TruGolf Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –NATURE OF THE ORGANIZATION AND BUSINESS

TruGolf Holdings, Inc. (the “Company” or “TruGolf”), is a Delaware corporation headquartered in Centerville, Utah. The Company and its wholly-owned subsidiary, have historically been engaged in creating indoor golf software and custom hardware as well as establishing and selling franchises that would use the Company’s indoor golf and recreational sports simulators and other equipment. The Company sells its software and custom hardware directly to customers and its franchise owners.

Reverse Stock Split

On June 23, 2025, the Company filed a Certificate of Amendment to the Company’s Amended and restated Certificate of Incorporation with the Secretary of the State of Delaware to effect a 1-for-50 reverse stock split of the Class A and Class B shares of the Company’s issued and outstanding common stock, effective as of 12:01 a.m. Eastern Time on June 23, 2025 (the “Reverse Stock Split”) and began trading on a Reverse Stock Split-adjusted basis on Nasdaq on June 23, 2025. As a result of the Reverse Stock Split, the number of Class A common shares outstanding was reduced from 40,532,150 to 810,617 and the number of Class B common shares outstanding was reduced from 10,000,000 to 200,000, and the number of authorized shares of common stock remained unchanged. All share amounts have been retroactively adjusted for the Reverse Stock Split.

Proportionate adjustments for the Reverse Stock Split were made to the exercise prices and number of shares issuable under the Company’s equity incentive plans, and the number of shares underlying outstanding equity awards and warrants, as applicable. See Note 13 - Stockholders’ Equity for information and disclosures relating to adjustments related to the Reverse Stock Split.

Nasdaq Compliance

On July 15, 2024, the Company received a deficiency letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying the Company that since it failed to file its Form 10-Q for the period ended March 31, 2024 it no longer complied with Nasdaq Listing Rule 5250(c)(1). The deficiency letter did not result in the immediate delisting of the Company’s common stock from the Nasdaq Capital Market. On August 14, 2024, the Company filed its Quarterly Report in the Form 10-Q for the period ended March 31, 2024 and the Company regained compliance with the applicable Nasdaq rule.

On August 19, 2024, the Company received a delist notice from the staff of the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the listing of its Class A common stock was not in compliance with: (i) the minimum Market Value of Publicly Held Shares requirement set forth in Nasdaq Listing Rule 5450(b)(2)(C); and (ii) the minimum shareholders’ equity requirement set forth in Nasdaq Listing Rule 5450(b)(1)(A).

On November 5, 2024, the Company received a delist notice from the Staff notifying the Company that the listing of its Class A common stock was not in compliance with the minimum bid price requirement of $1.00 per share set forth in Nasdaq Listing Rule 5450(a)(1).

The Company requested a hearing before a Nasdaq hearing panel (the “Panel”) to present a plan to regain compliance with all the continued listing requirements of Nasdaq and such hearing was held May 15, 2025. On May 30, 2025, the Panel provided the Company an exception with various milestones to regain compliance, including with Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”) until July 8, 2025 and the minimum Market Value of Publicly Held Shares requirement and minimum shareholders’ equity requirement until July 30, 2025. In addition, the Panel directed that the Company’s listing be transferred to the Nasdaq Capital Market, effective at the open of business on June 3, 2025.

On July 17, 2025, the Staff confirmed that the Company had regained compliance with the Bid Price Rule as required by the Panel’s decision.

On August 1, 2025, the Company received a letter from Nasdaq notifying the Company that it had demonstrated compliance with Nasdaq Listing Rule 5550(b)(1) (the “Equity Rule”), as required by the Panel’s decision, and, following the Company’s phase down to the Nasdaq Capital Market on June 3, 2025, the Company demonstrated compliance with the minimum market value of publicly held securities required by Nasdaq Listing Rule 5550(a)(5).

Pursuant to the letter, in application of Listing Rule 5815(d)(4)(B), the Company will be subject to a Mandatory Panel Monitor for a period of one year from the date of the letter. If, within that one-year monitoring period, the Staff finds the Company again out of compliance with the Equity Rule, notwithstanding Rule 5810(c)(2), the Company will not be permitted to provide the Staff with a plan of compliance with respect to that deficiency and Staff will not be permitted to grant additional time for the Company to regain compliance with respect to that deficiency, nor will the company be afforded an applicable cure or compliance period pursuant to Rule 5810(c)(3). Instead, Staff will issue a delist determination letter and the Company will have an opportunity to request a new hearing.

