What changed in this filing

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Item 1. Financial Statements

2024-11-14 compared with 2024-08-21 · 631 added, 380 removed, 1465 unchanged (41% of the section changed)

2 unchanged sentences

to the Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023

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

Condensed Consolidated Statements of Stockh older ’s Deficit for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2024 and 2023 (unaudited)

Condensed Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)

Condensed Consolidated Statement of Comprehensive Income for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)

Condensed Consolidated Statements of Stockholder’s Deficit for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2024 and 2023 (unaudited)

Notes to the Condensed Consolidated Financial Statements (unaudited)

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CONSOLIDATED BALANCE SHEETS

OF SEPTEMBER 30, 2024 AND DECEMBER 31, 2023

Current assets:

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Notes payable to related parties, current portion

Notes payable

Line of credit, bank

1 unchanged sentence

Convertible notes payable

Notes payable assumed in Merger

Accrued interest

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Note payables to related parties, net of current portion

Note payables

Notes payable assumed in the Merger

PIPE loan payable, net

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CONSOLIDATED STATEMENTS OF OPERATIONS

the Three and Six Months Ended June 30,

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,

For the Three Months Ended

For the Six Months Ended

September 30,

For the Nine Months Ended

September 30,

Revenues, net

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( 2,176,810 )

( 1,265,775 )

Loss on investment

1 unchanged sentence

( 2,074,922 )

( 1,194,233 )

Loss from operations before income taxes

10 unchanged sentences

HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME

THE THREE and SIX MONTHS ENDED JUNE 30,

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

For the Three Months Ended

For the Six Months Ended

September 30,

For the Nine Months Ended

September 30,

$ ( 2,660,868 )

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

THE THREE and SIX MONTHS ENDED JUNE 30, 2024 AND 2023

Preferred Stock

Common Stock- Series A

Common Stock- Series B

Treasury Stock

Comprehensive

Stockholders’

THE THREE and NINE MONTHS ENDED September 30, 2024 and 2023

Stock- Series A

Stock- Series B

Additional Paid-in

Accumulated Other Comprehensive

Total Stockholders’

Balance, December 31, 2023

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$ ( 10,508,104 )

Common stock issued for interest

Balance, September 30, 2024

$ ( 2,037,000 )

$ ( 15,291,447 )

$ ( 10,226,583 )

Balance, December 31, 2022

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( 4,276,690 )

Unrealized gain in fair value of short term investments

Balance, June 30, 2023

$ ( 2,037,000 )

1 unchanged sentence

$ ( 4,321,706 )

$ ( 2,037,000 )

$ ( 7,426,836 )

$ ( 4,321,706 )

Unrealized gain in fair value of short term investments

Balance, June 30, 2023

( 2,660,868 )

Net income (loss)

( 2,660,868 )

Balance, September 30, 2023

$ ( 2,037,000 )

$ ( 10,087,704 )

$ ( 7,013,436 )

$ ( 2,037,000 )

$ ( 10,087,704 )

$ ( 7,013,436 )

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE SIX MONTHS ENDED JUNE 30, 2024 and 2023

CONSOLIDATED STATEMENTS OF CASHFLOWS

THE NINE MONTHS ENDED SEPTEMBER 30,

Cash flows from operating activities:

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Stock issued for services

Stock issued for interest

Changes in operating assets and liabilities:

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( 2,143,225 )

( 1,057,286 )

Inventory, net

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Repayments of notes payable - related party

Proceeds from notes payable - related party

Payments on assumed liabilities in Merger

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Repayment of line of credit

( 1,980,937 )

Repayment of notes payable assumed in Merger

Dividends paid

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Net change in cash, cash equivalents, and restricted cash

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has elected to comply with certain reduced public company reporting requirements.

On May 10, 2024 the Company formed a wholly owned subsidiary in the state of Delaware.

TruGolf Links Franchising,

LLC (“Links”) has a sole member, TruGolf Holdings, Inc.

Links was formed to establish and sell franchises that would use the

Company’s Simulators and other equipment.

A region consists of approximately 1,000,000 people in population, and the franchisee

may sell up to ten (10) franchises within the region.

The purchase price per region is $ 75,000 to $ 100,000 paid up front.

May 10, 2024 the Company formed a wholly owned subsidiary in the state of Delaware.

TruGolf Links Franchising, LLC (“Links”)

has a sole member, TruGolf, Inc.

Links was formed to establish and sell franchises that would use the Company’s indoor golf and

recreational sports simulators and other equipment.

Links offers a Service Area franchise agreement for a single location.

It also offers

a regional developer franchise agreement that allows the franchisee to sell franchises within its region.

The upfront fees range from

$ 45,000 to $ 100,000 .

Links has received proceeds of $ 500,000 from its CEO and $ 75,000 from a third party to purchase the franchise rights

to some regions yet to be determined.

As of September 30, 2024, the Company recorded $ 575,000 of deferred revenue and incurred $ 306,539

of expenses that are included in Selling, general and administrative category.

BUSINESS COMBINATION AND PURCHASE PRICE ALLOCATION

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Ordinary shares, par value $0.01 per share

Ordinary shares, par value $ 0.01 per share

Exchange Ratio

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and the Series B Warrants.

of June 30, 2024, the Company recorded PIPE Convertible Notes payable of $ 4,650,000 and an original issue discount of $ 465,000 resulting

of September 30, 2024, the Company recorded PIPE Convertible Notes payable of $ 4,650,000 and an original issue discount of $ 465,000 resulting

in the net balance of $ 4,185,000 .

For the six months ended June 30, 2024 the Company recorded interest expense on the PIPE Convertible

For the nine months ended September 30, 2024 the Company recorded interest expense on the PIPE Convertible

Notes of $ 647,047 , and interest expense relating to the amortization of the OID of $ 47,447 .

The Company did not timely file the quarterly

report on Form 10-Q for the period ended March 31, 2024.

The scheduled second tranche of the PIPE Convertible Notes payable has not been

received by the Company.

to satisfying the conditions discussed below, TruGolf Holdings, Inc.

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(the “Second Mandatory Additional Closing”).

addition, pursuant to the Purchase Agreement, each PIPE Investor has the right, but not the obligation, to require that, upon notice,

TruGolf Holdings sell to such PIPE Investor at one or more additional closings such PIPE Investor’s pro rata share of up to a maximum

aggregate principal amount of $ 10,850,000 in additional PIPE Convertible Notes (each such additional closing, an “Additional Optional

provided that, the principal amount of the additional PIPE Convertible Notes issued at each Additional Optional Closing

must equal at least $ 250,000 .

If a PIPE Investor has not elected to effect an Additional Optional Closing on or prior to August 2, 2024,

such PIPE Investor shall have no further right to effect an Additional Optional Closing under the Purchase Agreement.

addition, pursuant to the Purchase Agreement, as amended by the Waiver (described below) each PIPE Investor has the right, but not the

obligation, to require that, upon notice, TruGolf Holdings sell to such PIPE Investor at one or more additional closings such PIPE Investor’s

pro rata share of up to a maximum aggregate principal amount of $ 10,850,000 in additional PIPE Convertible Notes (each such additional

closing, an “Additional Optional Closing”);

provided that, the principal amount of the additional PIPE Convertible Notes

issued at each Additional Optional Closing must equal at least $ 250,000 .

If a PIPE Investor has not elected to effect an Additional Optional

Closing on or prior to August 30, 2025, such PIPE Investor shall have no further right to effect an Additional Optional Closing under

the Purchase Agreement.

August 13, 2024, the Company entered into those certain waiver and amendment agreements (the “Waiver”), pursuant to which

the Company and the PIPE Investors agreed to:

(i) waive any breaches or defaults caused by the Company’s failure to timely file

its SEC reports through August 14, 2024;

(ii) extend the date by which the Additional Optional Closings may occur until 11 months from

the effective date of the initial Registration Statement;

(iii) permit the Company to raise debt financing from its affiliates through

non-convertible, unsecured notes with a maturity date that is later than the maturity date of the PIPE Convertible Notes;

certain registration failures until September 3, 2024 and permit the issuance of common stock to satisfy certain registration failures;

and (v) allow the Company to satisfy the interest payments due April 1, 2024, July 1, 2024 and October 1, 2024 from the issuance of common

stock or by allowing such amounts to be added to the principal amount of the PIPE Convertible Notes, at the option of the PIPE Investors.

In addition, certain PIPE Investors agreed to acquire additional PIPE Convertible Notes without regard to any volume or price requirements

in the instruments.

In connection with the Waiver, the Company issued an aggregate of 192,151

shares in satisfaction of certain registration

statement delay payments and issued an aggregate of 157,582

shares in satisfaction of outstanding interest

Such payments were made at the “Alternate Conversion Price” set forth in the PIPE Convertible Notes, which is equal

to the lesser of (i) the Conversion Price, and (ii) 90% of the lowest volume weighted average price of the Class A common stock during

the five consecutive trading days immediately prior to such conversion.

November 7, 2024, the Company entered into those certain amendments to the Waivers (the “Amendments”), pursuant to which the Company and

the PIPE Investors agreed to:

(i) waive any breaches or defaults caused by the Company’s failure to timely file its SEC reports

through August 21, 2024;

and (ii) waive certain registration failures until October 3, 2024.

In addition, the PIPE Investors waived any

breaches or defaults that may have occurred or will occur solely as a result of the Company’s failure to comply with the continued

listing requirements of the Nasdaq Stock Market due to:

(i) the Company’s failure to meet the stockholders’ equity requirement

for continued listing, provided that the foregoing waiver shall expire on January 15, 2025, (ii) the Company’s failure to meet the market value of publicly held shares requirement for continued listing,

provided that the foregoing waiver shall expire on January 15, 2025, and/or (iii) the Company’s failure to

meet the minimum bid price requirement for continued listing;

provided that the foregoing waiver shall expire on January 15, 2025, provided

further that to the extent the Company is in compliance with all other Nasdaq Stock Market listing requirements and has filed a preliminary

proxy statement to hold a special meeting to vote on a reverse stock split to remedy the bid price failure, the waiver shall be extended

to March 15, 2025.

