TruGolf Holdings, Inc. 10-Q

Item 1. Financial Statements TRUGOLF HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, 2025 2024 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 10,515,820 $ 8,782,077 Restricted cash 2,100,000 2,100,000 Accounts receivable, net 1,579,614 1,399,153 Inventory, net 3,852,977 2,349,345 Prepaid expenses and other current assets 189,961 116,619 Other current assets - 45,737 Total Current Assets 18,238,372 14,792,931 Property and equipment, net 192,711 143,852 Capitalized software development costs, net 1,710,652 1,540,121 Right-of-use assets 545,915 634,269 Other long-term assets 31,023 31,023 Total Assets $ 20,718,673 $ 17,142,196 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current Liabilities: Accounts payable $ 2,563,454 $ 2,819,703 Deferred revenue 4,141,790 3,113,010 Notes payable, current portion 10,148 10,001 Notes payable to related parties, current portion 2,937,000 2,937,000 Notes payable, current portion 2,937,000 2,937,000 Line of credit, bank 802,738 802,738 Dividend notes payable 4,023,923 4,023,923 Accrued interest 565,402 661,376 Accrued and other current liabilities 2,823,067 999,307 Accrued and other current liabilities - assumed in Merger 45,008 45,008 Lease liability, current portion 296,291 363,102 Total Current Liabilities 18,208,821 15,775,168 Non-current Liabilities: Notes payable, net of current portion 7,137 9,732 Note payables to related parties, net of current portion 624,000 624,000 Note payables, net of current portion 624,000 624,000 PIPE loan payable, net 5,165,893 4,068,953 Gross sales royalty payable 1,000,000 1,000,000 Lease liability, net of current portion 278,071 305,125 Total Liabilities 25,283,922 21,782,978 Commitments and Contingencies - - Stockholders’ Deficit: Preferred stock, $ 0.0001 par value, 10 million shares authorized; zero shares issued and outstanding, respectively - - Common stock, $ 0.0001 par value, 100,000,000 shares authorized: Common stock - Series A, $ 0.0001 par value, 90 million shares authorized; 29,184,965 and 26,120,545 shares issued and outstanding, respectively 2,918 2,612 Common stock - Series B, $ 0.0001 par value, 10 million shares authorized; 1,716,860 and 1,716,860 shares issued and outstanding, respectively 172 172 Common stock value 172 172 Treasury stock at cost, 4,692 shares of common stock held, respectively ( 2,037,000 ) ( 2,037,000 ) Additional paid-in capital 21,294,479 18,548,931 Accumulated deficit ( 23,825,818 ) ( 21,155,496 ) Total Stockholders’ Deficit ( 4,565,249 ) ( 4,640,781 ) Total Liabilities and Stockholders’ Deficit $ 20,718,673 $ 17,142,196 The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements. 3 TRUGOLF HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the For the Three Months Ended Three Months Ended March 31, 2025 March 31, 2024 Revenue, net $ 5,389,230 $ 5,012,022 Cost of revenue 1,726,199 1,959,023 Total gross profit 3,663,031 3,052,999 Operating expenses: Royalties 225,320 329,888 Salaries, wages and benefits 1,946,816 1,841,595 Selling, general and administrative 2,725,119 1,825,201 Total operating expenses 4,897,255 3,996,684 Loss from operations ( 1,234,224 ) ( 943,685 ) Other (expenses) income: Interest income 54,596 30,587 Interest expense ( 1,490,694 ) ( 384,854 ) Loss on investment - ( 3,912 ) Total other expense ( 1,436,098 ) ( 358,179 ) Loss from operations before provision for income taxes ( 2,670,322 ) ( 1,301,864 ) Provision for income taxes - - Net loss $ ( 2,670,322 ) $ ( 1,301,864 ) Net loss per common share Series A - basic and diluted $ ( 0.09 ) $ ( 0.22 ) Net loss per common share Series B - basic and diluted $ ( 1.56 ) $ ( 1.14 ) Weighted average shares outstanding Series A - basic and diluted 28,461,277 5,994,704 Weighted average shares outstanding Series B - basic and diluted 1,716,860 1,144,573 The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements. 4 TRUGOLF HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024 (Unaudited) Accumulated Additional Other Preferred Stock Class A Common Stock Class B Common Stock Treasury Stock Paid-in Comprehensive Accumulated Shares Amount Shares Amount Shares Amount Shares Amount Capital Gain (Loss) Deficit Total Balance at December 31, 2023 - $ - 13,098 $ 120 - $ - ( 4,692 ) $ ( 2,037,000 ) $ 10,479,738 $ ( 1,662 ) $ ( 12,358,924 ) $ ( 3,917,728 ) Realized gain in fair value of short-term investments - - - - - - - - - 1,662 - 1,662 Common stock exchanged in Merger - - ( 13,098 ) ( 120 ) - - - - ( 3,854,573 ) - - ( 3,854,693 ) Issuance of common stock - Series A exchanged in Merger - - 11,538,252 1,154 - - - - ( 1,154 ) - - - Issuance of common stock - Series B issued in Merger - - - - 1,716,860 172 - - ( 172 ) - - - Net loss - - - - - - - - - - ( 1,301,864 ) ( 1,301,864 ) Balance as of March 31, 2024 - $ - 11,538,252 $ 1,154 1,716,860 $ 172 ( 4,692 ) $ ( 2,037,000 ) $ 6,623,839 $ - $ ( 13,660,788 ) $ ( 9,072,623 ) Balance at December 31, 2024 - $ - 26,120,545 $ 2,612 1,716,860 $ 172 ( 4,692 ) $ ( 2,037,000 ) $ 18,548,931 $ - $ ( 21,155,496 ) $ ( 4,640,781 ) Balance - $ - 26,120,545 $ 2,612 1,716,860 $ 172 ( 4,692 ) $ ( 2,037,000 ) $ 18,548,931 $ - $ ( 21,155,496 ) $ ( 4,640,781 ) Issuance of common stock for interest and make good - - 2,402,420 240 - - - - 1,087,273 - - 1,087,513 Issuance of common stock for conversion of notes - - 662,000 66 - - - - 1,654,934 - - 1,655,000 Stock-based compensation - options - - - - - - - - 3,341 - - 3,341 Net loss - - - - - - - - - - ( 2,670,322 ) ( 2,670,322 ) Balance as of March 31, 2025 - $ - 29,184,965 $ 2,918 1,716,860 $ 172 ( 4,692 ) $ ( 2,037,000 ) $ 21,294,479 $ - $ ( 23,825,818 ) $ ( 4,565,249 ) Balance - $ - 29,184,965 $ 2,918 1,716,860 $ 172 ( 4,692 ) $ ( 2,037,000 ) $ 21,294,479 $ - $ ( 23,825,818 ) $ ( 4,565,249 ) The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements. 5 TRUGOLF HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the For the Three Months Ended Three Months Ended March 31, 2025 March 31, 2024 Cash flows from operating activities: Net loss $ ( 2,670,322 ) $ ( 1,301,864 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 115,300 36,105 Amortization of convertible notes discount 231,940 947 Amortization of right-of-use asset 88,354 82,454 Change in OCI - 1,662 Stock issued for make good provisions on debt conversion 1,087,513 - Stock options issued to employees 3,341 - Changes in operating assets and liabilities: Accounts receivable, net ( 180,461 ) 468,422 Inventory, net ( 1,503,632 ) ( 216,569 ) Prepaid expenses ( 73,342 ) 200,278 Other current assets 45,737 2,478,953 Accounts payable ( 256,248 ) 1,146,347 Deferred revenue 1,028,780 90,524 Accrued interest payable ( 95,974 ) 82,759 Accrued and other current liabilities 1,823,760 ( 321,090 ) Lease liability ( 93,865 ) ( 80,311 ) Net cash provided by (used in) operating activities ( 449,119 ) 2,668,617 Cash flows from investing activities: Purchases of property and equipment ( 64,159 ) ( 332,342 ) Capitalized software, net ( 270,531 ) - Net cash used in investing activities ( 334,690 ) ( 332,342 ) Cash flows from financing activities: Proceeds from PIPE loans, net of discount 2,520,000 4,320,000 Cash acquired in Merger - 103,818 Increase in other liabilities - 18,545 Costs of Merger paid from PIPE loan - ( 2,082,787 ) Repayments of line of credit - ( 1,980,937 ) Repayments of liabilities assumed in Merger - ( 15,716 ) Repayments of notes payable ( 2,448 ) ( 2,295 ) Repayments of notes payable - related party - ( 268,500 ) Net cash provided by financing activities 2,517,552 92,128 Net change in cash , cash equivalents and restricted cash 1,733,743 2,428,403 Cash, cash equivalents and restricted cash - beginning of year 10,882,077 5,397,564 Cash, cash equivalents and restricted cash - end of year $ 12,615,820 $ 7,825,967 Supplemental cash flow information: Cash paid for: Interest $ 108,993 $ 302,095 Income taxes $ - $ - Non-cash investing and financing activities: PIPE note principal converted to Class A Common Stock $ 1,655,000 $ - Notes payable assumed in Merger $ - $ 1,565,000 Accrued liabilities assumed in Merger $ - $ 310,724 Remeasurement of common stock exchanged/issued in Merger $ - $ ( 1,875,724 ) The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements. 6 TRUGOLF HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS Nature of the Business For over 40 years, TruGolf Holdings, In. (including its subsidiaries “the Company”, “we”, “us”, or “our”) has been creating indoor golf software and hardware and are focused on both the residential and commercial golf simulation industries. We design, develop, manufacture and sell golf simulators for residential and commercial applications. We offer portable, professional, commercial and custom simulators. In addition, to bundling our software with our simulators, we offer our E6 Connect and E6 Apex software as well as other gaming software on a standalone basis. We have leveraged the power of our hardware and software platform to create a collection of multi-sport games including football, soccer, soccer golf, frisbee golf, zombie dodgeball, and cowboy target practice. TruGolf Nevada has been creating indoor golf software for 40 years. We began as a subsidiary of Access Software, Inc., a video game developer based in Salt Lake City, Utah (“Access Software”), which was co-founded in November 1982, by Christopher Jones, the Company’s largest stockholder, Chief Executive Officer, President and Chairman. In April 1999, Access Software was purchased by Microsoft Corp., for its expertise in golf software development. Following the acquisition, the core programming and graphics team of Links™, which created Links LS 1999, one of the bestselling PC sports games of 1999, were spun out to TruGolf Nevada. Since 1999, we have focused on establishing residential and commercial golf simulation as a viable industry, and since 2007, we have focused on fabricating custom golf simulators for luxury clients. Part of our initial strategy included partnering with hardware inventors to provide them world class software. Over time, we found that it was not viable to rely on these early hardware inventors alone, we also began building and selling our own hardware. In addition, we are working with a video game company to utilize their new dynamic graphics engine which will enable us to bring photorealistic golf courses to life through our E6 software (discussed below). In addition, we have developed multiple sources and 3rd party manufacturers for the raw materials or parts for our products, including but not limited to, steel or aluminum frames, fabric, turf, screens, projectors, PCs, cameras, lasers, infrared sensors, and supporting subsystems. The availability of the frames and fabric from our principal provider, Allied ES&A, has been increased as they have moved into a much larger facility directly located in a large employee base community and we have entered into negotiations with a second supplier in order to provide alternative sourcing if needed. A third supplier, Impact Signs, has also been used in the past and TruGolf Nevada believes that it could purchase turf, and screen supplies from them as well if needed. Both turf (Controlled Products), and screen suppliers (Allied), are so specialized that we have come to rely on one vendor for each, respectively. Turf particularly experienced some delivery delays in 2022 that have been rectified, additional inventory has been secured locally, and our highest volume portable simulators have been redesigned to use less raw materials from that vendor, while adding an improved hitting surface from a second vendor, Real Feel, to mitigate risk. Negotiations with a second supplier of screen materials is in progress. Projectors (TV Specialists), PCs, lasers, IR sensors and other systems come from multiple suppliers with no historical delay in supply. We have 2 primary suppliers of cameras, IDS and Basler, and have integrated products from both in the new Apogee unit to ensure the greatest availability possible. The Company is an “emerging growth company” as that term is used in the Jumpstart our Business Startups Act of 2012, and as such, has elected to comply with certain reduced public company reporting requirements. Corporate History Trugolf Holdings, Inc. (f/k/a Deep Medicine Acquisition Corp.) (the “Company” or “TruGolf”, “we”, “us”) was incorporated on July 8, 2020 as a Delaware corporation and formed for the purpose of effecting a business combination, with no material operation of its own. Our operations are conducted through our subsidiary TruGolf, Inc., a Nevada Corporation (“TruGolf Nevada”). TruGolf Nevada was formed as a Utah corporation on October 4, 1995, under the name “TruGolf, Incorporated”. TruGolf Nevada’s original business plan was the creation of golfing video games. On June 9, 1999, the TruGolf Nevada changed its name to “TruGolf, Inc.” Effective on April 26, 2016, TruGolf Nevada filed Articles of Merger with the State of Utah, Department of Commerce, and on April 28, 2016, TruGolf Nevada filed Articles of Merger with the Secretary of State of Nevada, pursuant to which TruGolf, Inc., a Utah corporation, merged with and into TruGolf Nevada, pursuant to a Plan of Merger. TruGolf Nevada was the surviving corporation in the merger. In connection with the Plan of Merger, TruGolf Nevada affected a four-for-one forward stock split of its outstanding common stock. 7 On January 31, 2024 the Company completed the previously announced business combination pursuant to the terms of the Agreement and Plan of Merger, dated as of July 21, 2023 (as amended, the “Merger Agreement”), which provided for, Merger Sub to merge with and into TruGolf Nevada, with TruGolf Nevada surviving as a direct, wholly owned subsidiary of Deep Medicine Acquisition Corp. (“DMAQ”), a Delaware corporation and TruGolf’s predecessor company as a consequence of the merger (together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). In connection with the consummation of the Business Combination, DMAQ changed its name to TruGolf Holdings, Inc. TruGolf Holdings, Inc.’s Class A common stock commenced trading on The Nasdaq Global Market under the ticker symbol “TRUG” on February 1, 2024. On May 10, 2024 the Company formed TruGolf Links Franchising, LLC (“Links”), a wholly owned subsidiary in the state of Delaware. 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. Nasdaq Compliance On July 15, 2024, the Company received a deficiency letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying the Company that since it failed to file its Form 10-Q for the period ended March 31, 2024 it no longer complied with Nasdaq Listing Rule 5250(c)(1). The deficiency letter did not result in the immediate delisting of the Company’s common stock from the Nasdaq Capital Market. On August 14, 2024, the Company filed its Quarterly Report in the Form 10-Q for the period ended March 31, 2024 and the Company regained compliance with the applicable Nasdaq rule. On August 19, 2024, the Company received a written notification (the “ Equity Notice”) from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying the Company that, based on the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, the Company’s stockholders’ equity was ($ 10,508,104 ), and therefore, the Company was not in compliance with Nasdaq’s Listing Rule 5450(b)(1)(A), which requires a $ 10,000,000 minimum stockholders’ equity standard (the “Global Equity Standard”). Pursuant to Nasdaq Marketplace Rule 5810(c)(2)(C), the Company was provided 45 calendar days, or until November 18, 2024, to supply a specific plan to regain compliance with all Nasdaq Global Market listing requirements and the Company’s time frame to complete its plan. The Company submitted its plan of compliance on November 18, 2024, which was accepted by the Staff, and Nasdaq granted an extension of 180 calendar days from the date of the Equity Notice, or until March 31, 2025, to evidence compliance. On April 2, 2025, the Company received a delist determination letter from the Staff (the “Nasdaq Notice”) advising the Company that the Staff had determined that the Company had not regained compliance with the Global Equity Standard. Accordingly, the Staff indicated that unless the Company requests a hearing panel (a “Panel”) appeal of the delist determination by April 9, 2025, its securities would be delisted on April 11, 2025. On April 9, 2025, the Company appealed Nasdaq’s determination to a Panel pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series to stay the suspension of the Company’s securities pending the Panel’s decision and the expiration of any additional extension period granted by the Panel following the hearing. Such hearing has been set for May 15, 2025. On November 5, 2024, the Company received a written notification (the “Bid Notice”) from the Staff notifying the Company that, for the 30 consecutive business days ended November 4, 2024, the Company’s security did not maintain a minimum bid price of $ 1 per share. Nasdaq stated in its letter that in accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has a compliance period of 180 calendar days from the date of the Bid Notice (the “Compliance Period”), and that it may regain compliance if the closing bid on the Company’s security is at least $1 for a minimum of ten consecutive days during the Compliance Period, which will end May 5, 2025. If the Company chooses to implement a reverse stock split, it must complete the split no later than 10 business days prior to the expiration of the Compliance Period, in order to regain compliance. On November 5, 2024, the Company received an additional written notice (the “MVPHS Notice”) from the Staff notifying the Company that, for 30 consecutive business days ended November 4, 2024, the Company’s market value of publicly held securities (“MVPHS”) closed below the $15,000,000 MVPHS threshold required for continued listing on the Nasdaq Global Market under Nasdaq Listing Rule 5450(b)(2)(C) (the “MVPHS Rule”). Nasdaq stated in its letter that in accordance with Nasdaq Listing Rule 5810(c)(3)(D), the Company has a compliance period of 180 calendar days from the date of the MVPHS Notice, and it may regain compliance if at any time during the Compliance Period the MVPHS closes at $15,000,000 or more for a minimum of ten consecutive business days. On May 7, 2025, the Company received written notice (the “MVPHS Notice”) from Nasdaq stating that the Company had not regained compliance with the MVPHS requirement or the bid price requirement. The Company intends to present to the Panel at the hearing a plan to regain compliance with all the continued listing requirements of Nasdaq, including the MVPHS requirement and the bid price requirement. 8 Liquidity The accompanying unaudited condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which contemplates realization of assets and satisfying liabilities in the normal course of business. At March 31, 2025, the Company has an accumulated deficit of approximately $ 23.8 million and working capital surplus of approximately $ 30,000 . For the three months ended March 31, 2025, the Company had a loss from operations of approximately $ 1.2 million and negative cash flows from operations of approximately $ 449,000 . Although the Company is showing positive revenue growth and gross profit trends, the Company expects to incur further losses through the end of 2025. To date the Company has been funding operations primarily through the reinvestment of free cash flows generated from our business operations, sale of equity in private placements, PIPE convertible debt instruments and revenues generated by the Company’s services. During the three months ended March 31, 2025, the Company received $ 2,520,000 in proceeds from the issuance of PIPE Convertible Notes, net of $ 280,000 in original issue discounts, from a PIPE Convertible Note. Based on its current cash resources and commitments, the Company believes it will be able to maintain its current planned development and corresponding level of expenditure for at least twelve months from the date of the issuance of these consolidated financial statements, although no assurance can be given that it will not need additional funds prior to such time. The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial information as of and for the three months ended March 31, 2025 and 2024 has been prepared in accordance with GAAP for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position at such dates and the operating results and cash flows for such periods. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission (the “SEC”). These unaudited financial statements and related notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2025. Principles of Consolidation The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America, which requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures at the date of the financial statements and the reported amounts of expenses during the reported period. These assumptions and estimates could have a material effect on the financial statements. Actual results may differ materially from those estimates. The Company’s management periodically reviews estimates on an ongoing basis based on information currently available, and changes in facts and circumstances may cause the Company to revise these estimates. Significant estimates include estimates used in the valuation allowance related to deferred tax assets and capitalized software costs. Actual results may differ from these estimates. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. 9 Reclassifications Certain reclassifications have been made to the unaudited condensed consolidated financial statements for the three months ended March 31, 2024 to conform to the unaudited condensed consolidated financial statement presentation for the three months ended March 31, 2025. These reclassifications had no effect on net loss or cash flows as previously reported. Use of Estimates Preparing unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates these estimates and judgments. Actual results could differ from those estimates. Key estimates relate primarily to determining the net realizable value and demand for inventory, useful lives associated with property and equipment and capitalized software, valuation allowances with respect to deferred tax assets, contingencies, and the valuation and assumptions underlying share-based compensation and equity warrants. On an ongoing basis, management evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents. Cash equivalents primarily consist of institutional money market funds, U.S. Treasury securities, certificates of deposit, and commercial paper and are carried at cost, which approximates fair value. Concentration of Credit Risk The Company maintains the majority of its cash and cash equivalents in accounts with large financial institutions. At times, balances in these accounts may exceed federally insured limits; however, to date, the Company has not incurred any losses on its deposits of cash and cash equivalents. Marketable Investment Securities The Company generally invests its excess cash in investments in corporate fixed income securities and U.S. Treasury securities. Such investments are included in cash and cash equivalents or marketable investment securities on the accompanying consolidated balance sheets and are classified based on original maturity. The Company considers all highly liquid investments with an original maturity date of 90 days or less to be cash equivalents and considers all highly liquid investments with an original maturity greater than 90 days and less than one year to be marketable securities. Marketable fixed income securities are classified as available-for-sale and reported at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss). 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. Each reporting period, the Company evaluates whether declines in fair value below carrying value are due to expected credit losses, as well as its ability and intent to hold the investment until a forecasted recovery of the carrying value occurs. Expected credit losses are recorded as an allowance through other income (expense), net on the Company’s consolidated statements of operations. During the three months ended March 31, 2024, the Company sold and liquidated most of its marketable securities resulting in a gain of $ 1,662 recorded in the unaudited condensed consolidated statements of comprehensive gain (loss). Marketable investment securities had a balance of $ 10,114 as of March 31, 2025 and December 31, 2024, respectively, and are included with cash and cash equivalents on the unaudited condensed consolidated balance sheets. 10 Accounts Receivable, net Accounts receivable are reported at their outstanding unpaid principal balances, net of allowances for credit losses. The Company periodically assesses its accounts and other receivables for collectability on a specific identification basis. The Company estimates its allowance using a rate loss model based on delinquency. The estimated loss rate is based on historical experience with specific customers, understanding of the Company’s current economic circumstances, reasonable and supportable forecasts, and the Company’s judgment as to the likelihood of ultimate payment based upon available data. Management believes the Company’s credit risk is mitigated by the geographically diverse customer base and its credit evaluation procedures. The actual rate of future credit losses, however, may not be similar to past experience. The Company writes off accounts receivable against the allowance for credit losses when a balance is determined to be uncollectable. As of March 31, 2025 and December 31, 2024, the Company’s allowance for credit losses was $ 1,424,074 and $ 1,470,868 , respectively. Inventory, net The Company’s inventory consists of raw materials and are valued at the lower of historical cost or net realizable value, where net realizable value is considered to be the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. Historic inventory costs are calculated on an average or specific cost basis. The Company records inventory write-downs for excess or obsolete inventories based upon assumptions on current and future demand forecasts. As of both March 31, 2025 and December 31, 2024, the Company had $ 448,360 reserved for obsolete inventory. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated over the estimated useful lives of the related assets using the straight-line method. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term (including renewals that are reasonably assured) or the estimated useful lives of the improvements. For internal-use software, external costs and employee payroll expenses directly associated with developing new or enhancing existing software applications are capitalized subsequent to the preliminary stage of development. Internal-use software costs are amortized using the straight-line method over the estimated useful life of the software when the project is substantially complete and ready for its intended use. SCHEDULE OF ESTIMATED USEFUL LIVES Category Estimated Useful Life Computer equipment and software 3 - 10 years Furniture and fixtures 3 - 15 years Vehicles 5 years Equipment 5 - 10 years Expenditures for major additions and improvements are capitalized, and minor replacements, maintenance, and repairs are expensed as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gains or losses are included in the Company’s results of operations for the respective period. Capitalized Software Development Costs The Company capitalizes certain costs related to the development of our software used in our simulators. In accordance with authoritative guidance, including the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 985-20, Software – Costs of Software to be Sold, Leased, or Marketed, the Company began to capitalize these costs when the technological 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 when placed in service, on a straight-line basis over the estimated life of the related asset, estimated to be three years beginning on February 1, 2024. Costs incurred prior to meeting these criteria together with costs incurred for training and maintenance are expensed as incurred and recorded in selling, general and administrative expenses on our consolidated statements of operations. The Company does not capitalize any testing or maintenance costs. The accounting for these capitalized software costs requires management to make significant judgments, assumptions and estimates related to the timing and amount of recognized capitalized software development costs. See Note 6 – Property and Equipment, Net for further details. 11 Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. For asset groups held and used, the carrying value of the asset group is considered recoverable when the estimated undiscounted future cash flows expected to be generated from the use and eventual disposition of the asset group exceed the respective carrying value. In the event the carrying value is not recoverable, an impairment charge would be recognized for the asset group to be held and used equal to the excess of the carrying value above the estimated fair value of the asset group. Impairment charges are recognized within selling, general and administrative expenses in the consolidated statements of operations. The Company did not record a loss on impairment during the three months ended March 31, 2025 and 2024, respectively. Advertising and Marketing Costs The Company expenses advertising and marketing costs as they are incurred. Advertising and marketing expenses were $ 352,291 and $ 111,489 for the three months ended March 31, 2025 and 2024, respectively, and are recorded in operating expenses on the unaudited condensed consolidated statements of operations. Debt with Warrants In accordance with ASC 470-20-25, when the Company issued debt with warrants, the Company treats the fair value of the warrants as a debt discount, recorded as a contra-liability against the debt, and amortizes the balance over the life of the underlying debt as amortization of debt discount expense in the unaudited condensed consolidated statements of operations using the straight-line method. The offset to the contra-liability is recorded as either equity or liability in the Company’s unaudited condensed consolidated balance sheets depending on the accounting treatment of the warrants. If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt discount expense in the unaudited condensed consolidated statements of operations. Fair Value Measurements As defined in ASC 820, Fair Value Measurements and Disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement. Level 1: Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Level 3: Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The significant unobservable inputs used in the fair value measurement for nonrecurring fair value measurements of long-lived assets include pricing models, discounted cash flow methodologies and similar techniques. 12 Fair Value of Financial Instruments The carrying value of cash, accounts receivable, accounts payable and accrued expenses, and other current liabilities approximate their fair values using Level 1 inputs, based on the short-term maturity of these instruments. The carrying amount of notes payable approximate the estimated fair value for this financial instrument as management believes that such debt and interest payable on the notes approximates the Company’s incremental borrowing rate. The following table shows the Company’s cash, cash equivalents, restricted cash, marketable securities, and derivative liabilities by significant investment category as of March 31, 2025 and December 31, 2024: SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS Fair Value Level 1 Level 2 Level 3 Fair Value at December 31, 2023 $ 2,534,169 $ 55,216 $ 2,478,953 $ - Money market funds ( 45,102 ) ( 45,102 ) - - Corporate fixed income securities ( 452,682 ) - ( 452,682 ) - U.S. treasury securities ( 2,026,271 ) - ( 2,026,271 ) - Derivative liability (1) - - - - Fair value at December 31, 2024 $ 10,114 $ 10,114 $ - $ - Derivative liability (2) - - - - Fair value at March 31, 2025 $ 10,114 $ 10,114 $ - $ - (1) During the year ended December 31, 2024, the Company recorded a derivative liability related to the PIPE Warrants of $ 142,319 . During the year ended December 31, 2024, the Company recorded a gain on fair value remeasurement of $ 142,319 . (2) During the three months ended March 31, 2025, the Company did not record a loss on fair value remeasurement. Leases A lease is defined as a contract that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. In accordance with ASC 842, Leases, the Company recognized a right-of-use (“ROU”) asset and corresponding lease liability on its balance sheets for its office space and warehouse. See Note 17 – Leases for further discussion, including the impact on the Company’s unaudited condensed consolidated financial statements and related disclosures. ROU assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option. Leases in which the Company is the lessee are comprised of office and warehouse rental. All of the leases are classified as operating leases. The Company has two lease agreements with remaining terms of 3.1 years and 8 months. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the unaudited condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company utilizes ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the unaudited condensed consolidated financial statements or tax returns. The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely than not” that a deferred tax asset will not be realized. At March 31, 2025 and December 31, 2024, the Company’s net deferred tax asset has been fully reserved. For uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the unaudited condensed consolidated financial statements. The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the unaudited condensed consolidated statements of operations when a determination is made that such expense is likely. Revenue Recognition Revenue Recognition Policy Revenue is recognized upon satisfaction of all contractual performance obligations and transfer of control to the customer and is measured as the amount of consideration to which the Company expects to be entitled to in exchange for corresponding goods or services. Each sales transaction results in an implicit contract with the customer to deliver a product or service at the point of sale. The Company has two distinct revenue streams: golf simulators and content software subscriptions. 13 Performance obligations under our contracts consist of hardware, software consisting of perpetual licenses and subscription licenses, and support within a single operating segment. Golf Simulators – Substantially all the Company’s sales are multiple performance obligation arrangements for its golf simulators, for which the transaction price is equivalent to the stated price of the product or service, net of any stated discounts applicable at a point in time. Golf simulators are bundled and are comprised of both hardware, a software license (for the software to operate the simulator), and a content software subscription license. Revenue from golf simulators is recognized at the point in time when installation (hardware and software) has occurred and has been accepted by the customer. For transactions where the Company utilizes a third-party to complete the installation, the Company recognizes revenue solely for the simulator hardware upon delivery to the customer or third-party installer and then recognizes the remainder of the revenue upon installation and customer acceptance. Perpetual License – Golf simulators require specific proprietary software to run the simulations. The Company records revenue from the proprietary software products under perpetual licenses. Revenue from the perpetual licenses is recognized at the time of installation and customer acceptance. Content Software Subscriptions – The Company offers content software subscriptions for one and twelve months. 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 software license has been delivered and accepted by the customer. The content software subscription revenue is recognized over the term of the contract. Deferred Revenue Deferred revenue represents either customer advance payments or performance obligations that have not yet been met. Revenue from golf simulators and perpetual software licenses is deferred and primarily recognized upon the installation of the golf simulators and acceptance from the customer. Revenue from content software subscriptions is deferred and recognized ratably over the life of the subscription (one or twelve months). During the three months ended March 31, 2025, the Company recognized approximately $ 1.2 million of golf simulator and subscription services revenue, respectively, that was included in deferred revenue balances at the beginning of the year. Remaining Performance Obligations As of March 31, 2025, approximately $ 4.1 million of revenue is expected to be recognized from remaining performance obligations. The Company expects to recognize 100 % of this revenue over the next 12 months. Disaggregated Revenue SCHEDULE OF DISAGGREGATED REVENUE 2025 2024 Three Months Ended March 31, 2025 2024 Revenues: Golf Simulators (1) $ 3,587,912 $ 2,724,658 Content Software Subscriptions 1,159,705 2,250,699 Franchise Revenue 75,000 - Other (2) 566,613 36,665 Total net revenue $ 5,389,230 $ 5,012,022 (1) Includes items such as hardware and proprietary perpetual licenses (2) Includes items such as shipping income and installation income Cost of Revenues Cost 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 consistently reviewed by the Company. During the three months ended March 31, 2025 and 2024, the Company recorded an expense of $ 0 and $ 171,502 in inventory write-down, respectively. 14 Royalties The Company has royalty agreements with certain software suppliers to pay royalties based on the number of units and subscriptions sold. The royalty percentages range between 20 % and 30 %. Royalty expense for the three months ended March 31, 2025 and 2024, was $ 225,320 and $ 329,888 , respectively. Net Loss Per Common Share Net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. All outstanding options and warrants are considered potentially outstanding common stock. The dilutive effect, if any, of stock options or warrants is calculated using the treasury stock method. All outstanding convertible notes are considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method. The following table sets forth the computations of loss per share: SCHEDULE OF LOSS PER SHARE 2025 2024 Three Months Ended March 31, 2025 2024 Numerators: Net loss $ ( 2,670,322 ) $ ( 1,301,864 ) Denominator: Weighted-average common shares Series A outstanding, basic and diluted 28,461,277 5,994,704 Weighted-average common shares Series B outstanding, basic and diluted 1,716,860 1,144,573 Net loss per common share Series A, basic and diluted $ ( 0.09 ) $ ( 0.22 ) Net loss per common share Series B, basic and diluted $ ( 1.56 ) $ ( 1.14 ) Since the effect of common stock equivalents is anti-dilutive with respect to losses, the options, warrants and shares issuable upon conversion have been excluded from the Company’s computation of net loss per common share for the three months ended March 31, 2025 and 2024. The following table summarizes the securities that were excluded from the diluted per share calculation because the effect of including these potential shares was anti-dilutive due to the Company’s net loss position even though the exercise price could be less than the average market price of the common shares: SCHEDULE OF POTENTIAL DILUTIVE SHARES Stock Options 1,131,000 PIPE Convertible Notes (1) 401,200 Common Stock - Series A warrants 1,409,092 Common stock - Series B warrants 1,550,000 Earnout shares - Earned in three Tranches over three years (assumes achievement of revenue and VWAP targets) 4,500,000 Underwriter warrants to I-Bankers convertible at $ 12.00 /common share 632,500 Total dilutive 9,623,792 (1) Does 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. Stock-based Compensation The Company has the ability to grant employees a number of different stock-based awards, including restricted shares of common stock, restricted stock units, stock options, and stock appreciation rights to purchase common stock, under the TruGolf Holdings, Inc. 2024 Incentive Plan (the “2024 Plan”). The Company records stock-based compensation expense based on the fair value of stock awards at the grant date and recognizes the expense over the employees’ service periods. For performance-based awards, recognition of stock-based compensation expense also includes management’s estimate of the probability of performance criteria as of the end of each reporting period. Stock-based compensation expense is recognized net of estimated forfeitures and expense is not recognized for awards that do not vest if service or performance conditions are not satisfied. Pursuant to Accounting Standards Update (“ASU”) 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting, the Company accounts for stock options issued to non-employees for their services in accordance with ASC 718. The Company uses valuation methods and assumptions to value the stock options that are in line with the process for valuing employee stock options noted above. 15 Emerging Growth Company Status The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (i) no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these unaudited condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The JOBS Act does not preclude an emerging growth company from early adopting new or revised accounting standards. The Company expects to use the extended transition period for any new or revised accounting standards during the period which the Company remains an emerging growth company. Segment Reporting The Company currently operates as one business segment, which is also the sole reportable segment, focusing on the manufacturing and sales of indoor golf simulators. The Company’s business offerings have similar economic and other characteristics, including the nature of products, manufacturing, types of customers, and distribution methods. The determination of a single business segment is consistent with the unaudited condensed consolidated financial information regularly provided to the Company’s chief operating decision maker (“CODM”). The Company’s CODM is its Principal Executive and Financial Officer and Director, who reviews and evaluates consolidated profit and loss and total assets for the purpose of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods. Warrants The fair value of the warrants is estimated on the date of issuance using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including the expected term of the warrants, expected stock price volatility, and expected dividends. These estimates involve inherent uncertainties and the application of management’s judgment. Expected volatilities used in the valuation model are based on the average volatility of the comparable publicly traded on recognized stock exchanges. The risk-free rate for the expected term of the option is based on the United States Treasury yield curve in effect at the time of the grant. Recently Adopted Accounting Pronouncements In December 2023, the FASB issued Update 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the disclosure requirements for income tax rate reconciliation, domestic and foreign income taxes paid, and unrecognized tax benefits. The amendments of ASU 2023-09 are effective for annual periods beginning after December 15, 2024. The Company adopted this new guidance on January 1, 2025, and the adoption did not have a material effect on the Company’s unaudited condensed consolidated financial statements. Recent Accounting Pronouncements In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date , which amends ASU 2024-03 to clarify when public business entities (PBEs) and all other entities must begin providing the new expense-disaggregation disclosures. ASU 2025-01 does not change the underlying disclosure requirements introduced by ASU 2024-03; rather, it revises paragraph 220-40-65-1 to state explicitly that the amendments are effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027 . Early adoption continues to be permitted. The Company is currently evaluating the impact of these amendments on its consolidated financial statements and related disclosures. 16 NOTE 3 – ACCOUNTS RECEIVABLE Accounts receivable and allowance for credit losses consisted of the following: SCHEDULE OF ALLOWANCE FOR CREDIT LOSSES March 31, December 31, 2025 2024 Trade accounts receivable $ 2,962,397 $ 2,870,021 Other 41,291 - Accounts receivable 3,003,688 2,870,021 Less allowance for credit losses ( 1,424,074 ) ( 1,470,868 ) Total accounts receivable, net $ 1,579,614 $ 1,399,153 NOTE 4 – INVENTORY, NET The following summarizes inventory: SCHEDULE OF INVENTORY March 31, December 31, 2025 2024 Inventory - raw materials $ 4,301,337 $ 2,797,705 Less reserve allowance for obsolescence ( 448,360 ) ( 448,360 ) Inventory, net $ 3,852,977 $ 2,349,345 NOTE 5 – MARKETABLE INVESTMENT SECURITIES In February 2023, the Company entered into a brokerage agreement and deposited $ 2,500,000 . In February 2023, the Company purchased $ 450,751 in corporate fixed income securities (corporate bonds) and $ 1,981,061 in government securities (Treasury securities). The Company terminated the brokerage agreement during the three months ended December 31, 2024, liquidated the vast majority of its investments and has $ 10,114 recorded in cash and cash equivalents on its unaudited condensed consolidated balance sheet as March 31, 2025 and December 31, 2024, respectively. NOTE 6 – PROPERTY AND EQUIPMENT, NET The following summarizes property and equipment: SCHEDULE OF PROPERTY AND EQUIPMENT March 31, December 31, 2025 2024 Software and computer equipment $ 860,243 $ 795,369 Furniture and fixtures 228,033 230,883 Vehicles 59,545 59,545 Equipment 18,008 15,873 Property and equipment, gross 1,165,829 1,101,670 Less accumulated depreciation ( 973,118 ) ( 957,818 ) Total other long-term assets $ 192,711 $ 143,852 The Company recorded depreciation expense was $ 15,300 and $ 14,317 for the three months ended March 31, 2025 and 2024, respectively. The following summarizes capitalized software development costs as of March 31, 2025 and December 31, 2024: SCHEDULE OF CAPITALIZED SOFTWARE DEVELOPMENT COSTS Capitalized software, net - beginning balance, December 31, 2024 $ 1,540,121 Capitalized software development costs - 2025 270,531 Less accumulated amortization ( 100,000 ) Capitalized software development costs, net $ 1,710,652 The Company recorded amortization of capitalized software costs of $ 100,000 and $ 18,463 for the three months ended March 31, 2025 and 2024, respectively. 17 NOTE 7 – ACCRUED AND OTHER CURRENT LIABILITIES Accrued and other current liabilities consist of the following amounts: SCHEDULE OF ACCRUED AND OTHER CURRENT LIABILITIES March 31, December 31, 2025 2024 Accrued payroll $ 279,837 $ 108,945 Credit cards 341,884 55,180 Warranty reserve 140,000 140,000 Sales tax payable 103,530 105,563 Other accrued liabilities 1,957,816 589,619 Total accrued and other current liabilities $ 2,823,067 $ 999,307 Accrued liabilities and other current liabilities assumed in Merger: SCHEDULE OF ACCRUED LIABILITIES AND OTHER CURRENT LIABILITIES ASSUMED IN MERGER Accrued tax payable $ 45,008 Total accrued and other current liabilities assumed in Merger $ 45,008 NOTE 8 – NOTES PAYABLE Notes payable consisted of the following: SCHEDULE OF NOTES PAYABLE March 31, December 31, 2025 2024 Note payable - Ethos Management Inc. $ - $ - Note payable - Mercedez-Benz 17,285 19,733 Note payable 17,285 19,733 Less current portion ( 10,148 ) ( 10,001 ) Note payable long-term portion $ 7,137 $ 9,732 Ethos Management Inc. In January 2023, the Company entered into a financing agreement with Ethos Asset Management Inc. (the “Ethos Loan” or “Ethos”) in the principal amount of up to $ 10 million. Pursuant to the terms of the Ethos Loan, the Company may draw down financing proceeds equal to $ 833,333 each month beginning in April 2023, up to the $ 10 million amount. Interest associated with the Ethos Loan is fixed at 4 % per annum and has a three-year grace period for principal and interest payments. Annual principal and interest payments will commence in 2027 and continue through 2034. As a condition to funding, the Company provided Ethos with a $ 1,875,000 deposit as collateral (the “Deposit Collateral”) for the note. The Ethos Loan stipulates that fundings should happen approximately every 30 banking days, subject to Ethos completing periodic internal audits to ensure the Company was in compliance with the terms of the loan agreement. In August 2023, Ethos informed the Company that unrelated to the Company, Ethos was undergoing a routine audit of its portfolio, and pending the close of the audit, borrowers may experience delays in drawing on funds when requested. In February 2024, due to the lack of additional fundings and in accordance with the terms of the Ethos Loan, the Company sent Ethos a notice of termination for materially breaching the Ethos Loan agreement. Based on the termination for default clause in the Ethos Loan, the Company was entitled to retain all funds disbursed by Ethos and Ethos must release the Deposit Collateral. At the date of the Ethos Loan termination the principal and accrued interest owed on the Ethos Loan was $ 2,383,059 and $ 81,560 , respectively. As a result of the Ethos Loan termination, the outstanding principal and accrued interest was offset by the Deposit Collateral leaving $ 589,619 , which is included in Accrued and other current liabilities on the unaudited condensed consolidated balance sheets at March 31, 2025 and December 31, 2024, respectively (See Note 7 – Accrued and Other Current Liabilities ). Mercedes-Benz In November 2020, the Company entered into a $ 59,545 , 5.90 % annual interest rate note payable with Mercedez-Benz for a delivery van. The note matures on November 20, 2026 , and is secured by the van. The Company makes a monthly payment of $ 908 , which includes both principal and interest. The outstanding principal on the note at March 31, 2025 and December 31, 2024, was $ 17,285 and $ 19,733 , respectively. 18 Notes Assumed in Merger As a successor to DMAQ, the Company assumed notes payable from the Merger in the amount of $ 1,565,000 , which was comprised of: (i) an unsecured promissory note in the aggregate principal amount of $ 1,265,000 issued to two affiliates of the Sponsor on October 15, 2022, in connection with the First Extensions, from October 29, 2022 to January 29, 2023, and (ii) an unsecured promissory note in the principal amount of $ 300,000 issued to an affiliate of the Sponsor on February 9, 2023 in connection with the Second Extension, from January 29, 2023, to July 29, 2023, pursuant to which a monthly payment of $ 50,000 had been deposited in the Trust Account after January 29, 2023 for six months. Pursuant to the fully executed Promissory Notes, each of the Promissory Notes bears no interest and is due upon the earlier of the consummation of DMA’s initial business combination or the date of the liquidation of DMAQ. During the year ended December 31, 2024, the Company made a principal payment of $ 100,000 to one of the note holders. On December 31, 2024, using the proceeds from the November 7, 2024, funding of additional PIPE Convertible Notes (See Note 9 – PIPE Convertible Notes ) the Company repaid the remaining balance of such notes in full. The extinguishment of one of the convertible notes resulted in extinguishment accounting. See Note 9 – PIPE Convertible Notes for additional details. NOTE 9 – PIPE CONVERTIBLE NOTES On November 2, 2023 and December 7, 2023, DMAQ executed loan agreements with certain accredited investors (together, the “Prior Loan Agreements”) pursuant to which such investors agreed to loan DMAQ up to an aggregate $ 11 million in exchange for the issuance of convertible notes and warrants. On February 2, 2024, the Company executed a securities purchase agreement (the “Purchase Agreement”) with each of the investors that executed the Prior Loan Agreements, which replaced the Prior Loan Agreements in their entirety, and with additional investors (together, the “PIPE Investors”). Pursuant to the terms and conditions of the Purchase Agreement, the PIPE Investors agreed to purchase from the Company (i) senior convertible notes in the aggregate principal amount of up to $ 15.5 million (the “PIPE Convertible Notes”), (ii) Series A warrants to initially purchase 1,409,091 shares of the Company’s Class A common stock (the “Series A Warrants”), and (iii) Series B warrants to initially purchase 1,550,000 shares of the Company’s Class A common stock (the “Series B Warrants,” and collectively with the Series A Warrants, the “PIPE Warrants”) (the “PIPE Financing”). Under the terms of the Purchase Agreement, the Company had the right, but not the obligation, to require that the PIPE Investors purchase additional PIPE Convertible Notes at up to two additional closings. On February 6, 2024, the first additional closing (the “First Mandatory Additional Closing”) occurred for the sale of $ 4.65 million in additional PIPE Convertible Notes with an Original Issue Discount of $ 465,000 for gross proceeds of $ 4.185 million, subject to the filing of a registration statement and satisfaction of customary closing conditions. In addition, pursuant to the Purchase Agreement, as amended, each PIPE Investor had the right, but not obligation, to require the Company to sell to such investor its pro rata share of up to an aggregate principal amount of $ 10.85 million of additional PIPE Convertible Notes in one or more “Additional Optional Closings,” provided that the principal amount issued in each such closing is no less than $ 250,000 . These optional rights expire on August 30, 2025. On August 13, 2024, the Company entered into waiver and amendment agreements (the “Waiver”) with the PIPE Investors. Under the Waiver, the parties agreed to, among other things: to (i) waive any defaults caused by the Company’s failure to timely file SEC reports through August 14, 2024, (ii) extend the deadline for Additional Optional Closings to 11 months following the effectiveness of the initial registration statement, (iii) permit the Company to raise non-convertible, unsecured debt financing from its affiliates, (iv) waive certain registration failures through September 3, 2024, and allow such failures to be cured through the issuance of common stock, and (v) allow interest payments due April 1, July 1, and October 1, 2024, to be paid in shares of common stock or added to the principal of the PIPE Convertible Notes, at the election of the applicable PIPE Investor. In connection with the Waiver, the Company issued 192,151 shares of Class A common stock to satisfy registration delay penalties and 157,582 shares of Class A common stock to satisfy accrued interest obligations. These issuances were made at the “Alternate Conversion Price” set forth in the PIPE Convertible Notes, which is defined as the lesser of the fixed conversion price or 90% of the lowest volume weighted average price (VWAP) of the Company’s Class A common stock over the five consecutive days prior to conversion. Additionally, the Company issued 190,586 shares to a PIPE Investor as a result of language in the PIPE Convertible Note related to ownership percentage prior to the Merger. 19 On November 7, 2024, the Company and certain PIPE Investors entered into further amendments to the Waiver (the “Amendments”) under which the PIPE Investors agreed to waive any breaches or defaults resulting from the Company’s failure to timely file SEC reports through August 21, 2024, and extended the waiver for certain registration failures through October 3, 2024. The PIPE Investors also waived defaults related to the Company’s non-compliance with the continued listing requirements of the Nasdaq Stock Market, including (i) failure to meet the minimum stockholders’ equity threshold, (ii) failure to meet the minimum market value of publicly held shares, and (iii) failure to meet the minimum bid price requirement. These waivers are effective through January 15, 2025, but may be extended through March 15, 2025, solely with respect to the bid price deficiency, provided the Company remains in compliance with all other listing requirement and files a preliminary proxy statement to seek shareholder approval of a reverse stock split. In connection with these Amendments, the Company issued 116,959 shares of Class A common stock to satisfy additional registration delay penalties and 65,790 shares of Class A common stock for unpaid interest, also at the Alternate Conversion Price. Also on November 7, 2024, certain PIPE Investors agreed to purchase an additional $ 3.3 million in principal amount of PIPE Convertible Notes with an Original Issue Discount of $ 330,000 for gross proceeds of $ 2.97 million. The Company used approximately $ 2.5 million of the proceeds from this issuance to repay outstanding debt and cover related transaction expenses. One of the PIPE Notes issued on November 7, 2024 was purchased in exchange for a convertible note payable and an unsecured note payable that were previously issued to the same PIPE Investor. The exchange resulted in debt extinguishment accounting as the present value of the future cash flows of the new PIPE Convertible Note was greater than 10% of the remaining present value of the cash flows of the exchanged notes. As a result, the Company recorded a loss on extinguishment of debt of $ 270,594 on the consolidated statements of operations for the year ended December 31, 2024. On December 16, 2024, a certain PIPE Investor agreed to purchase an additional $ 2.1 million in the principal amount of a PIPE Convertible Note with an Original Issue Discount of $ 210,000 for gross proceeds of $ 1.89 million. On January 8, 2025, certain PIPE Investors agreed to purchase an additional $ 2.8 million in principal amount of PIPE Convertible Notes with an Original Issue Discount of $ 280,000 for gross proceeds of $ 2.52 million. During the three months ended March 31, 2025, the Company converted an aggregate principal amount of $ 1,655,000 and $ 1,087,513 in accrued and make-whole interest related to the PIPE Convertible Notes into 3,064,420 shares of the Company’s Class A common stock. PIPE Convertible Notes payable consisted of the following: SCHEDULE OF PIPE CONVERTIBLE NOTES PAYABLE PIPE Convertible Note Balance at January 1, 2024 $ - PIPE Convertible Notes issued 10,320,594 Less: Debt Discount associated with OID and Warrants ( 1,147,319 ) PIPE Convertible Notes, net 9,173,275 Less: Gross PIPE Convertible Note principal converted into Class A common stock ( 5,832,600 ) Add: Accretion of debt discount 728,278 Total PIPE Convertible Notes, net at December 31, 2024 4,068,953 PIPE Convertible Notes issued 2,800,000 Less: Debt Discount associated with OID ( 280,000 ) PIPE Convertible Notes, net 6,588,953 Less: Gross PIPE Convertible Note principal converted into Class A common stock ( 1,655,000 ) Add: Accretion of debt discount 231,940 Total PIPE Convertible Notes, net at March 31, 2025 $ 5,165,893 During the three months ended March 31, 2025 and 2024, amortization expense related to the Debt Discount of the PIPE Convertible Notes was $ 231,940 and $ 3,325 , respectively. The principal balance of the PIPE Convertible Notes, net of Debt Discounts, and accrued interest related to the PIPE Convertible Notes at March 31, 2025, was $ 5,165,893 and $ 0 , respectively. The principal balance net of Debt Discounts and accrued interest related to the PIPE Convertible Notes at December 31, 2024, was $ 4,068,953 and $ 154,500 , respectively. 20 NOTE 10 – RELATED PARTY NOTES AND LOANS PAYABLE Related party notes payable consisted of the following: SCHEDULE OF RELATED PARTY NOTES PAYABLE March 31, December 31, 2025 2024 Note payable - ARJ Trust $ 650,000 $ 650,000 Note payable - McKettrick 800,000 800,000 Note payable - Carver 111,000 111,000 Loan - Chris Jones 2,000,000 2,000,000 Notes payable 3,561,000 3,561,000 Less current portion ( 2,937,000 ) ( 2,937,000 ) Note payable long-term portion $ 624,000 $ 624,000 Future maturities of related party notes and loan payables as of March 31, 2025: SCHEDULE OF FUTURE MATURITIES OF RELATED PARTY NOTES PAYABLE 2025 $ 2,937,000 2026 287,000 2027 337,000 Total $ 3,561,000 ARJ Trust In December 2008, the Company entered into a note payable with ARJ Trust, a trust that is indirectly controlled by the Company’s chief executive officer. The note has a principal amount of $ 500,000 , an interest rate of 8.50 % per annum, and a maturity date of March 31, 2024. The Company is required to make monthly interest-only payments of $ 3,541 . In June 2010, the Company entered into a second note payable with ARJ Trust. The note has a principal amount of $ 150,000 , an interest rate of 8.50 % per annum, and a maturity date of March 31, 2024. The Company is required to make monthly interest-only payments of $ 1,063 . On March 31, 2024 , the maturity date of the notes was extended to March 31, 2025 . On March 31, 2025, the maturity date of the notes was extended to September 30, 2025. The Company made interest-only payments of $ 13,812 and $ 10,901 during the three months ended March 31, 2025 and 2024, respectively. The principal balance of the notes was $ 650,000 at both March 31, 2025 and December 31, 2024. McKettrick In May 2019, the Company entered into a $ 1,750,000 , zero interest rate note payable with a former shareholder to repurchase all their owned shares in the Company. The note is payable in annual installments of $ 250,000 due on December 21 of each year. The note matures on December 1, 2027 . If the annual installment is not paid within 10 days of the due date a late fee of 5% is charged. During the year ended December 31, 2024, the Company paid the December 2024 and 2023 installments totaling $ 500,000 and $ 50,000 in a negotiated extension fee for the 2023 installment. The principal balance of the note payable was $ 800,000 at both March 31, 2025 and December 31, 2024. Carver In January 2021, the Company entered into a $ 222,000 , zero interest rate note payable with a former shareholder to repurchase all their owned shares in the Company. The note is payable in semi-annual installments of $ 18,500 due on March 31 and September 30 each year and matures on October 1, 2027 . The Company has not made the required installments totaling $ 18,500 for the three months ended March 31, 2025 and $ 37,000 for the year ended December 31, 2024. The principal balance of the note payable was $ 111,000 at both March 31, 2025 and December 31, 2024. Chris Jones During the year ended December 31, 2024, the Company chief executive officer loaned the Company an aggregate of $ 2 million for operating expenses. The loaned amount has a zero interest rate and no stated maturity date. The Company made no payments towards the loan during the three months ended March 31, 2025, however, the Company expects to pay back the loan in full. The principal balance of the loan payable was $ 2,000,000 at March 31, 2025 and December 31, 2024. 21 NOTE 11 – LINES OF CREDIT JPMorgan Chase In December 2023, the Company entered into a $ 2,000,000 variable rate line of credit with JPMorgan. The purpose of the new line of credit was to consolidate the balances outstanding on the note payable and the previous line of credit, which had matured. The line of credit matured on December 31, 2024. The line of credit had an annual interest rate of the Adjusted SOFR (Secured Overnight Financing Rate) Rate plus 3.00 %. On January 1, 2025, the maturity date of the line of credit was extended to December 31, 2025. Upon the maturity date extension the annual interest rate was increased to the Adjusted SOFR Rate plus 3.50 %. The line of credit is secured by a pledge of $ 2,100,000 in the Company’s deposit accounts (restricted cash) at JPMorgan. The outstanding principal balance on the line of credit was $ 802,738 at March 31, 2025 and December 31, 2024. Morgan Stanley During February 2023, the Company entered into a variable rate line of credit with Morgan Stanley which was secured by the marketable securities held in our brokerage account (See Note 5 – Marketable Investment Securities ). The Company terminated the brokerage agreement during the year ended December 31, 2024, liquidated the vast majority of its investments and has $ 10,114 recorded in cash and cash equivalents on its unaudited condensed consolidated balance sheet as of March 31, 2025 and December 31, 2024. NOTE 12 – DIVIDEND NOTES PAYABLE Prior to the Merger, TruGolf Nevada filed its tax returns as an S Corporation. Historically, all income tax liabilities and benefits of TruGolf Nevada are passed through to the shareholders annually through distributions. No dividends were declared during 2023 or 2022. During 2021, the Board of Directors declared $ 7,395,694 in dividends to the shareholders, payable in cash as the Company’s liquidity allows. During 2022, TruGolf Nevada paid the shareholders an aggregate amount of $ 1,965,706 . In November 2022, each shareholder agreed to defer the accrued dividends payable by entering into 6.00 % interest rate dividend notes payable. All outstanding and accrued interest is due and payable when the dividend notes payable mature on December 31, 2025. Interest commenced accruing on January 1, 2023. Dividends declared, distributed, and accrued are as follows: SCHEDULE OF DIVIDENDS DECLARED, DISTRIBUTED, AND ACCRUED March 31, December 31, 2025 2024 Accrued interest on dividends payable $ 576,036 $ 515,677 Dividends payable $ 4,023,923 $ 4,023,923 NOTE 13 – GROSS SALES ROYALTY PAYABLE In June 2015, the Company entered into a Royalty Purchase Agreement (the “Royalty Agreement”) with a purchaser (“Purchaser”) for a gross sales royalty. The Purchaser agreed to purchase a sales royalty for the sum of $ 1,000,000 plus applicable taxes. Upon mutual agreement the Purchaser may purchase one or more additional royalties in an aggregate amount of up to $ 1,000,000 . For the period June 2015 through May 2017, the Company paid a monthly payment of $ 20,833 . Effective June 1, 2017, all subsequent monthly royalty payments has been equal to the greater of $ 20,833 plus the amount determined in accordance with the following: i. If the trailing twelve-month revenue of the Company is equal to or less than $ 6,110,000 , 3.60 % of the Company’s monthly revenues, in perpetuity (unless terminated in accordance with the Royalty Agreement); ii. If the trailing twelve-month revenue of the Company is equal to or greater than $ 17,200,000 , 1.30 % of the Company’s monthly revenues, in perpetuity (unless terminated in accordance with the Royalty Agreement); or iii. If the trailing twelve-month revenue of the Company is greater than $ 6,110,000 but less than $ 17,200,000 , such percentage of monthly revenue determined by dividing $ 220,060 by the amount of the trailing twelve-month revenue and multiplying the result by 100, in perpetuity (unless terminated in accordance with the Royalty Agreement). 22 The royalty percentage was fixed at 3.6 % based on the trailing twelve-month revenue at the time of executing the Royalty Agreement. On June 1, 2017, the royalty percentage was changed to 2.4 % based on the trailing twelve-month revenues at the time as outlined in the table above. The Royalty Agreement contains an option for a one-time buy down of the royalty rate. At any time following the date on which the Purchaser has received royalty payments that are, in the aggregate, equal to two times the then applicable Aggregate Installment Amount ($ 1,000,000 ) , the Company may purchase and extinguish 75 % (but no more nor less) of all amounts owing or to become owing to the Purchaser hereunder. In the event the Company wants to exercise the buy down option, the Company would pay the Purchaser $ 750,000 . The adjusted royalty rate going forward would then be 0.6 % ( 75 % of the 2.4 %). The Royalty Agreement also contains an option for a buyout upon the change of control. If pursuant to a proposed change of control the acquirer under such transaction requires, as a condition to the completion of such transaction, that the Company purchase and extinguish all amounts owing or to become owing to the Purchaser hereunder, the Company will pay the greater of: i. An amount equal to two times the aggregate installment amount as at the date of the change of control buyout notice; and ii. An amount equal to A multiplied by B multiplied by C, where: a. A is equal to the aggregate installment amount as at the date of the change in control divided by $ 22,500,000 ; b. B is equal to 0.8; and c. C is equal to the net equity value of the Company; or in the case of a proposed asset sale, the proposed net purchase price of all or substantially all of the Company’s assets. The Royalty Agreement does not contain a stated maturity date or bear interest. The agreement provides for a perpetual payment obligation, whereby the Company is required to remit a royalty equal to either 2.4 % or 0.6 % of applicable revenue, depending on whether the royalty rate buy-down option has been exercised. While the royalty percentage may be reduced pursuant to the terms of the buy-down provision, the only mechanism for terminating the Royalty Agreement is through a buyout that may be required by an acquirer in connection with a change of control transaction. In the absence of such a change of control, the Royalty Agreement remains in effect indefinitely. Because the gross sales royalty payable has no stated fixed interest rate or maturity date, it is considered variable interest perpetual debt. The periodic variable payments to the Purchaser are recorded in interest expense. The outstanding balance at March 31, 2025 and December 31, 2024, was $ 1,000,000 . During the three months ended March 31, 2025 and 2024, the Company incurred interest expense of $ 38,911 and $ 96,509 , respectively. NOTE 14 – STOCKHOLDERS’ DEFICIT Preferred Stock The Company has authorized preferred stock of 10,000,000 shares with a par value of $ 0.0001 . As of March 31, 2025 and December 31, 2024, there were no shares of preferred stock issued and outstanding. Common Stock Class A Common Stock The Class A Common Stock has voting rights of 1 vote per share and votes as a single class together with the Class B Common Stock . Class B Common Stock The Class B Common stock has voting rights of 25 votes per share, and votes as a single class together with the Class A Common Stock . Equity Transactions During the Period 23 Class A Common Stock During the three months ended March 31, 2025, the Company issued an aggregate of 662,000 shares of Class A Common Stock with a fair value of $ 2.50 per share to PIPE Convertible Note holders for conversion of an aggregate principal amount of $ 1,655,000 in PIPE Convertible Notes (See Note 9 – PIPE Convertible Notes ). During the three months ended March 31, 2025, the Company issued an aggregate of 2,402,420 shares of Class A Common Stock with fair values ranging from $ 0.34 - $ 0.60 per share to PIPE Convertible Note holders in lieu of cash for interest and make whole provisions (See Note 9 – PIPE Convertible Notes ). Warrant and Option Valuation The Company has computed the fair value of warrants and options granted using the Black-Scholes option pricing model. The expected term for warrants and options issued to non-employees is the contractual life and the expected term used for options issued to employees and directors is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued. Warrant Offerings During the three months ended March 31, 2025, the Company did not issue any warrants. Series A Warrants On February 2, 2024, the Company issued 5 five year immediately vested warrants to purchase an aggregate of 1,409,092 shares of the Company’s Class A Common Stock in association with the issuance of the PIPE Convertible Notes (the “Series A Warrants”). The Series A Warrants have an exercise price of $ 13.00 per share. The Series A Warrants had an aggregate grant date fair value of $ 126,819 . The Series A Warrants met the definition of a liability per ASC 815 – Derivatives and Hedging. In applying the Black-Scholes option pricing model to the Series A Warrants granted or issued, the Company used the following assumptions: SCHEDULE OF FAIR VALUE ASSUMPTIONS OF WARRANTS For the Three Months Ended March 31, 2024 Risk free interest rate 4.03 % Expected term (years) 5.00 Expected volatility 53.12 % Expected dividends 0.00 % The weighted average estimated fair value of the Series A Warrants granted during the three months ended March 31, 2024, was approximately $ 0.09 per share. No Series A Warrants were issued during the three months ended March 31, 2025. Series B Warrants On February 2, 2024, the Company issued two-and-a-half-year 2.5 immediately vested warrants to purchase an aggregate of 1,550,000 shares of the Company’s Class A Common Stock in association with the issuance of the PIPE Convertible Notes (the “Series B Warrants”). The Series B Warrants have an exercise price of $ 10.00 per share. The Series B Warrants had an aggregate grant date fair value of $ 15,500 . 24 In applying the Black-Scholes option pricing model to the Series B Warrants granted or issued, the Company used the following assumptions: SCHEDULE OF FAIR VALUE ASSUMPTIONS OF WARRANTS For the Three Months Ended March 31, 2024 Risk free interest rate 4.14 % Expected term (years) 2.50 Expected volatility 49.40 % Expected dividends 0.00 % The weighted average estimated fair value of the Series B Warrants granted during the three months ended March 31, 2024, was approximately $ 0.01 per share. No Series B Warrants were issued during the three months ended March 31, 2025. A summary of the warrant activity during the three months ended March 31, 2025, is presented below: SCHEDULE OF WARRANT ACTIVITY Weighted Weighted Average Average Remaining Aggregate Number of Exercise Life Intrinsic Warrants Price In Years Value Outstanding, December 31, 2024 2,959,092 $ 11.43 - Granted - - Exercised - - Forfeited - - Outstanding, March 31, 2025 2,959,092 $ 11.43 2.5 $ - Exercisable, March 31, 2025 2,959,092 $ 11.43 2.5 $ - The following table presents information related to stock warrants at March 31, 2025: SCHEDULE OF INFORMATION RELATED TO STOCK WARRANTS Warrants Outstanding Warrants Exercisable Weighted Outstanding Average Exercisable Exercise Number of Remaining Life Number of Price Warrants In Years Warrants $ 10.00 1,550,000 1.4 1,550,000 $ 13.00 1,409,092 3.9 1,409,092 2,959,092 2,959,092 NOTE 15 – STOCK-BASED COMPENSATION The Company accounts for its stock-based compensation in accordance with the fair value recognition of ASC 718. 2024 Stock Incentive Plan The Company did not grant options during the three months March 31, 2025 or 2024. 25 Compensation-based stock option activity for qualified and unqualified stock options are summarized below: SCHEDULE OF OPTION ACTIVITY Number of Options Weighted Average Exercise Price Weighted Average Remaining Life In Years Intrinsic Value Outstanding, December 31, 2024 1,131,000 $ 0.93 - Granted - 0 Exercised - 0 Forfeited - 0 Outstanding, March 31, 2025 1,131,000 $ 0.93 4.5 $ - Exercisable, March 31, 2025 1,103,500 $ 0.93 4.5 $ - The following table summarizes information about options to purchase shares of the Company’s Class A common stock outstanding and exercisable at March 31, 2025: SCHEDULE OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE Options Outstanding Options Exerciseable Exercise Price Outstanding Number of Options Weighted Average Remaining Life In Years Exerciseable Number of Options $ 0.93 1,131,000 4.5 1,103,500 1,131,000 1,103,500 Total compensation expense related to options was $ 3,341 for the three months ended March 31, 2025. As of March 31, 2025, there was future compensation cost of $ 7,798 with a weighted average recognition period of 0 .75 years. The aggregate intrinsic value totaled $ 0 and was based on the Company’s closing stock price of $ 0.35 as of March 31, 2025, which would have been received by the option holders had all option holders exercised their options as of that date. Stock-Based Compensation Expense The following table presents information related to stock-based compensation expense: SCHEDULE OF STOCK-BASED COMPENSATION EXPENSE For the Three Months Ended March 31, Unrecognized at March 31, Weighted Average Remaining Amortization Period 2025 2025 (Years) General and administrative $ 3,341 $ 7,798 0.75 Total $ 3,341 $ 7,798 0.75 NOTE 16 – LEASES The Company is party to two leases: (i) office space in Centerville, Utah (the “Centerville Lease”) and (ii) a warehouse in North Salt Lake City, Utah (the “SLC Lease”). The Centerville lease is scheduled to expire in May 2028 and the SLC Lease is scheduled to expire in November 2025. The Company has operating leases for its corporate headquarters and warehouse. The Company determines if an arrangement contains a lease at inception based on the ability to control a physically distinct asset. Operating lease right-of-use assets are recorded in the consolidated balance sheets on the initial measurement of the lease liability as adjusted to include prepaid rent and initial direct costs less any lease incentives received. Lease liabilities are measured at the commencement date based on the present value of the lease payments over the lease term. The Company separately accounts for lease and non-lease components within lease agreements. The Company uses its incremental borrowing rate to present value the lease liability as key inputs to determine the interest rate implicit in the lease are not shared by lessors. Operating lease expense is recorded on a straight-line basis over the lease term. Right-of-use assets and lease liabilities for short-term leases are not recognized in the consolidated balance sheets. Payments for short-term leases are recognized in the consolidated statements of operations on a straight-line basis over the lease term. 26 When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated incremental borrowing rate at lease inception point. The weighted average incremental borrowing rate applied was 8.39 %. As of March 31, 2025, the Company’s leases had a remaining weighted average term of 2.15 years. The following table presents net lease cost and other supplemental lease information: SCHEDULE OF LEASE COST AND SUPPLEMENTAL LEASE INFORMATION March 31, December 31, 2025 2024 Lease cost Operating lease cost (cost resulting from lease payments) $ 107,336 $ 403,109 Net lease costs $ 107,336 $ 403,109 Operating lease - operating cash flows (fixed payments) $ 107,336 $ 403,109 Operating lease - operating cash flows (liability reduction) $ 93,865 $ 334,254 Non-current leases - right-of-use assets $ 545,915 $ 634,269 Current liabilities - operating lease liabilities $ 296,291 $ 363,102 Non-current liabilities - operating lease liabilities $ 278,071 $ 305,125 Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the three months ended March 31, 2025, are as follows: SCHEDULE OF FUTURE MINIMUM PAYMENTS UNDER OPERATING LEASES Fiscal Year Operating Leases 2025 $ 299,654 2026 140,163 2027 144,227 2028 60,809 Total future minimum lease payments $ 644,853 Amount representing interest ( 70,491 ) Present value of net future minimum lease payments $ 574,362 NOTE 17 – SEGMENT INFORMATION The Company currently operates as one business segment, which is also the sole reportable segment, focusing on the manufacturing and sales of indoor golf simulators. The Company’s business offerings have similar economic and other characteristics, including the nature of products, manufacturing, types of customers, and distribution methods. The determination of a single business segment is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (“CODM”). The Company’s CODM is its Principal Executive and Financial Officer and Director, who reviews and evaluates consolidated profit and loss and total assets for the purpose of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods. In addition to the significant expense categories included within net loss presented on the Company’s Consolidated Statements of Operations, see below for disaggregated amounts that comprise consulting, contract labor, personnel, business development, royalty, and marketing expenses: SCHEDULE OF REVENUE BY SEGMENT INFORMATION For The Three Months Ended March 31, 2025 2024 Consulting expenses $ 633,981 $ 410,104 Contract labor 613,340 222,208 Personnel expenses 1,946,816 1,619,387 Business development expenses 119,610 263,844 Royalty expenses 225,320 329,888 Marketing expenses 334,378 111,489 Other expenses * 1,023,810 1,039,764 Total operating expenses $ 4,897,255 $ 3,996,684 * Other expenses is materially comprised of rent, insurance, stock-based compensation, depreciation and amortization, licenses, dues and subscriptions, travel and entertainment, and merchant fees. 27 NOTE 18 – COMMITMENTS AND CONTINGENCIES Legal Claims There are no material pending legal proceedings in which the Company or any of its subsidiaries is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of its voting securities, or security holder is a party adverse to the Company, or has a material interest adverse to the Company. NOTE 19 – CONCENTRATION OF CREDIT RISK Cash Deposits Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 . As of March 31, 2025 and December 31, 2024, the Company had approximately $ 11,244,000 and $ 9,662,000 , respectively, in excess of the FDIC insured limit. NOTE 20 – SUBSEQUENT EVENTS Dividend Notes Payable On April 21, 2025, the Company entered into agreements with the holders of approximately $ 3.9 million in outstanding notes payable (including accrued interest) originally issued in November 2022, including officers and directors of the Company, pursuant to which such note holders converted all outstanding amounts payable to such note holders into (i) 8,283,139 shares of the Company’s Class B common stock, with respect to $ 2.6 million in principal and interest of such notes payable, and into (ii) 4,233,077 shares of Class A common stock, with respect to $ 1.3 million in principal and interest of such notes payable, in each case at a conversion price of $ 0.31204 per share, which was above the closing price of the Company’s Common Stock prior to conversion. PIPE Convertible Notes On April 21, 2025, the Company agreed to cancel and rescind the conversion of $ 300,000 of PIPE Convertible Notes, plus interest, as a result of such noteholder not being able to take possession of such conversion shares prior to the expiration of a DWAC deposit by our transfer agent with the Depository Trust Company. On April 22, 2025, the Company entered into Exchange Agreements (the “Exchange Agreements” and each, an “Exchange Agreement”), by and among the Company and each of the Holders, pursuant to which each such Holder would exchange (i) the amounts remaining outstanding under the PIPE Convertible Notes and certain other amounts outstanding with respect thereto in the aggregate amount (the “Note Exchange”), and (ii) the PIPE Warrants. Pursuant to the Exchange Agreements, on the effective date of the Exchange Agreements, the PIPE Warrants were exchanged, in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), into an aggregate of 1,885 shares of the Company’s newly created Series A preferred stock (the “Series A Preferred Stock” and such Series A Preferred Stock to be issued in the exchange of the PIPE Warrants, the “Initial New Exchange Preferred Shares”, and such shares of Class A Common Stock (the “Common Stock”) issuable pursuant to the terms of the Certificate of Designations, including, without limitation, upon conversion or otherwise, collectively, the “Initial New Exchange Conversion Shares”), and (ii) a warrant to purchase up to 37,033 shares of Series A Preferred Stock. The Note Exchange will occur on the Closing Date (as defined in the Exchange Agreements), whereby the amounts owing under the PIPE Convertible Notes will be exchanged into shares of the Company’s Series A Preferred Stock. From the date of the Exchange Agreements until the date of the Note Exchange, the conversion price of the PIPE Convertible Notes was reduced to $ 1.00 per share. Additionally, the Exchange Agreements amended the Prior Purchase Agreement and contained certain covenants of the Company to, among other items, hold one or more stockholder meetings no later than 90 days following the execution of the Exchange Agreements to approve the shares of the Company’s Common Stock issuable underlying the Series A Preferred Stock upon conversion in compliance with the rules and regulations of the Nasdaq Stock Market. Issuance of Common Stock Subsequent to March 31, 2025, the Company issued an aggregate of 2,182,159 shares of Class A common stock with fair values ranging from $ 0.221 - $ 1.00 per share to PIPE Convertible Note holders in connection with the conversion of outstanding PIPE Convertible Notes, accrued interest, and make-good provisions. On May 5, 2025, the Company issued 50,000 shares of Class A common stock with a fair value of $ 0.284 per share to a PIPE Convertible Note holder in lieu of cash for accrued interest. 28