Liquidity

The accompanying unaudited condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which contemplates realization of assets and satisfying liabilities in the normal course of business. At June 30, 2025, the Company has an accumulated deficit of approximately $27 million and working capital surplus of approximately $2.8 million. For the three and six months ended June 30, 2025, the Company had a loss from operations of approximately $1.9 million and $3.1 million, respectively, and negative cash flows from operations of approximately $1.4 million. Although the Company is showing positive revenue growth and gross profit trends, the Company expects to incur further losses through the end of 2025.

To date the Company has been funding operations primarily through the reinvestment of free cash flows generated from its business operations, sale of equity in private placements, convertible debt instruments and revenues generated by the Company’s services. During the six months ended June 30, 2025, the Company received $2.5 million in proceeds from the issuance of convertible notes (the “PIPE Convertible Notes”), net of $280,000 in original issue discounts, from a PIPE Convertible Note.

Based on its current cash resources and commitments, the Company believes it will be able to maintain its current planned development and corresponding level of expenditure for at least twelve months from the date of the issuance of these consolidated financial statements, although no assurance can be given that it will not need additional funds prior to such time.

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and in conformity with the instructions on Form 10-Q and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (the “SEC”). The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of such statements. The results of operations for the three and six months ended June 30, 2025, are not necessarily indicative of the results that may be expected for the entire year. The significant accounting policies used in preparing these unaudited condensed consolidated are consistent with those described in the audited financial statements included in the Company’s Form 10-K for the year ended December 31, 2024, except as disclosed below. These unaudited financial statements and related should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2025.

Reclassifications

Certain reclassifications have been made to the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2024 to conform to the unaudited condensed consolidated financial statement presentation for the three and six months ended June 30, 2025. These reclassifications had no effect on net loss or cash flows as previously reported.

Revenue Recognition

Remaining Performance Obligations

As of June 30, 2025, approximately $4.9 million of revenue is expected to be recognized from remaining performance obligations. The Company expects to recognize 100% of this revenue over the next 12 months.

Disaggregated Revenue

NOTE 3 –EARNINGS PER SHARE BASIC AND DILUTED

The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as they would be anti-dilutive:

NOTE 4 –ACCOUNTS RECEIVABLE

Accounts receivable and allowance for credit losses consisted of the following:

NOTE 5 –INVENTORY, NET

The following summarizes inventory:

NOTE 6 –PROPERTY AND EQUIPMENT, NET

The following summarizes property and equipment:

The Company recorded depreciation expense was $12,588 and $20,967 and $27,588 and $35,284 for the three and six months ended June 30, 2025 and 2024, respectively.

The following summarizes capitalized software development costs as of June 30, 2025 and December 31, 2024:

The Company recorded amortization of capitalized software costs of $334,054 and $119,453, and $434,054 and $137,916 for the three and six months ended June 30, 2025 and 2024, respectively.

NOTE 7 –ACCRUED AND OTHER CURRENT LIABILITIES

Accrued and other current liabilities consist of the following amounts:

Accrued liabilities and other current liabilities assumed in Merger:

NOTE 8 –NOTES PAYABLE

Notes payable consisted of the following:

Ethos Management Inc.

In January 2023, the Company entered into a financing agreement with Ethos Asset Management Inc. (the “Ethos Loan” or “Ethos”) in the principal amount of up to $10 million. Pursuant to the terms of the Ethos Loan, the Company may draw down financing proceeds equal to $833,333 each month beginning in April 2023, up to the $10 million amount. Interest associated with the Ethos Loan is fixed at 4% per annum and has a three-year grace period for principal and interest payments. Annual principal and interest payments will commence in 2027 and continue through 2034. As a condition to funding, the Company provided Ethos with a $1,875,000 deposit as collateral (the “Deposit Collateral”) for the note.

The Ethos Loan stipulates that fundings should happen approximately every 30 banking days, subject to Ethos completing periodic internal audits to ensure the Company was in compliance with the terms of the loan agreement. In August 2023, Ethos informed the Company that unrelated to the Company, Ethos was undergoing a routine audit of its portfolio, and pending the close of the audit, borrowers may experience delays in drawing on funds when requested. In February 2024, due to the lack of additional fundings and in accordance with the terms of the Ethos Loan, the Company sent Ethos a notice of termination for materially breaching the Ethos Loan agreement. Based on the termination for default clause in the Ethos Loan, the Company was entitled to retain all funds disbursed by Ethos and Ethos must release the Deposit Collateral. At the date of the Ethos Loan termination the principal and accrued interest owed on the Ethos Loan was $2,383,059 and $81,560, respectively. As a result of the Ethos Loan termination, the outstanding principal and accrued interest was offset by the Deposit Collateral leaving $589,619, which is included in Accrued and other current liabilities on the unaudited condensed consolidated balance sheets at June 30, 2025 and December 31, 2024, respectively (See Note 7 – Accrued and Other Current Liabilities).

