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OPERATING SEGMENTS
 12 Months Ended
Dec. 31, 2024
Segment Reporting [Abstract]  
OPERATING SEGMENTS

NOTE 22. OPERATING SEGMENTS

 

The Company adopted ASU 2023-07 in 2024 and applied the amendment retrospectively to all periods presented in the Company’s consolidated financial statements. Segment financial information is prepared in accordance with GAAP and our significant accounting policies described in Note 1. Resources are allocated and performance is assessed using segment operating income by our Chief Executive Officer, whom we have determined to be our Chief Operating Decision Maker (“CODM”). Our CODM utilizes segment operating income when making decisions about allocating capital and personnel to the segments, predominantly in the annual budget and quarterly forecasting processes. In addition, our CODM uses operating income, including comparison of actual results to budget and forecast, in assessing the performance of each segment and in evaluating product pricing, distribution strategies and marketing investments. Our CODM reviews balance sheet information at a consolidated level. We compute segment operating income based on net sales revenue, less cost of goods sold, SG&A, asset impairment charges and restructuring charges. The SG&A used to compute each segment’s operating income is directly associated with the segment. We do not allocate non-operating income and expense, including interest or income taxes, to operating segments.

 

We operate in three strategic business segments. 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 years ended December 31, 2024, and 2023:

 

                          
Year ended December 31, 2024
                 
   Video Solutions   Entertainment   Revenue cycle Management   Corporate and other   Total 
Net revenues:                         
  Product  $1,997,389   $3,406,928   $—   $—   $5,404,317 
   Service   3,758,002    4,356,833    6,131,650    —    14,246,485 
Total segment net revenues  $5,755,391   $7,763,761   $6,131,650   $—   $19,650,802 
Less significant segment
expenses:		                         
Cost of Revenue - Product  $1,780,284   $4,118,846   $—   $—   $5,899,130 
Cost of Revenue – Service and
other		   1,252,213    3,243,791    3,766,336    —    8,262,340 
Research and development expense   1,339,673    —    —    —    1,339,673 
Selling, advertising and
promotional expense		   1,124,012    996,953    23,529    —    2,144,494 
 General and administrative
expense		   1,459,064    3,701,024    1,838,399    5,378,218    12,376,705 
Goodwill and intangible asset
impairment charge		   —    508,000    4,322,000    —    4,830,000 
                          
 Total segment operating income (loss)  $(1,199,855)  $(4,804,853)  $(3,818,614)  $(5,378,218)  $(15,201,540)
                          
Interest expense                       (3,815,323)
Loss on litigation                       (1,959,396)
Change in fair value of derivative liabilities                       (1,240,407)
Gain on the extinguishment of liabilities                       917,935 
Loss on extinguishment of debt                       (753,339)
Gain on sale of property, plant and equipment                       360,082 
Other non-operating income (loss)                       (23,737)
Total non-operating income (loss)                       (6,514,185)
                          
Loss before income tax benefit (provision)                      $(21,715,725)
                          
Depreciation and amortization expense  $598,895   $1,316,541   $106,878   $—   $2,022,314 
                          
Total identifiable assets, net of
eliminations		  $12,804,820   $5,741,116   $1,771,850   $7,418,787   $27,736,573 

 

 

                          
Year ended December 31, 2023
                 
   Video Solutions   Entertainment   Revenue cycle Management   Corporate and other   Total 
Net revenues:                         
  Product  $4,303,369   $5,044,576   $—   $—   $9,347,945 
   Service   3,167,916    9,018,805    6,713,678    —    18,900,399 
Total segment net revenues  $7,471,285   $14,063,381   $6,713,678   $—   $28,248,344 
Less significant segment
expenses:		                         
Cost of Revenue - Product  $4,824,967   $5,149,923   $—   $—   $9,974,890 
Cost of Revenue – Service and
other		   1,355,809    7,213,754    3,941,407    —    12,510,970 
Research and development
expense		   2,618,746    —    —    —    2,618,746 
Selling, advertising and
promotional expense		   4,780,184    2,328,759    28,586    —    7,137,529 
 General and administrative
expense		   1,027,163    3,017,715    2,451,142    11,750,742    18,246,762 
Goodwill and intangible asset
impairment charge		   —    —    —    —    — 
                          
Total segment operating
income (loss)		  $(7,135,584)  $(3,646,770)  $292,543   $(11,750,742)  $(22,240,553)
                          
Interest expense                       (3,134,253)
Change in fair value of derivative liabilities                       1,846,642 
Gain on the extinguishment of liabilities                       550,867 
Loss on litigation                       (1,792,308)
Loss on extinguishment of convertible debt                       (1,112,705)
Other non-operating income (loss)                       418,361 
Total non-operating income (loss)                       (3,223,396)
                          
Loss before income tax benefit (provision)                      $(25,463,949)
                          
Depreciation and amortization
expense		  $836,699   $1,277,186   $104,352   $—   $2,218,237 
                          
Total identifiable assets, net of
eliminations		  $26,396,559   $6,324,211   $2,260,376   $12,047,663   $47,028,809 

 

 

The segments recorded noncash items affecting 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 $2,037,252 and $4,355,666 and a reserve for the entertainment segment of $132,403 and $186,795 as of December 31, 2024 and 2023.

 

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.