Filing summary
Entity mismatch: The supplied filing is for Deep Medicine Acquisition Corp. (a SPAC), not TruGolf Holdings, Inc. It covers the quarter and six months ended September 30, 2022, and was filed November 14, 2022. The filing identifies the company as a shell company formed to pursue a business combination; it reports no operating business or revenue.
Financial results and position
- Revenue: None. The company had not commenced operations and expected no operating revenue before completing a business combination.
- Net loss: $165,559 for the quarter, versus $78,774 in the prior-year quarter; $319,979 for the six months, versus $95,273 in the prior-year period. Current-period losses reflected operating costs partly offset by trust-account investment income.
- Operating expenses: $717,723 for the quarter and $987,556 for the six months, compared with $78,774 and $95,273, respectively, in the comparable 2021 periods. Trust investment income was $552,164 for the quarter and $667,577 for the six months; there was no such income in the 2021 comparisons.
- Cash flow: Operating activities used $362,426 during the six months, compared with $173,596 in 2021. There was no investing or financing cash flow in the 2022 period.
- Liquidity: September 30 cash outside the trust was $514,673, down from $877,099 at March 31. Trust cash and marketable securities totaled $128,428,444, up from $127,760,867. The company reported a $331,863 working-capital deficit.
- Liabilities: Total liabilities were $5,454,013, including $500,000 of non-interest-bearing sponsor debt, $515,513 of accrued expenses, and $4,427,500 in deferred underwriting commissions payable upon a business combination. Stockholders’ deficit was $4,559,363. No margins are meaningful for a company without operating revenue.
Material developments and outlook
- The company signed a business combination agreement with Chijet Inc. in July 2022, concerning businesses that include Chinese electric-vehicle and traditional-vehicle manufacturers. The agreement was terminated September 26, 2022; the company stated it owed no termination penalty.
- After quarter-end, sponsor affiliates provided $1,265,000 under non-interest-bearing notes, deposited into the trust on October 19 to extend the combination deadline from October 29, 2022 to January 29, 2023.
- Management said available cash may not be adequate to sustain the company’s business-combination search without further support. It cited substantial doubt about the company’s ability to continue as a going concern; sponsor or other financing was possible but not committed.
- If no business combination is completed by the applicable deadline, the company must cease operations and redeem public shares, subject to the filing’s stated terms. Rights may expire worthless if the company liquidates.
- Key risks include the limited time and funding to find another target, potential dilution or debt from financing a transaction, regulatory approval delays, possible investment-company status, market and economic volatility, and a potential 1% federal excise tax on certain redemptions after December 31, 2022. Management reported disclosure controls were effective and no material change in internal control during the quarter.
Most important facts to verify
- Confirm whether this Deep Medicine Acquisition Corp. filing, rather than a TruGolf Holdings, Inc. filing, is the intended source.
- Verify the post-quarter extension funding, revised January 29, 2023 deadline, and any subsequent extensions or business-combination developments.
- Check current cash needs and whether sponsor or third-party financing became available, given the disclosed working-capital deficit and going-concern substantial doubt.
- Review the terms and redemption implications of any eventual business combination, including potential dilution, deferred underwriting fees, and the possible excise tax.