Mercedes-Benz

In November 2020, the Company entered into a $59,545,5.90% annual interest rate note payable with Mercedez-Benz for a delivery van. The note matures on November 20, 2026, and is secured by the van. The Company makes a monthly payment of $908, which includes both principal and interest. The outstanding principal on the note at June 30, 2025 and December 31, 2024, was $14,805 and $19,733, respectively.

NOTE 9 –PIPE CONVERTIBLE NOTES

As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, the Company entered into a securities purchase agreement with accredited investors for the issuance of PIPE Convertible Notes and Warrants.

During the three months ended June 30, 2025, the Company converted an aggregate principal amount of $1,558,000 and $1,082,194 in accrued and make-whole interest related to the PIPE Convertible Notes into 142,308 shares of the Company’s Class A common stock.

PIPE Convertible Notes payable consisted of the following:

During the three and six months ended June 30, 2025 and 2024, amortization expense related to the Debt Discount of the PIPE Convertible Notes was $127,097 and $20,872 and $359,037 and $24,197, respectively. The principal balance of the PIPE Convertible Notes, net of Debt Discounts, and accrued interest related to the PIPE Convertible Notes at June 30, 2025, was $3,734,990 and $40,957, respectively. The principal balance net of Debt Discounts and accrued interest related to the PIPE Convertible Notes at December 31, 2024, was $4,068,953 and $154,500, respectively.

PIPE Exchange Agreements

On April 22, 2025, the Company entered into Exchange Agreements, (the “Exchange Agreements” and each, an “Exchange Agreement”), by and among the Company and each of the PIPE Convertible Note holders (the “Holders”)., pursuant to which each such Holder would exchange (i) the amounts remaining outstanding under the PIPE Convertible Notes and certain other amounts outstanding with respect thereto in the aggregate amount (the “Note Exchange”), and (ii) the PIPE Warrants. Pursuant to the Exchange Agreements, on the effective date of the Exchange Agreements, which was April 22, 2025, the PIPE Warrants were exchanged, in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), into an aggregate of 1,885 shares of the Company’s newly created Series A preferred stock (the “Series A Preferred Stock”, and (ii) warrants to purchase up to 37,033 shares of Series A Preferred Stock (the “Series A Preferred Warrants”).

Pursuant to the Exchange Agreements, on the closing of the Note Exchange the amounts owing under the PIPE Convertible Notes were to be exchanged into share of the Company’s Series A Preferred Stock. From the date of the Exchange Agreements until the date of the Note Exchange, the conversion price of the PIPE Convertible Notes was reduced to $1.00 per share, which was then adjusted to $50.00 per share as a result of the Reverse Stock Split.

Due to the bundled nature of the Exchange Agreements transaction and that the PIPE Convertible Notes had not been exchanged as of June 30, 2025, the PIPE Convertible Notes remain outstanding and are classified as liabilities on the Company’s unaudited condensed consolidated balance sheet as of that date. The exchange of the PIPE Convertible Notes did not occur until July 21, 2025, and the associated issued Series A Preferred Stock and Series A Preferred Warrants are presented within equity as non-cash issuances, pending full settlement. See Note 13 – Stockholders’ Equity for the impact on the Company’s equity instruments.

NOTE 10 –RELATED PARTY NOTES AND LOANS PAYABLE

Related party notes payable consisted of the following:

Future maturities of related party notes and loan payables as of June 30, 2025:

ARJ Trust

In December 2008, the Company entered into a note payable with ARJ Trust, a trust that is indirectly controlled by the Company’s chief executive officer. The note has a principal amount of $500,000, an interest rate of 8.50% per annum, and a maturity date of March 31, 2024. The Company is required to make monthly interest-only payments of $3,541.

In June 2010, the Company entered into a second note payable with ARJ Trust. The note has a principal amount of $150,000, an interest rate of 8.50% per annum, and a maturity date of March 31, 2024. The Company is required to make monthly interest-only payments of $1,063.

