court on December 27, 2022.

Because Culp McAuley’s original counsel withdrew, Culp McAuley was ordered

to obtain new counsel on or before December 2, 2022.

On December 5, 2022, the Court ordered that Culp McAuley show cause in writing by

December 21, 2022, why the Court should not direct the Clerk to enter default against it.

On December 22, 2022, the Court directed the

Clerk to enter default against Culp McAuley.

On May 31, 2022, the Company

filed a lawsuit against Culp McAuley, Inc.

(“Culp McAuley”) and four individuals (Brandon Culp, Campbell McAuley, Mark Depew

and Larry Roberts) (collectively the “defendants”) in the United States District Court for the District of Kansas, seeking

monetary damages and injunctive relief based on certain conduct by the defendants.

On July 18, 2022, Culp McAuley filed its Answer to

the Company’s Verified Complaint and included Counterclaims alleging breach of contract and seeking monetary damages.

8, 2022, the Company filed its Reply and Affirmative Defenses to the Counterclaims by, among other things, denying the allegations and

any and all liability.

On December 20, 2022, the

Company filed a motion for leave to file a second amended complaint to add additional claims against the defendants to avoid fraudulent

transfers, to pierce the corporate veil of Culp McAuley, and for remedies related to the claims for fraudulent transfers and piercing

the corporate veil.

On December 22, 2022, the Court issued an Order granting the Company’s motion for leave to file a second amended

complaint, which was filed with the Court on December 27, 2022.

Because Culp McAuley’s original counsel withdrew, Culp McAuley was

ordered to obtain new counsel on or before December 2, 2022.

On December 5, 2022, the Court ordered that Culp McAuley show cause in writing

by December 21, 2022, why the Court should not direct the Clerk to enter default against it.

On December 22, 2022, the Court directed

the Clerk to enter default against Culp McAuley.

On February 21, 2023, the Clerk entered default against Culp McAuley.

In February and March, 2023, defendants

Larry Roberts and Mark Depew filed separate motions to dismiss, respectively.

In February and March, 2023,

defendants Larry Roberts and Mark Depew filed separate motions to dismiss, respectively.

The Company opposed both motions.

On July 7, 2023, the Court

issued an Order granting Roberts’ motion to dismiss and denying Depew’s motion to dismiss.

On December 7, 2023, the Company

filed an application for the Clerk’s entry of default against defendant Brandon Culp.

On December 13, 2023, the Clerk entered default

against Brandon Culp.

2023, the Court issued an Order granting Roberts’ motion to dismiss and denying Depew’s motion to dismiss.

On December 7,

2023, the Company filed an application for the Clerk’s entry of default against defendant Brandon Culp.

On December 13, 2023, the

Clerk entered default against Brandon Culp.

On January 5, 2024, the Company

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that ended the appeal after the Company and Depew reached a settlement.

In March 2024, the Company filed

a complaint against Larry Roberts (“defendant”) in the Superior Court of the State of California, County of Orange.

arises from the defendant’s multiple breaches of his obligations to the Company.

The Company seeks monetary damages based on certain

conduct by the defendant.

On May 28, 2024, the defendant filed a motion to strike portions of the complaint and a motion for demurrer.

In March 2024, the Company

filed a complaint against Larry Roberts (“defendant”) in the Superior Court of the State of California, County of Orange.

The lawsuit arises from the defendant’s multiple breaches of his obligations to the Company.

The Company seeks monetary damages

based on certain conduct by the defendant.

On May 28, 2024, the defendant filed a motion to strike portions of the complaint and a motion

for demurrer.

On October 4, 2024, the Court sustained in part and overruled in part defendant’s motion for demurrer.

The Court further denied

the defendant’s motion to strike in its entirety.

The Court further

denied the defendant’s motion to strike in its entirety.

A jury trial has been scheduled for October 19, 2026.

As of March 31, 2025 and December

As of June 30, 2025 and December

31, 2024, we are able to estimate a range of reasonably possible loss related to the Culp McCauley case (when taking into account, among

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has recorded an additional loss of $ 1,959,396 on this matter as of December 31, 2024 which together with the previously recorded losses

in prior years, reduces the Company’s net exposure to zero at March 31, 2025 and December 31, 2024.

in prior years, reduces the Company’s net exposure to zero at June 30, 2025 and December 31, 2024.

Our estimate with respect to

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

Notices of Failure to Satisfy a Continued

Minimum Bid Price Requirement

– On December 20, 2024, the Company received a written notification from The Nasdaq Stock Market LLC indicating that the Company

was not in compliance with Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”), as the Company’s closing

bid price for its Common Stock was below $ 1.00 per share for the prior thirty (30) consecutive business days.

The Company has been granted

a 180-calendar day compliance period, or until June 18, 2025, to regain compliance with the Minimum Bid Price Requirement.

If the Company

is not in compliance by June 18, 2025, the Company may be afforded a second 180-calendar day compliance period.

If the Company does not

regain compliance within such compliance period, including any granted extensions, its Common Stock may be subject to delisting, which

delisting may be appealed to a Nasdaq hearings panel.

Minimum Stockholders’

Equity Standard - On January 2, 2025, the Company received a notice (the “Notice”) from the staff of the Listing Qualifications

department (the “Staff”) of Nasdaq, which indicated that the Company was not in compliance with Nasdaq Listing Rule 5550(b)(1)

(the “Stockholders’ Equity Requirement”), as the Company’s stockholders’ equity of ($ 2,448,310 ) , as reported

in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024, was below the required minimum

of $ 2.5 million, and the Company did not meet either the alternative compliance standards relating to market value of listed securities

of at least $ 35 million or net income from continuing operations of at least $ 500,000 in the most recently completed fiscal year or in

two of the last three most recently completed fiscal years.

Under Nasdaq listing rules

and as specified in the Notice, the Company has 45 calendar days from the date of the Notice to submit to the Staff a plan to regain compliance

with the Stockholders’ Equity Requirement.

If the Company’s plan to regain compliance is accepted, Nasdaq may grant an extension

of up to 180 calendar days from the date of the Notice for the Company to evidence compliance.

The Company submitted its

plan to Nasdaq to regain compliance with the Stockholders’ Equity Requirement on February 17, 2025.

There can be no assurance that

the Company’s plan will be accepted or that if it is, that the Company will be able to regain compliance with the Stockholders’

Equity Requirement.

If the Company does not regain

compliance within the allotted compliance period(s), including any extensions that may be granted by Nasdaq, Nasdaq will provide notice

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

At that time, the Company may appeal any such delisting

determination to a Nasdaq hearings panel.

Minimum Bid Price

Requirement - On March 6, 2025, the Company received notice (the “March 6 Letter”) from the Nasdaq 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”).

As a result, the Staff determined to delist the Company’s securities from

Nasdaq, unless the Company timely requests an appeal of the Staff’s determination to a Hearings Panel (the

“Panel”), pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series.

The Company must request a

hearing no later than 4:00 p.m.

Eastern Time on March 13, 2025.

The 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, which hearing date has not been set

as of the date of this Form 10-K.

While the appeal process is pending, the suspension of trading of the Company’s Common Stock,

will be stayed and the Common Stock will continue 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.

On 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 following conditions:

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

On or before May 20, 2025, the Company must file a public disclosure describing any transactions undertaken by the Company to increase its equity and provide an indication of its equity following those transactions.

In 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.

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

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

The Company continues to work

diligently to regain and maintain compliance with the Minimum Bid Price Requirement and Stockholders’ Equity Requirement as promptly

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 June 30, 2025.

Furthermore, management believes that it has

achieved compliance with the Minimum Bid Price Requirement prior to June 6, 2025, as required by the Panel.