In connection with the Amendment, the Company issued an aggregate of 116,959 shares in satisfaction of certain registration

statement delay payments and issued an aggregate of 65,790 shares in satisfaction of outstanding interest payments.

Such payments were

made at the “Alternate Conversion Price” set forth in the PIPE Convertible Notes, which is equal to the lesser of (i) the

Conversion Price, and (ii) 90% of the lowest volume weighted average price of the Class A common stock during the five consecutive trading

days immediately prior to such conversion.

November 7, 2024, certain PIPE Investors agreed to purchase additional PIPE Convertible Notes in aggregate principal amount of $ 3,300,000

for aggregate proceeds of $ 2,970,000 .

In connection with the foregoing, the Company agreed to repay an aggregate of $ 2,496,686 in outstanding

debt and transaction expenses.

3 – Summary of Significant Accounting Policies

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financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Registration

Statement on Form S-1 and its amendments as filed with the SEC on February 14, 2024, in Form 8-K/A as filed with the SEC on April 17,

2024 and in Form 10-Q March 31, 2024 as filed with the SEC on August 14, 2024.

Statement on Form S-1 effective as of September 30, 2024 and in Form 8-K/A as filed with the SEC on April 17, 2024.

of Presentation – Accounting for the Business Combination

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less when purchased.

of June 30, 2024 and December 31, 2023, the Company’s cash and cash equivalents consisted of $ 6,651,272 and $ 5,397,564 , respectively.

The Company maintains its cash in banks insured by the Federal Deposit Insurance Corporation 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 balances amounted to $ 5,238,762 and $ 4,251,124 respectively.

of September 30, 2024 and December 31, 2023, the Company’s cash and cash equivalents consisted of $ 7,452,185 and $ 5,397,564 , respectively.

The Company maintains its cash in banks insured by the Federal Deposit Insurance Corporation in accounts that at times may exceed the

federally insured limit of $ 250,000 per bank.

The Company minimizes this risk by placing its cash deposits with major financial institutions.

At September 30, 2024 and December 31, 2023 the uninsured balances amounted to $ 6,125,053 and $ 4,251,124 respectively.

Investment Securities

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The Company designates investments in debt securities as available-for-sale.

Available-for-sale debt securities with

original maturities of three months or less from the date of purchase are classified within cash and cash equivalents.

Available-for-sale debt securities are reported at fair value with the related unrealized gains and losses included in accumulated

other comprehensive income (loss), a component of stockholders’ equity, net of tax.

Realized gains and losses on the sale of

marketable securities are determined using the average cost method on a first-in, first-out basis and recorded in total other income

(expense), net in the statements of operations and comprehensive loss.

The Company sold and liquidated most of its marketable

securities during the six months ended June 30, 2024 resulting in a balance of $ 10,114

as of that date and is included with cash and cash equivalents.

Available-for-sale debt securities with original

maturities of three months or less from the date of purchase are classified within cash and cash equivalents.

Available-for-sale debt

securities are reported at fair value with the related unrealized gains and losses included in accumulated other comprehensive income

(loss), a component of stockholders’ equity, net of tax.

Realized gains and losses on the sale of marketable securities are determined

using the average cost method on a first-in, first-out basis and recorded in total other income (expense), net in the statements of operations

and comprehensive loss.

The Company sold and liquidated most of its marketable securities during the nine months ended September 30,

2024 resulting in a balance of $ 10,114 as of that date and is included with cash and cash equivalents.

Receivable, net

manage credit risk associated with our accounts receivables at the customer level.

Because the same customers typically generate the

revenues that are accounted for under both Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (Topic

606) and Accounting Standards Codification Topic 326, Credit Losses (Topic 326)., the discussions below on credit risk and our allowances

for doubtful accounts address our total revenues from Topic 606 and Topic 326.

manage credit risk associated with our accounts receivable at the customer level.

Because the same customers typically generate the revenues

that are accounted for under both Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (Topic 606) and

Accounting Standards Codification Topic 326, Credit Losses (Topic 326)., the discussions below on credit risk and our allowances for

doubtful accounts address our total revenues from Topic 606 and Topic 326.

believe the concentration of credit risk, with respect to our receivables, is limited because our customer base is comprised of a number

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Based on management’s evaluation, there is a balance in the allowance for doubtful accounts of

$ 1,227,136 as of June 30, 2024 and December 31, 2023.

$ 1,295,533 and $ 1,227,136 as of September 30, 2024 and December 31, 2023, respectively.

of our inventory consists of raw materials and are valued at the lower of historic cost or net realizable value;

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write-downs for excess or obsolete inventories based upon assumptions on current and future demand forecasts.

As of June 30, 2024 and

December 31, 2023, the Company had $ 448,360 and $ 429,050 , respectively, reserved for obsolete inventory.

As of September 30, 2024

and December 31, 2023, the Company had $ 448,360 and $ 429,050 , respectively, reserved for obsolete inventory.

Value of Financial Instruments

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including ASC 985-20, Software-Costs of Software to be Sold, Leased or Marketed , we began to capitalize these costs when the technological

feasibility was established and preliminary development efforts were successfully completed, management has authorized and committed

project funding, and it was probable that the project would be completed and the software would be used as intended.

feasibility was established and preliminary development efforts were successfully completed, management authorized and committed project

funding, and it was probable that the project would be completed and the software would be used as intended.

Such costs are amortized

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estimates related to the timing and amount of recognized capitalized software development costs.

For the six months ended June 30, 2024

For the nine months ended September

30, 2024 we capitalized $ 1,967,418 of costs related to the development of software applications.

Amortization of capitalized software costs was

$ 137,916 for the for the six months ended June 30, 2024.

Amortization of capitalized software

costs was $ 279,001 for the for the nine months ended September 30, 2024.

of Long-lived Assets

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are changes to the lease contract that do not give rise to a separate lease.

Company recognizes revenue when the products and services are delivered.

The Company’s revenues are accounted for under ASC Topic

606, “Revenue From Contracts With Customers” (“ASC 606”).

The fees are generally fixed at the point of sale and

all consideration from contracts is included in the transaction price.

The Company’s contracts do not include multiple performance

obligations or material variable considerations.

accordance with ASC 606, the Company recognizes revenue upon the transfer of promised goods or services to customers in an amount that

reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

The Company recognizes

revenue in accordance with that core principle by applying the following:

the contract(s) with a customer;

the performance obligation in the contract;

recognize revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

standards - Topic 606 “Revenue from Contracts with Customers” (“Topic 606”).

entering into contracts with our customers, we review the following five steps of Topic 606:

the contract with the customer.

the performance obligation.

the transaction price.

the transaction price to the performance obligations in the contract;

revenue when (or as) the Company satisfies a performance obligation.

derive our revenue principally from product sales, rentals and subscription fees paid by the customer.

We recognize subscription fees

income and costs over the life of the agreement.

the transaction price to the performance obligation.

the satisfaction of the performance obligation.

account for contracts, with our customers, when we have approval and commitment from both parties, the rights of the parties are identified,

payment terms are established, the contract has commercial substance and collectability of consideration is probable.

Topic 606, we recognize revenue only when we satisfy a performance obligation by transferring a promised good or service to our customer

and completion of all performance obligations.

A good or service is considered transferred when the customer obtains control.

defines control as an entity’s ability to direct the use of, and obtain substantially all of the remaining benefits from, an asset.

We recognize revenue once control has passed to the customer.

The following indicators are evaluated in determining when control has

passed to the customer:

have a right to a payment for the product or service.

customer has legal title to the product.

have transferred physical possession of the product to the customer.

customer has the risk and rewards of ownership of the product.

customer has accepted the product.

Recognition for Golf Simulators.

Revenues from the sale of golf simulators are recognized with the selling price to the customer

recorded as revenues and the acquisition cost of the product recorded as cost of revenues.

We recognize revenue from these transactions

when control has passed to the customer and the performance obligations have been satisfied.

Control is considered to have passed to

the customer when the simulators has been delivered, installed and accepted by the customer.

Golf simulators are bundled and are comprised

of both hardware and a software license (for the software to operate the simulator).

Our simulator contracts with customers generally

do not include multiple performance obligations.

Recognition for Content Software Subscriptions .

The Company offers content software subscriptions for one and twelve months.

revenue from these transactions when control has passed to the customer and the performance obligations have been satisfied.

is considered to have passed to the customer when the software license has been delivered and accepted by the customer.

The content software

subscription revenue is recognized over the term of the contract.

of revenue includes direct materials, labor, manufacturing overhead costs and reserves for estimated warranty cost (excluding depreciation).

Cost of revenues also includes charges to write down the carrying value of the inventory when it exceeds its estimated net realizable

value and to provide for on-hand inventories that are either obsolete or in excess of forecasted demand.

As a result of the introduction

of the new simulator products in late 2022 and the sunsetting of older hardware models, management consistently reviews the inventory.

During the six months ended June 30, 2024 and 2023, the Company recorded $ 239,583 in inventory write-down and $ 232,119 reduction to cost

of revenue, respectively.

value and to provide for on-hand inventories that are either obsolete or in excess of forecasted demand, as consistently reviewed by

During the nine months ended September 30, 2024 and 2023, the Company recorded an expense of $ 123,891 and $ 36,992 in inventory

write-down, respectively.

have royalty agreements with certain software suppliers to pay royalties based on the number of units and subscriptions sold.

percentages range between 20 % and 30 %.

Royalty expense for the six months ended June 30, 2024 and 2023 was $ 553,038 and $ 316,756 , respectively.

Royalty expense for the nine months ended September 30, 2024 and 2023 was $ 719,668 and $ 447,366 ,

respectively.

Company utilizes the asset and liability approach to measure deferred tax assets and liabilities based on temporary differences existing

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or liabilities prior to January 31, 2024.

