Current Trends and Recent Developments for the Company
Our reportable segments are: 1) video solutions, 2) revenue cycle management, and 3) ticketing.
Revenue Cycle Management Operating Segment
Our revenue cycle management segment consists of our medical billing subsidiaries. Revenues of this segment arerecognized after we perform our obligations of our revenue cycle management services. Our revenue cycle management services are services, performed and charged monthly, generally based on a contractual percentage of total customer collections, for which we recognize our net service fees.
To judge the health of our revenue cycle management segment, we review the collection success rate and collection timing. In addition, we review the associated costs incurred to assist our customers, and any changes in operating margins and cash flows.
Summarized financial information for the Company's reportable business segments is provided for the years ended December 31, 2021, and 2020:
The factors and trends affecting our recent performance include:
? The Company formed two new operating segments in 2021 and revenues increased
in the third and fourth quarters of 2021 compared to the previous quarters.
The primary reason for the revenue increase, beginning in the third quarter of
2021 is the completion of three acquisitions, being TicketSmarter which is
included in our ticketing operating segment and two acquisitions of medical
billing companies through our revenue cycle management operating segment. The
new ticketing operating segment generated $10,709,760 in 2021 revenue since
its acquisition date of September 1, 2021, and with our revenue cycle
management operating segment generating $1,630,048 in revenues for the year
ended December 31, 2021. We expect to continue to experience improved results
from our two new operating segments and their recent acquisitions, and expect
to continue acquiring new businesses particularly in our revenue cycle
management operating segment. We are employing a roll-up strategy in our
revenue cycle management operating segment and have completed two acquisitions
in 2022 and have a signed letter of intent to acquire a third in 2022.
? Our objective is to expand our video solutions segment's recurring service
revenue to help stabilize our revenues on a quarterly basis. Revenues from
cloud storages have been increasing in recent quarters and reached
approximately $302,634 in the fourth quarter of 2021, an increase of $73,710
(32%) over the fourth quarter of 2020. Overall, cloud revenues increased to
approximately $1,055,965 for the year ended December 31, 2021 compared to
approximately $937,000 for the year ended December 31, 2020 an increase of
$118,965, or 13%. We are pursuing several new market channels outside of our
traditional law enforcement and private security customers, similar to our
NASCAR and event security customers, which we believe will help expand the
appeal of our products and service capabilities to new commercial markets. If
successful, we believe that these new market channels could yield recurring
service revenues for us in the future.
? We have a multi-year official partnership with NASCAR, naming us "A Preferred
Technology Provider of NASCAR." As part of the relationship, we provide
cameras that are mounted in the Monster Energy NASCAR Cup Series garage
throughout the season, bolstering both NASCAR's commitment to safety at every
racetrack, as well as enhancing its officiating process through technology.
Our relationship with NASCAR has yielded many new opportunities with NASCAR
related sponsors. We believe this partnership with NASCAR demonstrate the
flexibility of our product offerings and help expand the appeal of our
products and service capabilities to new commercial markets. We also have an
affiliation with the Indy series races and, in particular, the Rahal Letterman
Lanigan Racing team which has several cars in most Indy style races. These
relationships provide us with access to many potential customers through the
various programs supported by both the NASCAR and Indy-Style car race series.
? On July 20, 2020, the Company and Brickell Key Investments LP ("BKI") executed
a Termination Agreement and Mutual Release (the "Termination Agreement").
Under the terms of the Termination Agreement, the Company made a payment in
the amount of $1,250,000 to BKI, and the parties agreed to terminate a
Proceeds Investment Agreement (the "PIA"), which they previously entered into
on July 31, 2018, and to release each other from any further liability under
the PIA. As a result, any obligations under the PIA have been extinguished and
a $5,250,000 change in fair value was assessed for the year ended December 31,
For the Years Ended December 31, 2021 and 2020
Revenues by Type and by Operating Segment
Our operating segments generate two types of revenues:
The following table presents revenues by type and segment:
Total service and other revenues 12,233,147 392.2 % 2,485,411 Total revenues
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
? Sales to international customers are made through independent distributors who
purchase products from us at a wholesale price and sell to the end user
(typically law enforcement agencies or a commercial customer) at a retail
price. The distributor retains the margin as its compensation for its role in
the transaction. The distributor generally maintains product inventory,
customer receivables and all related risks and rewards of ownership. Revenue
is recorded when the product is shipped to the distributor consistent with the
terms of the distribution agreement.
recognized upon shipment of the repair parts and acceptance of the service or
Our revenue cycle management operating segment sells its services to customers in the following manner:
? Our revenue cycle management operating segment generates service revenues
through relationships with medium to large healthcare organizations, in which
the underlying service revenue is recognized upon execution of services.
