Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024.

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to __________.

Commission File Number: 001-33899

Digital Ally, Inc.

(Exact name of registrant as specified in its charter)

Nevada

20-0064269

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

14001 Marshall Drive, Lenexa, KS 66215

(Address of principal executive offices) (Zip Code)

(913) 814-7774

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of exchange on which registered
Common stock, $0.001 par value per share		DGLY		The Nasdaq Capital Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class		Outstanding at August 15, 2024
Common Stock, $0.001 par value per share		3,855,160

FORM 10-Q

DIGITAL ALLY, INC.

JUNE 30, 2024

TABLE OF CONTENTS		Page(s)
PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Condensed Consolidated Balance Sheets – June 30, 2024 (Unaudited) and December 31, 2023		3

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)		4

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)		5

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (Unaudited)		6

Notes to the Condensed Consolidated Financial Statements (Unaudited)		7-34

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		35-60

Item 3. Quantitative and Qualitative Disclosures About Market Risk.		60

Item 4. Controls and Procedures.		60

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.		61

Item 1A. Risk Factors.		61

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		61

Item 3. Defaults Upon Senior Securities		61

Item 4. Mine Safety Disclosures		61

Item 5. Other Information.		61

Item 6. Exhibits.		62

SIGNATURES		63

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements.

DIGITAL ALLY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2024 (Unaudited)			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	517,113		$	680,549
Accounts receivable – trade, net of $239,391 allowance – June 30, 2024 and $200,668 – December 31, 2023		1,343,205			1,584,662
Other receivables, net of $25,000 allowance – June 30, 2024 and $5,000 – December 31, 2023		3,545,833			3,107,634
Inventories, net		2,218,133			3,845,281
Prepaid expenses		6,620,477			6,366,368

Total current assets		14,244,761			15,584,494

Property, plant, and equipment, net		6,033,091			7,283,702
Goodwill and other intangible assets, net		16,281,622			16,510,422
Operating lease right of use assets, net		869,166			1,053,159
Other assets		5,898,575			6,597,032

Total assets	$	43,327,215		$	47,028,809

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	11,501,820		$	10,732,089
Accrued expenses		3,380,005			3,269,330
Current portion of operating lease obligations		223,629			279,538
Contract liabilities – current portion		3,093,492			2,937,168
Notes payable – related party – current portion		2,700,000			2,700,000
Debt obligations – current portion		2,980,903			1,260,513
Warrant derivative liabilities		3,796,748			1,369,738
Income taxes payable		—			61

Total current liabilities		27,676,597			22,548,437

Long-term liabilities:
Debt obligations – long term		4,898,418			4,853,237
Operating lease obligation – long term		692,423			827,836
Contract liabilities – long term		6,999,141			7,340,459
Lease Deposit		10,445			10,445

Total liabilities		40,277,024			35,580,414

Commitments and contingencies		-			-

Stockholders’ Equity:
Common stock, $0.001 par value per share; 200,000,000 shares authorized; shares issued: 3,502,037 shares issued – June 30, 2024 and 2,800,754 shares issued – December 31, 2023		3,502			2,801
Additional paid in capital		128,995,997			128,441,083
Noncontrolling interest in consolidated subsidiary		734,354			673,292
Accumulated deficit		(126,683,662	)		(117,668,781	)

Total stockholders’ equity		3,050,191			11,448,395

Total liabilities and stockholders’ equity	$	43,327,215		$	47,028,809

See Notes to the Unaudited Condensed Consolidated Financial Statements.

DIGITAL ALLY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	2024			2023			2024			2023
	For the three months ended June 30,						For the six months ended June 30,
	2024			2023			2024			2023
Revenue:
Product	$	2,207,601		$	3,077,661		$	3,773,447		$	5,531,469
Service and other		3,408,634			5,201,971			7,372,139			10,445,351

Total revenue		5,616,235			8,279,632			11,145,586			15,976,820

Cost of revenue:
Product		3,419,254			2,219,515			4,986,647			4,520,616
Service and other		1,954,589			3,323,077			4,395,109			7,174,375

Total cost of revenue		5,373,843			5,542,592			9,381,756			11,694,991

Gross profit		242,392			2,737,040			1,763,830			4,281,829

Selling, general and administrative expenses:
Research and development expense		545,776			540,276			1,033,242			1,475,215
Selling, advertising and promotional expense		728,906			2,104,625			1,487,762			3,952,115
General and administrative expense		2,881,931			5,032,843			6,796,019			9,968,010

Total selling, general and administrative expenses		4,156,613			7,677,744			9,317,023			15,395,340

Operating loss		(3,914,221	)		(4,940,704	)		(7,553,193	)		(11,113,511	)

Other income (expense):
Interest income		29,933			55,730			49,289			71,085
Interest expense		(1,085,063	)		(1,515,509	)		(1,733,690	)		(1,521,049	)
Other income		30,445			25,394			58,046			50,786
Loss on accrual for legal settlement		—			(1,792,308	)		—			(1,792,308	)
Loss on conversion of convertible note		—			(93,386	)		—			(93,386	)
Change in fair value of warrant derivative liabilities		(2,818	)		(59,766	)		(351,710	)		(59,766	)
Change in fair value of contingent consideration promissory notes		—			—			—			158,021
Gain on extinguishment of liabilities		—			—			682,345			—
Loss on extinguishment of debt		(68,827	)					(68,827	)
Gain on sale of intangibles		—			—			5,582			—
Loss on sale of property, plant and equipment		—			—			(41,661	)		—

Total other income (expense)		(1,096,330	)		(3,379,845	)		(1,400,626	)		(3,186,617	)

Loss before income tax benefit		(5,010,551	)		(8,320,549	)		(8,953,819	)		(14,300,128	)
Income tax benefit		—			—			—			—

Net loss		(5,010,551	)		(8,320,549	)		(8,953,819	)		(14,300,128	)

Net (income) attributable to noncontrolling interests of consolidated subsidiary		(73,310	)		(72,755	)		(61,063	)		(198,994	)

Net loss attributable to common stockholders	$	(5,083,861	)	$	(8,393,304	)	$	(9,014,882	)	$	(14,499,122	)

Net loss per share information:
Basic	$	(1.74	)	$	(3.01	)	$	(3.12	)	$	(5.24	)
Diluted	$	(1.74	)	$	(3.01	)	$	(3.12	)	$	(5.24	)

Weighted average shares outstanding:
Basic		2,921,307			2,785,663			2,891,205			2,768,683
Diluted		2,921,307			2,785,663			2,891,205			2,768,683

See Notes to the Unaudited Condensed Consolidated Financial Statements.

DIGITAL ALLY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

	Shares			Amount			Capital			subsidiary			deficit			Total
	Common Stock						Additional Paid In			Noncontrolling interest in consolidated			Accumulated
	Shares			Amount			Capital			subsidiary			deficit			Total
Balance, December 31, 2022		2,720,170		$	2,721		$	127,869,342		$	448,694		$	(91,980,234	)	$	36,340,523

Stock-based compensation		—			—			114,848			—			—			114,848
Restricted common stock forfeitures		35,000			35			(35	)		—			—			—
Issuance due to rounding from reverse stock split		54			—			—						—			—
Net income (loss)		—			—			—			126,239			(6,105,818	)		(5,979,579	)

Balance, March 31, 2023		2,755,224		$	2,756		$	127,984,155		$	574,933		$	(98,086,052	)	$	30,475,792

Stock-based compensation		—			—			179,483			—			—			179,483
Restricted common stock forfeitures		(3,625	)		(4	)		4			—			—			—
Issuance due to rounding from reverse stock split		24,154			24			(24	)		—			—			—
Conversion of convertible note into common stock		25,000			25			119,725			—			—			119,750
Net income (loss)		—			—			—			72,755			(8,393,304	)		(8,320,549	)

Balance, June 30, 2023		2,800,753		$	2,801		$	128,283,343		$	647,688		$	(106,479,356	)	$	22,454,476

Balance, December 31, 2023		2,800,754		$	2,801		$	128,441,083		$	673,292		$	(117,668,781	)	$	11,448,395

Stock-based compensation		—			—			40,695			—			—			40,695
Restricted common stock grant		80,197			80			(80	)		—			—			—
Restricted common stock forfeitures		(1,125	)		(1	)		1			—			—			—
Net loss		—			—			—			(12,248	)		(3,931,020	)		(3,943,268	)

Balance, March 31, 2024		2,879,826		$	2,880		$	128,481,699		$	661,044		$	(121,599,801	)	$	7,545,822
Balance		2,879,826		$	2,880		$	128,481,699		$	661,044		$	(121,599,801	)	$	7,545,822

Stock-based compensation		—			—			60,772			—			—			60,772
Sale of common stock and pre-funded warrants, net of offering costs		622,211			622			2,528,826			—			—			2,529,448
Fair value of warrants issued along with sale of common stock		—			—			(2,075,300	)		—			—			(2,075,300	)
Net Income (loss)		—			—			—			73,310			(5,083,861	)		(5,010,551	)

Balance, June 30, 2024		3,502,037		$	3,502		$	128,995,997		$	734,354		$	(126,683,662	)	$	3,050,191
Balance		3,502,037		$	3,502		$	128,995,997		$	734,354		$	(126,683,662	)	$	3,050,191

See Notes to the Unaudited Condensed Consolidated Financial Statements.

DIGITAL ALLY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(Unaudited)

	2024			2023
	For the six months ended June 30,
	2024			2023
Cash Flows From Operating Activities:
Net loss	$	(8,953,819	)	$	(14,300,128	)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Depreciation and amortization		1,079,000			1,091,042
Loss on accrual for legal settlement		—			1,792,308
Loss on sale of property, plant and equipment		41,661			—
Gain on sale on intangible		(5,582	)		—
Stock-based compensation		101,467			294,331
Non-cash interest expense		150,000			576,380
Amortization of debt issuance costs		1,105,168			—
Gain on extinguishment of liabilities		(682,345	)		—
Loss on extinguishment of debt		68,827			—
Change in fair value of warrant derivative liabilities		351,710			59,766
Convertible debt discount amortization		—			925,455
Loss on conversion of debt		—			93,386
Provision for inventory obsolescence		(407,460	)		(75,007	)
Provision for doubtful accounts receivable		38,724			24,140
Allowance for doubtful lease reserve		20,000			5,000
Change in fair value of contingent consideration promissory note		—			(158,021	)

Change in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable – trade		(284,767	)		155,015
Other receivable		(458,199	)		1,318,442
Inventories		2,075,608			1,074,197
Prepaid expenses		(235,109	)		1,503,919
Operating lease right of use assets		110,099			195,894
Other assets		698,456			(2,092,524	)
Increase (decrease) in:
Accounts payable		2,307,612			3,066,137
Accrued expenses		(128,075	)		56,606
Accrued Expenses – related party		188,750			—
Income taxes payable		(61	)		(17,444	)
Lease deposit		—			10,445
Operating lease obligations		(117,428	)		(195,894	)
Contract liabilities		(472,994	)		1,486,569

Net cash used in operating activities		(3,408,757	)		(3,109,986	)

Cash Flows from Investing Activities:
Purchases of property, plant and equipment		(24,882	)		(52,338	)
Additions to intangible assets		(65,361	)		(74,608	)
Cash paid for acquisition of Country Stampede		(514,432	)		—
Proceeds from sale of intangible asset		90,535			—
Proceeds from sale of property, plant and equipment		550,644			—

Net cash provided by (used in) investing activities		36,504			(126,946	)

Cash Flows from Financing Activities:
Proceeds – Merchant Advances – Video Solutions Segment		1,144,000			—
Proceeds – Merchant Advances – Entertainment Segment		915,000			—
Net proceeds of equity offering with detachable warrants		2,194,742			—
Net proceeds of convertible debt with detachable warrants		—			2,640,000
Proceeds – Commercial Extension of Credit – Entertainment Segment		575,000			1,000,000
Payments on Commercial Extension of Credit – Entertainment Segment		(162,928	)		(794,332	)
Payments on Merchant Advances – Video Solutions Segment		(1,215,000	)		—
Payments on Merchant Advances – Entertainment Segment		(51,899	)		—
Principal payment on EIDL loan		(1,628	)		—
Principal payment on contingent consideration promissory notes		(188,470	)		(217,054	)

Net cash provided by financing activities		3,208,817			2,628,614

Net decrease in cash, cash equivalents, and restricted cash		(163,436	)		(608,318	)

Cash, cash equivalents and restricted cash, beginning of period		778,149			3,532,199

Cash, cash equivalents and restricted cash, end of period	$	614,713		$	2,923,881

Supplemental disclosures of cash flow information:
Cash payments for interest	$	293,441		$	18,129

Cash payments for income taxes	$	8,097		$	8,097

Supplemental disclosures of non-cash investing and financing activities:
Commercial extension of credit repaid through accrued revenue – Entertainment segment	$	487,500		$	30,052

ROU and lease liability recorded on extension (termination) of lease	$	(73,894	)	$	538,056

Conversion of convertible notes payable into common stock	$	—		$	119,750

Fair value of warrants issued with sale of shares	$	2,075,300		$	—

Assets acquired in business acquisitions	$	605,000		$	—

Liabilities assumed in the business acquisition	$	288,000		$	—

Goodwill acquired in business acquisitions	$	225,959		$	—

Adjustments of accounts payable with the sale proceeds of property, plant and equipment	$	549,356		$	—

Restricted common stock grant	$	80		$	35

Reverse stock split rounding issuances	$	—		$	24

Restricted common stock forfeitures	$	1		$	4

Debt discount on convertible note	$	—		$	3,000,000

See Notes to the Unaudited Condensed Consolidated Financial Statements.

DIGITAL ALLY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations:

Digital Ally, Inc. was originally incorporated in Nevada on December 13, 2000 as Vegas Petra, Inc. and had no operations until 2004. On November 30, 2004, Vegas Petra, Inc. entered into a Plan of Merger with Digital Ally, Inc., at which time the merged entity was renamed Digital Ally, Inc. (such merged entity, the “Predecessor Registrant”).

On August 23, 2022 (the “Effective Time”), the Predecessor Registrant merged with and into its wholly owned subsidiary, DGLY Subsidiary Inc., a Nevada corporation (the “Registrant”), pursuant to an agreement and plan of merger, dated as of August 23, 2022 (the “Merger Agreement”), between the Predecessor Registrant and the Registrant, with the Registrant as the surviving corporation in the merger (such transaction, the “Merger”). At the Effective Time, Articles of Merger were filed with the Secretary of State of the State of Nevada, pursuant to which the Registrant was renamed “Digital Ally, Inc.” and, by operation of law, succeeded to the assets, continued the business and assumed the rights and obligations of the Predecessor Registrant immediately prior to the Merger. Under the Nevada Revised Statutes, shareholder approval was not required in connection with the Merger Agreement or the transactions contemplated thereby.

At the Effective Time, pursuant to the Merger Agreement, (i) each outstanding share of Predecessor Registrant’s common stock, par value $0.001 per share (the “Predecessor Common Stock”) automatically converted into one share of common stock, par value $0.001 per share, of the Registrant (“Registrant Common Stock”), (ii) each outstanding option, right or warrant to acquire shares of Predecessor Common Stock converted into an option, right or warrant, as applicable, to acquire an equal number of shares of Registrant Common Stock under the same terms and conditions as the original options, rights or warrants, and (iii) the directors and executive officers of the Predecessor Registrant were appointed as directors and executive officers, as applicable, of the Registrant, each to serve in the same capacity and for the same term as such person served with the Predecessor Registrant immediately before the Merger.

The business of the Registrant, Digital Ally, Inc. (with its wholly-owned subsidiaries, Digital Ally International, Inc., Shield Products, LLC, Digital Ally Healthcare, LLC (“Digital Ally Healthcare”), TicketSmarter, Inc. (“TicketSmarter”), Worldwide Reinsurance, Ltd., Digital Connect, Inc., BirdVu Jets, Inc., Kustom 440, Inc. (“Kustom 440”), Kustom Entertainment, Inc., and its majority-owned subsidiary Nobility Healthcare, LLC, collectively, “Digital Ally,” “Digital,” and the “Company”), is divided into three reportable operating segments: 1) the Video Solutions Segment, 2) the Revenue Cycle Management Segment and 3) the Ticketing Segment. The Video Solutions Segment is our legacy business that produces digital video imaging, storage products, disinfectant and related safety products for use in law enforcement, security and commercial applications. This segment includes both service and product revenues through our subscription models offering cloud and warranty solutions, and hardware sales for video and health safety solutions. The Revenue Cycle Management Segment provides working capital and back-office services to a variety of healthcare organizations throughout the country, as a monthly service fee. The Entertainment Segment acts as an intermediary between ticket buyers and sellers within our secondary ticketing platform, ticketsmarter.com, and we also acquire tickets from primary sellers to then sell through various platforms. The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Such required segment information is included in Note 18.

Reverse Stock Split

On February 6, 2023, the Company filed a Certificate of Amendment to its Articles of Incorporation, as amended, with the Secretary of State of the State of Nevada to effect a 1-for-20 reverse stock split (the “Reverse Stock Split”) of the shares of its common stock. The Reverse Stock Split was effective as of time of filing. No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares of our Common Stock that would have otherwise resulted from the Reverse Stock Split were rounded up to the nearest whole number. In connection with the Reverse Stock Split, the board of directors of the Company approved appropriate and proportional adjustments to all outstanding securities or other rights convertible or exercisable into shares of the Company’s common stock, including, without limitation, all preferred stock, warrants, options, and other equity compensation rights. All historical share and per-share amounts reflected throughout the Company’s consolidated financial statements and other financial information in this Report have been adjusted to reflect the Reverse Stock Split as if the split occurred as of the earliest period presented. The par value per share of the Company’s common stock was not affected by the Reverse Stock Split.

Business Combination

In June 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Clover Leaf Capital Corp., a Delaware corporation (Nasdaq: CLOE) (“Clover Leaf”), CL Merger Sub, Inc., a Nevada corporation and a wholly owned subsidiary of Clover Leaf (“Merger Sub”), Yntegra Capital Investments LLC, a Delaware limited liability company, in the capacity as the representative from and after the Effective Time (as defined in the Merger Agreement) for the stockholders of Clover Leaf in accordance with the terms and conditions of the Merger Agreement, and Kustom Entertainment, Inc., a Nevada corporation, a wholly owned subsidiary of the Company, with a focus and mission to own and produce events, festivals, and entertainment alongside its evolving primary and secondary ticketing technologies (“Kustom”). Pursuant to the Merger Agreement, subject to the terms and conditions set forth therein upon the consummation of the transactions contemplated by the Merger Agreement (the “Closing”), Merger Sub will merge with and into Kustom (the “Merger”), with Kustom continuing as the surviving corporation in the Merger and a wholly owned subsidiary of Clover Leaf. In the Merger, all of the issued and outstanding capital stock of Kustom immediately prior to the Closing shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, in exchange for the right for the Company to receive the Merger Consideration (as defined below).

The total consideration to be received by Company and its financial advisor at the Closing in connection with the Merger (the “Merger Consideration”) will be a number of newly issued shares of Class A Common Stock, par value $0.0001 per share, of Clover Leaf (the “Combined Company Common Stock”) with an aggregate value equal to $125,000,000, subject to adjustments for Kustom’s closing debt (net of cash) and based on a deemed value of $11.14 per share of Combined Company Common Stock.

The Company will also distribute to its stockholders and certain of its warrant holders 30% of the Combined Company Common Stock received as Merger Consideration immediately following the Closing, and will distribute the balance of such shares immediately following the lock-up period, which will expire six months after the Closing.

The Closing is subject to the approval of Clover Leaf’s shareholders and the satisfaction or waiver of certain other customary closing conditions.

Basis of Presentation:

The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three- and six-month period ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

The balance sheet at December 31, 2023 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by generally accepted accounting principles in the United States for complete financial statements.

For further information, refer to the audited financial statements and footnotes included in the Company’s annual report on Form 10-K for the year ended December 31, 2023.

Liquidity and Going Concern

During the second quarter of 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This update provided U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. Under this standard, the Company is required to evaluate whether there is substantial doubt about its ability to continue as a going concern each reporting period, including interim periods. In evaluating the Company’s ability to continue as a going concern, management considered the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within 12 months after the Company’s financial statements were issued (August 15, 2024). Management considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows and the Company’s obligations due before August 15, 2024.

The Company has experienced net losses and cash outflows from operating activities since inception. For the six months ended June 30, 2024, the Company had a net loss attributable to common stockholders of $8,953,819, net cash used in operating activities of $3,408,757, $36,504 provided by investing activities and $3,208,817 provided by financing activities. The Company will have to restore positive operating cash flows and profitability over the next year and/or raise additional capital to fund its operational plans, meet its customary payment obligations and otherwise execute its business plan. There can be no assurance that it will be successful in restoring positive cash flows and profitability, or that it can raise additional financing when needed, and obtain it on terms acceptable or favorable to the Company.

The Company has implemented an enhanced quality control program to detect and correct product issues before they result in significant rework expenditures affecting its gross margins and has seen progress in that regard. The Company has also implemented a marketing and advertisement reduction plan for its entertainment segment, which will focus on reducing and alleviating current obligations from its media marketing agreements and place a hold on entering into any new agreements. The Company believes that its quality control, cost-cutting initiatives, and new product introduction will eventually restore positive operating cash flows and profitability, although it can offer no assurances in this regard.

Management has evaluated the significance of the conditions described above in relation to the Company’s ability to meet its obligations and concluded that, without additional funding, the Company will not have sufficient funds to meet its obligations within one year from the date the unaudited condensed consolidated financial statements were issued.

Basis of Consolidation:

The accompanying financial statements include the consolidated accounts of Digital Ally, its wholly-owned subsidiaries, Digital Ally International, Inc., Shield Products, LLC, Digital Ally Healthcare, LLC, TicketSmarter, Inc., Worldwide Reinsurance, Ltd., Digital Connect, Inc., BirdVu Jets, Inc., Kustom 440, Inc., and its majority-owned subsidiary Nobility Healthcare, LLC. All intercompany balances and transactions have been eliminated during consolidation.

The Company formed Digital Ally International, Inc. during August 2009 to facilitate the export sales of its products. The Company formed Shield Products, LLC in May 2020 to facilitate the sales of its Shield™ line of disinfectant/cleanser products and ThermoVu™ line of temperature monitoring equipment. The Company formed Nobility Healthcare, LLC (“Nobility Healthcare”) in June 2021 to facilitate the operations of its revenue cycle management solutions and back-office services for healthcare organizations. The Company formed TicketSmarter, Inc. upon its acquisition of Goody Tickets, LLC and TicketSmarter, LLC, to facilitate its global ticketing operations. The Company formed Worldwide Reinsurance Ltd., which is a captive insurance company domiciled in Bermuda. It will provide primarily liability insurance coverage to the Company for which insurance may not be currently available or economically feasible in today’s insurance marketplace. The Company formed Kustom 440, Inc. in 2022 to create unique entertainment experiences directly for consumers, and Kustom Entertainment, Inc. in 2023 to serve as the participant in the Business Combination.

Fair Value of Financial Instruments:

The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and notes payable approximate fair value because of the short-term nature of these items.

Revenue Recognition:

The Company applies the provisions of Accounting Standards Codification (ASC) 606-10, Revenue from Contracts with Customers, and all related appropriate guidance. The Company recognizes revenue under the core principle to depict the transfer of control to its customers in an amount reflecting the consideration to which it expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

The Company has two different revenue streams, product and service, represented through its three segments. The Company reports all revenues on a gross basis, other than service revenues from the Company’s entertainment and revenue cycle management segments, Revenues generated by all segments are reported net of sales taxes.

Video Solutions

The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with the customer. In situation where sales are to a distributor, the Company had concluded its contracts are with the distributor as the Company holds a contract bearing enforceable rights and obligations only with the distributor. As part of part of its consideration for the contract, the Company evaluates certain factors including the customers’ ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which it expects to be entitled. As the Company’s standard payment terms are less than one year, it has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on its relative standalone selling price. The product price as specified on the purchase order is considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Revenue is recognized when control of the product is transferred to the customer (i.e. when the Company’s performance obligations is satisfied), which typically occurs at shipment. Further in determining whether control has been transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer. Customers do not have a right to return the product other than for warranty reasons for which they would only receive repair services or replacement products. The Company has also elected the practical expedient under ASC 340-40-25-4 to expense commissions for product sales when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than one year.

Service and other revenue is comprised of revenues from extended warranties, repair services, cloud revenue and software revenue. Revenue is recognized upon shipment of the product and acceptance of the service or materials by the end customer for repair services. Revenue for extended warranty, cloud service or other software-based products is over the term of the contract warranty or service period. A time-elapsed method is used to measure progress because the Company transfers control evenly over the contractual period. Accordingly, the fixed consideration related to these revenues is generally recognized on a straight-line basis over the contract term, as long as the other revenue recognition criteria have been met.

The Company’s multiple performance obligations may include future in-car or body-worn camera devices to be delivered at defined points within a multi-year contract, and in those arrangements, the Company allocates total arrangement consideration over the life of the multi-year contract to future deliverables using management’s best estimate of selling price.

Revenue Cycle Management

The Company reports revenue cycle management revenues on a net basis, as its primary source of revenue is its end-to-end service fees which is generally determined as a percentage of the invoice amounts collected. These service fees are reported as revenue monthly upon completion of the Company’s performance obligation to provide the agreed upon service.

Entertainment

The Company reports ticketing revenue on a gross or net basis based on management’s assessment of whether the Company is 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.

The Company sells tickets held in inventory, which consists of one performance obligation, being to transfer control of an event ticket to the buyer upon confirmation of the order. The Company acts as the principal in these transactions as the ticket is owned by the Company at the time of sale, therefore controlling 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.

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

Other

Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract and are reported separately as current liabilities and non-current liabilities in the Consolidated Balance Sheets. Such amounts consist of extended warranty contracts, prepaid cloud services and prepaid installation services and are generally recognized as the respective performance obligations are satisfied. During the six months ended June 30, 2024, the Company recognized revenue of $1.4 million related to its contract liabilities. Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract and are reported separately as current liabilities and non-current liabilities in the Consolidated Balance Sheets. Such amounts consist of extended warranty contracts, prepaid cloud services and prepaid installation services and are generally recognized as the respective performance obligations are satisfied. Total contract liabilities consist of the following:

SCHEDULE OF CONTRACT LIABILITIES

	June 30, 2024
	December 31, 2023		Additions/ Reclass		Recognized Revenue			June 30, 2024
Contract liabilities, current	$	2,937,168	$	767,131	$	(610,807	)	$	3,093,492
Contract liabilities, non-current		7,340,459		412,632		(753,950	)		6,999,141

	$	10,277,627	$	1,179,763	$	(1,364,757	)	$	10,092,633

	June 30, 2023
	December 31, 2022		Additions/ Reclass		Recognized Revenue			June 30, 2023
Contract liabilities, current	$	2,154,874	$	1,246,212	$	(496,034	)	$	2,905,052
Contract liabilities, non-current		5,818,082		1,223,497		(487,106	)		6,554,473

	$	7,972,956	$	2,469,709	$	(983,140	)	$	9,459,525

Sales returns and allowances aggregated $93,170 and $117,713 for the six months ended June 30, 2024 and December 31, 2023, respectively. Obligations for estimated sales returns and allowances are recognized at the time of sales on an accrual basis. The accrual is determined based upon historical return rates adjusted for known changes in key variables affecting these return rates.

Use of Estimates:

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management utilizes various other estimates, including but not limited to determining the estimated lives of long-lived assets, determining the potential impairment of long-lived assets, the fair value of warrants, options, the recognition of revenue, inventory valuation reserve, fair value of assets and liabilities acquired in a business combination, incremental borrowing rate on leases, the valuation allowance for deferred tax assets and other legal claims and contingencies. The results of any changes in accounting estimates are reflected in the financial statements in the period in which the changes become evident. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period that they are determined to be necessary.

Cash and cash equivalents:

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

SCHEDULE OF SHORT TERM INVESTMENTS

	June 30, 2024
	Adjusted Cost		Realized Gains		Realized Losses		Fair Value
Demand deposits	$	439,881	$	—	$	—	$	439,881
Short-term investments with original maturities of 90 days or less (Level 1):
Money market funds		77,232		—		—		77,232

	$	517,113	$	—	$	—	$	517,113

	December 31, 2023
	Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value
Demand deposits	$	545,207	$	—	$	—	$	545,207
Short-term investments with original maturities of 90 days or less (Level 1):
Money market funds		135,342		—		—		135,342

	$	680,549	$	—	$	—	$	680,549

The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At June 30, 2024 and December 31, 2023, the uninsured balance amounted to $136,717 and $29,700, respectively.

Restricted Cash:

Restricted cash of $97,600 and $97,600 was included in other assets as of June 30, 2024 and December 31, 2023, respectively. Restricted cash consists of bank deposits that collateralize our debt obligations.

The following table provides a reconciliation of cash and cash equivalents in the consolidated balance sheets to cash, cash equivalents and restricted cash in the consolidated statements of cash flows:

	June 30, 2024		December 31, 2023
Cash and cash equivalents	$	517,113	$	680,549
Long-term restricted cash included in other assets		97,600		97,600
Total cash, cash equivalents and restricted cash in the statements of cash flows	$	614,713	$	778,149

Accounts Receivable:

Accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a weekly basis. The Company determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions.

Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. A trade receivable is considered to be past due if any portion of the receivable balance is outstanding for more than thirty (30) days beyond terms. No interest is charged on overdue trade receivables.

Goodwill and Other Intangibles:

Goodwill - In connection with acquisitions, the Company applies the provisions of ASC 805, Business Combinations, using the acquisition method of accounting. The excess purchase price over the fair value of net tangible assets and identifiable intangible assets acquired is recorded as goodwill. In accordance with ASC 350, Intangibles - Goodwill and Other, the Company assesses goodwill for impairment annually as of December 31, and more frequently if events and circumstances indicate that goodwill might be impaired.

Goodwill impairment testing is performed at the reporting unit level. Goodwill is assigned to reporting units at the date the goodwill is initially recorded. Once goodwill has been assigned to reporting units, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or internally generated, are available to support the value of the goodwill.

Traditionally, goodwill impairment testing is a two-step process. Step one involves comparing the fair value of the reporting units to its carrying amount. If the carrying amount of a reporting unit is greater than zero and its fair value is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount is greater than the fair value, the second step must be completed to measure the amount of impairment, if any. Step two involves calculating an implied fair value of goodwill. The Company has adopted ASU 2017-04 which simplifies subsequent goodwill measurement by eliminating step two from the goodwill impairment test. As a result, the Company compares the fair value of a reporting unit with its respective carrying value and recognized an impairment charge for the amount by which the carrying amount exceeded the reporting unit’s fair value.

The Company determines the fair value of its reporting units using the market approach. Under the market approach, we estimate the fair value based on multiples of comparable public companies and precedent transactions. Significant estimates in the market approach include: identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on investment, and assessing comparable revenue and operating income multiples in estimating the fair value of the reporting unit.