Company has no tax positions as of June 30, 2024 and December 31, 2023 for which the ultimate deductibility is highly certain but for

which there is uncertainty about the timing of such deductibility.

Company has no tax positions as of September 30, 2024 and December 31, 2023 for which the ultimate deductibility is highly certain but

for which there is uncertainty about the timing of such deductibility.

Company recognizes any interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

For the six months ending June 30, 2024 and the year ending December 31, 2023, the Company recognized no interest and penalties.

For the nine months ending September 30, 2024 and 2023, the Company recognized no interest and penalties.

Earnings (Loss) Per Share

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The computation of basic and diluted income

(loss) per share for the six months ended June 30, 2024 and 2023 excludes potentially dilutive securities when their inclusion would

be anti-dilutive, or if their exercise prices were greater than the average market price during the period.

potential dilutive shares as of June 30, 2024 consisted of the following:

(loss) per share for the nine months ended September 30, 2024 and 2023 excludes potentially dilutive securities when their inclusion

would be anti-dilutive, or if their exercise prices were greater than the average market price during the period.

There were no potential

dilutive shares as September 30, 2023.

potential dilutive shares as of September 30, 2024 consisted of the following:

OF POTENTIAL DILUTIVE SHARES

PIPE Convertible Notes (assumes full funding of $15,500,000) (i)

PIPE Convertible Notes (assumes full funding of $ 15,500,000 )

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Total dilutive

not include shares for interest or make-whole amounts as the number of shares is undeterminable

since the calculation is based on variable floating factors.

Accounting Pronouncements

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of Credit and Supplier Risk

instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash deposits and trade accounts

instruments that potentially subject the Company to concentration of credit risk consist primarily of cash deposits and trade accounts

Credit risk can be negatively impacted by adverse changes in the economy or by disruptions in the credit markets.

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We maintain reserves for potential

There were no customers that accounted for more than 10.0 % of our revenues for the six months ended June 30, 2024 and 2023.

There were no customers that accounted for more than 10.0 % of our revenues for the nine months ended September 30, 2024 and 2023.

purchase a significant amount of parts we consume in manufacturing our simulators from nationally known original equipment manufacturers,

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ACCOUNTS RECEIVABLE, NET

receivable and allowance for doubtful accounts consisted of the following as of June 30, 2024 and December 31, 2023:

receivable and allowance for doubtful accounts consisted of the following as of September 30, 2024 and December 31, 2023:

OF ALLOWANCE FOR DOUBTFUL ACCOUNTS

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In our normal course of

business we have four customers that accounted for approximately 50 % of our balance of accounts receivable as of June 30, 2024 and December

31, 2023, respectively.

business we have four to five customers that accounted for approximately 50 % of our balance of accounts receivable as of September 30,

2024 and December 31, 2023, respectively.

INVENTORY, NET

following summarizes inventory as of June 30, 2024 and December 31, 2023:

following summarizes inventory as of September 30, 2024 and December 31, 2023:

Inventory – raw materials

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The Company terminated the brokerage

agreement during the six months ended June 30, 2024, liquidated the vast majority of its investments and has $ 10,114 on its balance sheet

as of June 30, 2024.

agreement during the nine months ended September 30, 2024, liquidated the vast majority of its investments and has $ 10,114 on its balance

sheet as of September 30, 2024.

As of December 31, 2023, the marketable securities consisted of the following:

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or for other purposes.

We record such securities at fair value in our balance sheet, with unrealized gains or losses reported as a component

We record such securities at fair value on our balance sheet, with unrealized gains or losses reported as a component

of accumulated comprehensive loss.

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recorded against an allowance for credit losses with an offsetting entry to interest and other expense, net on the statement of operations.

As of June 30, 2024, the Company had $ 10,114 of short-term investments in cash and cash equivalents remaining.

As of September 30, 2024, the Company had $ 10,114 of short-term investments in cash and cash equivalents remaining.

OTHER LONG-TERM ASSETS

following summarizes other long-term assets as of June 30, 2024 and December 31, 2023:

following summarizes other long-term assets as of September 30, 2024 and December 31, 2023:

OF OTHER LONG TERM ASSETS

Other long-term assets

Security deposit – Ethos Management loan

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all the funds disbursed by Ethos, and Ethos must release the deposit collateral, which offsets in part the loan payable of $ 2,383,059

(Note 10.) and accrued interest of $ 81,560 as of June 30, 2024.

(Note 10.) and accrued interest of $ 81,560 as of September 30, 2024.

PROPERTY AND EQUIPMENT, NET

following summarizes property and equipment as of June 30, 2024 and December 31, 2023:

following summarizes property and equipment as of September 30, 2024 and December 31, 2023:

OF PROPERTY AND EQUIPMENT

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Property and equipment, net

expense for the six months ended June 30, 2024 and 2023, was $ 35,284 and $ 28,088 , respectively.

following summarizes capitalized software development costs as of June 30, 2024:

expense for the nine months ended September 30, 2024 and 2023, was $ 42,753 and $ 35,704 respectively.

following summarizes capitalized software development costs as of September 30, 2024:

OF CAPITALIZED SOFTWARE DEVELOPMENT COSTS

Capitalized software – beginning balance

Capitalized software development costs – 2024

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is applied to an order at the time of invoicing.

As of June 30, 2024 and December 31, 2023, and 2022, customer deposits were $ 2,479,124

and $ 1,704,224 , respectively.

As of September 30, 2024 and December 31, 2023 customer deposits were $ 4,600,105 and

$ 1,704,224 , respectively.

NOTES PAYABLE

payable consisted of the following as of June 30, 2024 and December 31, 2023:

payable consisted of the following as of September 30, 2024 and December 31, 2023:

SCHEDULE OF NOTES PAYABLE

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The balance of the Ethos liability after offsetting the collateral deposit and accrued interest payable is $ 589,619 ,

which amount is included in ‘Accrued and other current liabilities’ on the balance sheet as of June 30, 2024.

which amount is included in ‘Accrued and other current liabilities’ on the balance sheet as of September 30, 2024.

Payable – Mercedes-Benz

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initial business combination or the date of the liquidation of DMA.

As of June 30,2024, the balance of the notes payable assumed in the

Merger was $ 1,565,000 .

As of September 30,2024, the balance of the notes payable assumed

in the Merger was $ 1,465,000 after a payment of $ 100,000 to one on the note holders.

February 2, 2024, the Company executed a securities purchase agreement (the “Purchase Agreement”) with each of the investors

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“Series B Warrants,” and collectively with the Series A Warrants, the “PIPE Warrants”) (the “PIPE Financing”).

Purchase Agreement contemplates funding of the investment (the “Investment”) across multiple tranches.

At the first closing

(the “Initial Closing”) an aggregate principal amount of $ 4,650,000 of PIPE Convertible Notes will be issued upon the satisfaction

of certain customary closing conditions in exchange for aggregate gross proceeds of $ 4,185,000 , representing an original issue discount

On such date (the “Initial Closing Date”), the Company will also issue the PIPE Investors the Series A Warrants and

the Series B Warrants.

of June 30, 2024, the Company recorded PIPE Convertible Notes payable of $ 4,650,000 and an original issue discount of $ 465,000 resulting

of September 30, 2024, the Company recorded PIPE Convertible Notes payable of $ 4,650,000 and an original issue discount of $ 465,000 resulting

in the net balance of $ 4,185,000 .

As of June 30, 2024, the Company recorded interest expense on the PIPE Convertible Notes of 459,329 ,

As of September 30, 2024, the Company recorded interest expense on the PIPE Convertible Notes of $ 647,047 ,

and interest expense relating to the amortization of the OID of $ 47,447 .

The Company did not timely file the quarterly report on Form

10-Q for the period ended March 31, 2024.

The scheduled second tranche of the PIPE Convertible Notes payable has not been received by

to satisfying the conditions discussed below, the Company has the right under the Purchase Agreement, but not the obligation, to require

that PIPE Investors purchase additional Notes at up to two additional closings.

Upon notice at any time after the 2nd trading day following

the Initial Closing Date, the Company may require that the PIPE Investors purchase an additional aggregate principal amount of $ 4,650,000

of PIPE Convertible Notes, in exchange for aggregate gross proceeds of $ 4,185,000 , if (i) the Registration Statement (as described below)

has been filed;

and (ii) certain customary closing conditions are satisfied (the “First Mandatory Additional Closing”).

notice at any time after the 2nd trading day following the date that the First Mandatory Additional Closing is consummated, the Company

may require that the PIPE Investors purchase an additional aggregate principal amount of $ 6,200,000 of PIPE Convertible Notes, in exchange

for aggregate gross proceeds of $ 5,580,000 , if (i) the shareholder approval is obtained (as described below);

(ii) the Registration Statement

has been declared effective by the SEC;

and (iii) certain customary closing conditions are satisfied (the “Second Mandatory Additional

As of May 14, 2024, the Company did not timely file the quarterly report on Form 10-Q for the period ended March 31,

The scheduled second tranche of the PIPE Convertible Notes payable has not been received by the Company.

addition, pursuant to the Purchase Agreement, each PIPE Investor has the right, but not the obligation, to require that, upon notice,

the Company sell to such PIPE Investor at one or more additional closings such PIPE Investor’s pro rata share of up to a maximum

aggregate principal amount of $ 10,850,000 in additional PIPE Convertible Notes (each such additional closing, an “Additional Optional

provided that, the principal amount of the additional PIPE Convertible Notes issued at each Additional Optional Closing

must equal at least $ 250,000 .

If a PIPE Investor has not elected to effect an Additional Optional Closing on or prior to August 2, 2024,

such PIPE Investor shall have no further right to effect an Additional Optional Closing under the Purchase Agreement.

