What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-18 compared with 2025-05-20 · 877 added, 479 removed, 532 unchanged (72% of the section changed)

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the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking

We undertake no obligation to

publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

A wide variety

of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs.

There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate.

Factors that could cause or contribute

to our actual results differing materially from those discussed herein or for our stock price to be adversely affected include, but are

not limited to:

We undertake no obligation

to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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

There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be

Factors that could cause or

contribute to our actual results differing materially from those discussed herein or for our stock price to be adversely affected include,

but are not limited to:

(1) our losses in recent years, including fiscal years 2024 and 2023;

(2) economic and other risks for our business from

the effects of the COVID-19 pandemic, including the impacts on our law-enforcement and commercial customers, suppliers and employees and

on our ability to raise capital as required;

(2) economic and other risks for our business

from the effects of the COVID-19 pandemic, including the impacts on our law-enforcement and commercial customers, suppliers and employees

and on our ability to raise capital as required;

(3) our ability to increase revenues, increase our margins and return to consistent profitability

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

Current Trends and Recent Developments for the

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

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

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

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

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

Eastern Time on May 6, 2025.

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

The Common Stock

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

The Reverse Stock Split

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

remain as set forth pursuant to the Articles of Incorporation.

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

Current Trends and Recent Developments for

Reverse Stock Split

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

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

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

the Reverse Stock Split.

Notifications

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

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

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

Bid Price Requirement”).

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

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

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

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

“Stockholders’ Equity Requirement”).

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

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

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

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

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

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

if during any compliance period specified

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

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

Stocks Rule”).

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

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

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

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.

Nasdaq Notifications

As previously disclosed, on

December 20, 2024, the Company received notice from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market

LLC (“Nasdaq”) that the bid price of its listed securities had closed at less than $1 per share over the previous 30 consecutive

business days, and, as a result, did not comply with Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).

Therefore, in accordance with Listing Rule 5810(c)(3)(A), the Company was provided 180 calendar days, or until June 18, 2025, to regain

compliance with the Minimum Bid Price Requirement.

As previously disclosed, on

January 2, 2025, the Staff notified the Company that it was not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires companies

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

Equity Requirement”).

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

10-Q for the quarter ended September 30, 2024, and, as a result, did not satisfy the Stockholders’ Equity Requirement pursuant to

Listing Rule 5550(b)(1).

As previously disclosed, on

March 6, 2025, the Company received notice (the “March 6 Letter”) from the Staff that the Staff had determined that as of

March 5, 2025, the Company’s securities had a closing bid price of $0.10 or less for ten consecutive trading days triggering application

of Listing Rule 5810(c)(3)(A)(iii) which states in part:

if during any compliance period specified in Rule 5810(c)(3)(A), a company’s

security has a closing bid price of $0.10 or less for ten consecutive trading days, the Listing Qualifications Department shall issue

a Staff Delisting Determination under Rule 5810 with respect to that security (the “Low Priced Stocks Rule”).

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.

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

was stayed and the Common Stock continued to trade on the Nasdaq Capital Market until the hearing process concludes, and the Panel

issues a written decision.

The Company held its hearing with the Panel as scheduled on April 17, 2025.

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

Such decision is subject to the following conditions:

or before May 2, 2025, the Company shall file Form 10-K for 2024 in compliance with Listing

Rule 5250(c)(1).

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

undertaken by the Company to increase its equity and providing an indication of its equity

following those transactions.

addition, on or before May 20, 2025, the Company must provide the Panel with an update on

its fundraising plans, and updated income projections for the next 12 months, with all underlying

assumptions clearly stated.

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

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

Company will be delisted.

are no assurances however, that the Company will be able to meet and maintain all such conditions required by the Panel.

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

Company meeting and maintaining 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.

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

Requirement as promptly as possible.

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

Stockholders’ Equity Requirement as reported in the accompanying Statement of Stockholders’ Equity (Deficit) as of June

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.

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

Segment Overview

Video Solutions Operating Segment

– Within our video solutions operating segment we supply technology-based products utilizing our portable digital video and

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

have the ability to integrate electronic, radio, computer, mechanical, and multi-media technologies to create positive solutions to our

customers’ requests.

Video Solutions Operating

Segment – Within our video solutions operating segment we supply technology-based products utilizing our portable digital video

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

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

our customers’ requests.

Our products include:

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

enforcement and commercial markets;

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

law enforcement and commercial markets;

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

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

for both law enforcement and commercial markets;

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

and commercial market;

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

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

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

activation for both law enforcement and commercial markets;

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

enforcement and commercial market;

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

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

and FleetVu and VuLink, which are our cloud-based

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which are for use against viruses and bacteria.

Our video solutions segment revenue

encompasses video recording products and services for our law enforcement and commercial customers and the sale of Shield disinfectant

Our video solutions segment

revenue encompasses video recording products and services for our law enforcement and commercial customers and the sale of Shield disinfectant

and personal protective products.

This segment generates revenues through our subscription models offering cloud and warranty solutions,

This segment generates revenue through our subscription models offering cloud and warranty solutions,

and hardware sales for video and personal protective safety products and solutions.

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3 or 5 years.

Revenue Cycle Management Operating

Segment – We entered the revenue cycle management business late in the second quarter of 2021 with the formation of our wholly

owned subsidiary, Digital Ally Healthcare, Inc., and its majority-owned subsidiary Nobility Healthcare.

Nobility Healthcare completed

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

of private medical billing companies, in which we will assist in providing working capital and back-office services to healthcare organizations

throughout the country.

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

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

to substantial improvements in their operating margins and cash flows.

Our revenue cycle management segment

consists of our medical billing subsidiaries.

Revenues of this segment are recognized after we perform the obligations of our revenue

cycle management services.

Our revenue cycle management services are services, performed and charged monthly, generally based on a contractual

percentage of total customer collections, for which we recognize our net service fees.

Entertainment Operating Segment

- We also entered into live entertainment and events ticketing services through the formation of our wholly owned subsidiary, TicketSmarter

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

TicketSmarter provides ticket sales,

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

TicketSmarter

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

and performing arts.

We also offer production and promotion of live music events in third-party venues throughout the country.

These services

begin with the logistical matters of an event, including artist booking and research, ticketing, staging, on-site operations, vendor sourcing,

and day of production.

Our entertainment operating segment

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

Revenues of this segment

include ticketing service charges generally determined as a percentage of the face value of the underlying ticket and ticket sales from

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

Entertainment direct expenses include the cost of tickets

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

well as other administrative costs.

Revenue Cycle Management

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

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

Nobility Healthcare

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

acquisitions of private medical billing companies, in which we will assist in providing working capital and back-office services to healthcare

organizations throughout the country.

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

coding, and collections.

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

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

Our revenue cycle management

segment consists of our medical billing subsidiaries.

Revenues of this segment are recognized after we fulfil the obligations of our

revenue cycle management services.

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

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

Entertainment

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

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

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

live events, TicketSmarter.com.

TicketSmarter offers tickets for over 125,000 live events throughout the country through its

platform, including concerts, sporting events, theatres, and performing arts.

We also began offering production and promotion

services in relation to live music events in third-party venues throughout the country through our Kustom Entertainment, Inc.

These services begin with the logistical

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

Our entertainment operating

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

Revenues of this

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

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

Entertainment direct expenses include the cost of

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

fees, as well as other administrative costs.

Off-Balance Sheet Arrangements

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or expenses other than the following:

We are a party to operating leases

and license agreements that represent commitments for future payments and we have issued purchase orders in the ordinary course of business

that represent commitments to future payments for goods and services.

Comparison of the Three Months Ended March 31,

We are a party to operating

leases and license agreements that represent commitments for future payments, and we have issued purchase orders in the ordinary course

of business that represent commitments to future payments for goods and services.

Comparison of the Three Months Ended June

30, 2025 and 2024

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Summarized financial information

for the Company’s reportable business segments is provided for the three months ended March 31, 2025, and 2024:

Three Months Ended March 31,

for the Company’s reportable business segments is provided for the three months ended June 30, 2025, and 2024:

Three Months Ended June 30,

Net Revenues:

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Video Solutions

$ (1,400,039 )

Revenue Cycle Management

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$ (4,095,073 )

$ (3,914,221 )

Depreciation and Amortization:

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Our operating segments generate

two types of revenues:

Product revenues primarily includes

video solutions operating segment hardware sales of in-car and body-worn cameras, along with sales of our ThermoVu TM units,

disinfectants, and personal protective equipment.

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

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

segment until their sale.

two types of revenue:

Product revenues primarily include

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

Additionally, product revenues also include the sale

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

in inventory by our entertainment segment until their sale.

Our entertainment sector also generates product revenue through our production

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

Service and other revenues consist

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throughout the country.