Long-lived and Other Intangible Assets - The Company periodically assesses potential impairments of its long-lived assets in accordance with the provisions of ASC 360, Accounting for the Impairment or Disposal of Long-lived Assets. An impairment review is performed whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. The Company groups its assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of the other assets and liabilities. The Company has determined that the lowest level for which identifiable cash flows are available is the operating segment level.

Factors considered by the Company include, but are not limited to, significant underperformance relative to historical or projected operating results; significant changes in the manner of use of the acquired assets or the strategy for the overall business; and significant negative industry or economic trends. When the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of the above indicators of impairment, the Company estimates the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected future undiscounted cash flows and eventual disposition is less than the carrying amount of the asset, the Company recognizes an impairment loss. An impairment loss is reflected as the amount by which the carrying amount of the asset exceeds the fair value of the asset, based on the fair value if available, or discounted cash flows, if fair value is not available. The Company last assessed potential impairments of its long-lived assets as of December 31, 2023 and concluded that there was no impairment. Subsequent to completing our 2023 annual impairment test, no events or changes in circumstances were noted that required an interim goodwill impairment test.

Intangible assets include deferred patent costs, license agreements, trademarks and trade names. Legal expenses incurred in preparation of patent application have been deferred and will be amortized over the useful life of granted patents. Costs incurred in preparation of applications that are not granted will be charged to expense at that time. The Company has entered into several sublicense agreements under which it has been assigned the exclusive rights to certain licensed materials used in its products. These sublicense agreements generally require upfront payments to obtain the exclusive rights to such material. The Company capitalizes the upfront payments as intangible assets and amortizes such costs over their estimated useful life on a straight-line method.

Segment Reporting

The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s three operating segments are Video Solutions, Revenue Cycle Management, and Entertainment, each of which has specific personnel responsible for that business and reports to the CODM. Corporate expenses capture the Company’s corporate administrative activities and are also to be reported in the segment information.

Contingent Consideration

In circumstances where an acquisition involves a contingent consideration arrangement that meets the definition of a liability under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity, the Company recognizes a liability equal to the fair value of the contingent payments the Company expects to make as of the acquisition date. The Company remeasures this liability each reporting period and records changes in the fair value through the consolidated statement of operations.

Non-Controlling Interests

Non-controlling interests in the Company’s Consolidated Financial Statements represent the interest in subsidiaries held by our venture partner. The venture partner holds a noncontrolling interest in the Company’s consolidated subsidiary Nobility Healthcare, LLC. Since the Company consolidates the financial statements of all wholly-owned and majority owned subsidiaries, the noncontrolling owners’ share of each subsidiary’s results of operations are deducted and reported as net income or loss attributable to noncontrolling interest in the Consolidated Statements of Operations.

New Accounting Standards

In November 2023, the FASB issued Accounting Standards Update No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

NOTE 2. INVENTORIES

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

SCHEDULE OF INVENTORIES

	June 30, 2024			December 31, 2023
Raw material and component parts– video solutions segment	$	2,614,267		$	3,044,653
Work-in-process– video solutions segment		15,895			20,396
Finished goods – video solutions segment		3,436,629			4,623,489
Finished goods – entertainment segment		286,343			699,204
Subtotal		6,353,134			8,387,742
Reserve for excess and obsolete inventory– video solutions segment		(4,008,278	)		(4,355,666	)
Reserve for excess and obsolete inventory – entertainment segment		(126,723	)		(186,795	)
Total inventories	$	2,218,133		$	3,845,281

Finished goods inventory includes units held by potential customers and sales agents for test and evaluation purposes. The cost of such units totaled $43,274 and $42,797 as of June 30, 2024 and December 31, 2023, respectively.

NOTE 3. DEBT OBLIGATIONS

Debt obligations is comprised of the following:

SCHEDULE OF DEBT OBLIGATIONS

	June 30, 2024			December 31, 2023
Economic injury disaster loan (EIDL)	$	146,154		$	147,781
Contingent consideration promissory note – Nobility Healthcare Division Acquisition		—			129,651
Contingent consideration promissory note – Nobility Healthcare Division Acquisition		—			58,819
Revolving Loan Agreement		4,880,000			4,880,000
Commercial Extension of Credit- Entertainment Segment		12,500			87,928
Merchant Advances – Video Solutions Segment		2,259,000			1,350,000
Merchant Advances – Entertainment Segment		1,373,101			—
Unamortized debt issuance costs		(791,434	)		(540,429	)
Debt obligations		7,879,321			6,113,750
Less: current maturities of debt obligations		2,980,903			1,260,513
Debt obligations, long-term	$	4,898,418		$	4,853,237

Debt obligations mature as follows as of June 30, 2024:

	June 30, 2024
2024 (July 1, 2024 to December 31, 2024)	$	2,979,213
2025		4,759,024
2026		3,542
2027		3,677
2028 and thereafter		133,865

Total	$	7,879,321

2020 Small Business Administration Notes.

On May 12, 2020, the Company received $150,000 in loan funding from the SBA under the Economic Injury Disaster Loan (“EIDL”) program administered by the SBA, which program was expanded pursuant to the recently enacted CARES Act. The EIDL is evidenced by a secured promissory note, dated May 8, 2020, in the original principal amount of $150,000 with the SBA, the lender.

Under the terms of the note issued under the EIDL program, interest accrues on the outstanding principal at the rate of 3.75% per annum. The term of such note is thirty years, though it may be payable sooner upon an event of default under such note. Monthly principal and interest payments began in November 2022, after being deferred for thirty months after the date of disbursement and total $731 per month thereafter. Such note may be prepaid in part or in full, at any time, without penalty. The Company granted the SBA a continuing interest in and to any and all collateral, including but not limited to tangible and intangible personal property.

The Company made principal payments of $1,628 during the six months ended June 30, 2024 and recorded interest expense of $1,383 and $2,758 for the three and six months ended June 30, 2024.

Contingent Consideration Promissory Notes

On June 30, 2021, Nobility Healthcare, a subsidiary of the Company, issued a contingent consideration promissory note (the “June Contingent Note”) in connection with a stock purchase agreement between Nobility Healthcare and a private company (the “June Seller”) of $350,000. The June Contingent Note has a three-year term and bears interest at a rate of 3.00% per annum. Quarterly principal and interest payments are deferred for six months and is due in equal quarterly installments on the seventh business day of each quarter. The principal amount of the June Contingent Note is subject to an earn-out adjustment, being the difference between $975,000 (the “June Projected Revenue”) and the cash basis revenue (the “June Measurement Period Revenue”) collected by the June Seller in its normal course of business from the clients existing on June 30, 2021, during the period from October 1, 2021 through September 30, 2022 (the “June Measurement Period”) measured on a quarterly basis and annualized as of the relevant period. If the June Measurement Period Revenue is less than the June Projected Revenue, such amount will be subtracted from the principal balance of this June Contingent Note on a dollar-for-dollar basis. If the June Measurement Period Revenue is more than the June Projected Revenue, such amount will be added to the principal balance of this June Contingent Note on a dollar-for-dollar basis. In no event will the principal balance of this June Contingent Note become a negative number. The maximum downward earn-out adjustment to the principal balance will be a reduction to zero. There are no limits to the increases to the principal balance of the June Contingent Note as a result of the earn-out adjustments.

The June Contingent Note is considered to be additional purchase price; therefore, the estimated fair value of the contingent liability is recorded as a liability at the acquisition date and the fair value is considered part of the consideration paid for the acquisition with subsequent changes in fair value recorded as a gain or loss in the Consolidated Statements of Operations. Management recorded the contingent consideration promissory note at its estimated fair value of $350,000 at the acquisition date. Total principal payments, since inception, on this contingent consideration promissory note totaled $290,952. The estimated fair value of the June Contingent Note at June 30, 2024 is $-0-, representing a reduction in its estimated fair value of $58,819 as compared to its estimated fair value as of December 31, 2023. This reduction only relates to the principal payments made for the six months ended June 30, 2024. Therefore, the Company recorded no gain or loss in the Consolidated Statements of Operations for the six months ended June 30, 2024.

On August 31, 2021, Nobility Healthcare, issued another contingent consideration promissory note (the “August Contingent Payment Note”) in connection with a stock purchase agreement between Nobility Healthcare and a private company (the “August Sellers”) of $650,000. The August Contingent Payment Note has a three-year term and bears interest at a rate of 3.00% per annum. Quarterly principal and interest payments are deferred for six months and is due in equal quarterly installments on the seventh business day of each quarter. The principal amount of the August Contingent Payment Note is subject to an earn-out adjustment, being the difference between the $3,000,000 (the “August Projected Revenue”) and the cash basis revenue (the “August Measurement Period Revenue”) collected by the August Sellers in its normal course of business from the clients existing on September 1, 2021, during the period from December 1, 2021 through November 30, 2022 (the “August Measurement Period”) measured on a quarterly basis and annualized as of the relevant period. If the August Measurement Period Revenue is less than the August Projected Revenue, such amount will be subtracted from the principal balance of this August Contingent Payment Note on a dollar-for-dollar basis. If the August Measurement Period Revenue is more than the August Projected Revenue, such amount will be added to the principal balance of this August Contingent Payment Note on a dollar-for-dollar basis. In no event will the principal balance of this August Contingent Payment Note become a negative number. The maximum downward earn-out adjustment to the principal balance will be to zero. There are no limits to the increases to the principal balance of the August Contingent Payment Note as a result of the earn-out adjustments.

The August Contingent Payment Note is considered to be additional purchase price, therefore the estimated fair value of the contingent liability is recorded as a liability at the acquisition date and the fair value is considered part of the consideration paid for the acquisition. Management has recorded the contingent consideration promissory note at its estimated fair value of $650,000 at the acquisition date. Principal payments, since its inception, on this contingent consideration promissory note totaled $681,907. The estimated fair value of the August Contingent Note at June 30, 2024 is $-0-, representing a decrease in its estimated fair value of $129,651 as compared to is estimated fair value as of December 31, 2023. This reduction only relates to the principal payments made for the six months ended June 30, 2024. Therefore, the Company recorded no gain or loss in the Consolidated Statements of Operations for the six months ended June 30, 2024.

2023 Commercial Extension of Credit

On February 23, 2023, the Company’s Entertainment segment entered into an extension of credit in the form of a loan to use in marketing and operating its business in accordance with the Private Label Agreement previously entered into with the Lender. The Lender agreed to extend, subject to the conditions hereof, and Borrower agreed to take, a Loan for Principal Sum of $1,000,000.

Lender shall retain 25% of each remittance owed to Borrower under the terms of the Private Label Agreement. Such remittances shall include regular weekly remittances and any additional incentive payments to which the Borrower may be entitled. The 25% withholding of the Borrower’s applicable remittance shall be deemed a “Payment” under the terms of this Note, and Payments shall continue until the earlier of (i) repayment of the Principal Sum, accrued Interest, and a fee of $35,000 or (ii) expiration of the Private Label Agreement on December 31, 2023.

During the six months ended June 30, 2024, the Entertainment segment Company’s Entertainment segment repaid the outstanding principal of $87,928 and did not renew this agreement.

2024 Commercial Extension of Credit

On January 22, 2024, the Company’s Entertainment segment entered into an extension of credit in the form of a loan to use in marketing and operating its business in accordance with the Ticket Solution Agreement. The Lender, Ticket Evolution, Inc., agreed to extend, subject to the conditions hereof, and Borrower agreed to take, a Loan for Principal Sum of $75,000 with monthly advances of $100,000.

The advances made are recoupable from client service fees with no more than $25,000 being recouped in any one week. The total advances received for the six months ended June 30, 2024 were $575,000 and payments made totaled $562,500. The outstanding balance as of June 30, 2024 was $12,500.

Convertible Note

On April 5, 2023, the Company entered into and consummated the initial closing (the “First Closing”) of the transactions contemplated by a Securities Purchase Agreement, dated as of April 5, 2023 (the “Purchase Agreement”), between the Company and certain investors (the “Purchasers”).

At the First Closing, the Company issued and sold to the Purchasers Senior Secured Convertible Notes in the aggregate original principal amount of $3,000,000 (the “Notes”) and warrants (the “Warrants”). The Purchase Agreement provided for a ten percent (10%) original interest discount resulting in gross proceeds to the Company of $2,700,000. No interest accrues under the Notes. The Warrants are exercisable for an aggregate 1,125,000 shares comprised of 375,000 warrants at an exercise price of $5.50 per share of the Company’s common stock, par value $0.001 (the “Common Stock”), 375,000 warrants at an exercise price of $6.50 per share of Common Stock, and 375,000 warrants at an exercise price of $7.50 per share of Common Stock.

Subject to certain conditions, within 18 months from the effectiveness date and while the Notes remain outstanding, the Purchasers have the right to require the Company to consummate a second closing of up to an additional $3,000,000 of Notes (the “Second Notes”) and Warrants on the same terms and conditions as the First Closing, except that the Second Notes may be subordinate to a mortgage on the Company’s headquarters building (the “Bank Mortgage”).

The Notes are convertible into shares of Common Stock at the election of the Purchasers at any time at a fixed conversion price of $5.00 (the “Conversion Price”) per share of Common Stock. The Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for, Common Stock at a price below the then-applicable Conversion Price (subject to certain exceptions). Subject to certain conditions, including certain equity conditions, the Company may redeem some or all of the then outstanding principal amount of the Note for cash in an amount equal to 110% of the outstanding principal amount of the Notes (the “Optional Redemption Amount”). In addition, the Purchasers may, at their option, demand repayment at the Optional Redemption Amount upon five (5) business days’ written notice following (i) the closing by the Company of the Bank Mortgage, or (ii) a sale by the Company of Common Stock or Common Stock equivalents.

The Notes rank senior to all outstanding and future indebtedness of the Company and its subsidiaries, and are secured by substantially all of the Company’s assets, as evidenced by (i) a security agreement entered into at the Closing, (ii) a trademark security agreement entered into at the Closing, (iii) a patent security agreement entered into at the Closing, (iv) a guaranty executed by all direct and indirect subsidiaries of the Company pursuant to which each of them has agreed to guaranty the obligations of the Company under the Notes, and (v) a mortgage on the Company’s headquarters building in favor of the Purchasers.

Also at the Closing, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Purchasers. Pursuant to the terms of the Registration Rights Agreement, the Company has agreed to prepare and file with the SEC within the 10th business day following the First Closing (the “Filing Date”) a registration statement covering the resale of the shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants, and to use its best efforts to cause such Registration Statement to be declared effective under the Securities Act of 1933, as amended (the “Securities Act”), as promptly as possible, but in any event no later than 45 days following the Filing Date (the “Effectiveness Date”). If the Registration Statement is not filed by the Filing Date or is not declared effective by the Effectiveness Date, or under certain other circumstances described in the Registration Rights Agreement, then the Company shall be obligated to pay, as partial liquidated damages, to each Purchaser an amount in cash equal to 2% of the original principal amount of the Notes each month until the applicable event giving rise to such payments is cured. If the Company fails to pay any partial liquidated damages in full within seven days after the date payable, the Company will pay interest thereon at a rate of 10% per annum.

The Company recognized the full warrant derivative value, with the remaining amount being allocated to the debt obligation. As the warrant derivative value exceeded the net proceeds from the issuance, the excess amount is recognized as a loss on the date of the issue date. Thus, the Company recorded a loss of $576,380 as an interest expense on the date of issuance relating to the Notes. The following is the assumptions used in calculating the estimated grant-date fair value of the detachable warrants to purchase common stock granted in connection with the Notes:

	Terms at April 5, 2023 (issuance date)
Volatility - range		106.0	%
Risk-free rate		3.36	%
Dividend		0	%
Remaining contractual term		5.0 years
Exercise price	$	5.50 – 7.50
Common stock issuable under the warrants		1,125,000

On June 2, 2023, the Purchasers elected to convert $125,000 principal, at the fixed price of $5.00 per share of common stock, 25,000 shares valued at $119,750. The loss on conversion of convertible note into common shares, of $93,386, was recorded during the period.

On October 26, 2023, the Company entered into a Revolving Loan Agreement of which a portion of the net proceeds were used to repay the principal amount of the Convertible debt. The warrants associated with the convertible debt remain outstanding.

Revolving Loan Agreement

On October 26, 2023, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) by and between the Company, Digital Ally Healthcare, Inc., a Nevada corporation and wholly-owned subsidiary of the Company (“Digital Ally Healthcare” and, together with the Company, the “Borrower”), and Kompass Kapital Funding, LLC, a Kansas limited liability company (“Kompass”). In connection with the Loan Agreement, on October 26, 2023, the Company entered into a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing (the “Mortgage”) by and between the Company, as grantor, and Kompass, as grantee, and issued a Revolving Note (the “Revolving Note”) to Kompass. The gross proceeds to the Company were $4,880,000 before repaying those certain Senior Secured Convertible Notes issued on April 5, 2023 in the aggregate amount of $3,162,500 and paying customary fees and expenses.

Pursuant to the Loan Agreement, Kompass agreed to make revolving loans (the “Revolving Loans”) available to the Borrower as the Borrower may from time to time request until, but not including, October 26, 2025, and in such amounts as the Borrower may from time to time request, provided, however, that the aggregate principal balance of the Revolving Loans outstanding at any time shall not exceed the lesser of $4,880,000 or an amount equal to eighty percent of the value of the mortgaged property, which consists of the real property owned by the Company having an address of 14001 Marshall Drive, Lenexa, KS 66215 (the “Mortgaged Property”). Under the Loan Agreement, the Revolving Loans made by Kompass may be repaid and, subject to customary terms and conditions, borrowed again up to, but not including October 26, 2025, unless the Revolving Loans are otherwise accelerated, terminated or extended as provided in the Loan Agreement. The Revolving Loans shall be used by the Borrower for the purpose of working capital and to retire existing debt. Under the Loan Agreement, the Borrower is required to provide written notice to Kompass prior to creating, assuming or incurring any debt or becoming liable, whether as endorser, guarantor, surety or otherwise, for any debt or obligation of any other party. While obligations remain outstanding under the Loan Agreement, the Borrower is required to maintain a minimum balance of $97,600 in a reserve account (the “Capital Reserve Account”). Under the Loan Agreement, the Borrower is prohibited from creating, assuming, incurring or suffering or permitting to exist any lien of any kind or character upon the collateral, which consists of the Mortgaged Property and the Company’s interest in the Capital Reserve Account. The Loan Agreement contains customary covenants, representations and warranties by the Borrower.

Pursuant to the Loan Agreement, the Company issued the Revolving Note to Kompass whereby the Company and Digital Ally Healthcare jointly and severally promise to pay to the order of Kompass the lesser of (i) $4,880,000.00, or (ii) the aggregate principal amount of all Revolving Loans outstanding under and pursuant to the Loan Agreement at the maturity or maturities and in the amount or amounts stated on the records of Kompass, together with interest (computed on the actual number of days elapsed on the basis of a 360 day year) at a floating per annum rate equal to the greater of (i) the Prime Rate plus four percent or (ii) eight percent, on the aggregate principal amount of all Revolving Loans outstanding from time to time as provided in the Loan Agreement.

The Company entered into the Mortgage to secure its obligations under the Loan Agreement. The property mortgaged under the Mortgage consists of the Mortgaged Property. The Mortgage contains customary covenants, representations and warranties by the Company. In addition, the Company recorded debt issuance costs of $188,255. During the three and six months ended June 30, 2024, the Company amortized $23,435 and $46,871 of debt discount under interest expense.

Merchant Cash Advances – Video Solutions Segment

In November 2023, the Company obtained a short-term merchant advance, which totaled $1,050,000, from a single lender to fund operations. These advances included origination fees totaling $50,000 for net proceeds of $1,000,000. The advance is, for the most part, secured by expected future sales transactions of the Company with expected payments on a weekly basis. The Company will repay an aggregate of $1,512,000 to the lender. The loan bears interest at 2.9% per week. During the six months ended June 30, 2024, the Company made repayments totaling $1,215,000 and received additional proceeds of $1,144,000. The Company refinanced this loan in April 2024 resulting in the additional proceeds. The refinancing was deemed to be an extinguishment of debt and a loss on extinguishment of debt was recorded during the three months ended June 30, 2024 of $68,827.

As of June 30, 2024 the outstanding balance was $2,259,000 which is expected to be repaid in 2024.

During the six months ended June 30, 2024 the Company amortized $820,429 of debt discount under interest expense.

Merchant Cash Advances – Entertainment Segment

In March 2024, the Company obtained a short-term merchant advance, which totaled $1,000,000, from a single lender to fund operations. These advances included origination and issuance fees totaling $85,000 for net proceeds of $915,000. The advance is, for the most part, is secured by expected future sales transactions of the Company with expected payments on a weekly basis. The Company will repay an aggregate of $1,425,000 to the lender. The loan bears interest at 5.19% per month. During the six months ended June 30, 2024, the Company made repayments totaling $51,899. As of June 30, 2024 the outstanding balance was $1,373,101 which is expected to be repaid in 2024.

During the three and six months ended June 30, 2024 the Company amortized $139,118 and $202,868 of debt discount and issuance costs under interest expense.

NOTE 4. FAIR VALUE MEASUREMENT

In accordance with ASC Topic 820 — Fair Value Measurements and Disclosures (“ASC 820”), the Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities or a group of assets or liabilities, such as a business.

ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

●	Level 1 — Quoted prices in active markets for identical assets and liabilities

●	Level 2 — Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities)

●	Level 3 — Significant unobservable inputs (including the Company’s own assumptions in determining the fair value)

The following table represents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:

	June 30, 2024
	Level 1		Level 2		Level 3		Total
Liabilities:
Warrant derivative liabilities	$	—	$	—	$	3,796,746	$	3,796,746
Contingent consideration promissory notes and contingent consideration earn-out agreement		—		—		—		—
	$	—	$	—	$	3,796,746	$	3,796,746

	December 31, 2023
	Level 1		Level 2		Level 3		Total
Liabilities:
Warrant derivative liabilities	$	—	$	—	$	1,369,738	$	1,369,738
Contingent consideration promissory notes and contingent consideration earn-out agreement		—		—		188,470		188,470
	$	—	$	—	$	1,558,208	$	1,558,208

The following table represents the change in Level 3 tier value measurements for the three months ended June 30, 2024:

	Contingent Consideration Promissory Notes and Earn-Out Agreement			Warrant Derivative Liabilities

Balance, December 31, 2023	$	188,470		$	1,369,738

Issuance of warrant derivative liabilities					2,075,300

Change in fair value of warrant derivative liabilities		—			351,710

Principal payments on contingent consideration promissory notes – Revenue Cycle Management Acquisitions		(188,470	)		—

Change in fair value of contingent consideration promissory notes - Revenue Cycle Management Acquisitions		—			—

Balance, June 30, 2024	$	—		$	3,796,748

NOTE 5. ACCRUED EXPENSES

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

SCHEDULE OF ACCRUED EXPENSES

	June 30, 2024		December 31, 2023
Accrued warranty expense	$	11,615	$	17,699
Accrued litigation costs		2,040,292		2,040,292
Accrued sales commissions		1,465		87,421
Accrued payroll and related fringes		420,596		367,826
Accrued sales returns and allowances		93,170		117,713
Accrued taxes		161,639		150,981
Accrued interest - related party		283,782		95,031
Customer deposits		75,283		219,462
Other		292,163		172,905
Total accrued expenses	$	3,380,005	$	3,269,330

Accrued warranty expense was comprised of the following for the six months ended June 30, 2024:

SCHEDULE OF ACCRUED WARRANTY EXPENSE

Beginning balance	$	17,699
Provision for warranty expense		38,898
Charges applied to warranty reserve		(44,982	)

Ending balance	$	11,615

NOTE 6. INCOME TAXES

The effective tax rate for the three and six months ended June 30, 2024 and 2023 varied from the expected statutory rate due to the Company continuing to provide a 100% valuation allowance on net deferred tax assets. The Company determined that it was appropriate to continue the full valuation allowance on net deferred tax assets as of June 30, 2024, primarily because of the Company’s history of operating losses.

The Company has incurred operating losses in recent years, and it continues to be in a three-year cumulative loss position at June 30, 2024. Accordingly, the Company determined there was not sufficient positive evidence regarding its potential for future profits to outweigh the negative evidence of our three-year cumulative loss position under the guidance provided in ASC 740. Therefore, it is determined to continue to provide a 100% valuation allowance on its net deferred tax assets. The Company expects to continue to maintain a full valuation allowance until it determines that it can sustain a level of profitability that demonstrates its ability to realize these assets. To the extent the Company determines 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. The Company has available to it approximately $140.9 million (based on its December 31, 2023 tax return) in net operating loss carryforwards to offset future taxable income as of June 30, 2024.

NOTE 7. PREPAID EXPENSES

Prepaid expenses were the following at June 30, 2024 and December 31, 2023:

SCHEDULE OF PREPAID EXPENSE

	June 30, 2024		December 31, 2023
Prepaid inventory	$	5,200,463	$	5,318,939
Prepaid advertising		410,226		612,292
Other		1,009,788		435,137
Total prepaid expenses	$	6,620,477	$	6,366,368

NOTE 8. PROPERTY, PLANT AND EQUIPMENT

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

	Estimated Useful Life	June 30, 2024			December 31, 2023
Building	25 years	$	4,537,037		$	4,537,037
Land	Infinite		739,734			739,734
Office furniture, fixtures, equipment, and aircraft	3-20 years		779,879			2,065,092
Warehouse and production equipment	3-7 years		237,141			29,055
Demonstration and tradeshow equipment	3-7 years		77,791			87,987
Building improvements	5-7 years		1,341,471			1,328,654
Total cost			7,713,053			8,787,559
Less: accumulated depreciation and amortization			(1,679,962	)		(1,503,857	)

Net property, plant and equipment		$	6,033,091		$	7,283,702

Depreciation expense for the three months ended June 30, 2024 and June 30, 2023 was $181,121 and $174,261, respectively, and is included in general and administrative expenses. Depreciation expense for the six months ended June 30, 2024 and June 30, 2023 was $343,833 and $345,892, respectively, and is included in general and administrative expenses.

During the six months ended June 30, 2024 the Company engaged a broker and sold its aircraft for $1,100,000 less closing costs of $1,500. The carrying amount of the aircraft on the date of sale was $1,141,661. As a result of the sale the Company recorded a loss of $41,661 in the Consolidated Statement of Operations.

NOTE 9. OPERATING LEASE

The Company entered into an operating lease with a third party in October 2023 for copiers used for office and warehouse purposes. The terms of the lease include 48 monthly payments of $1,786 with a maturity date of October 2027. 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 June 30, 2024 was forty months.

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. 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 June 30, 2024 was thirty months.

On June 30, 2021, the Company completed the acquisition of its 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 remaining lease term for the Company’s office operating lease as of June 30, 2024 was one month. The lease was not renewed by the Company.

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 was renewed in April 2023 with favorable terms and payments ranging from $7,436 to $8,877 thereafter, with a termination date in March 2030. The Company is responsible for property taxes, utilities, insurance and its proportionate share of common area costs related to this location. The remaining term for the Company’s office operating lease was sixty-nine months as of June 30, 2024.

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 Company currently rents this space on a month-to-month basis with intentions to relocate upon the identification of suitable space.

On January 1, 2022, the Company completed the acquisition of a private medical billing company, through its revenue cycle management segment. Upon completion of this acquisition, the Company became responsible for the operating lease for the seller’s office space. The lease terms include monthly payments ranging from $4,233 to $4,626, with a termination date of June 2025. 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 January 1, 2022. The Company terminated this lease in January 2024 and reversed the right of use asset and lease liability by $73,894.

Lease expense related to the office space and copier operating leases were recorded on a straight-line basis over their respective lease terms. Total lease expense under the operating leases was approximately $117,810 and $226,695 during the three and six months ended June 30, 2024.

The weighted-average remaining lease term related to the Company’s lease liabilities as of June 30, 2023 was 4.3 years.

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 June 30, 2024:

Assets:
Operating lease right of use assets	$	869,166

Liabilities:
Operating lease obligations-current portion	$	223,629
Operating lease obligations-less current portion		692,423
Total operating lease obligations	$	916,052

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

SCHEDULE OF LEASE EXPENSE


Selling, general and administrative expenses		$	226,695

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

Year ending December 31:
2024 (July 1, to December 31, 2024)	$	146,105
2025		288,720
2026		293,300
2027		117,492
Thereafter		235,020
Total undiscounted minimum future lease payments		1,080,637
Imputed interest		(164,585	)
Total operating lease liability	$	916,052

NOTE 10. GOODWILL AND OTHER INTANGIBLE ASSETS

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

SCHEDULE OF INTANGIBLE ASSETS

	June 30, 2024						December 31, 2023
	Gross value		Accumulated amortization		Net carrying value		Gross value		Accumulated amortization		Net carrying value
Amortized intangible assets:
Licenses (video solutions segment)	$	151,652	$	21,270	$	130,382	$	225,545	$	89,887	$	135,658
Patents and trademarks (video solutions segment)		483,521		332,462		151,059		483,521		266,403		217,118
Sponsorship agreement network (entertainment segment)		5,600,000		3,173,333		2,426,667		5,600,000		2,613,333		2,986,667
SEO content (entertainment segment)		600,000		425,000		175,000		600,000		350,000		250,000
Personal seat licenses (entertainment segment)		117,339		11,081		106,258		180,081		14,004		166,077
Software		23,653		—		23,653		-		-		-
Website enhancements (entertainment segment)		25,630		4,014		21,616		13,500		—		13,500
Client agreements (revenue cycle management segments)		999,034		276,719		722,315		999,034		226,768		772,266
		8,000,829		4,243,879		3,756,950		8,101,681		3,560,395		4,541,286

Indefinite life intangible assets:
Goodwill (entertainment and revenue cycle management segments)		11,593,473		—		11,593,473		11,367,514		—		11,367,514
Trade name (entertainment segment)		900,000		—		900,000		600,000		—		600,000
Patents and trademarks pending (video solutions segment)		31,199		—		31,199		1,622		—		1,622

Total	$	20,525,501	$	4,243,879	$	16,281,622	$	20,070,817	$	3,560,395	$	16,510,422

Patents and trademarks pending will be amortized beginning at the time they are issued by the appropriate authorities. If issuance of the final patent or trademark is denied, then the amount deferred will be immediately charged to expense.

Amortization expense for the three months ended June 30, 2024 and 2023 was $346,889 and $374,714, respectively and $735,167 and $745,150 for the six months ended June 30, 2024 and 2023, respectively. Estimated amortization for intangible assets with definite lives for the next five years ending December 31 and thereafter is as follows:

Year ending December 31:
2024 (July 1, to December 31, 2024)	$	743,141
2025		1,414,848
2026		910,310
2027		116,646
2028 and thereafter		572,005
Total	$	3,756,950

NOTE 11. OTHER ASSETS

Other assets were the following at June 30, 2024 and December 31, 2023:

SCHEDULE OF OTHER ASSETS

	June 30, 2024		December 31, 2023
Lease receivable	$	5,453,486	$	6,095,050
Restricted Cash		97,600		97,600
Other		347,489		404,382
Total other assets	$	5,898,575	$	6,597,032

NOTE 12. COMMITMENTS AND CONTINGENCIES

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 reevaluate and update accruals as matters progress over time.

