Filing identity and reporting period
Important discrepancy: The supplied filing is for Deep Medicine Acquisition Corp., not TruGolf Holdings, Inc. It is a Form 10-Q for the three months ended June 30, 2022, filed August 3, 2022. Deep Medicine’s fiscal year ends March 31, making this its first fiscal quarter of 2023. The company described itself as a blank-check company seeking a business combination, with no operating business or operating revenue.
Financial results and position
| Metric | Three months ended June 30, 2022 | Comparable 2021 period |
|---|---|---|
| Operating revenue | None | None |
| Operating expenses | $269,833 | $16,499 |
| Trust-account gain | $115,413 | None |
| Net loss | $154,420 | $16,499 |
| Net loss per share | $0.02 combined; class-specific amounts reported as $0.01 for Class A and $0.02 for Class B | $0.01 combined and for Class B |
| Cash used in operating activities | $169,122 | $2,252 |
General and administrative expense was $254,833, compared with $1,499 in the prior-year quarter; officer compensation was $15,000 in both periods. There was no income tax expense and no investing or financing cash flow. Operating margins are not meaningful because the company had no revenue.
At June 30, 2022, cash outside the trust was $707,977, versus $877,099 at March 31. Trust assets were $127,876,280, primarily in money market funds invested in U.S. Treasury securities, compared with $127,760,867 at March 31. Total current assets were $128,823,338; current liabilities were $561,198, including a $500,000 zero-interest sponsor loan. The loan is unsecured and repayable upon a business combination. The company also reported $4,427,500 of deferred underwriting commissions and $4,988,698 of total liabilities. Working capital was $385,860. No marketable or other funded debt was reported.
Changes, outlook and risks
- The quarterly net loss increased from $16,499 to $154,420, principally as general and administrative costs rose; the $115,413 trust-account gain partly offset expenses.
- On July 12, 2022, after quarter-end, Deep Medicine entered into a definitive business combination agreement with Chijet Inc. Chijet has interests in a Chinese electric-vehicle manufacturer and a traditional fuel-vehicle manufacturer. The transaction had not closed by the filing date.
- The agreement sets an initial Chijet valuation of $2.55 billion, subject to due diligence. If the revised valuation is below $2.295 billion and the parties do not agree on revised consideration, Deep Medicine may terminate or proceed using the stated minimum valuation. Closing remains subject to the agreement’s conditions.
- The company had until October 29, 2022 to complete a business combination, with a possible extension to April 29, 2023. If it fails to complete a transaction within the applicable period, it must cease operations and redeem public shares under the stated terms; rights may expire worthless.
- Management disclosed substantial doubt about the company’s ability to continue as a going concern because available liquidity is limited and additional financing is not committed. Management expected available resources and potential sponsor or other loans to meet needs through a business combination or deadline, but such funding is not assured. The company noted that failure to secure funding could require curtailing operations or suspending the transaction search.
- Management cited possible COVID-19 effects on its financial position and transaction search, but said the impact could not be determined. No material risk-factor changes, legal proceedings, or off-balance-sheet arrangements were reported. Disclosure controls were concluded effective, with no material change in internal control over financial reporting during the quarter.
Investor verification points
- Confirm the filing is being matched to the intended issuer: this document names Deep Medicine Acquisition Corp., not TruGolf Holdings, Inc.
- Review the Chijet agreement, subsequent transaction updates, due-diligence valuation, financing needs, closing conditions, and redemption levels.
- Assess liquidity outside the trust, the going-concern disclosure, the sponsor loan terms, and whether additional funding was secured.
- Verify the business-combination deadline and any extension, plus the potential effects of public-share redemptions and securities rights or warrants.