The following table presents revenues by

type and segment:

Three Months Ended March 31,

The following table presents revenues

by type and segment:

Three Months Ended June 30,

Product revenues:

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Total revenues

Our video solutions operating segment sells our products

and services to customers in the following manner:

Our video solutions operating segment sells our

products and services to customers in the following manner:

Sales to domestic customers are made directly to the end customer (typically a law enforcement agency or a commercial customer) through our sales force, comprised of our employees.

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

Our revenue cycle management operating segment sells

its services to customers in the following manner:

Our revenue cycle management operating segment

sells its services to customers in the following manner:

Our revenue cycle management operating segment generates service revenues through relationships with medium to large healthcare organizations, in which the underlying service revenue is recognized upon execution of services.

Service revenues are generally determined as a percentage of the dollar amount of medical billings collected by the customer.

Our entertainment operating segment sells our products

and services to customers in the following manner:

Our entertainment operating segment sells our

products and services to customers in the following manner:

Our entertainment operating segment generates product revenues from the sale of tickets directly to consumers for a particular event that the entertainment operating segment has previously purchased and held in inventory for ultimate resale to the end consumer.

Our entertainment segment also generates product revenues from the sale of tickets, merchandise, parking and concessions at live events that it sponsors such as the annual Country Stampede music festival.

Service sales through TicketSmarter are driven largely in part to the usage of the TicketSmarter.com marketplace by buyers and sellers, in which the Company collects service fees for each transaction completed through this platform

We may discount our prices on

specific orders based upon the size of the order, the specific customer and the competitive landscape.

We may discount our prices

on specific orders based upon the size of the order, the specific customer and the competitive landscape.

Product revenues by operating

segment is as follows:

Three Months Ended March 31,

segment are as follows:

Three Months Ended June 30,

Product Revenues:

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Total Product Revenues

Product revenues for the three months ended March

Product revenues for the three months ended June

30, 2025 and 2024 were $2,178,960 and $2,207,601, respectively, a decrease of $28,641 (1.3%), due to the following factors:

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

The entertainment operating segment generated $667,119 in product revenues for the three months ended March 31, 2025, compared to $844,658 for the three months ended March 31, 2024.

This product revenue relates to the first Country Stampede music festival held by Kustom during 2024, as well as the resale of tickets purchased for live events, sporting events, concerts, and theatre, then sold through various platforms to customers.

The decrease in revenues is attributable to a reduction in scope of primary ticket sales by Ticketsmarter as it focuses on higher margin events to improve its gross margins.

In addition, the wildfires in California caused many event cancellations and postponements during the three months ended March 31, 2025, that also depressed product sales.

The Company’s video segment operating segment generated revenues totaling $54,231 during the three months ended March 31, 2025 compared to $721,188 for the three months ended March 31, 2024.

Revenues generated by the entertainment operating segment began with the Company’s September 2021 acquisition of TicketSmarter and the 2024 acquisition of the Country Stampede Music Festival.

The entertainment operating segment generated $1,740,828 in product revenues for the three months ended June 30, 2025, compared to $1,586,662 for the three months ended June 30, 2024.

Product revenue includes revenues generated by the Country Stampede music festival held annually during the last weekend of June, as well as the resale of tickets purchased for live events, sporting events, concerts, and theatre, then sold through various platforms to customers.

The 2025 Country Stampede Music Festival generated $1,380,616 in total revenue compared to $787,208 in 2024.

The slight decrease in revenues is attributable to a reduction in the scope of primary ticket sales by Ticketsmarter as it focuses on higher margin events to improve its gross margins.

In addition, the wildfires in California caused many event cancellations and postponements during the three months ended June 30, 2025, that also depressed product sales.

The Company’s video segment operating segment generated revenues totaling $438,132 during the three months ended June 30, 2025 compared to $620,939 for the three months ended June 30, 2024.

In general, our video solutions operating segment has experienced pressure on its product revenues as our in-car and body-worn systems are facing increased competition because our competitors have released new products with advanced features.

Additionally, our law enforcement revenues declined compared to the same period in 2024 due to the Company not having inventory in–stock to fulfill existing backlog orders, price-cutting and competitive actions by our competitors and adverse marketplace effects related to our recent financial condition.

We have been able to start the product supply chain during the first quarter 2025 with funds generated by the February 2025 public equity offering which we believe will improve our video solutions product sales during the remainder of 2025.

We have been able to start the product supply chain during the first and second quarter of 2025 with funds generated by the February 2025 public equity offering which we believe will improve our video solutions product sales during the remainder of 2025.

Our video solutions operating segment management has continued to focus on migrating commercial customers, from a hardware sale to a service fee model.

Therefore, we expect a reduction in commercial hardware sales (principally DVM-250’s, FLT-250’s, and a portion of our body-worn camera line) as we convert these customers to a service model under which we provide the hardware as part of a recurring monthly service fee.

In that respect, we introduced a monthly subscription agreement plan for our body worn cameras and related equipment during the second quarter of 2020 that allowed law enforcement agencies to pay a monthly service fee to obtain body worn cameras without incurring a significant upfront capital outlay.

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We expect this program to continue to hold traction, resulting in recurring revenues over a span of three to five years.

Service and other revenues by

operating segment is as follows:

Three months ended March 31,

Service and other revenues

by operating segment is as follows:

Three months ended June 30,

Service and Other Revenues:

Video Solutions

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Total Service and Other Revenues

Service and other revenues for the three months ended

March 31, 2025 and 2024 were $3,753,914 and $3,963,505, respectively, a decrease of $209,591 (5%), due to the following factors:

Cloud revenues generated by the video solutions operating segment were $594,742 and $616,488 for the three months ended March 31, 2025 and 2024, respectively, a slight decrease of $21,746 (4%).

We continue to experience increased interest in our cloud solutions for law enforcement primarily due to the deployment of our cloud-based EVO-HD in-car system and our next generation body-worn camera products, which contributed to our cloud revenues in the three months ended March 31, 2024.

Service and other revenues for the three months

ended June 30, 2025 and 2024 were $3,453,079 and $3,408,634, respectively, an increase of $44,445 (1.3%), due to the following factors:

Cloud revenues generated by the video solutions operating segment were $637,846 and $637,379 for the three months ended June 30, 2025 and 2024, respectively, a slight increase of $467.

We expect this trend to continue for 2025 as the migration from local storage to cloud storage continues in our customer base.

Video solutions operating segment revenues from extended warranty services were $228,430 and $380,618 for the three months ended March 31, 2025 and 2024, respectively, a decrease of $152,188 (40%).

T his correlates with the decrease in sales of hardware during the three months ended March 31, 2025.

Our entertainment operating segment generated service revenues totaling $1,535,313 and $1,531,801 for the three months ended March 31, 2025 and 2024, respectively, a slight increase of $3,512 (0.2%).

Video solutions operating segment revenues from extended warranty services were $239,988 and $233,031 for the three months ended June 30, 2025 and 2024, respectively, a slight increase of $6,957 (3.0%).

Our entertainment operating segment generated service revenues totaling $1,118,245 and $879,549 for the three months ended June 30, 2025 and 2024, respectively, an increase of $238,696 (27.1%).

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

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Our entertainment segment has focused on cost cutting and overall improvements in gross margin rather than top line revenues, which has resulted in a reduction in revenues for ticketing events that did not meet its gross margin goals.

Our revenue cycle management operating segment generated service revenues totaling $1,350,551 and $1,434,599 for the three months ended March 31, 2025 and 2024, respectively, a decrease of $84,048 (6%).

The entertainment operating segment has increased its use of Facebook and other social media to generate increased ticketing revenues in the second quarter of 2025 compared to 2024.

Our revenue cycle management operating segment generated service revenues totaling $1,432,294 and $1,564,354 for the three months ended June 30, 2025 and 2024, respectively, a decrease of $132,060 (8.4%).

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

The decrease in revenue is due to refinement within one of the recent acquisitions, as they strive to maximize profitability rather than focus on top-line revenue.

Total revenues for the three months

ended March 31, 2025, and 2024 were $4,475,264 and $5,529,351, respectively, a decrease of $1,054,087 (19%), due to the reasons noted

Total revenues for the three

months ended June 30, 2025, and 2024 were $5,632,039 and $5,616,235, respectively, a slight increase of $15,804 (0.3%), due to the reasons

Cost of Product Revenue

Overall cost of product revenue

sold for the three months ended March 31, 2025, and 2024 was $675,639 and $1,567,393, respectively, a decrease of $891,754 (57%).

cost of goods sold for products as a percentage of product revenues for the three months ended March 31, 2025, and 2024 were 94% and 100%,

respectively.

sold for the three months ended June 30, 2025, and 2024 was $3,901,864 and $3,419,254, respectively, an increase of $482,610 (19.9%).

Overall cost of goods sold for products as a percentage of product revenues for the three months ended June 30, 2025, and 2024 were 179%

and 155%, respectively.