The process for the second tranche of the PIPE Convertible Notes

payable has commenced and should be completed in November 2024.

to satisfying the conditions discussed below, TruGolf Holdings, Inc.

has the right under the Purchase Agreement, but not the obligation,

to require that the PIPE Investors purchase additional Notes at up to two additional closings.

Upon notice at any time after the 2nd

trading day following the Initial Closing Date, TruGolf Holdings may require that the PIPE Investors purchase an additional aggregate

principal amount of $ 4,650,000 of PIPE Convertible Notes, in exchange for aggregate gross proceeds of $ 4,185,000 , if (i) the Registration

Statement (as described below) has been filed;

and (ii) certain customary closing conditions are satisfied (the “First Mandatory

Additional Closing”).

Upon notice at any time after the 2nd trading day following the date that the First Mandatory Additional

Closing is consummated, TruGolf Holdings may require that the PIPE Investors purchase an additional aggregate principal amount of $ 6,200,000

of PIPE Convertible Notes, in exchange for aggregate gross proceeds of $ 5,580,000 , if (i) the shareholder approval is obtained (as described

(ii) the Registration Statement has been declared effective by the SEC;

and (iii) certain customary closing conditions are satisfied

(the “Second Mandatory Additional Closing”).

addition, pursuant to the Purchase Agreement, as amended by the Waiver (described below) each PIPE Investor has the right, but not the

obligation, to require that, upon notice, TruGolf Holdings sell to such PIPE Investor at one or more additional closings such PIPE Investor’s

pro rata share of up to a maximum aggregate principal amount of $ 10,850,000 in additional PIPE Convertible Notes (each such additional

closing, an “Additional Optional Closing”);

provided that, the principal amount of the additional PIPE Convertible Notes

issued at each Additional Optional Closing must equal at least $ 250,000 .

If a PIPE Investor has not elected to effect an Additional Optional

Closing on or prior to August 30, 2025, such PIPE Investor shall have no further right to effect an Additional Optional Closing under

the Purchase Agreement.

August 13, 2024, the Company entered into those certain waiver and amendment agreements (the “Waiver”), pursuant to

which the Company and the PIPE Investors agreed to:

(i) waive any breaches or defaults caused by the Company’s failure to

timely file its SEC reports through August 14, 2024;

(ii) extend the date by which the Additional Optional Closings may occur until

11 months from the effective date of the initial Registration Statement;

(iii) permit the Company to raise debt financing from its

affiliates through non-convertible, unsecured notes with a maturity date that is later than the maturity date of the PIPE

Convertible Notes;

(iv) waive certain registration failures until September 3, 2024 and permit the issuance of common stock to

satisfy certain registration failures;

and (v) allow the Company to satisfy the interest payments due April 1, 2024, July 1, 2024

and October 1, 2024 from the issuance of common stock or by allowing such amounts to be added to the principal amount of the PIPE

Convertible Notes, at the option of the PIPE Investors.

In addition, certain PIPE Investors agreed to acquire additional PIPE

Convertible Notes without regard to any volume or price requirements in the instruments.

In connection with the Waiver, the Company

issued an aggregate of 192,151 shares

in satisfaction of certain registration statement delay payments and issued an aggregate of 157,582 shares

in satisfaction of outstanding interest payments.

Such payments were made at the “Alternate Conversion Price” set forth

in the PIPE Convertible Notes, which is equal to the lesser of (i) the Conversion Price, and (ii) 90% of the lowest volume weighted

average price of the Class A common stock during the five consecutive trading days immediately prior to such conversion.

November 7, 2024, the Company entered into those certain amendments to the Waivers (the “Amendments”), pursuant to which

the Company and the PIPE Investors agreed to:

(i) waive any breaches or defaults caused by the Company’s failure to timely

file its SEC reports through August 21, 2024;

and (ii) waive certain registration failures until October 3, 2024.

In addition, the

PIPE Investors waived any breaches or defaults that may have occurred or will occur solely as a result of the Company’s

failure to comply with the continued listing requirements of the Nasdaq Stock Market due to:

(i) the Company’s failure to meet

the stockholders’ equity requirement for continued listing, provided that the foregoing waiver shall expire on January 15,

2025, (ii) the Company’s failure to meet the market value of publicly held shares requirement for continued listing, provided

that the foregoing waiver shall expire on January 15, 2025, and/or (iii) the Company’s failure to meet the minimum bid price

requirement for continued listing;

provided that the foregoing waiver shall expire on January 15, 2025, provided further that to the

extent the Company is in compliance with all other Nasdaq Stock Market listing requirements and has filed a preliminary proxy

statement to hold a special meeting to vote on a reverse stock split to remedy the bid price failure, the waiver shall be extended

to March 15, 2025.

In connection with the Amendment, the Company issued an aggregate of 116,959 shares

in satisfaction of certain registration statement delay payments and issued an aggregate of 65,790 shares

in satisfaction of outstanding interest payments.

Such payments were made at the “Alternate Conversion Price” set forth

in the PIPE Convertible Notes, which is equal to the lesser of (i) the Conversion Price, and (ii) 90% of the lowest volume weighted

average price of the Class A common stock during the five consecutive trading days immediately prior to such conversion.

November 7, 2024, certain PIPE Investors agreed to purchase additional PIPE Convertible Notes in aggregate principal amount of $ 3,300,000

for aggregate proceeds of $ 2,970,000 .

In connection with the foregoing, the Company agreed to repay an aggregate of $ 2,496,686 in outstanding

debt and transaction expenses.

RELATED PARTY NOTES PAYABLE

party notes payable consisted of the following as of June 30, 2024 and December 31, 2023:

party notes payable consisted of the following as of September 30, 2024 and December 31, 2023:

OF RELATED PARTY NOTES PAYABLE

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( 1,937,000 )

( 1,237,000 )

Long-term portion

maturities of related party notes payable are as follows as of June 30, 2024:

maturities of related party notes payable are as follows as of September 30, 2024:

OF FUTURE MATURITIES OF RELATED PARTY NOTES PAYABLE

2024 (six months)

2024 (three months)

Payable – ARJ Trust

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We make monthly interest-only payments of $ 3,541 .

As of June 30, 2024 and December 31, 2023,

As of September 30, 2024 and December 31,

2023, the principal balance was $ 500,000 .

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payments of $ 1,063 .

As of June 30, 2024 and December 31, 2023, the principal balance outstanding was $ 150,000 .

of June 30, 2024 and December 31, 2023, the principal balance outstanding was $ 650,000 and accrued interest was $ 2,911 .

to mature on March 31, 2024 and was extended to March 31, 2025 .

As of September 30, 2024 and December 31, 2023, the principal balance outstanding was $ 150,000 .

of September 30, 2024 and December 31, 2023, the principal balance outstanding was $ 650,000 and accrued interest was $ 4,604 .

was to mature on March 31, 2024 and was extended to March 31, 2025 .

trustee of the ARJ Trust is a related party to the Company’s chief executive officer.

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a late fee of 5%, if not paid within 10 days of the due date .

During the six months ended June 30, 2024, the Company paid the December

During the nine months ended September 30, 2024, the Company paid the December

2023 installment of $ 250,000 and $ 50,000 in negotiated extension fee.

The balance of the note payable at September 30, 2024 and December

31, 2023 was $ 1,050,000 and $ 1,300,000 , respectively.

Payable – Carver

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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 paid $ 18,500 on the note on March 31, 2024.

The Company paid $ 18,500 on the note on March 31, 2024 and September 30, 2024.

The balance of the note payable as of September 30, 2024

and December 31, 2023 was $ 111,000 and $ 148,000 , respectively.

LINES OF CREDIT

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line of credit was secured by a pledge of $ 2,100,000 in the Company’s deposit accounts (restricted cash) at JP Morgan Chase.

of June 30, 2024 and December 31, 2023, the balance outstanding on the line of credit was $ 802,738 .

of September 30, 2024 and December 31, 2023, the balance outstanding on the line of credit was $ 802,738 .

February 2023, the Company entered into a variable rate line of credit with Morgan Stanley which is secured by the marketable securities

held in our brokerage account.

As of June 30, 2024 and December 31, 2023, the balance outstanding was $ 10,114 and $ 1,980,937 , at a rate

of 7.21 %, respectively, as the Company paid off the majority of the line of credit during the three months ended March 31, 2024.

As of September 30, 2024 and December 31, 2023, the balance outstanding was $ 10,114 and $ 1,980,937 , at

a rate of 7.21 %, respectively, as the Company paid off the majority of the line of credit during the three months ended March 31, 2024.

CONVERTIBLE NOTES PAYABLE

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date of this filing.

was zero OID remaining as of June 30, 2024 and December 31, 2023, and there was no OID interest expense or amortization recorded during

the six months ended June 30, 2024 and 2023.

was zero OID related to the Convertible Notes remaining as of September 30, 2024 and December 31, 2023, and there was no OID interest

expense or amortization recorded during the nine months ended September 30, 2024 and 2023.

of September 30, 2024 and December 31, 2023, the balance of the Convertible Notes was $ 954,622 .

The Convertible Notes were paid off in

connection with the November 7, 2024, funding of the additional PIPE Convertible Notes referenced in Note 11.

DIVIDEND NOTES PAYABLE

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Interest commenced accruing on January 1, 2023.

declared, distributed, and accrued are as follow as of June 30, 2024 and December 31, 32023:

OF DIVIDENDS DECLARED, DISTRIBUTED, AND ACCRUED

declared, distributed, and accrued are as follows as of September 30, 2024 and December 31, 32023:

SCHEDULE OF DIVIDENDS DECLARED, DISTRIBUTED, AND ACCRUED

Accrued interest on dividends payable

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variable payments to the Purchaser are recorded in interest expense.

As of June 30, 2024 and December 31, 2023, the amount outstanding

was $ 1,000,000 .

During the six months ended June 30, 2024 and 2023, we paid $ 177,281 and $ 0 , respectively, in interest expense to the

As of September 30, 2024 and December 31, 2023, the outstanding

amount was $ 1,000,000 .