Service revenues are generally determined as a percentage of the amount of
Our ticketing operating segment sells our products and services to customers in the following manner:
? Our ticketing operating segment generates product revenues from the sale of
tickets directly to consumers for a particular event that the ticketing
operating segment has previously purchased and held in inventory for ultimate
resale to the end consumer. Service sales through TicketSmarter, are driven
largely in part to the usage of the TicketSmarter.com marketplace by buyers and
We may discount our prices on specific orders based upon the size of the order, the specific customer and the competitive landscape.
Product revenues for the years ended December 31, 2021 and 2020 were $9,180,287 and $8,029,457, respectively, an increase of $1,150,830 (14.3%), due to the following factors:
? Revenues generated by the new ticketing operating segment began with the
Company's recent acquisition of TicketSmarter on September 1, 2021. The
new ticketing operating segment generated $2,787,237 in product revenues
for the year ended December 31, 2021, compared to $-0- for the year ended
December 31, 2020. This relates to the resale of tickets purchased for
live events, including sporting events, concerts, and theatre, then sold
through various platforms to customers.
? The Company's video segment operating segment generated revenues totaling
in 2020 related to our COVID-19 response. Late in the second quarter of
non-contact temperature-screening instrument that measures temperature
through the wrist and controls entry to facilities when temperature
measurements exceed pre-determined parameters. ThermoVu™ has optional
features such as facial recognition to improve facility security by
restricting access based on temperature and/or facial recognition
reasons. ThermoVu™ provides an instant pass/fail audible tone with its
launched its Shield™ disinfectant/sanitizer product lines to fulfill
demand by current customers and others for a disinfectant and sanitizer
that is less harsh than many of the traditional products now widely
distributed. The Shield™ Cleanser product line contains a cleanser with
The Company's video solution operating segment began offering the Shield™ line
of disinfecting products to its first responder customers including police,
fire and paramedics late in the second quarter of 2020. Commercial customers
such as hospitals, dental offices, office buildings, retail stores, and
restaurants have applied these products. The Company has enhanced the line of
disinfectant products through the newly designed Shield Electrostatic Sprayer
to efficiently and effectively dispense the disinfectants. The Company is
hopeful that its law enforcement and commercial customers will adopt this new
product offering to combat the spread of the COVID-19 virus as well as other
? The video solutions operating segment shipped seven individual
? In general, our video solutions operating segment has experienced
? Video solutions operating segment installation service revenues were
Total Cost of Product Revenues $ 8,635,047 $ 5,739,572
Total Cost of Service Revenues $ 7,114,612 $ 712,702
Overall gross profit for the years ended December 31, 2021 and 2020 was $5,663,775 and $4,062,594, respectively, an increase of $1,601,181 (39.4%). Gross profit by operating segment was as follows:
Selling, General and Administrative Expenses
Total selling, general and administrative expenses $ 20,424,685 $ 11,726,245
For the reasons previously stated, our operating loss was $14,760,910 and $7,663,651 for the years ended December 31, 2021 and 2020, respectively, an increase of $7,100,764 (93%). Operating loss as a percentage of revenues improved to 69% in 2021 from 73% in 2020.
Change in Fair Value of Secured Convertible Notes
We recognized a loss on change in fair value of secured convertible notes totaling $-0- and $1,300,252 during the years ended December 31, 2021 and 2020, respectively.
Change in Fair Value of Proceeds Investment Agreement
We recorded a gain on the change in fair value of proceeds investment agreement of $-0- and $5,250,000 during the years ended December 31, 2021 and 2020, respectively.
Change in Fair Value of Short-Term Investments
Change in Fair Value of Warrant Derivative Liabilities
Change in Fair Value of Contingent Consideration Promissory Notes and Earn-Out Agreements
Gain on Extinguishment of Debt
Secured Convertible Notes Issuance Expenses
We recognized secured convertible note issuance expenses of $-0- and $34,906 during the years ended December 31, 2021 and 2020, respectively.
Income/(Loss) before Income Tax Benefit
As a result of the above, we reported a net income/(loss) before income tax benefit of $25,530,961 and ($2,625,881) for the years ended December 31, 2021 and 2020, respectively, an improvement of $28,156,843 (1,072%).
Net Income Attributable to Noncontrolling Interests of Consolidated Subsidiary
Net Income/(Loss) Attributable to Common Stockholders
Basic and Diluted Income/(Loss) per Share
? Registered Direct Offering - On January 14, 2021, the Company, pursuant a
securities purchase agreement, closed a registered direct offering (the
"January Offering") of (i) 2,800,000 shares of Common Stock, (ii) pre-funded
warrants to purchase up to 7,200,000 of Common Stock at an exercise price of
$0.01 per share, issuable to investors whose purchase of shares of Common
Stock would otherwise result in such investor, together with its affiliates
and certain related parties, beneficially owning more than 4.99% (or, at the
election of the holder, 9.99%) of the Company's outstanding Common Stock
immediately following the consummation of the January Offering; and (iii)
common stock purchase warrants ("January Warrants") to purchase up to an
aggregate of 10,000,000 shares of Common Stock, which are exercisable for a
period of five years after issuance at an initial exercise price $3.25 per
share, subject to certain adjustments, as provided in the January Warrants.
The January Offering was conducted pursuant to a placement agency agreement,
dated January 11, 2021 (the "January Placement Agency Agreement"), between the
Company and Kingswood Capital Markets, division of Benchmark Investments, Inc.
(the "January Placement Agent"). The combined offering price of each share of
Common Stock and accompanying January Warrant in the January Offering was
Pursuant to the terms of the January Placement Agency Agreement, the Company
agreed not to, for a period of 90 days after the date of the January Placement
Agency Agreement, with certain exceptions, unless it has obtained the prior
written consent of the January Placement Agent, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of
capital stock of the Company or any securities convertible into or exercisable
or exchangeable for shares of capital stock of the Company; (ii) file or cause
to be filed any registration statement with the SEC relating to the offering
of any shares of capital stock of the Company or any securities convertible
into or exercisable or exchangeable for shares of capital stock of the
Company; (iii) complete any offering of debt securities of the Company, or
(iv) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of capital
? Registered Direct Offering - On February 1, 2021, the Company,
Management believes that it has adequate funding to support its business operations for the foreseeable future as a result of the funds raised by the January Offering and the February Offering.
We had $32,007,792 of available cash and equivalents and net working capital of $33,122,288 as of December 31, 2021. Net working capital as of December 31, 2021, included approximately $4.7 million of accounts receivable and other receivables and $9.7 million of current inventory.
activities: used in operating activities was $17,825,108 and $13,274,715 for
? Financing $64,595,521 of net cash provided by financing activities. Cash
The net result of these activities was an increase in cash of $27,646,034 to $32,007,792 for the year ended December 31, 2021.
The weighted-average remaining lease term related to the Company's lease liabilities as of December 31, 2021 and December 31, 2020 was 3.8 years and 5.8 years, respectively.
The discount rate implicit within the Company's operating leases was not generally determinable, and therefore, the Company determined the discount rate based on its incremental borrowing rate on the information available at commencement date. As of commencement date, the operating lease liabilities reflect a weighted average discount rate of 8%.
The following sets forth the operating lease right of use assets and liabilities as of December 31, 2021:
Operating lease obligations-current portion $ 373,371 Operating lease obligations-less current portion $ 688,207 Total operating lease obligations
Following are the minimum lease payments for each year and in total.
Total undiscounted minimum future lease payments 1,237,658 Imputed interest
? Fair value of assets and liabilities acquired in business combinations; 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:
(iv) Allocate the transaction price to the performance obligations in the
As of December 31, 2021, and 2020, we had provided a reserve for doubtful accounts of $113,234 and $123,224, respectively.
Inventories consisted of the following as of December 31, 2021 and 2020:
© Edgar Online, source Glimpses