Cost of products sold by operating segment is as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Cost of Product Revenues:

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The decrease in cost of goods

sold for our video solutions segment products is due to large decrease in product sales experienced during the three months ended March

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

sold for our video solutions segment products is due to large decrease in product sales experienced during the three months ended June

We could not fulfil open orders due to low inventory levels.

We have utilized funds from the February 2025 public equity

offering to ramp the supply chain which we believe will lead to improved product sales.

Cost of product sold as a percentage of product

revenues for the video solutions segment decreased to 119% for the three months ended March 31, 2025 as compared to 111% for the three

months ended March 31, 2024.

The decrease in entertainment

operating segment cost of product sold directly correlates to the lower product revenues for the three months ended March 31, 2025.

of Product Revenues were $611,087 and $769,899 for the three months ended March 31, 2025 and 2024, a decrease of $158,812 (21%).

of product sold as a percentage of product revenues for the entertainment segment increased to 92% for the three months ended March 31,

2025 as compared to 91% for the three months ended March 31, 2024.

offering to ramp the supply chain which we believe will lead to improved product sales during the remainder of 2025.

Cost of product sold

as a percentage of product revenues for the video solutions segment decreased to 133% for the three months ended June 30, 2025 as compared

to 154% for the three months ended June 30, 2024.

The increase in entertainment

operating segment cost of product sold directly correlates to the increased revenues and costs associated with our annual Country Stampede

Music Festival.

Cost of product sold related to the 2025 Country Stampede Music Festival totaled $2,992,052 as compared to $1,848,167

for the 2024 Festival.

Total cost of product revenues for the entertainment operating segment was $3,317,407 and $2,460,792 for the three

months ended June 30, 2025 and 2024, an increase of $856,615 (34.8%).

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

entertainment segment increased to 191% for the three months ended June 30, 2025 as compared to 155% for the three months ended June 30,

Cost of Service Revenue

Overall cost of service revenue

sold for the three months ended March 31, 2025, and 2024 was $2,198,126 and $2,438,259, respectively, a decrease of $240,133 (10%).

cost of goods sold for services as a percentage of service revenues for the three months ended March 31, 2025, and 2024 were 59% and 62%,

respectively.

sold for the three months ended June 30, 2025, and 2024 was $2,362,800 and $1,954,589, respectively, an increase of $408,211 (20.9%).

Overall cost of goods sold for services as a percentage of service revenues for the three months ended June 30, 2025, and 2024 were 68%

and 81%, respectively.

Cost of service revenues by operating segment is as follows:

Three months ended March 31,

Three months ended June 30,

Cost of Service Revenues:

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Total Cost of Service Revenues

The decrease in cost of service

The increase in cost of service

revenues for our video solutions segment demonstrates the leverage we are enjoying as we increase our service revenues during the three

months ended March 31, 2025 compared to the three months ended March 31, 2024.

months ended June 30, 2025 compared to the three months ended June 30, 2024.

Cost of service revenues as a percentage of service revenues

for the video solutions segment decreased to 35% for the three months ended March 31, 2025 as compared to 36% for the three months ended

March 31, 2024.

for the video solutions segment increased to 43% for the three months ended June 30, 2025 as compared to 35% for the three months ended

June 30, 2024.

This represents an increase in costs for securing cloud storage from our providers in 2025 compared to 2024.

The decrease in revenue cycle

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

segment decreased to 65% for the three months ended March 31, 2025 as compared to 68% for the three months ended March 31, 2024.

The decrease in entertainment

segment remained stable at 62% for the three months ended June 30, 2025 as compared to 62% for the three months ended June 30, 2024.

The increase in entertainment

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

The entertainment

cost of service revenue was $1,013,170 for the three months ended March 31, 2025, compared to $1,112,287 for the three months ended March

Cost of service revenues as a percentage of service revenues for the entertainment segment decreased to 66% for the three months

ended March 31, 2025 as compared to 73% for the three months ended March 31, 2024.

Overall gross profit for the three

months ended March 31, 2025 and 2024 was $1,796,034 and $1,523,699, respectively, an increase of $272,335 (18%).

segment terminated several unprofitable sponsorships which required termination payments during the three months ended June 30, 2025,

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

The entertainment segment cost of

service revenue was $1,094,131 for the three months ended June 30, 2025, compared to $652,273 for the three months ended June 30, 2024.

Cost of service revenues as a percentage of service revenues for the entertainment segment increased to 98% for the three months ended

June 30, 2025 as compared to 74% for the three months ended June 30, 2024.

Overall gross profit for the

three months ended June 30, 2025 and 2024 was $(632,625) and $242,392, respectively, a decrease of $875,017 (361%).

Gross profit by operating

segment was as follows:

Three months ended March 31,

Three months ended June 30,

Gross Profit:

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Total Gross Profit

The increase in

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

segment service revenues.

There was an overall decrease in the cost of sales as a percentage of overall revenues to 64% for the

three months ended March 31, 2025 from 72% for the three months ended March 31, 2024.

This is primarily driven by large head-count

reductions in our work-force during the three months ended March 31, 2025 as compared to 2024, a focus on right sizing recent acquisitions to increase

profitability and a transition to a service subscription-based model in our video solutions segment.

Our goal is to improve our

margins over the longer term based on the expected margins generated by our new recent revenue cycle management and entertainment

operating segments together with our video solutions operating segment and its expected margins from our EVO-HD, DVM-800, VuLink,

FirstVu Pro, FirstVu II, EVO Fleet, FLT-250, DVM-250, DVM-250 Plus and our cloud evidence storage and management offering, provided

that they gain traction in the marketplace.

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

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

The decrease in gross profits

is primarily due to a deterioration in our cost of sales as a percentage of sales particularly in our entertainment segment service product

and service revenues.

The primary reason is the larger negative margins generated by our 2025 Country Stampede Music Festival as compared

to the 2024 Festival.

There was an overall increase in the cost of sales as a percentage of overall revenues to 111% for the three months

ended June 30, 2025 from 96% for the three months ended June 30, 2024.

The primary reason for the overall negative gross margins in 2025

is the larger negative margins generated by our 2025 Country Stampede Music Festival as compared to the 2024 Festival.

Selling, General and Administrative Expenses

Selling, general and administrative

expenses were $2,576,179 and $5,162,733 for the three months ended March 31, 2025 and 2024, respectively, a decrease of $2,586,554 (50%).

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

general and administrative expenses as a percentage of sales increased to 58% for the three months ended March 31, 2025 compared to 93%

expenses were $3,462,448 and $4,156,613 for the three months ended June 30, 2025 and 2024, respectively, a decrease of $694,165 (17%).

The decrease was primarily attributable to the reduction in new advertising sponsorships being entered into by the Company and large reductions

in selling, general and administrative head count as the Company right-sized its operations across all operating segments.

general and administrative expenses as a percentage of sales increased to 61% for the three months ended June 30, 2025 compared to 74%

in the same period in 2024.

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

Three Months ended March 31,

Three Months ended June 30,

Research and development expense

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Research and development

Our research and development expenses totaled $84,417 and $487,466 for the three months ended March 31, 2025 and 2024,

Our research and development expenses totaled $183,811 and $545,776 for the three months ended June 30, 2025 and 2024,

respectively which represents a decrease of $361,965 (66.3%).

We have focused on controlling our expenditures on bringing new products to

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

The decrease in research and development

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

with our revenues.

Selling, advertising and

promotional expenses.

Selling, advertising and promotional expense totaled $108,041 and $761,118 for the three months ended March

31, 2025 and 2024, respectively, a decrease of $653,077 (86%).

We have focused on controlling our expenditures for bringing new products

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

The decrease in research and

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

this area with our revenues.

Selling, advertising

and promotional expenses.

Selling, advertising and promotional expense totaled $283,137 and $728,906 for the three months ended

June 30, 2025 and 2024, respectively, a decrease of $445,769 (61.2%).

The decrease in selling, advertising and promotional expenses reflects

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General and administrative

General and administrative expenses totaled $2,383,721 and $3,914,149 for the three months ended March 31, 2025 and 2024,

respectively which represents a decrease of $1,530,428 (39%).

The decrease in general and administrative expenses in the three months

ended March 31, 2025 compared to the same period in 2024 is primarily attributable to a decrease in administrative salaries and reductions

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

The decrease in general and administrative expenses was

offset by a substantial increase legal and professional expenses for the three months ended March 31, 2025 compared to the same period

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

General and administrative expenses totaled $2,995,500 and $2,881,931 for the three months ended June 30, 2025 and 2024,

respectively which represents a slight increase of $113,569 (3.9%).

The increase in general and administrative expenses in the three months

ended June 30, 2025 compared to the same period in 2024 is primarily attributable to a substantial increase legal and professional expenses

for the three months ended June 30, 2025 compared to the same period in 2024 due to the failed merger with CloverLeaf and various capital

raises we have undertaken which was offset by a decrease in administrative salaries and reductions in headcount in order to right-size

our expenses across all operating segments with our revenues.

