TruGolf(US:TRUG)2025-08-19 19:56markdown [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [ITEM 1. Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of TruGolf Holdings, Inc. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, changes in stockholders' deficit, and cash flows, along with detailed notes explaining significant accounting policies, financial instruments, and operational changes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :---------------------- | :------------------ | | Total Assets | $24,357,512 | $17,142,196 | | Total Liabilities | $20,043,824 | $21,782,978 | | Total Stockholders' Equity (Deficit) | $4,313,688 | $(4,640,781) | | Current Assets | $20,985,256 | $14,792,931 | | Current Liabilities | $18,165,590 | $15,775,168 | - Total assets increased by **$7.22 million**, primarily driven by current assets, while total liabilities decreased by **$1.74 million**. Stockholders' equity shifted from a deficit of **$(4.64) million** to a positive **$4.31 million**[7](index=7&type=chunk)[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric (Six Months Ended June 30) | 2025 (Unaudited) | 2024 (Unaudited) | | :-------------------------------- | :--------------- | :--------------- | | Revenue, net | $9,700,094 | $8,885,185 | | Cost of revenue | $4,125,158 | $3,259,234 | | Total gross profit | $5,574,936 | $5,625,951 | | Loss from operations | $(3,104,250) | $(1,728,726) | | Net loss | $(5,991,792) | $(2,871,192) | | Net loss per common share Series A – basic and diluted | $(9.31) | $(11.53) | | Net loss per common share Series B – basic and diluted | $(59.02) | $(83.62) | | Metric (Three Months Ended June 30) | 2025 (Unaudited) | 2024 (Unaudited) | | :-------------------------------- | :--------------- | :--------------- | | Revenue, net | $4,310,864 | $3,873,163 | | Cost of revenue | $2,398,959 | $1,300,212 | | Total gross profit | $1,911,905 | $2,572,951 | | Loss from operations | $(1,870,026) | $(785,042) | | Net loss | $(3,321,470) | $(1,569,329) | | Net loss per common share Series A – basic and diluted | $(4.63) | $(6.80) | | Net loss per common share Series B – basic and diluted | $(19.69) | $(45.70) | - For the six months ended June 30, 2025, net loss widened to **$(5.99) million** from **$(2.87) million** in the prior year, despite a **9%** increase in revenue, due to higher cost of revenue, operating expenses, and other expenses[11](index=11&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Deficit](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Deficit) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------------- | :------------------ | :------------------ | | Additional paid-in capital | $18,551,660 | $33,497,876 | | Accumulated deficit | $(21,155,496) | $(27,147,288) | | Total Stockholders' Equity (Deficit) | $(4,640,781) | $4,313,688 | - Total stockholders' deficit improved significantly from **$(4.64) million** at December 31, 2024, to a positive **$4.31 million** at June 30, 2025, primarily due to increases in additional paid-in capital from equity issuances[9](index=9&type=chunk)[14](index=14&type=chunk) - Key drivers for the increase in additional paid-in capital include the issuance of common stock for PIPE interest and make good provisions (**$2,169,707** for six months ended June 30, 2025), conversion of PIPE notes (**$3,213,000** for six months ended June 30, 2025), conversion of dividend notes (**$3,905,561** for three months ended June 30, 2025), and issuance of Series A Preferred and associated warrants (**$5,651,310** for three months ended June 30, 2025)[13](index=13&type=chunk)[14](index=14&type=chunk)[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric (Six Months Ended June 30) | 2025 (Unaudited) | 2024 (Unaudited) | | :-------------------------------- | :--------------- | :--------------- | | Net cash provided by (used in) operating activities | $(1,354,546) | $2,615,975 | | Net cash used in investing activities | $(1,614,744) | $(1,433,513) | | Net cash provided by financing activities | $2,246,572 | $71,246 | | Net change in cash, cash equivalents