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.

STOCK-BASED COMPENSATION

Company recorded pre-tax compensation expense related to the grant of stock options and restricted stock issued of $ 23,565 and

$ 40,695 for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, the Company

$ 101,467 for the six months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, the Company

had adopted ten separate stock option and restricted stock plans:

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its Plans with the SEC.

A total of 6,852 shares remained available for awards under the various Plans as of March 31, 2024.

A total of 69 shares remained available for awards under the various Plans as of June 30, 2024.

The fair value of each option

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Activity in the various Plans

during the three months ended March 31, 2025 and 2024 is reflected in the following table:

during the six months ended June 30, 2025 and 2024 is reflected in the following table:

SCHEDULE OF STOCK OPTIONS OUTSTANDING

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Outstanding at January 1, 2025

Outstanding at March 31, 2025

Exercisable at March 31, 2025

Outstanding at June 30, 2025

Exercisable at June 30, 2025

Exercise Price

Outstanding at January 1, 2024

Outstanding at March 31, 2024

Exercisable at March 31, 2024

Outstanding at June 30, 2024

Exercisable at June 30, 2024

The fair value of each option

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There were no shares surrendered pursuant to cashless exercises during the three months

ended March 31, 2025 and 2024.

At March 31, 2025 and December

ended June 30, 2025 and 2024.

At June 30, 2025 and December

31, 2024, the aggregate intrinsic value of options outstanding was approximately $- 0 - and $- 0 -, respectively, and the aggregate intrinsic

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the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s

option plans as of March 31, 2025:

option plans as of June 30, 2025:

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

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$ 70,000 to $ 99,999

$ 100,000 to $ 129,999

$ 130,000 to $ 159,999

Restricted stock grants.

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have no purchase price for the recipient.

Restricted stock awards typically vest over one to four years corresponding to anniversaries

Restricted stock awards typically vest over one to four years corresponding to the anniversaries

of the grant date.

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receive cash dividends.

A summary of all restricted stock

activity under the equity compensation plans for the three months ended March 31, 2025 and 2024 is as follows:

A summary of all restricted

stock activity under the equity compensation plans for the six months ended June 30, 2025 and 2024 is as follows:

OF RESTRICTED STOCK ACTIVITY

Nonvested balance, January 1, 2025

Nonvested balance, March 31, 2025

Nonvested balance, June 30, 2025

Nonvested balance, January 1, 2024

Nonvested balance, March 31, 2024

The Company estimated the fair

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

As of March 31, 2025, there

( 20,120.00 )

( 44,400.00 )

Nonvested balance, June 30, 2024

The Company estimated the

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

As of June 30, 2025, there

was $ 34,969 of total unrecognized compensation costs related to all remaining non-vested restricted stock grants, which will be amortized

over the next thirty-four months in accordance with their respective vesting scale.

over the next thirty-one months in accordance with their respective vesting scale.

The nonvested balance of restricted

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SCHEDULE OF NON-VESTED BALANCE OF RESTRICTED STOCK

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

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

COMMON STOCK PURCHASE WARRANTS

The following table summarizes

information about shares issuable under warrants outstanding during the three months ended March 31, 2025 and 2024:

information about shares issuable under warrants outstanding during the six months ended June 30, 2025 and 2024:

SCHEDULE OF WARRANT ACTIVITY

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Issuance February 2025 – Prefunded Warrants

Issuance/activation of February 2025 – Series A Warrants

Issuance/activation of February 2025 – Series B Warrants

Exercise February 2025 – Prefunded Warrants

( 4,907,500 )

Exercised June 2024 - Series B warrants

Exercised February 2025 – Series B Warrants

( 1,669,320 )

Terminated/Cancelled

Balance, March 31, 2025

Balance, June 30, 2025

exercise price

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Terminated/Cancelled

Balance, March 31, 2024

intrinsic value of all outstanding warrants aggregated $- 0 -

and $ 2,128,320

as of March 31, 2025 and December 31, 2024, respectively and the weighted average remaining term was 48.5

months as of March 31, 2025 and 2024, respectively.

Balance, June 30, 2024

The total intrinsic value

of all outstanding warrants aggregated $ 88 and $ 2,128,320 as of June 30, 2025 and December 31, 2024, respectively and the weighted average

remaining term was 45.6 and 42.6 months as of June 30, 2025 and 2024, respectively.

The following table summarizes

the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable warrants to purchase shares

of Common Stock as of March 31, 2025:

of Common Stock as of June 30, 2025:

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

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2025 Purchase Warrants

On February 13,

2025, the Company issued pre-funded units, each consisting of one-prefunded warrant (to purchase a total of 4,907,500

shares of Common Stock), one Series A warrant and one Series B warrant along with the sale of units, each consisting of one share of

Common Stock, one Series A warrant and one Series B warrant.

The Series A and Series B warrants were exercisable only upon receipt

of stockholder approval (the “Stockholder Approval”) to approve each of (i) certain terms in the Series A warrants and

Series B warrants and the issuance of the shares of Common Stock issuable upon the exercise of such warrants, as may be required by

the applicable rules and regulations of The Nasdaq Stock Market LLC and (ii) if necessary, a proposal to amend the Company’s

Articles of Incorporation, as amended, to increase the authorized share capital of the Company to an amount sufficient to cover the

shares of Common Stock issuable upon the exercise of the Series A warrants and Series B warrants.

The Series A Warrants were

exercisable commencing upon the date of public notice of the Stockholder Approval (the “Warrant Stockholder Approval

Date”) until five years after the Warrant Stockholder Approval Date, and the Series B Warrants were exercisable commencing

upon the Warrant Stockholder Approval Date until two and one-half years after the Warrant Stockholder Approval Date.

Both the Series

A and Series B warrants contain reset provisions that are activated upon the date Stockholder Approval is obtained.

terms provide for net cash settlement outside the control of the Company under certain circumstances.

As such, the Company is

required to treat these warrants as derivative liabilities which are valued at their estimated fair value at their issuance date and

at each reporting date with any subsequent changes reported in the condensed consolidated statements of operations as the change in

fair value of warrant derivative liabilities.

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

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

derivative liabilities through the condensed consolidated statement of operations.

The pre-funded

warrants were all exercised within days of their issuance therefore their total fair value was estimated to be $ 1,803 at the time of

their exercise which remained the same as their fair value as of the date of issuance.

The following are the assumptions used in

calculating the estimated fair value of the pre-funded warrants to purchase Common Stock which were effective and exercisable upon

issuance on February 13, 2025:

On February 13, 2025, the

Company issued pre-funded units, each consisting of one-prefunded warrant (to purchase a total of 49,075 shares of Common Stock), one

Series A warrant and one Series B warrant along with the sale of units, each consisting of one share of Common Stock, one Series A warrant

and one Series B warrant.

The Series A and Series B warrants were exercisable only upon receipt of stockholder approval to approve each

of (i) certain terms in the Series A warrants and Series B warrants and the issuance of the shares of Common Stock issuable upon the exercise

of such warrants, as may be required by the applicable rules and regulations of The Nasdaq Stock Market LLC and (ii) if necessary, a proposal

to amend the Company’s Articles of Incorporation, as amended, to increase the authorized share capital of the Company to an amount

sufficient to cover the shares of Common Stock issuable upon the exercise of the Series A warrants and Series B warrants.

Warrants were exercisable commencing upon the date of public notice of the Stockholder Approval (the “Warrant Stockholder Approval

Date”) until five years after the Warrant Stockholder Approval Date, and the Series B Warrants were exercisable commencing upon

the Warrant Stockholder Approval Date until two and one-half years after the Warrant Stockholder Approval Date.

Both the Series A and

Series B warrants contain reset provisions that are activated upon the date Stockholder Approval is obtained.

The Company’s Shareholders

approved the issuance of the Series A and B warrants at a Special Meeting of Shareholders on May 6, 2025 which serves as the Warrant Stockholder

Approval Date.

The Series A and B warrant terms provide for net cash settlement outside the control of the Company under certain circumstances.

As such, the Company is required to treat the Series A and B warrants as derivative liabilities until such time as the circumstances which

allow for settlement outside the control of the Company are terminated or no longer applicable.

Warrant derivative liabilities treatment

of the Series A and B warrants to be valued at their estimated fair value at their issuance/activation date and at each reporting date

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

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

with the resulting warrant derivative liability transitioned to change in fair value of warrant derivative liabilities through the condensed

consolidated statement of operations.

The pre-funded warrants were

all exercised within days of their issuance therefore their total fair value was estimated to be $ 1,803 at the time of their exercise

which remained the same as their fair value as of the date of issuance.

The following are the assumptions used in calculating the estimated

fair value of the pre-funded warrants to purchase Common Stock which were effective and exercisable upon issuance on February 13, 2025:

SCHEDULE OF WARRANT MODIFICATION

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Common stock issuable under the warrants

During the three months ended

March 31, 2025, the pre-funded warrants to purchase 4.907,500 shares of Common Stock were fully exercised.

During the six months ended

June 30, 2025, the pre-funded warrants to purchase 49,075 shares of Common Stock were fully exercised.

In conjunction with the exercise

of the pre-funded warrants, the Company transitioned the related warrant derivative liability totaling $ 1,803 to equity as of their exercise

The warrant derivative liability related to the pre-funded warrants was $- 0 - as of March 31, 2025.

The warrant derivative liability related to the pre-funded warrants was $- 0 - as of June 30, 2025.

The Series A warrants were

issued/activated on Warrant Shareholder Approval Date of May 6, 2025 and their total fair value was estimated to be $ 1,340,214

at the time of their issuance/activation.

The following are the assumptions used in calculating the estimated fair value of the Series

A warrants to purchase Common Stock which were effective and exercisable upon the Warrant Shareholder Approval Date of May 6, 2025:

Series A warrants

issuance/activation date – May 6, 2025

Volatility – range

Risk-free rate

Remaining contractual term

Exercise price

Common stock issuable under the warrants

On June 27, 2025, the

circumstances under which the Series A warrant terms allow for settlement outside the control of the Company were terminated and no

longer applicable.

Therefore, the Company determined the fair value of the warrant liability as of that date ($ 530,101 ) and

transitioned that value to equity as the Series A warrants were no longer treated as warrant derivative liabilities.

In conjunction

with change in warrant liability treatment of the Series A warrant on June 27, 2025, the Company transitioned the related warrant

derivative liability totaling $ 530,101 to equity.

The following are the assumptions used in calculating the estimated fair value of

the Series A warrants to purchase Common Stock as of transition date of June 27, 2025:

Series A warrants

transition date – June 27, 2025

Volatility – range

Risk-free rate

Remaining contractual term

Exercise price

Common stock issuable under the warrants

The Series B warrants were issued/activated on Warrant Shareholder Approval

Date of May 6, 2025 which based on the reset provisions a total of 1,669,357 Series B were issued at a zero exercise price and their total

fair value was estimated to be $ 5,406,408 .

The Series B Warrants contain a zero-exercise price option at the holder’s election.

Under the zero-exercise price option, a holder of the Series B Warrant has the right to receive an aggregate number of shares equal to

the product of (x) the aggregate number of shares of common stock that would be issuable upon a cash exercise of the Series B Warrant

and (y) three (3.0).

As a result of this feature, we did not receive nor did we expect to receive any cash proceeds from the exercise

of the Series B Warrants because it is highly unlikely that a Series B Warrant holder would elect to pay an exercise price in cash to

receive one share of common stock when they could elect the alternate cashless exercise option and pay no exercise price to receive more

shares of common stock than they would receive if they did pay an exercise price.

The following are the assumptions used in calculating

the estimated fair value of the Series B warrants to purchase Common Stock which were effective and exercisable upon the Warrant Shareholder

Approval Date of May 6, 2025:

Series B warrants issuance/activation date – May 6, 2025

Volatility – range

Risk-free rate

Remaining contractual term

Exercise price

Common stock issuable under the warrants

Of the 1,669,357 total Series B warrants issued on May 6, 2025 a total

of 1,669,320 warrants valued at $ 5,406,320 were immediately exercised by their holders and transitioned to equity during the three and

six months ended June 30, 2025.

There remain 37 Series B warrants issued and outstanding at June 30, 2025 which were valued at $ 88 .

2024 Purchase Warrants

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issued Series A and prefunded warrants to purchase a total of 88,411 shares of Common Stock along with the sale of Common Stock.

Company also issued Series B Warrants that will be issuable and exercisable at any time or times on or after the date that relevant stockholder approval

is obtained in addition to the Series A warrants that are not included in outstanding warrants until such time as relevant stockholder approval

Both the Series A and Series B warrants have reset provisions that are activated upon the date relevant stockholder approval is obtained.

also issued Series B Warrants that will be issuable and exercisable at any time or times on or after the date that relevant stockholder

approval is obtained in addition to the Series A warrants that are not included in outstanding warrants until such time as relevant stockholder

approval is obtained.

Both the Series A and Series B warrants have reset provisions that are activated upon the date relevant stockholder

approval is obtained.

The warrant terms provide for net cash settlement outside the control of the Company under certain circumstances.

As such, the Company

is required to treat these warrants as derivative liabilities which are valued at their estimated fair value at their issuance date and

at each reporting date with any subsequent changes reported in the condensed consolidated statements of operations as the change in fair

value of warrant derivative liabilities.

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

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

through the condensed consolidated statement of operations.

The Series B warrants issued in

this transaction become issuable and exercisable on the date that relevant stockholder approval is obtained, if ever.

Relevent stockholder approval was obtained

on December 17, 2024 which activated the Series A and B warrants.

Both the Series A and Series B warrants also contain price and warrant

reset provisions that were activated upon the date of relevant stockholder approval.

The reset provisions increased the number of common shares

issuable under the Series A warrant from 59,761 to 298,805 shares and the exercise price per Series A warrant was reduced from $ 50.20

to $ 10.04 per share effective December 17, 2024.

In addition, the Series B warrants became effective and exercisable upon relevant stockholder approval

on December 17, 2024 which resulted in 238,339 common shares issuable under the Series B warrants with an exercise price of $ 0.001 per

share effective December 17, 2024.

The Company recognized the full Series B warrant derivative liability value of $ 2,865,727 as of the

date of relevant stockholder approval when it became effective and exercisable of which $ 454,150 was recorded in equity and $ 2,411,577 was charged

as a loss in the consolidated statement of operations for the year ended December 31, 2024.

The following are the assumptions used in

calculating the estimated fair value of the detachable Series B warrants to purchase Common Stock which became effective and exercisable

upon relevant stockholder approval on December 17, 2024 and on December 31, 2024:

As such, the Company is required to treat these warrants as derivative liabilities which are valued at their estimated fair value at their

issuance date and at each reporting date with any subsequent changes reported in the condensed consolidated statements of operations as

the change in fair value of warrant derivative liabilities.

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

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

derivative liabilities through the condensed consolidated statement of operations.

The Series B warrants issued

in this transaction become issuable and exercisable on the date that relevant stockholder approval is obtained, if ever.

Relevant stockholder

approval was obtained on December 17, 2024 which activated the Series A and B warrants.