Operating Loss

For the reasons previously stated,

our operating loss was $974,680 and $3,639,034 for the three months ended March 31, 2025 and 2024, respectively, an improvement of $2,664,354

For the reasons previously

stated, our operating loss was $4,095,073 and $3,914,221 for the three months ended June 30, 2025 and 2024, respectively, a slight deterioration

of $180,852 (4.6%).

Operating loss as a percentage of revenues improved to 72.7% in 2025 as compared to 69.7% in 2024.

Interest Income

Interest income increased to $31,975

for the three months ended March 31, 2025, from $19,356 in 2024, which reflects our overall increase in our cash and cash equivalent levels

in 2025 compared to 2024 due to funds generated in the February 2025 public equity offering.

Interest income increased

to $45,946 for the three months ended June 30, 2025, from $29,933 in 2024, which reflects our overall increase in our cash and cash equivalent

levels in 2025 compared to 2024 due to funds generated in the February 2025 public equity offering.

Interest Expense

We incurred interest expenses

of $792,273 and $648,567 during the three months ended March 31, 2025 and 2024, respectively.

The increase is attributable to the amortization

of debt discounts associated with the senior secured promissory notes that were paid off with proceeds from the February 2025 public equity

of $77,280 and $1,085,063 during the three months ended June 30, 2025 and 2024, respectively.

The large decrease is attributable to the Company

paying off most of its interest-bearing debt in late 2024 and early 2025 including the senior secured promissory notes that were paid

off with proceeds from the February 2025 public equity offering.

Other income (expense)

Other income (expense) decreased

to $16,700 for the three months ended March 31, 2025, from $27,602 during the three months ended March 31, 2024, which reflects income

related to a warehouse sublease within the corporate headquarters during early 2024 which ceased upon the sale of the building which occurred

Gain on Extinguishment of Debt - related

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.

The Related Party Note bears interest of 13.25% per annum with repayment beginning January

On October 2, 2023 an additional $375,000 was advanced to Ticketsmarter which increased the loan balance to $2,700,000.

The use of proceeds of the TicketSmarter Related Party Note was to resolve numerous outstanding payables at a discounted rate, the discount

received 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.

to $18,767 for the three months ended June 30, 2025, from $30,445 during the three months ended June 30, 2024, which reflects income related

to a warehouse sublease within the corporate headquarters during early 2024 which ceased upon the sale of the building which occurred

Loss on Extinguishment of Debt - related

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.

The Related Party Note bears interest of 13.25% per annum with repayment

beginning January 2, 2024.

On October 2, 2023 an additional $375,000 was advanced to Ticketsmarter which increased the loan

balance to $2,700,000.

The use of proceeds of the TicketSmarter Related Party Note was to resolve numerous outstanding payables at a discounted

rate, the discount received 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 during the three months ended March

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

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

the proper accounting treatment for 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 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.

Loss on Extinguishment of debt

During the second quarter of 2024, the Company

refinanced its merchant advance loan and determined the refinancing of the debt should be treated as a debt extinguishment.

the Company recorded a loss of $68,827 on debt extinguishment during the three months ended June 30, 2024.

Change in Fair Value of Derivative Liabilities

The change in fair value of

the warrant derivative liabilities for the three months ended June 30, 2025 and 2024, respectively totaled a gain of $857,189 during the

three months ended June 30, 2025 as compared to a loss of $2,818 during the three months ended June 30, 2024.

The Company has issued various

detachable warrants in connection with capital raises during 2024 and 2025 that were required to be treated as warrant derivative liabilities.

Warrant derivative liabilities are required to be marked-to-market at each balance sheet date with the change in fair value recorded as

a gain or loss in the Condensed Statement of Operations.

The gain recorded in the three months ended June 30, 2025 reflects the large

decline in the closing market value of our common stock at June 30, 2025 when compared to March 31, 2025 closing market values.

Gain on Extinguishment of Liabilities

recorded a gain on the extinguishment of liabilities for the three months ended March 31, 2025 and 2024 of $2,220,097, and $682,345,

The Company recorded a gain

on the extinguishment of liabilities for the three months ended June 30, 2025 and 2024 of $10,619, and $—, respectively.

reflect income related to the 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,

Loss before Income Tax Benefit

As a result of the

above, we reported a net loss before income tax benefit of $(4,489,204) and $(5,010,551) for the three months ended June

30, 2025 and 2024, respectively, an improvement of $521,347 (10.4%).

Income Tax Benefit

We recorded an income tax

benefit of $-0- for the three months ended June 30, 2025 and 2024, respectively.

The effective tax rate for both 2025 and 2024 varied

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

We determined

that it was appropriate to continue the full valuation allowance on net deferred tax assets as of June 30, 2025 and December 31, 2024

primarily because of the recurring operating losses.

We have further determined

to continue providing a full valuation reserve on our net deferred tax assets as of June 30, 2025.

We had approximately

$156,019 of federal net operating loss carryforwards and $1,742,000 of research and development tax credit carryforwards as of June

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

Net Income (Loss)

As a result of the above,

we reported net income (loss) of $(4,489,204) and $(5,010,551) for the three months ended June 30, 2025 and 2024, respectively, an improvement

of $521,347 (10.4%).

Net Income Attributable to Noncontrolling Interests

of Consolidated Subsidiary

The Company has a 51% equity

interest in its consolidated subsidiary, Nobility Healthcare.

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

49% of the income/loss of Nobility Healthcare which is reflected in the condensed consolidated statement of income (loss) as “net

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

We reported net 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.

Net Loss Attributable to Common Stockholders

As a result of the above,

we reported a net income (loss) of $(4,545,201) and $(5,083,861) for the three months ended June 30, 2025 and 2024, respectively, an improvement

of $538,660 (10.6%).

Basic and Diluted Loss per Share

The basic and diluted loss

per share was $(3.21) and ($3,479.71) for the three months ended June 30, 2025 and 2024, respectively, for the reasons previously noted.

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

of diluted loss per share for the three months ended June 30, 2025 and 2024 because of their exercise price being higher than

the market value of our Common Stock and the net loss reported for 2025 and 2024.

Comparison of the Six Months Ended June

30, 2025 and 2024

Summary Financial Data

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,

Net Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Net Revenues

Gross Profit (loss):

Video Solutions

Revenue Cycle Management

Entertainment

Total Gross Profit

Operating Income (loss):

Video Solutions

$ (2,533,242 )

Revenue Cycle Management

Entertainment

Total Operating Income (Loss)

$ (5,069,753 )

$ (7,553,193 )

Depreciation and Amortization:

Video Solutions

Revenue Cycle Management

Entertainment

Total Depreciation and Amortization

Assets (net of eliminations):

Video Solutions

Revenue Cycle Management

Entertainment

Total Identifiable Assets

The segment net revenues reported

above represent sales to external customers.

Segment gross profit represents net revenues less cost of revenues.

Segment operating income,

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

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

Corporate assets primarily consist of cash, property,

plant and equipment, accounts receivable, inventories, and other assets.

Results of Operations

Revenues by Type and by Operating Segment

Our operating segments generate

two types of revenue:

Product revenues primarily include

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

Additionally, product revenues also include the sale

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

in inventory by our entertainment segment until their sale.

Our entertainment sector also generates product revenue through our production

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

Service and other revenues consist

of cloud and warranty services revenues from our subscription plan and storage offerings of our video solutions segment.

Our entertainment

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

We recognize service revenue from

sales generated through its secondary ticketing marketplace as we collect net services fees on secondary ticketing marketplace transactions.

Lastly, our revenue cycle management segment revenues are included in the service revenues for services provided to medical providers

throughout the country.

The following table presents revenues

by type and segment:

Six Months Ended June 30,

Product revenues:

Video solutions

Entertainment

Total product revenues

Service and other revenues:

Video solutions

Entertainment

Revenue cycle management

Total service and other revenues

Total revenues

Our video solutions operating segment sells our

products and services to customers in the following manner:

Sales to domestic customers are made directly to the end customer (typically a law enforcement agency or a commercial customer) through our sales force, comprised of our employees.

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

Sales to international customers are made through independent distributors who purchase products from us at a wholesale price and sell to the end user (typically law enforcement agencies or a commercial customer) at a retail price.

The distributor retains the margin as compensation for its role in the transaction.

The distributor generally maintains product inventory, customer receivables and all related risks and rewards of ownership.

Revenue is recorded when the product is shipped to the distributor consistent with the terms of the distribution agreement.

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

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

Our revenue cycle management operating segment

sells its services to customers in the following manner:

Service revenues are generally determined as a percentage of the dollar amount of medical billings collected by the customer.

