8-K/A: TruGolf Holdings Completes Merger, Files Amended Financials

TruGolf Holdings, Inc. files an amendment to its previous report, including audited financials for TruGolf, Inc. and pro forma combined financial information following its recent merger.

Summary

• TruGolf Holdings, Inc. has filed an amendment to its previous report to include audited financial statements for TruGolf, Inc. as of December 31, 2023 and 2022, and for the years then ended.
• The amendment also includes management's discussion and analysis of TruGolf, Inc.'s financial condition and results of operations, as well as unaudited pro forma condensed combined financial information.
• The company completed a business combination on January 31, 2024, with Deep Medicine Acquisition Corp., which resulted in TruGolf, Inc. becoming a wholly-owned subsidiary of TruGolf Holdings, Inc.
• TruGolf Holdings, Inc.'s Class A common stock began trading on the Nasdaq Capital Market LLC under the ticker symbol TRUG on February 1, 2024.
• TruGolf, Inc. reported net revenues of $20,583,851 for the year ended December 31, 2023, compared to $20,227,331 for the year ended December 31, 2022.
• The company experienced a net loss of $10,283,109 for the year ended December 31, 2023, compared to a net loss of $956,841 for the year ended December 31, 2022.
• The company's total assets were $15,769,560 as of December 31, 2023, compared to $14,586,384 as of December 31, 2022.
• The company's total liabilities were $19,687,288 as of December 31, 2023, compared to $18,017,143 as of December 31, 2022.
• The company's stockholders deficit was $(3,917,728) as of December 31, 2023, compared to $(3,430,759) as of December 31, 2022.

Sentiment

Score: 3

Explanation: The document reveals significant financial losses and operational challenges, including a going concern uncertainty and material weaknesses in internal controls. While there are some positive developments, the overall tone is negative from an investment perspective.

Positives

• The company's revenues increased slightly year-over-year.
• The company has successfully completed a business combination and is now publicly traded.
• The company is expanding its global reach through a franchising agreement.
• The company is investing in new technology through a licensing agreement with mlSpatial.
• The company's software records, on average, over 725,000 indoor golf shots per day.

Negatives

• The company experienced a significant net loss of $10,283,109 in 2023.
• Operating expenses increased substantially year-over-year.
• The company has a significant amount of debt maturing in the coming years.
• The company's auditors have identified material weaknesses in internal control over financial reporting.
• The company has a going concern uncertainty due to operating losses and reliance on financing.

Risks

• The company's ability to continue as a going concern is dependent on its ability to meet financial obligations, raise additional capital, and achieve success in future operations.
• The company may not be able to raise additional capital or obtain additional institutional financing due to future economic conditions.
• The company is experiencing a decline in demand for its products, which are considered lifestyle purchases.
• The company has a significant amount of debt maturing between 2025 and 2033.
• The company's internal controls over financial reporting have material weaknesses.
• The company's ability to grow its business depends on gaining broader acceptance of its products and expanding its customer base.
• The company's financial results may fluctuate based on the timing of orders, foreign currency exchange rates, and the mix of products sold.

Future Outlook

The company projects it will be able to meet its debt service and other cash obligations for at least the next 12 months, but no assurances can be given that the results anticipated by the projections will occur. The company anticipates spending between $1,850,000 to $2,500,000 on marketing and business development for the next twelve months. The company may have to significantly delay, scale back or discontinue the development and commercialization of one or more product offerings and other strategic initiatives if projected results do not occur.

Management Comments

• Management believes the plan outlined above provides an opportunity for the Company to continue as a going concern.
• Management believes that the new software and features will substantially improve the user experience and functionality of the software suite, making a best-in-class offering that much better.

Industry Context

The simulator/screen golf market is growing, with an estimated 6.2 million Americans using golf simulators in the past year, a 73% increase compared to pre-pandemic levels. The company believes there is a strong demand for its new hardware and software products based on this trend. The company's software integrates with more than twenty-four third party golf technology hardware manufacturers, translating to a staggering market integration coverage equal to roughly 90% of golf technology hardware in the global market space.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or competitors in terms of financial performance.
• However, it does mention that TruGolf's hardware offerings range from entry-level pricing to over $100,000 for custom projects, creating a wide range of pricing options compared to competitors who often focus on a narrow price range.
• The document also highlights that TruGolf's E6 Connect Software integrates with approximately 90% of golf technology hardware in the global market space, which is a significant competitive advantage.

Related Party Transactions

• The company has related party notes payable with ARJ Trust, McKettrick, and Carver.
• The company's chief executive officer is related to certain lenders of the company.

Stakeholder Impact

• Shareholders are impacted by the significant net loss and the going concern uncertainty.
• Employees are impacted by the reduction in force and potential future cost reduction measures.
• Customers may be impacted by potential delays in product development and commercialization.
• Creditors are impacted by the company's significant debt and potential inability to meet financial obligations.

Next Steps

• The company plans to continue hiring additional accounting staff with public company experience.
• The company plans to implement a new enterprise resource planning system.
• The company plans to implement additional review controls and processes.
• The company plans to hire a national accounting firm to assist in the design and implementation of controls and remediation of control gaps.

Key Dates

Keywords

golf simulators, indoor golf, TruGolf, financial statements, merger, Nasdaq, software, hardware, E6 Connect, APOGEE, franchising, AI, mlSpatial