During the nine months ended September 30, 2024 and 2023, we incurred $ 295,809 and $ 402,816 , respectively, in interest expense

to the Purchaser.

ACCRUED AND OTHER CURRENT LIABILITIES

and other current liabilities consisted of the following as of June 30, 2024 and December 31, 2023:

and other current liabilities consisted of the following as of September 30, 2024 and December 31, 2023:

OF ACCRUED AND OTHER CURRENT LIABILITIES

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Sales tax payable

Royalty payable

Accrued and other current liabilities

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

As of June 30, 2024 and December 31, 2023, there were

no shares of preferred stock issued and outstanding.

As of September 30, 2024 and December 31, 2023, there

were no shares of preferred stock issued and outstanding.

Stock – Series A

Company has authorized common stock – Series A of 90,000,000 shares, par value of $ 0.0001 .

As of June 30, 2024, there were 11,538,252

As of September 30, 2024, there were

11,887,985 shares of common stock – Series A and 1,716,860 shares of common stock – Series B issued and outstanding.

The summary of

exchanged and issued shares of common stock – Series A and B resulting from the Merger follows:

Company issued 349,733 shares of common stock – Series A for interest payment to the PIPE Convertible Note Holders during the nine

months ended September 30, 2024.The summary of exchanged and issued shares of common stock – Series A and B resulting from the

Merger follows:

closing of the Business Combination, shares of TruGolf Nevada common stock outstanding include the following:

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Company has authorized common stock – Series B of 10,000,000 shares, par value of $ 0.0001 .

As of June 30, 2024, there were 1,716,860

As of September 30, 2024, there were

1,716,860 shares of common stock – Series B issued and outstanding.

The common stock – Series B has voting rights of 25 votes per common

stock – Series A held.

As of June 30, 2024, three TruGolf insiders own 100 % of the 1,716,680 common stock – Series B.

The common stock – Series B has voting rights of 25 votes

per common stock – Series A held.

As of September 30, 2024, three TruGolf insiders own 100 % of the 1,716,680 common stock –

- Common stock – Series A and B

of June 30, 2024, the Company issued warrants to purchase 422,777 shares of the Company’s common stock – Series A to the

PIPE Convertible Notes holders with an exercise price of $ 13 per share and a term of five years commencing February 1, 2024.

Series A Warrants to be issued for all tranches of the PIPE Convertible Notes is 1,409,091 .

The pro rata amount of the first tranche

of PIPE Convertible Notes payable of $ 4,650,000 as a percentage of the total Series A Warrants results in the issuance of 422,777 warrants.

The value of the Series A Warrants was estimated to be approximately $ 703,000 (or $ 1.61 per warrant) using the Black-Scholes option-pricing

model as of the grant date (February 24, 2024) based on the following assumptions:

of September 30, 2024, the Company issued warrants to purchase 1,409,091 shares of the Company’s common stock – Series A

to the PIPE Convertible Notes holders with an initial exercise price of $ 13 per share and a term of five years commencing February 1,

The maximum Series A Warrants to be issued for all tranches of the PIPE Convertible Notes is 1,409,091 .

The value of the Series

A Warrants was estimated to be approximately $ 2,268,637 (or $ 1.61 per warrant) using the Black-Scholes option-pricing model as of the

grant date (February 24, 2024) based on the following assumptions:

expected volatility of 227.52 %;

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expected life of five years .

of June 30, 2024, the Company issued warrants to purchase 465,000 shares of the Company’s common stock – Series B to the

PIPE Convertible Notes holders with an exercise price of $ 10 per share and a term of thirty months commencing February 1, 2024.

Series B Warrants to be issued for all tranches of the PIPE Convertible Notes is 1,550,000 .

The pro rata amount of the first tranche

of PIPE Convertible Notes payable of $ 4,650,000 as a percentage of the total Series A Warrants results in the issuance of 465,000 Series

The value of the Series B Warrants was estimated to be approximately $ 662,400 (or $ 1.38 per warrant) using the Black-Scholes

option-pricing model as of the grant date (February 24, 2024) based on the following assumptions:

of September 30, 2024, the Company issued warrants to purchase 3,875,000 shares of the Company’s common stock – Series B

to the PIPE Convertible Notes holders with an initial exercise price of $ 10 per share and a term of thirty months commencing February

The maximum Series B Warrants to be issued for all tranches of the PIPE Convertible Notes is 1,550,000 .

The value of the Series

B Warrants was estimated to be approximately $ 5,347,500 (or $ 1.38 per warrant) using the Black-Scholes option-pricing model as of the

grant date (February 24, 2024) based on the following assumptions:

expected volatility of 227.52 %;

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The Company had no tax positions relating

to open income tax returns that were considered to be uncertain as of June 30, 2024.

to open income tax returns that were considered to be uncertain as of September 30, 2024.

to the merger, the Company was an S Corporation for federal and state income tax purposes with all income tax liabilities and/or benefits

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been provided for prior to January 31, 2024, the date of the consummation of the Merger.

Company incurred a net loss for the six months ended June 30, 2024 of $ 2,871,192 , which is available to reduce future taxable income

Company incurred a net loss for the nine months ended September 30, 2024 of $ 2,931,370 , which is available to reduce future taxable income

for federal and state income taxes, respectively.

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At the current federal tax rate of 21 % and including book to tax differences result in the current tax benefit NOL of

approximately $ 498,000 at June 30, 2024.

The Company has no income tax effect due to the recognition of a full valuation allowance on

the expected tax benefits of future loss carry forwards based on uncertainty surrounding realization of such assets.

During the six months

ended June 30, 2024, the Company increased the valuation allowance from $ 0 to $ 500,600 .

approximately $ 615,000 at September 30, 2024.

The Company has no income tax effect due to the recognition of a full valuation allowance

on the expected tax benefits of future loss carry forwards based on uncertainty surrounding realization of such assets.

During the nine

months ended September 30, 2024, the Company increased the valuation allowance from $ 0 to $ 615,000 .

COMMITMENTS AND CONTINGENCIES

of June 30, 2024, we had two operating leases as follows:

of September 30, 2024, we had two operating leases as follows:

June 2023, we entered into a five -year lease on the warehouse in North Salt Lake City, Utah.

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May 2024 is $ 10,849 , $ 11,163 through May 2025, $ 11,486 through May 2026, $ 11,819 through May 2027, and $ 12,162 through May 2028.

As of June 30, 2024, we had 47 months remaining on the lease.

As of September 30, 2024, we had 44 months remaining on the lease.

December 2022, we entered into a three -year lease on the corporate headquarters in Centerville, Utah.

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through November 2023 is $ 20,343 , $ 20,378 through November 2023 and $ 24,616 through November 2025.

As of June 30, 2024, we had 36

As of September 30, 2024, we had

33 months remaining on the lease.

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As of June 30, 2024

As of September 30, 2024

SCHEDULE OF LEASE LIABILITY

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As of June 30, 2024

As of September 30, 2024

table below reconciles the fixed component of the undiscounted cash flows for each of five years to the lease liabilities recorded on

the Balance Sheet as of June 30, 2024:

the Balance Sheet as of September 30, 2024:

SCHEDULE OF MATURITY LEASE LIABILITY

Minimum Lease

2024 – (Six Months)

2024 – (Three Months)

Less interest

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described in Note 14 – Dividend Notes Payable , the following were outstanding on the dividend notes payable to our officers

and shareholders as of June 30, 2024 and December 31, 2023:

and shareholders as of September 30, 2024 and December 31, 2023:

SCHEDULE OF DIVIDEND NOTES PAYABLE

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Notes Payable .

The Company’s chief executive officer purchased

five (5) regions from Links during the three months ended June 30, 2024.

Company’s chief executive officer paid $ 500,000 to purchase franchise regions from TruGolf Links Franchising, LLC during the three

months ended June 30, 2024.

the three months ended September 30, 2024, the Company’s chief executive officer provided a cash infusion to the Company in the

amount of $ 1,000,000 and is recorded under ‘Notes payable to related parties, current portion’ on the balance sheet.

TruGolf Links Franchising, LLC

TruGolf Links Franchising, LLC (“Links”) sold five (5) regions during the three

months ended June 30, 2024 and received proceeds of $ 500,000 , which was recorded as deferred revenue on the Company’s balance

The CEO of the Company individually purchased the regions from Links.

Links has a commitment from a buyer to purchase four (4)

regions in the subsequent quarter of 2024.

May 10, 2024 the Company formed a wholly owned subsidiary in the state of Delaware.

TruGolf Links Franchising, LLC (“Links”)

has a sole member, TruGolf, Inc.

Links was formed to establish and sell franchises that would use the Company’s indoor golf and

recreational sports simulators and other equipment.

Links offers a Service Area franchise agreement for a single location.

It also offers

a regional developer franchise agreement that allows the franchisee to sell franchises within its region.

The upfront fees range from

$ 45,000 to $ 100,000 .

Links has received proceeds of $ 500,000 from its CEO and $ 75,000 from a third party to purchase the franchise rights

to some regions yet to be determined.

As of September 30, 2024, the Company recorded $ 575,000 of deferred revenue and incurred $ 306,539

of expenses that are included in Selling, general and administrative category.

SUBSEQUENT EVENTS

October 4, 2024 the Company filed a Form S-8 to register 1,600,000 shares of the Company’s common stock – Series A to participants

in the TruGolf Holdings, Inc.

2024 Stock Incentive Plan.

On November 7, 2024, the Company entered into

those certain amendments to the Waivers (the “Amendments”), pursuant to which the Company and the PIPE Investors agreed

(i) waive any breaches or defaults caused by the Company’s failure to timely file its SEC reports through August 21, 2024;

and (ii) waive certain registration failures until October 3, 2024.

In addition, the PIPE Investors waived any breaches or defaults

that may have occurred or will occur solely as a result of the Company’s failure to comply with the continued listing

requirements of the Nasdaq Stock Market due to:

(i) the Company’s failure to meet the stockholders’ equity requirement

for continued listing, provided that the foregoing waiver shall expire on January 15, 2025, (ii) the Company’s failure to meet

the market value of publicly held shares requirement for continued listing, provided that the foregoing waiver shall expire on

January 15, 2025, and/or (iii) the Company’s failure to meet the minimum bid price requirement for continued listing;

that the foregoing waiver shall expire on January 15, 2025;

provided further that to the extent the Company is in compliance with

all other Nasdaq Stock Market listing requirements and has filed a preliminary proxy statement to hold a special meeting to vote on

a reverse stock split to remedy the bid price failure, the waiver shall be extended to March 15, 2025.

In connection with the

Amendment, the Company issued an aggregate of 116,959

shares in satisfaction of certain registration statement delay payments and issued an aggregate of 65,790

shares in satisfaction of outstanding interest payments.

Such payments were made at the “Alternate Conversion Price” set

forth in the PIPE Convertible Notes, which is equal to the lesser of (i) the Conversion Price, and (ii) 90% of the lowest volume

weighted average price of the Class A common stock during the five consecutive trading days immediately prior to such

On November 7, 2024, certain PIPE Investors

agreed to purchase additional PIPE Convertible Notes in aggregate principal amount of $ 3,300,000

for aggregate proceeds of $ 2,970,000 .

In connection with the foregoing, the Company agreed to repay an aggregate of $ 2,496,686

in outstanding debt and transaction expenses.

evaluate events and transactions occurring subsequent to the date of the financial statements for matters requiring recognition or disclosure

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the occurrence of any event, change or other circumstances, including the outcome of any legal proceedings that may be instituted against

the ability to maintain the listing of our securities on Nasdaq, and the potential liquidity and trading of our securities;

the ability to remedy the outstanding listing deficiencies with respect to our common stock and to maintain the listing of our securities

on Nasdaq, and the potential liquidity and trading of our securities;

the risk of disruption to our current plans and operations;

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On such date (the “Initial Closing Date”), we also issued the PIPE Investors the Series A Warrants and the Series

to satisfying the conditions discussed below, we have the right under the Purchase Agreement, but not the obligation, to require that

the PIPE Investors purchase additional Notes at up to two additional closings.

Upon notice at any time after the 2nd trading day following

the Initial Closing Date, we may require that the PIPE Investors purchase an additional aggregate principal amount of $4,650,000 of PIPE

Convertible Notes, in exchange for aggregate gross proceeds of $4,185,000, if (i) the Registration Statement (as described below) has

and (ii) certain customary closing conditions are satisfied (the “First Mandatory Additional Closing”).

notice at any time after the 2nd trading day following the date that the First Mandatory Additional Closing is consummated, we may require

that the PIPE Investors purchase an additional aggregate principal amount of $6,200,000 of PIPE Convertible Notes, in exchange for aggregate

gross proceeds of $5,580,000, if (i) the shareholder approval is obtained (as described below);

(ii) the Registration Statement has been

declared effective by the SEC;

and (iii) certain customary closing conditions are satisfied (the “Second Mandatory Additional Closing”).

addition, pursuant to the Purchase Agreement, each PIPE Investor has the right, but not the obligation, to require that, upon notice,

we sell to such PIPE Investor at one or more additional closings such PIPE Investor’s pro rata share of up to a maximum aggregate

principal amount of $10,850,000 in additional PIPE Convertible Notes (each such additional closing, an “Additional Optional Closing”);

provided that, the principal amount of the additional PIPE Convertible Notes issued at each Additional Optional Closing must equal at

least $250,000.

If a PIPE Investor has not elected to effect an Additional Optional Closing on or prior to August 2, 2024, such PIPE

Investor shall have no further right to effect an Additional Optional Closing under the Purchase Agreement.

TruGolf Links Franchising, LLC

On May 10, 2024 the Company formed a wholly owned subsidiary in the state of Delaware.

TruGolf Links Franchising,

LLC (“Links”) has a sole member, TruGolf Holdings, Inc.

Links was formed to establish and sell franchises that would use the

Company’s Simulators and other equipment.

A region consists of approximately 1,000,000 people in population, and the franchisee

may sell up to ten (10) franchises within the region.

The purchase price per region is $75,000 to $100,000 paid up front.

to satisfying the conditions discussed below, TruGolf Holdings, Inc.

has the right under the Purchase Agreement, but not the obligation,

to require that the PIPE Investors purchase additional Notes at up to two additional closings.

Upon notice at any time after the 2nd

trading day following the Initial Closing Date, TruGolf Holdings may require that the PIPE Investors purchase an additional aggregate

principal amount of $4,650,000 of PIPE Convertible Notes, in exchange for aggregate gross proceeds of $4,185,000, if (i) the Registration

Statement (as described below) has been filed;

and (ii) certain customary closing conditions are satisfied (the “First Mandatory

Additional Closing”).

Upon notice at any time after the 2nd trading day following the date that the First Mandatory Additional

Closing is consummated, TruGolf Holdings may require that the PIPE Investors purchase an additional aggregate principal amount of $6,200,000

of PIPE Convertible Notes, in exchange for aggregate gross proceeds of $5,580,000, if (i) the shareholder approval is obtained (as described

(ii) the Registration Statement has been declared effective by the SEC;

and (iii) certain customary closing conditions are satisfied

(the “Second Mandatory Additional Closing”).

addition, pursuant to the Purchase Agreement, as amended by the Waiver (described below) each PIPE Investor has the right, but not the

obligation, to require that, upon notice, TruGolf Holdings sell to such PIPE Investor at one or more additional closings such PIPE Investor’s

pro rata share of up to a maximum aggregate principal amount of $10,850,000 in additional PIPE Convertible Notes (each such additional

closing, an “Additional Optional Closing”);

provided that, the principal amount of the additional PIPE Convertible Notes

issued at each Additional Optional Closing must equal at least $250,000.

If a PIPE Investor has not elected to effect an Additional Optional

Closing on or prior to August 30, 2025, such PIPE Investor shall have no further right to effect an Additional Optional Closing under

the Purchase Agreement.

August 13, 2024, the Company entered into those certain waiver and amendment agreements (the “Waivers”), pursuant to which the Company

and the PIPE Investors agreed to:

(i) waive any breaches or defaults caused by the Company’s failure to timely file its SEC reports

through August 14, 2024;

(ii) extend the date by which the Additional Optional Closings may occur until 11 months from the effective

date of the initial Registration Statement;

(iii) permit the Company to raise debt financing from its affiliates through non-convertible,

unsecured notes with a maturity date that is later than the maturity date of the PIPE Convertible Notes;

(iv) waive certain registration

failures until September 3, 2024 and permit the issuance of common stock to satisfy certain registration failures;

and (v) allow the

Company to satisfy the interest payments due April 1, 2024, July 1, 2024 and October 1, 2024 from the issuance of common stock or by

allowing such amounts to be added to the principal amount of the PIPE Convertible Notes, at the option of the PIPE Investors.

certain PIPE Investors agreed to acquire additional PIPE Convertible Notes without regard to any volume or price requirements in the

In connection with the Waiver, the Company issued an aggregate of 192,151 shares in satisfaction of certain registration

statement delay payments and issued an aggregate of 157,582 shares in satisfaction of outstanding interest payments.

Such payments were

made at the “Alternate Conversion Price” set forth in the PIPE Convertible Notes, which is equal to the lesser of (i) the

Conversion Price, and (ii) 90% of the lowest volume weighted average price of the Class A common stock during the five consecutive trading

days immediately prior to such conversion.

November 7, 2024, the Company entered into those certain amendments to the Waivers (the “Amendments”), pursuant to which the Company and

the PIPE Investors agreed to:

(i) waive any breaches or defaults caused by the Company’s failure to timely file its SEC reports

through August 21, 2024;

and (ii) waive certain registration failures until October 3, 2024.

In addition, the PIPE Investors waived any

breaches or defaults that may have occurred or will occur solely as a result of the Company’s failure to comply with the continued

listing requirements of the Nasdaq Stock Market due to:

(i) the Company’s failure to meet the stockholders’ equity requirement

provided that the foregoing waiver shall expire on January 15, 2025, and/or (iii) the Company’s failure to

meet the minimum bid price requirement for continued listing;

provided that the foregoing waiver shall expire on January 15, 2025;

further that to the extent the Company is in compliance with all other Nasdaq Stock Market listing requirements and has filed a preliminary

proxy statement to hold a special meeting to vote on a reverse stock split to remedy the bid price failure, the waiver shall be extended

to March 15, 2025.

In connection with the Amendment, the Company issued an aggregate of 116,959 shares in satisfaction of certain registration

statement delay payments and issued an aggregate of 65,790 shares in satisfaction of outstanding interest payments.

Such payments were

made at the “Alternate Conversion Price” set forth in the PIPE Convertible Notes, which is equal to the lesser of (i) the

Conversion Price, and (ii) 90% of the lowest volume weighted average price of the Class A common stock during the five consecutive trading

days immediately prior to such conversion.

November 7, 2024, certain PIPE Investors agreed to purchase additional PIPE Convertible Notes in aggregate principal amount of $3,300,000

for aggregate proceeds of $2,970,000.

In connection with the foregoing, the Company agreed to repay an aggregate of $2,496,686 in outstanding

debt and transaction expenses.

Links Franchising, LLC

May 10, 2024 the Company formed a wholly owned subsidiary in the state of Delaware.

TruGolf Links Franchising, LLC (“Links”)

has a sole member, TruGolf, Inc.

Links was formed to establish and sell franchises that would use the Company’s indoor golf and

recreational sports simulators and other equipment.

Links offers a Service Area franchise agreement for a single location.

It also offers

a regional developer franchise agreement that allows the franchisee to sell franchises within its region.

The upfront fees range from

$45,000 to $100,000.