and restricted cash | $(722,718) | $1,253,708 | | Cash, cash equivalents and restricted cash - end of year | $10,159,359 | $6,651,272 | - Net cash used in operating activities was **$(1,354,546)** for the six months ended June 30, 2025, a significant decrease from **$2,615,975** provided in the prior year, primarily due to the net loss and increased accounts receivable[16](index=16&type=chunk)[139](index=139&type=chunk) - Non-cash investing and financing activities for the six months ended June 30, 2025, included **$3,213,000** in PIPE note principal converted to Class A Common Stock, **$3,905,561** in dividend note principal converted to Class A and Class B Common Stock, and **$5,651,310** for the exchange of PIPE Notes and Series A and B Warrants for Series A Convertible Preferred Stock and Warrants[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS](index=11&type=section&id=NOTE%201%20%E2%80%93%20NATURE%20OF%20THE%20ORGANIZATION%20AND%20BUSINESS) - TruGolf Holdings, Inc. creates indoor golf software and custom hardware, and sells franchises for simulators[19](index=19&type=chunk) - A **1-for-50** reverse stock split was effective June 23, 2025, reducing Class A shares from **40,532,150** to **810,617** and Class B shares from **10,000,000** to **200,000**[20](index=20&type=chunk) - The company regained compliance with Nasdaq's Bid Price Rule (July 17, 2025) and Equity Rule, and minimum market value of publicly held securities (August 1, 2025), but is under a one-year Mandatory Panel Monitor[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Accumulated deficit | $(27,147,288) | $(21,155,496) | | Working capital surplus | $2,819,666 | $(982,237) | | Loss from operations (6 months) | $(3,104,250) | $(1,728,726) | | Net cash used in operating activities (6 months) | $(1,354,546) | $2,615,975 | - The company received **$2.5 million** in proceeds from PIPE Convertible Notes during the six months ended June 30, 2025[30](index=30&type=chunk) [NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=12&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - Unaudited condensed consolidated financial statements are prepared in accordance with GAAP and SEC rules, consolidating the Company and its wholly-owned subsidiary[33](index=33&type=chunk) - Reclassifications to prior period statements had no effect on net loss or cash flows[34](index=34&type=chunk) - Approximately **$4.9 million** of revenue from remaining performance obligations is expected to be recognized over the next **12 months** as of June 30, 2025[35](index=35&type=chunk) | Revenue Category (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------- | :----------- | :----------- | | Golf Simulators | $6,798,471 | $4,567,383 | | Content Software Subscriptions | $1,501,148 | $4,280,695 | | Franchise Revenue | $75,000 | $- | | Other | $1,325,475 | $37,107 | | Total net revenue | $9,700,094 | $8,885,185 | | Revenue Category (Three Months Ended June 30) | 2025 | 2024 | | :-------------------------- | :----------- | :----------- | | Golf Simulators | $3,210,559 | $1,842,725 | | Content Software Subscriptions | $341,443 | $2,029,996 | | Franchise Revenue | $- | $- | | Other | $758,862 | $442 | | Total net revenue | $4,310,864 | $3,873,163 | [NOTE 3 – EARNINGS PER SHARE BASIC AND DILUTED](index=14&type=section&id=NOTE%203%20%E2%80%93%20EARNINGS%20PER%20SHARE%20BASIC%20AND%20DILUTED) | Security Type (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Options to purchase Common Stock | 22,620 | — | | PIPE Convertible Notes | 51,088 | 134,000 | | Series A Preferred Shares | 298,732 | — | | Common Stock - Series A Preferred Warrants | 5,869 | — | | Common Stock - Series A Warrants | — | 28,182 | | Common Stock - Series B warrants | — | 31,000 | | Earnout shares | 90,000 | 90,000 | | Underwriter warrants | 12,650 | 12,650 | | **Totals** | **480,959** | **295,832** | - A total of **480,959** potentially dilutive securities were excluded from diluted EPS calculations for the six months ended June 30, 2025, as they were anti-dilutive[37](index=37&type=chunk) [NOTE 4 – ACCOUNTS RECEIVABLE](index=14&type=section&id=NOTE%204%20%E2%80%93%20ACCOUNTS%20RECEIVABLE) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Trade accounts receivable | $3,622,597 | $2,870,021 | | Other | $41,291 | $- | | Less allowance for credit losses | $(1,478,000) | $(1,470,868) | | Total accounts receivable, net | $2,185,888 | $1,399,153 | - Net accounts receivable increased by **$786,735** to **$2,185,888** at June 30, 2025, from **$1,399,153** at December 31, 2024, primarily due to an increase in trade accounts receivable[38](index=38&type=chunk) [NOTE 5 – INVENTORY, NET](index=14&type=section&id=NOTE%205%20%E2%80%93%20INVENTORY,%20NET) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Inventory - raw materials | $3,146,670 | $2,797,705 | | Less reserve allowance for obsolescence | $(448,360) | $(448,360) | | Inventory, net | $2,698,310 | $2,349,345 | - Net inventory increased by **$348,965** to **$2,698,310** at June 30, 2025, from **$2,349,345** at December 31, 2024, driven by an increase in raw materials[39](index=39&type=chunk) [NOTE 6 – PROPERTY AND EQUIPMENT, NET](index=14&type=section&id=NOTE%206%20%E2%80%93%20PROPERTY%20AND%20EQUIPMENT,%20NET) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total property and equipment, net | $210,463 | $143,852 | | Capitalized software development costs, net | $2,674,845 | $1,540,121 | - Net property and equipment increased by **$66,611**, and capitalized software development costs, net, increased by **$1,134,724** at June 30, 2025, compared to December 31, 2024[40](index=40&type=chunk)[41](index=41&type=chunk) - Amortization of capitalized software costs for the six months ended June 30, 2025, was **$434,054**, up from **$137,916** in the prior year[41](index=41&type=chunk) [NOTE 7 – ACCRUED AND OTHER CURRENT LIABILITIES](index=15&type=section&id=NOTE%207%20%E2%80%93%20ACCURUED%20AND%20OTHER%20CURRENT%20LIABILITIES) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Accrued payroll | $- | $108,945 | | Credit cards | $308,631 | $55,180 | | Other accrued liabilities | $1,238,149 | $589,619 | | Total accrued and other current liabilities | $1,772,877 | $999,307 | - Total accrued and other current liabilities increased by **$773,570** to **$1,772,877** at June 30, 2025, primarily due to increases in credit card balances and other accrued liabilities, partially offset by a decrease in accrued payroll[42](index=42&type=chunk) [NOTE 8 – NOTES PAYABLE](index=15&type=section&id=NOTE%208%20%E2%80%93%20NOTES%20PAYABLE) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Note payable long-term portion | $4,232 | $9,732 | - The Ethos Loan was terminated in February 2024 due to a material breach, resulting in the Company retaining disbursed funds and Ethos releasing the **$1,875,000** deposit collateral, with a remaining **$589,619** included in Accrued and other current liabilities[45](index=45&type=chunk) - The Mercedes-Benz note payable principal balance decreased from **$19,733** at December 31, 2024, to **$14,805** at June 30, 2025[46](index=46&type=chunk) [NOTE 9 – PIPE CONVERTIBLE NOTES](index=16&type=section&id=NOTE%209%20%E2%80%93%20PIPE%20CONVERTIBLE%20NOTES) - During the three months ended June 30, 2025, **$1,558,000** in principal and **$1,082,194** in accrued and make-whole interest related to PIPE Convertible Notes were converted into **142,308** shares of Class A common stock[48](index=48&type=chunk) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------------- | :------------------ | :------------ | | Total PIPE Convertible Notes, net | $4,068,953 | $- | | PIPE Convertible Notes issued (6 months) | $- | $2,800,000 | | Gross PIPE Convertible Note principal converted (6 months) | $- | $(3,213,000) | - Amortization expense related to the Debt Discount of PIPE Convertible Notes was **$359,037** for the six months ended June 30, 2025, compared to **$24,197** in the prior year[49](index=49&type=chunk) - On April 22, 2025, Exchange Agreements were entered into to exchange PIPE Convertible Notes and Warrants for Series A Preferred Stock and Series A Preferred