Our entertainment operating segment sells our

products and services to customers in the following manner:

We may discount our prices

on specific orders based upon the size of the order, the specific customer and the competitive landscape.

Product revenues by operating

segment are as follows:

Six Months Ended June 30,

Product Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Product Revenues

Product revenues for the six months ended June

30, 2025 and 2024 were $2,937,780 and $3,773,447, respectively, a decrease of $835,667 (22.1%), due to the following factors:

Revenues generated by the entertainment operating segment began with the Company’s September 2021 acquisition of TicketSmarter and the 2024 acquisition of the Country Stampede Music Festival.

The entertainment operating segment generated $2,445,416 in product revenues for the six months ended June 30, 2025, compared to $2,431,320 for the six months ended June 30, 2024.

The 2025 Country Stampede Music Festival generated $1,380,616 in total revenue compared to $787,208 in 2024.

The slight increase in revenues is attributable to increased revenues from the 2025 Country Stampede Music festival offset by a reduction in scope of primary ticket sales by Ticketsmarter as it focuses on higher margin events to improve its gross margins.

In addition, the wildfires in California caused many event cancellations and postponements during the six months ended June 30, 2025, that also depressed product sales.

The Company’s video segment operating segment generated revenues totaling $492,364 during the six months ended June 30, 2025 compared to $1,342,127 for the six months ended June 30, 2024.

Our video solutions operating segment management has continued to focus on migrating commercial customers, from a hardware sale to a service fee model.

This program has gained some traction, resulting in decreased product revenues and increasing our service revenues.

We expect this program to continue to hold traction, resulting in recurring revenues over a span of three to five years.

Service and other revenues

by operating segment is as follows:

Six months ended June 30,

Service and Other Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Service and Other Revenues

Service and other revenues for the six months

ended June 30, 2025 and 2024 were $7,169,523 and $7,372,139, respectively, an increase of $202,616 (2.7%), due to the following factors:

Cloud revenues generated by the video solutions operating segment were $1,231,119 and $1,253,459 for the six months ended June 30, 2025 and 2024, respectively, a slight decrease of $22,339 (1.7%).

We expect this trend to continue for 2025 as the migration from local storage to cloud storage continues in our customer base.

Video solutions operating segment revenues from extended warranty services were $468,417 and $433,592 for the six months ended June 30, 2025 and 2024, respectively, a slight increase of $34,825 (8.0%).

Our entertainment operating segment generated service revenues totaling $2,616,088 and $2,411,351 for the six months ended June 30, 2025 and 2024, respectively, an increase of $204,737 (8.5%).

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

We expect our entertainment operating segment to continue to fluctuate as we look to right-size this segment and work towards profitability.

The entertainment operating segment has increased its use of Facebook and other social media to generate increased ticketing revenues in the second quarter of 2025 compared to 2024.

Our revenue cycle management operating segment generated service revenues totaling $2,782,845 and $2,998,952 for the six months ended June 30, 2025 and 2024, respectively, a decrease of $216,107 (7.2%).

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

The decrease in revenue is due to refinement within one of the recent acquisitions, as they strive to maximize profitability rather than focus on top-line revenue.

Total revenues for the six

months ended June 30, 2025, and 2024 were $10,107,303 and $11,145,586, respectively, a slight decrease of $1,038,283 (9.3%), due to the

reasons noted above.

Cost of Product Revenue

Overall cost of product revenue

sold for the six months ended June 30, 2025, and 2024 was $4,577,503 and $4,986,647, respectively, a decrease of $409,144 (8.2%).

cost of goods sold for products as a percentage of product revenues for the six months ended June 30, 2025, and 2024 were 156% and 132%,

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.

extinguishment of liabilities was $682,345 for the three months ended March 31, 2024, which reflects income related to the

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

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.

Cost of products sold by operating segment is as follows:

Six Months Ended June 30,

Cost of Product Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Cost of Product Revenues

The decrease in cost of goods

sold for our video solutions segment products is due to large decrease in product sales experienced during the six months ended June 30,

2025 compared to 2024.

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

We have utilized funds from the February 2025

public equity offering to ramp the supply chain which we believe will lead to improved product sales during the remainder of 2025.

of product sold as a percentage of product revenues for the video solutions segment increased to 132% for the six months ended June 30,

2025 as compared to 131% for the six months ended June 30, 2024.

The increase in entertainment

operating segment cost of product sold directly correlates to the increased revenues and costs associated with our annual Country Stampede

Music Festival.

Cost of product sold related to the 2025 Country Stampede Music Festival totaled $2,992,052 as compared to $1,848,167

for the 2024 Festival.

Total cost of product revenues for the entertainment operating segment was $3,928,494 and $3,230,691 for the six

months ended June 30, 2025 and 2024, an increase of $697,803 (21.6%).

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

entertainment segment increased to 161% for the six months ended June 30, 2025 as compared to 133% for the six months ended June 30, 2024.

Cost of Service Revenue

Overall cost of service revenue

sold for the six months ended June 30, 2025, and 2024 was $4,560,926 and $4,395,109, respectively, an increase of $165,817 (3.8%).

cost of goods sold for services as a percentage of service revenues for the six months ended June 30, 2025, and 2024 were 64% and 60%,

respectively.

Cost of service revenues by operating segment is as follows:

Six months ended June 30,

Cost of Service Revenues:

Video Solutions

Revenue Cycle Management

Entertainment

Total Cost of Service Revenues

The slight decrease in cost

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

the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Cost of service revenues as a percentage of service

revenues for the video solutions segment increased to 39% for the six months ended June 30, 2025 as compared to 35% for the six months

ended June 30, 2024.

This represents an increase in costs for securing cloud storage from our providers in 2025 compared to 2024.

The decrease in revenue cycle

management operating segment cost of service revenue is commensurate with the decline in revenues due to certain loss generating services

being eliminated during the year.

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

segment remained stable at 63% for the six months ended June 30, 2025 as compared to 64% for the six months ended June 30, 2024.

The increase in entertainment

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

The entertainment

segment terminated several unprofitable sponsorships which required termination payments during the six months ended June 30, 2025, that

is expected to lead to improvements in costs of service revenues during the remainder of 2025.

The entertainment segment cost of service

revenue was $2,107,401 for the six months ended June 30, 2025, compared to $1,766,821 for the six months ended June 30, 2024.

service revenues as a percentage of service revenues for the entertainment segment increased to 81% for the six months ended June 30,

2025 as compared to 73% for the six months ended June 30, 2024.

Overall gross profit for the

six months ended June 30, 2025 and 2024 was $(632,625) and $242,392, respectively, a decrease of $875,017 (361%).

Gross profit by operating

segment was as follows:

Six months ended June 30,

Gross Profit:

Video Solutions

Revenue Cycle Management

Entertainment

Total Gross Profit

The decrease in gross profits

is primarily due to a deterioration in our cost of sales as a percentage of sales particularly in our entertainment segment service product

and service revenues.

The primary reason is the larger negative margins generated by our 2025 Country Stampede Music Festival as compared

to the 2024 Festival.

There was an overall increase in the cost of sales as a percentage of overall revenues to 90% for the six months

ended June 30, 2025 from 84% for the six months ended June 30, 2024.

The primary reason for the overall negative gross margins in 2025

is the larger negative margins generated by our 2025 Country Stampede Music Festival as compared to the 2024 Festival.

Selling, General and Administrative Expenses

Selling, general and administrative

expenses were $6,038,627 and $9,317,023 for the six months ended June 30, 2025 and 2024, respectively, a decrease of $3,278,396 (35%).

The decrease was primarily attributable to the reduction in new advertising sponsorships being entered into by the Company and large reductions

in selling, general and administrative head count as the Company right-sized its operations across all operating segments.

general and administrative expenses as a percentage of sales increased to 60% for the six months ended June 30, 2025 compared to 84% in

the same period in 2024.

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

Six Months ended June 30,

Research and development expense

Selling, advertising and promotional expense

General and administrative expense

Research and development

Our research and development expenses totaled $268,228 and $1,033,242 for the six months ended June 30, 2025 and 2024,

respectively which represents a decrease of $765,014 (74%).

We have focused on controlling our expenditures for bringing new products

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

The decrease in research and

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

this area with our revenues.

Selling, advertising

and promotional expenses.

Selling, advertising and promotional expense totaled $391,178 and $1,487,762 for the six months ended

June 30, 2025 and 2024, respectively, a decrease of $1,096,584 (73.7%).

The decrease in selling, advertising and promotional expenses

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

with our revenues.

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

its subsidiary TicketSmarter.

General and administrative

General and administrative expenses totaled $5,379,221 and $6,796,019 for the six months ended June 30, 2025 and 2024,

respectively which represents a decrease of $1,416,798 (20.8%).