Links has received proceeds of $500,000 from its CEO and $75,000 from a third party to purchase the franchise rights

to some regions yet to be determined.

As of September 30, 2024, the Company recorded $575,000 of deferred revenue and incurred $306,539

of expenses that are included in the Selling, general and administrative category.

software development cost

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including ASC 985-20, Software-Costs of Software to be Sold, Leased or Marketed , we began to capitalize these costs when the technological

feasibility was established and preliminary development efforts were successfully completed, management has authorized and committed

project funding, and it was probable that the project would be completed and the software would be used as intended.

feasibility was established and preliminary development efforts were successfully completed, management authorized and committed project

funding, and it was probable that the project would be completed and the software would be used as intended.

Such costs are amortized

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estimates related to the timing and amount of recognized capitalized software development costs.

For the six months ended June 30, 2024

For the nine months ended September

30, 2024 we capitalized $1,967,418 of costs related to the development of software applications.

Amortization of capitalized software costs was

$137,916 for the for the six months ended June 30, 2024.

The balance of capitalized software was $1,345,522 net of accumulated amortization

of $137,916 at June 30, 2024.

Amortization of capitalized software

costs was $279,001 for the for the nine months ended September 30, 2024.

The balance of capitalized software was $1,738,417 net of accumulated

amortization of $279,001 at September 30, 2024.

Management INC

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all the funds disbursed by Ethos and Ethos must release the deposit collateral.

The Company has recorded a liability of $589,619 as of

September 30, 2024 which is the amount remaining after applying the security collateral of $1,875,000 against the loan payable and accrued

note that the simulator/screen golf market is growing according to the National Golf Foundation (www.ngf.org/simulator-golf-sees-real-surge),

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Receivable, net

manage credit risk associated with our accounts receivables at the customer level.

manage credit risk associated with our accounts receivable at the customer level.

believe the concentration of credit risk, with respect to our receivables, is limited because our customer base is comprised of a number

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of Operations

of the Three Months ended June 30, 2024 and 2023

following table sets forth certain condensed statement of operations data for the periods indicated in dollars.

of the Three Months ended September 30, 2024 and 2023

following table sets forth certain condensed statements of operations data for the periods indicated in dollars.

In addition, we note

that the period-to-period may not be indicative of future performance.

Three Months Ended June 30,

Three Months Ended September 30,

Revenues, net

$ (1,400,603 )

Cost of revenues

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Net (loss) income

(999,418.09 )%

Net loss income per common share

revenues were $3,873,163 for the three months ended June 30, 2024, compared to $5,273,766 for the three months ended June 30, 2023,

a decrease of $1,400,603 or 26.56%.

The decrease in revenues was due primarily to a decrease in software subscription and other sales.

cost of revenues for the three months ended June 30, 2024, decreased $555,758 or 29.94% to $1,300,212 from $1,855,970 for the three months

ended June 30, 2023.

The decrease was due primarily to the decrease in revenues as noted above.

The Company charged cost of revenues

$68,081 for an inventory adjustment during the three months ended June 30, 2024.

The Company reduced cost of revenues by $306,308 for

an inventory adjustment during the three months ended June 30, 2023.

Materials and components to manufacture our simulators primarily

include fabricated steel, cut cloth, turf, computers, cameras and other high-end electronics which are subject to inflationary pricing

The cost of shipping our finished simulators increased $60,203 due to price increases from our national shipping companies

UPS, FedEx and Seko.

These increased costs were offset by an approximate $322,138 decrease in material costs and other non-inventory

We are continuously working with our suppliers for volume pricing discounts and extended contract terms.

operating expenses were $3,357,993 for the three months ended June 30, 2024, compared to $3,007,221 for the three months ended June 30,

revenues were $6,236,795 for the three months ended September 30, 2024, compared to $3,431,735 for the three months ended September 30,

2023, an increase of $2,805,060 or 81.74%.

The increase for the three months ended June 30, 2024, compared to the three months ended June

30, 2023, was due primarily to:

The increase in revenues was due primarily to the increase of our product acceptance and greater

penetration in the industry market.

cost of revenues for the three months ended September 30, 2024, increased $390,402 or 25.46% to $1,924,093 from $1,533,691 for the three

months ended September 30, 2023.

The increase was due primarily to the increase in revenues as noted above.

The Company’s adjustment

to inventory included in the cost of revenue, resulted in a reduction of costs of $115,692 and charged cost of revenues $267,224 during

the three months ended September 30, 2024 and 2023, respectively.

Materials and components to manufacture our simulators primarily include

fabricated steel, cut cloth, turf, computers, cameras and other high-end electronics which are subject to inflationary pricing pressures.

The cost of shipping our finished simulators increased $36,741 to $163,232 during the three months ended September 30, 2024 compared

to the same period in 2023 due to price increases from our national shipping companies UPS, FedEx and Seko.

We are continuously working

with our suppliers for volume pricing discounts and extended contract terms.

operating expenses were $3,440,421 for the three months ended September 30, 2024, compared to $4,221,755 for the three months ended September

30, 2023, a decrease of $781,334 or (18.51)%.

The decrease for the three months ended September 30, 2024, compared to the three months

ended September 30, 2023, was due primarily to:

increase of $36,021 in royalty expenses was due to the addition of new distributors and increases in the royalty percentages for

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$557,170 decrease in salaries, wages and benefits expenses.

The three-month period year over

year decrease is a result of the Company’s human resource management efforts to reduce

payroll expenses.

$799,055 increase in selling, general and administrative expenses.

The three months over

the prior year’s three months increase is a result of sales and marketing expenses

decreased by $68,566 and office and administrative costs decreased by $232,235.

same periods, rent and facility costs increased by $48,034, insurance expenses increased

by $196,076 (principally for liability insurance), professional fees increased by $494,278

(of which $158,101 was incurred by Links) and repairs and supplies increased by $76,208.

interest income was $36,621 and $28,848 for the three months ended June 30, 2024 and 2023, respectively.

interest expense was $820,908 and $439,267 for the three months ended June 30, 2024 and 2023, respectively, an increase of $381,641 or

(86.88%) primarily due to the interest incurred on the PIPE convertible notes.

The three-month period year over year decrease is a result of the Company’s

human resource management efforts to reduce payroll expenses.

$260,185 decrease in selling, general and administrative expenses.

The three months over the prior year’s three months decrease

is a result of sales and marketing expenses decreasing by $323,604 and bad debt expense decreasing by $450,000.

During the same periods,

rent and facility costs increased by $23,917, insurance expenses increased by $169,126 (principally for liability insurance), professional

fees increased by $63,963 (of which $148,438 was incurred by Links) and subscription software expense increased by $128,092.

general and administrative expenses increased by $128,321.

interest income was $38,592 and $21,197 for the three months ended September 30, 2024 and 2023, respectively.

interest expense was $971,048 and $358,354 for the three months ended September 30, 2024 and 2023, respectively, an increase of $612,694

or 170.97% primarily due to the interest incurred on the PIPE convertible notes.

of Operations

of the Six Months ended June 30, 2024 and 2023

following table sets forth certain condensed statement of operations data for the periods indicated in dollars.

of the Nine Months ended September 30, 2024 and 2023

following table sets forth certain condensed statements of operations data for the periods indicated in dollars.

In addition, we note

that the period-to-period may not be indicative of future performance.

Six Months Ended June 30,

Nine Months Ended September 30,

Revenues, net

$ (1,471,780 )

Cost of revenues

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Net loss income per common share

revenues were $8,885,185 for the six months ended June 30, 2024, compared to $10,356,965 for the six months ended June 30, 2023, a

decrease of $1,471,780 or (14.21%).

The decrease in revenues was due primarily to a decrease in software subscription and other sales.

of revenues for the six months ended June 30, 2024, increased $261,496 or 8.72% to $3,259,234 from $2,997,738 for the six months ended

June 30, 2023.

The increase was due primarily to an increase in the inventory adjustment of $471,702 from ($232,119) to $239,583 during

the six months ended June 30, 2024 and 2023, respectively.

Materials and components to manufacture our simulators primarily include fabricated

steel, cut cloth, turf, computers, cameras and other high-end electronics which are subject to inflationary pricing pressures.

of shipping our finished simulators increased $267,765 due to price increases from our national shipping companies UPS, FedEx and Seko.

These increased costs were offset by an approximate $391,718 decrease in material costs and other non-inventory items.

We are continuously

working with our suppliers for volume pricing discounts and extended contract terms.

operating expenses were $7,354,677 for the six months ended June 30, 2024, compared to $11,853,172 for the six months ended June 30,

revenues were $15,121,980 for the nine months ended September 30, 2024, compared to $13,788,700 for the nine months ended September 30,

2023, an increase of $1,333,280 or 9.67%.

The increase in revenues was due primarily to the increase of our product acceptance and greater

penetration in the industry market.

of revenues for the nine months ended September 30, 2024, increased $651,899 or 14.39% to $5,183,328 from $4,531,429 for the nine months

ended September 30, 2023.

The increase was due primarily to an increase in revenues as discussed above.

The inventory adjustment included

in the cost of revenues increased by $88,786 from $35,105 to $123,891 during the nine months ended September 30, 2024 and 2023, respectively.

Materials and components to manufacture our simulators primarily include fabricated steel, cut cloth, turf, computers, cameras and other

high-end electronics which are subject to inflationary pricing pressures.

The cost of shipping our finished simulators increased $304,505

due to price increases from our national shipping companies UPS, FedEx and Seko.

We are continuously working with our suppliers for volume

pricing discounts and extended contract terms.

operating expenses were $10,795,100 for the nine months ended September 30, 2024, compared to $16,074,927 for the nine months ended September

30, 2023, a decrease of $5,279,827 or (32.85%).

The decrease for the six months ended June 30, 2024, compared to the six months ended June

30, 2023, was due primarily to:

An increase of $236,282 in royalty expenses was due to the addition of new distributors and increases in the royalty percentages for certain resellers.