Warrants, with the actual exchange of notes occurring on July 21, 2025[50](index=50&type=chunk)[52](index=52&type=chunk) [NOTE 10 – RELATED PARTY NOTES AND LOANS PAYABLE](index=17&type=section&id=NOTE%2010%20%E2%80%93%20RELATED%20PARTY%20NOTES%20AND%20LOANS%20PAYABLE) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Note payable long-term portion | $624,000 | $624,000 | | Less current portion | $(2,668,500) | $(2,937,000) | - The maturity dates for ARJ Trust notes (totaling **$650,000** principal) were extended to September 30, 2025[55](index=55&type=chunk) - The loan from CEO Chris Jones decreased from **$2,000,000** to **$1,750,000** due to a **$250,000** payment during the three months ended June 30, 2025[59](index=59&type=chunk) [NOTE 11 – LINES OF CREDIT](index=18&type=section&id=NOTE%2011%20%E2%80%93%20LINES%20OF%20CREDIT) - The JPMorgan Chase line of credit, with an outstanding principal balance of **$802,738**, had its maturity date extended to December 31, 2025, and its annual interest rate increased to Adjusted SOFR plus **3.50%**[61](index=61&type=chunk) - The JPMorgan Chase line of credit is secured by a pledge of **$2,100,000** in the Company's deposit accounts (restricted cash)[61](index=61&type=chunk) [NOTE 12 – DIVIDEND NOTES PAYABLE](index=18&type=section&id=NOTE%2012%20%E2%80%93%20DIVIDEND%20NOTES%20PAYABLE) - On April 21, 2025, approximately **$3.9 million** in outstanding dividend notes payable were converted into **84,662** shares of Class A common stock and **165,663** shares of Class B common stock[64](index=64&type=chunk) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Accrued interest on dividends payable | $586,766 | $515,677 | | Dividends payable | $118,362 | $4,023,923 | - Dividends payable significantly decreased by **$3,905,561** to **$118,362** at June 30, 2025, from **$4,023,923** at December 31, 2024, due to the conversion[65](index=65&type=chunk) [NOTE 13 – STOCKHOLDERS' DEFICIT](index=19&type=section&id=NOTE%2013%20%E2%80%93%20STOCKHOLDERS'%20DEFICIT) - On April 22, 2025, **50,000** shares of Series A Convertible Preferred Stock were designated, with a stated value of **$1,000** per share, **10%** annual dividends (**15%** if paid in Class A common stock), and a conversion rate of **$6.31** per share into Class A common stock[67](index=67&type=chunk)[68](index=68&type=chunk) - As of June 30, 2025, **1,885** shares of Series A Preferred Stock were issued and outstanding[69](index=69&type=chunk) - During the three months ended June 30, 2025, the company issued **31,160** Class A shares for PIPE Convertible Note principal, **111,148** Class A shares for PIPE interest/make-whole provisions, and **84,662** Class A shares and **165,663** Class B shares for dividend note conversions[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) - Series A Preferred Warrants to purchase **37,033** shares of Series A Preferred Stock were granted during the three months ended June 30, 2025, with an exercise price of **$900** and a grant date fair value of **$482,701**[79](index=79&type=chunk) [NOTE 14 – STOCK-BASED COMPENSATION](index=21&type=section&id=NOTE%2014%20%E2%80%93%20STOCK-BASED%20COMPENSATION) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :-------------------------- | :------------------------------- | :----------------------------- | | General and administrative | $3,342 | $6,684 | | Total | $3,342 | $6,684 | | Metric (June 30, 2025) | Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Life (Years) | Aggregate Intrinsic Value | | :-------------------------- | :---------------- | :------------------------------ | :-------------------------------------- | :------------------------ | | Outstanding | 22,620 | $46.50 | 4.25 | $0 | | Exercisable | 22,070 | $46.50 | 4.25 | $0 | - The aggregate intrinsic value of options was **$0** based on the Company's closing stock price of **$5.72** as of June 30, 2025[86](index=86&type=chunk) [NOTE 15 – FAIR VALUE MEASUREMENTS](index=22&type=section&id=NOTE%2015%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENTS) | Category | Type | Fair Value (June 30, 2025) | Level | | :-------------------------- | :-------------------------- | :------------------------- | :---- | | Recurring Fair Value | Money market funds | $10,114 | Level 1 | | Non-recurring Fair Value | Series A Preferred Stock | $5,168,609 | Level 2 | | Non-recurring Fair Value | Series A Preferred Warrants | $482,701 | Level 2 | - Fair value for Series A Preferred Stock was determined based on contractual conversion terms and the quoted price of the Company's common stock, while Series A Preferred Warrants were valued using the Black-Scholes Model, both utilizing Level 2 inputs[90](index=90&type=chunk) [NOTE 16 – LEASES](index=23&type=section&id=NOTE%2016%20%E2%80%93%20LEASES) - The company has two operating leases: office space in Centerville, Utah (expires May 2028) and a warehouse in North Salt Lake City, Utah (expires November 2025)[92](index=92&type=chunk) - As of June 30, 2025, the weighted average incremental borrowing rate applied was **8.39%**, and the remaining weighted average term of leases was **1.90 years**[93](index=93&type=chunk) | Metric (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------------- | :----------- | :----------- | | Operating lease cost | $214,995 | $403,109 | | Non-current leases - right-of-use assets | $455,925 | $634,269 | | Current liabilities - operating lease liabilities | $228,536 | $363,102 | | Non-current liabilities - operating lease liabilities | $250,002 | $305,125 | | Fiscal Year | Operating Leases | | :---------- | :--------------- | | 2025 | $191,995 | | 2026 | $140,163 | | 2027 | $144,227 | | 2028 | $60,809 | | Total future minimum lease payments | $537,194 | [NOTE 17 – SEGMENT INFORMATION](index=24&type=section&id=NOTE%2017%20%E2%80%93%20SEGMENT%20INFORMATION) - The Company operates as a single business segment, focusing on the manufacturing and sales of indoor golf simulators, with similar economic characteristics across its offerings[96](index=96&type=chunk) | Expense Category (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------- | :----------- | :----------- | | Consulting expenses | $1,657,071 | $1,055,815 | | Contract labor | $436,235 | $481,179 | | Personnel expenses | $2,953,026 | $2,958,881 | | Business development expenses | $146,737 | $449,087 | | Royalty expenses | $364,015 | $553,038 | | Marketing expenses | $557,255 | $220,396 | | Other expenses* | $2,564,847 | $1,636,281 | | **Total operating expenses** | **$8,679,186** | **$7,354,677** | - Total operating expenses increased by **$1,324,509** (**18%**) for the six months ended June 30, 2025, primarily due to increases in consulting, marketing, and other expenses[98](index=98&type=chunk) [NOTE 18 – COMMITMENTS AND CONTINGENCIES](index=25&type=section&id=NOTE%2018%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) - There are no material pending legal proceedings against the Company or its subsidiaries, nor any adverse to the Company involving directors, officers, or significant security holders[99](index=99&type=chunk) [NOTE 19 – CONCENTRATION OF CREDIT RISK](index=25&type=section&id=NOTE%2019%20%E2%80%93%20CONCENTRATION%20OF%20CREDIT%20RISK) - The Company's primary concentration of credit risk is in cash deposits[100](index=100&type=chunk) - As of June 30, 2025, approximately **$8,904,000** in cash deposits exceeded the FDIC insured limit of **$250,000**[100](index=100&type=chunk) [NOTE 20 – SUBSEQUENT EVENTS](index=25&type=section&id=NOTE%2020%20%E2%80%93%20SUBSEQUENT%20EVENTS) - On July 21, 2025, remaining PIPE Convertible Notes (**$3,938,311** principal) were exchanged for **3,938** shares of Series A Preferred Stock[101](index=101&type=chunk) - A holder of Series A Preferred Warrants partially exercised warrants for approximately **$5.0 million** cash, receiving **5,555** shares of Series A Preferred Stock[102](index=102&type=chunk) - Subsequent to June 30, 2025, **373,308** shares of Class A common stock were issued to Series A Preferred Stockholders for conversion of Series A Preferred Stock, accrued interest, and make-good provisions[103](index=103&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting key business developments, financial performance for the three and six months ended June 30, 2025, and an analysis of liquidity and capital resources. It also includes forward-looking statements and risk factors [Company Overview](index=26&type=section&id=Company%20Overview) - TruGolf Holdings, Inc. completed a business combination with TruGolf Nevada on January 31, 2024, and its Class A common stock began trading on Nasdaq under the ticker 'TRUG' on February 1, 2024[112](index=112&type=chunk) - The company develops innovative indoor golf solutions, including software (TruGolf E6 Connect, E6 Apex) and hardware (simulators, Apogee launch monitor), aiming to make golf more accessible through technology[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - TruGolf's software integrates with over **twenty-four** third-party golf technology hardware manufacturers, achieving approximately **90%** market integration coverage and enabling peer-to-peer play[117](index=117&type=chunk) - The company founded the Virtual Golf Association (VGA), a gamified virtual economy within its E6 Connect Software, rewarding users for play, practice, and competition[118](index=118&type=chunk) - A **1-for-50** reverse stock split of the Class A and Class B common stock was effective on June 23, 2025[120](index=120&type=chunk) [Results of Operations (Six Months)](index=28&type=section&id=Results%20of%20Operations%20(Six%20Months)) | Metric (Six Months Ended June 30) | 2025 | 2024 | Variance | | :-------------------------------- | :----------- | :----------- | :------- | | Revenue, net | $9,700,094 | $8,885,185 | +$814,909 | | Cost of revenue | $4,125,158 | $3,259,234 | +$865,924 | | Total gross profit | $5,574,936 | $5,625,951 | $(51,015) | | Operating loss | $(3,104,250) | $(1,728,726) | $(1,375,524) | | Other income (expenses) | $(2,887,542) | $(1,142,466) | $(1,745,076) | | Loss before income taxes | $(5,991,792) | $(2,871,192) | $(3,120,600) | - Revenue increased by **$814,909** (**9%**) for the six months ended June 30, 2025, driven by product acceptance and market penetration[125](index=125&type=chunk) - Cost of revenues increased by **$865,924** (**27%**), primarily due to inventory adjustments (**$170,982**) and increased costs related to the TruTrack product (**$830,541**)[126](index=126&type=chunk) - Total operating expenses increased by **$1,324,509** (**18%**), with selling, general and administrative expenses rising by **$1,519,387** (**40%**) due to higher software amortization, marketing, and professional fees[127](index=127&type=chunk) - Other income (expenses) increased by **$1,745,076** (**153%**) due to higher interest expense, amortization of PIPE Convertible Notes debt discount, and write-offs/make-good interest on conversions[128](index=128&type=chunk) [Results of Operations (Three Months)](index=29&type=section&id=Results%20of%20Operations%20(Three%20Months)) | Metric (Three Months Ended June 30) | 2025 | 2024 | Variance | | :-------------------------------- | :----------- | :----------- | :------- | | Revenue, net | $4,310,864 | $3,873,163 | +$437,701 | | Cost of revenue | $2,398,959 | $1,300,212 | +$1,098,747 | | Total gross profit | $1,911,905 | $2,572,951 | $(661,046) | | Operating loss | $(1,870,026) | $(785,042) | $(1,084,984) | | Other income (expenses) | $(1,451,444) | $(784,287) | $(667,157) | | Loss before income taxes | $(3,321,470) | $(1,569,329) | $(1,752,141) | - Revenue increased by **$437,701** (**11%**) for the three months ended June 30, 2025, due to increased product acceptance and market penetration[131](index=131&type=chunk) - Cost of revenues increased by **$1,098,747** (**85%**), primarily due to inventory adjustments (**$248,624**) and increased costs related to the TruTrack product (**$739,425**)[132](index=132&type=chunk) - Total operating expenses increased by **$423,938** (**13%**), with selling, general and administrative expenses up **$619,470** (**31%**) due to higher marketing, professional fees, and software amortization, partially offset by a decrease