On March 31, 2024, the maturity date of the notes was extended to March 31, 2025. On March 31, 2025, the maturity date of the notes was extended to September 30, 2025.

The Company made interest-only payments of $27,624 and $24,713 during the six months ended June 30, 2025 and 2024, respectively. The principal balance of the notes was $650,000 at both June 30, 2025 and December 31, 2024.

McKettrick

In May 2019, the Company entered into a $1,750,000, zero interest rate note payable with a former shareholder to repurchase all their owned shares in the Company. The note is payable in annual installments of $250,000 due on December 21 of each year. The note matures on December 1, 2027. If the annual installment is not paid within 10 days of the due date a late fee of 5% is charged. The principal balance of the note payable was $800,000 at both June 30, 2025 and December 31, 2024.

Carver

In January 2021, the Company entered into a $222,000, zero interest rate note payable with a former shareholder to repurchase all their owned shares in the Company. The note is payable in semi-annual installments of $18,500 due on March 31 and September 30 each year and matures on October 1, 2027. The Company made the required installments totaling $18,500 for the three months ended March 31, 2025. The principal balance of the note payable was $92,500 and $111,000 at June 30, 2025 and December 31, 2024, respectively.

Chris Jones

During the year ended December 31, 2024, the Company chief executive officer loaned the Company an aggregate of $2 million for operating expenses. The loaned amount has azero interest rate and no stated maturity date. The Company made a $250,000 payment towards the loan during the three months ended June 30, 2025, however, the Company expects to pay back the loan in full. The principal balance of the loan payable was $1,750,000 and $2,000,000 at June 30, 2025 and December 31, 2024, respectively.

NOTE 11 –LINES OF CREDIT

JPMorgan Chase

In December 2023, the Company entered into a $2,000,000 variable rate line of credit with JPMorgan. The purpose of the new line of credit was to consolidate the balances outstanding on the note payable and the previous line of credit, which had matured. The line of credit matured on December 31, 2024. The line of credit had an annual interest rate of the Adjusted SOFR (Secured Overnight Financing Rate) Rate plus 3.00%.

On January 1, 2025, the maturity date of the line of credit was extended to December 31, 2025. Upon the maturity date extension the annual interest rate was increased to the Adjusted SOFR Rate plus 3.50%.

The line of credit is secured by a pledge of $2,100,000 in the Company’s deposit accounts (restricted cash) at JPMorgan. The outstanding principal balance on the line of credit was $802,738 at June 30, 2025 and December 31, 2024.

Morgan Stanley

During February 2023, the Company entered into a variable rate line of credit with Morgan Stanley which was secured by the marketable securities held in our brokerage account. The Company terminated the brokerage agreement during the year ended December 31, 2024, liquidated the vast majority of its investments and has $10,114 recorded in cash and cash equivalents on its unaudited condensed consolidated balance sheet as of June 30, 2025 and December 31, 2024.

NOTE 12 –DIVIDEND NOTES PAYABLE

Prior to the Merger, TruGolf Nevada filed its tax returns as an S Corporation. Historically, all income tax liabilities and benefits of TruGolf Nevada are passed through to the shareholders annually through distributions. No dividends were declared during 2023 or 2022. During 2021, the Board of Directors declared $7,395,694 in dividends to the shareholders, payable in cash as the Company’s liquidity allows. During 2022, TruGolf Nevada paid the shareholders an aggregate amount of $1,965,706. In November 2022, each shareholder agreed to defer the accrued dividends payable by entering into 6.00% interest rate dividend notes payable. All outstanding and accrued interest is due and payable when the dividend notes payable mature on December 31, 2025. Interest commenced accruing on January 1, 2023.

On April 21, 2025, the Company entered into agreements with the shareholders owed approximately $3.9 million in outstanding dividends notes payable, pursuant to which each shareholder converted all of their outstanding amounts payable into (i)84,662 shares of the Company’s Class A common stock, with respect to approximately $1.3 million in principal and interest and (ii)165,663 shares of the Company’s Class B common stock with respect to approximately $2.6 million in principal and interest.

Dividends declared, distributed, and accrued are as follows:

NOTE 13 –STOCKHOLDERS’ DEFICIT

Preferred Stock

The Company has authorized preferred stock of 10,000,000 shares with a par value of $0.0001.

Series A Convertible Preferred Stock

On April 22, 2025, in connection with the signing of the Exchange Agreements, see Note 9 – PIPE Convertible Notes, the Company designated 50,000 shares of the Company’s authorized and unissued preferred stock as Series A Convertible Preferred Stock (Series A Preferred).