The decrease in general and administrative expenses in the six months

ended June 30, 2025 compared to the same period in 2024 is primarily attributable to a decrease in administrative salaries and reductions

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

The decrease in general and administrative expenses was

offset by a substantial increase legal and professional expenses for the six months ended June 30, 2025 compared to the same period in

2024 due to the failed merger with CloverLeaf and various capital raises we have undertaken.

Operating Loss

For the reasons previously

stated, our operating loss was $5,069,753 and $7,553,193 for the six months ended June 30, 2025 and 2024, respectively, an improvement

of $2,483,440 (32.9%).

Operating loss as a percentage of revenues improved to 50.2% in 2025 as compared to 67.8% in 2024.

Interest Income

Interest income increased

to $77,921 for the six months ended June 30, 2025, from $49,289 in 2024, which reflects our overall increase in our cash and cash equivalent

levels in 2025 compared to 2024 due to funds generated in the February 2025 public equity offering.

Interest Expense

We incurred interest expenses

of $869,553 and $1,733,690 during the six months ended June 30, 2025 and 2024, respectively.

The large decrease is attributable to the Company

paying off most of its interest-bearing debt in late 2024 and early 2025 including the senior secured promissory notes that were paid

off with proceeds from the February 2025 public equity offering.

Other income (expense)

Other income (expense) decreased

to $35,467 for the six months ended June 30, 2025, from $58,046 during the six months ended June 30, 2024, which reflects income related

to a warehouse sublease within the corporate headquarters during early 2024 which ceased upon the sale of the building which occurred

Loss on Extinguishment of debt

During the second quarter of 2024, the Company

refinanced its merchant advance loan and determined the refinancing of the debt should be treated as a debt extinguishment.

the Company recorded a loss of $68,827 on the debt extinguishment during the six months ended June 30, 2024.

Change in Fair Value of Derivative Liabilities

The change in fair value of

the warrant derivative liabilities for the six months ended June 30, 2025 and 2024, respectively totaled a gain of $3,373,080 during the

six months ended June 30, 2025 as compared to a loss of $351,710 during the six months ended June 30, 2024.

The Company has issued various

detachable warrants in connection with capital raises during 2024 and 2025 that were required to be treated as warrant derivative liabilities.

Warrant derivative liabilities are required to be marked-to-market at each balance sheet date with the change in fair value recorded as

a gain or loss in the Condensed Statement of Operations.

The gain recorded in the six months ended June 30, 2025 reflects the large decline

in the closing market value of our common stock at June 30, 2025 when compared to December 31, 2024 closing market values.

Gain on Extinguishment of Liabilities

The Company recorded a gain

on the extinguishment of liabilities for the six months ended June 30, 2025 and 2024 of $2,230,716, and $682,345, respectively.

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

obligations during the six months ended June 30, 2025 utilizing funds generated by the closing of the February 2025 public equity offering

on February 13, 2025.

The gain on extinguishment

of liabilities was $682,345 for the six months ended June 30, 2024, which reflects income related to the entertainment segment’s

ability to negotiate down payables and other contract obligations during the period.

The Company utilized funds from the related party

note payable to resolve numerous outstanding payables at a discounted rate, the discount received was recognized as a gain on extinguishment

of liabilities in the condensed consolidated statement of operations for the six months ended June 30, 2024.

Gain on disposal of intangibles

decreased to $-0- for the three months ended March 31, 2025, from $5,582 during the three months ended March 31, 2024.

Change in Fair Value of Derivative Liabilities

The change in fair value of the

warrant derivative liabilities for the three months ended March 31, 2025 and 2024, respectively totaled a gain of $2,515,891 during the

three months ended March 31, 2025 as compared to a loss of $348,891 during the three months ended March 31, 2024.

During 2024, the Company issued

Series A and Series B detachable warrants in conjunction with its June 2024 capital raise.

The underlying warrant terms under both of

the Series A and Series B warrants provide for net cash settlement outside the control of the Company in the event of tender offers under

certain circumstances and requires reset provisions which were triggered upon the approval the warrant issuances by the Company’s

shareholders.

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

fair value at their issuance date and at each reporting date, with any subsequent changes reported in the condensed consolidated statement

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

The warrants were approved by shareholders at the Company’s

annual meeting on December 17, 2024, which triggered the reset provisions which resulted in an increase in the estimated fair value of

the Series A and Series B warrants.

The holders fully exercised their Series B warrants during the three months ended March 31, 2025 which

caused a deterioration in the market value of the Company’s Common Stock which resulted in a large decrease in the estimated fair

value of the remaining Class A warrants resulting in the gain from the change in fair value of warrant derivative liabilities in the condensed

consolidated statement of operations for the three months ended March 31, 2025.

During 2023, the Company issued

detachable warrants to purchase a total of 56,250 shares of Common Stock in association with the two secured convertible notes.

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

circumstances.

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

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

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

The increase in the estimated fair value of the 2023 warrants

resulted in a loss from the change in fair value of warrant derivative liabilities in the condensed consolidated statement of operations

for the three months ended March 31, 2025.

decreased to $-0- for the six months ended June 30, 2025, from $5,582 during the six months ended June 30, 2024.

Loss on Sale of Property, Plant and Equipment

The Company reported a loss on

sale of property, plant and equipment of $-0- and $41,661 during the three months ended March 31, 2025, and 2024, respectively.

Income (loss) before Income Tax Benefit

As a result of the above, we reported

net income (loss) before income tax benefit of $4,267,082 and $(3,943,268) for the three months ended March 31, 2025 and 2024, respectively,

an improvement of $8,210,350 (208%).

The Company reported a loss

on sale of property, plant and equipment of $-0- and $41,661 during the six months ended June 30, 2025, and 2024, respectively.

Loss before Income Tax Benefit

As a result of the above,

we reported net loss before income tax benefit of $(222,122) and $(8,953,819) for the six months ended June 30, 2025 and 2024,

respectively, an improvement of $9,175,941 (102.5%).

Income Tax Benefit

We recorded an income tax benefit

of $-0- for the three months ended March 31, 2025 and 2024, respectively.

The effective tax rate for both 2025 and 2024 varied from the

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

We determined that it

was appropriate to continue the full valuation allowance on net deferred tax assets as of March 31, 2025 and December 31, 2024 primarily

We recorded an income tax

benefit of $-0- for the six months ended June 30, 2025 and 2024, respectively.

The effective tax rate for both 2025 and 2024 varied from

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

We determined that

it was appropriate to continue the full valuation allowance on net deferred tax assets as of June 30, 2025 and December 31, 2024 primarily

because of the recurring operating losses.

We have further determined to

continue providing a full valuation reserve on our net deferred tax assets as of March 31, 2025.

We have further determined

to continue providing a full valuation reserve on our net deferred tax assets as of June 30, 2025.

We had approximately $156,019,000

of federal net operating loss carryforwards and $1,742,000 of research and development tax credit carryforwards as of March 31, 2025 and

of federal net operating loss carryforwards and $1,742,000 of research and development tax credit carryforwards as of June 30, 2025 and

December 31, 2024 available to offset future net taxable income.

Net Income (Loss)

As a result of the above, we reported

a net income (loss) of $4,267,082 and $(3,943,268) for the three months ended March 31, 2025 and 2024, respectively, an improvement of

$8,210,350 (208%).

As a result of the above,

we reported net income (loss) of $(222,122) and $(8,953,819) for the six months ended June 30, 2025 and 2024, respectively, an improvement

of $8,731,697 (97.5%).

Net Income Attributable to Noncontrolling Interests

of Consolidated Subsidiary

The Company owns a 51% equity

The Company has a 51% equity

interest in its consolidated subsidiary, Nobility Healthcare.

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We reported net 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.

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

Net Loss Attributable to Common Stockholders

As a result of the above, we reported

a net income (loss) of $4,263,471 and $(3,931,020) for the three months ended March 31, 2025 and 2024, respectively, an improvement of

$8,194,491 (208%).

Basic and Diluted Income/(Loss) per Share

The basic and diluted income/(loss)

per share was $1.41 and ($27.48) for the three months ended March 31, 2025 and 2024, respectively, for the reasons previously noted.

outstanding stock options and Common Stock purchase warrants were considered antidilutive and therefore excluded from the calculation

of diluted income (loss) per share for the three months ended March 31, 2025 and 2024 because all potentially dilutive securities were

excluded from the computation because of their exercise price being higher than the market value of our Common Stock in 2025 and the net

loss reported for 2024.

As a result of the above,

we reported a net loss of $(281,730) and $(9,014,882) for the six months ended June 30, 2025 and 2024, respectively, an improvement

of $8,733,152 (96.9%).

Basic and Diluted Loss per Share

The basic and diluted

loss per share was $0.54 and ($6,234.36) for the six months ended June 30, 2025 and 2024, respectively, for reasons previously

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

calculation of diluted income (loss) per share for the six months ended June 30, 2025 and 2024.

Such potentially dilutive securities

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

and the net loss reported for 2025 and 2024.

Liquidity and Capital Resources

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Cash, cash equivalents:

As of March 31, 2025, we had cash and cash equivalents with an aggregate balance of $3,762,608, an increase from a balance of $454,314

at December 31, 2024.

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

the $3,308,294 net increase in cash during the three months ended March 31, 2025:

As of June 30, 2025, we had cash and cash equivalents with an aggregate balance of $622,820, an increase from a balance of $454,314 at

December 31, 2024.

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

$168,506 net increase in cash during the six months ended June 30, 2025:

Operating activities :

Net cash used in operating activities was $5,754,761 and $918,545 for the three months ended March 31, 2025 and 2024, respectively, a deterioration of $4,836,216.

The decrease is attributable to the repayment of accounts payable from proceeds of our February 2025 public equity offering, an increase in noncash gains from the change in fair value of warrant derivative liabilities, the extinguishment of liabilities and debt and cash used by the change in operating assets and liabilities during the three months ended March 31, 2025 compared to the same period in 2024.

Net cash used in operating activities was $8,644,106 and $3,408,757 for the six months ended June 30, 2025 and 2024, respectively, a deterioration of $5,235,349.

The decrease is attributable to the repayment of accounts payable from proceeds of our February 2025 public equity offering, an increase in noncash gains from the change in fair value of warrant derivative liabilities, the extinguishment of liabilities and debt and cash used by the change in operating assets and liabilities during the six months ended June 30, 2025 compared to the same period in 2024.

Investing activities :

Net cash provided by (used in) investing activities was $(85,447) and $160,830 for the three months ended March 31, 2025 and 2024, respectively.

During the three months ended March 31, 2025, we made expenditures for the purchase of property plant and equipment and also for patents.

Net cash provided by (used in) investing activities was $(313,041) and $36,504 for the six months ended June 30, 2025 and 2024, respectively.

During the six months ended June 30, 2025, we made expenditures for the purchase of property plant and equipment and also for patents.

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

Financing activities :

Net cash provided by financing activities was $9,148,502 and $1,005,027 for the three months ended March 31, 2025 and 2024, respectively.

During 2025, we most notably issued Common Stock in a February 2025 public equity with detachable warrants resulting in $14,308,300 in net cash proceeds and issued an unsecured promissory note raising $600,000 in net cash proceeds.

Net cash provided by financing activities was $9,125,653 and $3,208,817 for the six months ended June 30, 2025 and 2024, respectively.

During 2025, we most notably issued Common Stock in the February 2025 public equity with detachable warrants resulting in $14,308,300 in net cash proceeds and issued an unsecured promissory note raising $600,000 in net cash proceeds.

The cash proceeds were partially offset by payments on outstanding loans including the payments on senior secured promissory notes and merchant advances.

The net result of these activities

was an increase in cash of $3,308,294 to $3,762,608 for the three months ended March 31, 2025.

We had $3,762,608 of cash and

cash equivalents and net positive working capital of $3,385,051 as of March 31, 2025.

was an increase in cash of $168,506 to $622,820 for the six months ended June 30, 2025.

We have $622,820 of cash and

cash equivalents and net positive working capital of $119,506 as of June 30, 2025.

Accounts receivable and other receivables balances

represented $4,923,191 of our net working capital at March 31, 2025.

represented $4,613,334 of our net working capital at June 30, 2025.

We intend to collect our outstanding receivables on a timely basis

and reduce the overall level during 2025, which would help to provide positive cash flow to support our operations during 2025 and beyond.

Inventory represents $2,489,111 of our net working capital at March 31, 2025.

We are actively managing the level of inventory and our

goal is to reduce such level during 2025 by our sales activities, the decrease of which should provide additional cash flow to help support

Inventory represents $2,466,106 of our net working capital at June 30, 2025.

We are actively managing the level of inventory, and our goal

is to reduce such level during 2025 by our sales activities, the decrease of which should provide additional cash flow to help support

our operations during 2025 and beyond.

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We had the following material

commitments for capital expenditures at March 31, 2025:

commitments for capital expenditures at June 30, 2025:

Lease commitments.

lease expense under the Company’s operating leases was approximately $223,580 during the three months ended March 31, 2025.

The following sets forth the operating

lease right of use assets and liabilities as of March 31, 2025:

Operating lease right of use assets

lease expense under the Company’s operating leases was approximately $386,672 during the six months ended June 30, 2025.

The following sets forth the

operating lease right of use assets and liabilities as of June 30, 2025:

Operating lease right of use assets, net

Prepayment of rent

Total operating lease right of use asset

Operating lease obligations-current portion

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Total operating lease obligations

Following are the minimum lease

payments for each year and in total.

Following are the minimum

lease payments for each year and in total.

Year ending December 31:

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

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

2029 and thereafter

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Debt obligations - We have the following

outstanding debt as of March 31, 2025 which require future principal payments:

March 31, 2025

outstanding debt as of June 30, 2025 which require future principal payments:

June 30, 2025

Economic injury disaster loan (EIDL)

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Debt obligations, long-term

Debt obligations mature on an annual basis as follows

as of March 31, 2025:

March 31, 2025

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

Debt obligations mature on an annual basis as

follows as of June 30, 2025:

June 30, 2025

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

2029 and thereafter

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 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

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.

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Critical Accounting Estimates

Our significant accounting policies

are summarized in Note 1, “Nature of Business and Summary of Significant Accounting Policies ,” to our condensed consolidated

financial statements.

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

estimates, we believe the following accounting policies and estimates are the most critical to our financial statements, potentially involve

the most subjective judgments in their selection and application, and are the most susceptible to uncertainties and changing conditions:

Our significant accounting

policies are summarized in Note 1, “Nature of Business and Summary of Significant Accounting Policies ,” to our condensed

consolidated financial statements.

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

and estimates, we believe the following accounting policies and estimates are the most critical to our financial statements, potentially

involve the most subjective judgments in their selection and application, and are the most susceptible to uncertainties and changing conditions:

Revenue Recognition / Allowance for Doubtful Accounts;

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Accounting for Income Taxes.

Revenue Recognition / Allowances

for Doubtful Accounts.

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

conditions are met:

Revenue Recognition

/ Allowances for Doubtful Accounts.

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

the following conditions are met:

Identify the contract with the customer;

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Recognize revenue when a performance obligation is satisfied.

We consider the terms and conditions

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

We determine we have a contract when

the customer order is approved, we can identify each party’s rights regarding the services to be transferred, we can identify the

payment terms for the services, we have determined the customer has the ability and intent to pay and the contract has commercial substance.

We consider the terms and

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

We determine we have a contract

when the customer order is approved, we can identify each party’s rights regarding the services to be transferred, we can identify

the payment terms for the services, we have determined the customer has the ability and intent to pay and the contract has commercial

At contract inception we evaluate whether the contract includes more than one performance obligation.

We apply judgment in determining

the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment

experience or, in the case of a new customer, credit and financial information pertaining to the customer.

We apply judgment in

determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical

payment experience or, in the case of a new customer, credit and financial information pertaining to the customer.

Performance obligations promised

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None of our contracts contain a significant financing component.

If the contract contains a single

performance obligation, the entire transaction price is allocated to the single performance obligation.

Contracts that contain multiple

performance obligations require an allocation of the transaction price to each performance obligation based on the relative standalone

If the contract contains a

single performance obligation, the entire transaction price is allocated to the single performance obligation.

Contracts that contain

multiple performance obligations require an allocation of the transaction price to each performance obligation based on the relative standalone

selling price (“SSP”).

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prior to its transfer to the ticket buyer.

We sell our 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.

We act as the principal in these transactions as we own the ticket at the time of sale, therefore we control the ticket prior to transferring

to the customer.

In these transactions, revenue is recorded on a gross basis based on the value of the ticket and is recognized when an

order is confirmed.

We sell our tickets held in

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

We act as the principal in these transactions as we own the ticket at the time of sale, therefore we control the ticket prior

to transferring to the customer.

In these transactions, revenue is recorded on a gross basis based on the value of the ticket and is recognized

when an order is confirmed.

Payment is typically due upon delivery of the ticket.

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Revenues derived from this marketplace primarily consist of service

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

fees from entertainment operations, and consist of one primary performance obligation, which is facilitating the transaction between

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

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Payment is due at the time of sale.

We review all significant, unusual,

or nonstandard shipments of product or delivery of services as a routine part of our accounting and financial reporting process to determine

compliance with these requirements.

Extended warranties are offered on selected products, and when a customer purchases an extended warranty,

the associated proceeds are treated as deferred revenue and recognized over the term of the extended warranty.

We review all significant,

unusual, or non-standard shipments of product or delivery of services as a routine part of our accounting and financial reporting process

to determine compliance with these requirements.