On May 31, 2022, the Company filed a lawsuit against Culp McAuley, Inc. (“defendant”) in the United States District Court for the District of Kansas. The lawsuit arises from the defendant’s multiple breaches of its obligations to the Company. The Company seeks monetary damages and injunctive relief based on certain conduct by the defendant. On July 18, 2022, the defendant filed its Answer to the Company’s Verified Complaint and included Counterclaims alleging breach of contract and seeking monetary damages. On August 8, 2022, the Company filed its Reply and Affirmative Defenses to the Counterclaims by, among other things, denying the allegations and any and all liability.

As of June 30, 2023, we are able to estimate a range of reasonably possible loss related to the Culp McCauley case, our estimate of the aggregate reasonably possible loss (in excess of any accrued amounts) was approximately $1.8 million. Our estimate with respect to the aggregate reasonably possible loss is based upon currently available information and is subject to significant judgment and a variety of assumptions and known and unknown uncertainties, which may change quickly and significantly from time to time, particularly if and as we engage with applicable governmental agencies or plaintiffs in connection with a proceeding. Also, the matters underlying the reasonably possible loss will change from time to time. As a result, actual results may vary significantly from the current estimate.

While the ultimate resolution is unknown, based on the information currently available, 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.

Notice of Failure to Satisfy a Continued Listing Rule

On March 14, 2024, the Nasdaq Listing Qualifications staff notified Digital Ally, Inc. (the “Company”), that due to resignation of Mr. Michael J. Caulfield from the Company’s board of directors (the “Board”) effective on January 31, 2024, the Company no longer complies with the audit committee and compensation committee requirements as set forth in Listing Rule 5605 of The Nasdaq Stock Market LLC (“Nasdaq”), including the requirements that there are at least three independent directors on the Company’s audit committee and at least two independent directors on the Company’s compensation committee.

The notification has no immediate effect on the Company’s listing on the Nasdaq Capital Market. In accordance with Nasdaq Listing Rules, the Company is provided a cure period until the earlier of the Company’s next annual shareholders’ meeting (or July 29, 2024 if the next shareholders’ meeting will be held before July 29, 2024) or January 31, 2025 (the “Cure Period”). If the Company does not regain compliance by within the Cure Period, Nasdaq will provide written notice that the Company’s common stock, par value $0.001 per share, will be subject to delisting from the Nasdaq Capital Market, at which time, the Company may appeal the delisting determination to a Hearings Panel.

The management of the Company has resolved to take commercially reasonable steps to fill the vacancy on the Board with a new director who qualifies as independent under the Nasdaq Listing Rules as soon as is practical and anticipates regaining compliance during the Cure Period. However, there can be no assurance that the Company will be able to satisfy Nasdaq Listing Rule 5605 or will otherwise be in compliance with other Nasdaq listing criteria.

NOTE 13. STOCK-BASED COMPENSATION

The Company recorded pre-tax compensation expense related to the grant of stock options and restricted stock issued of $60,772 and $179,482 for the three months ended June 30, 2024 and 2023, and $101,467 and $321,779 for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, the Company had adopted ten separate stock option and restricted stock plans: (i) the 2005 Stock Option and Restricted Stock Plan (the “2005 Plan”), (ii) the 2006 Stock Option and Restricted Stock Plan (the “2006 Plan”), (iii) the 2007 Stock Option and Restricted Stock Plan (the “2007 Plan”), (iv) the 2008 Stock Option and Restricted Stock Plan (the “2008 Plan”), (v) the 2011 Stock Option and Restricted Stock Plan (the “2011 Plan”), (vi) the 2013 Stock Option and Restricted Stock Plan (the “2013 Plan”), (vii) the 2015 Stock Option and Restricted Stock Plan (the “2015 Plan”), (viii) the 2018 Stock Option and Restricted Stock Plan (the “2018 Plan”), (ix) the 2020 Stock Option and Restricted Stock Plan (the “2020 Plan”), and (x) the 2022 Stock Option and Restricted Stock Plan (the “2022 Plan”). The 2005 Plan, 2006 Plan, 2007 Plan, 2008 Plan, 2011 Plan, 2013 Plan, 2015 Plan, 2018 Plan, 2020 Plan and 2022 Plan are referred to as the “Plans.”

These Plans permit the grant of stock options or restricted stock to its employees, non-employee directors and others for up to a total of 333,750 shares of common stock. The 2005 Plan terminated during 2015 with 1,078 shares not awarded or underlying options, which shares are now unavailable for issuance. Stock options granted under the 2005 Plan that remain unexercised and outstanding as of June 30, 2024 total 284. The 2006 Plan terminated during 2016 with 2,739 shares not awarded or underlying options, which shares are now unavailable for issuance. Stock options granted under the 2006 Plan that remain unexercised and outstanding as of June 30, 2024 total 531. The 2007 Plan terminated during 2017 with 4,733 shares not awarded or underlying options, which shares are now unavailable for issuance. There are no stock options granted under the 2007 Plan that remain unexercised and outstanding as of June 30, 2024. The 2008 Plan terminated during 2018 with 2,025 shares not awarded or underlying options, which shares are now unavailable for issuance. There are no stock options granted under the 2008 Plan that remain unexercised and outstanding as of June 30, 2024.

Stock option grants. The Company believes that such awards better align the interests of our employees with those of its stockholders. Option awards have been granted with an exercise price equal to the market price of its stock at the date of grant with such option awards generally vesting based on the completion of continuous service and having ten-year contractual terms. These option awards typically provide for accelerated vesting if there is a change in control (as defined in the Plans). The Company has registered all shares of common stock that are issuable under its Plans with the SEC. A total of 137,042 shares remained available for awards under the various Plans as of June 30, 2024.

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model.

A summary of all stock option activity under the Plans for the three months ended June 30, 2024 is as follows:

SCHEDULE OF STOCK OPTIONS OUTSTANDING

Options	Number of Shares		Weighted Average Exercise Price
Outstanding at December 31, 2023		53,600	$	45.55
Granted		—		—
Exercised		—		—
Forfeited		—		—
Outstanding at June 30, 2024		53,600	$	45.55
Exercisable at June 30, 2024		53,600	$	45.55

The Plans allow for the cashless exercise of stock options. This provision allows the option holder to surrender/cancel options with an intrinsic value equivalent to the purchase/exercise price of other options exercised. There were no shares surrendered pursuant to cashless exercises during the six months ended June 30, 2024 and 2023.

The aggregate intrinsic value of options outstanding was $-0- and $-0-, at June 30, 2024 and December 31, 2023, respectively. The aggregate intrinsic value of options exercisable was $-0- and $-0-, at June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024, the unrecognized portion of stock compensation expense on all existing stock options was $-0-.

The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s option plans as of June 30, 2024:

Outstanding options

Exercisable options

Exercise price

range

Number of

options

Weighted average
remaining

contractual life

Number of

options

Weighted average

remaining

contractual life

0.01 to $49.99

37,000

6.1 years

37,000

6.1 years

50.00 to $69.99

15,100

4.0 years

15,100

4.0 years

70.00 to $89.99

1,500

1.9 years

1,500

1.9 years

53,600

5.4 years

53,600

5.4 years

Restricted stock grants. The Board of Directors has granted restricted stock awards under the Plans. Restricted stock awards are valued on the date of grant and have no purchase price for the recipient. Restricted stock awards typically vest over one to five years corresponding to anniversaries of the grant date. Under the Plans, unvested shares of restricted stock awards may be forfeited upon the termination of service to or employment with the Company, depending upon the circumstances of termination. Except for restrictions placed on the transferability of restricted stock, holders of unvested restricted stock have full stockholder’s rights, including voting rights and the right to receive cash dividends.

A summary of all restricted stock activity under the Plans for the three months ended June 30, 2024 is as follows:

SCHEDULE OF RESTRICTED STOCK ACTIVITY

	Number of Restricted shares			Weighted average grant date fair value
Nonvested balance, December 31, 2023		53,875		$	11.27
Granted		80,197			2.12
Vested		(30,750	)		10.06
Forfeited		(1,125	)		22.20
Nonvested balance, June 30, 2024		102,197		$	4.34

The Company estimated the fair market value of these restricted stock grants based on the closing market price on the date of grant. As of June 30, 2024, there were $184,461 of total unrecognized compensation costs related to all remaining non-vested restricted stock grants, which will be amortized over the next forty-five months in accordance with their respective vesting scale.

The nonvested balance of restricted stock vests as follows:

Years ended	Number of shares

2024 (July 1, 2024 through December 31, 2024)		1,500
2025		73,349
2026		18,349
2027		5,000
2028		4,000

NOTE 14. COMMON STOCK PURCHASE WARRANTS

2023 Purchase Warrants

On April 5, 2023, the Company issued warrants to purchase a total of 1,125,000 shares of Common Stock. The warrant terms provide for net cash settlement outside the control of the Company under certain circumstances. As such, the Company is required to treat these warrants as derivative liabilities which are valued at their estimated fair value at their issuance date and at each reporting date with any subsequent changes reported in the consolidated statements of operations as the change in fair value of warrant derivative liabilities. Furthermore, the Company re-values the fair value of warrant derivative liability as of the date the warrant is exercised with the resulting warrant derivative liability transitioned to change in fair value of warrant derivative liabilities through the consolidated statement of operations.

The Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the warrant derivative liabilities as of their date of issuance and as of June 30, 2024:

SCHEDULE OF WARRANT MODIFICATION

	Issuance date assumptions			June 30, 2024 assumptions
Volatility - range		106.0	%	$	105.0	%
Risk-free rate		3.36	%		4.33	%
Dividend		0	%		0	%
Remaining contractual term		5.0 years			3.8 years
Exercise price		5.50 – 7.50			5.50 – 7.50
Common stock issuable under the warrants		1,125,000			1,125,000

2024 Purchase Warrants

On June 25, 2024, the Company issued Series A and pre-funded warrants to purchase a total of 1,768,227 shares of Common Stock along with the sale of common stock. The Company also issued Series B Warrants that will be exercisable at any time or times on or after the date Stockholder Approval is obtained. The warrant terms provide for net cash settlement outside the control of the Company under certain circumstances. As such, the Company is required to treat these warrants as derivative liabilities which are valued at their estimated fair value at their issuance date and at each reporting date with any subsequent changes reported in the consolidated statements of operations as the change in fair value of warrant derivative liabilities. Furthermore, the Company re-values the fair value of warrant derivative liability as of the date the warrant is exercised with the resulting warrant derivative liability transitioned to change in fair value of warrant derivative liabilities through the consolidated statement of operations.

	Issuance date assumptions			June 30, 2024 assumptions
Volatility - range		72.1 - 101.1	%		72.5 - 101.1	%
Risk-free rate		4.25 - 5.46	%		4.33 - 5.47	%
Dividend		0	%		0	%
Remaining contractual term		0.1 - 5.0 years			0.1 - 5.0 years
Exercise price	$	2.51		$	2.51
Common stock issuable under the warrants		1,768,227			1,768,227

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

SCHEDULE OF WARRANT ACTIVITY

	Warrants		Weighted average exercise price
Vested Balance, December 31, 2023		1,125,000	$	6.50
Granted		1,768,227		2.51
Exercised		—		—
Forfeited/cancelled		—		—
Vested Balance, June 30, 2024		2,893,227	$	4.06

The total intrinsic value of all outstanding warrants aggregated $-0- as of June 30, 2024 and 2023, and the weighted average remaining term was 42.6 months as of June 30, 2024, respectively.

The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable warrants to purchase shares of common stock as of June 30, 2024:

		Outstanding and exercisable warrants
Exercise price		Number of warrants		Weighted average remaining contractual life
$	5.50		375,000		3.8 years
$	6.50		375,000		3.8 years
$	7.50		375,000		3.8 years
$	2.51		1,768,227		3.41 years

			2,893,227		3.6 years

NOTE 15. STOCKHOLDERS’ EQUITY

2023 Issuance of Restricted Common Stock

On January 10, 2023, the board of directors approved the grant of 22,500 shares of common stock to officers of the Company. Such shares will generally vest over a period of one to five years on their respective anniversary dates in January through January 2028, provided that each grantee remains an officer or employee on such dates. Additionally, the board of directors approved the grant of 12,500 restricted common shares to certain new employees of the Company. Such shares will generally vest over a period of one to two years on their respective anniversary dates in January through January 2025, provided that each grantee remains an employee of the company on such dates.

2024 Issuance of Restricted Common Stock

In January 2024, the board of directors approved the grant of 55,000 shares of common stock to officers of the Company. Such shares will generally vest over a period of one to five years on their respective anniversary dates in January through January 2028, provided that each grantee remains an officer or employee on such dates. Additionally, the board of directors approved the grant of 25,197 restricted common shares to certain new employees of the Company. Such shares will generally vest over a period of one to two years on their respective anniversary dates in January through January 2026, provided that each grantee remains an employee of the company on such dates.

2024 Private Placement Transaction

On June 24, 2024, the Company entered into a private placement transaction (the “Private Placement”), pursuant to a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain institutional investors (the “Purchasers”) for aggregate gross proceeds of approximately $2.9 million, before deducting fees of $0.8 million to the placement agent and other expenses payable by the Company in connection with the Private Placement.

As part of the Private Placement, the Company issued an aggregate of 1,768,227 units and pre-funded units (collectively, the “Units”) at a purchase price of $2.51 per unit (less $0.0001 per pre-funded unit). Each Unit consists of (i) one share of common stock, par value $0.001 per share, of the Company (the “Common Stock”) (or one pre-funded warrant to purchase one share of Common Stock (the “Pre-Funded Warrants”)), (ii) one Series A warrant to purchase one share of Common Stock (the “Series A Warrant”) and (iii) one Series B warrant to purchase such number of shares of Common Stock as will be determined on the Reset Date and in accordance with the terms therein (the “Series B Warrant”, and together with the Series A Warrant, the “Warrants”).

Cancellation of Restricted Stock

During the six months ended June 30, 2024, the Company cancelled 1,125 shares due to termination of employees.

Reverse Stock Split

On February 6, 2023, we filed a Certificate of Amendment to the Articles of Incorporation, as amended, with the Secretary of State of the State of Nevada to effect a 1-for-20 reverse stock split (the “Reverse Stock Split”) of the shares of our common stock. The Reverse Stock Split was effective as of time of filing. No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares of our Common Stock that would have otherwise resulted from the Reverse Stock Split were rounded up to the nearest whole number. In connection with the Reverse Stock Split, our board approved appropriate and proportional adjustments to all outstanding securities or other rights convertible or exercisable into shares of our Common Stock, including, without limitation, all preferred stock, warrants, options, and other equity compensation rights. All historical share and per-share amounts reflected throughout our consolidated financial statements and other financial information in this Report have been adjusted to reflect the Reverse Stock Split as if the split occurred as of the earliest period presented. The par value per share of our common stock was not affected by the Reverse Stock Split.

Noncontrolling Interests

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 attributable to noncontrolling interests of consolidated subsidiary of $73,310 and $72,754 for the three months ended June 30, 2024 and 2023, and $61,062 and $198,993 for the six months ended June 30, 2024 and 2023, respectively.

NOTE 16. NET EARNINGS (LOSS) PER SHARE

The calculation of the weighted average number of shares outstanding and loss per share outstanding for the three and six months ended June 30, 2024 and 2023 are as follows:

	2024			2023			2024			2023
	For the three months ended June 30,						For the six months ended June 30,
	2024			2023			2024			2023
Numerator for basic and diluted income per share – Net loss attributable to common stockholders	$	(5,083,861	)	$	(8,393,304	)	$	(9,014,882	)	$	(14,499,122	)

Denominator for basic loss per share – weighted average shares outstanding		2,921,307			2,785,663			2,891,205			2,768,683
Dilutive effect of shares issuable under stock options and warrants outstanding		—			—			—			—

Denominator for diluted loss per share – adjusted weighted average shares outstanding		2,921,307			2,785,663			2,891,205			2,768,683

Net loss per share:
Basic	$	(1.74	)	$	(3.01	)	$	(3.12	)	$	(5.24	)
Diluted	$	(1.74	)	$	(3.01	)	$	(3.12	)	$	(5.24	)

Basic income (loss) per share is based upon the weighted average number of common shares outstanding during the period. For the three and six months ended June 30, 2024 and 2023, all shares issuable upon conversion of convertible debt and the exercise of outstanding stock options and warrants were antidilutive, and, therefore, not included in the computation of diluted income (loss) per share.

NOTE 17. COUNTRY STAMPEDE ACQUISITION

On March 1, 2024, Kustom 440, entered into an Asset Purchase Agreement (the “Acquisition Agreement”) with JC Entertainment, LLC, a Kansas limited liability company (“JC Entertainment”). Pursuant to the Acquisition Agreement, Kustom 440 acquired certain assets associated with a music entertainment event (“Country Stampede”), including all intellectual property arising out of and relating to Country Stampede (“Country Stampede Intellectual Property”) and certain contracts in which JC Entertainment is a party to host and operate the 2024 Country Stampede (the “Assumed Contracts”, and together with the Country Stampede Intellectual Property, the “Purchased Assets”).

As consideration for acquiring the Purchased Assets, Kustom 440 paid JC Entertainment the aggregate purchase price amount $542,959. Kustom 440 shall receive a credit for all non-refunded festival ticket sales for the 2024 Country Stampede to be calculated immediately prior to Closing, and JC Entertainment shall be entitled to keep all ticket sale proceeds made and/or received prior to Closing. Kustom 440 shall be obligated, to the extent a refund is sought after Closing, to provide such refund, if appropriate, to the customer requesting a refund, and shall indemnify and hold harmless JC Entertainment from any and all claims, liabilities, costs, suits, or the like relating to such refund request.

The Company accounts for business combinations using the acquisition method and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was not significant. Accordingly, the presentation of the assets acquired, historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, are not required to be presented. Under the acquisition method, the purchase price of the Country Stampede Acquisition has been allocated to the acquired tangible and identifiable intangible assets and assumed liabilities based on their estimated fair values at the time of the Country Stampede Acquisition. This allocation involves a number of assumptions, estimates, and judgments that could materially affect the timing or amounts recognized in our financial statements. The Country Stampede Acquisition was structured as an asset purchase; however the parties agreed to coordinate the election to invoke IRS Section 338(h)(10) relative to this transaction for tax purposes. Therefore, the excess purchase price over the fair value of net tangible assets acquired was recorded as goodwill, which will be amortized over 15 years for income tax filing purposes. Likewise, the other acquired assets were stepped up to fair value and is deductible for income tax purposes. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date.

The purchase price of the Country Stampede Acquisition was allocated to tangible assets, goodwill, identifiable intangible assets, and assumed liabilities based on their preliminary estimated fair values at the time of the acquisition. The Company retained the services of an independent valuation firm to determine the fair value of these identifiable intangible assets. The Company will continue to evaluate the fair value of the identified intangible assets. The preliminary estimated fair value of assets acquired, and liabilities assumed in the Country Stampede Acquisition were as follows:

	As allocated (Preliminary)
Description	March 1, 2024
Assets acquired (provisional):
Tangible assets acquired	$	305,000
Identifiable intangible assets acquired (Trademarks and trade names)		300,000
Goodwill		225,959
Liabilities assumed		(288,000	)
Liabilities assumed pursuant to stock purchase agreement		(288,000	)
Net assets acquired and liabilities assumed	$	542,959
Consideration:
Cash paid at Country Stampede Acquisition date	$	400,000
Cash paid subsequent to closing		142,959

Total Country Stampede Acquisition purchase price	$	542,959

During the measurement period (which is the period required to obtain all necessary information that existed at the acquisition date, or to conclude that such information is unavailable, not to exceed one year), additional assets or liabilities may be recognized, or there could be changes to the amounts of assets or liabilities previously recognized on a preliminary basis, if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of these assets or liabilities as of that date.

NOTE 18. SEGMENT DATA

The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s three operating segments are Video Solutions, Revenue Cycle Management, and Entertainment, each of which has specific personnel responsible for that business and reports to the CODM. Corporate expenses capture the Company’s corporate administrative activities, is also to be reported in the segment information. The Company’s captive insurance subsidiary provides services to the Company’s other business segments and not to outside customers. Therefore, its operations are eliminated in consolidation and is not considered a separate business segment for financial reporting purposes.

The Video Solutions Segment encompasses our law, commercial, and Shield™ divisions. This segment includes both service and product revenues through our subscription models offering cloud and warranty solutions, and hardware sales for video and health safety solutions. The Revenue Cycle Management Segment provides working capital and back-office services to a variety of healthcare organizations throughout the country, as a monthly service fee. The Entertainment Segment acts as an intermediary between ticket buyers and sellers within our secondary ticketing platform, ticketsmarter.com, and we also acquire tickets from primary sellers to then sell through various platforms.

The Company’s corporate administration activities are reported in the corporate line item. These activities primarily include expense related to certain corporate officers and support staff, certain accounting staff, expense related to the Company’s Board of Directors, stock option expense for options granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes (if any), and deferred income taxes.

Summarized financial information for the Company’s reportable business segments is provided for the indicated periods and as of June 30, 2024, and June 30, 2023:

SCHEDULE OF SEGMENT REPORTING

	2024			2023			2024			2023
	For the three months ended June 30,						For the six months ended June 30,
	2024			2023			2024			2023
Net Revenues:
Video Solutions	$	1,585,670		$	1,899,590		$	3,303,963		$	3,798,953
Revenue Cycle Management		1,564,354			1,724,772			2,998,952			3,506,361
Entertainment		2,466,211			4,655,270			4,842,671			8,671,506
Total Net Revenues	$	5,616,235		$	8,279,632		$	11,145,586		$	15,976,820

Gross Profit:
Video Solutions	$	287,840		$	779,408		$	853,534		$	1,313,601
Revenue Cycle Management		601,406			802,174			1,065,137			1,578,107
Entertainment		(646,854	)		1,155,458			(154,841	)		1,390,121
Total Gross Profit	$	242,392		$	2,737,040		$	1,763,830		$	4,281,829

Operating Income (loss):
Video Solutions	$	(1,400,039	)	$	(1,364,987	)	$	(2,533,242	)	$	(3,328,173	)
Revenue Cycle Management		150,323			152,044			126,352			255,809
Entertainment		(1,828,513	)		(328,929	)		(2,470,732	)		(1,561,936	)
Corporate		(835,992	)		(3,398,832	)		(2,675,571	)		(6,479,211	)
Total Operating Income (Loss)	$	(3,914,221	)	$	(4,940,704	)	$	(7,553,193	)	$	(11,113,511	)

Depreciation and Amortization:
Video Solutions	$	178,555		$	203,987		$	387,724		$	402,109
Revenue Cycle Management		26,715			25,887			53,429			51,394
Entertainment		317,180			318,058			637,847			637,539
Total Depreciation and Amortization	$	522,450		$	547,932		$	1,079,000		$	1,091,042

	June 30, 2024		December 31, 2023
Assets (net of eliminations):
Video Solutions	$	22,998,670	$	26,396,559
Revenue Cycle Management		1,904,280		2,260,376
Entertainment		6,315,677		6,324,211
Corporate		12,108,588		12,047,663
Total Identifiable Assets	$	43,327,215	$	47,028,809

The segments recorded noncash items effecting the gross profit and operating income (loss) through the established inventory reserves based on estimates of excess and/or obsolete current and non-current inventory. The Company recorded a reserve for excess and obsolete inventory in the video solutions segment of $4,008,278 and a reserve for the entertainment segment of $126,723 as of June 30, 2024.

The segment net revenues reported above represent sales to external customers. Segment gross profit represents net revenues less cost of revenues. Segment operating income, which is used in management’s evaluation of segment performance, represents net revenues, less cost of revenues, less all operating 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.

NOTE 19. RELATED PARTY TRANSACTIONS

Transactions with Managing Member of Nobility Healthcare

The Company accrued reimbursable expenses payable to Nobility, LLC totaling $398,379 and $265,241 for the six months ended June 30, 2024 and 2023 and management fees in accordance with the operating agreement of $10,024 and $32,181 for the three months ended June 30, 2024 and 2023. The company recorded management fees of $22,403 and $67,106 for the six months ended June 30, 2024 and 2023.

Transactions with Related Party of TicketSmarter

On September 22, 2023, a trust, the beneficiaries of which are TicketSmarter’s Chief Executive Officer and his spouse, made a loan in the amount of $2,325,000 to TicketSmarter to support TicketSmarter’s operations. On October 2, 2023 an additional $375,000 was advanced to Ticketsmarter. The transaction was recorded as a related party note payable (the “TicketSmarter Related Party Note”). The TicketSmarter Related Party Note bears interest of 13.25% per annum with repayment beginning January 2, 2024. As of June 30, 2024, the entire TicketSmarter Related Party note is $2,700,000, is classified as current, with an accrued interest balance of $283,782. The use of proceeds of the TicketSmarter Related Party Note was to resolve numerous outstanding payables at a discounted rate, the discount received is recognized as a gain on extinguishment of liabilities on the statement of operations. Additionally, these negotiations relieved TicketSmarter of numerous future obligations following fiscal year 2023.

NOTE 20. SUBSEQUENT EVENTS

Letter Agreement

As previously disclosed, on March 1, 2024, the Company entered into a Note Purchase Agreement (the “Agreement”), by and between the Company, Kustom Entertainment (together with the Company, the “Borrowers”), and Mosh Man, LLC, a New Jersey limited liability company (the “Purchaser”), pursuant to which the Borrowers issued to the Purchaser a Senior Secured Promissory Note (the “Note”) with a principal amount of $1,425,000.

On July 13, 2024, the Company entered into a Letter Agreement (the “Letter Agreement”), by and between the Company, Kustom Entertainment and the Purchaser, increasing automatically the principal amount of the Note from $1,425,000 to $1,725,000; provided, however, that if the Borrowers repay the Note in full on or before August 15, 2024, then the principal amount of the Note shall be reduced automatically by $100,000. Pursuant to the Letter Agreement, the Borrowers’ failure to adhere to Sections 3.2(d)(iii) (the “Section 3.2(d)(iii) Failure”) and Section 3.3(a) (the “Section 3.3(a) Failure”) of the Purchase Agreement shall not constitute Events of Default, as defined in the Purchase Agreement; provided, however, that if the Borrowers shall be in breach or default under the Letter Agreement or otherwise fail to satisfy their obligations thereunder, the Section 3.2(d)(iii) Failure and Section 3.3(a) Failure shall each automatically constitute an Event of Default under the Purchase Agreement. Pursuant to the Letter Agreement, the Company agreed to make a cash payment to the Purchaser in the amount of $150,000 on or before July 26, 2024. The Company also agreed to sell or enter into a firm commitment to sell the office building owned by the Company and located at 14001 Marshall Drive, Lenexa, Kansas 66215 (the “Company Office Building”) and pay to the Purchaser: (i) $325,000, if the Company sells or enters into a firm commitment to sell the Company Office Building on or before August 7, 2024; or (ii) $400,000, if the Company sells or enters into a firm commitment to sell the Company Office Building after August 7, 2024. Pursuant to the Letter Agreement, the Company’s failure to sell or enter into a firm commitment to sell the Company Office Building prior to September 1, 2024 shall constitute an Event of Default, as defined in the Purchase Agreement, under the Purchase Agreement. The Company shall pay to the Purchaser $100,000 per month until the Note is repaid in full, with the first such payment occurring on August 12, 2024, and each subsequent payment occurring on the 12th calendar day of each month thereafter. Pursuant to the Letter Agreement, the Purchaser shall be a party to any and every flow of funds when there is an extraordinary receipt of capital by the Company. The Company shall pay to the Purchaser a penalty payment of $200,000 within five Business Days, as defined in the Purchase Agreement, if the Company fails to make the Purchaser a party to any flow of funds in respect of an extraordinary receipt of capital by the Company.

Except as stated above, the Letter Agreement does not result in any other substantive changes to the Agreement.

Purchase and Sale Agreement

On August 2, 2024, the Company entered into a purchase and sale agreement (the “Purchase Agreement”) with Serenity Now, LLC, a Kansas limited liability company (the “Buyer”) to sell a commercial office building and associated property located at 14001 Marshall Drive, Lenexa, KS (the “Office Building”). The Buyer has no prior material relationship with the Company beyond the Agreement.

Pursuant to the Agreement, the Buyer has agreed to acquire the Property (as defined in the Agreement) for five million nine hundred thousand and 00/100 dollars ($5,900,000), exclusive of closing costs.

The Purchase Agreement includes customary representations and warranties, covenants and closing conditions, including, without limitation, assignment and assumption of existing leases and performance of all the covenants. Pursuant to the terms of the Agreement, during the Inspection Period (as defined in the Purchase Agreement), the Buyer is entitled to conduct inspections and review title and survey matters. The Company will lease its premises in the Office Building from the Buyer for six months after the closing of the Agreement for $240,000.

On August 12, 2024, pursuant to the Agreement, the Company and the Buyer completed the sale of the Property. The Buyer has no prior material relationship with the Company beyond the Agreement.

Common Stock Issuance

The Company issued 353,123 shares of common stock subsequent to June 30, 2024.

Effectiveness of Registration Statement

Clover Leaf Capital Corp.’s (“Clover Leaf”) registration statement on Form S-4 was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) as of Tuesday, July 30, 2024, relating to the previously announced proposed business combination by and among Clover Leaf, Kustom Entertainment, Inc. and CL Merger Sub, Inc.

On August 1, the board of directors of the Company (the “Board”) set the record date for the dividend distribution to August 12, 2024 for determining stockholders entitled to receive the dividend distribution (the “Record Date”).

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

This quarterly report on Form 10-Q (the “Report”) of Digital Ally, Inc. (the “Company”, “we”, “us”, or “our”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. 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 years 2024 and 2023; (2) economic and other risks for our business from the effects of the COVID-19 pandemic, including the impacts on our law-enforcement and commercial customers, suppliers and employees and on our ability to raise capital as required; (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 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; (7) our ability to produce our products in a cost-effective manner; (8) competition from larger, more established companies with far greater economic and human resources; (9) our ability to attract and retain quality employees; (10) risks related to dealing with governmental entities as customers; (11) our expenditure of significant resources in anticipation of sales due to our lengthy sales cycle and the potential to receive no revenue in return; (12) characterization of our market by new products and rapid technological change; (13) our dependence on sales of our EVO-HD, DVM-800, DVM-250 and FirstVU products; (14) that stockholders may lose all or part of their investment if we are unable to compete in our markets and return to profitability; (15) defects in our products that could impair our ability to sell our products or could result in litigation and other significant costs; (16) 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; (17) our ability to protect technology through patents and to protect our proprietary technology and information, such as trade secrets, through other similar means; (18) our ability to generate more recurring cloud and service revenues; (19) risks related to our license arrangements; (20) the fluctuation of our operation results from quarter to quarter; (21) 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; (22) the issuance or sale of substantial amounts of our Common Stock, or the perception that such sales may occur in the future, which may have a depressive effect on the market price of our securities; (23) potential dilution from the issuance of Common Stock underlying outstanding options and warrants; (24) our additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of our Common Stock; (25) the volatility of our stock price due to a number of factors, including, but not limited to, a relatively limited public float; (26) our ability to integrate and realize the anticipated benefits from acquisitions; (27) our ability to maintain the listing of our Common Stock on the Nasdaq Capital Market

Current Trends and Recent Developments for the Company

Segment Overview

Video Solutions Operating Segment – Within our video solutions operating segment we supply technology-based products utilizing our portable digital video and audio recording capabilities for the law enforcement and security industries and for the commercial fleet and mass transit markets. 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.

Our video solutions segment revenue encompasses video recording products and services for our law enforcement and commercial customers and the sale of Shield disinfectant and personal protective products. This segment generates revenues through our subscription models offering cloud and warranty solutions, 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.

Revenue Cycle Management Operating Segment – We entered the revenue cycle management business late in the second quarter of 2021 with the formation of our wholly owned subsidiary, Digital Ally Healthcare, Inc. and its majority-owned subsidiary Nobility Healthcare. Nobility Healthcare completed its first acquisition in June 2021, when it acquired a private medical billing company, and has since completed three additional acquisitions of private medical billing companies, in which we will assist in providing working capital and back-office services to healthcare organizations throughout the country. Our assistance consists of insurance and benefit verification, medical treatment documentation and coding, and collections. Through our expertise and experience in this field, we maximize our customers’ service revenues collected, leading to substantial improvements in their operating margins and cash flows.

Our revenue cycle management segment consists of our medical billing subsidiaries. Revenues of this segment are recognized after we perform the obligations of our revenue cycle management services. Our revenue cycle management services are services, performed and charged monthly, generally based on a contractual percentage of total customer collections, for which we recognize our net service fees.

Entertainment Operating Segment - We also entered into live entertainment and events ticketing services through the formation of our wholly owned subsidiary, TicketSmarter and its completed acquisitions of Goody Tickets, LLC and TicketSmarter, LLC, on September 1, 2021. TicketSmarter provides ticket sales, partnerships, and mainly, ticket resale services through its online ticketing marketplace for live events, TicketSmarter.com. TicketSmarter offers tickets for over 125,000 live events through its platform, for a wide range of events, including concerts, sporting events, theatres, and performing arts, throughout the country. We also offer production and promotion of live music events in third-party venues throughout the country. These services begin with the logistical matters of an event, including artist booking and research, ticketing, staging, on-site operations, vendor sourcing, and day of production.

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

Results of Operations

Summarized financial information for the Company’s reportable business segments is provided for the indicated periods and as of June 30, 2024, and June 30, 2023:

	For the three months ended June 30,						For the six months ended June 30,
	2024			2023			2024			2023
Net Revenues:
Video Solutions	$	1,585,670		$	1,899,590		$	3,303,963		$	3,798,953
Revenue Cycle Management		1,564,354			1,724,772			2,998,952			3,506,361
Entertainment		2,466,211			4,655,270			4,842,671			8,671,506
Total Net Revenues	$	5,616,235		$	8,279,632		$	11,145,586		$	15,976,820

Gross Profit:
Video Solutions	$	287,840		$	779,408		$	853,534		$	1,313,601
Revenue Cycle Management		601,406			802,174			1,065,137			1,578,107
Entertainment		(646,854	)		1,155,458			(154,841	)		1,390,121
Total Gross Profit	$	242,392		$	2,737,040		$	1,763,830		$	4,281,829

Operating Income (loss):
Video Solutions	$	(1,400,039	)	$	(1,364,987	)	$	(2,533,242	)	$	(3,328,173	)
Revenue Cycle Management		150,323			152,044			126,352			255,809
Entertainment		(1,828,513	)		(328,929	)		(2,470,732	)		(1,561,936	)
Corporate		(835,992	)		(3,398,832	)		(2,675,571	)		(6,479,211	)
Total Operating Income (Loss)	$	(3,914,221	)	$	(4,940,704	)	$	(7,553,193	)	$	(11,113,511	)

Depreciation and Amortization:
Video Solutions	$	178,555		$	203,987		$	387,724		$	402,109
Revenue Cycle Management		26,715			25,887			53,429			51,394
Entertainment		317,180			318,058			637,847			637,539
Total Depreciation and Amortization	$	522,450		$	547,932		$	1,079,000		$	1,091,042

	June 30, 2024		December 31, 2023
Assets (net of eliminations):
Video Solutions	$	22,998,670	$	26,396,559
Revenue Cycle Management		1,904,280		2,260,376
Entertainment		6,315,677		6,324,211
Corporate		12,108,588		12,047,663
Total Identifiable Assets	$	43,327,215	$	47,028,809

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 the first half of 2024 and all quarters during 2023. The following is a summary of our recent operating results on a quarterly basis:

	For the Three Months Ended:
	June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023
Total revenue	$	5,616,235		$	5,529,351		$	6,228,351		$	6,337,699		$	8,279,632
Gross profit		242,392			1,523,699			549,031			1,226,149			2,737,040
Gross profit margin %		4.3	%		27.6	%		8.8	%		19.3	%		33.1	%
Total selling, general and administrative expenses		4,156,613			5,162,733			6,528,031			6,374,192			7,677,744
Operating income (loss)		(3,914,221	)		(3,639,034	)		(5,979,000	)		(5,148,043	)		(4,940,704	)
Operating income (loss) %		(69.7	)%		(65.8	)%		(96.0	)%		(81.2	)%		(59.7	)%
Net income (loss)	$	(5,010,551	)	$	(3,943,268	)	$	(7,484,778	)	$	(3,679,043	)	$	(8,320,549	)

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; and (7) the completion of corporate acquisitions including the recent purchases in the revenue cycle management and entertainment operating segments. We reported a net loss of $8,953,819 on revenues of $11,145,586 for the six months ended June 30, 2024.

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 other than the following:

We are a party to operating leases and license agreements that represent commitments for future payments (described in Note 9, “Operating Leases,” to our condensed consolidated financial statements) and we have issued purchase orders in the ordinary course of business that represent commitments to future payments for goods and services.

For the Three Months Ended June 30, 2024 and 2023

Results of Operations

Summarized immediately below and discussed in more detail in the subsequent subsections is an analysis of our operating results for the three months ended June 30, 2024 and 2023, represented as a percentage of total revenues for each such quarter:

	For the three months ended June 30,
	2024			2023
Revenue		100	%		100	%
Cost of revenue		96	%		67	%

Gross profit		4	%		33	%
Selling, general and administrative expenses:
Research and development expense		10	%		7	%
Selling, advertising and promotional expense		13	%		25	%
General and administrative expense		51	%		61	%

Total selling, general and administrative expenses		74	%		93	%

Operating loss		(70	)%		(60	)%

Loss on accrual for legal settlement		—	%		(22	)%
Loss on conversion of convertible notes		—	%		(1	)%
Change in fair value of derivative liabilities		—	%		(1	)%
Loss on extinguishment of debt		(1	)%
Other income and interest income (expense), net		(19	)%		(17	)%

Loss before income tax benefit		(90	)%		(101	)%
Income tax (provision)		—	%		—	%

Net loss		(90	)%		(101	)%

Net loss attributable to noncontrolling interests of consolidated subsidiary		(1	)%		(1	)%

Net loss attributable to common stockholders		(91	)%		(102	)%

Net loss per share information:
Basic	$	(1.74	)	$	(3.01	)
Diluted	$	(1.74	)	$	(3.01	)

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 ThermoVu^TMunits, disinfectants, and personal protective equipment. Additionally, product revenues also include the sale of tickets by our entertainment operating segment that have been purchased or received through our sponsorships and partnerships and held in inventory by our entertainment segment until their sale.

Service and other revenues consist of cloud and warranty services revenues from our subscription plan and storage offerings of our video solutions segment. Our entertainment operating 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.

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 compensation for its role in the transaction. The distributor generally maintains product inventory, customer receivables and all related risks and rewards of ownership. Revenue is recorded when the product is shipped to the distributor consistent with the terms of the distribution agreement.

	●	Repair parts and services for domestic and international customers are generally handled by our inside customer service employees. Revenue is recognized upon shipment of the repair parts and acceptance of the service or materials by the end customer.

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

●

Our revenue cycle management operating segment generates service revenues through relationships with medium to large healthcare organizations, in which the underlying service revenue is recognized upon execution of services. Service revenues are generally determined as a percentage of the dollar amount of medical billings collected by the customer.

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

●

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

Product revenues by operating segment is as follows:

	For the three months ended June 30,
	2024		2023
Product Revenues:
Video Solutions	$	620,939	$	1,148,602
Revenue Cycle Management		—		—
Entertainment		1,586,662		1,929,059
Total Product Revenues	$	2,207,601	$	3,077,661

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

●

Revenues generated by the entertainment operating segment began with the Company’s September 2021 acquisition of TicketSmarter. The entertainment operating segment generated $1,586,662 in product revenues for the three months ended June 30, 2024, compared to $1,929,059 for the three months ended June 30, 2023, a decrease of $342,397 (18%). This product revenue relates to the first Kustom 440 music festival in 2023 that did not recur in 2024, the initial Country Stampede music festival in 2024, as well as the resale of tickets purchased for live events, including sporting events, concerts, and theatre, then sold through various platforms to customers.

	●	The Company’s video segment operating segment generated revenues totaling $620,939 during the three months ended June 30, 2024 compared to $1,148,602 for the three months ended June 30, 2023, a decrease of $527,663 (46%). In general, our video solutions operating segment has experienced pressure on its product revenues as our in-car and body-worn systems are facing increased competition because our competitors have released new products with advanced features. Additionally, our law enforcement revenues declined compared to the same period in 2023 due to price-cutting and competitive actions by our competitors, adverse marketplace effects related to our patent litigation proceedings and our recent financial condition.

	●	Our video solutions operating segment management has continued to focus on migrating commercial customers, from a hardware sale to a service fee model. Therefore, we expect a reduction in commercial hardware sales (principally DVM-250’s, FLT-250’s, and a portion of our body-worn camera line) as we convert these customers to a service model under which we provide the hardware as part of a recurring monthly service fee. In that respect, we introduced a monthly subscription agreement plan for our body worn cameras and related equipment during the second quarter of 2020 that allowed law enforcement agencies to pay a monthly service fee to obtain body worn cameras without incurring a significant upfront capital outlay. This program has gained some traction, resulting in decreased product revenues and increasing our service revenues. We expect this program to continue to hold traction, resulting in recurring revenues over a span of three to five years.

Service and other revenues by operating segment is as follows:

	For the three months ended June 30,
	2024		2023
Service and Other Revenues:
Video Solutions	$	964,731	$	750,988
Revenue Cycle Management		1,564,354		1,724,772
Entertainment		879,549		2,726,211
Total Service and Other Revenues	$	3,408,634	$	5,201,971

Service and other revenues for the three months ended June 30, 2024 and 2023 were $3,408,634 and $5,201,971, respectively, a decrease of $1,793,337 (34%), due to the following factors:

	●	Cloud revenues generated by the video solutions operating segment were $637,786 and $471,949 for the three months ended June 30, 2024 and 2023, respectively, an increase of $165,837 (35%). We have experienced increased interest in our cloud solutions for law enforcement primarily due to the deployment of our cloud-based EVO-HD in-car system and our next generation body-worn camera products, which contributed to our increased cloud revenues in the three months ended June 30, 2024. We expect this trend to continue throughout 2024 as the migration from local storage to cloud storage continues in our customer base.

	●	Video solutions operating segment revenues from extended warranty services were $233,031 and $221,228 for the three months ended June 30, 2024 and 2023, respectively, an increase of $11,803 (5%).

	●	Our entertainment operating segment generated service revenues totaling $879,549 and $2,726,211 for the three months ended June 30, 2024 and 2023, respectively, a decrease of $1,846,662 (68%). TicketSmarter collects fees on transactions administered through the TicketSmarter.com platform for the buying and selling of tickets for live events throughout the country. We expect our entertainment operating segment to continue to fluctuate as we look to right-size this segment and work towards profitability.

	●	Our revenue cycle management operating segment generated service revenues totaling $1,564,354 and $1,724,772 for the three months ended June 30, 2024 and 2023, respectively, a decrease of $160,418 (9%). Our revenue cycle management operating segment provides revenue cycle management solutions and back-office services to healthcare organizations throughout the country. We expect our revenue cycle management segment to continue to present a strong revenue outlook moving forward.

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

Cost of Product Revenue

Overall cost of product revenue sold for the three months ended June 30, 2024, and 2023 was $3,419,254 and $2,219,515, respectively, an increase of $1,199,739 (54%). Overall cost of goods sold for products as a percentage of product revenues for the three months ended June 30, 2024, and 2023 were 155% and 72%, respectively. Cost of products sold by operating segment is as follows:

	For the three months ended June 30,
	2024		2023
Cost of Product Revenues:
Video Solutions	$	958,462	$	805,389
Revenue Cycle Management		—		—
Entertainment		2,460,792		1,414,126
Total Cost of Product Revenues	$	3,419,254	$	2,219,515

The increase in cost of goods sold for our video solutions segment products was primarily driven by inventory adjustments and returns as compared to the same period in the prior year. Cost of product sold as a percentage of product revenues for the video solutions segment increased to 154% for the three months ended June 30, 2024 as compared to 70% for the three months ended June 30, 2023.

The increase in entertainment operating segment cost of product sold was driven by the costs of the Country Stampede music festival for the three months ended June 30, 2024 compared to June 30, 2023, resulting in cost of product revenue of $2,460,792 for the three months ended June 30, 2024, compared to $1,414,126 for the three months ended June 30, 2023. Cost of product sold as a percentage of product revenues for the entertainment segment was 155% for the three months ended June 30, 2024 as compared to 73% for the three months ended June 30, 2023.

We recorded $4,135,001 and $4,542,461 in reserves for obsolete and excess inventories at June 30, 2024 and December 31, 2023, respectively. Total raw materials, component parts, and work-in-progress were $2,630,162 and $3,065,049 at June 30, 2024 and December 31, 2023, respectively, a decrease of $434,887 (14%). Finished goods balances were $3,722,972 and $5,322,693 at June 30, 2024 and December 31, 2023, respectively, a decrease of $1,599,721 (30%) which was attributable to a decrease in finished goods from our entertainment segment. The small decrease in the inventory reserve is primarily due to the reduction in finished goods and movement of excess inventory, offset by the decrease in reserve at the entertainment segment. We believe the reserves are appropriate given our inventory levels as of June 30, 2024.

Cost of Service Revenue

Overall cost of service revenue sold for the three months ended June 30, 2024, and 2023 was $1,954,589 and $3,323,077, respectively, a decrease of $1,368,488 (41%). Overall cost of goods sold for services as a percentage of service revenues for the three months ended June 30, 2024, and 2023 were 57% and 64%, respectively. Cost of service revenues by operating shipment is as follows:

	For the three months ended June 30,
	2024		2023
Cost of Service Revenues:
Video Solutions	$	339,368	$	314,794
Revenue Cycle Management		962,948		922,598
Entertainment		652,273		2,085,685
Total Cost of Service Revenues	$	1,954,589	$	3,323,077

The increase in cost of service revenues for our video solutions segment is commensurate with the increase in service revenues in the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Cost of service revenues as a percentage of service revenues for the video solutions segment decreased to 35% for the three months ended June 30, 2024 as compared to 42% for the three months ended June 30, 2023.

Cost of service revenues as a percentage of service revenues for the revenue cycle management operating segment was 62% for the three months ended June 30, 2024 as compared to 53% for the three months ended June 30, 2023.

The decrease in entertainment operating segment cost of service revenues is commensurate with the decrease in service revenues in the three months ended June 30, 2024, compared to the three months ended June 30, 2023. Cost of service revenues as a percentage of service revenues for the entertainment segment was 74% for the three months ended June 30, 2024 as compared to 77% for the three months ended June 30, 2023.

Gross Profit

Overall gross profit for the three months ended June 30, 2024 and 2023 was $242,392 and $2,737,040, respectively, a decrease of $2,494,648 (91%). Gross profit by operating segment was as follows:

	For the three months ended June 30,
	2024			2023

Gross Profit:
Video Solutions	$	287,840		$	779,407
Revenue Cycle Management		601,406			802,174
Entertainment		(646,854	)		1,155,459
Total Gross Profit	$	242,392		$	2,737,040

The overall decrease is attributable to the decrease in gross profit for the entertainment segment for the three months ended June 30, 2024 along with a decrease in the overall cost of sales as a percentage of overall revenues to 96% for the three months ended June 30, 2024 from 67% for the three months ended June 30, 2023. Our goal is to continue to improve our margins over the longer term based on the expected margins generated by our new recent revenue cycle management and entertainment operating segments together with our video solutions operating segment and its expected margins from our EVO-HD, DVM-800, VuLink, FirstVu Pro, FirstVu II, Shield^TM disinfectants and our cloud evidence storage and management offering, provided that they gain traction in the marketplace. In addition, if revenues from the video solutions segment increase, we will seek to further improve our margins from this segment through expansion and increased efficiency utilizing fixed manufacturing overhead components. We plan to continue our initiative to more efficiently management of our supply chain through outsourcing production, quantity purchases and more effective purchasing practices.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $4,156,613 and $7,677,744 for the three months ended June 30, 2024 and 2023, respectively, a decrease of $3,521,131 (46%). The decrease was primarily attributable to the reduction in new sponsorships being entered into by the Company. Our selling, general and administrative expenses as a percentage of sales decreased to 74% for the three months ended June 30, 2024 compared to 93% in the same period in 2023. The significant components of selling, general and administrative expenses are as follows:

	For the three months ended June 30,
	2024		2023
Research and development expense	$	545,776	$	540,276
Selling, advertising and promotional expense		728,906		2,104,625
General and administrative expense		2,881,931		5,032,843

Total	$	4,156,613	$	7,677,744

Research and development expense. We continue to focus on bringing new products to market, including updates and improvements to current products. Our research and development expenses totaled $545,776 and $540,276 for the three months ended June 30, 2024 and 2023, respectively. Most of our engineers are dedicated to research and development activities for new products, primarily the new generation of body-worn cameras, EVO-HD and EVO Fleet that can be located in multiple places in a vehicle. We expect our research and development activities will continue to trend higher in future quarters as we continue to expand our product offerings based on our new body-worn camera and EVO-HD product platform and as we outsource more development projects. We consider our research and development capabilities and new product focus to be a competitive advantage and intend to continue to invest in this area on a prudent basis and consistent with our financial resources.

Selling, advertising and promotional expenses. Selling, advertising and promotional expense totaled $728,906 and $2,104,625 for the three months ended June 30, 2024 and 2023, respectively, a decrease of $1,357,719 (65%). Promotional and advertising expenses represent the primary component of these costs and totaled $387,179 during the three months ended June 30, 2024, compared to $1,654,593 during the three months ended June 30, 2023, a decrease of $1,267,414 (77%). The decrease is primarily attributable to the reduction in new sponsorships being entered into by the Company. Additionally, TicketSmarter remains active in sponsorship and advertising, as it continues to build its brand and gain recognition.

General and administrative expense. General and administrative expenses totaled $2,881,931 and $5,032,843 for the three months ended June 30, 2024 and 2023, respectively. The decrease in general and administrative expenses in the three months ended June 30, 2024 compared to the same period in 2023 is primarily attributable to a decrease in administrative salaries and reductions in headcount. General and administrative expenses also decreased due to a decline in travel expenses and legal and professional expenses for the three months ended June 30, 2024 compared to the same period in 2023.

Operating Loss

For the reasons stated above, our operating loss was $3,914,221 and $4,940,704 for the three months ended June 30, 2024 and 2023, respectively, an improvement of $1,026,483 (21%). Operating loss as a percentage of revenues increased to 70% in the three months ended June 30, 2024 from 60% in the same period in 2023.

Interest Income

Interest income decreased to $29,933 for the three months ended June 30, 2023, from $55,730 in the same period of 2024, which reflects our change in cash and cash equivalent levels in the second quarter of 2024 compared to the second quarter of 2023.

Interest Expense

We incurred interest expenses of $1,085,063 and $1,515,509 during the three months ended June 30, 2024 and 2023, respectively. The decrease is attributable to the convertible note issued in the second quarter of 2023, along with a reduction in the contingent earn-out notes associated with the four Nobility Healthcare acquisitions partially offset by merchant advances issued in 2024.

Change in Fair Value of Derivative Liabilities

During the second quarter of 2023, the Company issued detachable warrants to purchase a total of 1,125,000 shares of Common Stock in association with the two secured convertible notes previously described. The Company issued an additional 1,768,227 warrants in June 2024. 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 March 31, 2024, to June 30, 2024, totaled $2,818, as a result a loss was recognized in the income statement for the three months ended June 30, 2024.

Loss on Extinguishment of debt

During the second quarter of 2024, the Company refinanced its merchant advance loan and determined the refinancing of the debt should be treated as a debt extinguishment. As a result, the Company recorded a loss of $68,827 on the extinguishment during the three months ended June 30, 2024.

Loss on accrual for legal settlement

The Company recognized a loss on accrual for legal settlement of $-0- and $1,792,308 during the three months ended June 30, 2024 and 2023, respectively. This is in connection with the ongoing lawsuit with Culp McCauley, Inc.

Loss on conversion of convertible debt

The Company recognized a loss on conversion of convertible debt of $-0- and $93,386 during the three months ended June 30, 2024 and 2023, respectively. This is in connection with the convertible note issued during the three months ended June 30, 2023 and the conversion from debt to equity during the period.

Other income (loss)

Other income (loss) increased to $30,445 for the three months ended June 30, 2024, from $25,394 during the three months ended June 30, 2023, which reflects income related to a warehouse lease within the corporate headquarters.

Loss before Income Tax Benefit

As a result of the above results of operations, we reported a loss before income tax benefit of $5,010,551, and $8,320,549 for the three months ended June 30, 2024 and 2023, respectively, a decrease of $3,309,998 (40%).

Income Tax Benefit

We did not record an income tax expense related to our income for the three months ended June 30, 2024 due to our overall net operating loss carryforwards available. We have further determined to continue providing a full valuation reserve on our net deferred tax assets as of June 30, 2023. We had approximately $113.3 million of net operating loss carryforwards and $1.8 million of research and development tax credit carryforwards as of June 30, 2024 available to offset future net taxable income.

Net Loss

As a result of the above results of operations, we reported a net loss of $5,010,551 and $8,320,549 for the three months ended June 30, 2024 and 2023, respectively, a decrease of $3,309,998 (40%).

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 of Nobility Healthcare which is reflected in the statement of income as “net income attributable to noncontrolling interests of consolidated subsidiary”. We reported net income attributable to noncontrolling interests of consolidated subsidiary of $73,310 and $72,755 for the three months ended June 30, 2024 and 2023, respectively.

Net Loss Attributable to Common Stockholders

As a result of the above, we reported a net loss attributable to common stockholders of $5,083,861 and $8,393,304 for the three months June 30, 2024 and 2023, respectively, an improvement of $3,309,443 (39%).

Basic and Diluted Loss per Share

The basic and diluted loss per share was $1.74 and $3.01 for the three months ended June 30, 2024 and 2023, respectively. Basic loss per share is based upon the weighted average number of common shares outstanding during the period. For the three months ended June 30, 2024 and 2023, all shares issuable upon conversion of convertible debt and the exercise of outstanding stock options and warrants were antidilutive, and, therefore, not included in the computation of diluted loss per share.

For the Six Months Ended June 30, 2024 and 2023

Results of Operations

Summarized immediately below and discussed in more detail in the subsequent subsections is an analysis of our operating results for the six months ended June 30, 2024 and 2023, represented as a percentage of total revenues for each such quarter:

	For the six months ended June 30,
	2024			2023
Revenue		100	%		100	%
Cost of revenue		84	%		73	%

Gross profit		16	%		27	%
Selling, general and administrative expenses:
Research and development expense		9	%		9	%
Selling, advertising and promotional expense		13	%		25	%
General and administrative expense		61	%		62	%

Total selling, general and administrative expenses		83	%		96	%

Operating loss		(67	)%		(70	)%
Loss on accrual for legal settlement		—	%		(11	)%
Change in fair value of contingent consideration promissory notes		—	%		1	%
Change in fair value of derivative liabilities		(3	)%		—	%
Gain on extinguishment of liabilities		6	%		—	%
Other income and interest income (expense), net		(16	)%		(12	)%
Income (loss) before income tax benefit		(80	)%		(90	)%
Income tax (provision)		—	%		—	%

Net loss		(80	)%		(90	)%

Net loss attributable to noncontrolling interests of consolidated subsidiary		(1	)%		(1	)%

Net loss attributable to common stockholders		(81	)%		(91	)%

Net loss per share information:
Basic	$	(3.12	)	$	(5.24	)
Diluted	$	(3.12	)	$	(5.24	)

Product revenues by operating segment is as follows:

	For the six months ended June 30,
	2024		2023
Product Revenues:
Video Solutions	$	1,342,127	$	2,341,622
Revenue Cycle Management		—		—
Entertainment		2,431,320		3,189,847
Total Product Revenues	$	3,773,447	$	5,531,469

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

●

Revenues generated by the entertainment operating segment began with the Company’s September 2021 acquisition of TicketSmarter. The new entertainment operating segment generated $2,431,320 in product revenues for the six months ended June 30, 2024, compared to $3,189,847 for the six months ended June 30, 2023. This product revenue relates to the first Country Stampede music festival held by Kustom, as well as the resale of tickets purchased for live events, including sporting events, concerts, and theatre, then sold through various platforms to customers.

●

The Company’s video segment operating segment generated revenues totaling $1,342,127 during the six months ended June 30, 2024 compared to $2,341,622 for the six months ended June 30, 2023. In general, our video solutions operating segment has experienced pressure on its product revenues as our in-car and body-worn systems are facing increased competition because our competitors have released new products with advanced features. Additionally, our law enforcement revenues declined compared to the same period in 2023 due to price-cutting and competitive actions by our competitors, adverse marketplace effects related to our patent litigation proceedings and our recent financial condition.

●

Our video solutions operating segment management has continued to focus on migrating commercial customers, from a hardware sale to a service fee model. Therefore, we expect a reduction in commercial hardware sales (principally DVM-250’s, FLT-250’s, and a portion of our body-worn camera line) as we convert these customers to a service model under which we provide the hardware as part of a recurring monthly service fee. In that respect, we introduced a monthly subscription agreement plan for our body worn cameras and related equipment during the second quarter of 2020 that allowed law enforcement agencies to pay a monthly service fee to obtain body worn cameras without incurring a significant upfront capital outlay. This program has gained some traction, resulting in decreased product revenues and increasing our service revenues. We expect this program to continue to hold traction, resulting in recurring revenues over a span of three to five years.

Service and other revenues by operating segment is as follows:

	For the six months ended June 30,
	2024		2023
Service and Other Revenues:
Video Solutions	$	1,961,836	$	1,457,331
Revenue Cycle Management		2,998,952		3,506,361
Entertainment		2,411,351		5,481,659
Total Service and Other Revenues	$	7,372,139	$	10,445,351

Service and other revenues for the six months ended June 30, 2024 and 2023 were $7,372,139 and $10,445,351, respectively, a decrease of $3,073,212 (29%), due to the following factors:

●

Cloud revenues generated by the video solutions operating segment were $1,254,275 and $894,773 for the six months ended June 30, 2024 and 2023, respectively, an increase of $359,502 (40%). We have experienced increased interest in our cloud solutions for law enforcement primarily due to the deployment of our cloud-based EVO-HD in-car system and our next generation body-worn camera products, which contributed to our increased cloud revenues in the six months ended June 30, 2023. We expect this trend to continue throughout 2024 as the migration from local storage to cloud storage continues in our customer base.

	●	Video solutions operating segment revenues from extended warranty services were $464,007 and $433,074 for the six months ended June 30, 2024 and 2023, respectively, an increase of $30,933 (7%). This correlates with the increase in sales of DVM-800 hardware systems resulting in an increase in their associated extended warranty.

	●	Our entertainment operating segment generated service revenues totaling $2,411,351 and $5,481,659 for the six months ended June 30, 2024 and 2023, respectively, a decrease of $3,070,308 (56%). The Company completed the acquisitions of Goody Tickets, LLC and TicketSmarter, LLC on September 1, 2021, thus resulting in the new revenue stream for the Company. TicketSmarter collects fees on transactions administered through the TicketSmarter.com platform for the buying and selling of tickets for live events throughout the country. We expect our entertainment operating segment to continue to fluctuate as we look right-size this segment and work towards profitability.

	●	Our revenue cycle management operating segment generated service revenues totaling $2,998,952 and $3,506,361 for the six months ended June 30, 2024 and 2023, respectively, a decrease of $507,409 (15%). Our revenue cycle management operating segment has completed four acquisitions since formation in June of 2021, thus resulting in the new service revenue stream added in the six months ended June 30, 2023. Our revenue cycle management operating segment provides revenue cycle management solutions and back-office services to healthcare organizations throughout the country. The slight decrease in revenue is due to refinement within one of the recent acquisitions, as they strive to maximize profitability rather than focus on top line revenue.

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

Cost of Product Revenue

Overall cost of product revenue sold for the six months ended June 30, 2024, and 2023 was $4,986,647 and $4,520,616, respectively, an increase of $466,031 (10%). Overall cost of goods sold for products as a percentage of product revenues for the six months ended June 30, 2024, and 2023 were 132% and 82%, respectively. Cost of products sold by operating segment is as follows:

	For the six months ended June 30,
	2024		2023
Cost of Product Revenues:
Video Solutions	$	1,755,956	$	1,842,983
Revenue Cycle Management		—		—
Entertainment		3,230,691		2,677,633
Total Cost of Product Revenues	$	4,986,647	$	4,520,616

The decrease in cost of goods sold for our video solutions segment products is directly correlated with the decrease in product sales for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. In addition, the video solutions segment recorded valuation allowances for its older product lines and a portion of its Shield products during the first six months of 2023, directly increasing cost of goods sold for the period. Cost of product sold as a percentage of product revenues for the video solutions segment improved to 131% for the six months ended June 30, 2024 as compared to 79% for the six months ended June 30, 2023.

The increase in entertainment operating segment cost of product sold was driven by the costs of the Country Stampede music festival for the six months ended June 30, 2024 compared to June 30, 2023, resulting in cost of product revenue of $3,230,691 for the six months ended June 30, 2024, compared to $2,677,633 for the six months ended June 30, 2023. Cost of product sold as a percentage of product revenues for the entertainment segment was 133% for the three months ended June 30, 2024 as compared to 84% for the six months ended June 30, 2023.

Cost of Service Revenue

Overall cost of service revenue sold for the six months ended June 30, 2024, and 2023 was $4,395,109 and $7,174,375, respectively, a decrease of $2,779,266 (39%). Overall cost of goods sold for services as a percentage of service revenues for the six months ended June 30, 2024, and 2023 were 60% and 69%, respectively. Cost of service revenues by operating segment is as follows:

	For the six months ended June 30,
	2024		2023
Cost of Service Revenues:
Video Solutions	$	694,473	$	642,369
Revenue Cycle Management		1,933,816		1,928,253
Entertainment		1,766,820		4,603,753
Total Cost of Service Revenues	$	4,395,109	$	7,174,375

The increase in cost of service revenues for our video solutions segment is commensurate with the increase in service revenues in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Cost of service revenues as a percentage of service revenues for the video solutions segment decreased to 35% for the six months ended June 30, 2024 as compared to 44% for the six months ended June 30, 2023.

The revenue cycle management operating segment cost of service revenue was consistent with the prior period. Cost of service revenues as a percentage of service revenues for the revenue cycle management operating segment was 65% for the six months ended June 30, 2024 as compared to 55% for the six months ended June 30, 2023.

The decrease in entertainment operating segment cost of service revenues is commensurate with the decrease in service revenues in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Cost of service revenues as a percentage of service revenues for the entertainment operating segment was 73% for the six months ended June 30, 2024 as compared to 84% for the six months ended June 30, 2023.

Gross Profit

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

	For the six months ended June 30,
	2024			2023
Gross Profit:
Video Solutions	$	853,534		$	1,313,601
Revenue Cycle Management		1,065,137			1,578,107
Entertainment		(154,841	)		1,390,121
Total Gross Profit	$	1,763,830		$	4,281,829

The overall decrease is attributable to the overall decrease in revenues for the six months ended June 30, 2024 and an increase in the overall cost of sales as a percentage of overall revenues to 84% for the six months ended June 30, 2024 from 73% for the six months ended June 30, 2023. Our goal is to improve our margins over the longer term based on the expected margins generated by our new recent revenue cycle management and entertainment operating segments together with our video solutions operating segment and its expected margins from our EVO-HD, DVM-800, VuLink, FirstVu Pro, FirstVu II, ShieldTM disinfectants and our cloud evidence storage and management offering, provided that they gain traction in the marketplace. In addition, if revenues from the video solutions segment increase, we will seek to further improve our margins from this segment through expansion and increased efficiency utilizing fixed manufacturing overhead components. We plan to continue our initiative to more efficient management of our supply chain through outsourcing production, quantity purchases and more effective purchasing practices.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $9,317,023 and $15,395,340 for the six months ended June 30, 2024 and 2023, respectively, a decrease of $6,078,317 (39%). The decrease was primarily attributable to the reduction in new sponsorships being entered into by the Company. Our selling, general and administrative expenses as a percentage of sales decreased to 84% for the six months ended June 30, 2024 compared to 96% in the same period in 2023. The significant components of selling, general and administrative expenses are as follows:

	For the six months ended June 30,
	2024		2023
Research and development expense	$	1,033,242	$	1,475,215
Selling, advertising and promotional expense		1,487,762		3,952,115
General and administrative expense		6,796,019		9,968,010

Total	$	9,317,023	$	15,395,340

Research and development expense. We continue to focus on bringing new products to market, including updates and improvements to current products. Our research and development expenses totaled $1,033,242 and $1,475,215 for the six months ended June 30, 2024 and 2023, respectively, a decrease of $441,973 (30%). Most of our engineers are dedicated to research and development activities for new products, primarily the new generation of body-worn cameras, EVO-HD and EVO Fleet that can be located in multiple places in a vehicle. We expect our research and development activities will continue to trend higher in future quarters as we continue to expand our product offerings based on our new body-worn camera and EVO-HD product platform and as we outsource more development projects. We consider our research and development capabilities and new product focus to be a competitive advantage and intend to continue to invest in this area on a prudent basis and consistent with our financial resources.

Selling, advertising and promotional expenses. Selling, advertising and promotional expense totaled $1,487,762 and $3,952,115 for the six months ended June 30, 2024 and 2023, respectively, a decrease of $2,464,353 (62%). The decrease is primarily attributable to the reduction in new sponsorships being entered into by the Company. Additionally, TicketSmarter remains active in sponsorship and advertising, as it continues to build its brand and gain recognition.

General and administrative expense. General and administrative expenses totaled $6,796,019 and $9,968,010 for the six months ended June 30, 2024 and 2023, respectively, a decrease of $3,171,991 (32%). The decrease in general and administrative expenses in the six months ended June 30, 2024 compared to the same period in 2023 is primarily attributable to a decrease in administrative salaries and headcount. General and administrative expenses also decreased due to a decline in rent expenses, and legal and professional expenses for the six months ended June 30, 2024 compared to the same period in 2023.

Operating Loss

For the reasons stated above, our operating loss was $7,553,193 and $11,113,511 for the six months ended June 30, 2024 and 2023, respectively, an improvement of $3,560,318 (32%). Operating loss as a percentage of revenues changed to 68% in the six months ended June 30, 2024 from 70% in the same period in 2023.

Interest Income

Interest income decreased to $49,289 for the six months ended June 30, 2024, from $71,085 in the same period of 2023, which reflects our change in cash and cash equivalent levels in the second quarter of 2024 compared to the second quarter of 2023. The Company held significant cash and cash equivalents throughout the second quarter of 2023, allowing a full six months of interest income.

Interest Expense

We incurred interest expense of $1,733,690 and $1,521,049 during the six months ended June 30, 2024 and 2023, respectively. The increase is attributable additional debt issued in the second half of 2023 and 2024 partially offset by the convertible note entered into in the second quarter of 2023, and the contingent earn-out notes associated with the four Nobility Healthcare acquisitions.

Change in Fair Value of Derivative Liabilities

During the second quarter of 2023, the Company issued detachable warrants to purchase a total of 1,125,000 shares of Common Stock in association with the two secured convertible notes previously described. The Company issued an additional 1,768,227 warrants in June 2024. 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 December 31, 2023, to June 30, 2024, totaled $351,710 which was recognized as expense in the second quarter of 2024.

Gain on Extinguishment of Liabilities

During the second quarter of 2024, the Company recorded a gain on the extinguishment of liabilities for the six months ended June 30, 2024 of $682,345, which reflects income related to the video segment’s ability to negotiate down payables and contract liabilities during the period.

Loss on Extinguishment of debt

Loss on sale of fixed asset

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

Loss on accrual for legal settlement

The Company recognized a loss on accrual for legal settlement of $-0- and $1,792,308 during the six months ended June 30, 2024 and 2023, respectively. This is in connection with the ongoing lawsuit with Culp McCauley, Inc.

Loss on conversion of convertible debt

The Company recognized a loss on conversion of convertible debt of $-0- and $93,386 during the six months ended June 30, 2024 and 2023, respectively. This is in connection with the convertible note issued during the six months ended June 30, 2023 and the conversion from debt to equity during the period.

Other income

Other income increased to $58,046 for the six months ended June 30, 2024, from $50,786 during the six months ended June 30, 2023, which reflects income related to a warehouse lease within the corporate headquarters.

Loss before Income Tax Benefit

As a result of the above results of operations, we reported a loss before income tax benefit of $8,953,819 and $14,300,128 for the six months ended June 30, 2024 and 2023, respectively, an improvement of $5,346,309 (37%).

Income Tax Benefit

We did not record an income tax expense related to our income for the six months ended June 30, 2024 due to our overall net operating loss carryforwards available. We have further determined to continue providing a full valuation reserve on our net deferred tax assets as of June 30, 2024. We had approximately $113.3 million of net operating loss carryforwards and $1.8 million of research and development tax credit carryforwards as of June 30, 2024 available to offset future net taxable income.

Net Loss

As a result of the above results of operations, we reported a net loss of $8,953,819 and $14,300,128 for the six months ended June 30, 2024 and 2023, respectively, an improvement of $5,346,309 (37%).

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 of Nobility Healthcare which is reflected in the statement of income as “net income attributable to noncontrolling interests of consolidated subsidiary”. We reported net income attributable to noncontrolling interests of consolidated subsidiary of $61,063 and $198,994 for the six months ended June 30, 2024 and 2023, respectively.

Net Loss Attributable to Common Stockholders

As a result of the above, we reported a net loss attributable to common stockholders of $9,014,882 and $14,499,122 for the six months June 30, 2024 and 2023, respectively, an improvement of $5,484,240 (38%).

Basic and Diluted Loss per Share

The basic and diluted loss per share was $3.12 and $5.24 for the six months ended June 30, 2024 and 2023, respectively. Basic loss per share is based upon the weighted average number of common shares outstanding during the period. For the six months ended June 30, 2024 and 2023, all shares issuable upon conversion of convertible debt and the exercise of outstanding stock options and warrants were antidilutive, and, therefore, not included in the computation of diluted loss per share.

Liquidity and Capital Resources

Overall:

Management’s Liquidity Plan. We have experienced net losses and cash outflows from operating activities since inception. Based upon our current operating forecast, we anticipate that we will need to restore positive operating cash flows and/or raise additional capital in the short-term to fund operations, meet our customary payment obligations and otherwise execute our business plan over the next 12 months. We are continuously in discussions to raise additional capital, which may include a variety of equity and debt instruments; however, there can be no assurance that our capital raising initiatives will be successful. Our recurring losses and level of cash used in operations, along with uncertainties concerning our ability to raise additional capital, raise substantial doubt about our ability to continue as a going concern.

Cash, cash equivalents: As of June 30, 2024, we had cash, cash equivalents and restricted cash with an aggregate balance of $614,713, a decrease from a balance of $778,149 at December 31, 2023. Summarized immediately below and discussed in more detail in the subsequent subsections are the main elements of the $163,436 net decrease in cash during the six months ended June 30, 2024:

●	Operating activities:	$3,408,757 of net cash used in operating activities. Net cash used in operating activities was $3,408,757 and $3,109,986 for the six months ended June 30, 2024 and 2023, respectively, an increase of $298,771. The increase is attributable to the net loss and the usage of cash for operating assets during the six months ended June 30, 2024 compared to the same period in 2023.

●	Investing activities:	$36,504 of net cash provided by investing activities. Cash provided by investing activities was $36,504 compared to cash used in investing activities of $126,946 for the six months ended June 30, 2024 and 2023, respectively. During the six months ended June 30, 2024, we made expenditures for: (i) the acquisition of Country Stampede; and (ii) received proceeds from the sale of our aircraft. These expenditures were partially offset by acquisitions of certain intangibles and property, plant and equipment.

●	Financing activities:	$3,208,817 net cash provided by financing activities. Cash provided by financing activities was $3,208,817 and $2,628,614 for the six months ended June 30, 2024 and 2023, respectively. During the first six months of 2024, we most notably refinanced a loan resulting in proceeds of $1,144,000, obtained an additional merchant advance providing proceeds of $915,000 and issued common stock with detachable warrants resulting in $2,194,742 in net cash proceeds. The cash proceeds were partially offset by payments on outstanding loans.

Commitments:

We had $614,713 of cash and cash equivalents, including restricted cash of $97,600 and net negative working capital of $13,431,836 as of June 30, 2024. Accounts receivable and other receivables balances represented $4,889,038 of our net working capital at June 30, 2024. We intend to collect our outstanding receivables on a timely basis and reduce the overall level during 2024, which would help to provide positive cash flow to support our operations during 2024. Inventory represents $2,218,133 of our net working capital at June 30, 2024. We are actively managing the level of inventory and our goal is to reduce such level during the balance of 2024 by our sales activities, the increase of which should provide additional cash flow to help support our operations during 2024.

Capital Expenditures:

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

Lease commitments. Total lease expense under the five operating leases was approximately $117,810 and $226,695, during the three and six months ended June 30, 2024, respectively.

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

Assets:
Operating lease right of use assets	$	869,166

Liabilities:
Operating lease obligations-current portion	$	223,629
Operating lease obligations-less current portion		692,423
Total operating lease obligations	$	916,052

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

Selling, general and administrative expenses

226,695

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

Year ending December 31:
2024 (July 1, to December 31, 2024)	$	146,105
2025		288,720
2026		293,300
2027		117,492
Thereafter		235,020
Total undiscounted minimum future lease payments		1,080,637
Imputed interest		(164,585	)
Total operating lease liability	$	916,052

Debt obligations – Outstanding debt obligations comprises the following:

	June 30, 2024			December 31, 2023
Economic injury disaster loan (EIDL)	$	146,154		$	147,781
Contingent consideration promissory note – Nobility Healthcare Division Acquisition		—			129,651
Contingent consideration promissory note – Nobility Healthcare Division Acquisition		—			58,819
Revolving Loan Agreement		4,880,000			4,880,000
Commercial Extension of Credit- Entertainment Segment		12,500			87,928
Merchant Advances – Video Solutions Segment		2,259,000			1,350,000
Merchant Advances – Entertainment Segment		1,373,101			—
Unamortized debt issuance costs		(791,434	)		(540,429	)
Debt obligations		7,879,321			6,113,750
Less: current maturities of debt obligations		2,980,903			1,260,513
Debt obligations, long-term	$	4,898,418		$	4,853,237

Debt obligations mature as follows as of June 30, 2024:

	June 30, 2024
2024 (July 1, 2024 to December 31, 2024)	$	2,979,213
2025		4,759,024
2026		3,542
2027		3,677
2028 and thereafter		133,865

Total	$	7,879,321

Critical Accounting Estimates

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 and estimates are the most critical to our financial statements, potentially involve the most subjective judgments in their selection and application, and are the most susceptible to uncertainties and changing conditions:

	●	Revenue Recognition / Allowance for Doubtful Accounts;

	●	Allowance for Excess and Obsolete Inventory;

	●	Goodwill and other intangible assets;

	●	Warranty Reserves;

	●	Fair value of warrant derivative liabilities;

	●	Stock-based Compensation Expense;

	●	Accounting for Income Taxes; and

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 our performance obligation to provide the agreed upon services.

Revenue for our entertainment 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 entertainment 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.

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 $253.6 million since we commenced deliveries during 2006.

For our entertainment 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.

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 at June 30, 2024 and December 31, 2023:

	June 30, 2024			December 31, 2023
Raw material and component parts– video solutions segment	$	2,614,267		$	3,044,653
Work-in-process– video solutions segment		15,895			20,396
Finished goods – video solutions segment		3,436,629			4,623,489
Finished goods – entertainment segment		286,343			699,204
Subtotal		6,353,134			8,387,742
Reserve for excess and obsolete inventory– video solutions segment		(4,008,278	)		(4,355,666	)
Reserve for excess and obsolete inventory – entertainment segment		(126,723	)		(186,795	)
Total inventories	$	2,218,133		$	3,845,281

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 65% of the gross inventory balance at June 30, 2024, compared to 54% of the gross inventory balance at December 31, 2023. We had $4,135,001 and $4,542,461 in reserves for obsolete and excess inventories at June 30, 2024 and December 31, 2023, respectively. Total raw materials, component parts, and work-in-process were $2,630,162 and $3,065,049 at June 30, 2024 and December 31, 2023, respectively, a decrease of $434,887 (14%). Finished goods balances were $3,722,972 and $5,322,693 at June 30, 2024 and December 31, 2023, respectively, a decrease of $1,599,721 (30%). The decrease in the inventory reserve is primarily due to the reduction in finished goods and movement of excess inventory. Additionally, the Company determined a reasonable reserve for inventory held at the ticket operating segment, in which some inventory items sell below cost or go unsold, thus having to be fully written-off following the event date. We believe the reserves are appropriate given our inventory levels as of June 30, 2024.

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 changes 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, 2023 that indicated no impairment. Subsequent to completing our 2023 annual impairment test, no events or changes in circumstances were noted that required an interim goodwill impairment test. Note 1 — Nature of Business and Summary of Significant Accounting Policies and Note 10 — Goodwill and Other Intangible Assets in the Notes to Consolidated Financial Statements provide additional information regarding the Company’s goodwill and other intangible assets.

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 $11,615 as of June 30, 2024 compared to $17,699 as of December 31, 2023 due to newer products gaining a long history of claims to consider, which was slightly offset as we begin to slow our warranty exposures through the roll-off of DVM-750 and DVM-800 units from warranty coverage. Standard warranty exposure on the DVM-800 and DVM-250plus are the responsibility of the contract manufacturers which reduced our overall warranty exposure as these are very popular products in our 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.

Warrant derivative liabilities. On April 5, 2023, the Company issued warrants to purchase a total of 1,125,000 shares of Common Stock. The warrant terms provide for net cash settlement outside the control of the Company under certain circumstances in the event of tender offers. As such, the Company is required to treat these warrants as derivative liabilities which are valued at their estimated fair value at their issuance date and at each reporting date with any subsequent changes reported in the consolidated statements of operations as the change in fair value of warrant derivative liabilities. Furthermore, the Company revalues the fair value of warrant derivative liability as of the date the warrant is exercised with the resulting warrant derivative liability transitioned to equity.

	Issuance date assumptions			June 30, 2024 assumptions
Volatility - range		72.1 - 101.1	%		72.5 - 101.1	%
Risk-free rate		4.25 - 5.46	%		4.33 – 5.47	%
Dividend		0	%		0	%
Remaining contractual term		0.1 - 5.0 years			0.1 - 5.0 years
Exercise price	$	2.51		$	2.51
Common stock issuable under the warrants		1,768,227			1,768,227

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

	Warrants		Weighted average exercise price
Vested Balance, December 31, 2023		1,125,000	$	6.50
Granted		1,768,227		2.51
Exercised		—		—
Forfeited/cancelled		—		—
Vested Balance, June 30, 2024		2,893,227	$	4.06

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

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.

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 June 30, 2023, we have fully reserved all of our deferred tax assets. Based on a review of our deferred tax assets and recent operating performance, we determined that our valuation allowance should be increased by $17,220,000 to a balance of $34,200,000 to fully reserve our deferred tax assets at December 31, 2023. We determined that it was appropriate to continue to provide a full valuation reserve on our net deferred tax assets as of June 30, 2024, because of the overall net operating loss carryforwards available. 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 June 30, 2024 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. We do not believe that our Video Solutions and Revenue Cycle Management segments business is seasonal in nature, however; the Entertainment Segment is expected to generate higher revenues during the second half of the calendar year than in the first half.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not Applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures, as such terms are defined in Rules 13a-15(e) under the Exchange Act. The Company, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of such disclosure controls and procedures for this Report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2024 to provide reasonable assurance that material information required to be disclosed by the Company in this Report was recorded, processed, summarized and communicated to the Company’s management as appropriate and within the time periods specified in SEC rules and forms.

As part of our plan to remediate our controls which were not effective, we are performing a full review of our internal control procedures. We have implemented, and plan to continue to implement, new controls and new processes. We have hired and plan to continue to hire additional qualified personnel and establish more robust processes to support our internal control over financial reporting, including clearly defined roles and responsibilities. The Company anticipates time being required to complete the implementation and to assess and ensure the sustainability of these controls. The effectiveness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

The information regarding certain legal proceedings in which we are involved as set forth in Note 12 – Contingencies of the Notes to the Condensed Consolidated Financial Statements (Part I, Item 1 of this Quarterly Report on Form 10-Q) is incorporated by reference into this Item 1.

In addition to such legal proceedings, we are faced with or involved in various other claims and legal proceedings arising in the normal course of our businesses. At this time, we do not believe any material losses under such other claims and proceedings to be probable. While the ultimate outcome of such claims or legal proceedings cannot be predicted with certainty, it is in the opinion of management, after consultation with legal counsel, that the final outcome in such proceedings, in the aggregate, would not have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

Item 1A. Risk Factors.

As a smaller reporting company, we are not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of equity securities during the first half of 2023 that were not disclosed by the Company on a Current Report on Form 8-K.

Item 3. Defaults upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

(a) Exhibits.

	4.1	Form of Senior Secured Convertible Note, issued by Digital Ally, Inc. (incorporated by reference to Exhibit 4.1 to Company’s Current Report on Form 8-K with the SEC on April 7, 2023).

	4.2	Form of Warrant, issued by Digital Ally, Inc (incorporated by reference to Exhibit 4.2 to Company’s Current Report on Form 8-K with the SEC on April 7, 2023).

	10.1	Form of Securities Purchase Agreement between Digital Ally, Inc. and certain Purchaser (incorporated by reference to Exhibit 10.1 to Company’s Current Report on Form 8-K with the SEC on April 7, 2023).

	10.2	Form of Security Agreement between Digital Ally, Inc. and certain Purchasers (incorporated by reference to Exhibit 10.2 to Company’s Current Report on Form 8-K with the SEC on April 7, 2023).

	10.3	Form of Trademark Security Agreement between Digital Ally, Inc. and certain Purchasers (incorporated by reference to Exhibit 10.3 to Company’s Current Report on Form 8-K with the SEC on April 7, 2023).

	10.4	Form of Patent Security Agreement between Digital Ally, Inc. and certain Purchasers (incorporated by reference to Exhibit 10.4 to Company’s Current Report on Form 8-K with the SEC on April 7, 2023).

	10.5	Form of Subsidiary Guaranty by and among Digital Ally, Inc. and its direct and indirect subsidiaries (incorporated by reference to Exhibit 10.5 to Company’s Current Report on Form 8-K with the SEC on April 7, 2023).

	10.6	Form of Registration Rights Agreement between Digital Ally, Inc. and certain Purchasers (incorporated by reference to Exhibit 10.6 to Company’s Current Report on Form 8-K with the SEC on April 7, 2023).

	31.1	Certificate of Stanton E. Ross pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934, as amended.

	31.2	Certificate of Thomas J. Heckman pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934, as amended.

	32.1	Certificate of Stanton E. Ross pursuant to Rule 13a-14(b) under the Securities and Exchange Act of 1934, as amended.

	32.2	Certificate of Thomas J. Heckman pursuant to Rule 13a-14(b) under the Securities and Exchange Act of 1934, as amended.

	101.INS	Inline XBRL Instance Document

	101.SCH	Inline XBRL Schema Document

	101.CAL	Inline XBRL Calculation Linkbase Document

	101.DEF	Inline XBRL Definition Linkbase Document

	101.LAB	Inline XBRL Label Linkbase Document

	101.PRE	Inline XBRL Presentation Linkbase Document

	104	Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit)

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 14, 2024

	DIGITAL ALLY, INC.

	By:	/s/ Stanton E. Ross
	Name:	Stanton E. Ross
	Title:	Chief Executive Officer

	By:	/s/ Thomas J. Heckman
	Name:	Thomas J. Heckman
	Title:	Chief Financial Officer, Secretary and Treasurer (Principal Financial and Accounting Officer)

EXHIBIT 31.1

DIGITAL ALLY, INC.

CERTIFICATIONS

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stanton E. Ross, Chief Executive Officer of Digital Ally, Inc., certify that:

	1.	I have reviewed this report on Form 10-Q for the six months ended June 30, 2024 of Digital Ally, Inc.

	2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

	3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

	4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 14, 2024

/s/ Stanton E. Ross
Stanton E. Ross
Chief Executive Officer
(Principal Executive Officer)

EXHIBIT 31.2

DIGITAL ALLY, INC.

CERTIFICATIONS

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas J. Heckman, Chief Financial Officer of Digital Ally, Inc., certify that:

	1.	I have reviewed this report on Form 10-Q for the six months ended June 30, 2024 of Digital Ally, Inc.

	2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

	3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

	4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 14, 2024

/s/ Thomas J. Heckman
THOMAS J. HECKMAN
Chief Financial Officer
(Principal Financial Officer)

EXHIBIT 32.1

DIGITAL ALLY, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Digital Ally, Inc. (the “Company”) on Form 10-Q for the three months ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stanton E. Ross, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stanton E. Ross
Stanton E. Ross
Chief Executive Officer
(Principal Executive Officer)
August 14, 2024

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Digital Ally, Inc. and will be retained by Digital Ally, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32.2

DIGITAL ALLY, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Digital Ally, Inc. (the “Company”) on Form 10-Q for the three months ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas J. Heckman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Thomas J. Heckman
THOMAS J. HECKMAN
Chief Financial Officer
(Principal Financial Officer)
August 14, 2024

Cover - $ / shares	6 Months Ended
Cover - $ / shares	Jun. 30, 2024	Aug. 15, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	001-33899
Entity Registrant Name	Digital Ally, Inc.
Entity Central Index Key	0001342958
Entity Tax Identification Number	20-0064269
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	14001 Marshall Drive
Entity Address, City or Town	Lenexa
Entity Address, State or Province	KS
Entity Address, Postal Zip Code	66215
City Area Code	(913)
Local Phone Number	814-7774
Title of 12(b) Security	Common stock, $0.001 par value per share
Trading Symbol	DGLY
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		3,855,160
Entity Listing, Par Value Per Share	$ 0.001

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 517,113	$ 680,549
Accounts receivable – trade, net of $239,391 allowance – June 30, 2024 and $200,668 – December 31, 2023	1,343,205	1,584,662
Other receivables, net of $25,000 allowance – June 30, 2024 and $5,000 – December 31, 2023	3,545,833	3,107,634
Inventories, net	2,218,133	3,845,281
Prepaid expenses	6,620,477	6,366,368
Total current assets	14,244,761	15,584,494
Property, plant, and equipment, net	6,033,091	7,283,702
Goodwill and other intangible assets, net	16,281,622	16,510,422
Operating lease right of use assets, net	869,166	1,053,159
Other assets	5,898,575	6,597,032
Total assets	43,327,215	47,028,809
Current liabilities:
Accounts payable	11,501,820	10,732,089
Accrued expenses	3,380,005	3,269,330
Current portion of operating lease obligations	223,629	279,538
Contract liabilities – current portion	3,093,492	2,937,168
Notes payable – related party – current portion	2,700,000	2,700,000
Debt obligations – current portion	2,980,903	1,260,513
Warrant derivative liabilities	3,796,748	1,369,738
Income taxes payable		61
Total current liabilities	27,676,597	22,548,437
Long-term liabilities:
Debt obligations – long term	4,898,418	4,853,237
Operating lease obligation – long term	692,423	827,836
Contract liabilities – long term	6,999,141	7,340,459
Lease Deposit	10,445	10,445
Total liabilities	40,277,024	35,580,414
Commitments and contingencies
Stockholders’ Equity:
Common stock, $0.001 par value per share; 200,000,000 shares authorized; shares issued: 3,502,037 shares issued – June 30, 2024 and 2,800,754 shares issued – December 31, 2023	3,502	2,801
Additional paid in capital	128,995,997	128,441,083
Noncontrolling interest in consolidated subsidiary	734,354	673,292
Accumulated deficit	(126,683,662)	(117,668,781)
Total stockholders’ equity	3,050,191	11,448,395
Total liabilities and stockholders’ equity	$ 43,327,215	$ 47,028,809

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable	$ 239,391	$ 200,668
Allowance for other receivable, current	$ 25,000	$ 5,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	3,502,037	2,800,754

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenue:
Total revenue	$ 5,616,235	$ 8,279,632	$ 11,145,586	$ 15,976,820
Cost of revenue:
Total cost of revenue	5,373,843	5,542,592	9,381,756	11,694,991
Gross profit	242,392	2,737,040	1,763,830	4,281,829
Selling, general and administrative expenses:
Research and development expense	545,776	540,276	1,033,242	1,475,215
Selling, advertising and promotional expense	728,906	2,104,625	1,487,762	3,952,115
General and administrative expense	2,881,931	5,032,843	6,796,019	9,968,010
Total selling, general and administrative expenses	4,156,613	7,677,744	9,317,023	15,395,340
Operating loss	(3,914,221)	(4,940,704)	(7,553,193)	(11,113,511)
Other income (expense):
Interest income	29,933	55,730	49,289	71,085
Interest expense	(1,085,063)	(1,515,509)	(1,733,690)	(1,521,049)
Other income	30,445	25,394	58,046	50,786
Loss on accrual for legal settlement		(1,792,308)		(1,792,308)
Loss on conversion of convertible note		(93,386)		(93,386)
Change in fair value of warrant derivative liabilities	(2,818)	(59,766)	(351,710)	(59,766)
Change in fair value of contingent consideration promissory notes				158,021
Gain on extinguishment of liabilities			682,345
Loss on extinguishment of debt	(68,827)		(68,827)
Gain on sale of intangibles			5,582
Loss on sale of property, plant and equipment			(41,661)
Total other income (expense)	(1,096,330)	(3,379,845)	(1,400,626)	(3,186,617)
Loss before income tax benefit	(5,010,551)	(8,320,549)	(8,953,819)	(14,300,128)
Income tax benefit
Net loss	(5,010,551)	(8,320,549)	(8,953,819)	(14,300,128)
Net (income) attributable to noncontrolling interests of consolidated subsidiary	(73,310)	(72,755)	(61,063)	(198,994)
Net loss attributable to common stockholders	$ (5,083,861)	$ (8,393,304)	$ (9,014,882)	$ (14,499,122)
Net loss per share information:
Basic	$ (1.74)	$ (3.01)	$ (3.12)	$ (5.24)
Diluted	$ (1.74)	$ (3.01)	$ (3.12)	$ (5.24)
Weighted average shares outstanding:
Basic	2,921,307	2,785,663	2,891,205	2,768,683
Diluted	2,921,307	2,785,663	2,891,205	2,768,683
Product [Member]
Revenue:
Total revenue	$ 2,207,601	$ 3,077,661	$ 3,773,447	$ 5,531,469
Cost of revenue:
Total cost of revenue	3,419,254	2,219,515	4,986,647	4,520,616
Service, Other [Member]
Revenue:
Total revenue	3,408,634	5,201,971	7,372,139	10,445,351
Cost of revenue:
Total cost of revenue	$ 1,954,589	$ 3,323,077	$ 4,395,109	$ 7,174,375