Both the Series A and Series B warrants also contain

price and warrant reset provisions that were activated upon the date of relevant stockholder approval.

The reset provisions increased

the number of common shares issuable under the Series A warrant from 59,761 to 298,805 shares and the exercise price per Series A warrant

was reduced from $ 50.20 to $ 10.04 per share effective December 17, 2024.

In addition, the Series B warrants became effective and exercisable

upon relevant stockholder approval on December 17, 2024 which resulted in 238,339 common shares issuable under the Series B warrants with

an exercise price of $ 0.001 per share effective December 17, 2024.

The Company recognized the full Series B warrant derivative liability

value of $ 2,865,727 as of the date of relevant stockholder approval when it became effective and exercisable of which $ 454,150 was recorded

in equity and $ 2,411,577 was charged as a loss in the consolidated statement of operations for the year ended December 31, 2024.

The following

are the assumptions used in calculating the estimated fair value of the detachable Series B warrants to purchase Common Stock which became

effective and exercisable upon relevant stockholder approval on December 17, 2024 and on December 31, 2024:

Series B issuance date - December 17, 2024

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No pre-funded warrants were exercised during

the three months ended March 31, 2025.

the three months ended June 30, 2025.

In conjunction with the exercise of the Series B warrants, the Company transitioned the related

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statement of operations for the year ended December 31, 2024.

During the three months ended

March 31, 2025, Series B warrants to purchase 189,689 shares of Common Stock were fully exercised.

In conjunction with the exercise

of the Series B warrants, the Company transitioned the related warrant derivative liability totaling $ 1,989,806 to equity as of their

exercise date.

The warrant derivative liability related to the Series B warrants was $- 0 - as of March 31, 2025, as they are now fully

The Company has utilized the following

assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the derivative liability relative to

the prefunded warrants and Series A warrants as of their date of issuance and as of December 31, 2024 and March 31, 2025:

During the six months ended

June 30, 2025, Series B warrants to purchase 1,897 shares of Common Stock were fully exercised.

In conjunction with the exercise of the

Series B warrants, the Company transitioned the related warrant derivative liability totaling $ 1,989,806 to equity as of their exercise

The warrant derivative liability related to the Series B warrants was $- 0 - as of June 30, 2025, as they are now fully exercised.

The Company has utilized the

following assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the derivative liability relative

to the prefunded warrants and Series A warrants as of their date of issuance and as of December 31, 2024 and June 30, 2025:

date assumptions

December 31, 2024

March 31, 2025

June 30, 2025

Volatility – range

72.1 - 101.1 %

Risk-free rate

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Remaining contractual term

0.1 - 5.0 years

Exercise price

Common stock issuable under the warrants

The Company recognized the fair

value of the Series A warrants of $ 1,998,074 as a warrant derivative liability as of the date of issuance.

There have been no Series A

warrants exercised through March 31, 2025.

The Company recognized the

fair value of the Series A warrants of $ 1,998,074 as a warrant derivative liability as of the date of issuance.

There have been no Series

A warrants exercised through June 30, 2025.

The fair value of the warrant derivative liability related to the Series A warrants was $ 1,853

and $ 2,408,598 as of March 31, 2025 and December 31, 2024, respectively.

and $ 2,408,598 as of June 30, 2025 and December 31, 2024, respectively.

The change in fair value of the Series A warrant derivative liability

from December 31, 2024 to March 31, 2025 totaled $ 2,360,141 which was included as a gain in the condensed consolidated statements of operations

for the three months ended March 31, 2025.

from December 31, 2024 to June 30, 2025 totaled $ 2,406,745 which was included as a gain in the condensed consolidated statements of operations

for the six months ended June 30, 2025.

2023 Purchase Warrants

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issued warrants to purchase a total of 562 shares of Common Stock.

The warrant terms provide for net cash settlement outside the

control of the Company under certain circumstances.

As such, the Company is required to treat these warrants as derivative liabilities

which are valued at their estimated fair value at their issuance date and at each reporting date with any subsequent changes reported

in the condensed consolidated statements of operations as the change in fair value of warrant derivative liabilities.

Furthermore, the

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

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

The Company has utilized the following

assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the warrant derivative liabilities as

of March 31, 2025 and as of December 31, 2024:

The warrant terms provide for net cash settlement outside the control

of the Company under certain circumstances.

As such, the Company is required to treat these warrants as derivative liabilities which are

valued at their estimated fair value at their issuance date and at each reporting date with any subsequent changes reported in the condensed

consolidated statements of operations as the change in fair value of warrant derivative liabilities.

Furthermore, the Company re-values

the fair value of warrant derivative liability as of the date the warrant is exercised with the resulting warrant derivative liability

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

The Company has utilized the

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

as of June 30, 2025 and as of December 31, 2024:

December 31, 2024

March 31, 2025

June 30, 2025

Volatility – range

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11,000.00 – 15,000.00

Common stock issuable under the warrants

1 unchanged sentence

February 2025 Public Equity Offering

On February 13,

2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp.

“Underwriter”) for the sale and issuance of (i) 392,500 units at a public offering price per

unit of $ 3.00 with each Unit consisting of one share of Common Stock, one Series A warrant to purchase

one share of Common Stock at an exercise price of $ 3.75 per share and one Series B warrant to purchase one share of Common Stock at

an exercise price of $ 6.00 and (ii) 4,607,500 pre-funded units at a public offering price of $ 2.98 per pre-funded unit, with each

pre-funded unit consisting of one pre-funded warrant exercisable for one share of Common Stock at an exercise price of $ 0.001 per

share, one Series A warrant and one Series B warrant.

The pre-funded warrants were immediately exercisable and may be exercised

at any time until all of the pre-funded warrants are exercised in full.

The Series A and

Series B warrants are exercisable only upon receipt of stockholder approval of (i) certain terms in the Series A and B warrants and

the issuance of the shares of Common Stock issuable upon the exercise of such Series A and Series B warrants, as may be required by

the applicable rules and regulations of The Nasdaq Stock Market LLC and (ii) if necessary, a proposal to amend the Company’s

Articles of Incorporation, to increase the authorized share capital of the Company to an amount sufficient to cover the shares of

Common Stock issuable upon the exercise of the Series A and Series B warrants.

The Series A warrants will be exercisable commencing

upon the date of public notice of Stockholder Approval until five years after such date, and the Series B Warrants will be

exercisable commencing upon the date of public notice of Stockholder Approval until two and one-half years after such date.

On February 13, 2025, the

Company entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp.

(the “Underwriter”)

for the sale and issuance of (i) 3,925 units at a public offering price per unit of $ 300.00 with each Unit consisting of one share of

Common Stock, one Series A warrant to purchase one share of Common Stock at an exercise price of $ 375.00 per share and one Series B warrant

to purchase one share of Common Stock at an exercise price of $ 600.00 and (ii) 46,075 pre-funded units at a public offering price of $ 298.00

per pre-funded unit, with each pre-funded unit consisting of one pre-funded warrant exercisable for one share of Common Stock at an exercise

price of $ 0.001 per share, one Series A warrant and one Series B warrant.

The pre-funded warrants were immediately exercisable and may

be exercised at any time until all of the pre-funded warrants are exercised in full.

The Series A and Series B

warrants are exercisable only upon receipt of stockholder approval of (i) certain terms in the Series A and B warrants and the issuance

of the shares of Common Stock issuable upon the exercise of such Series A and Series B warrants, as may be required by the applicable

rules and regulations of The Nasdaq Stock Market LLC and (ii) if necessary, a proposal to amend the Company’s Articles of Incorporation,

to increase the authorized share capital of the Company to an amount sufficient to cover the shares of Common Stock issuable upon the

exercise of the Series A and Series B warrants.

