UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________

Commission File Number: 001-41863

SIGNING DAY SPORTS, INC.

(Exact name of registrant as specified in its charter)

Delaware		87-2792157
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

8355 East Hartford Rd., Suite 100, Scottsdale, AZ		85255
(Address of principal executive offices)		(Zip Code)

(480) 220-6814

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		SGN		NYSE American LLC

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. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 19, 2024, there were a total of 16,867,503 shares of the registrant’s Common Stock, par value $0.0001 per share, outstanding.

SIGNING DAY SPORTS, INC.

Quarterly Report on Form 10-Q

Period Ended June 30, 2024

TABLE OF CONTENTS

	PART I FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	60
Item 4.	Controls and Procedures	60

	PART II OTHER INFORMATION

Item 1.	Legal Proceedings	61
Item 1A.	Risk Factors	61
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3.	Defaults Upon Senior Securities	61
Item 4.	Mine Safety Disclosures	61
Item 5.	Other Information	61
Item 6.	Exhibits	62

Signatures		64

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

SIGNING DAY SPORTS, INC.

UNAUDITED FINANCIAL STATEMENTS

		Page

Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023		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

SIGNING DAY SPORTS, INC.
Balance Sheets

	June 30, 2024			December 31,
	(Unaudited)			2023
ASSETS
Current assets
Cash and cash equivalents	$	35,943		$	1,123,529
Short term investments		2,164,382			2,109,011
Accounts receivable		43,182			58,775
Prepaid expense		204,381			125,841
Other current assets		106,389			68,500

Total current assets		2,554,277			3,485,656

Property and equipment, net		20,302			5,078
Internally developed software, net		789,182			895,534
Operating lease right of use asset, net		169,668			208,443
Intangible assets, net		14,117			20,900
Deferred tax asset		-			65,000
Other assets		24,000			24,000

Total assets	$	3,571,546		$	4,704,611

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities
Accounts payable	$	1,326,375		$	804,534
Accrued liabilities		169,281			379,948
Deferred revenue		9,196			4,282
Current operating lease right of use liability		86,553			83,736
Loans payable		795,641			3,530
Line of credit		2,000,000			1,540,125

Total current liabilities		4,387,046			2,816,155

Non-current liabilities
Noncurrent operating lease liability		100,446			144,325

Total liabilities	$	4,487,492		$	2,960,480

Stockholders’ equity (deficit)
Common stock: par value $0.0001 per share; 150,000,000 authorized shares, 16,017,086 and 13,248,552 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively.		1,602			1,326
Preferred Stock: 150,000,000 authorized shares, 0 shares issued and outstanding as of June 30, 2024 December 31, 2023, respectively.
Additional paid-in capital		19,852,126			18,701,752
Subscription receivable		(11	)		(11	)
Accumulated deficit		(20,769,663	)		(16,958,936	)

Total stockholders’ equity (deficit)		(915,946	)		1,744,131

Total liabilities and stockholders’ equity (deficit)		3,571,546			4,704,611

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

SIGNING DAY SPORTS, INC.
Statements of Operations
(Unaudited)

	For the Six Months Ended						Three Months Ended			Three Months Ended
	June 30,			June 30,			June 30,			June 30,
	2024			2023			2024			2023

Revenues, net	$	439,589		$	170,830		$	204,962		$	116,810
Cost of revenues		131,194			14,226			62,160			9,686

Gross profit		308,395			156,604			142,802			107,124

Operating cost and expenses
Advertising and marketing		93,609			197,816			884			107,194
General and administrative		3,310,921			1,216,270			1,267,952			665,394

Total operating expenses		3,404,530			1,414,086			1,268,836			772,588

Net loss from operations		(3,096,135	)		(1,257,482	)		(1,126,034	)		(665,464	)

Other income (expense)
Interest expense		(79,229	)		(455,448	)		(41,156	)		(255,141	)
Interest income		57,120			1,100			27,832			-
Deferred tax income, net		32,571			-			16,571			-
Other income (expense), net		(725,054	)		58,264			(190,055	)		29,682
Total other income (expense)		(714,592	)		(396,084	)		(186,808	)		(225,459	)

Net loss	$	(3,810,727	)	$	(1,653,566	)	$	(1,312,842	)	$	(890,923	)

Weighted average common shares outstanding - basic		14,524,228			7,614,070			14,842,944			7,614,070
Weighted average common shares outstanding - diluted		15,047,352			7,614,070			15,660,964			7,614,070

Net loss per common share - basic		0.26			0.22			0.09			0.12
Net loss per common share - diluted		0.25			0.22			0.08			0.11

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

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 December 31, 2022		8,086,152		$	809		$	3,377,459		$	-		$	(11,480,816	)	$	(8,102,548	)

Stock-based compensation expense		-			-			178,333			-			-			178,333

Stock repurchase and retirement		(600,000	)		(60	)		(799,940	)		-			-			(800,000	)

Net loss		-			-			-			-			(865,251	)		(865,251	)

Balance at March 31, 2023		7,486,152		$	749		$	2,755,852		$	-		$	(12,346,067	)	$	(9,589,466	)

Stock-based compensation expense		-			-			(145,099	)		-			-			(145,099	)

Issuance of common stock		105,000			11			-			(11	)		-			-

Net loss		-			-			-			-			(890,923	)		(890,923	)

Balance at June 30, 2023		7,591,152		$	760		$	2,610,753		$	(11	)	$	(13,236,990	)	$	(10,625,488	)

Net loss		-			-			-			-			(919,625	)		(919,625	)

Balance at September 30, 2023		7,591,152			760			2,610,753			(11	)		(14,156,615	)		(11,545,113	)

Stock-based compensation expense		-			-			514,689			-			-			514,689

Issuance of common stock pursuant to initial public offering, net of issuance costs of $1,342,913		1,210,700			121			4,656,967			-			-			4,657,088

Issuance of common stock pursuant to convertible notes, net of interest cancelled		4,446,700			445			10,919,343			-			-			10,919,788

Net loss		-			-						-			(2,802,321	)		(2,802,321	)

Balance at December 31, 2023		13,248,552		$	1,326		$	18,701,752		$	(11	)	$	(16,958,936	)	$	1,744,131

Stock-based compensation expense		1,310,185			131			427,761			-			-			427,892
		710,295			71			505,289			-			-			505,360
Issuance of common stock pursuant to equity line of credit		114,496			11			50,615			-			-			50,626

Net loss		-			-			-			-			(2,497,886	)		(2,497,886	)

Balance at March 31, 2024		15,383,528		$	1,539		$	19,685,417		$	(11	)		(19,456,822	)	$	230,124

Stock-based compensation expense		420,000			42			81,787			-			-			81,829

Stock-based compensation canceled / returned		(77,344	)		(8	)		8			-			-			-

Issuance of commitment fee Firstfire Prom Note		277,777			28			81,083			-			-			81,111

Boustead Issuance on Firstfire Transaction		13,125			1			3,832			-			-			3,833

Net loss		-			-			-			-			(1,312,842	)		(1,312,842	)

Balance at June 30, 2024		16,017,086		$	1,602		$	19,852,126		$	(11	)		(20,769,663	)	$	(915,946	)

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

SIGNING DAY SPORTS, INC.
Statements of Cash Flows
(Unaudited)

	For the Six Months Ended June 30,
	2024			2023

Cash flows from operating activities
Net loss	$	(3,810,727	)	$	(1,653,566	)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		49,512			26,271
Stock-based compensation		509,721			33,283
(Increase) decrease in assets:
Accounts receivable		15,593			5,776
Prepaid and other assets		(116,429	)		(14,473	)
Operating lease right of use asset		38,775			(246,518	)
Deferred offering costs		-			(86,144	)
Deferred tax asset		65,000			-
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities		521,841			310,343
Accrued liabilities		(210,667	)		237,564
Deferred revenue		4,914			(33,756	)
Deferred rent		-			(9,894	)
Lease liabilities		(41,062	)		246,698

Net cash used in operating activities		(2,973,530	)		(1,184,416	)

Cash flows from investing activities
Proceeds from investments		(55,371	)		-
Development of internal software		53,176			(768,454	)
Purchase of property and equipment		(4,777	)		-

Net cash used in investing activates		(6,972	)		(768,454	)

Cash flows from financing activities
Proceeds from issuance of convertible notes		-			2,493,715
Proceeds from revolving line of credit		1,251,986			-
Proceeds from loans		-			60,000
Proceeds from issuance of common stock pursuant to initial public offering		50,626			(49	)
Payments for commitment fee of the equity line of credit		505,355			-
Proceeds from issuance of common stock		84,948			-
Distribution to member		-			(800,001	)

Net cash provided by financing activities		1,892,915			1,753,665

Net decrease in cash and cash equivalents		(1,087,586	)		(199,205	)

Cash and cash equivalents, beginning of period		1,123,529			254,409

Cash and cash equivalents, end of period	$	35,943		$	55,204

Supplemental cash flow information
Cash paid for interest expense	$	-		$	3,825

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

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.

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 $1.313 million for the three months ended June 30, 2024 and $0.891 million for the three months ended June 30, 2023. We incurred a net loss of approximately $3.811 million for the six months ended June 30, 2024 and $1.654 million for the six months ended June 30, 2023. We had cash used in operating activities of approximately $2.974 million and $1.184 million for the six months ended June 30, 2024 and 2023, respectively, and an accumulated deficit of approximately $20.770 million and $16.9590 million as of June 30, 2024 and December 31, 2023, respectively. These conditions raise substantial doubt about our ability to continue as a going concern.

The Company is continuing its path to profitability through increased business development, marketing and sales of the Company’s multiple lines of subscriptions.

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. Management believes that its current operating strategy will provide the opportunity for us to continue as a going concern as long as we are able to obtain additional financing; however, there is no assurance this will occur. 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

These unaudited 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”).

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, 2024 and December 31, 2023, cash and cash equivalents consisted of cash on deposit with banks denominated in U.S. dollars and investments in money market funds.

Short-term Investments

The Company classifies its certificates of deposit as short-term investments and reassesses the appropriateness of the classification of its investments at the end of each reporting period. Certificates of deposit held for investment with an original maturity greater than three months are carried at amortized cost and reported as short-term investments on the balance sheets. The type of certificates of deposit that the Company invests in are not considered debt securities under Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 320, Investments - Debt Securities.

As of June 30, 2024 and December 31, 2023, the Company had approximately $2.2 million in certificates of deposit. The Company classified $2.2 million of its certificates of deposits as short-term investments on its balance sheets as of June 30, 2024 and December 31, 2023.

Receivables and Credit Policy

The Company estimates an allowance for doubtful accounts based upon an evaluation of the status of receivables, historical experience, and other factors as necessary. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. There were $43,182 of open receivables at June 30, 2024 and $58,775 at December 31, 2023. The Company reviews its receivables in accordance with Accounting Standards Update (“ASU”) 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), which currently has a minimal impact on the Company. At June 30, 2024 and December 31, 2023, the Company believes the accounts receivable are fully collectable.

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, except that user organizations may have subscriptions by agreeing to make payment on a monthly installment basis. 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 three to five years.

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, 2024 and December 31, 2023.

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 five years.

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, 2024 and 2023, the Company did not have an impairment charge.

Intangible Assets

Intangible assets consist of purchased development software, 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 Revenue

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 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 and short-term investments consisting of CDs. Total cash balances exceeded insured balances by the Federal Deposit Insurance Corporation as of June 30, 2024 and December 31, 2023. 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.

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 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, 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 did not identify any assets or liabilities 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 converted to a C corporation in August of 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, 2024 and December 31, 2023, 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, 2024, the 2020 through 2023 tax years generally remain subject to examination by federal and state authorities.

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. 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. There were $43,182 of open receivables at June 30, 2024 and $58,775 at December 31, 2023.

Debt Issuance Costs

Debt issuance costs are amortized over the period the related obligation is outstanding using the straight-line method. The straight-line method is a reasonable estimate of the effective interest method due to the relatively short maturities of the related debt. Debt issuance costs are included within long-term debt on the balance sheet. Amortization of debt issuance costs is included in interest expense in the accompanying financial statements. As of June 30, 2024 and December 31, 2023, unamortized debt issuance costs are $0 and $0, respectively.

Advertising Costs

Advertising and marketing costs are expensed as incurred. Such costs amounted to $884 for the three months ended June 30, 2024 and $107,194 for the three months ended June 30, 2023. Such costs amounted to $93,609 for the six months ended June 30, 2024 and $197,816 for the six months ended June 30, 2023. Advertising costs are included in advertising and marketing expenses in the statements of operations.

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 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, officers, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. 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 of June 30, 2024 and 2023, 299,333 and 488,800, respectively, stock options were excluded from dilutive loss per share as their effects were anti-dilutive.

	Three Months Ended June 30,
	2024			2023
Numerator:
Net loss	$	(1,312,842	)	$	(890,923	)

Denominator:
Weighted-average common shares outstanding - basic		14,842,944			7,614,070
Effect of potentially dilutive securities:
Stock options		-			-
Weighted-average common shares outstanding - diluted		15,660,964			7,614,070

Net loss per share - basic	$	(.09	)		(0.12	)
Net loss per share - diluted	$	(.08	)		(0.12	)

	Six Months Ended June 30,
	2024			2023
Numerator:
Net loss	$	(3,810,727	)	$	(1,653,566	)

Denominator:
Weighted-average common shares outstanding - basic		14,524,228			7,614,070
Effect of potentially dilutive securities:
Stock options		-			-
Weighted-average common shares outstanding - diluted		15,047,352			7,614,070

Net (loss) income per share - basic	$	(0.26	)		(0.22	)
Net (loss) income per share - diluted	$	(0.25	)		(0.22	)

The following potentially dilutive shares were excluded from the computation of diluted net (loss) income per share for the periods presented because including them would have been antidilutive:

	Three Months Ended June 30,
	2024		2023
Stock options		299,333		488,000

	Six Months Ended June 30,
	2024		2023
Stock options		299,333		488,000

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.

The lease 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.

Deferred Offering Costs

The Company capitalizes certain legal, accounting, and other third-party fees that are directly related to the Company’s equity financings, including the Company’s initial public offering, until such financings are consummated. After consummation of an equity financing, these costs are then recorded as a reduction of the proceeds received as a result of the financing. Should a planned equity financing be abandoned, terminated, or significantly delayed, the deferred offering costs would be immediately written off to operating expenses. Upon the closing of the initial public offering in November 2023, all deferred offering costs in the accompanying balance sheets were reclassified from prepaid expenses and other current assets and recorded against the initial public offering proceeds as a reduction to additional paid-in capital. There were no deferred offering costs capitalized as of June 30, 2024 and December 31, 2023.

Adopted Accounting Pronouncements

On January 1, 2023, the Company adopted ASC 326: Measurement of Credit Losses on Financial Instruments (“ASC 326”). This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally applies to financial assets measured at amortized cost, such as accounts receivable. The adoption did not have a material impact on the Company’s financial statements.

New Accounting Pronouncements

The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position.

Reclassification of Prior Period Presentation

Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.

Note 2 - Revenue

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,
	2024		2023
Revenue recognized over time	$	5,525	$	6,375
Revenue recognized at a point in time	$	199,437	$	110,435
Total revenue from contracts with customers recognized over time	$	204,962	$	116,810

	For the Six Months Ended June 30,
	2024		2023
Revenue recognized over time	$	9,755	$	7,863
Revenue recognized at a point in time	$	429,834	$	162,967
Total revenue from contracts with customers recognized over time	$	439,589	$	170,830

The following table presents our contract liabilities (deferred revenue) and certain information related to these balances as of:

	June 30,		December 31,
	2024		2023

Contract liabilities (deferred revenue)	$	9,196	$	4,282

	For the Three Months Ended June 30,
	2024		2023
Revenue recognized in the period from
Amounts included in contract liabilities at the beginning of the period	$	55,553	$	18,174

	For the Six Months Ended June 30,
	2024		2023
Revenue recognized in the period from
Amounts included in contract liabilities at the beginning of the period	$	1,558	$	35,529

The Company recognized revenue of $55,553 and $18,174 for the three months ended June 30, 2024 and June 30, 2023 that was included in the deferred revenue balance as of March 31, 2024, and March 31, 2023, respectively. The Company recognized revenue of $1,558 and $35,529 for the six months ended June 30, 2024 and June 30, 2023 that was included in the deferred revenue balance as of December 31, 2023, and December 31, 2022, respectively. The Company recognized the December 31, 2022 balance fully in the year ended December 31, 2023. The Company expects to recognize the December 31, 2023 balance fully in the year ending December 31, 2024.

Note 3 - Property and Equipment, net

The Company’s property and equipment include the following:

	June 30,			December 31,
	2024			2023
Office Furniture	$	21,430		$	5,642
Less: accumulated depreciation		(1,128	)		(564	)
Property and equipment, net	$	20,302		$	5,078

Note 4 - Internally Developed Software

Internally developed software asset consists of the following:

	Cost Basis		Accumulated Amortization			Net
	June 30, 2024
Internally developed software	$	1,063,526	$	(274,344	)	$	789,182

	December 31, 2023
Internally developed software	$	1,063,526	$	(167,992	)	$	895,534

Amortization expense for the three and six months ended June 30, 2024 is $53,176 and $106,353, respectively. Amortization expense for the three and six months ended June 30, 2023 is 0 and $27,207, respectively.

Note 5 - Intangible Assets

The Company’s intangible assets include the following:

			Accumulated
	Cost Basis		Amortization			Net
	June 30, 2024
Intellectual property	$	22,000	$	(11,000	)	$	11,000
Proprietary technology		18,700		(15,583	)		3,117
Total	$	40,700	$	(26,583	)	$	14,117

		December 31, 2023
Intellectual property	$	22,000	$	(7,333	)	$	14,667
Proprietary technology		18,700		(12,467	)		6,233
Total	$	40,700	$	(19,800	)	$	20,900

Amortization expense for the three and six months ended June 30, 2024 is $3,392 and $6,783, respectively. Amortization expense for the three and six months ended June 30, 2023 is $4,695 and $4,695, respectively.

Estimated amortization for intangible assets with definitive lives for the remaining six months of 2024 and the next year ended December 31, is as follows:

	Amount
Years Ended December 31,
2024 (remaining six months)		6,784
2025		7,333
Total	$	14,117

SEC Form 10-Q filed by Signing Day Sports Inc.