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Noncontrolling Interest [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2022	$ 2,721	$ 127,869,342	$ 448,694	$ (91,980,234)	$ 36,340,523
Balance, shares at Dec. 31, 2022	2,720,170
Stock-based compensation		114,848			114,848
Restricted common stock forfeitures	$ 35	$ (35)
Restricted common stock forfeitures, shares	35,000
Issuance due to rounding from reverse stock split
Issuance due to rounding from reverse stock split, shares	54
Net Income (loss)			126,239	$ (6,105,818)	$ (5,979,579)
Balance at Mar. 31, 2023	$ 2,756	127,984,155	574,933	(98,086,052)	30,475,792
Balance, shares at Mar. 31, 2023	2,755,224
Balance at Dec. 31, 2022	$ 2,721	127,869,342	448,694	(91,980,234)	36,340,523
Balance, shares at Dec. 31, 2022	2,720,170
Net Income (loss)					(14,300,128)
Balance at Jun. 30, 2023	$ 2,801	128,283,343	647,688	(106,479,356)	22,454,476
Balance, shares at Jun. 30, 2023	2,800,753
Balance at Mar. 31, 2023	$ 2,756	127,984,155	574,933	(98,086,052)	30,475,792
Balance, shares at Mar. 31, 2023	2,755,224
Stock-based compensation		179,483			179,483
Restricted common stock forfeitures	$ (4)	$ 4
Restricted common stock forfeitures, shares	(3,625)
Issuance due to rounding from reverse stock split	24	(24)
Issuance due to rounding from reverse stock split, shares	24,154
Net Income (loss)			$ 72,755	$ (8,393,304)	$ (8,320,549)
Conversion of convertible note into common stock	$ 25	119,725			119,750
Conversion of convertible note into common stock, shares	25,000
Balance at Jun. 30, 2023	$ 2,801	128,283,343	647,688	(106,479,356)	22,454,476
Balance, shares at Jun. 30, 2023	2,800,753
Balance at Dec. 31, 2023	$ 2,801	128,441,083	673,292	(117,668,781)	11,448,395
Balance, shares at Dec. 31, 2023	2,800,754
Stock-based compensation		40,695			40,695
Restricted common stock forfeitures	$ (1)	1
Restricted common stock forfeitures, shares	(1,125)
Net Income (loss)			(12,248)	(3,931,020)	(3,943,268)
Restricted common stock grant	$ 80	(80)
Restricted common stock grant, shares	80,197
Balance at Mar. 31, 2024	$ 2,880	128,481,699	661,044	(121,599,801)	7,545,822
Balance, shares at Mar. 31, 2024	2,879,826
Balance at Dec. 31, 2023	$ 2,801	128,441,083	673,292	(117,668,781)	$ 11,448,395
Balance, shares at Dec. 31, 2023	2,800,754
Restricted common stock forfeitures, shares					1,125
Net Income (loss)					$ (8,953,819)
Balance at Jun. 30, 2024	$ 3,502	128,995,997	734,354	(126,683,662)	3,050,191
Balance, shares at Jun. 30, 2024	3,502,037
Balance at Mar. 31, 2024	$ 2,880	128,481,699	661,044	(121,599,801)	7,545,822
Balance, shares at Mar. 31, 2024	2,879,826
Stock-based compensation		60,772			60,772
Net Income (loss)			73,310	(5,083,861)	(5,010,551)
Sale of common stock and pre-funded warrants, net of offering costs	$ 622	2,528,826			2,529,448
Sale of common stock and pre-funded warrants, net of offering costs, shares	622,211
Fair value of warrants issued along with sale of common stock		(2,075,300)			(2,075,300)
Balance at Jun. 30, 2024	$ 3,502	$ 128,995,997	$ 734,354	$ (126,683,662)	$ 3,050,191
Balance, shares at Jun. 30, 2024	3,502,037

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash Flows From Operating Activities:
Net loss	$ (8,953,819)	$ (14,300,128)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Depreciation and amortization	1,079,000	1,091,042
Loss on sale of property, plant and equipment	41,661
Gain on sale on intangible	(5,582)
Stock-based compensation	101,467	294,331
Non-cash interest expense	150,000	576,380
Amortization of debt issuance costs	1,105,168
Gain on extinguishment of liabilities	(682,345)
Loss on extinguishment of debt	68,827
Change in fair value of warrant derivative liabilities	351,710	59,766
Convertible debt discount amortization		925,455
Loss on conversion of debt		93,386
Provision for inventory obsolescence	(407,460)	(75,007)
Provision for doubtful accounts receivable	38,724	24,140
Allowance for doubtful lease reserve	20,000	5,000
Change in fair value of contingent consideration promissory note		(158,021)
(Increase) decrease in:
Accounts receivable – trade	(284,767)	155,015
Other receivable	(458,199)	1,318,442
Inventories	2,075,608	1,074,197
Prepaid expenses	(235,109)	1,503,919
Operating lease right of use assets	110,099	195,894
Other assets	698,456	(2,092,524)
Increase (decrease) in:
Accounts payable	2,307,612	3,066,137
Accrued expenses	(128,075)	56,606
Accrued Expenses – related party	188,750
Income taxes payable	(61)	(17,444)
Lease deposit		10,445
Operating lease obligations	(117,428)	(195,894)
Contract liabilities	(472,994)	1,486,569
Net cash used in operating activities	(3,408,757)	(3,109,986)
Cash Flows from Investing Activities:
Purchases of property, plant and equipment	(24,882)	(52,338)
Additions to intangible assets	(65,361)	(74,608)
Cash paid for acquisition of Country Stampede	(514,432)
Proceeds from sale of intangible asset	90,535
Proceeds from sale of property, plant and equipment	550,644
Net cash provided by (used in) investing activities	36,504	(126,946)
Cash Flows from Financing Activities:
Proceeds – Merchant Advances – Video Solutions Segment	1,144,000
Proceeds – Merchant Advances – Entertainment Segment	915,000
Net proceeds of equity offering with detachable warrants	2,194,742
Net proceeds of convertible debt with detachable warrants		2,640,000
Proceeds – Commercial Extension of Credit – Entertainment Segment	575,000	1,000,000
Payments on Commercial Extension of Credit – Entertainment Segment	(162,928)	(794,332)
Payments on Merchant Advances – Video Solutions Segment	(1,215,000)
Payments on Merchant Advances – Entertainment Segment	(51,899)
Principal payment on EIDL loan	(1,628)
Principal payment on contingent consideration promissory notes	(188,470)	(217,054)
Net cash provided by financing activities	3,208,817	2,628,614
Net decrease in cash, cash equivalents, and restricted cash	(163,436)	(608,318)
Cash, cash equivalents and restricted cash, beginning of period	778,149	3,532,199
Cash, cash equivalents and restricted cash, end of period	614,713	2,923,881
Supplemental disclosures of cash flow information:
Cash payments for interest	293,441	18,129
Cash payments for income taxes	8,097	8,097
Supplemental disclosures of non-cash investing and financing activities:
Commercial extension of credit repaid through accrued revenue – Entertainment segment	487,500	30,052
ROU and lease liability recorded on extension (termination) of lease	(73,894)	538,056
Conversion of convertible notes payable into common stock		119,750
Fair value of warrants issued with sale of shares	2,075,300
Assets acquired in business acquisitions	605,000
Liabilities assumed in the business acquisition	288,000
Goodwill acquired in business acquisitions	225,959
Adjustments of accounts payable with the sale proceeds of property, plant and equipment	549,356
Restricted common stock grant	80	35
Reverse stock split rounding issuances		24
Restricted common stock forfeitures	1	4
Debt discount on convertible note		$ 3,000,000

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations:

Reverse Stock Split

Business Combination

The Closing is subject to the approval of Clover Leaf’s shareholders and the satisfaction or waiver of certain other customary closing conditions.

Basis of Presentation:

For further information, refer to the audited financial statements and footnotes included in the Company’s annual report on Form 10-K for the year ended December 31, 2023.

Liquidity and Going Concern

Basis of Consolidation:

Fair Value of Financial Instruments:

Revenue Recognition:

Video Solutions

Revenue Cycle Management

Entertainment

Other

SCHEDULE OF CONTRACT LIABILITIES

	June 30, 2024
	December 31, 2023		Additions/ Reclass		Recognized Revenue			June 30, 2024
Contract liabilities, current	$	2,937,168	$	767,131	$	(610,807	)	$	3,093,492
Contract liabilities, non-current		7,340,459		412,632		(753,950	)		6,999,141

	$	10,277,627	$	1,179,763	$	(1,364,757	)	$	10,092,633

	June 30, 2023
	December 31, 2022		Additions/ Reclass		Recognized Revenue			June 30, 2023
Contract liabilities, current	$	2,154,874	$	1,246,212	$	(496,034	)	$	2,905,052
Contract liabilities, non-current		5,818,082		1,223,497		(487,106	)		6,554,473

	$	7,972,956	$	2,469,709	$	(983,140	)	$	9,459,525

Use of Estimates:

Cash and cash equivalents:

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

SCHEDULE OF SHORT TERM INVESTMENTS

	June 30, 2024
	Adjusted Cost		Realized Gains		Realized Losses		Fair Value
Demand deposits	$	439,881	$	—	$	—	$	439,881
Short-term investments with original maturities of 90 days or less (Level 1):
Money market funds		77,232		—		—		77,232

	$	517,113	$	—	$	—	$	517,113

	December 31, 2023
	Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value
Demand deposits	$	545,207	$	—	$	—	$	545,207
Short-term investments with original maturities of 90 days or less (Level 1):
Money market funds		135,342		—		—		135,342

	$	680,549	$	—	$	—	$	680,549

Restricted Cash:

	June 30, 2024		December 31, 2023
Cash and cash equivalents	$	517,113	$	680,549
Long-term restricted cash included in other assets		97,600		97,600
Total cash, cash equivalents and restricted cash in the statements of cash flows	$	614,713	$	778,149

Accounts Receivable:

Goodwill and Other Intangibles:

Segment Reporting

Contingent Consideration

Non-Controlling Interests

New Accounting Standards

INVENTORIES

6 Months Ended

Jun. 30, 2024

Inventory Disclosure [Abstract]

INVENTORIES

NOTE 2. INVENTORIES

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

SCHEDULE OF INVENTORIES

	June 30, 2024			December 31, 2023
Raw material and component parts– video solutions segment	$	2,614,267		$	3,044,653
Work-in-process– video solutions segment		15,895			20,396
Finished goods – video solutions segment		3,436,629			4,623,489
Finished goods – entertainment segment		286,343			699,204
Subtotal		6,353,134			8,387,742
Reserve for excess and obsolete inventory– video solutions segment		(4,008,278	)		(4,355,666	)
Reserve for excess and obsolete inventory – entertainment segment		(126,723	)		(186,795	)
Total inventories	$	2,218,133		$	3,845,281

DEBT OBLIGATIONS

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

DEBT OBLIGATIONS

NOTE 3. DEBT OBLIGATIONS

Debt obligations is comprised of the following:

SCHEDULE OF DEBT OBLIGATIONS

	June 30, 2024			December 31, 2023
Economic injury disaster loan (EIDL)	$	146,154		$	147,781
Contingent consideration promissory note – Nobility Healthcare Division Acquisition		—			129,651
Contingent consideration promissory note – Nobility Healthcare Division Acquisition		—			58,819
Revolving Loan Agreement		4,880,000			4,880,000
Commercial Extension of Credit- Entertainment Segment		12,500			87,928
Merchant Advances – Video Solutions Segment		2,259,000			1,350,000
Merchant Advances – Entertainment Segment		1,373,101			—
Unamortized debt issuance costs		(791,434	)		(540,429	)
Debt obligations		7,879,321			6,113,750
Less: current maturities of debt obligations		2,980,903			1,260,513
Debt obligations, long-term	$	4,898,418		$	4,853,237

Debt obligations mature as follows as of June 30, 2024:

	June 30, 2024
2024 (July 1, 2024 to December 31, 2024)	$	2,979,213
2025		4,759,024
2026		3,542
2027		3,677
2028 and thereafter		133,865

Total	$	7,879,321

2020 Small Business Administration Notes.

The Company made principal payments of $1,628 during the six months ended June 30, 2024 and recorded interest expense of $1,383 and $2,758 for the three and six months ended June 30, 2024.

Contingent Consideration Promissory Notes

2023 Commercial Extension of Credit

During the six months ended June 30, 2024, the Entertainment segment Company’s Entertainment segment repaid the outstanding principal of $87,928 and did not renew this agreement.

2024 Commercial Extension of Credit

Convertible Note

	Terms at April 5, 2023 (issuance date)
Volatility - range		106.0	%
Risk-free rate		3.36	%
Dividend		0	%
Remaining contractual term		5.0 years
Exercise price	$	5.50 – 7.50
Common stock issuable under the warrants		1,125,000

Revolving Loan Agreement

Merchant Cash Advances – Video Solutions Segment

As of June 30, 2024 the outstanding balance was $2,259,000 which is expected to be repaid in 2024.

During the six months ended June 30, 2024 the Company amortized $820,429 of debt discount under interest expense.

Merchant Cash Advances – Entertainment Segment

During the three and six months ended June 30, 2024 the Company amortized $139,118 and $202,868 of debt discount and issuance costs under interest expense.

FAIR VALUE MEASUREMENT

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENT

NOTE 4. FAIR VALUE MEASUREMENT

●	Level 1 — Quoted prices in active markets for identical assets and liabilities

●	Level 2 — Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities)

●	Level 3 — Significant unobservable inputs (including the Company’s own assumptions in determining the fair value)

The following table represents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:

	June 30, 2024
	Level 1		Level 2		Level 3		Total
Liabilities:
Warrant derivative liabilities	$	—	$	—	$	3,796,746	$	3,796,746
Contingent consideration promissory notes and contingent consideration earn-out agreement		—		—		—		—
	$	—	$	—	$	3,796,746	$	3,796,746

	December 31, 2023
	Level 1		Level 2		Level 3		Total
Liabilities:
Warrant derivative liabilities	$	—	$	—	$	1,369,738	$	1,369,738
Contingent consideration promissory notes and contingent consideration earn-out agreement		—		—		188,470		188,470
	$	—	$	—	$	1,558,208	$	1,558,208

The following table represents the change in Level 3 tier value measurements for the three months ended June 30, 2024:

	Contingent Consideration Promissory Notes and Earn-Out Agreement			Warrant Derivative Liabilities

Balance, December 31, 2023	$	188,470		$	1,369,738

Issuance of warrant derivative liabilities					2,075,300

Change in fair value of warrant derivative liabilities		—			351,710

Principal payments on contingent consideration promissory notes – Revenue Cycle Management Acquisitions		(188,470	)		—

Change in fair value of contingent consideration promissory notes - Revenue Cycle Management Acquisitions		—			—

Balance, June 30, 2024	$	—		$	3,796,748

ACCRUED EXPENSES

6 Months Ended

Jun. 30, 2024

Payables and Accruals [Abstract]

ACCRUED EXPENSES

NOTE 5. ACCRUED EXPENSES

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

SCHEDULE OF ACCRUED EXPENSES

	June 30, 2024		December 31, 2023
Accrued warranty expense	$	11,615	$	17,699
Accrued litigation costs		2,040,292		2,040,292
Accrued sales commissions		1,465		87,421
Accrued payroll and related fringes		420,596		367,826
Accrued sales returns and allowances		93,170		117,713
Accrued taxes		161,639		150,981
Accrued interest - related party		283,782		95,031
Customer deposits		75,283		219,462
Other		292,163		172,905
Total accrued expenses	$	3,380,005	$	3,269,330

Accrued warranty expense was comprised of the following for the six months ended June 30, 2024:

SCHEDULE OF ACCRUED WARRANTY EXPENSE

Beginning balance	$	17,699
Provision for warranty expense		38,898
Charges applied to warranty reserve		(44,982	)

Ending balance	$	11,615

INCOME TAXES

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 6. INCOME TAXES

PREPAID EXPENSES

6 Months Ended

Jun. 30, 2024

Prepaid Expenses

PREPAID EXPENSES

NOTE 7. PREPAID EXPENSES

Prepaid expenses were the following at June 30, 2024 and December 31, 2023:

SCHEDULE OF PREPAID EXPENSE

	June 30, 2024		December 31, 2023
Prepaid inventory	$	5,200,463	$	5,318,939
Prepaid advertising		410,226		612,292
Other		1,009,788		435,137
Total prepaid expenses	$	6,620,477	$	6,366,368

PROPERTY, PLANT AND EQUIPMENT

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT

NOTE 8. PROPERTY, PLANT AND EQUIPMENT

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

	Estimated Useful Life	June 30, 2024			December 31, 2023
Building	25 years	$	4,537,037		$	4,537,037
Land	Infinite		739,734			739,734
Office furniture, fixtures, equipment, and aircraft	3-20 years		779,879			2,065,092
Warehouse and production equipment	3-7 years		237,141			29,055
Demonstration and tradeshow equipment	3-7 years		77,791			87,987
Building improvements	5-7 years		1,341,471			1,328,654
Total cost			7,713,053			8,787,559
Less: accumulated depreciation and amortization			(1,679,962	)		(1,503,857	)

Net property, plant and equipment		$	6,033,091		$	7,283,702

OPERATING LEASE

6 Months Ended

Jun. 30, 2024

Operating Lease

OPERATING LEASE

NOTE 9. OPERATING LEASE

The weighted-average remaining lease term related to the Company’s lease liabilities as of June 30, 2023 was 4.3 years.

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

Assets:
Operating lease right of use assets	$	869,166

Liabilities:
Operating lease obligations-current portion	$	223,629
Operating lease obligations-less current portion		692,423
Total operating lease obligations	$	916,052

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

SCHEDULE OF LEASE EXPENSE


Selling, general and administrative expenses		$	226,695

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

Year ending December 31:
2024 (July 1, to December 31, 2024)	$	146,105
2025		288,720
2026		293,300
2027		117,492
Thereafter		235,020
Total undiscounted minimum future lease payments		1,080,637
Imputed interest		(164,585	)
Total operating lease liability	$	916,052

GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 10. GOODWILL AND OTHER INTANGIBLE ASSETS

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

SCHEDULE OF INTANGIBLE ASSETS

	June 30, 2024						December 31, 2023
	Gross value		Accumulated amortization		Net carrying value		Gross value		Accumulated amortization		Net carrying value
Amortized intangible assets:
Licenses (video solutions segment)	$	151,652	$	21,270	$	130,382	$	225,545	$	89,887	$	135,658
Patents and trademarks (video solutions segment)		483,521		332,462		151,059		483,521		266,403		217,118
Sponsorship agreement network (entertainment segment)		5,600,000		3,173,333		2,426,667		5,600,000		2,613,333		2,986,667
SEO content (entertainment segment)		600,000		425,000		175,000		600,000		350,000		250,000
Personal seat licenses (entertainment segment)		117,339		11,081		106,258		180,081		14,004		166,077
Software		23,653		—		23,653		-		-		-
Website enhancements (entertainment segment)		25,630		4,014		21,616		13,500		—		13,500
Client agreements (revenue cycle management segments)		999,034		276,719		722,315		999,034		226,768		772,266
		8,000,829		4,243,879		3,756,950		8,101,681		3,560,395		4,541,286

Indefinite life intangible assets:
Goodwill (entertainment and revenue cycle management segments)		11,593,473		—		11,593,473		11,367,514		—		11,367,514
Trade name (entertainment segment)		900,000		—		900,000		600,000		—		600,000
Patents and trademarks pending (video solutions segment)		31,199		—		31,199		1,622		—		1,622

Total	$	20,525,501	$	4,243,879	$	16,281,622	$	20,070,817	$	3,560,395	$	16,510,422

Year ending December 31:
2024 (July 1, to December 31, 2024)	$	743,141
2025		1,414,848
2026		910,310
2027		116,646
2028 and thereafter		572,005
Total	$	3,756,950

OTHER ASSETS

6 Months Ended

Jun. 30, 2024

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

OTHER ASSETS

NOTE 11. OTHER ASSETS

Other assets were the following at June 30, 2024 and December 31, 2023:

SCHEDULE OF OTHER ASSETS

	June 30, 2024		December 31, 2023
Lease receivable	$	5,453,486	$	6,095,050
Restricted Cash		97,600		97,600
Other		347,489		404,382
Total other assets	$	5,898,575	$	6,597,032

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 12. COMMITMENTS AND CONTINGENCIES

Litigation

Notice of Failure to Satisfy a Continued Listing Rule

STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 13. STOCK-BASED COMPENSATION

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model.

A summary of all stock option activity under the Plans for the three months ended June 30, 2024 is as follows:

SCHEDULE OF STOCK OPTIONS OUTSTANDING

Options	Number of Shares		Weighted Average Exercise Price
Outstanding at December 31, 2023		53,600	$	45.55
Granted		—		—
Exercised		—		—
Forfeited		—		—
Outstanding at June 30, 2024		53,600	$	45.55
Exercisable at June 30, 2024		53,600	$	45.55

As of June 30, 2024, the unrecognized portion of stock compensation expense on all existing stock options was $-0-.

Outstanding options

Exercisable options

Exercise price

range

Number of

options

Weighted average
remaining

contractual life

Number of

options

Weighted average

remaining

contractual life

0.01 to $49.99

37,000

6.1 years

37,000

6.1 years

50.00 to $69.99

15,100

4.0 years

15,100

4.0 years

70.00 to $89.99

1,500

1.9 years

1,500

1.9 years

53,600

5.4 years

53,600

5.4 years

A summary of all restricted stock activity under the Plans for the three months ended June 30, 2024 is as follows:

SCHEDULE OF RESTRICTED STOCK ACTIVITY

	Number of Restricted shares			Weighted average grant date fair value
Nonvested balance, December 31, 2023		53,875		$	11.27
Granted		80,197			2.12
Vested		(30,750	)		10.06
Forfeited		(1,125	)		22.20
Nonvested balance, June 30, 2024		102,197		$	4.34

The nonvested balance of restricted stock vests as follows:

Years ended	Number of shares

2024 (July 1, 2024 through December 31, 2024)		1,500
2025		73,349
2026		18,349
2027		5,000
2028		4,000

COMMON STOCK PURCHASE WARRANTS

6 Months Ended

Jun. 30, 2024

Common Stock Purchase Warrants

COMMON STOCK PURCHASE WARRANTS

NOTE 14. COMMON STOCK PURCHASE WARRANTS

2023 Purchase Warrants

SCHEDULE OF WARRANT MODIFICATION

	Issuance date assumptions			June 30, 2024 assumptions
Volatility - range		106.0	%	$	105.0	%
Risk-free rate		3.36	%		4.33	%
Dividend		0	%		0	%
Remaining contractual term		5.0 years			3.8 years
Exercise price		5.50 – 7.50			5.50 – 7.50
Common stock issuable under the warrants		1,125,000			1,125,000

2024 Purchase Warrants

	Issuance date assumptions			June 30, 2024 assumptions
Volatility - range		72.1 - 101.1	%		72.5 - 101.1	%
Risk-free rate		4.25 - 5.46	%		4.33 - 5.47	%
Dividend		0	%		0	%
Remaining contractual term		0.1 - 5.0 years			0.1 - 5.0 years
Exercise price	$	2.51		$	2.51
Common stock issuable under the warrants		1,768,227			1,768,227

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

SCHEDULE OF WARRANT ACTIVITY

	Warrants		Weighted average exercise price
Vested Balance, December 31, 2023		1,125,000	$	6.50
Granted		1,768,227		2.51
Exercised		—		—
Forfeited/cancelled		—		—
Vested Balance, June 30, 2024		2,893,227	$	4.06

The total intrinsic value of all outstanding warrants aggregated $-0- as of June 30, 2024 and 2023, and the weighted average remaining term was 42.6 months as of June 30, 2024, respectively.

		Outstanding and exercisable warrants
Exercise price		Number of warrants		Weighted average remaining contractual life
$	5.50		375,000		3.8 years
$	6.50		375,000		3.8 years
$	7.50		375,000		3.8 years
$	2.51		1,768,227		3.41 years

			2,893,227		3.6 years

STOCKHOLDERS’ EQUITY

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 15. STOCKHOLDERS’ EQUITY

2023 Issuance of Restricted Common Stock

2024 Issuance of Restricted Common Stock

2024 Private Placement Transaction

Cancellation of Restricted Stock

During the six months ended June 30, 2024, the Company cancelled 1,125 shares due to termination of employees.

Reverse Stock Split

Noncontrolling Interests

NET EARNINGS (LOSS) PER SHARE

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

NET EARNINGS (LOSS) PER SHARE

NOTE 16. NET EARNINGS (LOSS) PER SHARE

The calculation of the weighted average number of shares outstanding and loss per share outstanding for the three and six months ended June 30, 2024 and 2023 are as follows:

	2024			2023			2024			2023
	For the three months ended June 30,						For the six months ended June 30,
	2024			2023			2024			2023
Numerator for basic and diluted income per share – Net loss attributable to common stockholders	$	(5,083,861	)	$	(8,393,304	)	$	(9,014,882	)	$	(14,499,122	)

Denominator for basic loss per share – weighted average shares outstanding		2,921,307			2,785,663			2,891,205			2,768,683
Dilutive effect of shares issuable under stock options and warrants outstanding		—			—			—			—

Denominator for diluted loss per share – adjusted weighted average shares outstanding		2,921,307			2,785,663			2,891,205			2,768,683

Net loss per share:
Basic	$	(1.74	)	$	(3.01	)	$	(3.12	)	$	(5.24	)
Diluted	$	(1.74	)	$	(3.01	)	$	(3.12	)	$	(5.24	)

COUNTRY STAMPEDE ACQUISITION

6 Months Ended

Jun. 30, 2024

Country Stampede Acquisition [Member]

Business Acquisition [Line Items]

COUNTRY STAMPEDE ACQUISITION

NOTE 17. COUNTRY STAMPEDE ACQUISITION

	As allocated (Preliminary)
Description	March 1, 2024
Assets acquired (provisional):
Tangible assets acquired	$	305,000
Identifiable intangible assets acquired (Trademarks and trade names)		300,000
Goodwill		225,959
Liabilities assumed		(288,000	)
Liabilities assumed pursuant to stock purchase agreement		(288,000	)
Net assets acquired and liabilities assumed	$	542,959
Consideration:
Cash paid at Country Stampede Acquisition date	$	400,000
Cash paid subsequent to closing		142,959

Total Country Stampede Acquisition purchase price	$	542,959

SEGMENT DATA

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

SEGMENT DATA

NOTE 18. SEGMENT DATA

The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s three operating segments are Video Solutions, Revenue Cycle Management, and Entertainment, each of which has specific personnel responsible for that business and reports to the CODM. Corporate expenses capture the Company’s corporate administrative activities, is also to be reported in the segment information. The Company’s captive insurance subsidiary provides services to the Company’s other business segments and not to outside customers. Therefore, its operations are eliminated in consolidation and is not considered a separate business segment for financial reporting purposes.

Summarized financial information for the Company’s reportable business segments is provided for the indicated periods and as of June 30, 2024, and June 30, 2023:

SCHEDULE OF SEGMENT REPORTING

	2024			2023			2024			2023
	For the three months ended June 30,						For the six months ended June 30,
	2024			2023			2024			2023
Net Revenues:
Video Solutions	$	1,585,670		$	1,899,590		$	3,303,963		$	3,798,953
Revenue Cycle Management		1,564,354			1,724,772			2,998,952			3,506,361
Entertainment		2,466,211			4,655,270			4,842,671			8,671,506
Total Net Revenues	$	5,616,235		$	8,279,632		$	11,145,586		$	15,976,820

Gross Profit:
Video Solutions	$	287,840		$	779,408		$	853,534		$	1,313,601
Revenue Cycle Management		601,406			802,174			1,065,137			1,578,107
Entertainment		(646,854	)		1,155,458			(154,841	)		1,390,121
Total Gross Profit	$	242,392		$	2,737,040		$	1,763,830		$	4,281,829

Operating Income (loss):
Video Solutions	$	(1,400,039	)	$	(1,364,987	)	$	(2,533,242	)	$	(3,328,173	)
Revenue Cycle Management		150,323			152,044			126,352			255,809
Entertainment		(1,828,513	)		(328,929	)		(2,470,732	)		(1,561,936	)
Corporate		(835,992	)		(3,398,832	)		(2,675,571	)		(6,479,211	)
Total Operating Income (Loss)	$	(3,914,221	)	$	(4,940,704	)	$	(7,553,193	)	$	(11,113,511	)

Depreciation and Amortization:
Video Solutions	$	178,555		$	203,987		$	387,724		$	402,109
Revenue Cycle Management		26,715			25,887			53,429			51,394
Entertainment		317,180			318,058			637,847			637,539
Total Depreciation and Amortization	$	522,450		$	547,932		$	1,079,000		$	1,091,042

	June 30, 2024		December 31, 2023
Assets (net of eliminations):
Video Solutions	$	22,998,670	$	26,396,559
Revenue Cycle Management		1,904,280		2,260,376
Entertainment		6,315,677		6,324,211
Corporate		12,108,588		12,047,663
Total Identifiable Assets	$	43,327,215	$	47,028,809

RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2024

RELATED PARTY TRANSACTIONS

NOTE 19. RELATED PARTY TRANSACTIONS

Transactions with Managing Member of Nobility Healthcare

Transactions with Related Party of TicketSmarter

SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2024

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 20. SUBSEQUENT EVENTS

Letter Agreement

Except as stated above, the Letter Agreement does not result in any other substantive changes to the Agreement.

Purchase and Sale Agreement

On August 12, 2024, pursuant to the Agreement, the Company and the Buyer completed the sale of the Property. The Buyer has no prior material relationship with the Company beyond the Agreement.

Common Stock Issuance

The Company issued 353,123 shares of common stock subsequent to June 30, 2024.

Effectiveness of Registration Statement

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business Combination

Business Combination

The Closing is subject to the approval of Clover Leaf’s shareholders and the satisfaction or waiver of certain other customary closing conditions.

Basis of Presentation

Basis of Presentation:

For further information, refer to the audited financial statements and footnotes included in the Company’s annual report on Form 10-K for the year ended December 31, 2023.

Liquidity and Going Concern

Liquidity and Going Concern

Basis of Consolidation

Basis of Consolidation:

Fair Value of Financial Instruments

Fair Value of Financial Instruments:

Revenue Recognition

Revenue Recognition:

Video Solutions

Revenue Cycle Management

Entertainment

Other

SCHEDULE OF CONTRACT LIABILITIES

	June 30, 2024
	December 31, 2023		Additions/ Reclass		Recognized Revenue			June 30, 2024
Contract liabilities, current	$	2,937,168	$	767,131	$	(610,807	)	$	3,093,492
Contract liabilities, non-current		7,340,459		412,632		(753,950	)		6,999,141

	$	10,277,627	$	1,179,763	$	(1,364,757	)	$	10,092,633

	June 30, 2023
	December 31, 2022		Additions/ Reclass		Recognized Revenue			June 30, 2023
Contract liabilities, current	$	2,154,874	$	1,246,212	$	(496,034	)	$	2,905,052
Contract liabilities, non-current		5,818,082		1,223,497		(487,106	)		6,554,473

	$	7,972,956	$	2,469,709	$	(983,140	)	$	9,459,525

Use of Estimates

Use of Estimates:

Cash and cash equivalents

Cash and cash equivalents:

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

SCHEDULE OF SHORT TERM INVESTMENTS

	June 30, 2024
	Adjusted Cost		Realized Gains		Realized Losses		Fair Value
Demand deposits	$	439,881	$	—	$	—	$	439,881
Short-term investments with original maturities of 90 days or less (Level 1):
Money market funds		77,232		—		—		77,232

	$	517,113	$	—	$	—	$	517,113

	December 31, 2023
	Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value
Demand deposits	$	545,207	$	—	$	—	$	545,207
Short-term investments with original maturities of 90 days or less (Level 1):
Money market funds		135,342		—		—		135,342

	$	680,549	$	—	$	—	$	680,549

Restricted Cash

Restricted Cash:

	June 30, 2024		December 31, 2023
Cash and cash equivalents	$	517,113	$	680,549
Long-term restricted cash included in other assets		97,600		97,600
Total cash, cash equivalents and restricted cash in the statements of cash flows	$	614,713	$	778,149

Accounts Receivable

Accounts Receivable:

Goodwill and Other Intangibles

Goodwill and Other Intangibles:

Segment Reporting

Segment Reporting

Contingent Consideration

Contingent Consideration

Non-Controlling Interests

Non-Controlling Interests

New Accounting Standards

New Accounting Standards

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

SCHEDULE OF CONTRACT LIABILITIES

	June 30, 2024
	December 31, 2023		Additions/ Reclass		Recognized Revenue			June 30, 2024
Contract liabilities, current	$	2,937,168	$	767,131	$	(610,807	)	$	3,093,492
Contract liabilities, non-current		7,340,459		412,632		(753,950	)		6,999,141

	$	10,277,627	$	1,179,763	$	(1,364,757	)	$	10,092,633

	June 30, 2023
	December 31, 2022		Additions/ Reclass		Recognized Revenue			June 30, 2023
Contract liabilities, current	$	2,154,874	$	1,246,212	$	(496,034	)	$	2,905,052
Contract liabilities, non-current		5,818,082		1,223,497		(487,106	)		6,554,473

	$	7,972,956	$	2,469,709	$	(983,140	)	$	9,459,525

SCHEDULE OF SHORT TERM INVESTMENTS

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

SCHEDULE OF SHORT TERM INVESTMENTS

	June 30, 2024
	Adjusted Cost		Realized Gains		Realized Losses		Fair Value
Demand deposits	$	439,881	$	—	$	—	$	439,881
Short-term investments with original maturities of 90 days or less (Level 1):
Money market funds		77,232		—		—		77,232

	$	517,113	$	—	$	—	$	517,113

	December 31, 2023
	Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value
Demand deposits	$	545,207	$	—	$	—	$	545,207
Short-term investments with original maturities of 90 days or less (Level 1):
Money market funds		135,342		—		—		135,342

	$	680,549	$	—	$	—	$	680,549

SCHEDULE OF RECONCILIATION OF CASH AND CASH EQUIVALENTS

	June 30, 2024		December 31, 2023
Cash and cash equivalents	$	517,113	$	680,549
Long-term restricted cash included in other assets		97,600		97,600
Total cash, cash equivalents and restricted cash in the statements of cash flows	$	614,713	$	778,149

INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2024

Inventory Disclosure [Abstract]

SCHEDULE OF INVENTORIES

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

SCHEDULE OF INVENTORIES

	June 30, 2024			December 31, 2023
Raw material and component parts– video solutions segment	$	2,614,267		$	3,044,653
Work-in-process– video solutions segment		15,895			20,396
Finished goods – video solutions segment		3,436,629			4,623,489
Finished goods – entertainment segment		286,343			699,204
Subtotal		6,353,134			8,387,742
Reserve for excess and obsolete inventory– video solutions segment		(4,008,278	)		(4,355,666	)
Reserve for excess and obsolete inventory – entertainment segment		(126,723	)		(186,795	)
Total inventories	$	2,218,133		$	3,845,281

DEBT OBLIGATIONS (Tables)

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

SCHEDULE OF DEBT OBLIGATIONS

Debt obligations is comprised of the following:

SCHEDULE OF DEBT OBLIGATIONS

	June 30, 2024			December 31, 2023
Economic injury disaster loan (EIDL)	$	146,154		$	147,781
Contingent consideration promissory note – Nobility Healthcare Division Acquisition		—			129,651
Contingent consideration promissory note – Nobility Healthcare Division Acquisition		—			58,819
Revolving Loan Agreement		4,880,000			4,880,000
Commercial Extension of Credit- Entertainment Segment		12,500			87,928
Merchant Advances – Video Solutions Segment		2,259,000			1,350,000
Merchant Advances – Entertainment Segment		1,373,101			—
Unamortized debt issuance costs		(791,434	)		(540,429	)
Debt obligations		7,879,321			6,113,750
Less: current maturities of debt obligations		2,980,903			1,260,513
Debt obligations, long-term	$	4,898,418		$	4,853,237

SCHEDULE OF MATURITY OF DEBT OBLIGATIONS

Debt obligations mature as follows as of June 30, 2024:

	June 30, 2024
2024 (July 1, 2024 to December 31, 2024)	$	2,979,213
2025		4,759,024
2026		3,542
2027		3,677
2028 and thereafter		133,865

Total	$	7,879,321

SCHEDULE OF WARRANT TO PURCHASE COMMON STOCK GRANTED

	Terms at April 5, 2023 (issuance date)
Volatility - range		106.0	%
Risk-free rate		3.36	%
Dividend		0	%
Remaining contractual term		5.0 years
Exercise price	$	5.50 – 7.50
Common stock issuable under the warrants		1,125,000

FAIR VALUE MEASUREMENT (Tables)

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

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

The following table represents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:

	June 30, 2024
	Level 1		Level 2		Level 3		Total
Liabilities:
Warrant derivative liabilities	$	—	$	—	$	3,796,746	$	3,796,746
Contingent consideration promissory notes and contingent consideration earn-out agreement		—		—		—		—
	$	—	$	—	$	3,796,746	$	3,796,746

	December 31, 2023
	Level 1		Level 2		Level 3		Total
Liabilities:
Warrant derivative liabilities	$	—	$	—	$	1,369,738	$	1,369,738
Contingent consideration promissory notes and contingent consideration earn-out agreement		—		—		188,470		188,470
	$	—	$	—	$	1,558,208	$	1,558,208

SCHEDULE OF FAIR VALUE MEASUREMENTS CHANGE IN LEVEL 3 INPUTS

The following table represents the change in Level 3 tier value measurements for the three months ended June 30, 2024:

	Contingent Consideration Promissory Notes and Earn-Out Agreement			Warrant Derivative Liabilities

Balance, December 31, 2023	$	188,470		$	1,369,738

Issuance of warrant derivative liabilities					2,075,300

Change in fair value of warrant derivative liabilities		—			351,710

Principal payments on contingent consideration promissory notes – Revenue Cycle Management Acquisitions		(188,470	)		—

Change in fair value of contingent consideration promissory notes - Revenue Cycle Management Acquisitions		—			—

Balance, June 30, 2024	$	—		$	3,796,748

ACCRUED EXPENSES (Tables)

6 Months Ended

Jun. 30, 2024

Payables and Accruals [Abstract]

SCHEDULE OF ACCRUED EXPENSES

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

SCHEDULE OF ACCRUED EXPENSES

	June 30, 2024		December 31, 2023
Accrued warranty expense	$	11,615	$	17,699
Accrued litigation costs		2,040,292		2,040,292
Accrued sales commissions		1,465		87,421
Accrued payroll and related fringes		420,596		367,826
Accrued sales returns and allowances		93,170		117,713
Accrued taxes		161,639		150,981
Accrued interest - related party		283,782		95,031
Customer deposits		75,283		219,462
Other		292,163		172,905
Total accrued expenses	$	3,380,005	$	3,269,330

SCHEDULE OF ACCRUED WARRANTY EXPENSE

Accrued warranty expense was comprised of the following for the six months ended June 30, 2024:

SCHEDULE OF ACCRUED WARRANTY EXPENSE

Beginning balance	$	17,699
Provision for warranty expense		38,898
Charges applied to warranty reserve		(44,982	)

Ending balance	$	11,615

PREPAID EXPENSES (Tables)

6 Months Ended

Jun. 30, 2024

Prepaid Expenses

SCHEDULE OF PREPAID EXPENSE

Prepaid expenses were the following at June 30, 2024 and December 31, 2023:

SCHEDULE OF PREPAID EXPENSE

	June 30, 2024		December 31, 2023
Prepaid inventory	$	5,200,463	$	5,318,939
Prepaid advertising		410,226		612,292
Other		1,009,788		435,137
Total prepaid expenses	$	6,620,477	$	6,366,368

PROPERTY, PLANT AND EQUIPMENT (Tables)

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT

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

	Estimated Useful Life	June 30, 2024			December 31, 2023
Building	25 years	$	4,537,037		$	4,537,037
Land	Infinite		739,734			739,734
Office furniture, fixtures, equipment, and aircraft	3-20 years		779,879			2,065,092
Warehouse and production equipment	3-7 years		237,141			29,055
Demonstration and tradeshow equipment	3-7 years		77,791			87,987
Building improvements	5-7 years		1,341,471			1,328,654
Total cost			7,713,053			8,787,559
Less: accumulated depreciation and amortization			(1,679,962	)		(1,503,857	)

Net property, plant and equipment		$	6,033,091		$	7,283,702

OPERATING LEASE (Tables)

6 Months Ended

Jun. 30, 2024

Operating Lease

SCHEDULE OF OPERATING LEASES RIGHT OF USE ASSETS AND LIABILITIES

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

Assets:
Operating lease right of use assets	$	869,166

Liabilities:
Operating lease obligations-current portion	$	223,629
Operating lease obligations-less current portion		692,423
Total operating lease obligations	$	916,052

SCHEDULE OF LEASE EXPENSE

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

SCHEDULE OF LEASE EXPENSE


Selling, general and administrative expenses		$	226,695

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

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

Year ending December 31:
2024 (July 1, to December 31, 2024)	$	146,105
2025		288,720
2026		293,300
2027		117,492
Thereafter		235,020
Total undiscounted minimum future lease payments		1,080,637
Imputed interest		(164,585	)
Total operating lease liability	$	916,052

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

SCHEDULE OF INTANGIBLE ASSETS

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

SCHEDULE OF INTANGIBLE ASSETS

	June 30, 2024						December 31, 2023
	Gross value		Accumulated amortization		Net carrying value		Gross value		Accumulated amortization		Net carrying value
Amortized intangible assets:
Licenses (video solutions segment)	$	151,652	$	21,270	$	130,382	$	225,545	$	89,887	$	135,658
Patents and trademarks (video solutions segment)		483,521		332,462		151,059		483,521		266,403		217,118
Sponsorship agreement network (entertainment segment)		5,600,000		3,173,333		2,426,667		5,600,000		2,613,333		2,986,667
SEO content (entertainment segment)		600,000		425,000		175,000		600,000		350,000		250,000
Personal seat licenses (entertainment segment)		117,339		11,081		106,258		180,081		14,004		166,077
Software		23,653		—		23,653		-		-		-
Website enhancements (entertainment segment)		25,630		4,014		21,616		13,500		—		13,500
Client agreements (revenue cycle management segments)		999,034		276,719		722,315		999,034		226,768		772,266
		8,000,829		4,243,879		3,756,950		8,101,681		3,560,395		4,541,286

Indefinite life intangible assets:
Goodwill (entertainment and revenue cycle management segments)		11,593,473		—		11,593,473		11,367,514		—		11,367,514
Trade name (entertainment segment)		900,000		—		900,000		600,000		—		600,000
Patents and trademarks pending (video solutions segment)		31,199		—		31,199		1,622		—		1,622

Total	$	20,525,501	$	4,243,879	$	16,281,622	$	20,070,817	$	3,560,395	$	16,510,422

SCHEDULE OF ESTIMATED AMORTIZATION FOR INTANGIBLE ASSETS

Year ending December 31:
2024 (July 1, to December 31, 2024)	$	743,141
2025		1,414,848
2026		910,310
2027		116,646
2028 and thereafter		572,005
Total	$	3,756,950

OTHER ASSETS (Tables)

6 Months Ended

Jun. 30, 2024

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

SCHEDULE OF OTHER ASSETS

Other assets were the following at June 30, 2024 and December 31, 2023:

SCHEDULE OF OTHER ASSETS

	June 30, 2024		December 31, 2023
Lease receivable	$	5,453,486	$	6,095,050
Restricted Cash		97,600		97,600
Other		347,489		404,382
Total other assets	$	5,898,575	$	6,597,032

STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

SCHEDULE OF STOCK OPTIONS OUTSTANDING

A summary of all stock option activity under the Plans for the three months ended June 30, 2024 is as follows:

SCHEDULE OF STOCK OPTIONS OUTSTANDING

Options	Number of Shares		Weighted Average Exercise Price
Outstanding at December 31, 2023		53,600	$	45.55
Granted		—		—
Exercised		—		—
Forfeited		—		—
Outstanding at June 30, 2024		53,600	$	45.55
Exercisable at June 30, 2024		53,600	$	45.55

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

Outstanding options

Exercisable options

Exercise price

range

Number of

options

Weighted average
remaining

contractual life

Number of

options

Weighted average

remaining

contractual life

0.01 to $49.99

37,000

6.1 years

37,000

6.1 years

50.00 to $69.99

15,100

4.0 years

15,100

4.0 years

70.00 to $89.99

1,500

1.9 years

1,500

1.9 years

53,600

5.4 years

53,600

5.4 years

SCHEDULE OF RESTRICTED STOCK ACTIVITY

A summary of all restricted stock activity under the Plans for the three months ended June 30, 2024 is as follows:

SCHEDULE OF RESTRICTED STOCK ACTIVITY

	Number of Restricted shares			Weighted average grant date fair value
Nonvested balance, December 31, 2023		53,875		$	11.27
Granted		80,197			2.12
Vested		(30,750	)		10.06
Forfeited		(1,125	)		22.20
Nonvested balance, June 30, 2024		102,197		$	4.34

SCHEDULE OF NON-VESTED BALANCE OF RESTRICTED STOCK

The nonvested balance of restricted stock vests as follows:

Years ended	Number of shares

2024 (July 1, 2024 through December 31, 2024)		1,500
2025		73,349
2026		18,349
2027		5,000
2028		4,000

COMMON STOCK PURCHASE WARRANTS (Tables)

6 Months Ended

Jun. 30, 2024

Common Stock Purchase Warrants

SCHEDULE OF WARRANT MODIFICATION

	Issuance date assumptions			June 30, 2024 assumptions
Volatility - range		106.0	%	$	105.0	%
Risk-free rate		3.36	%		4.33	%
Dividend		0	%		0	%
Remaining contractual term		5.0 years			3.8 years
Exercise price		5.50 – 7.50			5.50 – 7.50
Common stock issuable under the warrants		1,125,000			1,125,000

	Issuance date assumptions			June 30, 2024 assumptions
Volatility - range		72.1 - 101.1	%		72.5 - 101.1	%
Risk-free rate		4.25 - 5.46	%		4.33 - 5.47	%
Dividend		0	%		0	%
Remaining contractual term		0.1 - 5.0 years			0.1 - 5.0 years
Exercise price	$	2.51		$	2.51
Common stock issuable under the warrants		1,768,227			1,768,227

SCHEDULE OF WARRANT ACTIVITY

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

SCHEDULE OF WARRANT ACTIVITY

	Warrants		Weighted average exercise price
Vested Balance, December 31, 2023		1,125,000	$	6.50
Granted		1,768,227		2.51
Exercised		—		—
Forfeited/cancelled		—		—
Vested Balance, June 30, 2024		2,893,227	$	4.06

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

		Outstanding and exercisable warrants
Exercise price		Number of warrants		Weighted average remaining contractual life
$	5.50		375,000		3.8 years
$	6.50		375,000		3.8 years
$	7.50		375,000		3.8 years
$	2.51		1,768,227		3.41 years

			2,893,227		3.6 years

NET EARNINGS (LOSS) PER SHARE (Tables)

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

SCHEDULE OF WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING AND LOSS PER SHARE OUTSTANDING

The calculation of the weighted average number of shares outstanding and loss per share outstanding for the three and six months ended June 30, 2024 and 2023 are as follows:

	2024			2023			2024			2023
	For the three months ended June 30,						For the six months ended June 30,
	2024			2023			2024			2023
Numerator for basic and diluted income per share – Net loss attributable to common stockholders	$	(5,083,861	)	$	(8,393,304	)	$	(9,014,882	)	$	(14,499,122	)

Denominator for basic loss per share – weighted average shares outstanding		2,921,307			2,785,663			2,891,205			2,768,683
Dilutive effect of shares issuable under stock options and warrants outstanding		—			—			—			—

Denominator for diluted loss per share – adjusted weighted average shares outstanding		2,921,307			2,785,663			2,891,205			2,768,683

Net loss per share:
Basic	$	(1.74	)	$	(3.01	)	$	(3.12	)	$	(5.24	)
Diluted	$	(1.74	)	$	(3.01	)	$	(3.12	)	$	(5.24	)

COUNTRY STAMPEDE ACQUISITION (Tables)

6 Months Ended

Jun. 30, 2024

Country Stampede Acquisition [Member]

Business Acquisition [Line Items]

SCHEDULE OF ESTIMATED FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED ACQUISITION

	As allocated (Preliminary)
Description	March 1, 2024
Assets acquired (provisional):
Tangible assets acquired	$	305,000
Identifiable intangible assets acquired (Trademarks and trade names)		300,000
Goodwill		225,959
Liabilities assumed		(288,000	)
Liabilities assumed pursuant to stock purchase agreement		(288,000	)
Net assets acquired and liabilities assumed	$	542,959
Consideration:
Cash paid at Country Stampede Acquisition date	$	400,000
Cash paid subsequent to closing		142,959

Total Country Stampede Acquisition purchase price	$	542,959

SEGMENT DATA (Tables)

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

SCHEDULE OF SEGMENT REPORTING

Summarized financial information for the Company’s reportable business segments is provided for the indicated periods and as of June 30, 2024, and June 30, 2023:

SCHEDULE OF SEGMENT REPORTING

	2024			2023			2024			2023
	For the three months ended June 30,						For the six months ended June 30,
	2024			2023			2024			2023
Net Revenues:
Video Solutions	$	1,585,670		$	1,899,590		$	3,303,963		$	3,798,953
Revenue Cycle Management		1,564,354			1,724,772			2,998,952			3,506,361
Entertainment		2,466,211			4,655,270			4,842,671			8,671,506
Total Net Revenues	$	5,616,235		$	8,279,632		$	11,145,586		$	15,976,820

Gross Profit:
Video Solutions	$	287,840		$	779,408		$	853,534		$	1,313,601
Revenue Cycle Management		601,406			802,174			1,065,137			1,578,107
Entertainment		(646,854	)		1,155,458			(154,841	)		1,390,121
Total Gross Profit	$	242,392		$	2,737,040		$	1,763,830		$	4,281,829

Operating Income (loss):
Video Solutions	$	(1,400,039	)	$	(1,364,987	)	$	(2,533,242	)	$	(3,328,173	)
Revenue Cycle Management		150,323			152,044			126,352			255,809
Entertainment		(1,828,513	)		(328,929	)		(2,470,732	)		(1,561,936	)
Corporate		(835,992	)		(3,398,832	)		(2,675,571	)		(6,479,211	)
Total Operating Income (Loss)	$	(3,914,221	)	$	(4,940,704	)	$	(7,553,193	)	$	(11,113,511	)

Depreciation and Amortization:
Video Solutions	$	178,555		$	203,987		$	387,724		$	402,109
Revenue Cycle Management		26,715			25,887			53,429			51,394
Entertainment		317,180			318,058			637,847			637,539
Total Depreciation and Amortization	$	522,450		$	547,932		$	1,079,000		$	1,091,042

	June 30, 2024		December 31, 2023
Assets (net of eliminations):
Video Solutions	$	22,998,670	$	26,396,559
Revenue Cycle Management		1,904,280		2,260,376
Entertainment		6,315,677		6,324,211
Corporate		12,108,588		12,047,663
Total Identifiable Assets	$	43,327,215	$	47,028,809

SCHEDULE OF CONTRACT LIABILITIES (Details) - USD ($)	6 Months Ended
SCHEDULE OF CONTRACT LIABILITIES (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Contract liabilities, current, beginning	$ 2,937,168	$ 2,154,874
Contract liabilities, current, additions/reclass	767,131	1,246,212
Contract liabilities, current, revenue recognized	(610,807)	(496,034)
Contract liabilities, current, ending	3,093,492	2,905,052
Contract liabilities, non-current, beginning	7,340,459	5,818,082
Contract liabilities, non-current, additions/reclass	412,632	1,223,497
Contract liabilities, non-current, revenue recognized	(753,950)	(487,106)
Contract liabilities, non-current, ending	6,999,141	6,554,473
Contract liabilities, current, beginning	10,277,627	7,972,956
Contract liabilities, additions/reclass	1,179,763	2,469,709
Contract liabilities, revenue recognized	(1,364,757)	(983,140)
Contract liabilities, ending	$ 10,092,633	$ 9,459,525

SCHEDULE OF SHORT TERM INVESTMENTS (Details) - USD ($)	6 Months Ended	12 Months Ended
SCHEDULE OF SHORT TERM INVESTMENTS (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Adjusted cost	$ 517,113	$ 680,549
Realized gains
Realized Losses
Fair value	517,113	680,549
Demand Deposits [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Adjusted cost	439,881	545,207
Realized gains
Realized Losses
Fair value	439,881	545,207
Money Market Funds [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Adjusted cost	77,232	135,342
Realized gains
Realized Losses
Fair value	$ 77,232	$ 135,342

SCHEDULE OF RECONCILIATION OF CASH AND CASH EQUIVALENTS (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023	Jun. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents	$ 517,113	$ 680,549
Long-term restricted cash included in other assets	97,600	97,600
Total cash, cash equivalents and restricted cash in the statements of cash flows	$ 614,713	$ 778,149	$ 2,923,881	$ 3,532,199

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)		1 Months Ended	6 Months Ended		12 Months Ended
	Feb. 06, 2023	Jun. 30, 2023 USD ($) $ / shares	Jun. 30, 2024 USD ($) Segments $ / shares	Jun. 30, 2023 USD ($) $ / shares	Dec. 31, 2023 USD ($) $ / shares	Mar. 14, 2024 $ / shares	Aug. 23, 2022 $ / shares
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Common stock, par value \| $ / shares			$ 0.001		$ 0.001	$ 0.001
Reverse stock split	1-for-20 reverse stock split
Net loss			$ 8,953,819
Net cash used in operating activities			3,408,757	$ 3,109,986
Net cash used in investing activities			36,504	(126,946)
Net cash used in financing activities			3,208,817	2,628,614
Contract liabilities, revenue recognized			1,364,757	$ 983,140
Sales return and allowances			93,170		$ 117,713
Cash, FDIC insured amount			250,000
Uninsured balance			136,717		29,700
Restricted cash			$ 97,600		$ 97,600
Number of operating segments \| Segments			3
Common Class A [Member] \| Clover Leaf Capital Corp [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Business acquisition, deemed value per share \| $ / shares		$ 0.0001		$ 0.0001
Business combination, aggregate value		$ 125,000,000
Common Stock [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Business acquisition percentage of warrant holders		30.00%		30.00%
Common Stock [Member] \| Clover Leaf Capital Corp [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Business acquisition, deemed value per share \| $ / shares		$ 11.14		$ 11.14
Merger Agreement [Member] \| Predecessor Common Stock [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Common stock, par value \| $ / shares							$ 0.001
Merger Agreement [Member] \| Registrant Common Stock [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Common stock, par value \| $ / shares							$ 0.001

SCHEDULE OF INVENTORIES (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Inventory Disclosure [Abstract]
Raw material and component parts– video solutions segment	$ 2,614,267	$ 3,044,653
Work-in-process– video solutions segment	15,895	20,396
Finished goods – video solutions segment	3,436,629	4,623,489
Finished goods – entertainment segment	286,343	699,204
Subtotal	6,353,134	8,387,742
Reserve for excess and obsolete inventory– video solutions segment	(4,008,278)	(4,355,666)
Reserve for excess and obsolete inventory – entertainment segment	(126,723)	(186,795)
Total inventories	$ 2,218,133	$ 3,845,281

INVENTORIES (Details Narrative) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Inventory Disclosure [Abstract]
Inventory cost	$ 43,274	$ 42,797

SCHEDULE OF DEBT OBLIGATIONS (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023	Jun. 02, 2023
Debt Disclosure [Abstract]
Economic injury disaster loan (EIDL)	$ 146,154	$ 147,781	$ 125,000
Contingent consideration promissory note – Nobility Healthcare Division Acquisition		129,651
Contingent consideration promissory note – Nobility Healthcare Division Acquisition		58,819
Revolving Loan Agreement	4,880,000	4,880,000
Commercial Extension of Credit- Entertainment Segment	12,500	87,928
Merchant Advances – Video Solutions Segment	2,259,000	1,350,000
Merchant Advances – Entertainment Segment	1,373,101
Unamortized debt issuance costs	(791,434)	(540,429)
Debt obligations	7,879,321	6,113,750
Less: current maturities of debt obligations	2,980,903	1,260,513
Debt obligations, long-term	$ 4,898,418	$ 4,853,237

SCHEDULE OF MATURITY OF DEBT OBLIGATIONS (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Debt Disclosure [Abstract]
2024 (July 1, 2024 to December 31, 2024)	$ 2,979,213
2025	4,759,024
2026	3,542
2027	3,677
2028 and thereafter	133,865
Debt obligations	$ 7,879,321	$ 6,113,750

SCHEDULE OF WARRANT TO PURCHASE COMMON STOCK GRANTED (Details) - Warrant [Member]	Apr. 05, 2023 $ / shares shares
Debt Instrument [Line Items]
Volatility - range	106.00%
Risk-free rate	3.36%
Dividend	0.00%
Remaining contractual term	5 years
Common stock issuable under the warrants \| shares	1,125,000
Minimum [Member]
Debt Instrument [Line Items]
Exercise price	$ 5.50
Maximum [Member]
Debt Instrument [Line Items]
Exercise price	$ 7.50

DEBT OBLIGATIONS (Details Narrative) - USD ($)										1 Months Ended	3 Months Ended		6 Months Ended
DEBT OBLIGATIONS (Details Narrative) - USD ($)	Jan. 22, 2024	Nov. 30, 2023	Oct. 26, 2023	Jun. 02, 2023	Apr. 05, 2023	Feb. 23, 2023	Aug. 31, 2021	Jun. 30, 2021	May 12, 2020	Mar. 31, 2024	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Mar. 14, 2024	Dec. 31, 2023
Short-Term Debt [Line Items]
Face value				$ 125,000							$ 146,154		$ 146,154			$ 147,781
Principal loan through remittances											$ 87,928		87,928
Proceeds from convertible debt														$ 2,640,000
Common stock, par value											$ 0.001		$ 0.001		$ 0.001	$ 0.001
Issuance of warrant derivative liabilities													$ 576,380
Conversion of convertible securities												$ 119,750
Loss on conversion of convertibleNote				$ 93,386										93,386
Debt issuance costs													188,255
Proceeds merchant advances													1,144,000
Loss on extinguishment of debt											$ 68,827		68,827
Merchant advances outstanding balance											2,259,000		2,259,000			$ 1,350,000
Merchant advances entertainment segment outstanding balance											1,373,101		1,373,101
Merchant Cash Advances [Member]
Short-Term Debt [Line Items]
Amortization of debt discount													820,429
Short-term merchant advance		$ 1,050,000
Origination fees total		50,000
Net proceeds of origination fees		1,000,000
Short-term debt		$ 1,512,000
Loan interest rate		2.9
Repayments of short-term debt													1,215,000
Proceeds merchant advances													1,144,000
Merchant Cash Advances Entertainment Segment [Member]
Short-Term Debt [Line Items]
Amortization of debt discount											139,118		202,868
Short-term merchant advance										$ 1,000,000
Origination fees total										85,000
Net proceeds of origination fees										915,000
Short-term debt										$ 1,425,000
Loan interest rate										5.19
Repayments of short-term debt													51,899
Revolving Loan Agreement [Member]
Short-Term Debt [Line Items]
Proceeds from secured convertible debt			$ 4,880,000
Proceeds from secured convertible debt			3,162,500
Principal amount outstanding of loans			4,880,000
Debt instrument, repaid, principal			$ 97,600
Loan agreement description			the Company issued the Revolving Note to Kompass whereby the Company and Digital Ally Healthcare jointly and severally promise to pay to the order of Kompass the lesser of (i) $4,880,000.00, or (ii) the aggregate principal amount of all Revolving Loans outstanding under and pursuant to the Loan Agreement at the maturity or maturities and in the amount or amounts stated on the records of Kompass, together with interest (computed on the actual number of days elapsed on the basis of a 360 day year) at a floating per annum rate equal to the greater of (i) the Prime Rate plus four percent or (ii) eight percent, on the aggregate principal amount of all Revolving Loans outstanding from time to time as provided in the Loan Agreement.
Amortization of debt discount											$ 23,435		$ 46,871
Registration Rights Agreement [Member]
Short-Term Debt [Line Items]
Contractual interest rate											10.00%		10.00%
Purchaser percentage											2.00%		2.00%
Warrant [Member]
Short-Term Debt [Line Items]
Aggregate shares exercisable					1,125,000
Comprised shares					1,125,000
Warrant One [Member]
Short-Term Debt [Line Items]
Comprised shares					375,000
Warrant exercise price					$ 5.50
Common stock, par value					$ 0.001
Warrant Two [Member]
Short-Term Debt [Line Items]
Comprised shares					375,000
Warrant exercise price					$ 6.50
Warrant Three [Member]
Short-Term Debt [Line Items]
Comprised shares					375,000
Warrant exercise price					$ 7.50
Common Stock [Member]
Short-Term Debt [Line Items]
Common stock, convertible, conversion price, increase					$ 5.00
Debt instrument, redemption price, percentage					110.00%
Shares issued price per share				$ 5.00
Conversion of convertible securities, shares				25,000								25,000
Conversion of convertible securities				$ 119,750								$ 25
2020 Small Business Administration Notes [Member]
Short-Term Debt [Line Items]
Proceeds from loans									$ 150,000
Face value									$ 150,000		$ 1,628		$ 1,628
Contractual interest rate									3.75%
principal payment									$ 731
Interest expense											1,383		2,758
June Contingent Payment Note [Member]
Short-Term Debt [Line Items]
Face value								$ 350,000
Contractual interest rate								3.00%
principal payment								$ 290,952
Principal amount								975,000
Debt instrument fair value								$ 350,000			0		0			58,819
August Contingent Payment Note [Member]
Short-Term Debt [Line Items]
Face value							$ 650,000
Contractual interest rate							3.00%
principal payment							$ 681,907
Principal amount							3,000,000
Debt instrument fair value							$ 650,000				$ 0		0			$ 129,651
Twenty Twenty Three Commercial Extension Of Credit [Member]
Short-Term Debt [Line Items]
Line of credit						$ 1,000,000
Borrower percentage						25.00%
Credit facility description						The 25% withholding of the Borrower’s applicable remittance shall be deemed a “Payment” under the terms of this Note, and Payments shall continue until the earlier of (i) repayment of the Principal Sum, accrued Interest, and a fee of $35,000 or (ii) expiration of the Private Label Agreement on December 31, 2023.
2024 Commercial Extension Of Credit [Member]
Short-Term Debt [Line Items]
Line of credit	$ 75,000
Monthly advances	100,000
Client fees	$ 25,000
Deposits received													575,000
Advance payments													562,500
Outstanding balance													$ 12,500
Securities Purchase Agreement [Member]
Short-Term Debt [Line Items]
Contractual interest rate					10.00%
Principal amount					$ 3,000,000
Proceeds from convertible debt					2,700,000
Principal amount					$ 3,000,000