Each share of Series A Preferred has a stated value of $1,000 per share. The Series A, with respect to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company, ranks senior to all capital stock of the Company. The holders of Series A Preferred will be entitled to 10% per annum dividends, payable in cash or shares of Class A common stock, provided that if the shares of Class A common stock are utilized to pay the dividends then the dividend rate will be recalculated to 15%. The Series A Preferred have a conversion rate of $6.31 per share and convert into Class A common stock.

As of June 30, 2025 and December 31, 2024, there were 1,885 and 0 shares of Series A Preferred issued and outstanding.

Common Stock

Class A Common Stock

The Class A Common Stock has voting rights of 1 vote per share and votes as a single class together with the Class B Common Stock.

Class B Common Stock

The Class B Common stock has voting rights of 25 votes per share, and votes as a single class together with the Class A Common Stock.

Equity Transactions During the Period

Series A Convertible Preferred Stock

On April 22, 2025, in connection with the signing of the Exchange Agreements, see Note 9 – PIPE Convertible Notes, the Company issued an aggregate of 1,885 shares of Series A Convertible Preferred Stock with a fair value of $2,742 per share. See Note 15 – Fair Value Measurements for more information on the Company’s valuation methodology.

Class A Common Stock

During the three months ended June 30, 2025, the Company issued an aggregate of 31,160 shares of Class A Common Stock with a fair value of $50.00 per share to PIPE Convertible Note holders for conversion of an aggregate principal amount of $1,558,000 in PIPE Convertible Notes (See Note 9 – PIPE Convertible Notes).

During the three months ended June 30, 2025, the Company issued an aggregate of 111,148 shares of Class A Common Stock with fair values ranging from $8.80 - $12.17 per share to PIPE Convertible Note holders in lieu of cash for interest and make whole provisions (See Note 9 – PIPE Convertible Notes).

During the three months ended June 30, 2025, the Company issued an aggregate of 84,662 shares of Class A Common Stock with a fair value of $16.50 per share to dividend note payable holders in lieu of cash dividends (See Note 12 – Dividend notes payable).

Class B Common Stock

During the three months ended June 30, 2025, the Company issued an aggregate of 165,663 shares of Class B Common Stock with a fair value of $33.00 per share to dividend note payable holders in lieu of cash dividends (See Note 12 – Dividend notes payable).

Warrant and Option Valuation

The Company has computed the fair value of warrants and options granted using the Black-Scholes option pricing model. The expected term for warrants and options issued to non-employees is the contractual life and the expected term used for options issued to employees and directors is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

Warrant Offerings

Series A Preferred Warrants

In applying the Black-Scholes option pricing model to the Series A Preferred Warrants, the Company used the following assumptions:

During the three months ended June 30, 2025, in connection with the signing of the Exchange Agreements, see Note 9 – PIPE Convertible Notes, PIPE Warrant holders exchanged their outstanding 28,182 Series A Warrants and 31,000 Series B Warrants for Series A Preferred Warrants to purchase 37,033 shares of Series A Preferred Stock. The Series A Preferred Warrants are immediately vested, have an exercise price of $900, and have a grant date fair value of $482,701.

A summary of the Series A Warrant Activity during the six months ended June 30, 2025, is presented below:

Series A and Series B Warrant

A summary of the warrant activity during the six months ended June 30, 2025, is presented below:

NOTE 14 –STOCK-BASED COMPENSATION

The Company accounts for its stock-based compensation in accordance with the fair value recognition of ASC 718.

2024 Stock Incentive Plan

The Company did not grant options during the three months June 30, 2025 or 2024.

Compensation-based stock option activity for qualified and unqualified stock options are summarized below:

The following table summarizes information about options to purchase shares of the Company’s Class A common stock outstanding and exercisable at June 30, 2025:

Total compensation expense related to options was $3,342 and $6,684 for the three and six months ended June 30, 2025. As of June 30, 2025, there was future compensation cost of $4,456 with a weighted average recognition period of 0.50 years.

The aggregate intrinsic value totaled $0 and was based on the Company’s closing stock price of $5.72 as of June 30, 2025, which would have been received by the option holders had all option holders exercised their options as of that date.

Stock-Based Compensation Expense

The following table presents information related to stock-based compensation expense:

NOTE 15 –FAIR VALUE MEASUREMENTS

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the six months ended June 30, 2025. The carrying amounts of cash equivalents, accounts receivable, other current assets, other assets, accounts payable, and accrued expenses approximated their fair values as of the six months ended June 30, 2025, due to their short-term nature.