in salaries due to capitalization[133](index=133&type=chunk) - Other income (expenses) increased by **$667,157** (**85%**) due to higher interest expense, amortization of PIPE Convertible Notes debt discount, and write-offs/make-good interest on conversions[134](index=134&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash on hand | $10,159,359 | $10,882,077 | | Working capital surplus (deficiency) | $2,819,666 | $(982,237) | - The working capital surplus of **$2,819,666** at June 30, 2025, represents a significant improvement from a **$982,237** deficiency at December 31, 2024, primarily due to the recognition of a **$5,651,310** current asset related to Series A Preferred Stock and warrants from the PIPE Exchange Agreement[135](index=135&type=chunk)[137](index=137&type=chunk) | Cash Flow Activity (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------------- | :----------- | :----------- | | Net cash provided by (used in) operating activities | $(1,354,546) | $2,615,975 | | Net cash used in investing activities | $(1,614,778) | $(1,433,513) | | Net cash provided by financing activities | $2,246,572 | $71,246 | - Operating activities consumed **$1,354,546** in cash for the six months ended June 30, 2025, primarily due to the net loss and an increase in accounts receivable[139](index=139&type=chunk) - The company expects to continue incurring operating losses and negative cash flows in the near future, funding these through equity sales and convertible notes[136](index=136&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=31&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there have been no material changes in market risk compared to the information disclosed in the company's 2024 Annual Report on Form 10-K - No material changes in market risk from the information provided in the 2024 Annual Report on Form 10-K[144](index=144&type=chunk) [ITEM 4. Controls and Procedures](index=31&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting. These weaknesses include a lack of risk assessment, inadequate segregation of duties, insufficient documentation, and the absence of a full-time CFO and experienced public company accounting personnel. Management plans to remediate these issues by identifying skill gaps, developing policies, and continuing the search for a qualified CFO - Disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting[146](index=146&type=chunk)[149](index=149&type=chunk) - Material weaknesses include lack of risk assessment procedures, inadequate segregation of duties, lack of documentation on policies and procedures, and lack of a full-time Chief Financial Officer and personnel with public company accounting expertise[151](index=151&type=chunk) - Management plans to remediate by identifying skill gaps, developing policies and procedures for internal control, and continuing the search for a qualified Chief Financial Officer[152](index=152&type=chunk) - No other changes in internal control over financial reporting occurred during the second quarter of 2025 that materially affected or are reasonably likely to materially affect internal control[154](index=154&type=chunk) [PART II. OTHER INFORMATION](index=33&type=section&id=PART%20II.%20OTHER%20INFORMATION) [ITEM 1. Legal Proceedings](index=33&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings that are expected to have a significant adverse effect on its business or involve any related parties adversely - No material pending legal proceedings in which the Company or any of its subsidiaries is a party or in which any director, officer or affiliate has a material adverse interest[156](index=156&type=chunk) [ITEM 1A. Risk Factors](index=33&type=section&id=ITEM%201A.