Trugolf Holdings, Inc. annual report, FY2023

Filing summary

Issuer and period: The provided filing is Deep Medicine Acquisition Corp.’s Form 10-K for the fiscal year ended March 31, 2023—not a filing by TruGolf Holdings, Inc. The filing describes TruGolf as a proposed merger target; the transaction had not closed as of the filing.

Business context and reporting period

Deep Medicine was a blank-check company with no operating business or operating revenue. Its activity consisted of formation, its 2021 IPO, and the search for a business combination. It entered into a merger agreement with TruGolf on March 31, 2023. The combined company was proposed to be named TruGolf, Inc., subject to approvals and closing conditions.

Financial results and liquidity

MetricYear ended March 31, 2023Year ended March 31, 2022
Operating revenueNoneNone
Operating expenses$2.17 million$409,912
Trust investment income (loss)$1.82 million$(4,133)
Net loss$400,232$414,045
Net loss per share$0.03$0.05
Cash used in operating activities$1.04 million$697,868
  • At March 31, 2023, reported cash was $595,536, trust-account cash and marketable securities were $9.16 million, total assets were $9.78 million, and total liabilities were $7.22 million.
  • Current liabilities were $2.80 million, including $1.865 million of sponsor and affiliate loans, $866,500 of accrued expenses, and $57,569 of taxes payable. The filing reports a $2.18 million working capital deficit.
  • The $1.865 million related-party loans were non-interest-bearing and repayable upon a business combination or liquidation. The company also had $4.43 million in deferred underwriting/marketing fees, payable only if a business combination is completed. It reported no long-term debt.
  • Trust assets fell from $127.76 million to $9.16 million, principally after $121.03 million was paid to redeem 11,819,790 public shares in December 2022. The reported redemption value at March 31, 2023 was approximately $10.83 per public share.
  • Margins are not meaningful because the company had no operating revenue.

Material changes, transaction terms, and outlook

  • Operating expenses rose substantially, mainly reflecting higher general and administrative costs and due diligence activity. The net loss narrowed slightly as trust investment income increased.
  • Stockholders extended the business-combination deadline to July 29, 2023. The company had 4,613,410 Class A shares outstanding at March 31, 2023 after founder-share conversion and public-share redemptions.
  • The proposed TruGolf consideration was up to $125 million in shares, subject to adjustments for closing debt, cash, and unpaid transaction expenses. It included $80 million of base consideration and up to $45 million in escrowed restricted shares tied to revenue, share-price, or franchise-location milestones for 2024–2026.
  • Closing required stockholder approvals and other conditions, including at least $5,000,001 in net tangible assets and at least $10 million in cash after redemptions and specified payments. The agreement could be terminated if conditions were not met by the outside date, subject to a possible extension.
  • Management said it expected available resources and potential sponsor or other funding to support operations through a business combination or the deadline, but no additional financing commitment was in place.

Risks, contingencies, and unusual items

  • The auditor and management identified substantial doubt about the company’s ability to continue as a going concern if it does not complete a business combination or obtain funding. Failure to complete a transaction by the deadline would require winding up and redeeming public shares; rights would expire worthless.
  • Disclosure controls and internal control over financial reporting were ineffective at year-end due to inadequate segregation of duties and insufficient written accounting, IT, and reporting procedures. Management described remediation efforts but gave no assurance they would be effective.
  • Trust funds could be exposed to creditor or bankruptcy claims. The sponsor’s indemnity is limited, and the filing says the sponsor has not reserved funds to meet it.
  • Potential conflicts include the sponsor’s reported approximately 3% interest in TruGolf, sponsor and affiliate loans, founder economics, and compensation and share arrangements for insiders and the IPO underwriter. The filing says an independent financial advisory firm provided a fairness opinion.
  • The filing also cites market volatility, inflation, interest rates, financing availability, regulatory and SPAC-related uncertainty, and a possible 1% federal excise tax on certain share redemptions.

Investor facts to verify

  • Confirm the issuer identity: this is Deep Medicine Acquisition Corp.’s 10-K, not TruGolf Holdings, Inc.’s annual report.
  • Check subsequent filings for whether the TruGolf merger closed, was amended, or was terminated, and for the final redemption and financing figures.
  • Review TruGolf’s proxy materials and audited financial statements; this 10-K does not provide TruGolf’s operating results.
  • Verify the company’s funding and liquidity against the $10 million closing-cash condition, sponsor-note repayments, taxes, and deferred fees.
  • Track remediation of the disclosed material weakness and any later updates to the going-concern assessment.