On April 22, 2025, the Company entered into a bundled non-cash transaction in which it issued 1,885 shares of Series A Preferred Stock (Series A Preferred) and warrants (Series A Preferred Warrants) to purchase 37,033 shares of Series A Preferred Stock in anticipation of a future exchange for the outstanding PIPE Convertible Notes and previously issued Series A and Series B Warrants (see Note 9 – PIPE Convertible Notes). The fair value for the Series A Preferred Stock was determined based on the contractual conversion terms into common stock and the quoted price of the Company’s common stock on the date of issuance, in accordance with ASC 820. The Series A Preferred Warrants were valued using the Black-Scholes Model, including the market price of the Company’s common stock, expected volatility, expected term, and the risk-free interest rate. The Series A Preferred and Series A Warrants were measured using Level 2 inputs given the absence of an active market for the Series A Preferred, specifically the quoted market price of the Company’s common stock and the number of common shares contractually receivable upon conversion.

The following table sets forth a summary of the Company’s assets and liabilities that are measured at fair value on a recurring basis:

NOTE 16 –LEASES

The Company is party to two leases: (i) office space in Centerville, Utah (the “Centerville Lease”) and (ii) a warehouse in North Salt Lake City, Utah (the “SLC Lease”). The Centerville lease is scheduled to expire in May 2028 and the SLC Lease is scheduled to expire in November 2025. There were no material changes to the Company’s lease arrangements during the six months ended June 30, 2025. Additional information regarding the Company’s lease arrangements is included in Note 20 – Leases the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated incremental borrowing rate at lease inception point. The weighted average incremental borrowing rate applied was 8.39%. As of June 30, 2025, the Company’s leases had a remaining weighted average term of 1.90 years.

The following table presents net lease cost and other supplemental lease information:

Future minimum payments under non-cancellable leases for operating leases for the remaining terms of the leases following the six months ended June 30, 2025, are as follows:

NOTE 17 –SEGMENT INFORMATION

The Company currently operates asone business segment, which is also the sole reportable segment, focusing on the manufacturing and sales of indoor golf simulators. The Company’s business offerings have similar economic and other characteristics, including the nature of products, manufacturing, types of customers, and distribution methods. The determination of a single business segment is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (“CODM”). The Company’s CODM is its Principal Executive and Financial Officer and Director, who reviews and evaluates consolidated profit and loss and total assets for the purpose of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods.

In addition to the significant expense categories included within net loss presented on the Company’s Consolidated Statements of Operations, see below for disaggregated amounts that comprise consulting, contract labor, personnel, business development, royalty, and marketing expenses:

NOTE 18 –COMMITMENTS AND CONTINGENCIES

Legal Claims

There are no material pending legal proceedings in which the Company or any of its subsidiaries is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of its voting securities, or security holder is a party adverse to the Company, or has a material interest adverse to the Company.

NOTE 19 –CONCENTRATION OF CREDIT RISK

Cash Deposits

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of June 30, 2025 and December 31, 2024, the Company had approximately $8,904,000 and $9,662,000, respectively, in excess of the FDIC insured limit.

NOTE 20 –SUBSEQUENT EVENTS

PIPE Convertible Notes and Issuance of Series A Preferred Stock

On July 21, 2025, in connection with the Exchange Agreements dated April 22, 2025, (i) holders of the Company’s PIPE Convertible Notes agreed to waive the remaining closing condition to the Note Exchange, and the exchange was consummated. PIPE Convertible Notes with an aggregate principal amount of $3,938,311 (representing 100% of the remaining PIPE Convertible Notes) were exchanged for 3,938 shares of the Company’s Series A Preferred Stock and (ii) the Company agreed to extend the expiration date of the Series A Preferred Warrants held by such holders by two years.

On July 21, 2025, a holder of Series A Preferred Warrants to purchase 18,333 shares of Series A Preferred Stock partially exercised its warrants for cash proceeds of approximately $5.0 million and was issued 5,555 shares of Series A Preferred Stock.

Issuance of Common Stock

Subsequent to June 30, 2025, the Company issued an aggregate of 373,308 shares of Class A common stock with fair values ranging from $4.13 - $6.31 per share to Series A Preferred Stockholders in connection with the conversion of outstanding Series A Preferred Stock, accrued interest, and make-good provisions.