%20Risk%20Factors) The company has previously failed to comply with Nasdaq listing requirements and, despite regaining compliance, is now subject to a one-year Mandatory Panel Monitor. Future non-compliance with the Equity Rule would result in immediate delisting without traditional cure periods, severely impacting liquidity, market price, and the ability to raise financing. Additionally, the conversion of Series A Preferred Stock and warrants into Class A common stock could significantly dilute existing stockholders' ownership interest, especially if conversion prices decrease due to future equity sales or stock price resets - The company has previously failed to maintain compliance with Nasdaq listing requirements and is now subject to a one-year Mandatory Panel Monitor[158](index=158&type=chunk)[162](index=162&type=chunk) - Future non-compliance with the Equity Rule during the monitoring period will result in immediate delisting without traditional cure periods, adversely affecting liquidity, market price, and financing capabilities[162](index=162&type=chunk)[163](index=163&type=chunk) - Conversion of Series A Preferred Stock and Series A Preferred Warrants into Class A common stock could dilute existing stockholders' ownership interest, particularly if conversion prices are reduced due to future equity sales or reset provisions[164](index=164&type=chunk)[165](index=165&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the three months ended June 30, 2025, the company issued 225,970 shares of Class A common stock for the conversion of PIPE Convertible Note principal and make-whole interest, and dividend note principal. Additionally, 165,663 shares of Class B common stock were issued for dividend note principal conversion. The company also issued Series A Preferred Stock and Series A Preferred Warrants in a non-cash bundled transaction. All these transactions were conducted under exemptions from registration - During the three months ended June 30, 2025, **225,970** shares of Class A common stock were issued for the conversion of **$1,558,000** in PIPE principal, **$1,082,194** in PIPE make-whole interest, and approximately **$1,300,000** in dividend note principal[167](index=167&type=chunk) - During the three months ended June 30, 2025, **165,663** shares of Class B common stock were issued for the conversion of approximately **$2,600,000** in dividend note principal[168](index=168&type=chunk) - On April 22, 2025, **1,885** shares of Series A Preferred Stock and Series A Preferred Warrants to purchase **37,033** shares were issued in a bundled non-cash transaction involving the future settlement of outstanding PIPE Convertible Notes[169](index=169&type=chunk) - These transactions were undertaken in reliance upon exemptions from registration provided by Section 4(a)(2) and Section 3(a)(9) of the Securities Act of 1933[168](index=168&type=chunk)[169](index=169&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=34&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred during the period[170](index=170&type=chunk) [ITEM 4. Mine Safety Disclosures](index=34&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section states that there are no mine safety disclosures applicable to the company - No mine safety disclosures are applicable[171](index=171&type=chunk) [ITEM 5. Other Information](index=34&type=section&id=ITEM%205.%20Other%20Information) No director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - No director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[172](index=172&type=chunk) [ITEM 6. Exhibits](index=35&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to the Certificate of Incorporation, various forms of agreements (Exchange Agreement, Registration Rights Agreement, Equity Purchase Facility Agreement), and certifications (Rule 13a-14(a)/15d-14(a), Section 1350) - Exhibits include amendments to the Certificate of Incorporation, various forms of agreements (e.g., Exchange Agreement, Registration Rights Agreement, Equity Purchase Facility Agreement), and certifications (Rule 13a-14(a)/15d-14(a), Section 1350)[173](index=173&type=chunk) [SIGNATURES](index=36&type=section&id=SIGNATURES) - The report is signed by Christopher (Chris) Jones, Chief Executive Officer, Director, Interim Chief Financial Officer, and Interim Principal Accounting Officer of TruGolf Holdings, Inc[177](index=177&type=chunk) - The report was signed on August 19, 2025[177](index=177&type=chunk)