SCHEDULE OF FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	$ 3,796,746	$ 1,558,208
Contingent Consideration Promissory Notes and Contingent Consideration Earn Out [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value		188,470
Warrant Derivative Liability [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	3,796,746	1,369,738
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value
Fair Value, Inputs, Level 1 [Member] \| Contingent Consideration Promissory Notes and Contingent Consideration Earn Out [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value
Fair Value, Inputs, Level 1 [Member] \| Warrant Derivative Liability [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value
Fair Value, Inputs, Level 2 [Member] \| Contingent Consideration Promissory Notes and Contingent Consideration Earn Out [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value
Fair Value, Inputs, Level 2 [Member] \| Warrant Derivative Liability [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	3,796,746	1,558,208
Fair Value, Inputs, Level 3 [Member] \| Contingent Consideration Promissory Notes and Contingent Consideration Earn Out [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value		188,470
Fair Value, Inputs, Level 3 [Member] \| Warrant Derivative Liability [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	$ 3,796,746	$ 1,369,738

SCHEDULE OF FAIR VALUE MEASUREMENTS CHANGE IN LEVEL 3 INPUTS (Details)	6 Months Ended
	Jun. 30, 2024 USD ($)
Short-Term Debt [Line Items]
Beginning balance	$ 1,558,208
Issuance of warrant derivative liabilities	(576,380)
Ending balance	3,796,746
Contingent Consideration Promissory Note [Member]
Short-Term Debt [Line Items]
Beginning balance	188,470
Change in fair value of warrant derivative liabilities
Principal payments on contingent consideration promissory notes - Revenue Cycle Management Acquisitions	(188,470)
Change in fair value of contingent consideration promissory notes - Revenue Cycle Management Acquisitions
Ending balance
Warrant Derivative Liabilities [Member]
Short-Term Debt [Line Items]
Beginning balance	1,369,738
Issuance of warrant derivative liabilities	2,075,300
Change in fair value of warrant derivative liabilities	351,710
Principal payments on contingent consideration promissory notes - Revenue Cycle Management Acquisitions
Change in fair value of contingent consideration promissory notes - Revenue Cycle Management Acquisitions
Ending balance	$ 3,796,748

SCHEDULE OF ACCRUED EXPENSES (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Accrued warranty expense	$ 11,615	$ 17,699
Accrued litigation costs	2,040,292	2,040,292
Accrued sales commissions	1,465	87,421
Accrued payroll and related fringes	420,596	367,826
Accrued sales returns and allowances	93,170	117,713
Accrued taxes	161,639	150,981
Accrued interest - related party	283,782	95,031
Customer deposits	75,283	219,462
Other	292,163	172,905
Total accrued expenses	$ 3,380,005	$ 3,269,330

SCHEDULE OF ACCRUED WARRANTY EXPENSE (Details)	6 Months Ended
SCHEDULE OF ACCRUED WARRANTY EXPENSE (Details)	Jun. 30, 2024 USD ($)
Payables and Accruals [Abstract]
Beginning balance	$ 17,699
Provision for warranty expense	38,898
Charges applied to warranty reserve	(44,982)
Ending balance	$ 11,615

INCOME TAXES (Details Narrative) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
INCOME TAXES (Details Narrative) - USD ($) $ in Millions	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Statutory rate valuation allowances	100.00%	100.00%	100.00%	100.00%
Deferred tax assets valuation allowance percentage			100.00%
Operating loss carryforwards	$ 140.9		$ 140.9

SCHEDULE OF PREPAID EXPENSE (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Prepaid Expenses
Prepaid inventory	$ 5,200,463	$ 5,318,939
Prepaid advertising	410,226	612,292
Other	1,009,788	435,137
Total prepaid expenses	$ 6,620,477	$ 6,366,368

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Building	$ 4,537,037	$ 4,537,037
Land	739,734	739,734
Office furniture, fixtures, equipment, and aircraft	779,879	2,065,092
Warehouse and production equipment	237,141	29,055
Demonstration and tradeshow equipment	77,791	87,987
Building improvements	1,341,471	1,328,654
Total cost	7,713,053	8,787,559
Less: accumulated depreciation and amortization	(1,679,962)	(1,503,857)
Net property, plant and equipment	$ 6,033,091	$ 7,283,702
Building [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Life	25 years
Land [Member]
Property, Plant and Equipment [Line Items]
Property, Plant, and Equipment, Useful Life, Term, Description [Extensible Enumeration]	Useful Life, Lease Term [Member]
Furniture and Fixtures [Member] \| Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Life	3 years
Furniture and Fixtures [Member] \| Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Life	20 years
Warehouse [Member] \| Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Life	3 years
Warehouse [Member] \| Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Life	7 years
Demonstration and Tradeshow Equipment [Member] \| Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Life	3 years
Demonstration and Tradeshow Equipment [Member] \| Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Life	7 years
Building Improvements [Member] \| Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Life	5 years
Building Improvements [Member] \| Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Life	7 years

PROPERTY, PLANT AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 181,121	$ 174,261	$ 343,833	$ 345,892
Sold aircraft			1,100,000
Closing cost			1,500
Carrying amount	1,141,661		1,141,661
Loss on sale of assets			(41,661)
Aircraft [Member]
Property, Plant and Equipment [Line Items]
Loss on sale of assets			$ 41,661

SCHEDULE OF OPERATING LEASES RIGHT OF USE ASSETS AND LIABILITIES (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Operating Lease
Operating lease right of use assets	$ 869,166	$ 1,053,159
Operating lease obligations-current portion	223,629	279,538
Operating lease obligations-less current portion	692,423	$ 827,836
Total operating lease obligations	$ 916,052

SCHEDULE OF LEASE EXPENSE (Details)	6 Months Ended
SCHEDULE OF LEASE EXPENSE (Details)	Jun. 30, 2024 USD ($)
Selling, General and Administrative Expenses [Member]
Selling, general and administrative expenses	$ 226,695

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS (Details)	Jun. 30, 2024 USD ($)
Operating Lease
2024 (July 1, to December 31, 2024)	$ 146,105
2025	288,720
2026	293,300
2027	117,492
Thereafter	235,020
Total undiscounted minimum future lease payments	1,080,637
Imputed interest	(164,585)
Total operating lease liability	$ 916,052

OPERATING LEASE (Details Narrative) - USD ($)					1 Months Ended		3 Months Ended	6 Months Ended
OPERATING LEASE (Details Narrative) - USD ($)	Jan. 02, 2022	Sep. 01, 2021	Aug. 31, 2021	May 13, 2020	Oct. 31, 2023	Jun. 30, 2021	Jun. 30, 2024	Jun. 30, 2024	Jun. 30, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Lease liability								$ 73,894	$ (538,056)
Weighted-average remaining lease term									4 years 3 months 18 days
First Medical Billing Company [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Lessee, operating lease, remaining lease term							1 month	1 month
Lessor, operating lease, description						termination date in July 2024
Second Medical Billing Company [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Lessee, operating lease, remaining lease term							69 months	69 months
Lessor, operating lease, description			termination date in March 2030
Goody Tickets, LLC and TicketSmarter, LLC [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Lessor, operating lease, description		termination date of December 2022
Private Medical Billing Company [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Lessor, operating lease, description	termination date of June 2025
Minimum [Member] \| First Medical Billing Company [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Operating lease, payments						$ 2,648
Minimum [Member] \| Second Medical Billing Company [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Operating lease, payments			$ 7,436
Minimum [Member] \| Goody Tickets, LLC and TicketSmarter, LLC [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Operating lease, payments		$ 7,211
Minimum [Member] \| Private Medical Billing Company [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Operating lease, payments	$ 4,233
Maximum [Member] \| First Medical Billing Company [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Operating lease, payments						$ 2,774
Maximum [Member] \| Second Medical Billing Company [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Operating lease, payments			$ 8,877
Maximum [Member] \| Goody Tickets, LLC and TicketSmarter, LLC [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Operating lease, payments		$ 7,364
Maximum [Member] \| Private Medical Billing Company [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Operating lease, payments	$ 4,626
October 2023 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Lessee, operating lease, term of contract					48 months
Operating lease, payments					$ 1,786
Lessee, operating lease, remaining lease term							40 months	40 months
Warehouse And Office Space [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Lessee, operating lease, remaining lease term							30 months	30 months
Lessor, operating lease, description				termination date of December 2026.
Warehouse And Office Space [Member] \| Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Operating lease, payments				$ 12,398
Warehouse And Office Space [Member] \| Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Operating lease, payments				$ 14,741
Office Space and Copier [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Operating lease							$ 117,810	$ 226,695
Discount rate							8.00%	8.00%

SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Gross value	$ 20,525,501	$ 20,070,817
Accumulated amortization	4,243,879	3,560,395
Net carrying value	16,281,622	16,510,422
Amortized Intangible Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Gross value	8,000,829	8,101,681
Accumulated amortization	4,243,879	3,560,395
Net carrying value	3,756,950	4,541,286
Amortized Intangible Assets [Member] \| Licenses [Member]
Finite-Lived Intangible Assets [Line Items]
Gross value	151,652	225,545
Accumulated amortization	21,270	89,887
Net carrying value	130,382	135,658
Amortized Intangible Assets [Member] \| Patents and Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Gross value	483,521	483,521
Accumulated amortization	332,462	266,403
Net carrying value	151,059	217,118
Amortized Intangible Assets [Member] \| Sponsorship Agreement Network [Member]
Finite-Lived Intangible Assets [Line Items]
Gross value	5,600,000	5,600,000
Accumulated amortization	3,173,333	2,613,333
Net carrying value	2,426,667	2,986,667
Amortized Intangible Assets [Member] \| SEO Content [Member]
Finite-Lived Intangible Assets [Line Items]
Gross value	600,000	600,000
Accumulated amortization	425,000	350,000
Net carrying value	175,000	250,000
Amortized Intangible Assets [Member] \| Personal Seat Licenses (Entertainment Segment) [Member]
Finite-Lived Intangible Assets [Line Items]
Gross value	117,339	180,081
Accumulated amortization	11,081	14,004
Net carrying value	106,258	166,077
Amortized Intangible Assets [Member] \| Software [Member]
Finite-Lived Intangible Assets [Line Items]
Gross value	23,653
Accumulated amortization
Net carrying value	23,653
Amortized Intangible Assets [Member] \| Website Enhancements Entertainment Segment [Member]
Finite-Lived Intangible Assets [Line Items]
Gross value	25,630	13,500
Accumulated amortization	4,014
Net carrying value	21,616	13,500
Amortized Intangible Assets [Member] \| Client agreements (revenue cycle management segments) [Member]
Finite-Lived Intangible Assets [Line Items]
Gross value	999,034	999,034
Accumulated amortization	276,719	226,768
Net carrying value	722,315	772,266
Unamortized Intangible Assets [Member] \| Goodwill [Member]
Finite-Lived Intangible Assets [Line Items]
Gross value	11,593,473	11,367,514
Accumulated amortization
Net carrying value	11,593,473	11,367,514
Unamortized Intangible Assets [Member] \| Trade Name [Member]
Finite-Lived Intangible Assets [Line Items]
Gross value	900,000	600,000
Accumulated amortization
Net carrying value	900,000	600,000
Unamortized Intangible Assets [Member] \| Patents and Trademarks Pending [Member]
Finite-Lived Intangible Assets [Line Items]
Gross value	31,199	1,622
Accumulated amortization
Net carrying value	$ 31,199	$ 1,622

SCHEDULE OF ESTIMATED AMORTIZATION FOR INTANGIBLE ASSETS (Details)	Jun. 30, 2024 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2024 (July 1, to December 31, 2024)	$ 743,141
2025	1,414,848
2026	910,310
2027	116,646
2028 and thereafter	572,005
Total	$ 3,756,950

GOODWILL AND OTHER INTANGIBLE ASSETS (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 346,889	$ 374,714	$ 735,167	$ 745,150

SCHEDULE OF OTHER ASSETS (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Lease receivable	$ 5,453,486	$ 6,095,050
Restricted Cash	97,600	97,600
Other	347,489	404,382
Total other assets	$ 5,898,575	$ 6,597,032

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ / shares in Units, $ in Millions	Jun. 30, 2024	Mar. 14, 2024	Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Aggregate carrying amount of litigation loss	$ 1.8
Common stock, par value	$ 0.001	$ 0.001	$ 0.001

SCHEDULE OF STOCK OPTIONS OUTSTANDING (Details) - Stock Options [Member]	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Options outstanding, beginning balance \| shares	53,600
Weighted average exercise price, outstanding, beginning balance \| $ / shares	$ 45.55
Options granted \| shares
Weighted average exercise price, granted \| $ / shares
Options exercised \| shares
Weighted average exercise price, exercised \| $ / shares
Options forfeited \| shares
Weighted average exercise price, forfeited \| $ / shares
Options outstanding, ending balance \| shares	53,600
Weighted average exercise price, outstanding, ending balance \| $ / shares	$ 45.55
Options exercisable, ending balance \| shares	53,600
Weighted average exercise price, exercisable, ending balance \| $ / shares	$ 45.55

SCHEDULE OF SHARES AUTHORIZED UNDER STOCK OPTION PLANS BY EXERCISE PRICE RANGE (Details)	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Number of options, outstanding	53,600
Weighted average remaining contractual life, outstanding options	5 years 4 months 24 days
Number of options, exercisable	53,600
Weighted average remaining contractual life, exercisable options	5 years 4 months 24 days
Range One [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise price range, lower limit \| $ / shares	$ 0.01
Exercise price range, upper limit \| $ / shares	$ 49.99
Number of options, outstanding	37,000
Weighted average remaining contractual life, outstanding options	6 years 1 month 6 days
Number of options, exercisable	37,000
Weighted average remaining contractual life, exercisable options	6 years 1 month 6 days
Range Two [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise price range, lower limit \| $ / shares	$ 50.00
Exercise price range, upper limit \| $ / shares	$ 69.99
Number of options, outstanding	15,100
Weighted average remaining contractual life, outstanding options	4 years
Number of options, exercisable	15,100
Weighted average remaining contractual life, exercisable options	4 years
Range Three [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise price range, lower limit \| $ / shares	$ 70.00
Exercise price range, upper limit \| $ / shares	$ 89.99
Number of options, outstanding	1,500
Weighted average remaining contractual life, outstanding options	1 year 10 months 24 days
Number of options, exercisable	1,500
Weighted average remaining contractual life, exercisable options	1 year 10 months 24 days

SCHEDULE OF RESTRICTED STOCK ACTIVITY (Details) - Restricted Stock [Member]	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of restricted shares, non-vested beginning balance \| shares	53,875
Weighted average grant date fair value, non-vested beginning balance \| $ / shares	$ 11.27
Number of restricted shares, granted \| shares	80,197
Weighted average grant date fair value, granted \| $ / shares	$ 2.12
Number of restricted shares, vested \| shares	(30,750)
Weighted average grant date fair value, vested \| $ / shares	$ 10.06
Number of restricted shares, forfeited \| shares	(1,125)
Weighted average grant date fair value, forfeited \| $ / shares	$ 22.20
Number of restricted shares, non-vested ending balance \| shares	102,197
Weighted average grant date fair value, non-vested ending balance \| $ / shares	$ 4.34

SCHEDULE OF NON-VESTED BALANCE OF RESTRICTED STOCK (Details)	Jun. 30, 2024 shares
Share-Based Payment Arrangement [Abstract]
2024 (July 1, 2024 through December 31, 2024)	1,500
2025	73,349
2026	18,349
2027	5,000
2028	4,000

STOCK-BASED COMPENSATION (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
STOCK-BASED COMPENSATION (Details Narrative) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based payment arrangement, expense	$ 60,772	$ 179,482	$ 101,467	$ 321,779
Stock options or restricted stock granted	333,750		333,750
Options, available for grant	137,042		137,042
Aggregate intrinsic value	$ 0		$ 0		$ 0
Aggregate intrinsic value of options exercisable	0		0		$ 0
Unrecognized portion of stock compensation expense	0		0
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unrecognized portion of stock compensation expense	$ 184,461		$ 184,461
2005 Stock Option Plan [Member] \| During 2015 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares unavailable for issuance	1,078		1,078
Shares unexercised and outstanding	284		284
2006 Stock Option Plan [Member] \| During 2016 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares unavailable for issuance	2,739		2,739
Shares unexercised and outstanding	531		531
2007 Stock Option Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares unexercised and outstanding	0		0
2007 Stock Option Plan [Member] \| During 2017 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares unavailable for issuance	4,733		4,733
2008 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares unexercised and outstanding	0		0
2008 Plan [Member] \| During 2018 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares unavailable for issuance	2,025		2,025

SCHEDULE OF WARRANT MODIFICATION (Details)	Jun. 30, 2024 shares	Jun. 25, 2024 shares	Apr. 05, 2023 shares
2023 Purchase Warrants [Member]
Common stock issuable under the warrants	1,125,000		1,125,000
2023 Purchase Warrants [Member] \| Measurement Input, Price Volatility [Member]
Warrants measurement input	105.0		106.0
2023 Purchase Warrants [Member] \| Measurement Input, Risk Free Interest Rate [Member]
Warrants measurement input	4.33		3.36
2023 Purchase Warrants [Member] \| Measurement Input, Expected Dividend Rate [Member]
Warrants measurement input	0		0
2023 Purchase Warrants [Member] \| Measurement Input, Expected Term [Member]
Remaining contractual term	3 years 9 months 18 days		5 years
2023 Purchase Warrants [Member] \| Measurement Input, Exercise Price [Member] \| Minimum [Member]
Warrants measurement input	5.50		5.50
2023 Purchase Warrants [Member] \| Measurement Input, Exercise Price [Member] \| Maximum [Member]
Warrants measurement input	7.50		7.50
2024 Purchase Warrants [Member]
Common stock issuable under the warrants	1,768,227	1,768,227
2024 Purchase Warrants [Member] \| Measurement Input, Price Volatility [Member] \| Minimum [Member]
Warrants measurement input	72.5	72.1
2024 Purchase Warrants [Member] \| Measurement Input, Price Volatility [Member] \| Maximum [Member]
Warrants measurement input	101.1	101.1
2024 Purchase Warrants [Member] \| Measurement Input, Risk Free Interest Rate [Member] \| Minimum [Member]
Warrants measurement input	4.33	4.25
2024 Purchase Warrants [Member] \| Measurement Input, Risk Free Interest Rate [Member] \| Maximum [Member]
Warrants measurement input	5.47	5.46
2024 Purchase Warrants [Member] \| Measurement Input, Expected Dividend Rate [Member]
Warrants measurement input	0	0
2024 Purchase Warrants [Member] \| Measurement Input, Expected Term [Member] \| Minimum [Member]
Remaining contractual term	1 month 6 days	1 month 6 days
2024 Purchase Warrants [Member] \| Measurement Input, Expected Term [Member] \| Maximum [Member]
Remaining contractual term	5 years	5 years
2024 Purchase Warrants [Member] \| Measurement Input, Exercise Price [Member]
Warrants measurement input	2.51	2.51

SCHEDULE OF WARRANT ACTIVITY (Details) - 2024 Purchase Warrants [Member]	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Warrants, vested, beginning balance \| shares	1,125,000
Weighted average exercise price, vested, beginning balance \| $ / shares	$ 6.50
Warrants, granted \| shares	1,768,227
Weighted average exercise price, granted \| $ / shares	$ 2.51
Warrants, exercised \| shares
Weighted average exercise price, exercised \| $ / shares
Warrants, forfeited/cancelled \| shares
Weighted average exercise price, forfeited/cancelled \| $ / shares
Warrants, vested, ending balance \| shares	2,893,227
Weighted average exercise price, vested, ending balance \| $ / shares	$ 4.06

SCHEDULE OF RANGE OF EXERCISE PRICES AND WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE OF WARRANTS (Details)	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Outstanding and exercisable warrants, weighted average remaining contractual life	42 months 18 days
2023 Purchase Warrants [Member] \| Range One [Member]
Outstanding and exercisable warrants, Exercise price \| $ / shares	$ 5.50
Outstanding and exercisable warrants, number of warrants	375,000
Outstanding and exercisable warrants, weighted average remaining contractual life	3 years 9 months 18 days
2023 Purchase Warrants [Member] \| Range Two [Member]
Outstanding and exercisable warrants, Exercise price \| $ / shares	$ 6.50
Outstanding and exercisable warrants, number of warrants	375,000
Outstanding and exercisable warrants, weighted average remaining contractual life	3 years 9 months 18 days
2023 Purchase Warrants [Member] \| Range Three [Member]
Outstanding and exercisable warrants, Exercise price \| $ / shares	$ 7.50
Outstanding and exercisable warrants, number of warrants	375,000
Outstanding and exercisable warrants, weighted average remaining contractual life	3 years 9 months 18 days
2024 Purchase Warrants [Member]
Outstanding and exercisable warrants, number of warrants	2,893,227
Outstanding and exercisable warrants, weighted average remaining contractual life	3 years 7 months 6 days
2024 Purchase Warrants [Member] \| Range Four [Member]
Outstanding and exercisable warrants, Exercise price \| $ / shares	$ 2.51
Outstanding and exercisable warrants, number of warrants	1,768,227
Outstanding and exercisable warrants, weighted average remaining contractual life	3 years 4 months 28 days

COMMON STOCK PURCHASE WARRANTS (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 25, 2024	Jun. 30, 2023	Apr. 05, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Outstanding and exercisable warrants, weighted average remaining contractual life	42 months 18 days
Warrant [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrant to purchase				1,125,000
Intrinsic value of outstanding warrants	$ 0		$ 0
2023 Purchase Warrants [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrant to purchase				1,125,000
2024 Purchase Warrants [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrant to purchase		1,768,227

STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)				1 Months Ended	3 Months Ended		6 Months Ended
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)	Jun. 24, 2024	Feb. 06, 2023	Jan. 10, 2023	Jan. 31, 2024	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Mar. 14, 2024	Dec. 31, 2023
Common stock, par value					$ 0.001		$ 0.001		$ 0.001	$ 0.001
Cancellation of restricted stock, shares							1,125
Reverse stock split		1-for-20 reverse stock split
Net income (loss) attributable to noncontrolling interest					$ 73,310	$ 72,755	$ 61,063	$ 198,994
Nobility Healthcare LLC [Member]
Subsidiary, ownership percentage, parent					49.00%		49.00%
Net income (loss) attributable to noncontrolling interest					$ 73,310	$ 72,754	$ 61,062	$ 198,993
Nobility Healthcare LLC [Member]
Equity method investment, ownership percentage					51.00%		51.00%
Private Placement [Member]
Issuance of stock, shares	1,768,227
Share price	$ 2.51
Pre-funded unit price	0.0001
Common stock, par value	$ 0.001
The Securities Purchase Agreement [Member]
Proceeds from private placement	$ 2,900,000
Other expenses payable	$ 800,000
Officers [Member]
Common stock issuance granted			22,500	55,000
Vesting drescription			Such shares will generally vest over a period of one to five years on their respective anniversary dates in January through January 2028, provided that each grantee remains an officer or employee on such dates	Such shares will generally vest over a period of one to five years on their respective anniversary dates in January through January 2028, provided that each grantee remains an officer or employee on such dates
New Employees [Member]
Common stock issuance granted			12,500	25,197
New Employees [Member] \| Minimum [Member]
Vesting period			1 year	1 year
New Employees [Member] \| Maximum [Member]
Vesting period			2 years	2 years

SCHEDULE OF WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING AND LOSS PER SHARE OUTSTANDING (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Earnings Per Share [Abstract]
Net loss attributable to common stockholders	$ (5,083,861)	$ (8,393,304)	$ (9,014,882)	$ (14,499,122)
Net loss attributable to common stockholders	$ (5,083,861)	$ (8,393,304)	$ (9,014,882)	$ (14,499,122)
Denominator for basic loss per share – weighted average shares outstanding	2,921,307	2,785,663	2,891,205	2,768,683
Dilutive effect of shares issuable under stock options and warrants outstanding
Denominator for diluted loss per share – adjusted weighted average shares outstanding	2,921,307	2,785,663	2,891,205	2,768,683
Basic	$ (1.74)	$ (3.01)	$ (3.12)	$ (5.24)
Diluted	$ (1.74)	$ (3.01)	$ (3.12)	$ (5.24)

SCHEDULE OF ESTIMATED FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED ACQUISITION (Details) - Country Stampede Acquisition [Member]	Mar. 01, 2024 USD ($)
Business Acquisition [Line Items]
Tangible assets acquired	$ 305,000
Identifiable intangible assets acquired (Trademarks and trade names)	300,000
Goodwill	225,959
Liabilities assumed pursuant to stock purchase agreement	(288,000)
Net assets acquired and liabilities assumed	542,959
Cash paid at Country Stampede Acquisition date	400,000
Cash paid subsequent to closing	142,959
Acquisition purchase price	$ 542,959

COUNTRY STAMPEDE ACQUISITION (Details Narrative)	Mar. 01, 2024 USD ($)
JC Entertainment LLC [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred	$ 542,959

SCHEDULE OF SEGMENT REPORTING (Details) - USD ($)	3 Months Ended		6 Months Ended
SCHEDULE OF SEGMENT REPORTING (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Segment Reporting Information [Line Items]
Total Net Revenues	$ 5,616,235	$ 8,279,632	$ 11,145,586	$ 15,976,820
Total Gross Profit	242,392	2,737,040	1,763,830	4,281,829
Total Operating Income (Loss)	(3,914,221)	(4,940,704)	(7,553,193)	(11,113,511)
Total Depreciation and Amortization			1,079,000	1,091,042
Total identifiable assets	43,327,215		43,327,215		$ 47,028,809
Video Solutions [Member]
Segment Reporting Information [Line Items]
Total identifiable assets	22,998,670		22,998,670		26,396,559
Revenue Cycle Management [Member]
Segment Reporting Information [Line Items]
Total identifiable assets	1,904,280		1,904,280		2,260,376
Entertainment Segment [Member]
Segment Reporting Information [Line Items]
Total identifiable assets	6,315,677		6,315,677		6,324,211
Corporate Segment [Member]
Segment Reporting Information [Line Items]
Total identifiable assets	12,108,588		12,108,588		$ 12,047,663
Operating Segments [Member]
Segment Reporting Information [Line Items]
Total Net Revenues	5,616,235	8,279,632	11,145,586	15,976,820
Total Gross Profit	242,392	2,737,040	1,763,830	4,281,829
Total Operating Income (Loss)	(3,914,221)	(4,940,704)	(7,553,193)	(11,113,511)
Total Depreciation and Amortization	522,450	547,932	1,079,000	1,091,042
Operating Segments [Member] \| Video Solutions [Member]
Segment Reporting Information [Line Items]
Total Net Revenues	1,585,670	1,899,590	3,303,963	3,798,953
Total Gross Profit	287,840	779,408	853,534	1,313,601
Total Operating Income (Loss)	(1,400,039)	(1,364,987)	(2,533,242)	(3,328,173)
Total Depreciation and Amortization	178,555	203,987	387,724	402,109
Operating Segments [Member] \| Revenue Cycle Management [Member]
Segment Reporting Information [Line Items]
Total Net Revenues	1,564,354	1,724,772	2,998,952	3,506,361
Total Gross Profit	601,406	802,174	1,065,137	1,578,107
Total Operating Income (Loss)	150,323	152,044	126,352	255,809
Total Depreciation and Amortization	26,715	25,887	53,429	51,394
Operating Segments [Member] \| Entertainment Segment [Member]
Segment Reporting Information [Line Items]
Total Net Revenues	2,466,211	4,655,270	4,842,671	8,671,506
Total Gross Profit	(646,854)	1,155,458	(154,841)	1,390,121
Total Operating Income (Loss)	(1,828,513)	(328,929)	(2,470,732)	(1,561,936)
Total Depreciation and Amortization	317,180	318,058	637,847	637,539
Operating Segments [Member] \| Corporate Segment [Member]
Segment Reporting Information [Line Items]
Total Operating Income (Loss)	$ (835,992)	$ (3,398,832)	$ (2,675,571)	$ (6,479,211)

SEGMENT DATA (Details Narrative)	6 Months Ended
SEGMENT DATA (Details Narrative)	Jun. 30, 2024 USD ($) Segments
Segment Reporting Information [Line Items]
Number of operating segments \| Segments	3
Video Solutions [Member]
Segment Reporting Information [Line Items]
Inventory reserve	$ 4,008,278
Entertainment Segment [Member]
Segment Reporting Information [Line Items]
Inventory reserve	$ 126,723

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023	Oct. 02, 2023	Sep. 22, 2023
Related Party Transaction [Line Items]
Notes payable current	$ 2,700,000		$ 2,700,000		$ 2,700,000
Nobility LLC [Member]
Related Party Transaction [Line Items]
Accrued reimbursable expenses payable			398,379	$ 265,241
Nobility LLC [Member] \| Operating Agreement [Member]
Related Party Transaction [Line Items]
Management fees	10,024	$ 32,181	22,403	$ 67,106
Related Party [Member]
Related Party Transaction [Line Items]
Notes payable current	2,700,000		2,700,000				$ 2,325,000
Business combination, contingent consideration, asset						$ 375,000
Interest rate							13.25%
Accrued interest	$ 283,782		$ 283,782

SUBSEQUENT EVENTS (Details Narrative) - USD ($)	Aug. 02, 2024	Jul. 13, 2024	Aug. 14, 2024	Jun. 30, 2024	Mar. 01, 2024	Dec. 31, 2023	Jun. 02, 2023
Subsequent Event [Line Items]
Principal amount				$ 146,154		$ 147,781	$ 125,000
Subsequent Event [Member] \| Common Stock [Member]
Subsequent Event [Line Items]
Number of share issued			353,123
Note Purchase Agreement [Member]
Subsequent Event [Line Items]
Principal amount					$ 1,425,000
Letter Agreement [Member] \| Subsequent Event [Member]
Subsequent Event [Line Items]
Debt Instrument, Repurchased Face Amount		$ 1,425,000
Cash payment to the purchaser		$ 150,000
Debt instrument, debt default, description of event of default		(i) $325,000, if the Company sells or enters into a firm commitment to sell the Company Office Building on or before August 7, 2024; or (ii) $400,000, if the Company sells or enters into a firm commitment to sell the Company Office Building after August 7, 2024.
Purchaser per month		$ 100,000
Payment of debt		200,000
Letter Agreement [Member] \| Subsequent Event [Member] \| Maximum [Member]
Subsequent Event [Line Items]
Debt Instrument, Repurchased Face Amount		1,725,000
Letter Agreement [Member] \| Subsequent Event [Member] \| Minimum [Member]
Subsequent Event [Line Items]
Debt Instrument, Repurchased Face Amount		$ 100,000
Purchase And Sale Agreement [Member] \| Subsequent Event [Member]
Subsequent Event [Line Items]
Payments to acquire property	$ 5,900,000
Payments to acquire building	$ 240,000

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