This discussion contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. The words
"believe," "expect," "anticipate," "intend," "estimate," "may," "should,"
"could," "will," "plan," "future," "continue," and other expressions that are
predictions of or indicate future events and trends and that do not relate to
historical matters identify forward-looking statements. These forward-looking
statements are based largely on our expectations or forecasts of future events,
can be affected by inaccurate assumptions, and are subject to various business
risks and known and unknown uncertainties, a number of which are beyond our
control. Therefore, actual results could differ materially from the
forward-looking statements contained in this document, and readers are cautioned
not to place undue reliance on such forward-looking statements.

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: (1) our losses in recent years,
including fiscal 2021 and 2020; (2) economic and other risks for our business
from the effects of the COVID-19 pandemic, including the impacts on our
law-enforcement and commercial customers, suppliers and employees and on our
ability to raise capital as required; (3) our ability to increase revenues,
increase our margins and return to consistent profitability in the current
economic and competitive environment; (4) our operation in developing markets
and uncertainty as to market acceptance of our technology and new products; (5)
the availability of funding from federal, state and local governments to
facilitate the budgets of law enforcement agencies, including the timing, amount
and restrictions on such funding; (6) our ability to deliver our new product
offerings as scheduled in 2022, and whether new products perform as planned or
advertised and whether they will help increase our revenues; (7) whether we will
be able to increase the sales, domestically and internationally, for our
products in the future; (8) our ability to maintain or expand our share of the
market for our products in the domestic and international markets in which we
compete, including increasing our international revenues; (9) our ability to
produce our products in a cost-effective manner; (10) competition from larger,
more established companies with far greater economic and human resources; (11)
our ability to attract and retain quality employees; (12) risks related to
dealing with governmental entities as customers; (13) our expenditure of
significant resources in anticipation of sales due to our lengthy sales cycle
and the potential to receive no revenue in return; (14) characterization of our
market by new products and rapid technological change; (15) that stockholders
may lose all or part of their investment if we are unable to compete in our
markets and return to profitability; (16) defects in our products that could
impair our ability to sell our products or could result in litigation and other
significant costs; (17) our dependence on key personnel; (18) our reliance on
third-party distributors and sales representatives for part of our marketing
capability; (19) our dependence on a few manufacturers and suppliers for
components of our products and our dependence on domestic and foreign
manufacturers for certain of our products; (20) our ability to protect
technology through patents and to protect our proprietary technology and
information, such as trade secrets, through other similar means; (21) our
ability to generate more recurring cloud and service revenues; (22) risks
related to our license arrangements; (23) our revenues and operating results may
fluctuate unexpectedly from quarter to quarter; (24) sufficient voting power by
coalitions of a few of our larger stockholders, including directors and
officers, to make corporate governance decisions that could have a significant
effect on us and the other stockholders; (25) the sale of substantial amounts of
our Common Stock that may have a depressive effect on the market price of the
outstanding shares of our Common Stock; (26) the possible issuance of Common
Stock subject to options and warrants that may dilute the interest of
stockholders; (27) our nonpayment of dividends and lack of plans to pay
dividends in the future; (28) future sale of a substantial number of shares of
our Common Stock that could depress the trading price of our common stock, lower
our value and make it more difficult for us to raise capital; (29) our
additional securities available for issuance, which, if issued, could adversely
affect the rights of the holders of our Common Stock; (30) our stock price is
likely to be highly volatile due to a number of factors, including a relatively
limited public float; (31) whether such technology will have a significant
impact on our revenues in the long-term; (32) whether we will be able to meet
the standards for continued listing on the Nasdaq Capital Market; and (33)
indemnification of our officers and directors.

16




Current Trends and Recent Developments for the Company

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. We have the ability to
integrate electronic, radio, computer, mechanical, and multi-media technologies
to create positive solutions to our customers' requests. Our products include:
the EVO-HD, DVM-800 and DVM-800 Lite, which are in-car digital video systems for
law enforcement and commercial markets; the FirstVU body-worn camera line,
consisting of the FirstVu Pro, FirstVu, and the FirstVU HD; 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; the FLT-250, DVM-250, and DVM-250 Plus, which are our
commercial line of digital video mirrors that serve as "event recorders" for the
commercial fleet and mass transit markets; and FleetVu and VuLink, which are our
cloud-based evidence management systems. We further diversified and broadened
our product offerings in 2020, by introducing two new lines of branded products:
(1) the ThermoVu® which is a line of self-contained temperature monitoring
stations that provides alerts and controls facility access when an individual's
temperature exceeds a pre-set threshold and (2) our Shield™ disinfectants and
cleansers which are for use against viruses and bacteria. We began offering our
Shield™ disinfectants and cleansers to our law enforcement and commercial
customers late in the second quarter of 2020.



Revenue Cycle Management Operating Segment - We have recently entered the
revenue cycle management business late in the second quarter of 2021 with the
formation of our wholly owned subsidiary, Digital Ally Healthcare, Inc. and its
majority-owned subsidiary Nobility Healthcare. Nobility Healthcare completed its
first acquisition on June 30, 2021, when it acquired a private medical billing
company, and a second acquisition on August 31, 2021 upon the completion of its
acquisition of another private medical billing company, 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, leafing to substantial improvements in
their operating margins and cash flows.



Ticketing Operating Segment - We have also recently 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 through its platform, for a wide range of
events, including concerts, sporting events, theatres, and performing arts,

throughout the country.


Segment Overview

Our reportable segments are: 1) video solutions, 2) revenue cycle management, and 3) ticketing.

Video Solutions Operating Segment





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
our subscription models offering cloud and warranty solutions, and hardware
sales for video and personal protective safety products and solutions. Revenues
for product sales are recognized upon delivery of the product, and revenues from
our cloud and warranty subscription plans are deferred over the term of the
subscription, typically 3 or 5 years.



To judge the health of our video solutions segment, we review the current active
subscriptions and deferred service revenues, along with the quantity and gross
margins generated by our video solutions hardware sales.



Revenue Cycle Management Operating Segment

Our revenue cycle management segment consists of our medical billing subsidiaries. Revenues of this segment arerecognized after we perform our 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.

To judge the health of our revenue cycle management segment, we review the collection success rate and collection timing. In addition, we review the associated costs incurred to assist our customers, and any changes in operating margins and cash flows.




17






Ticketing Operating Segment



Our ticketing operating segment consists of ticketing services provided through
TicketSmarter and its online platform, TicketSmarter.com. Revenues of this
segment include ticketing service charges generally determined as a percentage
of the face value of the underlying ticket and ticket sales from our ticket
inventory which are recognized when the underlying tickets are sold. Ticketing
direct expenses include the cost of tickets purchased for resale by the Company
and holds as inventory, credit card fees, ticketing platform expenses, website
maintenance fees, along with other administrative costs.



To judge the health of our ticketing operating segment, we review the gross
transaction value, which represents the total value related to a ticket sale and
includes the face value of the ticket as well as the service charge. In
addition, we review the number of visits to our websites, cost of customer
acquisition, the purchase conversion rate, the overall number of customers in
our database, and the number and percentage of tickets sold via the website

and
mobile app.



Results of Operations


Summarized financial information for the Company's reportable business segments is provided for the years ended December 31, 2021, and 2020:




                                         Years Ended December 31,
                                          2021              2020
Net Revenues:
Video Solutions                       $   9,073,626     $ 10,514,868
Revenue Cycle Management                  1,630,048                -
Ticketing                                10,709,760                -
Total Net Revenues                    $  21,413,434     $ 10,514,868

Gross Profit:
Video Solutions                       $   2,002,345     $  4,062,594
Revenue Cycle Management                    521,047                -
Ticketing                                 3,140,382                -
Total Gross Profit                    $   5,663,774     $  4,062,594

Operating Income (loss):
Video Solutions                       $  (4,497,196 )   $   (578,417 )
Revenue Cycle Management                     93,763                -
Ticketing                                   235,432                -
Corporate                               (10,592,909 )     (7,085,234 )

Total Operating Income (Loss) $ (14,760,910 ) $ (7,663,651 )



Depreciation and Amortization:
Video Solutions                       $     395,361     $    250,156
Revenue Cycle Management                          -                -
Ticketing                                   427,128                -

Total Depreciation and Amortization $ 822,489 $ 250,156



Assets (net of eliminations):
Video Solutions                       $  25,983,348     $ 16,435,769
Revenue Cycle Management                    934,095                -
Ticketing                                12,260,780                -
Corporate                                43,810,974        4,361,758
Total Identifiable Assets             $  82,989,197     $ 20,797,527



Segment net revenues reported above represent only sales to external customers.
Segment gross profit represents net revenues less cost of revenues. Segment
operating income (loss), which is used in management's evaluation of segment
performance, represents net revenues, less cost of revenues, less all operating
expenses. 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.

Consolidated Results of Operations



We experienced operating losses for all quarters during 2021 and 2020. The
following is a summary of our recent operating results on a quarterly basis:

                                                                                                      For the Three Months Ended:
                                       December 31,         September 30,          June 30,          March 31,         December 31,         September 30,          June 30,          March 31,
                                           2021                 2021                 2021               2021               2020                 2020                 2020               2020
Total revenue                          $  11,744,112       $     4,639,822

$ 2,493,671 $ 2,535,829 $ 2,798,291 $ 3,558,640 $ 1,732,192 $ 2,425,745 Gross profit

                               2,190,523             1,400,570          1,260,800            811,882           1,182,160             1,222,648            392,758          1,265,028
Gross profit margin percentage                  18.7 %                30.2 %             50.6 %             32.0 %                43 %                34.1 %             22.7 %             52.2 %
Total selling, general and
administrative expenses                    7,869,883             4,999,543          3,877,684          3,677,575           2,931,334             3,066,606          2,535,912          3,192,396
Operating loss                            (5,679,360 )          (3,598,973

) (2,616,884 ) (2,865,693 ) (1,749,174 ) (1,843,958 ) (2,143,154 ) (1,927,368 ) Operating loss percentage

                      (48.4 )%              (77.6 )%          (104.9 )%          (113.0 )%            (63.2 )%              (51.4 )%          (123.7 )%           (79.5 )%
Net income/(loss)                      $   1,122,791       $     8,068,799

$ (5,382,487 ) $ 21,721,858 $ (321,318 ) $ 527,442 $ (497,894 ) $ (2,334,110 )


Our business is subject to substantial fluctuations on a quarterly basis as
reflected in the significant variations in revenues and operating results in the
above table. These variations result from various factors, including but not
limited to: (1) the timing of large individual orders; (2) the traction gained
by products, such as the recently released FirstVu Pro, FirstVu II, FLT-250, EVO
HD, the ThermoVu™ and the Shield™ lines; (3) production, quality and other
supply chain issues affecting our cost of goods sold; (4) unusual increases in
operating expenses, such as the timing of trade shows and stock-based and bonus
compensation; (5) the timing of patent infringement litigation settlements (6)
ongoing patent and other litigation and related expenses respecting outstanding
lawsuits; (7) the impact of COVID-19 on the economy and our businesses; and (8)
the completion of corporate acquisitions including the 2021 purchases in the
revenue cycle management and ticketing operating segments. We reported net
income of $1,122,790 on revenues of $11,744,112 for fourth quarter 2021.


18




The factors and trends affecting our recent performance include:

? The Company formed two new operating segments in 2021 and revenues increased

in the third and fourth quarters of 2021 compared to the previous quarters.

The primary reason for the revenue increase, beginning in the third quarter of

2021 is the completion of three acquisitions, being TicketSmarter which is

included in our ticketing operating segment and two acquisitions of medical

billing companies through our revenue cycle management operating segment. The

new ticketing operating segment generated $10,709,760 in 2021 revenue since

its acquisition date of September 1, 2021, and with our revenue cycle

management operating segment generating $1,630,048 in revenues for the year

ended December 31, 2021. We expect to continue to experience improved results

from our two new operating segments and their recent acquisitions, and expect

to continue acquiring new businesses particularly in our revenue cycle

management operating segment. We are employing a roll-up strategy in our

revenue cycle management operating segment and have completed two acquisitions

in 2022 and have a signed letter of intent to acquire a third in 2022.

? Our objective is to expand our video solutions segment's recurring service

revenue to help stabilize our revenues on a quarterly basis. Revenues from

cloud storages have been increasing in recent quarters and reached

approximately $302,634 in the fourth quarter of 2021, an increase of $73,710

(32%) over the fourth quarter of 2020. Overall, cloud revenues increased to

approximately $1,055,965 for the year ended December 31, 2021 compared to

approximately $937,000 for the year ended December 31, 2020 an increase of

$118,965, or 13%. We are pursuing several new market channels outside of our

traditional law enforcement and private security customers, similar to our

NASCAR and event security customers, which we believe will help expand the

appeal of our products and service capabilities to new commercial markets. If

successful, we believe that these new market channels could yield recurring

service revenues for us in the future.

? We have a multi-year official partnership with NASCAR, naming us "A Preferred

Technology Provider of NASCAR." As part of the relationship, we provide

cameras that are mounted in the Monster Energy NASCAR Cup Series garage

throughout the season, bolstering both NASCAR's commitment to safety at every

racetrack, as well as enhancing its officiating process through technology.

Our relationship with NASCAR has yielded many new opportunities with NASCAR

related sponsors. We believe this partnership with NASCAR demonstrate the

flexibility of our product offerings and help expand the appeal of our

products and service capabilities to new commercial markets. We also have an

affiliation with the Indy series races and, in particular, the Rahal Letterman

Lanigan Racing team which has several cars in most Indy style races. These

relationships provide us with access to many potential customers through the

various programs supported by both the NASCAR and Indy-Style car race series.

? On July 20, 2020, the Company and Brickell Key Investments LP ("BKI") executed

a Termination Agreement and Mutual Release (the "Termination Agreement").

Under the terms of the Termination Agreement, the Company made a payment in

the amount of $1,250,000 to BKI, and the parties agreed to terminate a

Proceeds Investment Agreement (the "PIA"), which they previously entered into

on July 31, 2018, and to release each other from any further liability under

the PIA. As a result, any obligations under the PIA have been extinguished and

a $5,250,000 change in fair value was assessed for the year ended December 31,


    2020.



Off-Balance Sheet Arrangements



We do not have any off-balance sheet debt, nor did we have any transactions,
arrangements, obligations (including contingent obligations) or other
relationships with any unconsolidated entities or other persons that may have a
material current or future effect on financial conditions, changes in the
financial conditions, results of operations, liquidity, capital expenditures,
capital resources, or significant components of revenue or expenses.

We are a party to operating leases and license agreements that represent
commitments for future payments (described in Note 13, "Commitments and
Contingencies," to our consolidated financial statements) and we have issued
purchase orders in the ordinary course of business that represent commitments to
future payments for goods and services.

19




For the Years Ended December 31, 2021 and 2020

Results of Operations



Summarized immediately below and discussed in more detail in the subsequent
sub-sections is an analysis of our operating results for the years ended
December 31, 2021 and 2020, represented as a percentage of total revenues for
each respective year:

                                                          Years Ended December 31,
                                                        2021                    2020
Revenue                                                        100 %                   100 %
Cost of revenue                                                 74 %                    61 %

Gross profit                                                    26 %                    39 %
Selling, general and administrative expenses:
Research and development expense                                 9 %                    18 %
Selling, advertising and promotional expense                    27 %                    25 %
General and administrative expense                              60 %                    69 %

Total selling, general and administrative
expenses                                                        96 %                   112 %

Operating loss                                                 (69 )%                  (73 )%

Change in fair value of derivative liabilities                 171 %                     - %
Change in fair value of contingent consideration
promissory notes and earn-out agreements                        17 %                     - %
Warrant modification expense                                    (1 )%                    - %
Change in fair value of short-term investments                   - %                     - %
Change in fair value of note payable                             - %                   (12 )%
Change in fair value of proceeds investment
agreement                                                        - %                    50 %
Gain on extinguishment of debt                                   - %                    13 %
Secured convertible note payable issuance
expenses                                                         - %                    (1 )%
Interest income (expense) and other income, net                  1 %                     - %

Income (loss) before income tax benefit                        119 %       

           (25 )%
Income tax expense (benefit)                                     - %                     - %

Net income (loss)                                              119 %                   (25 )%

Net loss attributable to noncontrolling
interests of consolidated subsidiary                             - %                     - %

Net income (loss) attributable to common
stockholders                                                   119 %                   107 %

Net loss per share information:
Basic                                              $          0.51         $         (0.12 )
Diluted                                            $          0.51         $         (0.12 )



Revenues

Revenues by Type and by Operating Segment

Our operating segments generate two types of revenues:


Product revenues primarily includes video operating segment hardware sales of
in-car and body-worn cameras, along with sales of our ThermoVuTM units,
disinfectants, and personal protective equipment. Additionally, product revenues
also include the sale of tickets by our ticketing operating segment that have
been purchased or received through our sponsorships and partnerships and held in
inventory by our ticketing segment until their sale.



Service and other revenues consist of cloud and warranty services revenues from
our subscription plan and storage offerings of our video solutions segment. Our
ticketing operating segments' secondary ticketing marketplace revenues are
included in service revenue. 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.


20




The following table presents revenues by type and segment:



                                              Year Ended December 31,
                                       2021          % Change           2020
Product revenues:
Video solutions                    $  6,393,050          (20.4 )%   $  8,029,457
Ticketing                             2,787,237            100 %               -
Total product revenues                9,180,287           14.3 %       8,029,457
Service and other revenues:
Video solutions                       2,680,576            7.9 %       2,485,411
Ticketing                             7,922,523            100 %               -
Revenue cycle management              1,630,048            100 %               -

Total service and other revenues 12,233,147 392.2 % 2,485,411 Total revenues

$ 21,413,434          103.6 %    $ 10,514,868



Current product offerings from our video operating segment include the
following:

  Product                                 Description
EVO-HD         An in-car digital audio/video system which records in 1080P HD
               video and is designed for law enforcement and commercial fleet
               customers. This system includes two cameras and can use up to four
               external cameras for a total of four video streams. This system
               includes integrated, patented VuLink technology, internal GPS, and
               an internal Wi-Fi Module. The system includes the choice between a
               Wireless Microphone Kit or the option to use the, FirstVy PRO,
               FirstVu II, or FirstVu HD Body Camera as the wireless microphone.
               This system also includes a three-year advanced exchange warranty.
               We offer a cloud storage solution to manage the recorded evidence
               and charge a monthly device license fee for our cloud storage.
DVM-750        An in-car digital audio/video system that is integrated into a
               rear-view mirror primarily designed for law enforcement customers.
               We offer local storage as well as cloud storage solutions to
               manage the recorded evidence. We charge a monthly storage fee for
               our cloud storage option and a one-time fee for the local storage
               option. This product is being discontinued and phased out of our
               product line but we are supporting existing customers with new
               products and repair and parts.
DVM-250        An in-car digital audio/video system that is integrated into a
Plus/DVM-250   rear-view mirror primarily designed for commercial fleet
               customers. We offer a web-based, driver management and monitoring
               analytics package for a monthly service fee that is available for
               our DVM-250 customers.
FLT-250        The same great features of the DVM-250 in a new compact,
               non-mirrored form factor that allows for multiple mounting options
               in any vehicle type for commercial fleets.
DVM-800        An in-car digital audio/video system which records in 480P
               standard definition video that is integrated into a rear-view
               mirror primarily designed for law enforcement customers. This
               system can use an internal fixed focus camera or two external
               cameras for a total of four video streams. This system also
               includes the premium package which has additional warranty. We
               offer local storage as well as cloud storage solutions to manage
               the recorded evidence. We charge a monthly storage fee for our
               cloud storage option and a one-time fee for the local storage
               option.
DVM-800 Lite   An in-car digital audio/video system which records in 480P
               standard definition video that is integrated into a rear view
               mirror primarily designed for law enforcement customers. This
               system can use an internal fixed focus camera or two external
               cameras for a total of four video streams. We offer local storage
               as well as cloud storage solutions to manage the recorded
               evidence. We charge a monthly storage fee for our cloud storage
               option and a one-time fee for the local storage option. This
               system is replacing the DVM-100 and DVM-400 product offerings and
               allows the customer to configure the system to their needs.



21





FirstVu Pro    A body-worn camera system that is light weight, one-piece unit
               that captures full HD video and audio, while offering industry
               leading features such as live streaming, a full-color touchscreen
               display, an advanced image sensor with IR LEDs, proprietary image
               distortion reduction, IP67 rated resisting dust & wind and is
               water submersible for 30 minutes at a depth of 3 feet. It is
               MIL-STD-810G compliant capable of handling drops, shock, and
               vibration, and will function flawlessly in a wide temperature
               range. We also offer a cloud-based evidence storage and management
               solution for our FirstVu Pro customers for a monthly service fee.
FirstVu II     A body-worn camera system that is a one-piece device and offers
               industry leading technology such as an articulating camera head, a
               full-color display, an advanced image sensor, and GPS. It can be
               used by law enforcement, private and event security and commercial
               customers. We also offer a cloud-based evidence storage and
               management solution for our FirstVu II customers for a monthly
               service fee.
FirstVu HD     A body-worn digital audio/video camera system primarily designed
               for law enforcement customers. We also offer a cloud-based
               evidence storage and management solution for our FirstVu HD
               customers for a monthly service fee.
VuLink         An in-car device that enables an in-car digital audio/video system
               and a body worn digital audio/video camera system to automatically
               and simultaneously start recording.
QuickVu        Compatible with the FirstVu PRO and FirstVu II, the QuickVu
Docking        docking stations provide a comprehensive and elegant solution for
Stations       storing and charging body cameras while uploading video evidence
               to the cloud. QuickVu also allows for rapid reviewing of footage
               right from the interactive touchscreen display. Available in eight
               (8) or twenty-four (24) individual docking bays.
12-Bay         Compatible with the FirstVu HD body-worn camera, the 12-bay
Docking        docking station includes a 1TB local memory hard drive and can
Stations &     simultaneously upload 4 hours of video from 12 FirstVu HD cameras
Mini-Docks     within a 15-minute shift change and push configuration updates.
               The Mini-Dock is a single unit, portable smart dock that uploads
               video evidence to VuVault.com from a FirstVu HD body camera.
ThermoVuTM     A non-contact temperature-screening instrument that measures
               temperature through the wrist and controls entry to facilities
               when temperature measurements exceed pre-determined parameters
ShieldTM       Disinfectant and cleanser line, which is for use against viruses
line           and bacteria, that is less harsh than many of the traditional
               products now widely distributed. Offered in a variety of sizes and
               quantities. Also offering personal protective equipment, including
               nitrile and vinyl gloves, level 3 and N95 NIOSH certified face
               masks, as well as the electrostatic sprayer.
Event          TicketSmarter offers ticket to over 125,000 live events through
Ticketing      their ticket marketplace, including sporting events, concerts, and
               theatre. TicketSmarter is the official resale partner of more than
               35 collegiate conferences, 300+ universities, and hundreds of
               events and venues.


Our video 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 its compensation for its role in

the transaction. The distributor generally maintains product inventory,

customer receivables and all related risks and rewards of ownership. Revenue

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

terms of the distribution agreement.





22





  ? 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:

? 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 amount of


    medical billings collected by the customer.



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

? Our ticketing operating segment generates product revenues from the sale of

tickets directly to consumers for a particular event that the ticketing

operating segment has previously purchased and held in inventory for ultimate

resale to the end consumer. Service sales through TicketSmarter, are driven

largely in part 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.


The COVID-19 pandemic had an impact on all of our operating segment revenue
streams for the year ended December 31, 2021. In particular, it had a negative
impact generally on our video solutions operating segment legacy products and,
specifically, our commercial event recorder hardware (DVM-250 Plus) and in-car
hardware for law enforcement (DVM-800) during the year. Ticketing operating
segment revenues were also negatively impacted due to the cancellation of a
number of live events and government-imposed restrictions and large gatherings.
Our revenue cycle management operating segment was also affected due to the
higher level of healthcare service utilization due to the pandemic while certain
elective and routine healthcare services were reduced due to COVID-19 pandemic
restrictions.

Product revenues for the years ended December 31, 2021 and 2020 were $9,180,287 and $8,029,457, respectively, an increase of $1,150,830 (14.3%), due to the following factors:

? Revenues generated by the new ticketing operating segment began with the

Company's recent acquisition of TicketSmarter on September 1, 2021. The

new ticketing operating segment generated $2,787,237 in product revenues

for the year ended December 31, 2021, compared to $-0- for the year ended

December 31, 2020. This relates to the resale of tickets purchased for

live events, including sporting events, concerts, and theatre, then sold

through various platforms to customers.

? The Company's video segment operating segment generated revenues totaling


         over $6,393,050 during the years ended December 31, 2021 compared to
         $8,029,457 for the year ended December 31, 2020 due to new product lines

in 2020 related to our COVID-19 response. Late in the second quarter of


         2020, the Company launched two product lines in direct response to the
         increased safety precautions that organizations and individuals are
         taking due to the COVID-19 pandemic. ThermoVu™ was launched as a

non-contact temperature-screening instrument that measures temperature

through the wrist and controls entry to facilities when temperature

measurements exceed pre-determined parameters. ThermoVu™ has optional

features such as facial recognition to improve facility security by

restricting access based on temperature and/or facial recognition

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


         temperature display and controls access to facilities based on such
         results. ThermoVuTM has been applied in schools, dental office,
         hospitals, office buildings, and other public venues. The Company also

launched its Shield™ disinfectant/sanitizer product lines to fulfill

demand by current customers and others for a disinfectant and sanitizer

that is less harsh than many of the traditional products now widely

distributed. The Shield™ Cleanser product line contains a cleanser with


         no harsh chemicals or fumes.



23




The Company's video solution operating segment began offering the Shield™ line

of disinfecting products to its first responder customers including police,

fire and paramedics late in the second quarter of 2020. Commercial customers

such as hospitals, dental offices, office buildings, retail stores, and

restaurants have applied these products. The Company has enhanced the line of

disinfectant products through the newly designed Shield Electrostatic Sprayer

to efficiently and effectively dispense the disinfectants. The Company is

hopeful that its law enforcement and commercial customers will adopt this new

product offering to combat the spread of the COVID-19 virus as well as other


    bacteria and viruses.


? The video solutions operating segment shipped seven individual


              orders in excess of $100,000, for a total of approximately $986,062
              in revenue for the year ended December 31, 2021, compared to four
              individual orders in excess of $100,000, for a total of
              approximately $903,910 in revenue for the year ended December 31,
              2020.

? 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 over the prior period due to
              price-cutting and competitive actions by our competitors, adverse
              marketplace effects related to our patent litigation

proceedings and


              our recent financial condition. We introduced our EVO-HD late in the
              second quarter of 2019 with the goal of enhancing our product line
              features to meet these competitive challenges and we started to see
              traction in late 2019. We expect customers and potential customers
              to review and test the EVO-HD prior to committing to this new
              product platform, all of which has been delayed due to the COVID-19
              pandemic. Additionally, we introduced or new body-worn cameras, the
              FirstVu Pro and FirstV II, in the fourth quarter of 2021, with the
              goal of shipping these products in the first quarter of 2022. We
              hope to see increased traction with these products into 2022 after
              the market is able to review and test these new products.

       ?      Our video solutions operating segment product shipments have been
              particularly impacted by the COVID-19 pandemic because of delays in
              the shipment of certain law enforcement orders since the first
              quarter of 2020 as police forces and governments deal with its
              impact. Our product sales to law enforcement decreased for the year
              ended December 31, 2021 compared to the year ended December 31,
              2020, as the impact of the COVID-19 pandemic continues to impact our
              business.

              The COVID-19 pandemic impact remains relevant, as the shipment of
              commercial orders during the year ended December 31, 2021 remain
              slow, and cruise lines, taxi cabs, paratransit and other commercial
              customers continue to deal with its impact. Our product sales to
              commercial customers decreased for the year ended December 31, 2021
              compared to the year ended December 31, 2020 due to the impact of
              the COVID-19 pandemic.



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

customers, from


              a hardware sale to a service fee model. Therefore, we expect a
              reduction in commercial hardware sales (principally DVM-250's,
              FLT-250's, and our body-worn camera line) as we convert these
              customers to a service model under which we provide the hardware as
              part of a recurring monthly service fee. In that respect, we
              introduced a monthly subscription agreement plan for our body worn
              cameras and related equipment during the second quarter of 2020 that
              allowed law enforcement agencies to pay a monthly service fee to
              obtain body worn cameras without incurring a significant upfront
              capital outlay. This program has 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.



24





Service and other revenues for the years ended December 31, 2021 and 2020 were
$12,233,147 and $2,485,411, respectively, an increase of $9,747,736 (392.2%),
due to the following factors:

       ?      Cloud revenues generated by the video solutions operating segment
              were $1,055,965 and $954,873 for the years ended December 31, 2021
              and 2020, respectively, an increase of $101,092 (11%). We have
              experienced increased interest in our cloud solutions for law
              enforcement primarily due to the deployment of our

cloud-based


              EVO-HD in-car system and our next generation body-worn camera
              products, which contributed to our increased cloud revenues 

in the


              year ended December 31, 2021. We expect this trend to 

continue for


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

       ?      Video solutions operating segment revenues from extended warranty
              services were $978,018 and $1,173,169 for the years ended December
              31, 2021 and 2020, respectively, a decrease of $195,151 (17%). We
              have many customers that have purchased extended warranty packages,
              primarily in our DVM-800 premium service program. However, the
              fallout from the COVID-19 pandemic and related restrictions on
              travel adversely affected our sales of DVM-800 hardware systems
              resulting in a decrease in their sales of 15% in the 2021 period
              compared to 2020.

? Video solutions operating segment installation service revenues were

$204,701 and $180,319 for the years ended December 31, 2021

and


              2020, respectively, an increase of $24,382 (14%). 

Installation


              revenues tend to vary more than other service revenue types 

and are


              dependent on larger customer implementations. The slight 

increase in


              installation revenues in the years ended December 31, 2021 compared
              to the same period 2020 was attributable to the resumption of
              previous projects pending install due to the effects related to the
              COVID-19 pandemic.

       ?      Revenues from building rental income were $290,012 and $-0- for the
              years ended December 31, 2021 and 2020, respectively, an

increase of

$290,012 (100%). The Company completed the purchase of an
              office/warehouse building during the years ended December 31, 2021,
              in which current tenants were under existing agreements. The
              agreement terminated at the end of August 2021.

       ?      Our new ticketing operating segment generated service revenues
              totaling $7,922,523 and $-0- for the years ended December 30, 2021
              and 2020, respectively, an increase of $7,922,523 (100%). The
              Company completed the acquisitions of Goody Tickets, LLC and
              TicketSmarter, LLC on September 1, 2021, thus resulting in the new
              revenue stream for the Company. TicketSmarter collects fees on
              transactions administered through the TicketSmarter.com

platform for


              the buying and selling of tickets for live events throughout the
              country. This increase reflects just four months of service revenues
              by our ticketing operating segment, which we hope will present a
              strong revenue outlook moving forward.

       ?      Our new revenue cycle management operating segment generated service
              revenues totaling $1,630,048 and $-0- for the years ended December
              31, 2021 and 2020, respectively, an increase of $1,630,048 (100%).
              Our revenue cycle management operating segment completed the
              acquisitions of its first medical billing company on June 30, 2021
              and the second medical billing company on August 31, 2021, thus
              resulting in the new service revenue stream added in the year ended
              December 31, 2021 for the Company. Our revenue cycle management
              operating segment provides revenue cycle management solutions and
              back-office services to healthcare organizations throughout the
              country. This increase reflects three months of the first medical
              billing company revenues and just one month of the second medical
              billing company revenues within the new revenue cycle management
              operating segment, which we home will present a strong revenue
              outlook moving forward.



25





Total revenues for the years ended December 31, 2021, and 2020 were $21,413,434
and $10,514,868, respectively, an increase of $10,898,566 (103.6%), due to

the
reasons noted above.

Cost of Product Revenue

Overall cost of product revenue sold for the years ended December 31, 2021, and
2020 was $8,635,047 and $5,739,572, respectively, an increase of $2,895,475
(50.4%). Overall cost of goods sold for products as a percentage of product
revenues for the years ended December 31, 2021, and 2020 were 94.1% and 71.5%,
respectively. Cost of products sold by operating segment is as follows:

                                   Years Ended December 31,
                                     2021             2020
Cost of Product Revenues:
Video Solutions                  $   6,197,061     $ 5,739,572
Revenue Cycle Management                     -               -
Ticketing                            2,437,986               -

Total Cost of Product Revenues $ 8,635,047 $ 5,739,572


The increase in cost of goods sold for our video solutions segment products is
due to numerous factors including higher sales of the lower margin Shield
disinfectant and personal protective products during 2021 and increases in the
allowance for excess and obsolete inventory. Cost of product sold as a
percentage of product revenues for the video solutions segment increased to
96.9% for the year ended December 31, 2021 as compared to 71.5% for the year
ended December 31, 2020.

The increase in ticketing operating segment cost of product sold is the due to
the September 1, 2021acquisition of TicketSmarter, resulting in an increase to
cost of product revenue of $2,437,986 for the year ended December 31, 2021,
compared to $-0- for the year ended December 31, 2020. Cost of product sold as a
percentage of product revenues for the ticketing solutions was 87.5% for the
year ended December 31, 2021.


We recorded $3,353,458 and $1,960,351 in reserves for obsolete and excess
inventories for the years ended December 31, 2021 and 2020, respectively. Total
raw materials and component parts were $3,062,046 and $3,186,426 for the years
ended December 31, 2021 and 2020, respectively, a decrease of $124,380 (4%).
Finished goods balances were $10,512,577 and $6,974,291 for the years ended
December 31, 2021 and December 31, 2020, respectively, an increase of $3,538,286
(51%) which was attributable to accumulating inventory for the expanded Shield
and video solutions product lines, along with $2,102,272 in finished goods from
our newly acquired ticketing segment. The increase in the inventory reserve is
primarily due to inventory obsolescence for the level of component parts of the
older versions of our printed circuit boards and the phase out of our DVM-750,
DVM-500 Plus, LaserAlly legacy products, and ThermoVu products. Additionally,
the Company determined a reasonable reserve for inventory held at the ticket
operating segment, in which some inventory items sell below cost or go unsold,
thus having to be fully written-off following the event date. We believe the
reserves are appropriate given our inventory levels as of December 31, 2021.



Cost of Service Revenue



Overall cost of service revenue sold for the years ended December 31, 2021, and
2020 was $7,114,612 and $712,702, respectively, an increase of $6,401,910
(898.3%). Overall cost of goods sold for services as a percentage of service
revenues for the years ended December 31, 2021, and 2020 were 58.2% and 28.7%,
respectively. Cost of service revenues by operating shipment is as follows:




                                   Years Ended December 31,
                                      2021             2020
Cost of Service Revenues:
Video Solutions                  $      874,219      $ 712,702
Revenue Cycle Management              1,109,001              -
Ticketing                             5,131,392              -

Total Cost of Service Revenues $ 7,114,612 $ 712,702


The increase in cost of service revenues for our video solutions segment is
commensurate with the increase in service revenues in the year ended December
31, 2021 compared to the year ended December 31, 2020. Cost of service revenues
as a percentage of service revenues for the video solutions segment increased to
32.6% for the year ended December 31, 2021 as compared to 28.7% for year ended
December 31, 2020.



The increase in revenue cycle management operating segment cost of service
revenue is the due to the 2021 acquisitions of two medical billing companies in
late 2021 The revenue cycle management operating segment was formed in 2021 and
did not exist in 2020. Cost of service revenues as a percentage of product
revenues for the revenue cycle management operating segment was 68.0% for 2021.



The increase in ticketing operating segment cost of service revenues is the due
to the September 1, 2021 acquisition of TicketSmarter, resulting in an increase
to cost of service revenue of $5,131,392 for the year ended December 31, 2021,
compared to $-0- for the year ended December 31, 2020. Cost of service revenues
as a percentage of service revenues for the ticketing increased to 64.8% for the
year ended December 31, 2021.



Gross Profit


Overall gross profit for the years ended December 31, 2021 and 2020 was $5,663,775 and $4,062,594, respectively, an increase of $1,601,181 (39.4%). Gross profit by operating segment was as follows:





Gross Profit:
Video Solutions            $ 2,002,345     $ 4,062,594
Revenue Cycle Management       521,047               -
Ticketing                    3,140,383               -
Total Gross Profit         $ 5,663,775     $ 4,062,594




The overall increase is attributable to the large overall increase in revenues
for the year ended December 31, 2021 and an increase in the overall cost of
sales as a percentage of overall revenues to 73.6% for the year ended December
31, 2021 from 61.4% for the year ended December 31, 2020. Our goal is to improve
our margins over the longer term based on the expected margins generated by our
new recent revenue cycle management and ticketing operating segments together
with our video solutions operating segment and its expected margins from our
EVO-HD, DVM-800, VuLink, FirstVu Pro, FirstVu II, FirstVu HD, ThermoVuTM,
ShieldTM disinfectants and our cloud evidence storage and management offering,
provided that they gain traction in the marketplace and subject to a normalizing
economy in the wake of the COVID-19 pandemic. In addition, if revenues from the
video solutions segment increase, we will seek to further improve our margins
from this segment through expansion and increased efficiency utilizing fixed
manufacturing overhead components. We plan to continue our initiative to more
efficient management of our supply chain through outsourcing production,
quantity purchases and more effective purchasing practices.



26





Selling, General and Administrative Expenses





Overall selling, general and administrative expenses were $20,424,685 and
$11,726,245 for the years ended December 31, 2021 and 2020, respectively, an
increase of $8,698,440 (74.2%). The increase was primarily attributable to the
recent acquisitions completed in the third quarter of 2021. Our selling, general
and administrative expenses as a percentage of sales decreased to 95% for 2021
compared to 112% in the same period in 2020. The significant components of
selling, general and administrative expenses are as follows:



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



                                                        Year ended December 31,
                                                         2021             2020
Research and development expense                     $  1,930,784     $  

1,842,800


Selling, advertising and promotional expense            5,717,824        

2,607,242


Professional fees and expense                           1,513,862         

990,975


Executive, sales, and administrative staff payroll      3,288,360        2,449,690
Other                                                   7,973,855        3,835,538
Total                                                $ 20,424,685     $ 11,726,245




Selling, general and administrative expenses by operating segment are as
follows:



                                                       Years Ended December 31,
                                                         2021             2020
Selling, general and administrative expenses:
Video Solutions                                      $  6,231,254     $  4,641,011
Revenue Cycle Management                                  427,284                -
Ticketing                                               2,904,951                -
Corporate                                              10,861,196        7,085,234

Total selling, general and administrative expenses $ 20,424,685 $ 11,726,245






Research and development expense. Our video solutions operating segment
continues to focus on bringing new products to market, including updates and
improvements to current products. Our research and development expenses totaled
$1,930,784 and $1,842,800 for the years ended December 31, 2021 and 2020,
respectively, an increase of $87,984 (4.8%). We employed 17 engineers at
December 31, 2021 compared to 15 engineers at December 31, 2020, most of whom
are dedicated to research and development activities for new products and
primarily the FirstVu Pro, FirstVu II, QuickVu docking stations, ThermoVuTM,
ShieldTM, EVO-HD and non-mirror based DVM-250 that can be located in multiple
places in a vehicle. We expect our research and development activities will
continue to trend higher in future quarters as we continue to expand our product
offerings based on our new EVO-HD product platform and we continue to outsource
more development projects. We consider our research and development capabilities
and new product focus to be a competitive advantage and will continue to invest
in this area on a prudent basis and consistent with our financial resources.



Selling, advertising and promotional expenses. Selling, advertising and
promotional expense totaled $5,717,824 and $2,607,242 for the years ended
December 31, 2021 and 2020, respectively, an increase of $3,110,582 (119.3%).
Salesman salaries and commissions for our video solutions segment represent the
primary components of these costs and were $1,605,034 and $1,616,267 for the
years ended December 31, 2021 and 2020, respectively, a slight decrease of
$11,233 (1%). The effective commission rate was 7.5% for the year ended December
31, 2021 compared to 15.4% for the year ended December 31, 2020. We reduced the
number of salesmen in our law enforcement and commercial channels in 2021
compared to 2020. In addition, we are utilizing third-party distributors as a
major component of our new Shield and ThermoVu sales channel. Lastly, our recent
acquisitions require minimal salespeople, due to their specific service
offerings and platforms.



Promotional and advertising expenses totaled $4,112,790 during the year ended
December 31, 2021 compared to $990,975 during the year ended December 31, 2020,
an increase of $3,121,815 (315%). The overall increase is primarily attributable
to our 2021 sponsorship of NASCAR and IndyCar, compared to the reduced expense
due to the ultimate suspension of the 2020 NASCAR season during 2020, and a
reduction in attendance at trade shows as a result of the COVID-19 pandemic
during 2020. Additionally, TicketSmarter is very active in sponsorship and
advertising, as they are continuing to build a brand and gaining recognition.
TicketSmarter accounted for $1,541,670 of the total promotional and advertising
expense for the year ended December 31, 2021.



Professional fees and expense. Professional fees and expenses totaled $1,513,862
and $990,975 for the years ended December 31, 2021 and 2020, respectively, an
increase of $522,887 (52.8%). The increase in professional fees is primarily
attributable to increased legal fees surrounding the two registered direct
offerings during the year ended December 31, 2021, along with increased legal
and broker fees associated with the Company's numerous acquisitions in 2021,
paired with other current due diligence items and opportunities the Company is
exploring. Additionally, increased board fees, audit fees, and service fees

are
attribute to this increase.



27






Executive, sales and administrative staff payroll. Executive, sales and
administrative staff payroll expenses totaled $3,288,360 and $2,449,690 for the
years ended December 31, 2021 and 2020, respectively, an increase of $838,670
(34.2%). The primary reason for the increase in executive, sales and
administrative staff payroll was the recent formation of the revenue cycle
management and ticketing operating segments and their acquisitions of the
medical billing companies and TicketSmarter which occurred in 2021 and therefore
had no impact on 2020 expenses. This increase is also due to a return to regular
staff levels compared to the same period in 2020, in which the Company
experienced a reduction in technical support staffing in response to the
COVID-19 pandemic during the second quarter of 2020, as the COVID-19 pandemic
had significantly impacted the Company's new event security business channel in
2020 because many sporting venues were closed including those served by these
service technicians. Additionally, this trend is expected to continue because of
the acquisitions completed during the year ended December 31, 2021, which
resulted in additional payroll expenses with expanded executive positions,
sales, and administrative staff numbers compared to 2020. Additionally, the
acquisitions completed during the year ended December 31, 2021, resulted in
additional payroll expenses with expanded executive positions, sales, and
administrative staff numbers.



Other. Other selling, general and administrative expenses totaled $7,973,854 and
$3,835,538 for the years ended December 31, 2021 and 2020, respectively, an
increase of $4,138,316 (108%). The increase in other expenses in the year ended
December 31, 2021 compared to the same period in 2020 is primarily attributable
to the increased expenses related to the two new operating segments and their
acquisitions, and associated operating expenses, completed during the year ended
December 31, 2021, that were not relevant to the year ended December 31, 2020.
Additionally, this increase is also attributable to an increase in travel costs
as COVID-19 restrictions begin to ease, as well as substantially increased
insurance costs compared to the same period in 2020. The increased insurance
costs are primarily in general liability and related coverages which premiums
have been increased to address the exposure to the COVID-19 pandemic.



Operating Loss


For the reasons previously stated, our operating loss was $14,760,910 and $7,663,651 for the years ended December 31, 2021 and 2020, respectively, an increase of $7,100,764 (93%). Operating loss as a percentage of revenues improved to 69% in 2021 from 73% in 2020.





Interest and Other Income



Interest income increased to $310,200 for the year ended December 31, 2021, from
$47,893 in 2020, which reflects our overall higher cash and cash equivalent
levels in 2021 compared to 2020. The Company completed two registered direct
offerings in the year ended December 31, 2021 which yielded net proceeds of
approximately $66.4 million which balances have earned increased interest income
when compared to the same period in 2020. Additionally, this increase is a
result of interest incurred on debt that the Company has issued, as well as
interest incurred on leased products.



Interest Expense



We incurred interest expense of $28,600 and $342,379 during the years ended
December 31, 2021 and 2020, respectively. The decrease was attributable to
utilizing a portion of the net proceeds from the registered direct offerings to
eliminate substantially all interest-bearing debt balances outstanding in the
year ended December 31, 2021 as compared to the year ended December 31, 2020. On
May 12, 2020, the Company received $150,000 in additional loan funding under the
Economic Injury Disaster Loans ("EIDL") program administered by the Small
Business Administration ("SBA"). Under the terms of the EIDL promissory note,
interest accrues on the outstanding principal at the rate of 3.75% per annum.
The term of the EIDL promissory note is thirty years and monthly principal and
interest payments are deferred for twelve months after the date of disbursement
and total $731.00 per month thereafter. Additionally, the increase is
attributable to the contingent earn-out notes associated with the two Nobility
Healthcare acquisitions, currently at a total balance of $967,211 for the two
notes, with interest rates of 3.00% per annum.



Change in Fair Value of Secured Convertible Notes

We recognized a loss on change in fair value of secured convertible notes totaling $-0- and $1,300,252 during the years ended December 31, 2021 and 2020, respectively.


We elected to account for the secured convertible notes that were issued on
April 17, 2020 on their fair value basis. Therefore, we determined the fair
value of the secured convertible notes as of their issuance date of April 17,
2020 and through June 12, 2020, when they were paid in full. The change in fair
value from their issuance date of April 17, 2020 to their pay-off date was
$887,807, which was recognized as a charge in the Consolidated Statement of
Operations for the year ended December 31, 2020. No similar changes in fair
value occurred during the year ended December 31, 2021.



28





We elected to account for the secured convertible notes that were issued in
August 2019 on its fair value basis. Therefore, we determined the fair value of
the secured convertible notes as of their issuance date on December 31, 2019
until they were paid in full March 3, 2020. The change in fair value from
December 31, 2019 to their pay-off date was $412,445, which was recognized as a
charge in the Consolidated Statement of Operations at December 31, 2020. No
similar changes in fair value occurred during the year ended December 31, 2021.

Change in Fair Value of Proceeds Investment Agreement

We recorded a gain on the change in fair value of proceeds investment agreement of $-0- and $5,250,000 during the years ended December 31, 2021 and 2020, respectively.



We elected to account for the PIA that we entered into with BKI in July 2018 on
its fair value basis. Therefore, we determined the fair value of the 2018 PIA as
of December 30, 2021, and December 31, 2020 to be $-0- and $5,250,000,
respectively. The change in fair value from December 21, 2019, to December 31,
2020 was $5,250,000, which was recognized as a gain in the Consolidated
Statement of Operations for the years ended December 31, 2020. No similar
changes in fair value occurred during the year ended December 31, 2021.

Change in Fair Value of Short-Term Investments



We recognized a loss on change in fair value of short-term investments totaling
$101,645 and $-0- during the years ended December 31, 2021 and 2020,
respectively. Such short-term investments are included in cash and cash
equivalents as they contain original maturities of ninety (90) days or less. The
increase reflects our overall higher cash and cash equivalent levels in 2021
compared to 2020. The Company completed two registered direct offerings in the
year ended December 31, 2021 which yielded net proceeds of approximately $66.4
million, a portion of which was invested in short-term securities with original
maturities of 90 days or less.

Change in Fair Value of Warrant Derivative Liabilities




During the year ended December 31, 2021, the Company issued detachable warrants
to purchase a total of 42,550,000 shares of Common Stock in association with the
two registered direct offerings previously described. The underlying warrant
agreement terms provide for net cash settlement outside the control of the
Company in the event of tender offers under certain circumstances. As such, the
Company is required to treat these warrants as derivative liabilities which are
valued at their estimated fair value at their issuance date and at each
reporting date with any subsequent changes reported in the condensed
consolidated statement of operations as the change in fair value of warrant
derivative liabilities. The change in fair value of the warrant derivative
liabilities from their issuance date to December 31, 2021 totaled $36,664,907
which was recognized as a gain in the year ended December 31, 2021. The Company
determined the fair value of such warrants as of their issuance date, and as of
December 31, 2021, to be $51,216,058 and $14,846,932, respectively.


Change in Fair Value of Contingent Consideration Promissory Notes and Earn-Out Agreements




During the year ended December 31, 2021, the Company issued a contingent
consideration earn-out agreement in connection with the Stock Purchase Agreement
between TicketSmarter, Inc., Goody Tickets, LLC and TicketSmarter of $3,700,000.
As of December 31, 2021, Management determined that the actual Measurement
Period EBITDA generated by TicketSmarter was less than 70% of the Projected
EBITDA threshold provided in such agreement. Therefore, no TicketSmarter
earn-out payments were due under such agreement. Therefore, the fair value of
the contingent consideration earn-out agreement was reduced to zero, and the
resulting gain of $3,700,000 was reported in our Consolidated Statements of
Operations for the year ended December 31, 2021.



Additionally, during the year ended December 31, 2021, the Company issued a
contingent consideration promissory note in connection with the Stock Purchase
Agreement between our revenue cycle management segment and a private company of
$350,000. Management's estimate of the fair value of this contingent promissory
note at December 31, 2021 is $317,211 representing a reduction in its estimated
fair value of $32,789. The Company recorded a gain of $32,789 in the
Consolidated Statements of Operations for the year ended December 31, 2021.

Gain on Extinguishment of Debt





We recognized a gain on extinguishment of debt totaling $10,000 and $1,417,413
during the years ended December 31, 2021 and 2020, respectively. During the year
ended December 31, 2021 the Company was notified that its $10,000 EIDL advance
received with the Payroll Protection Program (the "PPP") Loan was fully
forgiven, thus included in "Gain on Extinguishment of Debt" in our Consolidated
Statements of Operations for the year ended December 31, 2021.



As discussed in Note 8, "Debt Obligations," on May 4, 2020 the Company received
a $1,418,900 promissory note under the SBA's PPP Loan through the Coronavirus
Aid, Relief, and Economic Security Act (the "CARES Act"). On December 10, 2020,
we were informed that the Company's SBA Loan had been forgiven, resulting in the
remaining balance has been released resulting in a gain on extinguishment of
debt. In accordance with ASC Topic No. 470, "Debt - Modifications and
Extinguishments" (Topic 470), the transactions noted above were determined to be
an extinguishment of the existing debt. As a result, we recorded a gain on the
extinguishment of debt in the amount of $1,417,413, which is included in "Gain
on Extinguishment of Debt" in our Consolidated Statements of Operations for the
year ended December 31, 2020.



Secured Convertible Notes Issuance Expenses

We recognized secured convertible note issuance expenses of $-0- and $34,906 during the years ended December 31, 2021 and 2020, respectively.





We elected to account for and record our $1,667,000 principal amount of secured
convertible notes on April 17, 2020 on a fair value basis. Accordingly, we were
required to expense the related issuance costs to other expense in the
consolidated statements of operations. Such costs totaled $34,906 for the year
ended December 31, 2020 and primarily included related legal and accounting
fees. No similar debt issuances occurred during the year ended December 31,

2021.


29




Income/(Loss) before Income Tax Benefit

As a result of the above, we reported a net income/(loss) before income tax benefit of $25,530,961 and ($2,625,881) for the years ended December 31, 2021 and 2020, respectively, an improvement of $28,156,843 (1,072%).

Income Tax Benefit


We recorded an income tax benefit of $-0- for the years ended December 31, 2021
and 2020, respectively. The effective tax rate for both 2021 and 2020 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 December 31, 2021 and 2020 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 December 31, 2021. During 2021, we decreased our
valuation reserve on deferred tax assets by $7,615,000 whereby our deferred tax
assets continue to be fully reserved due to our recent operating losses.


We had approximately $81,385,000 of federal net operating loss carryforwards and
$1,795,000 of research and development tax credit carryforwards as of December
31, 2021 available to offset future net taxable income.


Net Income/(Loss)




As a result of the above, we reported a net income/(loss) of $25,530,961 and
($2,625,882) for the years ended December 31, 2021 and 2020, respectively, an
improvement of $28,156,843 (1,072%).



Net Income Attributable to Noncontrolling Interests of Consolidated Subsidiary





The Company owns a 51% equity interest in its consolidated subsidiary, Nobility
Healthcare. As a result, the noncontrolling shareholders or minority interest is
allocated 49% of the income/loss of Nobility Healthcare which is reflected in
the statement of income (loss) as "net income (loss) attributable to
noncontrolling interests of consolidated subsidiary". We reported net income
(loss) attributable to noncontrolling interests of consolidated subsidiary of
$56,453 and $-0- for the years ended December 31, 2021 and 2020, respectively.



Net Income/(Loss) Attributable to Common Stockholders





As a result of the above, we reported a net income/(loss) of $25,474,508 and
($2,625,882) for the years ended December 31, 2021 and 2020, respectively, an
improvement of $28,100,390 (1,070%).


Basic and Diluted Income/(Loss) per Share


The basic and diluted income/(loss) per share was $0.51 and ($0.12) for the
years ended December 31, 2021 and 2020, 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 years ended December 31, 2021 and 2020 because all
potentially dilutive securities during 2021 had exercise prices in excess of the
market value of the company's common stock and because of the net loss reported
for 2020.


Liquidity and Capital Resources

Overall:




Management's Liquidity Plan - The Company has historically raised and continue
to raise capital in the form of equity and debt instruments from private and
public sources to supplement its needs for funds to support its business
operational and strategic plans. The Company believes, that through such
instruments, it has the ability to generate and obtain adequate amounts of
capital to meet its requirements and plans for capital in the short-term and
long-term. In that regard, the Company had raised net proceeds of approximately
$66.4 million in registered direct offerings of Common Stock, pre-funded
warrants and warrants during the year ended December 31, 2021. Furthermore, the
Company has minimal interest-bearing debt for the year ended December 31, 2021
in that of $150,000 remaining due on the promissory notes under the EIDL
program, along with the two acquired private medical billing companies'
contingent consideration promissory notes and agreement, as more fully described
in Note 8, "Debt Obligations". The net proceeds of the registered direct
offerings are sufficient to fund our operations during 2022 and management
believes that it now has adequate liquidity for the foreseeable future from the
recently completed registered direct offerings in 2021. Such offerings were
completed through utilization of the Company's shelf-registration statement on
Form S-3 (File No. 333-239419), which was initially filed with the SEC on June
25, 2020, and was declared effective on July 2, 2020 (the "Shelf Registration
Statement").


30





Shelf Registration Statement on Form S-3 - The Shelf Registration Statement
allows the Company to offer and sell, from time to time in one or more
offerings, any combination of our Common Stock, debt securities, debt securities
convertible into Common Stock or other securities in any combination thereof,
rights to purchase shares of Common Stock or other securities in any combination
thereof, warrants to purchase shares of Common Stock or other securities in any
combination thereof or units consisting of Common Stock or other securities in
any combination thereof having an aggregate initial offering price not exceeding
$125,000,000. The Company has utilized the Shelf Registration Statement for two
recent offerings of its securities, as described as follows:

? Registered Direct Offering - On January 14, 2021, the Company, pursuant a

securities purchase agreement, closed a registered direct offering (the

"January Offering") of (i) 2,800,000 shares of Common Stock, (ii) pre-funded

warrants to purchase up to 7,200,000 of Common Stock at an exercise price of

$0.01 per share, issuable to investors whose purchase of shares of Common

Stock would otherwise result in such investor, together with its affiliates

and certain related parties, beneficially owning more than 4.99% (or, at the

election of the holder, 9.99%) of the Company's outstanding Common Stock

immediately following the consummation of the January Offering; and (iii)

common stock purchase warrants ("January Warrants") to purchase up to an

aggregate of 10,000,000 shares of Common Stock, which are exercisable for a

period of five years after issuance at an initial exercise price $3.25 per

share, subject to certain adjustments, as provided in the January Warrants.

The January Offering was conducted pursuant to a placement agency agreement,

dated January 11, 2021 (the "January Placement Agency Agreement"), between the

Company and Kingswood Capital Markets, division of Benchmark Investments, Inc.

(the "January Placement Agent"). The combined offering price of each share of

Common Stock and accompanying January Warrant in the January Offering was

$3.095.

Pursuant to the terms of the January Placement Agency Agreement, the Company

agreed not to, for a period of 90 days after the date of the January Placement

Agency Agreement, with certain exceptions, unless it has obtained the prior

written consent of the January Placement Agent, (i) offer, pledge, sell,

contract to sell, sell any option or contract to purchase, purchase any option

or contract to sell, grant any option, right or warrant to purchase, lend, or

otherwise transfer or dispose of, directly or indirectly, any shares of

capital stock of the Company or any securities convertible into or exercisable

or exchangeable for shares of capital stock of the Company; (ii) file or cause

to be filed any registration statement with the SEC relating to the offering

of any shares of capital stock of the Company or any securities convertible

into or exercisable or exchangeable for shares of capital stock of the

Company; (iii) complete any offering of debt securities of the Company, or

(iv) enter into any swap or other arrangement that transfers to another, in

whole or in part, any of the economic consequences of ownership of capital


    stock of the Company.



              The Company received approximately $29,013,000 in net

proceeds from


              the January Offering after deducting the discounts, 

commissions and


              other estimated offering expenses payable by the Company. The
              Company plans to use the net proceeds from the January 

Offering for


              working capital, product development, order fulfillment and for
              general corporate purposes.



31




? Registered Direct Offering - On February 1, 2021, the Company,


              pursuant a securities purchase agreement closed a registered direct
              offering (the "February Offering") of (i) 3,250,000 shares of Common
              Stock, (ii) pre-funded warrants to purchase up to 11,050,000 of
              Common Stock at an exercise price of $0.01 per share,

issuable to


              investors whose purchase of shares of Common Stock would otherwise
              result in such investor, together with its affiliates and certain
              related parties, beneficially owning more than 4.99% (or, at the
              election of the holder, 9.99%) of the Company's outstanding Common
              Stock immediately following the consummation of the February
              Offering; and (iii) common stock purchase warrants ("February
              Warrants") to purchase up to an aggregate of 14,300,000 shares of
              Common Stock, which are exercisable for a period of five

years after


              issuance at an initial exercise price $3.25 per share, 

subject to


              certain adjustments, as provided in the Warrants. The 

February


              Offering was conducted pursuant to a placement agency 

agreement,


              dated January 28, 2021 (the "February Placement Agency

Agreement"),


              between the Company and EF Hutton, division of Benchmark
              Investments, LLC ("February Placement Agent"). The combined offering
              price of each share of Common Stock and accompanying February
              Warrant in the February Offering was $2.80.

              Pursuant to the terms of the February Placement Agency

Agreement,


              the Company has agreed not to, for a period of 90 days after the
              date of the February Placement Agency Agreement, with certain
              exceptions, unless it has obtained the prior written consent of the
              February Placement Agent, (i) offer, pledge, sell, contract

to sell,


              sell any option or contract to purchase, purchase any option 

or


              contract to sell, grant any option, right or warrant to 

purchase,


              lend, or otherwise transfer or dispose of, directly or 

indirectly,


              any shares of capital stock of the Company or any securities
              convertible into or exercisable or exchangeable for shares of
              capital stock of the Company; (ii) file or cause to be filed any
              registration statement with the SEC relating to the offering of any
              shares of capital stock of the Company or any securities

convertible


              into or exercisable or exchangeable for shares of capital stock of
              the Company; (iii) complete any offering of debt securities of the
              Company, or (iv) enter into any swap or other arrangement that
              transfers to another, in whole or in part, any of the economic
              consequences of ownership of capital stock of the Company.

              The Company received approximately $37,447,100 in net

proceeds from


              the February Offering after deducting the discounts, 

commissions and


              other estimated offering expenses payable by the Company. The
              Company plans to use the net proceeds from the February Offering for
              working capital, product development, order fulfillment and for
              general corporate purposes.

              On August 19, 2021, the Company entered into a warrant exchange
              agreement (the "Exchange Agreement") with the investors of the
              February Offering (the "February Investors") cancelling February
              Warrants exercisable for an aggregate of 7,681,540 shares of Common
              Stock in consideration for its issuance of (i) new warrants (the
              "Exchange Warrants") to the February Investors exercisable for an
              aggregate of up to 7,681,540 shares of Common Stock. The Company
              also issued warrants (the "Replacement Original Warrants") replacing
              the February Warrants for the remaining shares of Common Stock
              exercisable thereunder, representing an aggregate of 6,618,460
              shares of Common Stock, and extended the expiration date of the
              February Warrants to September 18, 2026. The Company also filed a
              supplement to the Prospectus Supplement removing the cancelled
              February Warrants and the shares of Common Stock exercisable
              thereunder from registration under the shelf registration statement
              in order to provide additional availability for the issuance of
              securities under the shelf registration statement. The Exchange
              Warrants have a term of five years and 30 days and provide for an
              initial exercise price of $3.25 per share, subject to customary
              adjustments thereunder, and are immediately exercisable upon
              issuance for cash and on a cashless basis.


Management believes that it has adequate funding to support its business operations for the foreseeable future as a result of the funds raised by the January Offering and the February Offering.



The Company has increased its addressable market to expand beyond that of law
and non-law enforcement customers through the recent acquisitions completed in
2021. Additionally, the Company continues to obtain new law and non-law
enforcement contracts in 2021 and 2020, which contracts include recurring
revenue during the period from 2021 to 2025. The Company believes that its
quality control and cost cutting initiatives, expansion to other sales channels
and new product introductions will eventually restore positive operating cash
flows and profitability, although it can offer no assurances in this regard. The
extent to which our future operating results are affected by the COVID-19
pandemic will largely depend on future developments which cannot be accurately
predicted, including the duration and scope of the pandemic, governmental and
business responses to the pandemic and the impact on the global economy, our
customers' demand for our products and services, and our ability to provide our
products and services, particularly as a result of our employees working
remotely and/or the closure of certain offices and facilities. While these
factors are uncertain, we believe that the COVID-19 pandemic and/or the
perception of its effects will have a material adverse effect on our business,
financial condition, results of operations and cash flows.

We had warrants outstanding exercisable to purchase 26,008,598 shares of Common
Stock at a weighted average exercise price $3.24 per share outstanding as of
December 31, 2021. In addition, there are Common Stock options outstanding
exercisable to purchase 1,086,064 shares of Common Stock at an average price of
$2.37 per share. We could potentially use such outstanding warrants to provide
near-term liquidity if we could induce their holders to exercise their warrants
by adjusting/lowering the exercise price on a temporary or permanent basis if
the exercise price was below the then market price of our Common Stock, although
we can offer no assurances in this regard. Ultimately, we must restore
profitable operations and positive cash flows to provide liquidity to support
our operations and, if necessary, to raise capital on commercially reasonable
terms in 2022, although we can offer no assurances in this regard.

32





Our Common Stock is currently listed on The Nasdaq Capital Market. In order to
maintain our listing, we must satisfy minimum financial and other continued
listing requirements and standards, including those regarding director
independence and independent committee requirements, minimum stockholders'
equity, minimum share price, and certain corporate governance requirements.
There can be no assurances that we will be able to comply with the applicable
listing standards. See "Nasdaq Listing" below.


We had $32,007,792 of available cash and equivalents and net working capital of $33,122,288 as of December 31, 2021. Net working capital as of December 31, 2021, included approximately $4.7 million of accounts receivable and other receivables and $9.7 million of current inventory.





Cash, cash equivalents: As of December 31, 2021, we had cash and cash
equivalents with an aggregate balance of $32,007,792, an increase from a balance
of $4,361,758 for the year December 31, 2020. Summarized immediately below and
discussed in more detail in the subsequent subsections are the main elements of
the $27,646,034 net increase in cash during the year ended December 31, 2021:


  ? Operating      $17,825,108 of net cash used in operating activities. Net cash

activities: used in operating activities was $17,825,108 and $13,274,715 for


                   the years ended December 31, 2021 and 2020, 

respectively, a


                   deterioration of $4,550,393. The deterioration is 

attributable to


                   the net loss incurred for 2021, the non-cash gain 

attributable to


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

operating assets


                   during the year ended December 31, 2021 compared to the same
                   period in 2020.

  ? Investing      $19,124,379 of net cash used in investing activities. Cash used
    activities:    in investing activities was $19,124,379 and $1,499,189 for the
                   years ended December 31, 2021 and 2020 respectively. In 2021 we
                   incurred costs for: (i) the purchase of a office and warehouse
                   building; (ii) the build out of the new leased office and
                   warehouse space; (iii) the tooling of new products; (iv) patent
                   applications on our proprietary technology utilized in our new
                   products and included in intangible assets; and (v) the closing
                   of three acquisitions during the year ended December 31, 2021.

? Financing $64,595,521 of net cash provided by financing activities. Cash


    activities:    provided by financing activities was $64,595,521 for the year
                   ended December 31, 2021, compared to cash provided by $18,775,977
                   for the year ended December 31, 2020. In 2021, we closed two
                   underwritten public offerings of our Common Stock, which
                   generated $66.6 million of cash and repurchased and cancelled
                   shares of common stock of approximately $1.98 million. During
                   2020, we closed several underwritten public offerings of our
                   Common Stock, which generated $12.8 million of cash, we received
                   total proceeds of $5.2 million from the exercise of common stock
                   purchase warrants and we received a total of $1.6 million in
                   borrowings under the PPP and EIDL programs administered by the
                   SBA. In April 2020, we received net proceeds of

$1,500,000 from


                   the issuance of the convertible notes with detachable common
                   stock purchase warrants. In addition, we received $419,000 in
                   proceeds from the issuance of unsecured promissory notes payable
                   during the year ended December 31, 2020. These 2020 financing
                   cash inflows were offset by the extinguishment of the PIA
                   obligation and the repayment of principal on the secured
                   convertible notes and unsecured promissory notes.



The net result of these activities was an increase in cash of $27,646,034 to $32,007,792 for the year ended December 31, 2021.




33





Commitments:


We had $32,007,792 of cash and cash equivalents and net positive working capital
$33,122,288 as of December 31, 2021. Accounts receivable and other receivable
balances represented $4,748,865 of our net working capital as of December 31,
2021. We intend to collect our outstanding receivables on a timely basis and
reduce the overall level during 2022, which would help to provide positive cash
flow to support our operations during 2022. Inventory represented $9,659,536 of
our net working capital as of December 31, 2021 and finished goods represented
$10,631,618 of total current and non-current inventory. We are actively managing
the level of inventory and our goal is to reduce such level during 2022 by our
sales activities, the increase of which should provide additional cash flow to
help support our operations during 2022.



Capital Expenditures. On April 30, 2021, the Company closed on the purchase and
sale agreement to acquire a 71,361 square feet commercial office/warehouse
building located in Lenexa, Kansas which is intended to serve as the Company's
principal office and warehouse needs. The building contains approximately 30,000
square feet of office space and the remainder warehouse space. The total
purchase price was approximately $5.3 million, the Company funded the purchase
price with cash on hand, without the addition of external debt or other
financing. The Company will be incurred additional capital expenditures to
renovate the building to suit its office/warehouse needs during 2021.



The Company's revenue cycle management segment completed its first medical
billing company acquisition using approximately $1.0 in cash for the portion of
the purchase price during 2021. The acquisition of the medical billing company
included a contingent consideration promissory note payable to the sellers of
$350,000 at closing, which management estimated its fair value of $317,211

as of
December 31, 2021.



In addition, the Company's revenue cycle management segment completed its second
medical billing company acquisition using approximately $2.3 in cash for a
portion of the total purchase price. The acquisition of the second medical
billing company purchase price included a contingent consideration promissory
note payable to the sellers with an estimated fair value of $650,000 at closing
which remains outstanding as of December 31, 2021. Management expects to
continue its roll-up strategy in the RCM (medical billing services) industry
during the balance of 2021 and beyond. Management of the revenue cycle
management segment expects to continue its roll-up strategy in the RCM (medical
billing services) industry during 2022 and beyond.



The ticketing operating segment also completed the business acquisitions of
Goody Tickets and TicketSmarter for a total purchase price of approximately
$13.3 million during 2021 including approximately $8.6 million in cash at
closing. The TicketSmarter purchase price includes a contingent consideration
earn-out agreement payable to the sellers of up to $4,244,400, which was given a
fair value of $3,700,000 at acquisition, that was reduced to $-0- as of December
31, 2021 as the EBITDA thresholds specified in the agreement were not met.



Lease commitments. On May 13, 2020, the Company entered into an operating lease
for new warehouse and office space, which served as its new principal executive
office and primary business location prior to the April 30 purchase and sale
agreement. The original lease agreement was amended on August 28, 2020 to
correct the footage under lease and monthly payment amounts resulting from such
correction. The lease terms, as amended include no base rent for the first nine
months and monthly payments ranging from $12,398 to $14,741 thereafter, with a
termination date of December 2026. The Company is responsible for property
taxes, utilities, insurance and its proportionate share of common area costs
related to its new location. The Company took possession of the leased
facilities on June 15, 2020. The remaining lease term for the Company's office
and warehouse operating lease as of December 31, 2021 was sixty months. The
Company's previous office and warehouse space lease expired in April 2020 and
the Company paid holdover rent for the time period until it moved to and
commenced occupying the new space on June 15, 2020.



The Company entered into an operating lease with a third party in October 2019
for copiers used for office and warehouse purposes. The terms of the lease
include 48 monthly payments of $1,598 with a maturity date of October 2023. The
Company has the option to purchase such equipment at maturity for its estimated
fair market value at that point in time. The remaining lease term for the
Company's copier operating lease as of December 31, 2021 was 22 months.



On June 30, 2021, the Company completed the acquisition of is first medical
billing company, through Nobility Healthcare. Upon completion of this
acquisition, Nobility Healthcare became responsible for the operating lease for
the seller's office space. The lease terms include monthly payments ranging from
$2,648 to $2,774 thereafter, with a termination date in July 2024. The Company
is responsible for property taxes, utilities, insurance and its proportionate
share of common area costs related to this location. The Company took possession
of the leased facilities on June 30, 2021. The remaining lease term for the
Company's office and warehouse operating lease as of December 31, 2021 was

thirty-one months.


34






On August 31, 2021, the Company completed the acquisition of its second acquired
medical billing company, through Nobility Healthcare. Upon completion of this
acquisition, Nobility Healthcare became responsible for the operating lease for
the seller's office space. The lease terms include monthly payments ranging from
$11,579 to $11,811 thereafter, with a termination date in March 2023. The
Company is responsible for property taxes, utilities, insurance and its
proportionate share of common area costs related to this location. The Company
took possession of the leased facilities on September 1, 2021. The remaining
lease term for the Company's office and warehouse operating lease as of December
31, 2021 was fifteen months.



On September 1, 2021, the Company completed the acquisition of Goody Tickets,
LLC and TicketSmarter, LLC through TicketSmarter. Upon completion of this
acquisition, the Company became responsible for the operating lease for
TicketSmarter's office space. The lease terms include monthly payments ranging
from $7,211 to $7,364 thereafter, with a termination date of December 2022. The
Company is responsible for property taxes, utilities, insurance and its
proportionate share of common area costs related to this location. The Company
took possession of the leased facilities on September 1, 2021. The remaining
lease term for the Company's office and warehouse operating lease as of December
31, 2021 was twelve months.


Lease expense related to the office spaces and copier operating leases was
recorded on a straight-line basis over the lease term. Total lease expense under
the five operating leases was approximately $266,294 for the year ended December
31, 2021.


The weighted-average remaining lease term related to the Company's lease liabilities as of December 31, 2021 and December 31, 2020 was 3.8 years and 5.8 years, respectively.

The discount rate implicit within the Company's operating leases was not generally determinable, and therefore, the Company determined the discount rate based on its incremental borrowing rate on the information available at commencement date. As of commencement date, the operating lease liabilities reflect a weighted average discount rate of 8%.

The following sets forth the operating lease right of use assets and liabilities as of December 31, 2021:

Assets:


Operating lease right of use assets                $   993,384

Liabilities:

Operating lease obligations-current portion $ 373,371 Operating lease obligations-less current portion $ 688,207 Total operating lease obligations

$ 1,061,578

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



Year ending December 31:
2022                                               $   445,635
2023                                                   252,518
2024                                                   191,059
2025                                                   173,333
Thereafter                                             175,113

Total undiscounted minimum future lease payments 1,237,658 Imputed interest

                                      (176,080 )
Total operating lease liability                    $ 1,061,578

Litigation.



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 us. 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, the availability of
insurance, and the severity of any potential loss. We re-evaluate and update
accruals as matters progress over time.

35





While the ultimate resolution is unknown, we do not expect that these lawsuits
will individually, or in the aggregate, have a material adverse effect to our
results of operations, financial condition or cash flows. However, the outcome
of any litigation is inherently uncertain and there can be no assurance that any
expense, liability or damages that may ultimately result from the resolution of
these matters will be covered by our insurance or will not be in excess of
amounts recognized or provided by insurance coverage and will not have a
material adverse effect on our operating results, financial condition or cash
flows. See Item 3, "Legal Proceedings," of this Annual Report on Form 10-K for
information on our litigation.

401 (k) Plan. The Company sponsors a 401(k) retirement savings plan for the
benefit of its employees. The plan, as amended, requires the Company to provide
100% matching contributions for employees, who elect to contribute up to 3% of
their compensation to the plan and 50% matching contributions for employee's
elective deferrals on the next 2% of their contributions. The Company made
matching contributions totaling $127,293 and $110,491 for the years ended
December 31, 2021 and 2020, respectively. Each participant is 100% vested at all
times in employee and employer matching contributions.

Consulting and Distributor Agreements. The Company entered into an agreement
that required it to make monthly payments that will be applied to future
commissions and/or consulting fees to be earned by the provider. The agreement
is with a limited liability company ("LLC") that is minority owned by a relative
of the Company's chief financial officer. Under the agreement, dated January 15,
2016, and as amended on February 13, 2017, the LLC provides consulting services
for developing a new distribution channel outside of law enforcement for its
body-worn camera and related cloud storage products to customers in the United
States. The Company advanced amounts to the LLC against commissions ranging from
$5,000 to $6,000 per month plus necessary and reasonable expenses for the period
through June 30, 2017, which can be automatically extended based on the LLC
achieving minimum sales quotas. The agreement was renewed in January 2017 for a
period of three years, subject to yearly minimum sales thresholds that would
allow the Company to terminate the contract if such minimums are not met. As of
December 31, 2021, the Company had advanced a total of $274,731 pursuant to this
agreement which has been fully reserved for a net advance of $-0-. The minimum
sales threshold was not met, and the Company discontinued all advances, although
the contract has not been formally terminated. However, the exclusivity
provisions of the agreement have been terminated.

On June 1, 2018, the Company entered into an agreement with an individual that
required it to make monthly payments that will be applied to future commissions
and/or consulting fees to be earned by the provider. Under the agreement, the
individual provides consulting services for developing new distribution channels
both inside and outside of law enforcement for its in-car and body-worn camera
systems and related cloud storage products to customers within and outside the
United States. The Company was required to advance amounts to the individual as
an advance against commissions of $7,000 per month plus necessary and reasonable
expenses for the period through August 31, 2018, which was extended to December
31, 2018, by mutual agreement of the parties at $6,000 per month. The parties
have mutually agreed to further extend the arrangement on a monthly basis at
$5,000 per month. The Company had advanced a total of $53,332 pursuant to this
agreement, until September 2020 when the agreement was mutually terminated, thus
as of December 31, 2021, the Company had advanced $-0- pursuant to this
agreement.

Critical Accounting Policies



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

  ? Allowance for Excess and Obsolete Inventory;

  ? Goodwill and other intangible assets;



  ? Warranty Reserves;



  ? Stock-based Compensation Expense;

  ? Fair value of warrants;

? Fair value of assets and liabilities acquired in business combinations; and

? Accounting for Income Taxes.





36




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:



  (i)   Identify the contract with the customer;

  (ii)  Identify the performance obligations in the contract;

  (iii) Determine the transaction price;

(iv) Allocate the transaction price to the performance obligations in the


        contract; and

  (v)   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. 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.

Performance obligations promised in a contract are identified based on the
services and the products that will be transferred to the customer that are both
capable of being distinct, whereby the customer can benefit from the service
either on its own or together with other resources that are readily available
from third parties or from us, and are distinct in the context of the contract,
whereby the transfer of the services and the products is separately identifiable
from other promises in the contract. Our performance obligations consist of (i)
products, (ii) professional services, and (iii) extended warranties.

The transaction price is determined based on the consideration to which we
expect to be entitled in exchange for transferring services to the customer.
Variable consideration is included in the transaction price if, in our judgment
it is probable that a significant future reversal of cumulative revenue under
the contract will not occur. 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 selling price
("SSP").

Revenue for our video solutions segment is recognized at the time the related
performance obligation is satisfied by transferring the control of the promised
service to a customer. Revenue is recognized when control of the service is
transferred to the customer, in an amount that reflects the consideration that
we expect to receive in exchange for our services. We generate all our revenue
from contracts with customers.

Revenue for our revenue cycle management segment is recorded on a net basis, as
its primary source of revenue is its end-to end service fees. These service fees
are reported as revenue monthly upon completion of the our performance
obligation to provide the agreed upon services.

Revenue for our ticketing segment is recorded on a gross or net basis based on
management's assessment of whether we are acting as a principal or agent in the
transaction. The determination is based upon the evaluation of control over the
event ticket, including the right to sell the ticket, prior to its transfer to
the ticket buyer.

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. Payment is typically due upon delivery of the ticket.

We also act as an intermediary between buyers and sellers through the online
secondary marketplace. Revenues derived from this marketplace primarily consist
of service fees from ticketing operations, and consists of one primary
performance obligation, which is facilitating the transaction between the buyer
and seller, being satisfied at the time the order has been confirmed. As we do
not control the ticket prior to the transfer, we act as an agent in these
transactions. Revenue is recognized on a net basis, net of the amount due to the
seller when an order is confirmed, the seller is then obligated to deliver the
tickets to the buyer per the seller's listing. Payment is due at the time of
sale.

37





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 contract liability and
recognized over the term of the extended warranty.

For our video solutions segment, our principal customers are state, local, and
federal law enforcement agencies, which historically have been low risks for
uncollectible accounts. However, we have commercial customers and international
distributors that present a greater risk for uncollectible accounts than such
law enforcement customers and we consider a specific reserve for bad debts based
on their individual circumstances. Our historical bad debts have been
negligible, with less than $258,000 charged off as uncollectible on cumulative
revenues of $248.0 million since we commenced deliveries during 2006.

For our ticketing segment, our customers are mainly online visitors that pay at
the time of the transaction, and we collect the service fees charged with the
transaction. Thus, leading to minimal risk for uncollectible accounts, to which
we then consider a specific reserve for bad debts based on their individual
circumstances. As we continue to learn more about the collectability related to
this recent acquisition, we will track historical bad debts and continue to
assess appropriate reserves.

For our revenue cycle management segment, our customers are mainly medium to
large healthcare organizations that are charged monthly upon the execution of
our services. Being these customers are healthcare organizations with minimal
risk for uncollectible accounts, we consider a specific reserve for bad debts
based on their individual circumstances. As we continue to learn more about the
collectability related to this recently added segment, we will track historical
bad debts and continue to assess appropriate reserves.

As of December 31, 2021, and 2020, we had provided a reserve for doubtful accounts of $113,234 and $123,224, respectively.



We periodically perform a specific review of significant individual receivables
outstanding for risk of loss due to uncollectability. Based on such review, we
consider our reserve for doubtful accounts to be adequate as of December 31,
2021. However, should the balance due from any significant customer ultimately
become uncollectible then our allowance for bad debts will not be sufficient to
cover the charge-off and we will be required to record additional bad debt
expense in our statement of operations.

Allowance for Excess and Obsolete Inventory. We record valuation reserves on our
inventory for estimated excess or obsolete inventory items. The amount of the
reserve is equal to the difference between the cost of the inventory and the
estimated market value based upon assumptions about future demand and market
conditions. On a quarterly basis, management performs an analysis of the
underlying inventory to identify reserves needed for excess and obsolescence.
Management uses its best judgment to estimate appropriate reserves based on this
analysis. In addition, we adjust the carrying value of inventory if the current
market value of that inventory is below its cost.

Inventories consisted of the following as of December 31, 2021 and 2020:



                                                December 31, 2021       December 31, 2020
Raw material and component parts               $         3,062,046     $   

3,186,426


Work-in-process                                                  -         

1,907


Finished goods - video solutions                         8,410,307         

             -
Finished goods - ticketing                               2,102,272               6,974,291
Subtotal                                                13,574,625              10,162,625
Reserve for excess and obsolete inventory -
video solutions                                         (3,353,458 )            (1,960,351 )
Reserve for excess and obsolete inventory -
ticketing                                                 (561,631 )                     -
Total inventories                              $         9,659,536     $         8,202,274



38






We balance the need to maintain strategic inventory levels to ensure competitive
delivery performance to our customers against the risk of inventory obsolescence
due to changing technology and customer requirements. As reflected above, our
inventory reserves represented 28.8% of the gross inventory balance as of
December 31, 2021, compared to 19.3% of the gross inventory balance as of
December 31, 2020. We had $3,915,089 and $1,960,351 in reserves for obsolete and
excess inventories as of December 31, 2021 and 2020, respectively. Total raw
materials and component parts were $3,062,046 and $3,186,427 as of December 31,
2021 and 2020, respectively, a decrease of $124,381 (4%). In June 2020, the
Company moved to new and smaller warehouse facilities and during the move sorted
through its entire inventory and disposed of all excess and obsolete inventory
rather than moving such distressed products to the new location which
contributed to the significant decrease in the cost of raw materials and
component parts. We scrapped older version inventory component parts that were
mostly or fully reserved in 2020, which was the primary cause for steady levels
in total raw materials and component parts. Finished goods balances were
$10,512,577 and $6,974,291 as of December 31, 2021 and 2020, respectively, an
increase of $3,538,286 (51%). The increase in finished goods was primarily
attributable to accumulating inventory for the new Shield and ThermoVuTM product
lines, our new body-worn cameras and docking stations, along with $2,102,272 in
inventory from our Ticketing segment, acquired in September 2021. The increase
in the inventory reserve is primarily due to inventory obsolescence for the
level of component parts of the older versions of our printed circuit boards and
the phase out of our DVM-750, DVM-500 Plus, LaserAlly legacy products, and
ThermoVu products. Additionally, the Company determined a reasonable reserve for
inventory held at the ticket operating segment, in which some inventory items
sell below cost or go unsold, thus having to be fully written-off following the
event date. We believe the reserves are appropriate given our inventory levels
as of December 31, 2021.


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 analyses 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 a number of factors, including, but not limited to,
marketplace participants, consumer awareness and brand history. Additionally,
there are significant judgments inherent in discounted cash flows such as
estimating the amount and timing of projected future cash flows, the selection
of discount rates, hypothetical royalty rates and contributory asset capital
charges. Specifically, the selected discount rates are intended to reflect the
risk inherent in the projected future cash flows generated by the underlying
acquired intangible assets.



Determining an acquired intangible asset's useful life also requires significant
judgment and is based on evaluating a number of factors, including, but not
limited to, the expected use of the asset, historical client retention rates,
consumer awareness and trade name history, as well as any contractual 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
events or changes in circumstances indicate that the carrying value of goodwill
may not be recoverable. In addition, an impairment evaluation of our amortizable
intangible assets may also be performed if events or circumstances indicate
potential impairment. Among the factors that could trigger an impairment review
are current operating results that do not align with our annual plan or
historical performance; changes in our strategic plans or the use of our assets;
restructuring charges or other changes in our business segments; competitive
pressures and changes in the general economy or in the markets in which we
operate; and a significant decline in our stock price and our 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.



Evaluating the recoverability of goodwill requires judgments and assumptions
regarding future trends and events. As a result, both the precision and
reliability of our estimates are subject to uncertainty. Among the factors that
we consider in our qualitative assessment are general economic conditions and
the competitive environment; actual and projected reporting unit financial
performance; forward-looking business measurements; and external market
assessments. To determine the fair values of our reporting units for a
quantitative analysis, we typically utilize detailed financial projections,
which include significant variables, such as projected rates of revenue growth,
profitability and cash flows, as well as assumptions regarding discount rates,
the Company's weighted average cost of capital and other data.



Our most recent annual impairment test of goodwill was a qualitative analysis
conducted as of December 31, 2021 that indicated no impairment. Subsequent to
completing our 2021 annual impairment test, no events or changes in
circumstances were noted that required an interim goodwill impairment test. Note
1 - Nature of Business and Summary of Significant Accounting Policies and Note 7
- Goodwill and Other Intangible Assets in the Notes to Consolidated Financial
Statements provide additional information regarding the Company's goodwill

and
other intangible assets.



Warranty Reserves. We generally provide up to a two-year parts and labor
standard warranty on our products to our customers. Provisions for estimated
expenses related to product warranties are made at the time products are sold.
These estimates are established using historical information on the nature,
frequency, and average cost of claims. We actively study trends of claims and
take action to improve product quality and minimize claims. Our warranty
reserves were decreased to $13,742 as of December 31, 2021 compared to $31,845
as of December 31, 2020 as we begin to slow our warranty exposures through the
roll-off of DVM-750 and DVM-800 units from warranty coverage. Standard warranty
exposure on the DVM-800 and DVM-250plus are the responsibility of the contract
manufacturers which reduced our overall warranty exposure as these are very
popular products in our line. There is a risk that we will have higher warranty
claim frequency rates and average cost of claims than our history has indicated
on our legacy mirror products on our new products for which we have limited
experience. Actual experience could differ from the amounts estimated requiring
adjustments to these liabilities in future periods.

Stock-based Compensation Expense. We grant stock options to our employees and
directors and such benefits provided are share-based payment awards which
require us to make significant estimates related to determining the value of our
share-based compensation. Our expected stock-price volatility assumption is
based on historical volatilities of the underlying stock that are obtained from
public data sources and there were 300,000 stock options granted during the year
ended December 31, 2021.

If factors change and we develop different assumptions in future periods, the
compensation expense that we record in the future may differ significantly from
what we have recorded in the current period. There is a high degree of
subjectivity involved when using option pricing models to estimate share-based
compensation. Changes in the subjective input assumptions can materially affect
our estimates of fair values of our share-based compensation. Certain
share-based payment awards, such as employee stock options, may expire worthless
or otherwise result in zero intrinsic value compared to the fair values
originally estimated on the grant date and reported in our financial statements.
Alternatively, values may be realized from these instruments that are
significantly in excess of the fair values originally estimated on the grant
date and reported in our financial statements. Although the fair value of
employee share-based awards is determined using an established option pricing
model, that value may not be indicative of the fair value observed in a willing
buyer/willing seller market transaction. In addition, we account for forfeitures
as they occur.

39





Accounting for Income Taxes. Accounting for income taxes requires significant
estimates and judgments on the part of management. Such estimates and judgments
include, but are not limited to, the effective tax rate anticipated to apply to
tax differences that are expected to reverse in the future, the sufficiency of
taxable income in future periods to realize the benefits of net deferred tax
assets and net operating losses currently recorded and the likelihood that tax
positions taken in tax returns will be sustained on audit.


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. Authoritative guidance also requires
that deferred tax assets be reduced by a valuation allowance if it is more
likely than not that all or some portion of the deferred tax asset will not be
realized. As of December 31, 2021, cumulative valuation allowances in the amount
of $16,980,000 were recorded in connection with the net deferred income tax
assets. Based on a review of our deferred tax assets and recent operating
performance, we determined that our valuation allowance should be decreased by
$7,615,000 to a balance of $16,980,000 to fully reserve our deferred tax assets
at December 31, 2021. We determined that it was appropriate to continue to
provide a full valuation reserve on our net deferred tax assets as of December
31, 2021, because of the overall net operating loss carryforwards available. We
expect to continue to maintain a full valuation allowance until we determine
that we can sustain a level of profitability that demonstrates our ability to
realize these assets. To the extent we determine that the realization of some or
all of these benefits is more likely than not based upon expected future taxable
income, a portion or all of the valuation allowance will be reversed. Such a
reversal would be recorded as an income tax benefit and, for some portion
related to deductions for stock option exercises, an increase in shareholders'
equity.


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 December 31, 2021, representing uncertain tax positions.

We have generated substantial deferred income tax assets related to our
operations primarily from the charge to compensation expense taken for stock
options, certain tax credit carryforwards and net operating loss carryforwards.
For us to realize the income tax benefit of these assets, we must generate
sufficient taxable income in future periods when such deductions are allowed for
income tax purposes. In some cases where deferred taxes were the result of
compensation expense recognized on stock options, our ability to realize the
income tax benefit of these assets is also dependent on our share price
increasing to a point where these options have intrinsic value at least equal to
the grant date fair value and are exercised. In assessing whether a valuation
allowance is needed in connection with our deferred income tax assets, we have
evaluated our ability to generate sufficient taxable income in future periods to
utilize the benefit of the deferred income tax assets. We continue to evaluate
our ability to use recorded deferred income tax asset balances. If we fail to
generate taxable income for financial reporting in future years, no additional
tax benefit would be recognized for those losses, since we will not have
accumulated enough positive evidence to support our ability to utilize net
operating loss carryforwards in the future. Therefore, we may be required to
increase our valuation allowance in future periods should our assumptions
regarding the generation of future taxable income not be realized.

Inflation and Seasonality



Inflation has not materially affected us during the past fiscal year however, we
believe that it is likely to have significant impact to all of our operating
segments in 2022 and beyond. We do not believe that our business is seasonal in
nature; however, we generally generate higher revenues during the second half of
the calendar year compared to the first half.

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