The Series A warrants will be exercisable commencing upon the date of public notice of

Stockholder Approval until five years after such date, and the Series B Warrants will be exercisable commencing upon the date of public

notice of Stockholder Approval until two and one-half years after such date.

The offering closed on February

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to be paid per additional share of Common Stock will be equal to the public offering price of one Unit (less $ 0.00001 allocated to each

Series A and Series B warrant), as applicable, less the underwriting discount, and the purchase price to be paid per over-allotment Series

A and Series B warrant will be $ 0.00001 .

Series A and Series B warrants), as applicable, less the underwriting discount, and the purchase price to be paid per over-allotment Series

A and Series B warrants will be $ 0.00001 .

On February 14, 2025, the Underwriter exercised its over-allotment option with respect to 3,000

2 unchanged sentences

Aegis Capital Corp.

the sole book-running manager in the offering, pursuant to the terms of the Underwriting Agreement, and received seven percent ( 7 %) of

the aggregate purchase price paid by investors in the offering, a one percent ( 1 %) non-accountable expense and reimbursement of the legal

fees of its counsel.

The units and pre-funded units were offered by the

Company pursuant to an effective registration statement on Form S-1, as amended, which was declared effective by the SEC on February 12,

as the sole book-running manager in the offering, pursuant to the terms of the Underwriting Agreement, and received seven percent ( 7 %)

of the aggregate purchase price paid by investors in the offering, a one percent ( 1 %) non-accountable expense and reimbursement of the

legal fees of its counsel.

The units and pre-funded units

were offered by the Company pursuant to an effective registration statement on Form S-1, as amended, which was declared effective by the

SEC on February 12, 2025.

The final prospectus relating to the offering was filed with the SEC on February 13, 2025.

The aggregate net proceeds to

the Company from the offering including the underwriters exercise of their overallotment option were approximately $ 14,308,300 , after

The aggregate net proceeds

to the Company from the offering including the underwriters exercise of their overallotment option were approximately $ 14,308,300 , after

deducting underwriter’s fees and the payment of other offering expenses associated with the offering payable by the Company.

2024 Issuance of Restricted Common Stock

In January 2024, the board of

directors approved the grant of 2,750 shares of Common Stock to officers of the Company.

In January 2024, the board

of directors approved the grant of 27 shares of Common Stock to officers of the Company.

Such shares will generally vest over a period

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of the Company.

Such shares will generally vest over a period of one 1 to two years on their respective anniversary dates in January through

Such shares will generally vest over a period of one 1 to two years on their respective anniversary dates from January through

January 2026, provided that each grantee remains an employee of the company on such dates.

5 unchanged sentences

As part of the Private Placement,

the Company issued an aggregate of 59,761 units and pre-funded units (collectively, the “June Units”) at a purchase price

of $ 50.20 per unit (less $ 0.001 per pre-funded unit).

Each June Unit consists of (i) one share of Common Stock (or one pre-funded warrant to purchase one share of Common Stock (the “Pre-Funded

Warrants”)), (ii) one Series A warrant to purchase one share of Common Stock (the “Series A Warrant”) and (iii) one

Series B warrant to purchase such number of shares of Common Stock as will be determined on the Reset Date and in accordance with the

terms therein (the “Series B Warrant”, and together with the Series A Warrant, the “Warrants”).

Securities Purchase Agreement and Senior Secured

Promissory Notes

the Company issued an aggregate of 60 units and pre-funded units (collectively, the “June Units”) at a purchase price of $ 5020.00

per unit (less $ 0.001 per pre-funded unit).

Each June Unit consists of (i) one share of Common Stock (or one pre-funded warrant to purchase

one share of Common Stock (the “Pre-Funded Warrants”)), (ii) one Series A warrant to purchase one share of Common Stock (the

“Series A Warrant”) and (iii) one Series B warrant to purchase such number of shares of Common Stock as will be determined

on the Reset Date and in accordance with the terms therein (the “Series B Warrant”, and together with the Series A Warrant,

the “Warrants”).

Securities Purchase Agreement and Senior

Secured Promissory Notes

On November 6, 2024, the Company

1 unchanged sentence

agreed to issue and sell to such investors, in a private placement transaction, (i) senior secured promissory notes in aggregate principal

amount of $ 3,600,000 , and (ii) 40,419 shares (the “Commitment Shares”) of the Company’s Common Stock, for aggregate

gross proceeds of approximately $ 3.0 million, before deducting placement agent fees and other offering expenses payable by the Company.

This private placement closed on November 7, 2024.

amount of $ 3,600,000 , and (ii) 404 shares (the “Commitment Shares”) of the Company’s Common Stock, for aggregate gross

proceeds of approximately $ 3.0 million, before deducting placement agent fees and other offering expenses payable by the Company.

private placement closed on November 7, 2024.

The net proceeds of the private

8 unchanged sentences

Cancellation of Restricted Stock

During the three months ended

March 31, 2025 and 2024, the Company cancelled - 0 - and 56 shares due to termination of employees, respectively.

During the six months ended

June 30, 2025 and 2024, the Company cancelled - 0 - and 1 shares due to termination of employees, respectively.

Exercise of Prefunded Warrants

During the three months ended

March 31, 2025, prefunded warrants to purchase 4,907,500 shares of Common Stock that were issued in conjunction with the February 2025

public equity offering of Common Stock, were fully exercised at an exercise price of $ 0.001 per share.

June 30, 2025, prefunded warrants to purchase 49,075 shares of Common Stock that were issued in conjunction with the February 2025 public

equity offering of Common Stock, were fully exercised at an exercise price of $ 0.001 per share.

During the three months ended

March 31, 2025, Series B warrants to purchase 189,689 shares of Common Stock that were issued in conjunction with the June 2024 public

equity offering of Common Stock, were fully exercised for total proceeds of $ 3,793 .

June 30, 2025, Series B warrants to purchase 1,897 shares of Common Stock that were issued in conjunction with the June 2024 public equity

offering of Common Stock, were fully exercised for total proceeds of $ 3,793 .

In conjunction with the exercise of the Series B warrants,

the Company transitioned the related warrant derivative liability totaling $ 1,989,806 to equity as of their exercise date.

Reverse Stock Split

On 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 the Charter Amendment to its Articles of Incorporation, which effected a one-for-twenty

reverse stock split of all of the Company’s outstanding shares of 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.

As a result 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.

The 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 Reverse Stock Split.

The Reverse Stock Split was effective as of the time of this

Noncontrolling Interests

The Company owns a 51 % equity

The Company has a 51 % equity

interest in its consolidated subsidiary, Nobility Healthcare.

3 unchanged sentences

We reported net

(loss) income attributable to noncontrolling interests of consolidated subsidiary of $ 3,611 and $ 12,248 for the three months ended March

31, 2025 and 2024, respectively.

(loss) income attributable to noncontrolling interests of consolidated subsidiary of $ 55,997 and $ 73,310 for the three months ended June

30, 2025 and 2024, respectively and $ 59,608 and $ 61,063 for the six months ended June 30, 2025 and 2024, respectively.

RELATED PARTY TRANSACTIONS

1 unchanged sentence

The Company accrued reimbursable

expenses payable to Nobility, LLC totaling $ 271,487 and $ 245,716 as of March 31, 2025 and December 31, 2024, respectively.

expenses payable to Nobility, LLC totaling $ 42,082 and $ 245,716 as of June 30, 2025 and December 31, 2024, respectively.