A $960,149 decrease in salaries, wages and benefits expenses due primarily to management’s efforts of reducing payroll expenses.

A $3,774,627 decrease in selling, general and administrative expenses.

The six months over the prior year’s six months decrease is a result of:

The decrease for the nine months ended September 30, 2024, compared to the nine months

ended September 30, 2023, was due primarily to:

increase of $272,302 in royalty expenses was due to the addition of new distributors and increases in the royalty percentages for

certain resellers.

$1,517,318 decrease in salaries, wages and benefits expenses due primarily to management’s efforts to reduce payroll expenses.

$4,034,811 decrease in selling, general and administrative expenses.

The nine months over the prior year’s nine months decrease

is a result of:

March 2023, the Board of Directors granting and authorizing the issuance 821 shares of common stock two consultants (and holders

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of $4,493,333 (estimated fair value of the stock) at the time of grant and issuance.

other selling, general and administrative expenses (such as facilities professional fees, warehouse, travel, office supplies etc.)

increased $435,8770 for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 as a result of

amortization of capitalized software costs of $137,917, an increase in professional fees of $734,079 (of which $158,101 was incurred

by Links) and an increase in insurance expense of $259,500, offset in part by a decrease in sales and marketing of $205,106, a

decrease of $435,855 in general and administrative expenses.

interest income was $67,208 and $50,345 for the six months ended June 30, 2024 and 2023, respectively.

interest expense was $1,205,762 and $907,421 for the six months ended June 30, 2024 and 2023, respectively, an increase of $298,341 or (32.88%)

primarily due to the interest on the PIPE convertible notes.

general and administrative expenses (such as facilities professional fees, warehouse, travel, office supplies etc.) increased $360,173

for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 as a result of amortization of

capitalized software costs of $279,001, an increase in professional fees of $639,941 (of which $306,539 was incurred by Links), an

increase in insurance expense of $428,627, an increase of facility expense of $153,400, an increase in software subscriptions and

other subscriptions expense of $379,973, an increase in bank charges of $28,093, offset in part by a decrease in sales and marketing

of $528,711, a decrease in bad debt expense of $657,271 and a decrease in general and administrative expenses of $362,880.

interest income was $105,800 and $71,542 for the nine months ended September 30, 2024 and 2023, respectively.

interest expense was $2,176,810 and $1,265,775 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $911,035

or 71.97% primarily due to the interest on the PIPE convertible notes.

and Capital Resources

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from the business combination, of $4,650,000 with an original issue discount of $465,000 (or 10%).

The Company received proceeds of $500,000

from the sale of franchise regions sold by its wholly owned subsidiary, TruGolf Links Franchising, LLC, which was recorded as

deferred revenue.

The Company expects to grow this revenue stream in subsequent quarters of 2024.

Company received proceeds of $575,000 from the agreements for franchise regions sold by its wholly owned subsidiary, TruGolf Links Franchising,

LLC, which was recorded as deferred revenue.

The Company expects to grow this revenue stream in subsequent quarters.

have primarily obtained cash to fund our operations through the reinvestment of free cash flows generated from our business operations,

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instruments, and royalty structures.

of June 30, 2024 and December 31, 2023, we had $6,651,272 and 5,397,564 in cash, cash equivalents and restricted cash and current working

capital deficit of $66,473 and working capital of $1,988,267, respectively.

of September 30, 2024 and December 31, 2023, we had $7,452,185 and 5,397,564 in cash, cash equivalents and restricted cash and current

working capital deficit of $1,736,0636 and working capital of $1,988,267, respectively.

December 2023, we entered into a $2,000,000 variable rate line of credit with JP Morgan Chase Bank, N.A.

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rate line of credit was paid during the three months ended June 30, 2024.

As of June 30, 2024, the remaining balance was $10,114 and

was included in the cash balance.

As of September 30, 2024, the remaining balance was $10,114

and was included in the cash balance.

Flow from Operating Activities

the six months ended June 30, 2024 the net cash provided by our operating activities was $2,615,975 including the liquidation of the marketable

securities account of $2,478,953.

in the remaining operating assets and liabilities was $2,642,844, depreciation and amortization of $173,200, the amortization of the

ROU asset of $166,311 and the amortization of original issue discount of $24,197.

the six months ended June 30, 2023 the net cash used in our operating activities was $4,969,183.

The change in operating assets and liabilities

was a decrease of $4,632,611.

Other assets increased due to the $1,875,000 deposit paid for the Ethos Management Inc loan and $116,040

in net Ethos Management Inc deferred loan fees.

The net loss of $5,351,021 was partially offset by increases to cash from depreciation

and amortization of $28,091, amortization of convertible notes original issue discount of $139,848, amortization of ROU asset of $137,257,

bad debt expense of $215,920 and stock-based compensation expense of $4,493,333.

the nine months ended September 30, 2024 the net cash provided by our operating activities was $3,071,781 including the liquidation of

the marketable securities account of $2,478,953.

The change in the remaining operating assets and liabilities was $2,550,049, depreciation

and amortization of $331,728, the amortization of the ROU asset of $251,612 and the amortization of original issue discount of $47,447.

the nine months ended September 30, 2023 the net cash used in our operating activities was $6,121,139.

The change in operating assets

and liabilities was a decrease of $3,714,981.

Other assets increased due to the $1,875,000 deposit paid for the Ethos Management Inc

loan and $116,040 in Ethos Management Inc deferred loan fees.

The net loss of $8,011,889 was partially offset by increases to cash from

depreciation and amortization of $45,682, amortization of convertible notes original issue discount of $183,695, amortization of ROU

asset of $217,101, bad debt expense of $665,920 and stock-based compensation expense of $4,493,333.

Flows from Investing Activities

the six months ended June 30, 2024 and 2023, the cash used by our investing activities was $1,433,513 and $2,481,234, respectively.

the six months ended June 30, 2024 the Company capitalized software development costs of $1,433,438.

For the six months ended June 30,

2023 the Company purchased fixed assets of $65,381 and purchased short-term investments of $2,415,853.

the nine months ended September 30, 2024 and 2023, the cash used by our investing activities was $1,967,533 and $2,508,749, respectively.

For the nine months ended September 30, 2024 the Company capitalized software development costs of $1,967,418.

For the nine months ended

September 30, 2023 the Company purchased fixed assets of $89,024 and purchased short-term investments of $2,419,725.

Flows from Financing Activities

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from the business combination, of $4,650,000 less an original issue discount of 465,000 (or 10%).

the six months ended June 30, 2024 the cash provided by our financing activities was $71,246.

The Company received net proceeds from

the Merger of $2,325,315, made debt payments of $273,132, paid $15,716 of assumed liabilities and paid off the line of credit of $1,980,937.

the six months ended June 30, 2023 we borrowed $1,911,110 on our Morgan Stanely margin line of credit account, received proceeds of $1,666,666

from loans, received $121,750 from convertible note holders and made debt payments of $80,841.

One shareholder returned $35,037 in overpaid

past dividends.

the nine months ended September 30, 2024 the cash provided by our financing activities was $950,373.

The Company received net proceeds

from the Merger of $2,325,315, made debt payments of $294,005, paid $15,716 of assumed liabilities, paid $100,000 on a loan assumed in

the Merger, and paid off the line of credit of $1,980,937.

The Company received proceeds of $1,000,000 from the Company’s chief

executive officer.

the nine months ended September 30, 2023 we borrowed $1,945,397 on our Morgan Stanely margin line of credit account, received proceeds

of $2,499,999 from loans, received $185,500 from convertible note holders and made debt payments of $107,837.

One shareholder returned

$75,096 in overpaid past dividends.

The loan proceeds were used for ongoing operations.

Company has incurred net losses and negative operating cash flows for the six months ended June 30, 2024 and 2023.

As the Company continues

to incur losses, successful transition to profitability is dependent on achieving a level of revenues adequate to support the Company’s

cost structure.

Unless and until this occurs, the Company may need to raise capital or issue debt to support ongoing operations.

Company has incurred net losses and negative operating cash flows for the nine months ended September 30, 2024 and 2023.

As the Company

continues to incur losses, successful transition to profitability is dependent on achieving a level of revenues adequate to support the

Company’s cost structure.

Unless and until this occurs, the Company may need to raise capital or issue debt to support ongoing

Company’s financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction

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and Qualitative Disclosures About Market Risk

had cash and cash equivalents totaling $6,651,272 as of June 30, 2024.

Cash equivalents were invested primarily in low interest checking

or savings accounts.

had cash and cash equivalents totaling $7,452,185 as of September 30, 2024.

Cash equivalents were invested primarily in low interest

checking or savings accounts.

Our investment policy is focused on the preservation of capital and supporting our liquidity needs.

Under our investment

policy, we will only invest in highly rated securities, issued by the U.S.

our investment policy, we will only invest in highly rated securities, issued by the U.S.

government or liquid money market funds.

We do not invest

in financial instruments for trading or speculative purposes, nor do we use leveraged financial instruments.

We may utilize external

investment managers who adhere to the guidelines of our investment policy.

A hypothetical 10% change in interest rates would not have

a material impact on the value of our cash, cash equivalents and restricted cash, net loss or cash flows.

do not invest in financial instruments for trading or speculative purposes, nor do we use leveraged financial instruments.

We may utilize

external investment managers who adhere to the guidelines of our investment policy.

A hypothetical 10% change in interest rates would

not have a material impact on the value of our cash, cash equivalents and restricted cash, net loss or cash flows.

do not have significant exposure to interest rate risk as only our lines of credit are variable rate.

As of June 30, 2024, the variable

As of September 30, 2024, the variable

rate lines of credit had a balance outstanding of $802,738 compared to the total fixed rate debt outstanding of $14,509,137.

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insurance limits.

As of June 30, 2024, the amount in excess of federally insured limits was $5,238,762.

As of September 30, 2024, the amount exceeding the federally insured limits was $6,125,053.

Cybersecurity

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements