[10-Q] Signing Day Sports, Inc. Quarterly Earnings Report
Signing Day Sports, Inc. reported results for the quarter ended June 30, 2025 showing continued cash raises but persistent operating losses. Total assets were $1.425 million and cash and cash equivalents were $656,707, up from $181,271 at year-end, driven largely by net financing proceeds including $4,591,848 recorded as ATM issuance proceeds. Revenues for the six months ended June 30, 2025 were $215,164 versus $439,589 a year earlier, while gross profit narrowed to $195,505 for the six-month period. The company recorded a net loss of $1.367 million for the three months and $2.210 million for the six months ended June 30, 2025.
The balance sheet improved to positive stockholders' equity of $361,111 from a deficit, helped by equity financings and warrant exercises that reduced warrant liabilities to zero. The company disclosed substantial doubt about its ability to continue as a going concern due to recurring losses, negative operating cash flow of $3.709 million for the six months, and an accumulated deficit of approximately $27.9 million. Material post-period developments include a Business Combination Agreement with BlockchAIn Digital Infrastructure, a purchase commitment arrangement with Helena for up to $10 million, and an amended sponsorship agreement with Goat Farm Sports.
Signing Day Sports, Inc. ha comunicato i risultati per il trimestre chiuso al 30 giugno 2025, mostrando nuovi apporti di liquidità ma perdite operative persistenti. Le attività totali erano pari a $1.425 million e la liquidità e gli equivalenti di cassa ammontavano a $656,707, in aumento rispetto a $181,271 a fine esercizio, principalmente grazie a proventi netti da finanziamenti, incluso $4,591,848 contabilizzato come proventi da emissione ATM. I ricavi per i sei mesi chiusi al 30 giugno 2025 sono stati $215,164 rispetto a $439,589 dell’anno precedente, mentre il margine lordo si è ristretto a $195,505 nel periodo semestrale. La società ha registrato una perdita netta di $1.367 milioni per il trimestre e di $2.210 milioni per i sei mesi chiusi il 30 giugno 2025.
Lo stato patrimoniale è migliorato, portando il patrimonio netto a un valore positivo di $361,111 rispetto al deficit precedente, favorito da aumenti di capitale e dall’esercizio di warrant che ha azzerato le passività relative. La società ha espresso significativi dubbi sulla sua capacità di proseguire l’attività come going concern a causa di perdite ricorrenti, di un flusso di cassa operativo negativo di $3.709 milioni nei sei mesi e di un deficit accumulato di circa $27.9 milioni. Tra gli avvenimenti successivi di rilievo figurano un Business Combination Agreement con BlockchAIn Digital Infrastructure, un accordo di impegno d’acquisto con Helena fino a $10 milioni e la modifica dell’accordo di sponsorizzazione con Goat Farm Sports.
Signing Day Sports, Inc. informó resultados para el trimestre terminado el 30 de junio de 2025 que muestran nuevas inyecciones de efectivo pero pérdidas operativas persistentes. Los activos totales fueron $1.425 million y el efectivo y equivalentes de efectivo ascendieron a $656,707, frente a $181,271 al cierre del año, impulsados principalmente por ingresos netos por financiamiento, incluido $4,591,848 registrado como ingresos por emisiones ATM. Los ingresos para los seis meses terminados el 30 de junio de 2025 fueron $215,164 frente a $439,589 del año anterior, mientras que la utilidad bruta se redujo a $195,505 en el periodo semestral. La compañía registró una pérdida neta de $1.367 millones en el trimestre y de $2.210 millones en los seis meses terminados el 30 de junio de 2025.
El balance mejoró hasta mostrar un patrimonio neto positivo de $361,111 desde un déficit, favorecido por financiamientos de capital y el ejercicio de warrants que redujo las obligaciones por warrants a cero. La empresa manifestó dudas sustanciales sobre su capacidad para continuar como negocio en marcha debido a pérdidas recurrentes, un flujo de caja operativo negativo de $3.709 millones en los seis meses y un déficit acumulado de aproximadamente $27.9 millones. Entre los hechos posteriores relevantes se incluyen un Business Combination Agreement con BlockchAIn Digital Infrastructure, un acuerdo de compromiso de compra con Helena por hasta $10 millones y una enmienda al acuerdo de patrocinio con Goat Farm Sports.
Signing Day Sports, Inc.는 2025년 6월 30일로 종료된 분기 실적을 발표했으며, 현금 조달은 계속됐지만 영업 손실이 지속되고 있습니다. 총자산은 $1.425 million, 현금 및 현금성자산은 $656,707로 연초(연말) 기준 $181,271에서 증가했으며, 이는 주로 순자금 조달수익에 기인하고 그중 $4,591,848은 ATM 발행 수익으로 기록됐습니다. 2025년 6월 30일로 종료된 6개월간 매출은 $215,164로 전년 동기 $439,589 대비 감소했으며, 해당 반기 총이익은 $195,505로 축소되었습니다. 회사는 3개월 기준 순손실 $1.367백만, 6개월 기준 순손실 $2.210백만을 기록했습니다.
대차대조표는 자본잉여가 적자로부터 $361,111의 순자본(주주지분)으로 개선되었는데, 이는 자본 조달 및 워런트 행사로 워런트 부채가 0이 된 데 따른 것입니다. 회사는 반복적인 손실, 6개월간 영업활동현금흐름의 마이너스 $3.709백만, 약 $27.9백만의 누적적자를 이유로 계속기업 존속에 대한 중대한 의문을 표명했습니다. 주요 시기 이후 사건으로는 BlockchAIn Digital Infrastructure와의 Business Combination Agreement, Helena와 최대 $10백만까지의 매입 약정, Goat Farm Sports와의 후원계약 수정이 포함됩니다.
Signing Day Sports, Inc. a publié ses résultats pour le trimestre clos le 30 juin 2025, montrant des levées de liquidités continues mais des pertes d’exploitation persistantes. L’actif total s’élevait à $1.425 million et la trésorerie et équivalents de trésorerie à $656,707, contre $181,271 à la clôture de l’exercice, en grande partie grâce à des produits nets de financement, dont $4,591,848 comptabilisés comme produits d’émission ATM. Les revenus pour les six mois clos le 30 juin 2025 se sont élevés à $215,164 contre $439,589 l’année précédente, tandis que la marge brute s’est réduite à $195,505 sur la période semestrielle. La société a enregistré une perte nette de $1.367 million pour le trimestre et de $2.210 million pour les six mois clos le 30 juin 2025.
Le bilan s’est amélioré pour dégager des capitaux propres positifs de $361,111 contre un déficit, aidé par des financements en capital et l’exercice de warrants qui a ramené les passifs liés aux warrants à zéro. La société a exprimé d’importants doutes quant à sa capacité à poursuivre son activité en raison de pertes récurrentes, d’un flux de trésorerie opérationnel négatif de $3.709 million sur six mois et d’un déficit accumulé d’environ $27.9 million. Parmi les événements significatifs postérieurs à la période figurent un Business Combination Agreement avec BlockchAIn Digital Infrastructure, un engagement d’achat avec Helena pour jusqu’à $10 million et un avenant à l’accord de sponsoring avec Goat Farm Sports.
Signing Day Sports, Inc. meldete Ergebnisse für das Quartal zum 30. Juni 2025, die fortgesetzte Kapitalzuflüsse, aber anhaltende operative Verluste zeigen. Die Gesamtaktiva beliefen sich auf $1.425 million und verfügbare Zahlungsmittel und Zahlungsmitteläquivalente betrugen $656,707, gegenüber $181,271 zum Jahresende, hauptsächlich getrieben von Netto-Finanzierungserlösen, einschließlich $4,591,848, die als ATM-Emissionserlöse verbucht wurden. Die Erlöse für die sechs Monate zum 30. Juni 2025 lagen bei $215,164 gegenüber $439,589 ein Jahr zuvor, während der Bruttogewinn im Halbjahreszeitraum auf $195,505 schrumpfte. Das Unternehmen verzeichnete einen Nettoverlust von $1.367 Millionen für das Quartal und $2.210 Millionen für die sechs Monate zum 30. Juni 2025.
Die Bilanz verbesserte sich zu einem positiven Eigenkapital von $361,111 aus einem Defizit, unterstützt durch Eigenkapitalfinanzierungen und Ausübung von Warrants, wodurch die Verbindlichkeiten aus Warrants auf null reduziert wurden. Das Unternehmen äußerte erhebliche Zweifel an seiner Fortführungsfähigkeit (going concern) aufgrund wiederkehrender Verluste, eines negativen operativen Cashflows von $3.709 Millionen für die sechs Monate und eines kumulierten Verlusts von rund $27.9 Millionen. Wesentliche nach dem Berichtszeitraum eintretende Entwicklungen umfassen ein Business Combination Agreement mit BlockchAIn Digital Infrastructure, eine Kaufverpflichtungsvereinbarung mit Helena über bis zu $10 Millionen sowie eine geänderte Sponsoringvereinbarung mit Goat Farm Sports.
- Cash increased to $656,707 from $181,271 at year-end, supported by financing activity including $4,591,848 in ATM issuance proceeds
- Stockholders' equity turned positive to $361,111 from a deficit at December 31, 2024
- Warrant liability reduced to $0 as remaining FirstFire warrants were exercised, eliminating that derivative liability
- Entered a Business Combination Agreement with BlockchAIn Digital Infrastructure, a material definitive agreement
- Helena Purchase Agreement provides up to $10.0 million in potential equity purchases (conditional upon registration and other terms)
- Net loss of $1.366,684 for the quarter and $2,209,678 for the six months ended June 30, 2025
- Operating cash burn of $3,708,690 for the six months ended June 30, 2025
- Accumulated deficit of approximately $27.9 million and management notes substantial doubt about the company's ability to continue as a going concern
- Six-month revenue declined to $215,164 from $439,589 in the prior year period
- High revenue concentration: Shopify and Apple units accounted for large shares (Shopify ~64% of six-month 2025 revenue; Apple accounted for ~36% of six-month 2025 revenue)
Insights
TL;DR: Mixed operational weakness with improving liquidity from equity raises; ongoing cash burn and going concern raise material uncertainty.
The company shows meaningful near-term liquidity improvement driven by equity financing, including $4.59 million in ATM issuance proceeds, which increased cash to $656,707. However, operating performance remains weak: six-month revenue declined to $215,164 from $439,589 year-over-year and the firm used $3.709 million in operating cash in the six months ended June 30, 2025. Management explicitly states substantial doubt about going concern. The combination of improved financing access and persistent losses means solvency depends on continued successful financings and execution; absent sustained revenue growth or reduced cash burn, the balance sheet remains fragile.
TL;DR: Entered a material Business Combination Agreement and a conditional $10M purchase commitment, materially changing capital structure prospects.
Signing Day Sports executed a Business Combination Agreement with BlockchAIn Digital Infrastructure that contemplates a reverse-merger structure and conversion of SGN equity into Holdings shares, with earnout and advisory share mechanics tied to 2026 performance. The company also signed a Helena Purchase Agreement providing the right to direct up to $10 million in purchases of common stock, subject to SEC registration and effectiveness timelines. These transactions are material and could materially affect capitalization and liquidity if consummated, but they remain subject to customary closing conditions and regulatory approvals.
Signing Day Sports, Inc. ha comunicato i risultati per il trimestre chiuso al 30 giugno 2025, mostrando nuovi apporti di liquidità ma perdite operative persistenti. Le attività totali erano pari a $1.425 million e la liquidità e gli equivalenti di cassa ammontavano a $656,707, in aumento rispetto a $181,271 a fine esercizio, principalmente grazie a proventi netti da finanziamenti, incluso $4,591,848 contabilizzato come proventi da emissione ATM. I ricavi per i sei mesi chiusi al 30 giugno 2025 sono stati $215,164 rispetto a $439,589 dell’anno precedente, mentre il margine lordo si è ristretto a $195,505 nel periodo semestrale. La società ha registrato una perdita netta di $1.367 milioni per il trimestre e di $2.210 milioni per i sei mesi chiusi il 30 giugno 2025.
Lo stato patrimoniale è migliorato, portando il patrimonio netto a un valore positivo di $361,111 rispetto al deficit precedente, favorito da aumenti di capitale e dall’esercizio di warrant che ha azzerato le passività relative. La società ha espresso significativi dubbi sulla sua capacità di proseguire l’attività come going concern a causa di perdite ricorrenti, di un flusso di cassa operativo negativo di $3.709 milioni nei sei mesi e di un deficit accumulato di circa $27.9 milioni. Tra gli avvenimenti successivi di rilievo figurano un Business Combination Agreement con BlockchAIn Digital Infrastructure, un accordo di impegno d’acquisto con Helena fino a $10 milioni e la modifica dell’accordo di sponsorizzazione con Goat Farm Sports.
Signing Day Sports, Inc. informó resultados para el trimestre terminado el 30 de junio de 2025 que muestran nuevas inyecciones de efectivo pero pérdidas operativas persistentes. Los activos totales fueron $1.425 million y el efectivo y equivalentes de efectivo ascendieron a $656,707, frente a $181,271 al cierre del año, impulsados principalmente por ingresos netos por financiamiento, incluido $4,591,848 registrado como ingresos por emisiones ATM. Los ingresos para los seis meses terminados el 30 de junio de 2025 fueron $215,164 frente a $439,589 del año anterior, mientras que la utilidad bruta se redujo a $195,505 en el periodo semestral. La compañía registró una pérdida neta de $1.367 millones en el trimestre y de $2.210 millones en los seis meses terminados el 30 de junio de 2025.
El balance mejoró hasta mostrar un patrimonio neto positivo de $361,111 desde un déficit, favorecido por financiamientos de capital y el ejercicio de warrants que redujo las obligaciones por warrants a cero. La empresa manifestó dudas sustanciales sobre su capacidad para continuar como negocio en marcha debido a pérdidas recurrentes, un flujo de caja operativo negativo de $3.709 millones en los seis meses y un déficit acumulado de aproximadamente $27.9 millones. Entre los hechos posteriores relevantes se incluyen un Business Combination Agreement con BlockchAIn Digital Infrastructure, un acuerdo de compromiso de compra con Helena por hasta $10 millones y una enmienda al acuerdo de patrocinio con Goat Farm Sports.
Signing Day Sports, Inc.는 2025년 6월 30일로 종료된 분기 실적을 발표했으며, 현금 조달은 계속됐지만 영업 손실이 지속되고 있습니다. 총자산은 $1.425 million, 현금 및 현금성자산은 $656,707로 연초(연말) 기준 $181,271에서 증가했으며, 이는 주로 순자금 조달수익에 기인하고 그중 $4,591,848은 ATM 발행 수익으로 기록됐습니다. 2025년 6월 30일로 종료된 6개월간 매출은 $215,164로 전년 동기 $439,589 대비 감소했으며, 해당 반기 총이익은 $195,505로 축소되었습니다. 회사는 3개월 기준 순손실 $1.367백만, 6개월 기준 순손실 $2.210백만을 기록했습니다.
대차대조표는 자본잉여가 적자로부터 $361,111의 순자본(주주지분)으로 개선되었는데, 이는 자본 조달 및 워런트 행사로 워런트 부채가 0이 된 데 따른 것입니다. 회사는 반복적인 손실, 6개월간 영업활동현금흐름의 마이너스 $3.709백만, 약 $27.9백만의 누적적자를 이유로 계속기업 존속에 대한 중대한 의문을 표명했습니다. 주요 시기 이후 사건으로는 BlockchAIn Digital Infrastructure와의 Business Combination Agreement, Helena와 최대 $10백만까지의 매입 약정, Goat Farm Sports와의 후원계약 수정이 포함됩니다.
Signing Day Sports, Inc. a publié ses résultats pour le trimestre clos le 30 juin 2025, montrant des levées de liquidités continues mais des pertes d’exploitation persistantes. L’actif total s’élevait à $1.425 million et la trésorerie et équivalents de trésorerie à $656,707, contre $181,271 à la clôture de l’exercice, en grande partie grâce à des produits nets de financement, dont $4,591,848 comptabilisés comme produits d’émission ATM. Les revenus pour les six mois clos le 30 juin 2025 se sont élevés à $215,164 contre $439,589 l’année précédente, tandis que la marge brute s’est réduite à $195,505 sur la période semestrielle. La société a enregistré une perte nette de $1.367 million pour le trimestre et de $2.210 million pour les six mois clos le 30 juin 2025.
Le bilan s’est amélioré pour dégager des capitaux propres positifs de $361,111 contre un déficit, aidé par des financements en capital et l’exercice de warrants qui a ramené les passifs liés aux warrants à zéro. La société a exprimé d’importants doutes quant à sa capacité à poursuivre son activité en raison de pertes récurrentes, d’un flux de trésorerie opérationnel négatif de $3.709 million sur six mois et d’un déficit accumulé d’environ $27.9 million. Parmi les événements significatifs postérieurs à la période figurent un Business Combination Agreement avec BlockchAIn Digital Infrastructure, un engagement d’achat avec Helena pour jusqu’à $10 million et un avenant à l’accord de sponsoring avec Goat Farm Sports.
Signing Day Sports, Inc. meldete Ergebnisse für das Quartal zum 30. Juni 2025, die fortgesetzte Kapitalzuflüsse, aber anhaltende operative Verluste zeigen. Die Gesamtaktiva beliefen sich auf $1.425 million und verfügbare Zahlungsmittel und Zahlungsmitteläquivalente betrugen $656,707, gegenüber $181,271 zum Jahresende, hauptsächlich getrieben von Netto-Finanzierungserlösen, einschließlich $4,591,848, die als ATM-Emissionserlöse verbucht wurden. Die Erlöse für die sechs Monate zum 30. Juni 2025 lagen bei $215,164 gegenüber $439,589 ein Jahr zuvor, während der Bruttogewinn im Halbjahreszeitraum auf $195,505 schrumpfte. Das Unternehmen verzeichnete einen Nettoverlust von $1.367 Millionen für das Quartal und $2.210 Millionen für die sechs Monate zum 30. Juni 2025.
Die Bilanz verbesserte sich zu einem positiven Eigenkapital von $361,111 aus einem Defizit, unterstützt durch Eigenkapitalfinanzierungen und Ausübung von Warrants, wodurch die Verbindlichkeiten aus Warrants auf null reduziert wurden. Das Unternehmen äußerte erhebliche Zweifel an seiner Fortführungsfähigkeit (going concern) aufgrund wiederkehrender Verluste, eines negativen operativen Cashflows von $3.709 Millionen für die sechs Monate und eines kumulierten Verlusts von rund $27.9 Millionen. Wesentliche nach dem Berichtszeitraum eintretende Entwicklungen umfassen ein Business Combination Agreement mit BlockchAIn Digital Infrastructure, eine Kaufverpflichtungsvereinbarung mit Helena über bis zu $10 Millionen sowie eine geänderte Sponsoringvereinbarung mit Goat Farm Sports.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from ____________ to _____________
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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| Large accelerated filer ☐ | Accelerated filer ☐ | ||
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If an emerging growth company, indicate
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As of August 8, 2025, there were a total of
SIGNING DAY SPORTS, INC.
Quarterly Report on Form 10-Q
Period Ended June 30, 2025
TABLE OF CONTENTS
| PART I FINANCIAL INFORMATION |
1 | |
| Item 1. | Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 48 |
| Item 4. | Controls and Procedures | 48 |
| PART
II OTHER INFORMATION |
49 | |
| Item 1. | Legal Proceedings | 49 |
| Item 1A. | Risk Factors | 49 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 49 |
| Item 3. | Defaults Upon Senior Securities | 49 |
| Item 4. | Mine Safety Disclosures | 49 |
| Item 5. | Other Information | 49 |
| Item 6. | Exhibits | 50 |
| Signatures | 51 | |
i
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
SIGNING DAY SPORTS, INC.
UNAUDITED FINANCIAL STATEMENTS
| Page | |
| Unaudited Balance Sheets as of June 30, 2025 and December 31, 2024 | 2 |
| Unaudited Statements of Operations | 3 |
| Unaudited Statements of Stockholders’ Equity (Deficit) | 4 |
| Unaudited Statements of Cash Flows | 5 |
| Notes to Unaudited Financial Statements | 6 |
1
SIGNING DAY SPORTS, INC.
Unaudited Balance Sheets
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expense | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Internally developed software, net | ||||||||
| Operating lease right of use asset, net | ||||||||
| Intangible assets, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Deferred revenue | ||||||||
| Current operating lease right of use liability | ||||||||
| Warrant Liability | - | |||||||
| Loans payable | - | |||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Noncurrent operating lease liability | ||||||||
| Total liabilities | $ | $ | ||||||
| Stockholders' equity (deficit) | ||||||||
| Common stock: par value $ | ||||||||
| Preferred Stock: | - | - | ||||||
| Additional paid-in capital | ||||||||
| Subscription receivable | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' equity (deficit) | ( | ) | ||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited financial statements.
2
SIGNING DAY SPORTS, INC.
Statements of Operations
(Unaudited)
| For the Six Months Ended | For the Three Months Ended | |||||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues, net | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating cost and expenses | ||||||||||||||||
| Advertising and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Net loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | - | ( | ) | |||||||||
| Interest income | ||||||||||||||||
| Deferred tax income, net | - | - | ||||||||||||||
| Change in fair value of derivative and gain (loss) on warrant exercise | - | - | - | |||||||||||||
| Other income (expense), net | ( | ) | ( | ) | ||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted Average Common shares outstanding - basic and diluted | ||||||||||||||||
| Net loss per common share - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these unaudited financial statements.
3
SIGNING DAY SPORTS, INC.
Statements of Stockholders’ Equity (Deficit)
(Unaudited)
| Common Stock | Additional Paid-in | Subscription | Accumulated Equity | Total Stockholders' Equity | ||||||||||||||||||||
| Shares | Amount | Capital | Receivable | (Deficit) | (Deficit) | |||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| ATM Agreement Issuance | - | - | ||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | ||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| ATM Agreement Issuance | - | - | ||||||||||||||||||||||
| FirstFire Warrants Exercised | - | - | ||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | ||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Additional | Accumulated | Total Stockholders' | ||||||||||||||||||||||
| Common Stock | Paid-in | Subscription | Equity | Equity | ||||||||||||||||||||
| Shares | Amount | Capital | Receivable | (Deficit) | (Deficit) | |||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Stock-based compensation expense | - | - | ||||||||||||||||||||||
| Stock-based compensation canceled / returned | ( | ) | ( | ) | - | - | - | |||||||||||||||||
| Issuance of commitment fee Firstfire Prom Note | - | - | ||||||||||||||||||||||
| Boustead Issuance on Firstfire Transaction | - | - | ||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Stock-based compensation expense | - | - | ||||||||||||||||||||||
| Issuance of commitment fee pursuant to equity line of credit | - | - | ||||||||||||||||||||||
| Issuance of common stock pursuant to equity line of credit | - | - | ||||||||||||||||||||||
| Stock-based compensation canceled / returned | ( | ) | ( | ) | - | - | - | |||||||||||||||||
| Issuance of commitment fee Firstfire Prom Note | - | - | ||||||||||||||||||||||
| Boustead Issuance on Firstfire Transaction | - | - | ||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
The accompanying notes are an integral part of these unaudited financial statements.
4
SIGNING DAY SPORTS, INC
Unaudited Statements of Cash Flows
(Unaudited)
| For the Six Months Ended June 30 | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Gain on change in fair value of warrants | ( | ) | - | |||||
| Stock-based compensation | ||||||||
| (Increase) decrease in assets: | ||||||||
| Accounts receivable | ||||||||
| Prepaid and other assets | ( | ) | ( | ) | ||||
| Operating lease right of use asset | ||||||||
| Deferred tax asset | - | |||||||
| Increase (decrease) in liabilities: | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued liabilities | ( | ) | ( | ) | ||||
| Deferred revenue | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Proceeds from investments | - | ( | ) | |||||
| Development of internal software | - | |||||||
| Purchase of property and equipment | - | ( | ) | |||||
| Net cash used in investing activates | - | ( | ) | |||||
| Cash flows from financing activities | ||||||||
| Proceeds from revolving line of credit | - | |||||||
| Payments on debt borrowings | ( | ) | - | |||||
| Proceeds from issuance of common stock pursuant to initial public offering | - | |||||||
| Payment of commitment fee for equity line of credit by issuance of common stock | - | |||||||
| Proceeds from issuance of common stock pursuant to ATM agreement | - | |||||||
| Proceeds from issuance of common stock | - | |||||||
| Proceeds from exercise of warrants | - | |||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental cash flow information | ||||||||
| Cash paid for interest expense | $ | - | $ | - | ||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Issuance of common stock in exchange for convertible debt cancelation | $ | - | $ | - | ||||
The accompanying notes are an integral part of these unaudited financial statements.
5
SIGNING DAY SPORTS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Principal Business Activity and Significant Accounting Policies
Principal Business Activity
Signing Day Sports, Inc. (formerly known as Signing Day Sports, LLC) (“Company”) was formed and began operations in January 2019 and provides a digital ecosystem to help high school athletes get discovered and recruited by college coaches across the United States of America.
The Company’s website and mobile phone application provides an opportunity for athletes to create a personal profile by uploading measurables, videos of key drills, testing stats, academics and demographic information. Coaches can evaluate a prospect’s video, watch two separate prospects side by side simultaneously, and perform other actions with the video to visually evaluate talent. Intangible assets consist of development software, customer lists, trademarks, software IP, and customer data in the form of verifiable video uploads, player statistics, and academic records.
Segment Disclosure
The Company
determined that there is
Going Concern Considerations
Our financial statements have been prepared on
a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course
of business. We sustained significant losses and negative cash flows from operations and are dependent on debt and equity financing to
fund operations. We incurred a net loss of approximately $1.366 million and $
Failure to successfully continue to grow operational revenues could harm our profitability and adversely affect our financial condition and results of operations. We face all of the risks inherent in a new business, including the need for significant additional capital, management’s potential underestimation of initial and ongoing costs, and potential delays and other problems in connection with establishing sales channels.
We are continuing our plan to further grow and expand operations and seek sources of capital to pay our contractual obligations as they come due. The accompanying financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
Basis of Presentation
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”).
Out-of-Period Adjustment
During the three months ended June 30, 2025, the
Company recorded out-of-period adjustments to correct errors related to the overstatement of the Company’s cash balance, the understatement
of stock-based compensation expense and the understatement of general and administrative expense that were incorrectly presented within
the financial statements for the period ended March 31, 2025. Regarding the stock-based compensation expense error, Management incorrectly
omitted the expense under the assumption that no new stock options or awards had been granted during the three months ended March 31,
2025, and that awards are typically granted fully vested. However, this assessment did not consider the ongoing vesting of previously
granted stock options and restricted stock awards, which should have resulted in the recognition of stock-based compensation expense during
the period. Further, the Company incorrectly disclosed the amount of unrecognized compensation cost remaining as of December 31, 2024
and March 31, 2025. An adjustment of $
6
Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all short-term, highly liquid investments, including certificates of deposit (“CDs”) purchased with an original maturity of three months or less at the date of purchase, to be cash equivalents. Cash deposits are held with financial institutions with investment-grade ratings in the United States of America, or U.S. Cash deposits typically exceed federally insured limits. As of June 30, 2025 and December 31, 2024, cash and cash equivalents consisted of cash on deposit with banks denominated in U.S. dollars and investments in money market funds.
Accounts Receivable and Allowance for Credit Losses
Accounts Receivable are recorded at the invoiced
amount. The Company may maintain an allowance for credit losses which represents the portion of accounts receivable that is not expected
to be collected over the duration of its contractual life. Credit losses are recorded if the Company believes a customer may not be able
to meet their financial obligations. A considerable amount of judgment is required in determining expected credit losses. Relevant factors
include prior collection history of the customer, the related aging of past due balances, projections of credit losses based on past events
or historical trends, and the consideration of forecasts of future economic conditions. Allowance for credit losses are based on facts
available and are re-evaluated and adjusted on a regular basis. There were $
Payment Terms
Users may access the Company’s website and application on either a free-trial or paid basis. Users that are not eligible or no longer eligible for free-trial access are required to have subscriptions by making payment to the Company prior to access to the Company’s website and application. If a required payment is not made, access to the Company’s website and application is suspended until the required payment is received.
Property and Equipment
Property and equipment is recorded at cost. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense. When equipment is retired or sold, the cost and related accumulated depreciation are eliminated from the accounts and the resultant gain or loss is reflected in income.
Depreciation is provided using the straight-line
method, based on useful lives of the assets which range from
The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on this assessment there was no impairment at June 30, 2025 and December 31, 2024.
Internally Developed Software
Software consists of an internally developed information
system for use by the Company in matching athletes with qualified coaches. The Company has capitalized costs incurred with development
and upgrades of the information systems in accordance with applicable accounting standards. Costs incurred up to and including the feasibility
stage of development as well as maintenance costs are expensed as incurred. The Company amortizes these capitalized costs on a straight-line
basis over the estimated useful life of the asset of
7
The Company periodically performs reviews of the recoverability of such capitalized technology costs. At the time a determination is made that capitalized amounts are not recoverable based on estimated cash flows to be generated from technology; any remaining capitalized amounts are written off. During the three months ended June 30, 2025 and 2024, the Company did not have an impairment charge.
Intangible Assets
Intangible assets consist of customer lists, trademarks, software IP, and customer data in the form of verifiable video uploads, player statistics, and academic records. Intangible assets are stated at cost less accumulated amortization. For intangible assets that have finite lives, the assets are amortized using the straight-line method over the estimated useful lives of the related assets. For intangible assets with indefinite lives, the assets are tested periodically for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition.
Stock Subscription Receivable
The Company records stock issuances at the effective date. If the subscription is not funded upon issuance, the Company records a stock subscription receivable as an asset on the balance sheet. When stock subscription receivables are not received prior to the issuance of financial statements at a reporting date in satisfaction of the requirements under Accounting Standards Codification (“ASC”), 505-10-45-2, the stock subscription receivable is reclassified as a contra account to stockholder’s equity (deficit) on the balance sheet.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. Total cash balances exceeded insured balances by the Federal Deposit Insurance Corporation as of June 30, 2025 and December 31, 2024. The Company has cash equivalents that are invested in highly rated money market funds invested only in obligations of the U.S. government and its agencies.
Warrant Liability
Warrants for shares that are not deemed to be indexed the Company’s shares are classified as liabilities in the consolidated balance sheets. At initial recognition, the Company classified these warrants as liabilities on the balance sheets at their estimated fair value. The liability classified warrants are subject to remeasurement at each balance sheet date, with changes in fair value recognized in gain or loss on fair value adjustment of stock warrant liabilities in the consolidated statements of operations and comprehensive loss.
Fair Value Measurements
The Company uses the fair value framework that prioritizes the inputs to valuation techniques for recognizing financial assets and liabilities measured on a recurring basis and for non-financial assets and liabilities when these items are re-measured. Fair value is considered to be the exchange price in an orderly transaction between market participants, to sell an asset or transfer a liability at the measurement date. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. The Company categorizes each of its fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety.
These levels are:
Level 1 – This level consists of valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured.
Level 2 – This level consists of valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques.
Level 3 – This level consists of valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect assumptions about inputs that market participants would use in pricing an asset or liability.
8
The Company’s financial instruments also include accounts and receivable, accounts payable, and accrued liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the balance sheet.
ASC 825-10, Financial Instruments (“ASC 825-10”), allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date.
The Company identified certain warrant instruments that are required to be presented on the balance sheets at fair value in accordance with ASC 820, Fair Value Measurement.
Due to the short-term nature of all financial assets and liabilities, their carrying value approximates their fair value as of the balance sheet dates.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of internally developed software and net operating loss and research and development tax credit carry forwards for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Company evaluates its tax positions that have
been taken or are expected to be taken on income tax returns to determine if an accrual is necessary for uncertain tax positions. As of
June 30, 2025 and December 31, 2024 the unrecognized tax benefits accrual was
Deferred Revenue
Deferred revenues are contract liabilities for collections on subscription agreements in excess of revenue recognized.
Revenue Recognition
The Company accounts for revenue under the guidance of ASC 606, Revenue from Contracts from Customers (“ASC 606”).
ASC 606 prescribes a five-step model that focuses on transfer of control and entitlement to payment when determining the amount of revenue to be recognized. The five steps are as follows:
(1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
Revenue from performance obligations satisfied at a point in time consist of sales to individuals representing a one-month subscription and are recognized at the end of the subscription.
Revenue from performance obligations satisfied over time consists of the sale of subscription agreements to individual organizations or customers that are more than one month in duration and are recognized on a monthly basis over the life of the subscription agreement.
9
Advertising Costs
Advertising and marketing costs are expensed as
incurred. Such costs amounted to $
Contract Costs
Incremental costs of obtaining a contract are expensed as incurred as the amortization period of the asset that otherwise would have been recognized is estimated to be one year or less.
Stock-Based Compensation
The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation—Stock Compensation ("ASC 718"), which requires the measurement and recognition of compensation expense at the fair value of stock-based compensation awards that are ultimately expected to vest. Stock-based compensation expense recognized includes the compensation cost for all stock-based awards granted to employees, officers, and directors based on the grant date fair value. ASC 718 is also applied to awards modified, repurchased, or cancelled during the periods reported. Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services.
Basic and Diluted Net Loss per Common Share
Basic loss per common share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding for each period. Diluted loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding plus the dilutive effect of shares issuable through the common stock equivalents. The weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. As the Company generated net losses for the periods presented, diluted net loss per share is the same as basic loss per share as the effect of the issuance of restricted stock awards, stock options, and warrants would be anti-dilutive.
The following potentially dilutive shares were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive:
| Three Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Stock options | ||||||||
| Warrants | ||||||||
| Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Stock options | ||||||||
| Warrants | ||||||||
Leases
At the inception or modification of a contract, the Company determines whether a lease exists and classifies its leases as an operating or finance lease at commencement. Right-of-use ("ROU") assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent their obligation to make lease payments arising from the lease.
As most of the Company’s leases do not provide an implicit interest rate, the lease liability is calculated at lease commencement as the present value of unpaid lease payments using the Company’s estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease.
10
The right-of-use asset also reflects any prepaid rent, initial direct costs incurred and lease incentives received. The Company’s lease terms may include optional extension periods when it is reasonably certain that those options will be exercised.
Leases with an initial expected term of 12 months or less are not recorded in the Balance Sheet and the related lease expense is recognized on a straight-line basis over the lease term. For certain classes of underlying assets, the Company has elected to not separate fixed lease components from the fixed non-lease components.
New Accounting Pronouncements
The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it which are listed below:
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation table, as well as disclosure of income taxes paid disaggregated by jurisdiction. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2024. The amendments in this update should be applied on a prospective basis and retrospective application is permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.
In March 2024, the FASB issued ASU 2024-02, “Codification Improvements - Amendments to Remove References to the Concepts Statements”. This ASU contains amendments to the Codification that remove references to various FASB Concepts Statements. The effort facilitates Codification updates for technical corrections such as conforming amendments, clarifications to guidance, simplifications to wording or the structure of guidance, and other minor improvements. This ASU will be effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its financial statements and disclosures.
On November 4, 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses," that improves financial reporting by requiring public companies to disclose additional information about certain expenses in the notes to the financial statements. The amendments in the ASU are effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2023-07 and intends to adopt and report on this topic as required by this ASU.
Note 2 - Revenues, net
The following table disaggregates the Company’s revenue based on the timing of satisfaction of performance obligations as of:
| For the Three Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue recognized over time | $ | $ | ||||||
| Revenue recognized at a point in time | - | |||||||
| Total revenue from contracts with customers | $ | $ | ||||||
| For the Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue recognized over time | $ | $ | ||||||
| Revenue recognized at a point in time | - | |||||||
| Total revenue from contracts with customers | $ | $ | ||||||
11
The following table presents our contract liabilities (deferred revenue) and certain information related to these balances as of:
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Contract liabilities (deferred revenue) | $ | $ | ||||||
| For the Three Months Ended June 30, | ||||||||
| Revenue recognized in the period from: | 2025 | 2024 | ||||||
| Amounts included in contract liabilities at the beginning of the period | $ | $ | ||||||
| For the Six Months Ended June 30, | ||||||||
| Revenue recognized in the period from: | 2025 | 2024 | ||||||
| Amounts included in contract liabilities at the beginning of the period | $ | $ | ||||||
The Company recognized the December 31, 2023 balance fully in the year ended December 31, 2024. The Company expects to recognize the December 31, 2024 balance fully in the year ending December 31, 2025.
Revenue Concentration
Apple
For the three months ended June 30, 2025,
Shopify
For the three months ended June 30, 2025,
Note 3 - Property and Equipment, net
The Company’s property and equipment include the following:
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Office Furniture | $ | $ | ||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense of property and equipment was $
12
Note 4 - Internally Developed Software
Internally developed software asset consists of the following:
| Accumulated | ||||||||||||||||
| Cost Basis | Amortization | Impairment | Net | |||||||||||||
| June 30, 2025 | ||||||||||||||||
| Internally developed software | $ | $ | ( | ) | $ | - | $ | |||||||||
| December 31, 2024 | ||||||||||||||||
| Internally developed software | $ | $ | ( | ) | $ | - | $ | |||||||||
Amortization expense for the three months ended June 30, 2025 and 2024
was $
Note 5 - Intangible Assets
The Company’s intangible assets include the following:
| Accumulated | ||||||||||||
| Cost Basis | Amortization | Net | ||||||||||
| June 30, 2025 | ||||||||||||
| Intellectual property | $ | $ | ( | ) | $ | |||||||
| Proprietary technology | ( | ) | - | |||||||||
| Total | $ | $ | ( | ) | $ | |||||||
| December 31, 2024 | ||||||||||||
| Intellectual property | $ | $ | ( | ) | $ | |||||||
| Proprietary technology | ( | ) | - | |||||||||
| Total | $ | $ | ( | ) | $ | |||||||
Amortization expense for the three months ended June 30, 2025 and 2024
was $
Estimated amortization for intangible assets with definitive lives for the remaining nine months of 2025 is as follows:
| Amount | ||||
| Years ending December 31, | ||||
| 2025 (remaining six months) | ||||
| Total | $ | |||
Note 6 - Accrued Liabilities
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accrued Expenses | $ | - | $ | |||||
| Accrued Payroll | ||||||||
| Accrued Interest | ||||||||
| Total Accrued Expenses | $ | $ | ||||||
8% Nonconvertible Unsecured Promissory Notes
During the
year ended December 31, 2023, the Company entered into 11 unsecured nonconvertible notes payable, for $
13
In connection
with the closing of the Company’s initial public offering, warrants to purchase a total of
Note 7 - Notes Payable
The Company’s notes payable consists of the following:
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Daniel Nelson Promissory Notes | $ | - | $ | |||||
| October 2024 Note | - | |||||||
| $ | - | $ | ||||||
| Less unamortized debt issuance costs | - | - | ||||||
| Debt, less unamortized debt issuance costs | $ | - | $ | |||||
Daniel Nelson Promissory Notes
On September
20, 2023, a promissory note was issued to Daniel Nelson, Chief Executive Officer, Chairman and a director of the Company, in the principal
amount of $
On April
11, 2024, Daniel Nelson, the Chief Executive Officer, Chairman and a director of the Company, advanced $
On September
16, 2024, the Company issued a promissory note to Mr. Nelson, dated September 16, 2024, in the principal amount of $
14
The outstanding
balance at December 31, 2024 was $
FirstFire Convertible Note
On May 16,
2024, the Company entered into a Securities Purchase Agreement, dated as of May 16, 2024, between the Company and FirstFire, as amended
(as amended, the “May 2024 FF Purchase Agreement”) by that certain Amendment to the Transaction Documents, dated as of June
18, 2024, between the Company and FirstFire (the “Amendment to May 2024 FF Transaction Documents”), pursuant to which, as
a private placement transaction, the Company was required to issue FirstFire a senior secured promissory note, as amended by that certain
Amendment to Senior Secured Promissory Note and Warrants, dated as of May 20, 2024, between the Company and FirstFire (the “Amendment
to May 2024 FF Note and May 2024 FF Warrants”), in the principal amount of $
The Company
also entered into a Security Agreement, dated as of May 16, 2024, between the Company and FirstFire (the “May 2024 FF Security Agreement”),
under which the Company agreed to grant FirstFire a security interest to secure the Company’s obligations under the May 2024 FF
Note in all assets of the Company except for a certificate of deposit account with Commerce Bank of Arizona (“CBAZ”) with
an approximate balance of $
The closing
of the initial transaction contemplated by the May 2024 FF Purchase Agreement, including FirstFire’s payment of the purchase price
of $
The total
proceeds from the debt issuance were allocated between the debt instrument, common stock, and the warrants based on their fair values
at the issuance date. The portion of the proceeds allocated to the warrants of $
15
On July
26, 2024, the Company fully repaid the Second CBAZ Promissory Note. The certificate of deposit account underlying the CBAZ Collateral
was closed and redeemed with an early withdrawal penalty of $
On August
23, 2024, FirstFire converted $
FirstFire Convertible Note
On June
18, 2024, the Company entered into the Securities Purchase Agreement, dated as of June 18, 2024 (the “June 2024 FF Purchase Agreement”),
between the Company and FirstFire, pursuant to which, as a private placement transaction, the Company was required to issue FirstFire
a senior secured promissory note on June 18, 2024, in the principal amount of $
The Company also entered into a Security Agreement, dated as of June 18, 2024, between the Company and FirstFire (the “June 2024 FF Security Agreement”), under which the Company agreed to grant FirstFire a security interest to secure the Company’s obligations under the June 2024 FF Note in all assets of the Company except for the CBAZ Collateral, until the full repayment of the Second CBAZ Promissory Note, pursuant to the Second CBAZ Loan Agreement.
The closing
of the transaction contemplated by the June 2024 FF Purchase Agreement, including FirstFire’s payment of the purchase price of $
The total
proceeds from the debt issuance were allocated between the debt instrument, common stock, and the warrants based on their fair values
at the issuance date. The portion of the proceeds allocated to the warrants of $
On September 19, 2024, FirstFire
converted the entire balance under the June 2024 FF Note of $
16
January 29, 2025 Voluntary Temporary Offer of Reduced Exercise Price of Warrants Issued to FirstFire Global Opportunities Fund, LLC
On January 29, 2025, the Company delivered a letter
(the “January 2025 Reduced Exercise Price Offer”) to FirstFire containing an offer to voluntarily temporarily reduce the Exercise
Price from the current applicable exercise price of $
Exercise to Purchase Remaining Shares under First May 2024 FF Warrant
On January 30, 2025, the First May 2024 FF Warrant
was exercised to purchase all of the remaining
DRCR Convertible Promissory Note
On October
7, 2024, the Company issued a Convertible Promissory Note to DRCR, dated October 7, 2024, in the principal amount of $
In addition,
the October 2024 Note provides that at any time after an event of default, the holder of the October 2024 Note may convert the outstanding
principal amount plus accrued and unpaid interest into shares of common stock at a conversion price of $
The outstanding
balance at December 31, 2024 was $
Note 8 - Fair value of financial instruments
The determination of fair value measurements is based on the assumptions that market participants would use in pricing the asset or liability.
The Company’s First May 2024 Warrants and First June 2024 Warrants are recorded at fair value each reporting period (see Note 7). The Company used a Black Scholes model to value the Company’s derivative liability (see Note 7). The significant unobservable input used in the fair value measurement of the Company’s Level 3 liabilities is the volatility, which was developed using historical data of the Company or of peer companies when there is limited availability of market data. A significant increase (decrease) in these inputs could result in a significantly higher (lower) fair value measurement.
17
There were no transfers between levels during the three and six months ended June 30, 2025.
The following table provides the fair value of the Company’s financial liabilities carried at fair value and measured on a recurring basis:
| Period ended | |||||||||||
| Level | June 30, 2025 | December 31, 2024 | |||||||||
| Warrant liability | 3 | - | $ | ||||||||
The following table presents a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that use significant unobservable inputs (level 3) and the related gains and losses recorded in the consolidated statements of operations and comprehensive loss during the period:
| Derivative liability | ||||
| Balance at December 31, 2024 | $ | |||
| Extinguishment of warrant liability upon exercise | ( | ) | ||
| Gain on change in fair value of warrant liability | ( | ) | ||
| Balance at June 30, 2025 | $ | - | ||
Note 9 - Leases
The Company
leased office space under a long-term operating lease from a third party through May 31, 2023. Monthly rent was $
In November
2022, the company signed a
Leases with
an initial expected term of
18
Total lease assets and liabilities were as follows:
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Operating lease right of use asset | $ | $ | ||||||
| Less: operating asset lease accumulated depreciation | ( | ) | ( | ) | ||||
| Net operating lease right of use asset | $ | |||||||
| Current operating lease liability | $ | $ | ||||||
| Noncurrent operating lease liability | ||||||||
| Total operating lease liability | $ | $ | ||||||
Future minimum lease payments under non-cancelable leases as of June 30, 2025 were as follows:
| Amount | ||||
| Years ending December 31, | ||||
| 2025 (remaining six months) | $ | |||
| 2026 | ||||
| Total future minimum lease payments | $ | |||
| Less: interest | ||||
| Total lease liability | $ | |||
Note 10 - Income Taxes
There was no deferred tax income and no current tax expense for the three and six months ended June 30, 2025.
Deferred tax assets consist of the following components as of June 30, 2025 and December 31, 2024:
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Deferred Tax Asset | ||||||||
| Net operating loss carryforwards | $ | $ | ||||||
| Internally developed software / Intangibles | ||||||||
| Furniture and fixtures | ( | ) | ||||||
| Charitable Contribution Carryforward | ||||||||
| R&D Tax Credit Carryforwards | ||||||||
| AZ Refundable R&D Tax Credit | ||||||||
| Net deferred tax assets before valuation allowance | $ | $ | ||||||
| Less valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | $ | ||||||
The Company has a valuation allowance against most of the amount of its net deferred tax assets due to the uncertainty of realization of the deferred tax assets due to the operating loss history of the Company. The Company currently provides a valuation allowance against deferred taxes when it is more likely than not that some portion, or all of its deferred tax assets will not be realized. The valuation allowance could be reduced or eliminated based on future earnings and future estimates of taxable income.
As of June 30, 2025 and December 31, 2024, the
Company had approximately $
19
Note 11 - Stockholder’s Equity (Deficit)
Equity Incentive Plan
In August
2022, the Board of Directors adopted the Company’s 2022 Equity Incentive Plan (the “2022 Plan”), effective as of August
31, 2022. Awards that may be granted under the 2022 Plan include: (a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock
Appreciation Rights, (d) Restricted Awards, (e) Performance Share Awards, and (f) Performance Compensation Awards. The persons eligible
to receive Awards are the Employees, Consultants and Directors of the Company and its Affiliates and such other individuals designated
by the Committee who are reasonably expected to become Employees, Consultants and Directors after the receipt of Awards. The purpose of
the 2022 Plan is to attract and retain the types of Employees, Consultants and Directors who will contribute to the Company’s long-term
success; (b) provide incentives that align the interests of Employees, Consultants and Directors with those of the stockholders of the
Company; and (c) promote the success of the Company’s business. The 2022 Plan shall be administered by the Committee or, in the
Board’s sole discretion, by the Board. Subject to the terms of the Plan and the provisions of Section 409A of the Code (if applicable),
the Committee’s charter and Applicable Laws, and in addition to other express powers and authorization conferred by the Plan. The
Board initially reserved
As
of June 30, 2025, there were
Preferred Stock
The Company’s board of directors is authorized to designate the terms and conditions of any preferred stock the Company may issue without further action by the stockholders of the Company.
At The Market Offering Agreement
On December 2, 2024,
the Company entered into the At The Market Offering Agreement, dated December 2, 2024 (the “ATM Agreement”), by and between
the Company and H.C. Wainwright & Co., LLC, as sales agent (“Wainwright”). Pursuant to the ATM Agreement, the Company
may offer and sell, from time to time, shares of common stock, through or to Wainwright as the Company’s sales agent or as principal,
subject to the terms and conditions set forth in the ATM Agreement. As of June 30, 2025, the Company has registered the sale, at its discretion,
of shares of common stock in an aggregate offering amount up to $
The offer and sale of shares of common stock under the ATM Agreement is registered and being conducted pursuant to the Company’s shelf registration statement on Form S-3, which was filed with the SEC on December 2, 2024 (File No. 333-283559) (the “Shelf Registration Statement”), and the related prospectus, as supplemented by prospectus supplements pursuant to Rule 424(b) under the Securities Act. The Shelf Registration Statement was declared effective by the SEC on December 5, 2024. The Company is not obligated to make any sales of shares of common stock under the ATM Agreement and no assurance can be given that the Company will sell any shares of common stock under the ATM Agreement, or, if the Company does, as to the price or amount of shares of common stock that the Company will sell, or the dates on which any such sales will take place.
20
The Company or Wainwright,
under certain circumstances and upon notice to the other, may suspend the offering of shares of common stock under the ATM Agreement.
As of June 30, 2025, the offering of shares of common stock pursuant to the ATM Agreement will terminate upon the sale of shares of common
stock in an aggregate offering amount equal to $
The Company will pay
Wainwright a cash commission equal to
The Company made certain customary representations, warranties and covenants in the ATM Agreement concerning the Company and the Shelf Registration Statement, prospectus, prospectus supplement and other documents and filings relating to the offering of the shares of common stock. In addition, the Company has agreed to indemnify Wainwright against certain liabilities, including liabilities under the Securities Act.
During the three months
ended June 30, 2025, a total of
Share-Based Payment Valuation
The grant date fair value of stock options granted containing service-based vesting conditions and generally vesting in certain increments over time is determined using the Black-Scholes option-pricing model. Prior to the start of trading of the Company’s common stock on November 14, 2023 on the NYSE American LLC stock exchange, the grant-date fair value of the underlying common stock was calculated utilizing a probability-weighted expected return valuation model as of the date the awards are granted. Beginning November 14, 2023, the grant-date fair value of the underlying common stock is calculated utilizing the daily closing price as reported by NYSE American LLC.
No stock options or restricted stock awards were granted or exercised during the current year and thus, only continued vesting of awards granted in the prior year.
The total grant-date fair value of the restricted
stock granted during the three and six months ended June 30, 2024 is $
Note 12 - Commitments and Contingencies
Legal
The Company may be a party to various legal actions arising from the normal course of business. In management’s opinion, the Company has adequate legal defenses and/or insurance coverage and does not believe the outcome of such legal actions will materially affect the Company’s operation and/or financial position.
Collaborative Arrangements
The company has entered into collaborative arrangements with various parties for the cross promotion of technologies and services within certain geographical areas. These arrangements do not commit the Company or the counterpart to any financial obligation. If these arrangements result in a formal project, the Company and the counterparties will receive certain equity consideration in the project or be given first right of refusal to provide their products or services to the projects, as defined by the respective agreements. To date, these arrangements have not resulted in any formal projects.
21
Note 13 - Related Party Transactions
Daniel Nelson Promissory Notes
During the years ended December 31, 2024 and 2023, the Company entered into various promissory notes with Daniel Nelson, the Chief Executive Officer, Chairman, and a director of the Company. Refer to Note 7 for a discussion of the Daniel Nelson Promissory Notes.
Note 14 - Segment Information
The Company
has
Note 15 - Subsequent Events
Entry into a Material Definitive Agreement
On May 27, 2025, the Company entered into a Business Combination Agreement (the “Business Combination Agreement”) with BlockchAIn Digital Infrastructure, Inc., a Delaware corporation (“Holdings”), One Blockchain LLC, a Delaware limited liability company (“One Blockchain”), BCDI Merger Sub I Inc., a Delaware corporation and a wholly owned subsidiary of Holdings (“Merger Sub I”), and BCDI Merger Sub II LLC, a Delaware limited liability company and a wholly owned subsidiary of Holdings (“Merger Sub II”).
The Business Combination
Agreement provides that, upon the terms and subject to the conditions set forth therein, the parties will effect a business combination
transaction in which: (a) Merger Sub I will merge with and into Signing Day Sports (the “First Merger”), with Signing Day
Sports surviving the First Merger as a direct wholly owned subsidiary of Holdings; and (b) Merger Sub II will merge with and into One
Blockchain (the “Second Merger” and, together with the First Merger, the “Mergers,” and, together with the other
transactions contemplated by the Business Combination Agreement, the “Transactions”), with One Blockchain surviving the Second
Merger as a direct wholly owned subsidiary of Holdings. At the effective time of the First Merger, each outstanding share of common stock
of Signing Day Sports, $
The Business Combination
Agreement provides for the issuance of additional Holdings Shares (the “Earnout Shares”) to the members of One Blockchain
as of immediately prior to the closing of the Mergers (the “Closing”) if the net income plus interest, taxes, depreciation
and amortization of Holdings for the fiscal year ending December 31, 2026 equals or exceeds $
22
In addition, the Business
Combination Agreement provides that Holdings will issue to Maxim Partners LLC (“Maxim”) (or its designees) a number of Holdings
Shares equal to
The Closing is subject to the satisfaction or, to the extent permissible, the waiver, of certain conditions, including: (i) the expiration or termination of applicable antitrust waiting periods and any required antitrust consents having been obtained; (ii) approval of the Business Combination Agreement, the Mergers and the other contemplated Transactions by the requisite vote of Signing Day Sports stockholders; (iii) the Registration Statement (as defined below) having become effective in accordance with the provisions of the Securities Act of 1933, as amended (the “Securities Act”), and not being subject to any stop order or proceeding seeking a stop order or having been withdrawn; (iv) the approval for listing of the Holdings Shares to be issued pursuant to the Business Combination Agreement on the NYSE American (or another national securities exchange); (v) the absence of any law or order prohibiting the Transactions; (vi) the accuracy of the parties’ representations and warranties and compliance with their covenants, subject to specified materiality standards; (vii) the termination of the employment agreements of each of Craig Smith, the Chief Operating Officer and Secretary of Signing Day Sports, Daniel Nelson, the Chairman and Chief Executive Officer of Signing Day Sports, and Jeffry Hecklinski, the President of Signing Day Sports without any continuing liability to Signing Day Sports, Holdings, or One Blockchain; (viii) the execution of Executive Consulting Agreements with Holdings or one of its subsidiaries that provide that each of Mr. Smith, Mr. Nelson, and Mr. Hecklinski will be engaged as a consultant for a 24-month term and certain severance compensation; and (ix) other customary closing conditions.
Regulation FD Disclosure
On July 11, 2025, the Company issued a press release announcing the confidential submission of a draft registration statement on Form S-4 (the “Registration Statement”) to the U.S. Securities and Exchange Commission (the “SEC”) by BlockchAIn Digital Infrastructure, Inc., a Delaware corporation (“BlockchAIn”). As previously reported, the Company entered into the Business Combination Agreement expected to result in a reverse merger transaction.
Entry into a Material Definitive Agreement
On July 21, 2025, the
Company entered into a Purchase Agreement, dated as of July 21, 2025 (the “Helena Purchase Agreement”), between Signing Day
Sports and Helena Global Investment Opportunities 1 Ltd. (“Helena”). Under the Helena Purchase Agreement, the Company has
the right, but not the obligation, to direct Helena to purchase up to $
Pursuant to the Helena Purchase Agreement, the Company will be required to file a registration statement with the SEC registering the resale of Company common stock and any securities issued or issuable to Helena from time to time under the Helena Purchase Agreement within 30 calendar days of the date of the Helena Purchase Agreement, and to have such registration statement be declared effective by the SEC within 90 calendar days of the date of the Helena Purchase Agreement.
Entry into a Material Definitive Agreement
On July 31, 2025, the
Company entered into an Amended and Restated Sponsorship Agreement, dated as of July 31, 2025 (the “Amended and Restated Sponsorship
Agreement”), between Goat Farm Sports (“GFS”) and the Company. The Amended and Restated Sponsorship Agreement provides
for (i) a reduced term, which shall now terminate on December 31, 2025, (ii) a carve-out to the exclusivity provision permitting GFS
to partner with CurvAI for the 2025 Bowl (as defined in the January 2025 Form 8-K), and (iii) amendments to the provisions in the Sponsorship
Agreement relating to the Sponsorship Payments (as such term was defined by the Sponsorship Agreement), which, under the Amended and
Restated Sponsorship Agreement, now provide for the Company to pay $
We have evaluated subsequent events through August 12, 2025, the date the financial statements were available to be issued. Based on our evaluation, no additional events than listed above have occurred that would require adjustment to or disclosure in the financial statements.
23
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
References to the “Company”, “our”, “us”, “we”, “our company” or “Signing Day Sports”, refer to Signing Day Sports, Inc., a Delaware corporation. “Common stock” refers to the Company’s Common Stock, par value $0.0001 per share. The following management’s discussion and analysis of financial condition and results of operations provides information that management believes is relevant to an assessment and understanding of our plans and financial condition. The following financial information should be read in connection with the unaudited financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”) and the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on April 11, 2025 (the “2024 Annual Report”) and the risk factors contained therein.
Note Regarding Trademarks, Trade Names and Service Marks
We use various trademarks, trade names and service marks in our business. For convenience, we may not include the ℠, ® or ™ symbols, but such omission is not meant to indicate that we would not protect our intellectual property rights to the fullest extent allowed by law. Any other trademarks, trade names or service marks referred to in this Quarterly Report on Form 10-Q are the property of their respective owners.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
| ● | our ability to identify and execute value-enhancing merger, acquisition or other strategic transactions; |
| ● | anticipated benefits from strategic alliances, sponsorships, and collaborations with certain sports organizations or celebrity professional sports consultants; |
| ● | our ability to implement certain desired artificial intelligence features into our platform; |
| ● | our anticipated ability to obtain sufficient funding to maintain operations and offer additional services and offerings; |
| ● | expected market acceptance of existing and planned offerings; |
| ● | anticipated competition from existing or new offerings that may emerge; |
| ● | anticipated favorable impacts from strategic changes to our business on our net sales, revenues, income from continuing operations, or other results of operations; |
| ● | our expected ability to attract new users and customers; |
| ● | our expected ability to increase the rate of subscription renewals; |
| ● | our expected ability to slow the rate of user attrition; |
| ● | our expected ability and third parties’ abilities to retain or obtain intellectual property rights; |
| ● | our expected ability to adequately support future growth; |
| ● | our expected ability to comply with user data privacy laws and other current or anticipated legal requirements; |
| ● | anticipated legal and regulatory requirements and our ability to comply with such requirements; and |
| ● | our expected ability to attract and retain key personnel to manage our business effectively. |
24
In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item 1A. “Risk Factors” in our 2024 Annual Report, and elsewhere in this Quarterly Report on Form 10-Q. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events or information as of the date on which the statements are made in this Quarterly Report on Form 10-Q. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.
Overview
We are a technology company developing and operating a platform to give significantly more student-athletes the opportunity to go to college and continue playing sports. Our platform, Signing Day Sports, is a digital ecosystem to help student-athletes get discovered and recruited by coaches and recruiters across the country. We fully support football, baseball, softball, and men’s and women’s soccer, and we plan to expand the Signing Day Sports platform to include additional sports. Each sport is led by former professional athletes and coaches who know what it takes to get to the big leagues.
Signing Day Sports launched in 2019. During the first six months of 2025, 3,501 aspiring high school athletes and groups throughout the United States subscribed to the Signing Day Sports platform. Colleges in the National Collegiate Athletic Association (NCAA) Division I, Division II, and Division III, and the National Association of Intercollegiate Athletics (NAIA), have utilized our platform for recruitment purposes.
In short, we offer a comprehensive solution that services the needs of all participants in the sports recruitment process. Our goal is to change the way sports recruitment is done for the betterment of everyone.
Our Historical Performance
The Company’s management has expressed substantial doubt as to the Company’s ability to continue as a going concern. We have incurred losses for each period from our inception and have accumulated a significant deficit. For the six months ended June 30, 2025 and 2024, our net loss was approximately $2.2 million and approximately $3.8 million, respectively, and our net cash used in operating activities was approximately $3.7 million and approximately $3.0 million, respectively. As of June 30, 2025 and December 31, 2024, we had an accumulated deficit of approximately $27.9 million and approximately $25.7 million, respectively. As of June 30, 2025, we had total current liabilities of approximately $1.1 million, compared to approximately $0.7 million in cash and cash equivalents.
As a result of our critical financial condition, we are actively seeking multiple means to raise funds, primarily to pay off existing indebtedness and accounts payable to avoid loan defaults, lawsuits, bankruptcy, and liquidation, rather than for growth or expansion. If we are successful in these regards, we believe that we will be able to fund our planned operations and growth until June 30, 2026 and for at least 12 months beyond that period in order to transition to profitable operations and finance operations primarily from profits. Such acquisition and funding, if obtained, is expected to mitigate the factors which raise substantial doubt about the Company’s ability to continue as a going concern. However, there can be no assurance that the Company will be successful in these regards, or that its financial resources will be sufficient to remain in operation or that necessary financing will be available on satisfactory terms, if at all. The Company may be forced to significantly reduce its spending, delay or cancel its planned activities, sell off substantial assets, or substantially change its business plans or corporate or capital structure. There can also be no assurance that the Company will ever succeed in generating sufficient revenues to continue its operations as a going concern. For further discussion, see “We will need to obtain additional funding to continue operations. If we fail to obtain the necessary financing or fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations and be forced to significantly delay, scale back or discontinue our operations or explore other strategies.” in Part II. Item 1A. “Risk Factors” of the 2024 Annual Report.
25
Emerging Growth Company and Smaller Reporting Company
We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
| ● | have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”); |
| ● | present three years, and may instead present only two years, of audited financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in certain filings with the SEC; |
| ● | comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); |
| ● | comply with certain greenhouse gas emissions disclosure and related third-party assurance requirements; |
| ● | submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and |
| ● | disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. |
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1,235,000,000; (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter; or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
To the extent that we continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Exchange Act, after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including as to: (i) the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act; (ii) scaled executive compensation disclosures; (iii) presenting two years of audited financial statements, instead of three years; and (iv) compliance with certain greenhouse gas emissions disclosure and related third-party assurance requirements.
26
Principal Factors Affecting Our Financial Performance
Our operating results are primarily affected by the following factors:
| ● | our anticipated ability to obtain sufficient funding to maintain operations and offer additional services and offerings |
| ● | our ability to acquire new customers and users or retain existing customers and users; |
| ● | our ability to offer competitive product pricing; |
| ● | our ability to broaden product offerings; |
| ● | our ability to leverage technology and use and develop efficient processes; |
| ● | our ability to attract and retain talented employees; |
| ● | industry demand and competition; and |
| ● | market conditions and our market position. |
Results of Operations
Comparison of Three Months Ended June 30, 2025 and 2024
| Three Months Ended June 30, | ||||||||||||||||
| 2025 | 2024 | $ Change | % Change | |||||||||||||
| Revenues, net | $ | 66,806 | $ | 204,962 | $ | (138,156 | ) | -67.4 | % | |||||||
| Cost of revenues | 5,358 | 62,160 | (56,802 | ) | -91.4 | % | ||||||||||
| Gross profit (loss) | $ | 61,448 | $ | 142,802 | $ | (81,354 | ) | -57.0 | % | |||||||
| Operating cost and expenses | ||||||||||||||||
| Advertising and marketing | 602 | 884 | (282 | ) | -31.9 | % | ||||||||||
| General and administrative | 1,644,283 | 1,267,952 | 376,331 | 29.7 | % | |||||||||||
| Total operating expenses | $ | 1,644,885 | $ | 1,268,836 | $ | 376,049 | 29.6 | % | ||||||||
| Net income (loss) from operations | $ | (1,583,437 | ) | $ | (1,126,034 | ) | $ | (457,403 | ) | 40.6 | % | |||||
| Other Income (expense) | ||||||||||||||||
| Interest expense | - | (41,156 | ) | 41,156 | -100.0 | % | ||||||||||
| Interest income | 7,037 | 27,832 | (20,795 | ) | -74.7 | % | ||||||||||
| Deferred tax income | - | 16,571 | (16,571 | ) | -100.0 | % | ||||||||||
| Other income (expense), net | 209,716 | (190,055 | ) | 399,771 | -210.3 | % | ||||||||||
| Total other income (expense) | $ | 216,753 | $ | (186,808 | ) | $ | 403,561 | -216.0 | % | |||||||
| Net loss | $ | (1,366,684 | ) | $ | (1,312,842 | ) | $ | (53,842 | ) | 4.1 | % | |||||
Revenues, Net
Revenues, net for the three months ended June 30, 2025 and 2024 were approximately $0.07 million and approximately $0.20 million, respectively. Revenues, net decreased approximately $0.14 million, or 67.4%, due to a decrease in event fee payments.
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The following table presents information about the number of users of our platform under subscriptions by type of subscription plan for each of the three-month periods ended June 30, 2025 and 2024. Subscriptions to our platform require full payment following a seven-day trial for platform access, with the exception of group subscriptions that may make payments on a monthly installment basis.
| Users with Subscriptions | ||||||||
| Three Months Ended June 30, | ||||||||
| Subscription Type | 2025 | 2024 | ||||||
| Monthly | 1,717 | 2,653 | ||||||
| Annual | 13 | 26 | ||||||
| Total: | 1,730 | 2,679 | ||||||
Cost of Revenues
Cost of revenues for the three months ended June 30, 2025 and 2024 was approximately $0.005 million and approximately $0.062 million, respectively. Cost of revenue decreased approximately $0.057 million primarily due to a decrease in development labor cost.
General and Administrative
General and administrative expenses were approximately $1.64 million and approximately $1.27 million for the three months ended June 30, 2025 and 2024, respectively. The increase of approximately $0.38 million, or 29.7%, was primarily due to increases in non-legal professional fees of approximately $0.37 million and salaries and wages of $0.09 million, offset by a decrease in legal expenses of approximately $0.08 million.
Interest Expense
Interest expense was $0 and approximately $0.04 million for the three months ended June 30, 2025 and 2024, respectively. Interest expense decreased due to the repayment of remaining debt obligations of the Company prior to the three months ended June 30, 2025.
Interest Income
Interest income was approximately $0.01 million and approximately $0.03 million for the three months ended June 30, 2025 and 2024, respectively. Interest income decreased due to the redemption of a certificate of deposit, which had been held by the Company’s bank as collateral for a former line of credit, from which the interest income was received during the three months ended June 30, 2024. The interest income for the three months ended June 30, 2025 was earned from the Company’s money market account.
Deferred Tax Income
Deferred tax income was $0 and approximately $0.02 million for the three months ended June 30, 2025 and 2024, respectively. The decrease was due to the fact that the Company did not qualify for the Arizona refundable research and development tax credit in the three months ended June 30, 2025.
Other Income (Expense), Net
Other income (expense), net was approximately $0.21 million and approximately ($0.19) million for the three months ended June 30, 2025 and 2024, respectively. Other income for the three months ended June 30, 2025 was due to an Employee Retention Credit tax refund. Other expense for the three months ended June 30, 2024 was primarily due to the payments of commitment fees related to the FirstFire Convertible Notes.
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Comparison of Six Months Ended June 30, 2025 and 2024
| Six Months Ended June 30, | ||||||||||||||||
| 2025 | 2024 | $ Change | % Change | |||||||||||||
| Revenues, net | $ | 215,164 | $ | 439,589 | $ | (224,425 | ) | -51.1 | % | |||||||
| Cost of revenues | 19,659 | 131,194 | (111,535 | ) | -85.0 | % | ||||||||||
| Gross profit (loss) | $ | 195,505 | $ | 308,395 | $ | (112,890 | ) | -36.6 | % | |||||||
| Operating cost and expenses | ||||||||||||||||
| Advertising and marketing | 1,136 | 93,609 | (92,473 | ) | -98.8 | % | ||||||||||
| General and administrative | 2,614,154 | 3,310,921 | (696,767 | ) | -21.0 | % | ||||||||||
| Total operating expenses | $ | 2,615,290 | $ | 3,404,530 | $ | (789,240 | ) | -23.2 | % | |||||||
| Net income (loss) from operations | $ | (2,419,785 | ) | $ | (3,096,135 | ) | $ | 676,350 | -21.8 | % | ||||||
| Other Income (expense) | ||||||||||||||||
| Interest expense | (20,994 | ) | (79,229 | ) | 58,235 | -73.5 | % | |||||||||
| Interest income | 10,621 | 57,120 | (46,499 | ) | -81.4 | % | ||||||||||
| Deferred tax income | - | 32,571 | (32,571 | ) | -100.0 | % | ||||||||||
| Change in fair value of derivative and gain (loss) on warrant exercise | 10,764 | - | 10,764 | 100.0 | % | |||||||||||
| Other income (expense), net | 209,716 | (725,054 | ) | 934,770 | -128.9 | % | ||||||||||
| Total other income (expense) | $ | 210,107 | $ | (714,592 | ) | $ | 924,699 | -129.4 | % | |||||||
| Net loss | $ | (2,209,678 | ) | $ | (3,810,727 | ) | $ | 1,601,049 | -42.0 | % | ||||||
Revenues, Net
Revenues, net for the six months ended June 30, 2025 and 2024 were approximately $0.22 million and approximately $0.44 million, respectively. Revenues, net decreased approximately $0.22 million, or 51.1%, due to a decrease in event fee payments of approximately $0.19 million and a decrease in subscription revenue of approximately $0.03 million.
The following table presents information about the number of users of our platform under subscriptions by type of subscription plan for each of the six-month periods ended June 30, 2025 and 2024. Subscriptions to our platform require full payment following a seven-day trial for platform access, with the exception of group subscriptions that may make payments on a monthly installment basis.
| Users with Subscriptions | ||||||||
| Six Months Ended June 30, | ||||||||
| Subscription Type | 2025 | 2024 | ||||||
| Monthly | 3,477 | 4,780 | ||||||
| Annual | 24 | 46 | ||||||
| Total: | 3,501 | 4,826 | ||||||
Cost of Revenues
Cost of revenues for the six months ended June 30, 2025 and 2024 was approximately $0.02 million and approximately $0.13 million, respectively. Cost of revenue decreased approximately $0.11 million, or 85.0%, primarily due to a decrease in development labor cost of approximately $0.11 million.
Advertising and Marketing
Advertising and marketing expenses were approximately $0.001 million and approximately $0.094 million for the six months ended June 30, 2025 and 2024, respectively. The decrease of approximately $0.092 million, or 98.8%, was primarily attributable to a shift in marketing strategy, which emphasized the use of cost-effective methods such as social media campaigns during the six months ended June 30, 2025.
General and Administrative
General and administrative expenses were approximately $2.61 million and approximately $3.31 million for the six months ended June 30, 2025 and 2024, respectively. The decrease of approximately $0.70 million, or 21.0%, was primarily due to decreases in event and travel expenses of approximately $0.15 million, legal expenses of approximately $0.47 million, insurance expense of approximately $0.10 million, stock-based compensation of approximately $0.37 million, salaries and wages of approximately $0.19 million, and recruiting expenses of approximately $0.04 million, offset by an increase in non-legal professional fees of approximately $0.62 million.
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Interest Expense
Interest expense was approximately $0.02 million and approximately $0.08 million for the six months ended June 30, 2025 and 2024, respectively. Interest expense decreased due to the repayment of remaining debt obligations of the Company during the six months ended June 30, 2025.
Interest Income
Interest income was approximately $0.01 million and approximately $0.06 million for the six months ended June 30, 2025 and 2024, respectively. Interest income decreased due to the redemption of a certificate of deposit, which had been held by the Company’s bank as collateral for a former line of credit, from which the interest income was received during the six months ended June 30, 2024. The interest income for the six months ended June 30, 2025 is earned from the Company’s money market account.
Deferred Tax Income
Deferred tax income was approximately $0 and approximately $0.03 million for the six months ended June 30, 2025 and 2024, respectively. The decrease was due to the fact that the Company did not qualify for the Arizona refundable research and development tax credit in the six months ended June 30, 2025.
Change in Fair Value of Derivative and Gain on Warrant Exercise
The Company recorded a change in fair value of derivative and gain on warrant exercise of $0.01 million for the six months ended June 30, 2025. There was no derivative outstanding for the six months ended June 30, 2024.
Other Income (Expense), Net
Other income (expense), net was approximately $0.21 million and approximately ($0.73 million) for the six months ended June 30, 2025 and 2024, respectively. Other income for the six months ended June 30, 2025 was due to an Employee Retention Credit tax refund. Other expense for the six months ended June 30, 2024 was primarily due to the payments of commitment fees.
Liquidity and Capital Resources
As of June 30, 2025, we had cash and cash equivalents of $656,707. As of June 30, 2025, we also had total current liabilities of $1,055,717. As of June 30, 2025, we have financed our operations primarily through sales of securities.
We require additional financing as our current levels of cash will not be sufficient to meet our anticipated cash needs for our operations and other cash requirements until June 30, 2026 and for at least 12 months beyond that period, including our costs associated with being a public reporting company. We may also in the future require additional or alternative cash resources due to changing business conditions, pursuit of rapid product development, significant expansion or introduction of major marketing campaigns, or to fund significant business investments or acquisitions. Since our own financial resources may be insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities in public offerings, private placements or credit facilities. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.
Going Concern
Management currently believes there is substantial doubt regarding the Company’s ability to continue as a going concern. In recent years, we have suffered recurring losses from operations, negative working capital and cash outflows from operating activities, and therefore have been dependent upon external sources for financing our operations.
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As a result of our critical financial condition, we are actively seeking multiple means to raise funds, primarily to pay off existing indebtedness and accounts payable to avoid loan defaults, lawsuits, bankruptcy, and liquidation, rather than for growth or expansion. If we are successful in these regards, we believe that we will be able to fund our planned operations and growth until June 30, 2026 and for at least 12 months beyond that period in order to transition to profitable operations and finance operations primarily from profits. Such acquisition and funding, if obtained, is expected to mitigate the factors which raise substantial doubt about the Company’s ability to continue as a going concern. However, there can be no assurance that the Company will be successful in these regards, or that its financial resources will be sufficient to remain in operation or that necessary financing will be available on satisfactory terms, if at all. The Company may be forced to significantly reduce its spending, delay or cancel its planned activities, sell off substantial assets, or substantially change its business plans or corporate or capital structure. There can also be no assurance that the Company will ever succeed in generating sufficient revenues to continue its operations as a going concern. For further discussion, see “We will need to obtain additional funding to continue operations. If we fail to obtain the necessary financing or fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations and be forced to significantly delay, scale back or discontinue our operations or explore other strategies.” in Part II. Item 1A. “Risk Factors” of the 2024 Annual Report.
The financial statements that accompany this Quarterly Report on Form 10-Q do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
Signing Day Sports, Inc. Amended and Restated 2022 Equity Incentive Plan
On August 31, 2022, the Company adopted the Signing Day Sports, Inc. 2022 Equity Incentive Plan (as amended, the “Plan”) for the purpose of granting restricted stock, stock options, and other forms of incentive compensation to officers, employees, directors, and consultants of the Company. On February 27, 2024, the stockholders of the Company approved Amendment No. 1 to the Plan to increase the number of shares of common stock reserved for issuance under the Plan. On September 18, 2024, the stockholders of the Company approved the Signing Day Sports, Inc. Amended and Restated 2022 Equity Incentive Plan, which further increased the number of shares of common stock reserved for issuance under the Plan to 93,750 shares of common stock. As of June 30, 2025, stock options have been granted under the Plan to certain officers, directors, employees, and consultants that may be exercised to purchase a total of 6,024 shares of common stock, not including stock options that terminated without exercise. In addition, as of June 30, 2025, a total of 72,318 shares of restricted stock have been granted under the Plan, not including restricted stock that had been forfeited or returned for tax withholding purposes. See Item 11. “Executive Compensation – Signing Day Sports, Inc. 2022 Equity Incentive Plan” of the 2024 Annual Report for a summary of the principal features of the Plan.
Summary of Cash Flow
The following table provides detailed information about our net cash flow for the six months ended June 30, 2025 and 2024.
| Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | (3,708,690 | ) | $ | (2,973,530 | ) | ||
| Net cash used in investing activities | - | (6,972 | ) | |||||
| Net cash provided by financing activities | 4,184,126 | 1,892,915 | ||||||
| Net change in cash and cash equivalents | 475,436 | (1,087,587 | ) | |||||
| Cash and cash equivalents, beginning of period | 181,271 | 1,123,529 | ||||||
| Cash and cash equivalents, end of period | $ | 656,707 | $ | 35,943 | ||||
Net cash used in operating activities was approximately $3.71 million for the six months ended June 30, 2025, as compared to net cash used in operating activities of approximately $2.97 million for the six months ended June 30, 2024. The change was primarily due to a change from an increase of approximately $0.52 million in liabilities for accounts payable for the six months ended June 30, 2024 to a decrease in liabilities for accounts payable of approximately $1.57 million for the six months ended June 30, 2025, offset by a decrease of net loss of approximately $1.60 million.
Net cash used in investing activities was $0 for the six months ended June 30, 2025, while net cash used in investing activities was approximately $0.007 million for the six months ended June 30, 2024. The change was primarily due to the non-recurrence of development of internal software of $0.053 million, which was recorded as a cash inflow in the prior period as a result of a vendor credit that reimbursed previously capitalized software development cost, offset by proceeds from investments of approximately $0.055 million, which was recorded as a cash outflow due to the purchase of certificates of deposit in the prior period, and purchases of property of $0.005 million.
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Net cash provided by financing activities was approximately $4.18 million for the six months ended June 30, 2025, while net cash provided by financing activities was approximately $1.89 million for the six months ended June 30, 2024. The change was primarily due to proceeds from the issuance of common stock and exercises of warrants of approximately $4.62 million, offset by payments on debt borrowings of approximately $0.431 million during the six months ended June 30, 2025 and the non-recurrence of proceeds of approximately $1.25 million from a revolving line of credit during the six months ended June 30, 2024.
Contractual Obligations
Summary of Future Contractual Financial Obligations
The following table outlines our future contractual financial obligations by period in which payment is expected, as of June 30, 2025:
| Total | Short-Term | Long-Term | ||||||||||
| Operating lease obligations | $ | 100,446 | $ | 92,404 | $ | 8,042 | ||||||
| Loans payable | - | - | - | |||||||||
| Total contractual obligations | $ | 100,446 | $ | 92,404 | $ | 8,042 | ||||||
Business Combination Agreement
On May 27, 2025, the Company entered into a Business Combination Agreement (the “Business Combination Agreement”) with BlockchAIn Digital Infrastructure, Inc., a Delaware corporation (“BlockchAIn”), One Blockchain LLC, a Delaware limited liability company (“One Blockchain”), BCDI Merger Sub I Inc., a Delaware corporation and a wholly owned subsidiary of BlockchAIn (“Merger Sub I”), and BCDI Merger Sub II LLC, a Delaware limited liability company and a wholly owned subsidiary of BlockchAIn (“Merger Sub II”).
The Business Combination Agreement provides that, upon the terms and subject to the conditions set forth therein, the parties will effect a business combination transaction in which: (a) Merger Sub I will merge with and into the Company (the “First Merger”), with the Company surviving the First Merger as a direct wholly owned subsidiary of BlockchAIn; and (b) Merger Sub II will merge with and into One Blockchain (the “Second Merger” and, together with the First Merger, the “Mergers,” and, together with the other transactions contemplated by the Business Combination Agreement, the “Transactions”), with One Blockchain surviving the Second Merger as a direct wholly owned subsidiary of BlockchAIn. At the effective time of the First Merger, each outstanding share of common stock of the Company will be automatically canceled and converted into the right to receive a registered common share, $0.01 par value per share, of BlockchAIn (collectively, “BlockchAIn Shares”). Each outstanding option and warrant of the Company will be assumed by BlockchAIn and converted into options and warrants, respectively, to acquire BlockchAIn Shares, with the same terms and conditions, including exercise price, and each assumed option will immediately become fully vested. At the effective time of the Second Merger, the outstanding membership interests of One Blockchain (collectively, “One Blockchain Membership Interests”) will be canceled and converted into the right to receive a number of BlockchAIn Shares equal to the quotient of the total number of shares of common stock of the Company outstanding immediately prior to the First Merger on a fully diluted and as-converted basis, not including certain out-of-the-money derivative securities, divided by 0.085, less the total number of BlockchAIn Shares that the shares of common stock of the Company will be converted into the right to receive at the effective time of the First Merger, subject to certain adjustments.
The Business Combination Agreement provides for the issuance of additional BlockchAIn Shares (the “Earnout Shares”) to the members of One Blockchain as of immediately prior to the closing of the Mergers (the “Closing”) if the net income plus interest, taxes, depreciation and amortization of BlockchAIn for the fiscal year ending December 31, 2026 equals or exceeds $25 million. The Earnout Shares will equal 11.628% of the total number of BlockchAIn Shares issued to the members of One Blockchain prior to the One Blockchain Merger, subject to adjustment.
In addition, the Business Combination Agreement provides that BlockchAIn will issue to Maxim Partners LLC (“Maxim”) (or its designees) a number of BlockchAIn Shares equal to 3.5% of the total transaction enterprise value at the Closing, and, if applicable, 3.5% of the Earnout Shares, in accordance with the M&A Advisory Agreement between Blockchain One c/o VCV Digital and Maxim Group LLC dated January 29, 2025. The number of BlockchAIn Shares issued to Maxim (or its designees) will reduce only the equity ownership otherwise allocable to the holders of One Blockchain Membership Interests. The Business Combination Agreement provides that BlockchAIn may adjust the number of BlockchAIn Shares into which the shares of common stock of the Company and the One Blockchain Membership Interests may be converted so long as the aggregate number of BlockchAIn Shares that the stockholders of the Company are entitled to receive pursuant to the terms of the Business Combination Agreement will be at least 8.5% of the BlockchAIn Shares that are outstanding on a fully diluted basis immediately after the Closing (excluding any out-of-the-money options and warrants) and (ii) such adjustment does not have a negative impact on the qualification of the BlockchAIn Shares to become listed on the NYSE American LLC (the “NYSE American”).
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The Closing is subject to the satisfaction or, to the extent permissible, the waiver, of certain conditions, including: (i) the expiration or termination of applicable antitrust waiting periods and any required antitrust consents having been obtained; (ii) approval of the Business Combination Agreement, the Mergers and the other contemplated Transactions by the requisite vote of the Company stockholders; (iii) the Form S-4 Registration Statement (as defined below) having become effective in accordance with the provisions of the Securities Act, and not being subject to any stop order or proceeding seeking a stop order or having been withdrawn; (iv) the approval for listing of the BlockchAIn Shares to be issued pursuant to the Business Combination Agreement on the NYSE American (or another national securities exchange); (v) the absence of any law or order prohibiting the Transactions; (vi) the accuracy of the parties’ representations and warranties and compliance with their covenants, subject to specified materiality standards; (vii) the termination of the employment agreements of each of Craig Smith, the Chief Operating Officer and Secretary of the Company, Daniel Nelson, the Chairman and Chief Executive Officer of the Company, and Jeffry Hecklinski, the President of the Company without any continuing liability to the Company, BlockchAIn, or One Blockchain; (viii) the execution of Executive Consulting Agreements with BlockchAIn or one of its subsidiaries that provide that each of Mr. Smith, Mr. Nelson, and Mr. Hecklinski will be engaged as a consultant for a 24-month term and certain severance compensation; and (ix) other customary closing conditions.
In addition, the Business Combination Agreement contains certain covenants governing the interim period between the execution of the agreement and the earlier of the Closing or termination of the Business Combination Agreement (the “Interim Period”). In connection with the Mergers, the parties will jointly prepare and file with the SEC a registration statement on Form S-4 registering the issuance of, and containing a prospectus relating to, the BlockchAIn Shares to be issued pursuant to the Business Combination Agreement (the “Form S-4 Registration Statement”), and a proxy statement with respect to a meeting of the Company’s stockholders to be held to approve the Transactions and related proposals (the “Meeting”). These covenants also include a number of restrictions on the conduct of the Company. In particular, without the prior written consent of One Blockchain, which may not to be unreasonably withheld, the Company may not, among other things:
| ● | other than with respect to Permitted Capital Raises (as defined below): (A) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its equity securities or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its shares or other equity securities, or other securities, including any securities convertible into or exchangeable for any of its equity securities or other security interests of any class and any other equity-based awards, or engage in any hedging transaction with a third party with respect to such securities or (B) enter into any engagement letters in connection with any of the foregoing; |
| ● | split, combine, recapitalize, subdivide, reclassify any of its shares or other equity interests or issue any other securities in respect thereof or pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities; |
| ● | (A) incur, create, assume or otherwise become liable for any indebtedness (directly, contingently or otherwise), (B) make a loan or advance to or investment in any third party (other than advancement of expenses to employees in the ordinary course of business), or (C) guarantee or endorse any indebtedness; |
| ● | incur, create, assume or otherwise become liable for any obligation not in the ordinary course of the Company’s business; |
| ● | terminate, waive or assign any material right under any material agreement to which it is a party, or enter into any contract that would be a material agreement if entered into prior to the date of the Business Combination Agreement; |
| ● | fail to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage as are currently in effect; |
| ● | waive, release, assign, settle or compromise any claim or action, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, the Company) not in excess of $25,000 (individually or in the aggregate), unless such amount has been reserved in the Company’s financial statements; |
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The Business Combination Agreement provides that the Company may continue to offer and sell up to $4,000,000 in shares of common stock of the Company in its existing at the market offering (the “Permitted Capital Raises”). The Company may use the proceeds only to pay its liabilities and for working capital related to its business as of the date of the Business Combination Agreement (the “Legacy Business”). At the Closing, any cash the Company holds must first be used to pay off all remaining liabilities, and any leftover cash can only be used for the Legacy Business. Any liabilities remaining at the Closing will be the sole responsibility of the Legacy Business.
The Business Combination Agreement provides for termination by any of the following: (i) The mutual written consent of the parties; (ii) either the Company or One Blockchain’s notice of termination if any of the conditions to the Closing have not been satisfied or waived by December 31, 2025 (the “Outside Date”), subject to extension to February 15, 2026 if the Form S-4 Registration Statement has been declared effective by the SEC by the Outside Date but the Closing has not occurred, unless the breach of the party seeking termination was the principal cause of the failure of the closing condition; (iii) either the Company or One Blockchain’s notice of termination if any applicable, non-appealable law or order is enacted that prohibits the consummation of the Transactions, provided that the terminating party is not in breach of the Business Combination Agreement; (iv) One Blockchain’s notice of termination to the Company if there has been a material breach by the Company of its representations, warranties, covenants, or agreements, or if any representation or warranty of the Company becomes materially untrue or inaccurate, resulting in a failure of a closing condition, and such breach or inaccuracy is incapable of being cured or is not cured within the earlier of 30 days after written notice or the Outside Date, except if the Company would be entitled to terminate for a material uncured breach by One Blockchain or BlockchAIn; (v) the Company’ notice of termination to One Blockchain if there has been a material breach by One Blockchain or BlockchAIn of their respective representations, warranties, covenants, or agreements, or if any representation or warranty of such parties becomes materially untrue or inaccurate, resulting in a failure of a closing condition, and such breach or inaccuracy is incapable of being cured or is not cured within the earlier of 30 days after written notice or the Outside Date, except if One Blockchain would be entitled to terminate for a material uncured breach by the Company; (vi) One Blockchain’s notice of termination to the Company if, during the Interim Period, the Company receives a notice of delisting from the NYSE American and is not reasonably able to cure the deficiency, or if the NYSE American files a Form 25 or the Company is formally delisted and the shares of common stock of the Company cease trading on the NYSE American; (vii) either the Company or One Blockchain’s notice of termination if the Meeting is held and the required stockholder approval is not obtained; or (viii) either the Company or One Blockchain’s notice of termination if, prior to the Closing, NYSE American refuses to approve or indicates it will not approve the initial listing application for BlockchAIn.
In the event the Business Combination Agreement is terminated as a result of a material uncured breach by any party, the breaching party is required to pay to the non-breaching party an amount equal to the lesser of the non-breaching party’s actual expenses incurred in connection with the Transactions and $250,000 (the “Breakup Fee”). The Breakup Fee will not apply if: (i) the SEC does not declare effective or approve the Form S-4 Registration Statement; (ii) the staff of the NYSE American indicates that the Transactions cannot proceed or otherwise provides comments that make it impracticable to complete the Transactions; or (iii) if BlockchAIn is not able to list on any other national securities exchange, provided such inability is not due to any listing deficiencies or non-compliance by the Company. The Breakup Fee must be paid within one business day of the termination of the Business Combination Agreement.
Director Compensation
On April 17, 2025, upon the recommendation of the Compensation Committee of the board of directors of the Company, the board of directors of the Company approved cash bonuses of $45,000 to Peter Borish, $22,500 to Greg Economou, and $22,500 to Roger Mason, respectively, for their services as directors of the Company. These bonuses were in addition to any cash bonus that such directors may otherwise be entitled to or eligible for under each director’s respective Independent Director Agreement or Amended and Restated Independent Director Agreement with the Company.
Executive Compensation
On April 17, 2025, the Compensation Committee of the board of directors of the Company approved the following grants of discretionary cash bonuses: $140,000 to Daniel Nelson, Chief Executive Officer and Chairman; $50,000 to Damon Rich, Chief Financial Officer; $95,000 to Jeffry Hecklinski, President; and $105,000 to Craig Smith, Chief Operating Officer and Secretary. These bonuses were in addition to any compensation that the recipients may be entitled to or eligible for under their respective employment or consulting agreements with the Company. The Company pays Daniel Nelson and other officers certain compensation, including certain amounts of their bonuses, through their businesses rather than through payroll.
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Sponsorship Agreement
On January 30, 2025, the Company entered into a Sponsorship Agreement, dated as of January 30, 2025 (the “Original Sponsorship Agreement”), between Goat Farm Sports, LLC, a New Jersey limited liability company (“GFS”), and the Company. On July 31, 2025, the Company entered into an Amended and Restated Sponsorship Agreement, dated as of July 31, 2025 (the “A&R Sponsorship Agreement”), between GFS and the Company, which amended, restated and superseded the Original Sponsorship Agreement.
The A&R Sponsorship Agreement provides that GFS is the producer of the annual football event referenced as the U.S. Army Bowl, the All-American Bowl, and/or the Military Appreciation Bowl (the “Bowl”), along with a branded national combine event (the “National Combine”), the events known as “Bowl Week” (“Bowl Week”), and other football events including regional football combine events and academies throughout each year from 2024 through 2025 (the “Bowl Events”). Under the A&R Sponsorship Agreement, the Company will be the exclusive National Recruiting Partner to the Bowl and the Events for the years 2024 and 2025.
Under the A&R Sponsorship Agreement, the Company is granted activation rights at the Bowl and all of the Events. The Company will have promotional and branding rights during the Bowl Week in Frisco, Texas, and national and international marketing opportunities wherever GFS owns and operates the Events. The Company is authorized to use GFS’s trademarks, logos, and other indicia to promote the Bowl and the Events. The Company may construct promotional booths, distribute materials, and engage directly with athletes, parents, and coaches at the Bowl and the Events. Additionally, the Company will have access to athlete databases and significant speaking opportunities to educate and promote its services to participants and their families. The Company will pay any and all activation expenses except as otherwise provided by the A&R Sponsorship Agreement.
The A&R Sponsorship Agreement provides that GFS will grant the Company the ability to publish, use, and display Bowl-related media, including footage, images, and promotional materials, across digital and social media platforms globally. The Company will have rights to a media package for any “Selection Tour” events, the Bowl, the Events, and the Bowl television show. The Bowl television show will include at least six 30-second TV spots, two billboard ads, and in-game b-roll segments showcasing the Company. Both parties will collaborate on a Bowl website and a detailed promotional schedule promoting the Company during the year and leading up to the Bowl. If GFS sells a college announcement package, GFS will provide SDS activation or secondary rights to the announcement platform.
The Company will provide all testing for all athletes at the National Combine, including physical measurements and performance evaluations. GFS will pay the Company a $60 stipend for each athlete that participates in and pays the full registration fee for attending the National Combine, with provisions for additional regional and middle school combines (the “Athlete Stipend”). The A&R Sponsorship Agreement also provides for a 50/50 revenue-sharing arrangement for co-branded consumer products sold in connection with the website for the National Combine and the Bowl.
The A&R Sponsorship Agreement provides that the Company will make payments to GFS totaling $300,000 to support the Events, consisting of payment of $150,000 on or before January 30, 2025, which has been paid; $50,000 on or before September 1,2025; and $100,000 on or before December 21, 2025. The final payment will be reduced by the total of each earned but unpaid $60 Athelete Stipend for the 2025 Bowl, and further provided that if the total of each earned but unpaid Athelete Stipend exceeds $100,000, then no such payment will be due, and GFS will pay the difference between earned but unpaid Athelete Stipends and $100,000 to the Company by December 22, 2025.
The A&R Sponsorship Agreement provides that the Company may sponsor the Ladies Ball basketball series if it elects, subject to separate agreement and payment of $7,500 to GFS by October 1, 2025. If the Company declines to sponsor such event, GFS may sell the recruiting category to another party.
Under the A&R Sponsorship Agreement, GFS will allow the Company to manage certain regional combines each year as agreed to in writing by January 31 of such year during the term of the A&R Sponsorship Agreement (the “Selected Regional Combines”). The Company will be responsible for all venues, staffing, equipment, insurance, and other expenses associated with managing the Selected Regional Combines, and for all sales for any Selected Regional Combines, and will receive any revenues from any Selected Regional Combines. GFS will have final approval, unless unreasonably withheld, on all communication to athletes and parents with respect to Selected Regional Combines. In addition, any GFS-organized academy at the Selected Regional Combines will feature a one-day combine managed and operated by the Company, and will not otherwise interfere with the Selected Regional Combines. GFS will be responsible for the portion of any costs relating to such academies, including rent and other facilities expenses. GFS will also apportion $135 of any academy fee to the Company for any participation by the athletes in the combine portion of Selected Regional Combines, subject to change by the agreement of the parties. The Company will also support sales for any GFS-organized academy and receive the standard commission based on the rate received by the academy’s regional directors.
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The A&R Sponsorship Agreement provides that the Company and GFS will jointly provide up to ten official Bowl scholarships annually for athletes in need. The Company will cover all scholarship management costs, while GFS will reimburse the Company for half of the costs for up to five scholarships. Any additional scholarships awarded by either party beyond the agreed number or to athletes that do not meet agreed-to need-based criteria will be solely funded by the awarding party.
The Company will participate in the Bowl Selection Team to evaluate athletes for the Bowl, subject to GFS’s final authority on all Bowl selectees. The Company may present a Bowl jersey to each selected athlete on site before the end of the applicable Event, if there is no Bowl representative on site.
Both parties will indemnify each other against claims arising from the Bowl or the Events. GFS will indemnify the Company for any third-party claims that the Events infringe upon such third party’s intellectual property rights. The A&R Sponsorship Agreement prohibits GFS from engaging other companies in the football recruiting space as partners during the term, with an exception allowing GFS to partner with CurvAI for the 2025 Bowl, and restricts the Company from affiliating with competitors’ football combines, without the other party’s prior written consent.
The term of the A&R Sponsorship Agreement began on January 30, 2025, and will automatically terminate on December 31, 2025, subject to good-faith renewal discussions beginning 60 days prior to termination. The A&R Sponsorship Agreement may also be terminated immediately upon breach by the other party, if such breach is not cured within 20 business days of written notice of such breach.
Stock Purchase Agreement with Dear Cashmere Group Holding Company; Termination
On January 28, 2025, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”), dated as of January 28, 2025 (the “Effective Date”), by and among the Company, Dear Cashmere Group Holding Company, a Nevada corporation (“DRCR”), James Gibbons (“Gibbons”), and Nicolas Link (together with Gibbons, the “Sellers”). The Purchase Agreement provided that, subject to the satisfaction or waiver of the conditions set forth in the Purchase Agreement, the Company will consummate the transactions (the “DRCR Transactions”) contemplated by the Purchase Agreement at the date (the “DRCR Closing Date”) of the closing of the DRCR Transactions (the “DRCR Closing”). The DRCR Transactions were contemplated to include (a) the Company’s issuance to the Sellers of (i) shares of common stock constituting 19.99% of its outstanding shares of common stock; and (ii) an aggregate of 19,782.720 shares of a Series A Convertible Preferred Stock, par value $0.0001 per share, of the Company, which would automatically convert, upon and subject to certain conditions, into 19,782,720 shares of common stock (the “Preferred Stock Conversion”; and (b) the Sellers’ sale and transfer to the Company of the number of shares of common stock and preferred stock of DRCR that represent in the aggregate 99.13% of the issued and outstanding capital stock and aggregate voting power of DRCR.
The Purchase Agreement contemplated that: (a) the Company may enter into agreements with additional stockholders of DRCR to purchase their shares of DRCR, pursuant to the terms and conditions set forth in the respective purchase agreements (the “Additional Agreements”); (b) upon the DRCR Closing, DRCR would function as an operating subsidiary of the Company, and the Company would consolidate the financial results and information of DRCR with its own; (c) the Company had obtained an opinion of a financial advisor to the board of directors of the Company to the effect that, as of the date of such opinion, and based on and subject to the assumptions, limitations, qualifications and other matters set forth in such opinion, the DRCR Transactions were fair, from a financial point of view, to the stockholders of the Company, and had provided a copy of the written opinion to DRCR, solely for informational purposes; and (d) subsequent to the DRCR Closing, subject to receipt of any necessary stockholder, regulatory, and stock exchange consents or approvals, the Company would acquire the remaining outstanding equity ownership of the Company through a merger of DRCR into the Company or a wholly-owned subsidiary of the Company (the “DRCR Merger”).
In anticipation of the DRCR Closing, on February 20, 2025, the Company filed a Current Report on Form 8-K with the SEC that included, among other things, audited consolidated financial statements of DRCR as of and for the fiscal years ended December 31, 2023 and 2022; unaudited consolidated financial statements of DRCR as of September 30, 2024 and for the nine months ended September 30, 2024 and 2023; and unaudited pro forma combined condensed financial statements of the Company and DRCR as of and for the nine months ended September 30, 2024 and for the fiscal year ended December 31, 2023 giving effect to the DRCR Transactions, the Additional Agreements, and the DRCR Merger.
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The Purchase Agreement provided that the consummation of the DRCR Transactions was subject to the satisfaction or waiver of certain conditions to the DRCR Closing. The conditions to the DRCR Closing included the condition that the parties to the Purchase Agreement obtain all approvals required for the initial listing of the Company’s common stock on The Nasdaq Stock Market LLC (“Nasdaq”) and the transfer of the Company’s listing from the NYSE American to Nasdaq (the “Nasdaq Listing Requirement”).
The Purchase Agreement provided that the Company was required to seek to raise, with DRCR’s assistance, at least $2.0 million of funding through a private placement or public offering of its securities (the “Company Financing”) as soon as possible after the date of the Purchase Agreement. The net proceeds of the Company Financing was required to be equally split between the Company and DRCR, and each of them was required to use such proceeds for its operations and, in the case of the Company, to pay down its indebtedness and other liabilities such that there would be no material liabilities of the Company remaining at the time of the Preferred Stock Conversion. In order to split the net proceeds of the Company Financing as described above, the Company was required to make loans of one-half of the net proceeds (or such lesser amount as agreed to by the Company, DRCR and the Sellers) to DRCR, which loans were required to be (i) forgiven upon the Preferred Stock Conversion or (ii) repaid if the DRCR Transactions were unwound in accordance with the terns if the Purchase Agreement or if the Purchase Agreement was otherwise terminated in accordance with its terms. The Company Financing did not include the offering of securities pursuant to an at the market offering under the Company’s Registration Statement on Form S-3 (SEC File No. 333-283559) filed with the SEC on December 2, 2024 and declared effective by the SEC on December 5, 2024 (the “Form S-3”) or any similar at the market offering, the proceeds of which were required to be used to pay down the Company’s indebtedness and other liabilities such that there will be no material liabilities of the Company remaining at the time of the Preferred Stock Conversion.
In addition, the Purchase Agreement contained a number of covenants that restricted the Company’s conduct prior to the termination of the Purchase Agreement or the occurrence of certain other events (the “Restricted Period”). These included the following: The Company could not, without the written consent of DRCR, which could not be unreasonably withheld: (a) Declare any dividends; (ii) adjust, split, combine or reclassify its capital stock (except as may be necessary to satisfy any applicable continued listing requirements of any stock exchange on which the Company’s common stock was listed or any initial listing requirements of any stock exchange to which the Company has applied for listing of the Company’s common stock); (b), redeem, purchase, or otherwise acquire its capital stock (except, in the case of the Company, with respect to the warrant issued to FirstFire Global Opportunities Fund, LLC, dated May 16, 2024); (c) issue or sell its capital stock or securities convertible into its capital stock (other than pursuant to the exercise or conversion of convertible securities outstanding on the date of the Purchase Agreement, or, in the case of the Company, with respect to the At The Market Offering Agreement, dated December 2, 2024 (the “ATM Agreement”), by and between the Company and H.C. Wainwright & Co., LLC, as sales agent (“Wainwright”) and pursuant to the prospectus contained in the Form S-3); (d) enter into any contract with respect to the sale, voting, registration, or repurchase of capital stock (except, in the case of the Company, with respect to a Company Financing or the registration statement on Form S-4 that was required to be prepared and filed pursuant to the applicable terms and provisions of the Purchase Agreement; (e) incur more than $250,000 of indebtedness, subject to certain exceptions; (f) sell, lease, license, encumber, or dispose of any assets; (g) acquire material assets, properties, or business organizations; (h) enter into certain types of contracts; (i) make certain loans; (j) commence, settle, or take certain other actions with respect to legal actions pending before any governmental or regulatory body; (k) enter into transactions with any affiliate or stockholder that would reasonably be expected to materially delay or prevent the consummation of the DRCR Transactions or the DRCR Merger or that would be required to be described under Item 404 of Regulation S-K; or (l) increase or extend the compensation of any employees, directors, or officers or take certain other actions with respect to employees of the Company or DRCR.
The Purchase Agreement provided that it may be terminated by any of the parties at any time before the end of the Restricted Period, by written notice, if the DRCR Closing has not occurred on or before the 30th day following the Effective Date, except if the party seeking termination is in material breach of the Purchase Agreement and such breach proximately caused the failure to consummate the DRCR Transactions on or before the date of the termination (the “Termination Right”).
On March 4, 2025, the Company exercised the Termination Right and delivered a notice of such exercise to DRCR and the Sellers terminating the Purchase Agreement, effective as of March 4, 2025. The Company’s notice stated that the Company, in consultation with its legal counsel, had determined that the parties to the Purchase Agreement would not be able to satisfy or waive the Nasdaq Listing Requirement within the foreseeable future, and that the termination was effected in consequence of this determination.
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Termination Agreement with Boustead Securities, LLC
On September 18, 2024, the Company entered into the Termination Agreement, dated as of September 18, 2024 (the “Boustead Termination Agreement”), between the Company and Boustead Securities, LLC, a California limited liability company and registered broker-dealer (“Boustead”). The parties entered into the Boustead Termination Agreement in order to terminate the engagement letter, dated as of August 9, 2021, as amended by letter agreements entered into by Boustead and the Company dated as of November 4, 2023, November 8, 2023, and November 13, 2023 (as amended, the “Boustead Engagement Letter”), pursuant to which Boustead had certain rights to act as a financial advisor to the Company. The Boustead Termination Agreement also provides for the termination of the right of first refusal (the “Boustead Right of First Refusal”) provided under the Underwriting Agreement, dated as of November 13, 2023, between the Company and Boustead, as representative of the underwriters in connection with the Company’s firm commitment underwritten initial public offering (the “Underwriting Agreement”), in exchange for the issuance of the Termination Shares (as defined below).
The Boustead Termination Agreement provides that the Company will issue to Boustead 62,500 shares (the “Initial Termination Shares”) of the Company’s common stock by the later of the date that is (i) five business days after the date of the Boustead Termination Agreement and (ii) the date that the NYSE American authorizes the issuance of the Initial Termination Shares (the “Termination Date”). On the Termination Date, the Boustead Engagement Letter and the Boustead Right of First Refusal and rights and obligations pursuant to the Boustead Engagement Letter and the Boustead Right of First Refusal will be terminated except with respect to certain customary surviving provisions.
The Boustead Termination Agreement provides that upon issuance of common stock or other securities that are exercisable or exchangeable for, or convertible into, common stock of the Company to any third party (other than Boustead or any affiliate of Boustead), the Company will issue to Boustead a number of shares of common stock equal to 10.35% of the shares of common stock (or other securities) so issued by the Company in any such transaction other than a Change in Control (as defined in the Boustead Termination Agreement) (the “Additional Termination Shares,” and, together with the Initial Termination Shares, the “Termination Shares”), by the later of (i) five business days after the date of such issuance and (ii) the date that the NYSE American authorizes the issuance of the Additional Termination Shares. The Company’s obligation to issue Additional Termination Shares will cease immediately prior to the effective date of a Change in Control and, for the avoidance of doubt, Boustead will not be entitled to any percentage of the securities issued by the Company in connection with the Change in Control.
The Termination Shares have piggyback registration rights. The Boustead Termination Agreement provides that Boustead will not sell more than 10% of the total trading volume on any trading day, provided that the Termination Shares are registered for resale under an effective registration statement. Boustead will also agree to any leak-out provisions requested by the Company, which will be consistent with any leak-out agreement signed by other parties in connection with a Change in Control.
In addition, the Boustead Termination Agreement requires that if the Company raises at least $1 million in gross proceeds from a financing, the Company will pay Boustead $100,000 as partial consideration under the Boustead Termination Agreement and $68,467.43 to pay an existing account payable owed by the Company to Boustead.
On October 15, 2024, the Company entered into a letter agreement, dated as of October 15, 2024 (the “Termination Agreement Amendment”), between the Company and Boustead. The Termination Agreement Amendment amends and supplements the Boustead Termination Agreement to provide that notwithstanding anything to the contrary, the aggregate number of shares of common stock issuable to Boustead pursuant to the Boustead Termination Agreement will be limited to no more than 19.99% of the aggregate number of shares issued and outstanding shares of common stock immediately prior to the execution of the Boustead Termination Agreement, or 75,452 shares of common stock, which number of shares shall be reduced, on a share-for-share basis, by the number of shares of common stock issued or issuable pursuant to any transaction or series of transactions that may be aggregated with the transactions contemplated by the Boustead Termination Agreement under applicable rules of the NYSE American (the “Termination Shares Exchange Cap”), unless the Company’s stockholders have approved the issuance of common stock pursuant to the Boustead Termination Agreement in excess of that amount in accordance with the applicable rules of the NYSE American (the “Exchange Cap Stockholder Approval”).
The Termination Agreement Amendment states that the Company will be required to file a registration statement on Form S-4 that includes a joint proxy statement/prospectus relating to a stockholders meeting of the Company (the “DRCR Transaction Stockholders Meeting”) pursuant to the Purchase Agreement. The Termination Agreement Amendment provides that the Company will solicit proxies to vote for the Exchange Cap Stockholder Approval at the DRCR Transaction Stockholders Meeting and to include all necessary information to obtain the Exchange Cap Stockholder Approval in the related proxy statement. If the Company files a proxy statement in connection with any other meeting of stockholders, or an information statement in connection with a written consent of stockholders in lieu of a stockholders meeting, prior to the DRCR Transaction Stockholders Meeting, it will include a proposal to obtain the Exchange Cap Stockholder Approval in such proxy statement and solicit proxies for such Exchange Cap Stockholder Approval, or include disclosure of the Exchange Cap Stockholder Approval in such information statement, in each case in accordance with applicable rules of the SEC to obtain the Exchange Cap Stockholder Approval.
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The Termination Agreement Amendment provides that if the Company fails to obtain the Exchange Cap Stockholder Approval by the Extended Meeting Deadline (as defined in the Termination Agreement Amendment), then the Company will promptly, and in any event within 15 days of the Extended Meeting Deadline, make a true up cash payment to Boustead in an amount equal to the product of (i) the number of additional shares of common stock that Boustead would have received pursuant to the Boustead Termination Agreement, but for the Termination Shares Exchange Cap, multiplied by (ii) the value weighted average price of the common stock for the 30-day period ending on the day of the Extended Meeting Deadline.
The execution of the Termination Agreement Amendment was determined to be necessary in order for the Company and Boustead to effectuate the Termination Agreement.
On October 17, 2024, the Company issued the Initial Termination Shares to Boustead, resulting in the termination of the Boustead Engagement Letter and the Boustead Right of First Refusal.
On February 6, 2025, the Company paid Boustead $168,467.43 pursuant to the Boustead Termination Agreement.
Management Employment Agreements
Employment Agreement with Daniel Nelson
Under the Executive Employment Agreement, dated as of November 22, 2023, between the Company and Daniel Nelson, the Company’s Chief Executive Officer, Chairman, and a director (the “Original CEO Employment Agreement”), Mr. Nelson was employed in his current capacity as the Company’s Chief Executive Officer. Mr. Nelson’s annual base salary was $425,000 from November 22, 2023 to February 29, 2024, subject to modification upon execution of an amendment or addendum to the Original CEO Employment Agreement.
Under the Amended and Restated Executive Employment Agreement, dated as of March 1, 2024, between the Company and Mr. Nelson (the “Amended and Restated CEO Employment Agreement”), the Original CEO Employment Agreement was amended and restated to reduce Mr. Nelson’s annual base salary from $425,000 to $200,000, effective March 1, 2024.
The Company will pay or reimburse Mr. Nelson for all reasonable and necessary expenses actually incurred or paid by Mr. Nelson during his employment in the performance of his duties. Mr. Nelson will be eligible to participate in comprehensive benefits plans of the Company, including medical, dental and life insurance options, and will be entitled to paid time off and holiday pay in accordance with the Company’s policies in effect from time to time.
The Amended and Restated CEO Employment Agreement originally provided that if the Company terminates Mr. Nelson without cause, Mr. Nelson will be entitled to the following severance payments: (i) cash in the amount of base salary in effect on the date of such termination payable in 12 monthly installments; and (ii) all previously earned, accrued, and unpaid benefits from the Company and its employee benefit plans. The payment of severance may be conditioned on receiving a release of any and all claims that Mr. Nelson may have against the Company.
On July 9, 2024, the Company entered into Amendment No. 1 to Executive Employment Agreement, dated as of July 9, 2024, between the Company and Mr. Nelson (the “Amendment to CEO Agreement”). The Amendment to CEO Agreement amended and restated the severance provisions of the Amended and Restated CEO Employment Agreement. As amended, the Amended and Restated CEO Employment Agreement provides that if the Company terminates Mr. Nelson without cause, Mr. Nelson will be entitled to severance payments in cash in the amount of base salary in effect on the date of such termination payable in 12 monthly installments. If the Company terminates Mr. Nelson upon a Change of Control (as defined in the Amendment to CEO Agreement), Mr. Nelson will be entitled to severance payments in cash in the amount of one-half of base salary in effect on the date of such termination payable in six monthly installments. The payment of severance may be conditioned on receiving a release of any and all claims that Mr. Nelson may have against the Company.
Employment Agreement with Jeffry Hecklinski
Under the employment offer letter, dated March 7, 2023, between Jeffry Hecklinski and the Company (the “Former Hecklinski Employment Agreement”), Mr. Hecklinski was employed as the General Manager of the Company. Mr. Hecklinski’s annual base salary was $200,000. Under the Former Hecklinski Employment Agreement, Mr. Hecklinski was eligible to participate in standard benefits plans of the Company, including medical, dental and life insurance options, and was entitled to ten public holidays, ten vacation days, and five sick days per year, subject to the Company’s leave policies. Mr. Hecklinski’s employment was at-will.
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The Executive Employment Agreement, dated as of April 9, 2024, between the Company and Mr. Hecklinski (the “Hecklinski Employment Agreement”), amended, restated and superseded the Former Hecklinski Employment Agreement. Under the Hecklinski Employment Agreement, Mr. Hecklinski was employed as the Company’s President. Mr. Hecklinski’s annual base salary will remain $200,000. The Company agreed to pay or reimburse Mr. Hecklinski for all reasonable and necessary expenses actually incurred or paid by Mr. Hecklinski during his employment in the performance of his duties under the Hecklinski Employment Agreement. Mr. Hecklinski will be eligible to participate in comprehensive benefits plans of the Company, including medical, dental and life insurance options, and will be entitled to ten public holidays, ten vacation days, and five sick days per year, subject to the Company’s leave policies.
On July 9, 2024, the Company entered into Amendment No. 1 to Executive Employment Agreement, dated as of July 9, 2024, between the Company and Mr. Hecklinski (the “Amendment to Hecklinski Agreement”). The Amendment to Hecklinski Agreement amended and restated the severance provisions of the Hecklinski Employment Agreement. As amended, the Hecklinski Employment Agreement provides that if the Company terminates Mr. Hecklinski upon a Change of Control (as defined in the Amendment to Hecklinski Agreement), Mr. Hecklinski will be entitled to severance payments in cash in the amount of one-half of base salary in effect on the date of such termination payable in six monthly installments. The payment of severance may be conditioned on receiving a release of any and all claims that Mr. Hecklinski may have against the Company.
Employment Agreement with Craig Smith
Under the Executive Employment Agreement, dated as of April 22, 2024, between the Company and Craig Smith (the “Smith Employment Agreement”), Mr. Smith was employed as the Company’s Chief Operating Officer. Mr. Smith’s annual base salary will be $150,000. The Company agreed to pay or reimburse Mr. Smith for all reasonable and necessary expenses actually incurred or paid by Mr. Smith during his employment in the performance of his duties under the Smith Employment Agreement. Mr. Smith will be eligible to participate in comprehensive benefits plans of the Company, including medical, dental and life insurance options, and will be entitled to ten public holidays, ten vacation days, and five sick days per year, subject to the Company’s leave policies.
On July 9, 2024, the Company entered into Amendment No. 1 to Executive Employment Agreement, dated as of July 9, 2024, between the Company and Craig Smith, the Company’s President and director (the “Amendment to Smith Agreement”). The Amendment to Smith Agreement amended and restated the severance provisions of the Smith Employment Agreement. As amended, the Smith Employment Agreement provides that if the Company terminates Mr. Smith upon a Change of Control (as defined in the Amendment to Smith Agreement), Mr. Smith will be entitled to severance payments in cash in the amount of one-half of base salary in effect on the date of such termination payable in six monthly installments. The payment of severance may be conditioned on receiving a release of any and all claims that Mr. Smith may have against the Company.
Management Indemnification Agreements and Insurance
We have separately entered into an indemnification agreement with each of our directors and executive officers. Each indemnification agreement provides for indemnification to the fullest extent permitted by law, including: (i) all expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by an executive officer, or on their behalf, in connection with any proceeding other than proceedings by or in the right of the Company or any claim, issue or matter therein, if the executive officer acted in good faith and in a manner the executive officer reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal proceeding, had no reasonable cause to believe the executive officer’s conduct was unlawful; (ii) all expenses actually and reasonably incurred by an executive officer, or on their behalf, in connection with a proceedings by or in the right of the Company if the executive officer acted in good faith and in a manner the executive officer reasonably believed to be in or not opposed to the best interests of the Company, provided that if applicable law so provides, no indemnification against such expenses shall be made in respect of any claim, issue or matter in such proceeding as to which the executive officer shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made; (iii) to the extent that an executive officer is, by reason of the executive officer’s executive officer status, a party to and is successful, on the merits or otherwise, in any proceeding, including by dismissal of such proceeding with or without prejudice, then the executive officer shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all expenses actually and reasonably incurred by the executive officer or on the executive officer’s behalf in connection therewith; and (iv) all expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by an executive officer or on an executive officer’s behalf if, by reason of the executive officer’s status as an executive officer, the executive officer is, or is threatened to be made, a party to or participant in any proceeding (including a proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of the executive officer, except where the payment is finally determined (under the procedures, and subject to the presumptions, set forth in the indemnification agreements) to be unlawful. The Company shall also advance all such expenses incurred by or on behalf of each executive officer in connection with any of the above proceedings by reason of the executive officer’s executive officer status within 30 days after the receipt by the Company of a statement or statements from the executive officer requesting such advance or advances from time to time, whether prior to or after final disposition of such proceeding. Such statement or statements shall reasonably evidence the expenses incurred by the executive officer and shall include or be preceded or accompanied by a written undertaking by or on behalf of the executive officer to repay any expenses advanced if it shall ultimately be determined that the executive officer is not entitled to be indemnified against such expenses. Any advances and undertakings to repay shall be unsecured and interest-free. The indemnification agreements also provide for payments by the Company for the entire amount of any judgment or settlement of any action, suit or proceeding in which it is liable or would be liable if joined in such action, subject to the other terms and provisions of the indemnification agreements, and certain other indemnification and payment obligations. The indemnification agreements also provide that if we maintain a directors’ and officers’ liability insurance policy, that each director and executive officer will be covered by the policy to the maximum extent of the coverage available for any of the Company’s directors or executive officers.
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We have obtained standard directors and officers liability insurance under which coverage is provided (a) to our directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act, and (b) to us with respect to payments which we may make to such officers and directors pursuant to the indemnification agreements described above or otherwise as a matter of law.
Debt
October 2024 Convertible Promissory Note
On October 7, 2024, the Company issued a Convertible Promissory Note to DRCR, dated October 7, 2024, in the principal amount of $150,000 (the “October 2024 Note”). The principal under the October 2024 Note accrued interest at an annual rate of 35%. The principal and accrued interest became payable on the date of written demand any time after the closing of the Company’s next financing transaction (the “Payment Date”). The Company was required to make full payment of the balance of all principal and accrued interest on the Payment Date. The Company was permitted to prepay the principal and any interest then due without penalty. If any amount was not paid when due, such overdue amount accrued default interest at a rate of 37%. In addition, the October 2024 Note provided that at any time after an event of default, the holder of the October 2024 Note was permitted to convert the outstanding principal amount plus accrued and unpaid interest into shares of the Company’s common stock, at a conversion price of $14.40 per share, subject to adjustment for stock splits and similar transactions. The conversion right was subject to prior authorization (“Exchange Authorization”) of the NYSE American, and the October 2024 Note would be amended to incorporate any modifications requested by the NYSE American in order to provide the Exchange Authorization. The October 2024 Note also contained customary representations, warranties, and events of default provisions. As of December 31, 2024, the outstanding balance under the October 2024 Note was $150,000.
On March 4, 2025, the Company made full payment of the balance of all principal and accrued interest in the amount of $171,310 under the October 2024 Note.
September 2024 Promissory Note
On September 16, 2024, the Company issued a promissory note to Daniel Nelson, the Chief Executive Officer, Chairman and a director of the Company, dated September 16, 2024, in the principal amount of $100,000 (the “September 2024 Note”). The September 2024 Note permitted Mr. Nelson to make additional advances under the September 2024 Note of up to $100,000. The principal and any advances under the September 2024 Note accrued interest at a monthly rate of 20%, compounded monthly, from the 30th day following the date of issuance of the September 2024 Note to the 150th day following the date of issuance of the September 2024 Note, such that total interest of $20,000 accrued as of the end of the first month, $24,000 as of the end of the second month, and so on. The principal, any advances, and accrued interest became payable on the earlier of December 16, 2024 or upon the Company receiving any funding of $1,000,000 (the “September 2024 Note Maturity Date”). The Company was required to make full payment of the balance of all principal, advances, and accrued interest within two business days of receiving a written demand from Mr. Nelson on or after the September 2024 Note Maturity Date.
On January 8, 2025, the Company made full payment of the balance of all principal and accrued interest in the amount of $197,745 under the September 2024 Note.
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April 2024 Promissory Note
On April 11, 2024, Daniel Nelson, the Chief Executive Officer, Chairman and a director of the Company, advanced $100,000 to the Company, without repayment terms. On April 25, 2024, the Company issued a promissory note to Mr. Nelson, dated April 25, 2024, in the base principal amount of $100,000 (the “April 2024 Note”). The April 2024 Note provided for Mr. Nelson to make additional advances under the April 2024 Note of up to $100,000 in addition to the $100,000 base principal amount. On May 1, 2024, Mr. Nelson advanced $75,000 subject to the terms of the April 2024 Note. On June 14, 2024, Mr. Nelson advanced $2,500 subject to the terms of the April 2024 Note. The base principal and all advances under the April 2024 Note accrued interest at a monthly rate of 3.5%, compounded monthly, while such funds are outstanding, from the 30th day following the date of issuance of the April 2024 Note to the 150th day following the date of issuance of the April 2024 Note, such that total interest of $3,500 will accrue as of the end of the first month, $3,622.50 as of the end of the second month, and so on, with respect to the base principal, assuming that it is not prepaid. The base principal, any advances, and accrued interest become payable on the earlier of June 25, 2024 or upon the Company receiving any funding of $1,000,000 (the “April 2024 Note Maturity Date”). The Company is required to make full repayment of the balance of the base principal, advances, and accrued interest within two business days of receiving a written demand from Mr. Nelson on or after the April 2024 Note Maturity Date. The Company may prepay the base principal, any advances, and any interest then due without penalty.
On January 10, 2025 and January 13, 2025, the Company made full payment of the balance of all principal and accrued interest in the amount of $239,662 under the April 2024 Note.
Revolving Lines of Credit with Commerce Bank of Arizona
Under a Business Loan Agreement, dated October 6, 2023, between the Company and Commerce Bank of Arizona (“CBAZ”) (the “First CBAZ Loan Agreement”), the Company and CBAZ entered into a $350,000 secured revolving line of credit (the “First CBAZ LOC”). In connection with the First CBAZ LOC, CBAZ issued a promissory note to the Company, dated October 6, 2023 (the “First CBAZ Promissory Note”), with an initial principal amount of $350,000. The Company paid loan origination and other fees totaling $4,124. The principal balance under the First CBAZ Promissory Note bore interest at a variable rate per annum equal to one percentage point above The Wall Street Journal Prime Rate, initially 9.5% per annum, and was to mature on April 6, 2024. There was no penalty for prepayment of the First CBAZ Promissory Note. The First CBAZ LOC was required to be guaranteed by Daniel Nelson, Chief Executive Officer, Chairman and a director of the Company, Jodi B. Nelson, who is Mr. Nelson’s wife, and The Nelson Revocable Living Trust, an Arizona trust provided for by the Nelson Revocable Living Trust Agreement established on March 9, 1999 and amended and restated on November 21, 2005 (the “Nelson Trust”), and secured by the property of the Company, Daniel Nelson, Jodi B. Nelson, and the Nelson Trust. The First CBAZ LOC had been further conditioned on the issuance of Employee Retention Credit payroll tax refunds that the Company expected to be received by April 2024, and was subject to certain other terms and conditions.
Under a Business Loan Agreement, dated December 11, 2023, between the Company and CBAZ (the “Second CBAZ Loan Agreement”), the Company and CBAZ entered into a $2,000,000 secured revolving line of credit (the “Second CBAZ LOC”). In connection with the Second CBAZ LOC, CBAZ issued a promissory note to the Company, dated December 11, 2023 (the “Second CBAZ Promissory Note”), with principal of $2,000,000. The Company paid loan origination and other fees totaling $5,500 and CBAZ immediately disbursed $334,625 of the funds in connection with the Second CBAZ LOC for crediting the full prepayment of the balance in that amount outstanding in connection with the First CBAZ LOC. The principal balance under the Second CBAZ Promissory Note incurred interest at a fixed rate per annum of 7.21% per annum, and would have matured on December 11, 2024. There was no penalty for prepayment of the Second CBAZ Promissory Note. The Second CBAZ LOC was required to be secured by a 12-month certificate of deposit account held with CBAZ with a minimum balance of $2,100,000 (the “CD Collateral”) under the Assignment of Deposit Account, dated December 11, 2023, between the Company and CBAZ (the “Assignment of Deposit Account”).
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In connection with the Second CBAZ LOC, the Company agreed to the following negative covenants: (i) incurring any other indebtedness; (ii) permitting other liens on its property; (iii) selling any of its accounts receivable with recourse to any third party; (iv) engaging in substantially different business activities; (v) ceasing operations, engaging in certain corporate transactions, or selling the CD Collateral; or (vi) paying cash dividends on its stock except to pay certain income taxes of stockholders or repurchasing or retiring any of the Company’s outstanding common stock. The following events would have constituted a default under the Second CBAZ LOC: (i) failing to comply with the negative covenants described above; (ii) any change in ownership of 25% or more of the common stock of the Company; (iii) a material adverse change in the Company’s financial condition or CBAZ believing the prospect of payment or performance under any loans under the Second CBAZ LOZ is impaired; and (iv) other customary events of default including insolvency, foreclosure or forfeiture proceedings, and failure to make payment when due. Any late payments due would have been charged 5% of the regularly scheduled payments. Upon an event of default, the interest rate on the Second CBAZ Promissory Note would have increased to 13.21%; all indebtedness under the Second CBAZ Promissory Note would have become due at the option of CBAZ, except that if an event of default occurred due to an insolvency or certain similar events, the indebtedness would have become due immediately automatically; all of CBAZ’s obligations under the Second CBAZ Loan Agreement would have terminated; and CBAZ could have taken any actions permitted under the Assignment of Deposit Account, including application of account proceeds under the CD Collateral to outstanding indebtedness, and use of all rights and remedies of a secured creditor under the Arizona Uniform Commercial Code. The Second CBAZ LOC was also subject to certain other terms and conditions.
On July 26, 2024, the Company fully repaid the Second CBAZ Promissory Note. The certificate of deposit account underlying the CBAZ Collateral was closed and redeemed with an early withdrawal penalty of $54,747, and the CBAZ Assignment of Deposit and the Second CBAZ Loan Agreement are no longer in effect.
Nonconvertible 8% Unsecured Promissory Notes
In connection with the closing of the Company’s initial public offering, warrants to purchase a total of 940,000 shares of common stock at an exercise price of $2.50 per share were automatically exercised and the proceeds were automatically used to repay the outstanding principal underlying the 8% nonconvertible promissory notes consisting of $2,350,000. On the same date, a total of $113,304 in accrued interest under these promissory notes became due. As of June 30, 2025, $101,468 of accrued interest under these promissory notes remained due.
September 2023 Loan
On September 20, 2023, Daniel Nelson Financial Services Inc. Inc. (“Daniel Nelson Financial Services”) made a loan to the Company of $14,000 (the “September 2023 Loan”). Daniel Nelson is the Chief Executive Officer and sole owner of Daniel Nelson Financial Services and the Chief Executive Officer, Chairman and director of the Company. The September 2023 Loan was non-interest bearing and had no fixed maturity date. The Company repaid $10,470 of the September 2023 Loan on December 29, 2023. The balance of $3,530 was outstanding as of December 31, 2024. On March 7, 2025, the Company made full payment of the balance of all principal remaining in the amount of $3,530 under the September 2023 Loan.
Leases
The Company leases its corporate offices consisting of approximately 3,154 square feet under a lease agreement dated November 1, 2022, as amended by an addendum dated November 2, 2022 (the “Amendment to Office Lease”), and as further amended under a first amendment to lease dated April 1, 2023 (as amended, the “Office Lease”). The Office Lease’s initial term from November 1, 2022 to April 30, 2023 was extended for a 39-month term beginning on May 4, 2023 and ending on August 3, 2026. Under the Office Lease, rent for the first month was $6,742 and was $7,491 for each subsequent month through April 2023, plus applicable rental taxes, sales taxes, and operating expenses. Monthly rent was $7,359 from May 4, 2023 to May 3, 2024, abated for the first three months of this period; and will be $7,580 from May 4, 2024 to May 3, 2025; $7,808 from May 4, 2025 to May 3, 2026; and $8,042 from May 4, 2026 to August 3, 2026, plus applicable rental taxes. Parking fees were $290.50 for the first month and will be $325.00 for each subsequent month. The Company also paid an initial security deposit of $8,000 in November 2022 and a second security deposit of $16,000 in May 2023. The initial security deposit will be refunded and credited toward monthly rent for the months beginning May 4, 2024 and May 4, 2025 if the Company has performed all obligations under the Office Lease, including making all rent payments when due. The Company may exercise a one-time option to extend the Office Lease for an additional three-year term upon 9-12 months’ notice for the fair market rent at the time of the extension, as determined in accordance with the Office Lease, and which will not be less than 103% of the final rent amount under the current term. Under the Office Lease, the Company must pay for any tenant improvements above the allowance provided for such improvements of $37,848 or that are not in compliance with the terms of the amended lease agreement.
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The Company also leased office space under a lease agreement that expired on May 31, 2023. Monthly rent was $12,075 and included annual escalations. In December 2021, the Company entered into an agreement to sublease its office space. The sublease ended on May 31, 2023 and included fixed rent of $9,894 per month.
At The Market Offering Agreement
On December 2, 2024, the Company entered into the ATM Agreement with Wainwright as sales agent. Pursuant to the ATM Agreement, the Company may offer and sell, from time to time, shares of common stock, through or to Wainwright as the Company’s sales agent or as principal, subject to the terms and conditions set forth in the ATM Agreement. As of June 30, 2025, the Company has registered the sale, at its discretion, of shares of common stock in an aggregate offering amount up to $5,072,010.53 under the ATM Agreement. Wainwright will use commercially reasonable efforts consistent with its normal trading and sales practices to sell shares of common stock from time to time based upon the Company’s instructions, including any price, time or size limits specified by the Company. Upon delivery of a placement notice, and subject to the Company’s instructions in that notice, and the terms and conditions of the ATM Agreement generally, Wainwright may sell shares of common stock by any method permitted by law deemed to be an “at the market offering” as defined by Rule 415(a)(4) promulgated under the Securities Act.
The offer and sale of shares of common stock under the ATM Agreement is registered and being conducted pursuant to the Company’s shelf registration statement on Form S-3, which was filed with the SEC on December 2, 2024 (File No. 333-283559) (the “Shelf Registration Statement”), and the related prospectus, as supplemented by prospectus supplements pursuant to Rule 424(b) under the Securities Act. The Shelf Registration Statement was declared effective by the SEC on December 5, 2024. The Company is not obligated to make any sales of shares of common stock under the ATM Agreement and no assurance can be given that the Company will sell any shares of common stock under the ATM Agreement, or, if the Company does, as to the price or amount of shares of common stock that the Company will sell, or the dates on which any such sales will take place.
The Company or Wainwright, under certain circumstances and upon notice to the other, may suspend the offering of shares of common stock under the ATM Agreement. As of June 30, 2025, the offering of shares of common stock pursuant to the ATM Agreement will terminate upon the sale of shares of common stock in an aggregate offering amount equal to $5,072,010.53, or sooner if either the Company or Wainwright terminates the ATM Agreement.
The Company will pay Wainwright a cash commission equal to 3.0% of the gross proceeds from each sale of shares of common stock sold pursuant to the ATM Agreement, and will reimburse Wainwright for certain specified expenses, including the documented fees and costs of its legal counsel reasonably incurred in connection with entering into the transactions contemplated by the ATM Agreement in an amount up to $50,000 and up to $2,500 per due diligence update session.
The Company made certain customary representations, warranties and covenants in the ATM Agreement concerning the Company and the Shelf Registration Statement, prospectus, prospectus supplement and other documents and filings relating to the offering of the shares of common stock. In addition, the Company has agreed to indemnify Wainwright against certain liabilities, including liabilities under the Securities Act.
During the three months ended June 30, 2025, a total of 1,909,205 shares were sold through Wainwright under the ATM Agreement, for gross proceeds of $2,102,516, or net proceeds of $2,032,159, after paying fees and expenses of $70,357 to Wainwright with respect to such sales of shares pursuant to the ATM Agreement. As of June 30, 2025, $8,719 of the maximum aggregate offering amount of $5,072,010 under the ATM Agreement had not been sold.
Critical Accounting Estimates
We prepare our financial statements in accordance with U.S. GAAP. The preparation of financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statements presentation, financial condition, results of operations, and cash flows will be affected.
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See Note 1 – Principal Business Activity and Significant Accounting Policies in the financial statements included elsewhere in this Quarterly Report on Form 10-Q, for a description of our other significant accounting policies. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of internally developed software and net operating loss and research and development tax credit carry forwards for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Company converted to a C corporation in September 2021. As a limited liability company for the 2020 year and through the date of conversion in 2021, the Company’s taxable loss was allocated to members in accordance with their respective percentage of ownership. Therefore, no provision for income taxes has been included in the financial statements for the period prior to the Company’s conversion to a C corporation.
The Company evaluates its tax positions that have been taken or are expected to be taken on income tax returns to determine if an accrual is necessary for uncertain tax positions. As of June 30, 2025 and December 31, 2024, the unrecognized tax benefits accrual was zero. The Company will recognize future accrued interest and penalties related to unrecognized tax benefits in income tax expense if incurred. As of June 30, 2025 and December 31, 2024, the 2020 through 2024 tax years generally remain subject to examination by federal and state authorities.
Internally Developed Software
Software consists of an internally developed information system for use by the Company in matching student-athletes with qualified coaches. The Company has capitalized costs incurred with development and upgrades of the information systems in accordance with applicable accounting standards. Costs incurred up to and including the feasibility stage of development as well as maintenance costs are expensed as incurred. The Company amortizes these capitalized costs on a straight-line basis over the estimated useful life of the asset of five years.
In accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 350-40, Internal-Use Software, amortization of internal-use software should begin when the software is ready for its intended use. Software is ready for its intended use after all substantial testing is completed. On January 1, 2023, all substantial testing of the Company’s platform for purposes of football recruitment was completed. Amortization of the platform’s capitalized costs for purposes of football recruitment therefore started on January 1, 2023, due to its ready-for-use status.
In accordance with ASC Subtopic 350-40-25, during the application development stage, some costs are capitalized while other costs are expensed as incurred. In general, costs that are directly attributable to the development of the software are capitalized. The Company’s platform remained in the application development stage for soccer, baseball, and softball recruitment and additional feature development and enhancements for purposes of football recruitment during the three and six months ended June 30, 2025 and 2024. Capitalized costs associated with the platform during the three and six months ended June 30, 2025 and 2024 consisted of fees paid to third parties for services provided to develop the software during the application development stage, costs incurred to obtain computer software from third parties, and payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use computer software project, to the extent of the time spent directly on the project. The following other costs during the three and six months ended June 30, 2025 and 2024 were incurred as expenses and were not capitalized: Training costs, data conversion costs except for costs to develop or obtain software that allows for access or conversion of old data by new systems, and general and administrative costs and overhead costs.
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Revenue Recognition
The Company accounts for revenue under the guidance of ASC Topic 606, Revenue from Contracts from Customers (“ASC 606”).
ASC 606 prescribes a five-step model that focuses on transfer of control and entitlement to payment when determining the amount of revenue to be recognized. Under the ASC 606 guidance, an entity is required to perform the following five steps:
(1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
Revenue from performance obligations satisfied at a point in time consist of sales to individuals representing a one-month subscription and are recognized at the end of the subscription.
Revenue from performance obligations satisfied over time consists of the sale of subscription agreements to individual organizations or customers that are more than one month in duration and are recognized on a monthly basis over the life of the subscription agreement.
In accordance with ASC 606, contracts may be amended to account for changes in contract specifications and requirements. Contract modifications exist when the amendment either creates new, or changes existing, enforceable rights and obligations. When contract modifications create new performance obligations and the increase in consideration approximates the standalone selling price for goods and services related to such new performance obligations as adjusted for specific facts and circumstances of the contract, the modification is considered to be a separate contract and revenue is recognized prospectively. If a contract modification is not accounted for as a separate contract, the Company accounts for the promised goods or services not yet transferred at the date of the contract modification (the remaining promised goods or services) prospectively, as if it were a termination of the existing contract and the creation of a new contract, if the remaining goods or services are distinct from the goods or services transferred on or before the date of the contract modification. The Company accounts for a contract modification as if it were a part of the existing contract if the remaining goods or services are not distinct and, therefore, form part of a single performance obligation that is partially satisfied at the date of the contract modification. In such case the effect that the contract modification has on the transaction price, and on the entity’s measure of progress toward complete satisfaction of the performance obligation, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) at the date of the contract modification (the adjustment to revenue is made on a cumulative catch-up basis).
Fair Value Measurements
The Company uses the fair value framework that prioritizes the inputs to valuation techniques for recognizing financial assets and liabilities measured on a recurring basis and for non-financial assets and liabilities when these items are re-measured. Fair value is considered to be the exchange price in an orderly transaction between market participants, to sell an asset or transfer a liability at the measurement date. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. The Company categorizes each of its fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety.
These levels are:
Level 1 – This level consists of valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured.
Level 2 – This level consists of valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques.
Level 3 – This level consists of valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect assumptions about inputs that market participants would use in pricing an asset or liability.
The Company’s financial instruments also include accounts and receivable, accounts payable, and accrued liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the balance sheet.
ASC 825-10, Financial Instruments (“ASC 825-10”), allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date.
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Stock-Based Compensation
The Company accounts for stock-based compensation costs under the provisions of ASC Topic 718, Compensation—Stock Compensation (“ASC Topic 718”), which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock-based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, consultants, officers, and directors based on the grant date fair value estimated in accordance with the provisions of ASC Topic 718. ASC Topic 718 is also applied to awards modified, repurchased, or cancelled during the periods reported. Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. The Company measures and recognizes compensation expense for the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award.
The fair value of awards on the grant date is estimated using the Black-Scholes option-pricing model, which requires the use of certain subjective assumptions including expected term, volatility, risk-free interest rate and the fair value of our common stock. These assumptions generally require significant judgment. The resulting costs are recognized over the period during which an employee is required to provide service in exchange for the award, usually the vesting period. The Company amortizes the fair value of stock-based compensation on a straight-line basis over the requisite service periods. The Company recognizes forfeitures as they occur as a reduction to stock-based compensation expense and to additional paid-in-capital.
Expected term. Using the simplified method, the expected term is estimated as the midpoint of the expected time to vest and the contractual term, as permitted by the SEC.
Volatility. With respect to grants of equity awards made prior to the listing of our common stock on the NYSE American on November 14, 2023, given the absence of an active market for our common stock, the Company’s expected volatility was derived from the historical volatilities of several unrelated public companies in the digital media and social platform industries because we had little information on the volatility of the price of our common stock because we had no trading history. When making the selections of our industry peer companies to be used in the volatility calculation, we consider operational area, size, business model, industry and the business of potential comparable companies. These historical volatilities are weighted based on certain qualitative factors and combined to produce a single volatility factor. With respect to grants of equity awards made after the listing, the Company determines the expected volatility by weighing the historical average volatilities of publicly traded industry peers and its own trading history. The Company intends to continue to consistently apply this methodology using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company’s own common stock price becomes available, unless circumstances change such that the identified companies are no longer similar to the Company, in which case more suitable companies whose stock prices are publicly available would be utilized in the calculation.
Risk free rate. The risk free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group.
Dividend yield. The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero.
Fair Value of Common Stock. With respect to equity grants made before the listing of our common stock on the NYSE American on November 14, 2023, given the absence of an active market for our common stock, the estimated fair value of restricted stock grants and common stock underlying grants of stock options was determined using a modified probability-weighted expected return methodology (“PWERM”). For valuations after our listing on November 14, 2023, the fair value of restricted stock grants and common stock underlying grants of stock options is calculated utilizing the daily closing price as reported by the NYSE American.
If in the future the Company determines that another method is more reasonable, or if another method for calculating these input assumptions is prescribed by authoritative guidance, and, therefore, should be used to estimate volatility or expected life, the fair value calculated for our stock options could change significantly. Higher volatility and longer expected lives result in an increase to stock-based compensation expense determined at the date of grant. Stock-based compensation expenses affect our general and administrative expenses.
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Recent Accounting Pronouncements
See the sections titled “Principal Business Activity and Significant Accounting Policies — Adopted Accounting Pronouncements” and “—New Accounting Pronouncements” in Note 1 to our financial statements included elsewhere in this Quarterly Report on Form 10-Q.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
Not applicable.
| ITEM 4. | CONTROLS AND PROCEDURES. |
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) prior to the filing of this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were, in design and operation, not effective at a reasonable assurance level due to the following material weaknesses in our internal control over financial reporting:
| ● | Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties; and |
| ● | We did not have a comprehensive and formalized accounting and financial reporting policies and procedures manual which details the information needed for our financial reporting process. As a result, certain key processes were not consistently followed during our quarterly reporting, including proper and timely preparation and review of account reconciliations |
Changes in Internal Control over Financial Reporting
Following the identification of the material weaknesses described above, management commenced remediation actions relating to these material weaknesses beginning in the three months ended March 31, 2025, as follows:
| ● | To address the material weakness related to inadequate segregation of duties, management has engaged qualified external consultants to assist with financial reporting processes, account reconciliations, and review controls. These consultants provide an independent layer of oversight that may help to mitigate risks associated with limited internal staffing. As the Company grows and additional resources become available, management plans to expand the finance team and reassign responsibilities to achieve more effective separation of duties. In addition, enhanced management review procedures were immediately implemented. |
| ● | Management initiated the development of a comprehensive accounting and financial reporting policies and procedures manual, covering key processes such as revenue recognition, expense accruals, account reconciliations, financial close procedures, estimate preparation, and journal entry documentation and review. |
The material weaknesses identified above will not be considered fully remediated until these additional controls and procedures have operated effectively for a sufficient period of time and management has concluded, through testing, that these controls are effective. Our management will monitor the effectiveness of our remediation plans and will make changes management determines to be appropriate. If not remediated, these material weaknesses could result in material misstatements to our annual or interim consolidated financial statements that may not be prevented or detected on a timely basis or result in a delayed filing of required periodic reports. If we are unable to assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected, and we could become subject to litigation or investigations by The NYSE American LLC, the SEC, or other regulatory authorities, which could require additional financial and management resources.
There were no changes in our internal control over financial reporting during the three months ended June 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as described above.
Inherent Limitation on the Effectiveness of Internal Control
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.
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PART II
OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS. |
During the three months ended June 30, 2025, there were no material pending legal proceedings or material developments in pending legal proceedings, other than ordinary routine litigation incidental to our business, to which the Company is a party or of which any of their property is the subject.
| ITEM 1A. | RISK FACTORS. |
There are no material changes from the risk factors previously disclosed in Item 1A “Risk Factors” of the 2024 Annual Report.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
Unregistered Sales of Equity Securities
During the three months ended June 30, 2025, we did not sell any equity securities that were not registered under the Securities Act and that were not previously disclosed in a Current Report on Form 8-K.
Purchases of Equity Securities
No repurchases of our common stock were made during the three months ended June 30, 2025.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES. |
None.
| ITEM 4. | MINE SAFETY DISCLOSURES. |
Not applicable.
| ITEM 5. | OTHER INFORMATION. |
None of our directors or “officers,”
as defined in Rule 16a-1(f) under the Exchange Act,
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| ITEM 6. | EXHIBITS. |
|
Exhibit No. |
Description | |
| 2.1 | Business Combination Agreement, dated as of May 27, 2025, among Signing Day Sports, Inc., BlockchAIn Digital Infrastructure, Inc., One Blockchain LLC, BCDI Merger Sub I Inc., and BCDI Merger Sub II LLC* (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on May 28, 2025) | |
| 3.1 | Second Amended and Restated Certificate of Incorporation of Signing Day Sports, Inc. (incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K filed on March 29, 2024) | |
| 3.2 | Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of Signing Day Sports, Inc. filed with the Secretary of State of the State of Delaware on November 14, 2024 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on November 18, 2024) | |
| 3.3 | Second Amended and Restated Bylaws of Signing Day Sports, Inc. (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 filed on May 15, 2023) | |
| 3.4 | Amendment No. 1 to the Second Amended and Restated Bylaws of Signing Day Sports, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on December 8, 2023) | |
| 10.1 | Voting and Support Agreement, dated as of May 27, 2025, among Blockchain Digital Infrastructure, Inc., Signing Day Sports, Inc. and certain stockholders of Signing Day Sports, Inc., dated as of May 27, 2025* (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on May 28, 2025) | |
| 31.1** | Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2** | Certifications of Principal Financial and Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1*** | Certifications of Principal Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2*** | Certifications of Principal Financial and Accounting Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS** | Inline XBRL Instance Document | |
| 101.SCH** | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL** | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF** | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB** | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE** | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104** | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| † | Executive compensation plan or arrangement |
| * | Annexes, schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted annexes, schedules and exhibits upon request by the SEC. |
| ** | Filed herewith |
| *** | Furnished herewith |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
Date: August 12, 2025 |
SIGNING DAY SPORTS, INC. |
| /s/ Daniel Nelson | |
| Name: Daniel Nelson | |
| Title: Chief Executive Officer | |
|
(Principal Executive Officer) |
| /s/ Damon Rich | |
| Name: Damon Rich | |
| Title: Chief Financial Officer | |
| (Principal Accounting Officer and Principal Financial Officer) |
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FAQ
What was SGN's net loss for Q2 2025 and year-to-date?
How much cash did Signing Day Sports have at June 30, 2025 (SGN)?
What financing did SGN complete in the period?
Did the company disclose a going concern issue (SGN)?
What material agreements did SGN enter after period end?
How concentrated is SGN's revenue?
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