TRUG

TruGolf Holdings, Inc. (TRUG) - 10-Q Summary

Business Context and Reporting Period

This filing covers the quarterly period ended June 30, 2026. TruGolf Holdings, Inc. designs, develops, manufactures, and sells golf simulators and related software for residential and commercial applications. The company recently completed a redomestication from Delaware to Nevada and a 1-for-10 reverse stock split in March 2026. As of August 12, 2026, there were 1,903,708 shares of Class A common stock and 19,999 shares of Class B common stock outstanding.

Key Financial Metrics

Note: Total Debt includes Notes Payable ($560,007), Notes Payable to Related Parties ($2,100,000), Line of Credit ($802,738), and Dividend Notes ($118,362).

Material Changes vs. Prior Period

• Revenue Growth: Net revenue increased 34.4% ($1.48M) for the three months ended June 30, 2026, compared to the prior year period. This was driven by higher product acceptance and the recognition of previously deferred revenue.
• Improved Loss Profile: Net loss for the three months ended June 30, 2026, was $(447,808), a significant improvement from the $(3.32M) loss in the same period in 2025. This improvement is largely due to a reduction in interest expense following the exchange of PIPE convertible notes for Series A Preferred Stock in July 2025.
• Cost of Revenue: Cost of revenue decreased 8.3% for the quarter despite revenue growth, attributed to reduced inventory write-downs and other product cost variances.
• Liquidity Position: Cash and cash equivalents decreased from $10.47M at year-end 2025 to $6.37M at June 30, 2026. The company moved from a working capital surplus of $1.08M to a deficit of $2.35M.

Guidance, Outlook, Risks, and Unusual Items

• Legal Proceedings: On July 24, 2026, a putative class action and shareholder derivative complaint was filed in the U.S. District Court for the District of Utah. The complaint alleges material misstatements regarding financing transactions. The company intends to defend vigorously but cannot estimate potential losses.
• Nasdaq Compliance Risk: The company is not currently in compliance with Nasdaq's minimum bid price requirement ($1.00). Since the stock has traded below $1.00 since July 31, 2026, and a reverse stock split occurred within the last year, the company is not eligible for a standard grace period and faces potential delisting if compliance is not regained.
• Capitalized Software: Significant investment in software development continues, with capitalized software costs increasing to $4.88M (net). Amortization expense for the six months ended June 30, 2026, was $755,726.
• Going Concern: Management anticipates continued operating losses and negative cash flows from operations in the near future. The company relies on equity and convertible note sales to fund operations, with no assurance such financing will be available.
• Internal Controls: Disclosure controls and procedures were deemed ineffective as of June 30, 2026, due to a material weakness in internal control over financial reporting.

Investor Verification Checklist

• Nasdaq Delisting Status: Verify the current status of the bid price compliance and any appeals filed with the Nasdaq Listing Qualifications Panel.
• Legal Exposure: Monitor the progress of the Parker LaChance class action lawsuit filed in July 2026 regarding financing disclosures.
• Series A Preferred Conversion: Review the terms of the Series A Convertible Preferred Stock, specifically the "Make-Whole" provisions and reset mechanisms that could lead to significant dilution of common shareholders.
• Cash Burn Rate: Assess the sustainability of the current cash balance ($8.47M total) given the working capital deficit and continued operating losses.
• Related Party Debt: Note the $2.1M in notes payable to related parties (including the CEO) and the terms of repayment.