Trugolf Holdings, Inc. — Filing summary
Filing identity: The supplied filing is Deep Medicine Acquisition Corp.’s Form 10-Q, not a filing by Trugolf Holdings, Inc. It covers the quarter and six months ended September 30, 2023, and was signed November 13, 2023. Deep Medicine was a SPAC seeking to combine with TruGolf, Inc.; it had no operating business or revenue of its own. The results below are therefore those of the SPAC, not TruGolf.
Financial performance and position
| Metric | Three months ended September 30, 2023 | Six months ended September 30, 2023 | Prior-year comparison |
|---|---|---|---|
| Operating revenue | $0 | $0 | No operating revenue in either comparable 2022 period |
| Operating expenses | $361,033 | $733,133 | $717,723 and $987,556, respectively |
| Trust investment income | $90,687 | $201,222 | $552,164 and $667,577, respectively |
| Net loss | $270,346 | $531,911 | $165,559 and $319,979, respectively |
| Net loss per share | $0.06 | $0.12 | $0.01 and $0.02, respectively |
At September 30, 2023, cash outside the trust was $357,478, trust assets were $6,647,795, total assets were $7,005,273, and total liabilities were $7,897,236. Current liabilities were $3,469,736; the company reported a working-capital deficit of $3,112,258. Liabilities included $2,065,000 of sponsor and affiliate loans, an $84,617 third-party insurance-premium note, and $4,427,500 of deferred underwriting commissions payable only if a business combination closes. No cash interest or income taxes were paid during the six-month period.
Six-month operating cash outflow was $322,675, compared with $362,426 in 2022. Investing activities provided $2,714,230, primarily reflecting trust funds released for shareholder redemptions, partly offset by a trust deposit. Financing activities used $2,629,613, chiefly reflecting those redemptions. Cash declined by $238,058 to $357,478.
Material changes and transaction context
- Trust assets fell from $9,160,803 at March 31, 2023 to $6,647,795 at September 30, 2023. In July, holders redeemed 255,446 public shares for approximately $2,914,230, or $11.41 per share. The company had 574,764 public shares subject to redemption at quarter-end.
- In July 2023, Deep Medicine extended its business-combination deadline to January 29, 2024. It had previously extended the deadline from October 2022 through July 2023.
- The July 2023 amended merger agreement with TruGolf sets an implied TruGolf equity value of $80 million, subject to adjustments for closing debt, cash, and unpaid transaction expenses. Merger consideration is to be paid in shares, with a 90-day post-closing true-up. Up to 4.5 million additional shares may be earned against specified revenue, share-price, or franchise-opening milestones for 2024–2026; these are contingent transaction terms, not management guidance.
Outlook, risks, and unusual items
- Management disclosed that the SPAC lacks adequate liquidity to sustain its business-combination search and that the conditions raise substantial doubt about its ability to continue as a going concern. Management expects access to possible sponsor or other financing but has no committed funding assurances. If no combination is completed by the deadline, the company expects to cease operations and redeem public shares.
- After quarter-end, the trust investments were moved to an interest-bearing demand-deposit account, potentially reducing interest earned and redemption or liquidation proceeds.
- Also after quarter-end, agreements were signed for up to $8 million of convertible notes and warrants, contingent on the TruGolf combination and other conditions. The stated terms include 10% annual note interest, possible equity settlement, conversion-price adjustments and warrant-price adjustments. Funding is staged and not unconditional.
- Disclosure controls were deemed ineffective because of inadequate segregation of duties and insufficient written accounting, IT, and financial-reporting procedures. Management described remediation efforts but gave no assurance they would be successful.
- The filing cites market and geopolitical volatility, inflation, interest rates, supply-chain disruptions, and COVID-19 as risks to finding and completing a transaction. No pending or contemplated litigation was reported.
Key facts for investors to verify
- Confirm the intended issuer: this is Deep Medicine Acquisition Corp.’s 10-Q, not TruGolf Holdings, Inc.’s operating-company financial report.
- Check the current status and closing conditions of the TruGolf merger, including redemptions, transaction adjustments, and the January 29, 2024 deadline.
- Verify whether the proposed convertible-note financing closed, how much was funded, and the resulting dilution and repayment obligations.
- Review the SPAC’s available cash, related-party loans, going-concern disclosure, and progress remediating its material weakness in disclosure controls.
- Assess the effect of the trust-account investment change on interest earnings and public-share redemption value.