Total management

fees accrued and payable in accordance with the operating agreement totaled $ 9,321 and $ 38,625 as of March 31, 2025 and December 31, 2024,

fees accrued and payable in accordance with the operating agreement totaled $ 20,933 and $ 38,625 as of June 30, 2025 and December 31, 2024,

respectively.

The company recorded management fee expense of $ 9,321 and $ 12,379 for the three months ended March 31, 2025 and 2024, respectively.

The company recorded management fee expense of $ 30,255 and $ 22,403 for the six months ended June 30, 2025 and 2024, respectively.

Transactions with Related Party of TicketSmarter

On September 22, 2023, a trust,

the beneficiaries of which are TicketSmarter’s Chief Executive Officer and his spouse, made a loan in the amount of $ 2,325,000 to

TicketSmarter to support TicketSmarter’s operations.

On October 2, 2023 an additional $ 375,000 was advanced to Ticketsmarter.

transaction was recorded as a related party note payable (the “TicketSmarter Related Party Note”).

The TicketSmarter Related

Party Note bears interest of 13.25 % per annum with repayment beginning January 2, 2024.

As of December 31, the entire TicketSmarter Related

Party note balance totaled $ 2,700,000 , and is classified as current, with an accrued interest balance of $ 488,711 , respectively.

of proceeds of the TicketSmarter Related Party Note was to resolve numerous outstanding payables at a discounted rate, the discount received

to resolve such outstanding payables is recognized as a gain on extinguishment of liabilities on the condensed consolidated statement

of operations.

Additionally, these negotiations relieved TicketSmarter of numerous future obligations following fiscal year 2023.

On September 22, 2023, a

trust, the beneficiaries of which are an officer of TicketSmarter’s and his spouse, made a loan in the

amount of $ 2,325,000

to TicketSmarter to support TicketSmarter’s operations.

On October 2, 2023 an additional $ 375,000

was advanced to Ticketsmarter.

The transaction was recorded as a related party note payable (the “TicketSmarter Related Party

The TicketSmarter Related Party Note bears interest of 13.25 %

per annum with repayment beginning January 2, 2024.

As of December 31, 2024 the entire TicketSmarter Related Party note balance

totaled $ 2,700,000 ,

and was classified as current, with an accrued interest balance of $ 488,711 .

The use of proceeds of the TicketSmarter Related Party Note was to resolve numerous outstanding payables at a discounted rate, the

discount received to resolve such outstanding payables is recognized as a gain on extinguishment of liabilities on the condensed

consolidated statement of operations.

Additionally, these negotiations relieved TicketSmarter of numerous future obligations

following fiscal year 2023.

On August 19, 2024, the parties

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of the note rather than an extinguishment and reissuance of a new note.

No payments have been made to date in 2025.

On March 20, 2025, the parties

agreed to a second modification of the TicketSmarter Related Party Note.

The modification eliminated all accrued interest totaling $ 582,203

as of the date of the second modification, reduced the interest rate from 13.25 % per annum to 8 % per annum, and extended and reduced the

repayment amount from $ 54,000 per week to $ 11,000 per week beginning April 1, 2025.

The modification was deemed to be an extinguishment

of debt resulting in a gain on extinguishment of note payable – related party of $ 1,249,372 during the three months ended March

Payments totalling $ 22,000 have been made through June 30, 2025.

On March 20, 2025, the

parties agreed to a second modification of the TicketSmarter Related Party Note.

The modification eliminated all accrued interest

totaling $ 582,203

as of the date of the second modification, reduced the interest rate from 13.25 %

per annum to 8 %

per annum, and extended and reduced the repayment amount from $ 54,000

per week to $ 11,000

per week beginning April 1, 2025.

The modification was deemed to be an extinguishment of debt resulting in a gain on

extinguishment of note payable – related party of $ 1,249,372

during the three months ended March 31, 2025.

At the time of the modification, management considered the officer’s lack Company-wide policy making authority

and de-minimis beneficial ownership in the Company to determine that in its estimation the officer did not act in his capacity as an equity

holder in the Company when negotiating the March 20, 2025 debt modification.

On June 4, 2025, the parties

agreed to a third modification of the TicketSmarter Related Party Note.

The modification reduced the outstanding principal amount from

$ 2,678,000 to $ 2,000,000 , eliminated all accrued interest totaling $ 43,515 as of the date of the third modification, the interest rate

remained at 8 % per annum, and extended and reduced the repayment amount from $ 11,000 per week to $ 9,600 per week beginning January 1, 2026.

The modification was deemed to be an extinguishment of debt resulting in a gain on extinguishment of note payable – related party

of $ 622,622 during the three and six months ended June 30, 2025.

At the time of the June

4, 2025 modification, management considered the repetitive nature of the modifications as an indication that the Officer was acting

more in his capacity as an equity holder than as a creditor.

In addition, management reconsidered the accounting treatment for the

March 20, 2025 modification and changed its estimate whereby, the officer was more likely than not acting in his capacity as an

equity holder in the Company when negotiating the March 20, 2025 debt modification, as well.

As a result, the Company determined to

treat the $622,622 gain on the June 4, 2025 modification as a deemed contribution of capital rather than a gain recognized in the

condensed consolidated statement of operations.

In addition, the Company reconsidered the accounting treatment for the $1,249,372

gain on the March 20, 2025 modification and determined to treat it as a deemed contribution of capital rather than a gain recognized

in the condensed consolidated statement of operations.

Therefore the $1,249,372 gain on the March 20, 2025 modification was reversed

during the quarter ended June 30, 2025 and recorded as a deemed contribution of capital rather than a gain recognized in the

condensed consolidated statement of operations.

Company Related Party Note

On August 22, 2024, Digital Ally’s

Chief Executive Officer, made a loan in the amount of $ 100,000 to the Company to support its operations.

In addition, on October 24, 2024,

Digital Ally’s Chief Executive Officer, made an additional loan in the amount of $ 40,000 to the Company to support its operations.

On August 22, 2024, Digital

Ally’s Chief Executive Officer, made a loan in the amount of $ 100,000 to the Company to support its operations.

In addition, on

October 24, 2024, Digital Ally’s Chief Executive Officer, made an additional loan in the amount of $ 40,000 to the Company to support

its operations.

These transactions were recorded as related party notes payable (the “Company Related Party Notes”).

Related Party Notes bear interest at prime rate ( 8.00 % as of June 30, 2025 and December 31, 2024) per annum with repayment due on demand.

The Company paid off the Company Related Party Notes in full during the six months ended June 30, 2025.

As of December 31, 2024, the entire

Company Related Party note of $ 140,000 , is classified as current, with an accrued interest balance of $ 3,465 .

The Company Related Party

Notes bear interest at prime rate ( 8.00 % as of March 31, 2025 and December 31, 2024) per annum with repayment due on demand.

paid off the Company Related Party Notes in full during the three months ended March 31, 2025.

As of December 31, 2024, the entire Company

Related Party note of $ 140,000 , is classified as current, with an accrued interest balance of $ 3,465 .

The Company Related Party Notes

balance is $- 0 - and $ 140,000 and an accrued interest balance of $- 0 - and $ 3,465 as of March 31, 2025 and December 31, 2024, respectively.

Notes balance is $- 0 - and $ 140,000 and an accrued interest balance of $- 0 - and $ 3,465 as of June 30, 2025 and December 31, 2024, respectively.

Master Distribution Agreement

On June 11, 2025 the Company entered

into an exclusive global Master Distribution Agreement with Redwood Scientific Technologies, (“Redwood”) granting the Company

the rights to distribute Redwood’s nicotine cessation products, including TBX-Free and TBX Vape-Free.

This strategic partnership

positions Digital Ally as the commercialization partner for products aimed at helping Americans overcome addiction to cigarettes and vape

Redwood is preparing to validate the efficacy of these products as it prepares to submit its products for clinical trials utilizing

a double-blind, randomized scientific study to support the efficacy of such products No sales or marketing of the product will occur until

the clinical study concludes and the efficacy is evaluated and confirmed.

There can be no assurance whether and when the clinical study will be concluded and what the ultimate results

The agreement provides the Company

with comprehensive rights to Redwood’s technologies, brands, trademarks, manufacturing processes, vendor relationships, and additional

The two key products, TBX-Free and TBX Vape-Free, are designed to address significant health concerns.

TBX-Free targets traditional

cigarette smokers, while TBX Vape-Free is the first-of-its-kind oral thin-film solution specifically designed for vape users, addressing

a critical gap in addiction treatment options.

The Company paid $50,000 on July

8, 2025 to enter into the global Master Distribution Agreement with Redwood which included warrants to acquire a minority ownership position

in Redwood for a period of 5 years.

The Company’s CEO and CFO are minority beneficial shareholders of Redwood.

There have been no

other transactions during the three and six months ended June 30, 2025, between the Company and Redwood.

GAIN ON EXTINGUISHMENT OF LIABILITIES

recorded gains on the extinguishment of liabilities for the three months ended March 31, 2025 and 2024 of $ 2,220,097 ,

and $ 682,345 ,

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 three months ended March 31, 2025 utilizing funds generated by the closing of the

February 2025 public equity offering on February 13, 2025.

The discount received was recognized as a gain on extinguishment of

liabilities in the condensed consolidated statement of operations for the three months ended March 31, 2024.

extinguishment of liabilities was $ 682,345

for the three months ended March 31, 2024, 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 three months ended March 31, 2024.

NET INCOME (LOSS) PER SHARE

The calculation of the weighted

average number of shares outstanding and income (loss) per share outstanding for the three months ended March 31, 2025 and 2024 are as

The Company recorded gains

on the extinguishment of liabilities for the three months ended June 30, 2025 and 2024 of $ 10,619 , and $- 0 -, respectively, and $ 2,230,716 ,

and $ 682,345 for the six months ended June 30, 2025 and 2024, 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 three months ended June 30,

2025 utilizing funds generated by the closing of the February 2025 public equity offering on February 13, 2025.

The discount received

was recognized as a gain on extinguishment of liabilities in the condensed consolidated statement of operations for the three and six

months ended June 30, 2024.

The gain on extinguishment

of liabilities was $ 682,345 for the six months ended June 30, 2024, 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 six months ended June 30, 2024.

NET LOSS PER SHARE

The calculations of the weighted

average number of shares outstanding and loss per share outstanding for the three and six months ended June 30, 2025 and 2024

are as follows:

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

Three Months Ended

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

Six months ended

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

$ ( 4,545,201 )

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

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

$ ( 5,083,861 )

$ ( 281,730 )

$ ( 9,014,882 )

Denominator for basic loss per share – weighted average shares outstanding

Dilutive effect of shares issuable under stock options outstanding

Dilutive effect of shares issuable under common stock purchase warrants

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

Net income (loss) per share:

Basic loss per share is based

upon the weighted average number of shares of Common Stock outstanding during the period.

For the three months ended March 31, 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.

Net loss per share:

$ ( 3,479.71 )

$ ( 6,234.36 )

$ ( 3,479.71 )

$ ( 6,234.36 )

Basic loss per share is

based upon the weighted average number of shares of Common Stock outstanding during the period.

For the three and six months ended

June 30, 2025 and 2024, all shares issuable upon the exercise of outstanding stock options and warrants were antidilutive, and,

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

COUNTRY STAMPEDE ACQUISITION

14 unchanged sentences

be obligated, to the extent a refund is sought after Closing, to provide such refund, if appropriate, to the customer requesting a refund,

and shall indemnify and hold harmless JC Entertainment from any and all claims, liabilities, costs, suits, or the like relating to such

and shall indemnify and hold harmless JC Entertainment from all claims, liabilities, costs, suits, or the like relating to such

refund request.

The Company accounts for business

combinations using the acquisition method and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and

combinations using the acquisition method and the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and

has concluded that this acquisition was not significant.

8 unchanged sentences

however the parties agreed to

coordinate the election to invoke IRS Section 338(h)(10) relative to this transaction for tax purposes.

coordinate the election to invoke IRS Section 338(h)(10) in relation to this transaction for tax purposes.

Therefore, the excess purchase

3 unchanged sentences

of operations of acquired businesses are included in the condensed consolidated statement of operations from the acquisition date.

The purchase price of the Country

Stampede Acquisition was allocated to tangible assets, goodwill, identifiable intangible assets, and assumed liabilities based on their

preliminary estimated fair values at the time of the acquisition.

The Company retained the services of an independent valuation firm to

determine the fair value of these identifiable intangible assets.

The Company has finalized the estimated fair value of assets acquired,

and liabilities assumed in the Country Stampede Acquisition which are as follows:

The purchase price of the

Country Stampede Acquisition was allocated to tangible assets, goodwill, identifiable intangible assets, and assumed liabilities based

on their preliminary estimated fair values at the time of the acquisition.

The Company retained the services of an independent valuation

firm to determine the fair value of these identifiable intangible assets.

The Company has finalized the estimated fair value of assets

acquired, and liabilities assumed in the Country Stampede Acquisition which are as follows:

SCHEDULE OF PRELIMINARY FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ACQUISITION

14 unchanged sentences

existed as of the acquisition date that, if known, would have resulted in the recognition of these assets or liabilities as of that date.

There were no additional assets or liabilities recognized during the measurement period that ended March 1, 2025, the amounts of assets

or liabilities previously recognized on a preliminary basis are now final.

OPERATING SEGMENTS

32 unchanged sentences

Summarized financial information

for the Company’s reportable business segments is provided for the three months ended March 31, 2025, and 2024:

for the Company’s reportable business segments is provided for the three months ended June 30, 2025, and 2024:

SCHEDULE OF SEGMENT REPORTING

Three months ended March 31, 2025

Three months ended June 30, 2025

Video Solutions

15 unchanged sentences

$ ( 1,468,822 )

$ ( 4,095,073 )

Non-operating (expenses) income:

6 unchanged sentences

Income before income tax benefit (provision)

$ ( 2,617,210 )

Depreciation and amortization expense

Total identifiable assets, net of

Three months ended March 31, 2024

Three months ended June 30, 2024

Video Solutions

19 unchanged sentences

Interest expense

( 1,085,063 )

Change in fair value of derivative liabilities

Gain on the extinguishment of liabilities

Gain on the extinguishment of debt

Other non-operating income (loss), net

Total non-operating income (loss)

( 1,096,330 )

Loss before income tax benefit (provision)

2 unchanged sentences

Total identifiable assets, net of

Summarized financial information

for the Company’s reportable business segments is provided for the six months ended June 30, 2025, and 2024:

Six months ended June 30, 2025

Video Solutions

Entertainment

cycle Management

Corporate and other

Net revenues:

Total segment net revenues

Less significant segment

Cost of Revenue - Product

Cost of Revenue – Service and

Research and development expense

Selling, advertising and

promotional expense

General and administrative

Total segment operating income (loss)

$ ( 2,872,465 )

$ ( 2,313,574 )

$ ( 5,069,753 )

Non-operating (expenses) income:

Interest expense

Change in fair value of derivative liabilities

Gain on the extinguishment of liabilities

Gain on extinguishment of debt – related party

Other non-operating income (loss)

Total non-operating income (loss)

Income before income tax benefit (provision)

Depreciation and amortization expense

Total identifiable assets, net of

Six months ended June

Video Solutions

Entertainment

cycle Management

Corporate and other

Net revenues:

Total segment net revenues

Less significant segment

Cost of Revenue - Product

Cost of Revenue – Service and

Research and development

Selling, advertising and

promotional expense

General and administrative

Total segment operating

income (loss)

Non-operating (expenses) income:

Interest expense

Change in fair value of derivative liabilities

Gain on the extinguishment of liabilities

Other non-operating income (loss), net

Total non-operating income (loss)

Loss before income tax benefit (provision)

Depreciation and amortization

Total identifiable assets, net of

The segment net revenues reported

7 unchanged sentences

SUBSEQUENT EVENTS

Special Shareholder Meeting

On Tuesday, May 6, 2025, the Company

held its special meeting of stockholders.

Set forth below are each of the three proposals that were voted on at the Special Meeting and

the stockholder votes on each such proposal, as certified by the inspector of elections for the Special Meeting.

These proposals are described

in further detail in the Definitive Proxy Statement on Schedule 14A that the Company filed with the SEC on March 4, 2025.

Proposal One:

Approval of an

amendment to our Articles of Incorporation to increase the number of authorized shares of our capital stock that we may issue from

210,000,000 shares to 5,010,000,000 shares, of which 5,000,000,000 shares shall be classified as Common Stock.

The proposal was not

Proposal Two:

of a proposal to authorize the board of directors of the Company (the “Board”), in its sole and absolute discretion, and without

further action of the stockholders, to file an amendment to our Articles of Incorporation to effect a reverse stock split of our issued

and outstanding Common Stock at a ratio to be determined by the Board, ranging from one-for-five (1:5) to one-for-one hundred (1:100),

with such reverse stock split to be effected at such time and date, if at all, as determined by the Board in its sole discretion, but

no later than April 1, 2026, when the authority granted in this proposal to implement the reverse stock split would terminate.

proposal was approved.

Proposal Three:

Authorization,

for purposes of complying with Nasdaq listing rule 5635(d), of the issuance of Series A Warrants to purchase shares of Common Stock

(the “Series A Warrants”) and Series B Warrants to purchase shares of Common Stock (the “Series B Warrants”

and collectively with the Series A Warrants, the “Warrants”), shares of Common Stock underlying the Warrants and certain

provisions of the Warrants, issued in connection with an offering and sale of securities of the Company that was consummated on

February 14, 2025.

The proposal was approved

Reverse Stock Split

On 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 the Charter Amendment to its Articles of Incorporation, which effected a one-for-twenty reverse stock split of all of the Company’s outstanding shares of 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.

As a result 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.

The 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 Reverse Stock Split.

The Reverse Stock Split was effective as of the time of this

Notices of Failure to Satisfy a Continued Listing

Minimum Bid Price Requirement

- December 20, 2024, the Company received a written notification from The Nasdaq Stock Market LLC indicating that the Company was not

in compliance with Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”), as the Company’s closing bid

price for its Common Stock was below $ 1.00 per share for the prior thirty (30) consecutive business days.

The Company has been granted

a 180-calendar day compliance period, or until June 18, 2025, to regain compliance with the Minimum Bid Price Requirement.

If the Company

is not in compliance by June 18, 2025, the Company may be afforded a second 180-calendar day compliance period.

If the Company does not

regain compliance within such compliance period, including any granted extensions, its Common Stock may be subject to delisting, which

delisting may be appealed to a Nasdaq hearings panel.

Minimum Stockholders’

Equity Standard - On January 2, 2025, the Company received a notice (the “Notice”) from the staff of the Listing Qualifications

department (the “Staff”) of Nasdaq, which indicated that the Company was not in compliance with Nasdaq Listing Rule 5550(b)(1)

(the “Stockholders’ Equity Requirement”), as the Company’s stockholders’ equity of ($ 2,448,310 ) , as reported

in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024, was below the required minimum

of $ 2.5 million, and the Company did not meet either the alternative compliance standards relating to market value of listed securities

of at least $ 35 million or net income from continuing operations of at least $ 500,000 in the most recently completed fiscal year or in

two of the last three most recently completed fiscal years.

Under Nasdaq listing rules and

as specified in the Notice, the Company has 45 calendar days from the date of the Notice to submit to the Staff a plan to regain compliance

with the Stockholders’ Equity Requirement.

If the Company’s plan to regain compliance is accepted, Nasdaq may grant an extension

of up to 180 calendar days from the date of the Notice for the Company to evidence compliance.

The Company submitted its plan

to Nasdaq to regain compliance with the Stockholders’ Equity Requirement on February 17, 2025.

There can be no assurance that the

Company’s plan will be accepted or that if it is, that the Company will be able to regain compliance with the Stockholders’

Equity Requirement.

If the Company does not regain

compliance within the allotted compliance period(s), including any extensions that may be granted by Nasdaq, Nasdaq will provide notice

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

At that time, the Company may appeal any such delisting

determination to a Nasdaq hearings panel.

Minimum Bid Price Requirement

- On March 6, 2025, the Company received notice (the “March 6 Letter”) from the Nasdaq 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”).

As a result, the Staff determined to delist the Company’s securities from Nasdaq, unless the Company timely requests an appeal of

the Staff’s determination to a Hearings Panel (the “Panel”), pursuant to the procedures set forth in the Nasdaq Listing

Rule 5800 Series.

The Company must request a hearing no later than 4:00 p.m.

Eastern Time on March 13, 2025.

The 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, which hearing date has not been set as of

the date of this Form 10-K.

While the appeal process is pending, the suspension of trading of the Company’s Common Stock, will be stayed and the Common Stock will continue 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.

On 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 following conditions:

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

On 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.

On or before June 6, 2025,

the Company shall demonstrate compliance with the Minimum Bid Price Requirement.

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

The Company continues to work 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 March 31, 2025.

There are no assurances however,

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

Series A and B warrants issued in connection

with the February 2025 public equity offering

The Series A and B warrants issued

in the February 2025 public equity offering (See Note 12 – Stockholders Equity) become issuable and exercisable on the date of Stockholder

Stockholder approval was obtained on May 6, 2025 at the Special Meeting of Shareholders which activated both the Series A and

Both the Series A and Series B warrants also contain price and warrant reset provisions that were activated upon the date

of Stockholder Approval.

The reset provisions increased the number of common shares issuable under the Series A and B warrants as provided

for in their respective agreements and the exercise price was reduced from $ 3.75 per share to $ 0.62 per share relative to the Series

A warrants and $ 6.00 per share to $ 0.62 for the Series B warrants.

There have been no exercises

of the Series A warrants to date and the Series B warrants contained cashless exercise provisions.

The Series B warrant holders have

exercised a total of 161,068,935 of the total 166,935,591 Series B warrants available to be exercised on a cashless basis.

On July 31, 2025, the Company

received notification of partial compliance (the “Letter) from Nasdaq regarding the deficiencies identified in Note 9 – Commitments

and Contingencies.

The Letter advised the Company that the Nasdaq Hearings Panel found that the Company had regained compliance with Listing

Rules regarding the Bid Price Rule and the Periodic Report Rule, and the Equity Rule as required by the Panel’s decision dated May

The Letter noted that in

the Panel’s May 1, 2025 decision, should the company fail to maintain compliance with any listing rule prior to September 2, 2025,

it will remain subject to delisting.

In addition, the Letter advised the Company that if the Company remains in compliance with all continued

listing requirements through September 2, 2025, the Panel intends to impose a Discretionary Panel Monitor to monitor the Company’s

ongoing compliance with the Nasdaq’s continued listing standards for a period of time.

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

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

What changed 10-Q

Item 1. Financial Statements