Extended warranties are offered on selected products, and when a customer purchases an

extended warranty, the associated proceeds are treated as deferred revenue and recognized over the term of the extended warranty.

For our video solutions segment,

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segment, our customers are mainly medium to large healthcare organizations that are charged monthly upon the execution of our services.

Being these customers are healthcare organizations with minimal risk for uncollectible accounts, we consider a specific reserve for bad

Being these customers are healthcare organizations with minimal risk for uncollectible accounts;

we consider a specific reserve for bad

debts based on their individual circumstances.

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we will track historical bad debts and continue to assess appropriate reserves.

Allowance for Excess and

Obsolete Inventory.

Allowance for Excess

and Obsolete Inventory.

We record valuation reserves on our inventory for estimated excess or obsolete inventory items.

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

Inventories consisted of the following

at March 31, 2025 and December 31, 2024:

Inventories consisted of the

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

Raw material and component parts– video solutions segment

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As reflected above, our inventory reserves represented 40% of the gross inventory balance

at March 31, 2025, compared to 46% of the gross inventory balance at December 31, 2024.

at June 30, 2025, compared to 46% of the gross inventory balance at December 31, 2024.

We had $1,661,694 and $2,169,655 in reserves for

obsolete and excess inventories at March 31, 2025 and December 31, 2024, respectively.

obsolete and excess inventories at June 30, 2025 and December 31, 2024, respectively.

The decrease in the inventory reserve is primarily

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following the event date.

We believe the reserves are appropriate given our inventory levels as of March 31, 2025.

If actual future demand or market

conditions are less favorable than those projected by management or significant engineering changes to our products that are not anticipated

and appropriately managed, additional inventory write-downs may be required in excess of the inventory reserves already established.

Goodwill and other intangible

When we acquire a business, we determine the fair value of the assets acquired and liabilities assumed on the date of

acquisition, which may include a significant amount of intangible assets such as customer relationships, software and content, as well

When determining the fair values of the acquired intangible assets, we consider, among other factors, analyses of historical

financial performance and an estimate of the future performance of the acquired business.

The fair values of the acquired intangible assets

are primarily calculated using an income approach that relies on discounted cash flows.

This method starts with a forecast of the expected

future net cash flows for the asset and then adjusts the forecast to present value by applying a discount rate that reflects the risk

factors associated with the cash flow streams.

We consider this approach to be the most appropriate valuation technique because the inherent

value of an acquired intangible asset is its ability to generate future income.

In a typical acquisition, we engage a third-party valuation

expert to assist us with the fair value analyses for acquired intangible assets.

Determining the fair values of

acquired intangible assets requires us to exercise significant judgment.

We believe the reserves are appropriate given our inventory levels as of June 30, 2025.

If actual future demand or

market conditions are less favorable than those projected by management or significant engineering changes to our products that are not

anticipated and appropriately managed, additional inventory write-downs may be required in excess of the inventory reserves already established.

Goodwill and other

intangible assets.

When we acquire a business, we determine the fair value of the assets acquired and liabilities assumed on the

date of acquisition, which may include a significant amount of intangible assets such as customer relationships, software and content,

as well as goodwill.

When determining the fair values of the acquired intangible assets, we consider, among other factors, analyses of

historical financial performance and an estimate of the future performance of the acquired business.

The fair values of the acquired intangible

assets are primarily calculated using an income approach that relies on discounted cash flows.

This method starts with a forecast of the

expected future net cash flows for the asset and then adjusts the forecast to present value by applying a discount rate that reflects

the risk factors associated with the cash flow streams.

We consider this approach to be the most appropriate valuation technique because

the inherent value of an acquired intangible asset is its ability to generate future income.

In a typical acquisition, we engage a third-party

valuation expert to assist us with the fair value analysis for acquired intangible assets.

Determining the fair values

of acquired intangible assets requires us to exercise significant judgment.

We select reasonable estimates and assumptions based on evaluating

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provisions that could limit or extend an asset’s useful life.

The Company’s goodwill is

evaluated in accordance with FASB ASC Topic 350, which requires goodwill to be assessed for impairment at least annually and whenever

The Company’s goodwill

is evaluated in accordance with FASB ASC Topic 350, which requires goodwill to be assessed for impairment at least annually and whenever

events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

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market capitalization relative to our net book value.

When performing our annual assessment

of the recoverability of goodwill, we initially perform a qualitative analysis evaluating whether any events or circumstances occurred

or exist that provide evidence that it is more likely than not that the fair value of any of our reporting units is less than the related

carrying amount.

If we do not believe that it is more likely than not that the fair value of any of our reporting units is less than the

related carrying amount, then no quantitative impairment test is performed.

However, if the results of our qualitative assessment indicate

that it is more likely than not that the fair value of a reporting unit is less than its respective carrying amount, then we perform a

two-step quantitative impairment test.

When performing our annual

assessment of the recoverability of goodwill, we initially perform a qualitative analysis evaluating whether any events or circumstances

occurred or exist that provide evidence that it is more likely than not that the fair value of any of our reporting units is less than

the related carrying amount.

If we do not believe that it is more likely than not that the fair value of any of our reporting units is

less than the related carrying amount, then no quantitative impairment test is performed.

However, if the results of our qualitative assessment

indicate that it is more likely than not that the fair value of a reporting unit is less than its respective carrying amount, then we

perform a two-step quantitative impairment test.

Evaluating the recoverability

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

We performed an impairment test

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

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

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

Therefore, we performed an impairment test for our reporting units with remaining

We performed an impairment

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

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

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

Therefore, we performed an impairment test for our reporting units with

remaining goodwill.

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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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.

segment was $1,158,966 and $5,805,507, respectively as of June 30, 2025 and December 31, 2024.

Warranty Reserves.

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that can materially affect the fair value estimates.

Accounting for Income Taxes.

Accounting for Income

Accounting for income taxes requires significant estimates and judgments on the part of management.

Such estimates and judgments

include, but are not limited to, the effective tax rate anticipated to apply to tax differences that are expected to reverse in the future,

the sufficiency of taxable income in future periods to realize the benefits of net deferred tax assets and net operating losses currently

recorded and the likelihood that tax positions taken in tax returns will be sustained on audit.

As required by authoritative guidance,

we record deferred tax assets or liabilities based on differences between financial reporting and tax bases of assets and liabilities

Such estimates and

judgments include, but are not limited to, the effective tax rate anticipated to apply to tax differences that are expected to reverse

in the future, the sufficiency of taxable income in future periods to realize the benefits of net deferred tax assets and net operating

losses currently recorded and the likelihood that tax positions taken in tax returns will be sustained on audit.

As required by authoritative

guidance, we record deferred tax assets or liabilities based on differences between financial reporting and tax bases of assets and liabilities

using currently enacted rates that will be in effect when the differences are expected to reverse.

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asset will not be realized.

As of March 31, 2025 and December 31, 2024, we have fully reserved all of our deferred tax assets.

As of June 30, 2025 and December 31, 2024, we have fully reserved all of our deferred tax assets.

a review of our deferred tax assets and recent operating performance, we determined that our valuation allowance should be increased by

$4,680,000 to a balance of $46,290,000 to fully reserve our deferred tax assets at March 31, 2025 and December 31, 2024.

$4,680,000 to a balance of $46,290,000 to fully reserve our deferred tax assets at June 30, 2025 and December 31, 2024.

We determined

that it was appropriate to continue to provide a full valuation reserve on our net deferred tax assets as of March 31, 2025 and December

that it was appropriate to continue to provide a full valuation reserve on our net deferred tax assets as of June 30, 2025 and December

31, 2024, because of the overall net operating loss carryforwards available.

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to deductions for stock option exercises, an increase in shareholders’ equity.

As required by authoritative guidance,

we have performed a comprehensive review of our portfolio of uncertain tax positions in accordance with recognition standards established

by the FASB, an uncertain tax position represents our expected treatment of a tax position taken in a filed tax return or planned to be

taken in a future tax return, that has not been reflected in measuring income tax expense for financial reporting purposes.

recorded liability as of March 31, 2025 and December 31, 2024 representing uncertain tax positions.

As required by authoritative

guidance, we have performed a comprehensive review of our portfolio of uncertain tax positions in accordance with recognition standards

established by the FASB, an uncertain tax position represents our expected treatment of a tax position taken in a filed tax return or

planned to be taken in a future tax return, that has not been reflected in measuring income tax expense for financial reporting purposes.

We have no recorded liability as of June 30, 2025 and December 31, 2024 representing uncertain tax positions.

We have generated substantial

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Inflation and Seasonality

Inflation has not materially affected

us during the past fiscal year.

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

in nature, however;

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

in the first half.

Inflation has not materially

affected us during the past fiscal year.

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

seasonal in nature, however;

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

year than in the first half.

Quantitative and Qualitative Disclosures

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis