NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. USE OF ESTIMATES

The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Significant estimates and assumptions made by management include, but are not limited to, the determination of the provision for income taxes, the fair value of warrants, and the fair value of stock-based compensation. The Company bases the estimates on historical experience and on various other assumptions that are believed to be reasonable. Actual results could differ from those estimates.

b. CASH AND CASH EQUIVALENTS

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

c. CASH DEPOSITS

Time deposits represent interest-bearing deposits with financial institutions that have original maturities of greater than three months and are classified within “Prepaid expenses and other current assets” on the balance sheets due to their expected use within one year. Time deposits are recorded at cost, which approximates fair value due to their short-term maturities. Time deposits included within prepaid expenses and other current assets were $nil and $400,000 as of June 30, 2026 and December 31, 2025, respectively.

The Company monitors the creditworthiness of the financial institutions with which time deposits are placed and does not believe it is exposed to significant credit risk. The Company has not experienced any losses related to these instruments during the periods presented.

d. PROPERTY AND EQUIPMENT, NET

Property and equipment are stated at cost less accumulated depreciation and amortization. Property and equipment consist of computer equipment and depreciation expense is recognized using the straight-line method over the estimated useful life of five years for computer and equipment.

When assets are retired or otherwise disposed of, the cost, accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is reflected in the statements of operations in the period realized. Maintenance and repairs that do not enhance or extend the asset’s useful life are charged to operating expenses as incurred.

The following is a summary of property and equipment as of:

SCHEDULE OF PROPERTY AND EQUIPMENT 

Depreciation expense was $1,383 and $501 for the three months ended June 30, 2026 and 2025, respectively. Depreciation expense was $1,879 and $997 for the six months ended June 30, 2026 and 2025, respectively.

e. INTANGIBLE ASSET

Intangible assets are amortized over the respective estimated lives on a straight-line basis, unless the lives are determined to be indefinite and reviewed for impairment whenever events or other changes in circumstances indicate that the carrying amount may not be recoverable. Impairment testing compares carrying values to fair values and, when appropriate, the carrying value of these assets is reduced to fair value. Impairment charges, if any, are recorded in the period in which the impairment is detected. As of June 30, 2026, intangible assets consist of the trademark acquired from Patrick J. Rolfes and Ted Angelo (the “Sellers”), the owners of the trademark for “World Series of Pickleball” (the “Trademark”). Pursuant to the Trademark Acquisition Agreement, we acquired all rights to, and ownership of, the Trademark, in consideration for $25,000 in cash and warrants to purchase 50,000 shares of the Company’s common stock with a fair value of $283,287 (see Notes 5 and 6). In June 2026, the Company also capitalized a licensed right of $1,743,829, representing the fair value of warrants granted to Darren Cahill as consideration under a name and likeness license agreement (see Note 5). In June 2026, the Company also recorded a licensed right - related party of $250,000, representing consideration accrued under a name and likeness license agreement with a related party (see Notes 5 and 7). The Trademark and the licensed rights are each amortized over an estimated useful life of 15 years.

The following is a summary of intangible assets, net as of:

 SCHEDULE OF SUMMARY OF INTANGIBLE ASSETS

Amortization expense was $13,442 and $1,713 for the three months ended June 30, 2026 and 2025, respectively. Amortization expense was $18,580 and $1,713 for the six months ended June 30, 2026 and 2025, respectively. The carrying value of the related asset remaining for amortization as of June 30, 2026 was $2,271,547 (see Note 5).

f. SOFTWARE DEVELOPMENT IN PROGRESS

The Company capitalizes costs incurred to develop software for internal use in accordance with ASC 350-40, Intangibles—Goodwill and Other—Internal-Use Software. Costs incurred during the application development stage are capitalized, while costs incurred during the preliminary project stage and the post-implementation stage, including training and maintenance costs, are expensed as incurred. Capitalized software development costs will be amortized on a straight-line basis over the estimated useful life of the software, beginning when the software is substantially complete and ready for its intended use.

During the three months ended June 30, 2025, the Company began the development stage of its digital platform. As of June 30, 2026, the software remained in development and had not been placed in service, and accordingly no amortization was recorded. Software development in progress was $2,294,039 as of June 30, 2026 ($0 as of December 31, 2025), of which $1,126,491 was included in accounts payable and accrued expenses as of June 30, 2026. Technology-related costs that do not qualify for capitalization are expensed as incurred and included in research and development expenses.

g. IMPAIRMENT OF LONG-LIVED ASSETS

The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. The Company did not record any impairment losses on its long-lived assets as of June 30, 2026.

h. INCOME TAXES

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities, measured using enacted tax rates in effect for the years in which those differences are expected to reverse. A valuation allowance is established against deferred tax assets when the Company believes it is more likely than not that such assets will not be realized.

The Company recognizes the benefit of an uncertain tax position only if it is more likely than not that the position would be sustained upon examination based on its technical merits.

For the three and six months ended June 30, 2026 and 2025, the Company recorded no provision for or benefit from income taxes. Under the estimated annual effective tax rate method of ASC 740-270, the Company’s effective rate is 0%, as compared to the U.S. federal statutory rate of 21%, because the Company maintains a full valuation allowance against its net deferred tax assets, including net operating loss carryforwards, in light of its history of recurring losses. Utilization of those carryforwards may be subject to annual limitation under Section 382 of the Internal Revenue Code as a result of ownership changes, including in connection with the February 2026 exercise of warrants and the Company’s 2026 private placements. The Company has not completed a formal Section 382 analysis; any such limitation would not currently impact the condensed financial statements because the related deferred tax assets are fully reserved.

i. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company adopted Accounting Standards Codification (ASC) 820 “Fair Value Measurement” related to fair value measurement at inception. The standard defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The standard applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new fair value measurements. The standard clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the standard established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

At June 30, 2026 and December 31, 2025, the carrying amount of accounts payable and accrued liabilities approximate fair value because of the short maturity of these instruments.

j. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share exclude any dilutive effects of options, warrants, and convertible securities. Basic earnings per share are computed using the weighted average number of shares of common stock outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. The following potentially dilutive securities were excluded from the computation of diluted loss per share because their effect would have been antidilutive: 3,207,876 warrants, 300,000 restricted stock units, and 40,000 restricted stock awards, totaling 3,547,876, as of June 30, 2026. As of June 30, 2025, 3,875,000 warrants were excluded from the computation of diluted loss per share because their effect would have been antidilutive.

Loss per share is computed by dividing net loss attributable to common stockholders, which reflects the net loss adjusted for the deemed dividend on warrants issued to stockholders in consideration for lock-up agreements (see Note 6), by the weighted average number of common shares outstanding during the period. The weighted-average number of common shares used in the calculation of basic loss per share was 12,812,530 and 9,785,056 for the three months ended June 30, 2026 and 2025, respectively. The weighted-average number of common shares used in the calculation of basic loss per share was 12,161,281 and 9,785,056 for the six months ended June 30, 2026 and 2025, respectively.

k. RELATED PARTIES

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

l. STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation to employees and non-employees in accordance with Financial Accounting Standards Board (FASB) ASC 718, “Compensation-Stock Compensation”. ASC 718 requires companies to measure the cost of services received in exchange for an award of equity instruments, including stock options, based on the grant date fair value of the award and to recognize it as compensation expense over the period the grantee is required to provide service in exchange for the award, usually the vesting period. Following its adoption of ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting”, the Company measures awards granted to non-employees in exchange for goods or services at the grant-date fair value of the equity instruments the Company is obligated to issue, and equity-classified non-employee awards are not remeasured after the grant date. For non-employee awards containing a performance condition, compensation cost is recognized when achievement of the performance condition is probable; for awards subject only to service conditions, compensation cost is recognized over the requisite service (vesting) period. The Company has elected, as permitted by ASC 718-10-35-3, to account for forfeitures as they occur; previously recognized compensation cost for an unvested award is reversed in the period the award is forfeited, including upon termination of a grantee’s service.

The Company estimates the fair value of stock options and warrants granted as compensation using the Black-Scholes option-pricing model, which requires assumptions for the expected volatility of the Company’s common stock, the risk-free interest rate, the expected term of the award and expected dividends. The fair value of restricted stock awards and restricted stock units is measured by reference to the quoted market price of the Company’s common stock on the grant date.

m. WARRANTS

The Company accounts for warrants issued to non-employees, investors and other counterparties as equity-classified instruments when the warrants are indexed to the Company’s own stock and satisfy the conditions for equity classification in ASC 815-40, “Derivatives and Hedging—Contracts in Entity’s Own Equity”. The Company has evaluated the terms of its outstanding warrants and concluded that they meet the requirements for equity classification: cashless (net share) exercise provisions, where present, are settled solely in shares of common stock; beneficial ownership limitations of 4.999% (which a holder may increase to 9.999% upon at least 61 days’ prior written notice to the Company) limit the timing of exercise but do not create an obligation for the Company to settle in cash; and the registration rights granted to certain holders do not require net cash settlement, as the Company is permitted to deliver unregistered shares upon exercise. Accordingly, the warrants are recorded within stockholders’ equity at issuance and are not subsequently remeasured.

n. CONVERTIBLE NOTES

The Company accounts for convertible notes in accordance with ASC 470-20, “Debt—Debt with Conversion and Other Options”, as amended by ASU 2020-06. Convertible notes that do not contain embedded features requiring bifurcation under ASC 815 are accounted for as a single liability measured at amortized cost, with no portion of the proceeds separately allocated to the conversion feature. When a note is converted in accordance with its original terms, the carrying amount of the note, including accrued but unpaid interest, is credited to common stock and additional paid-in capital and no gain or loss is recognized.

o. REGISTRATION PAYMENT ARRANGEMENTS

The Company accounts for registration payment arrangements in accordance with ASC 825-20, “Financial Instruments—Registration Payment Arrangements”. A contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement is recognized as a liability when the transfer of consideration is probable and the amount can be reasonably estimated. No liability under registration payment arrangements was recognized at June 30, 2026 or December 31, 2025.

p. SEGMENT INFORMATION

In accordance with ASC 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. ASC 280 establishes standards for companies to report financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker (“CODM”), which is Ronald S. Boreta, its President and CEO, in deciding how to allocate resources and assess performance.

q. RECENT ACCOUNTING PRONOUNCEMENTS

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which requires enhanced disclosures about significant segment expenses and other segment items regularly provided to the chief operating decision maker, and requires that entities with a single reportable segment provide all of the disclosures required by ASC 280, as amended. The guidance is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The Company has adopted ASU 2023-07, and the disclosures required by the standard, including the identification of the CODM and the measures of segment profit or loss regularly reviewed by the CODM, are reflected in Note 3 – Segment Reporting. The adoption of ASU 2023-07 affected disclosures only and did not have a material impact on the Company’s financial position or results of operations.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” which is intended to enhance the transparency and decision usefulness of income tax disclosures. The guidance addresses investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. The guidance is effective for annual periods beginning after December 15, 2024. The Company adopted ASU 2023-09 on January 1, 2025. The adoption of ASU 2023-09 has not had a material impact on the Company’s financial statements and disclosures.

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which requires disclosure, in the notes to the financial statements, of specified categories of expenses, including employee compensation, depreciation and intangible asset amortization, included in each relevant expense caption presented on the face of the income statement. The guidance is effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect of ASU 2024-03 on its disclosures, including the disaggregation of the expenses presented within its general and administrative expenses caption.

The Company believes there was no other new accounting guidance adopted but not yet effective that either has not already been disclosed in prior reporting periods or is relevant to the readers of the Company’s financial statements.

The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change.