S-1: TruGolf Holdings Faces Nasdaq Delisting Threat Amidst Mounting Losses and Significant Dilution Risk

TruGolf Holdings, Inc. (TRUG) is grappling with severe financial challenges, including increased net losses and Nasdaq non-compliance, while registering a massive share offering that could significantly dilute existing shareholders.

Summary

• TruGolf Holdings, Inc. (TRUG) is an indoor golf software and hardware company, operating through its subsidiary TruGolf, Inc., which has been creating indoor golf software for 40 years.
• The company completed a business combination with Deep Medicine Acquisition Corp. on January 31, 2024, and its Class A common stock began trading on Nasdaq under the symbol TRUG on February 1, 2024.
• The total addressable market for golf products was estimated at $1.4 billion in 2022, with a projected CAGR of 11.05% to reach $3.8 billion by 2031; TruGolf currently holds a 4.28% market share.
• For the three months ended March 31, 2025, net revenue increased by 8% to $5,389,230 from $5,012,022 in the prior year period, and gross profit increased by $610,032.
• However, the net loss for the three months ended March 31, 2025, significantly widened to $(2,670,322) from $(1,301,864) in the same period of 2024, primarily due to increased operating expenses and other expenses.
• Operating expenses rose by 23% to $4,897,255 in Q1 2025, driven by increases in contracted labor ($364,000), marketing ($160,000), and professional fees ($180,000).
• Other expenses surged by 301% to $(1,436,098) in Q1 2025, mainly due to interest expense, amortization of PIPE Convertible Notes debt discount, and make-good interest expense.
• For the year ended December 31, 2024, net revenue increased by 6% to $21,858,864 compared to $20,583,851 in 2023, and gross profit increased by $1,829,269.
• The net loss for the year ended December 31, 2024, was $(8,795,419), an improvement from $(10,283,109) in 2023, largely due to a significant decrease in selling, general, and administrative expenses.
• As of March 31, 2025, the company had cash on hand of $12,615,820 and a working capital surplus of $29,551, an improvement from a working capital deficiency of $(982,237) at December 31, 2024, primarily due to proceeds from PIPE Convertible Notes.
• The company continues to experience negative cash flows from operations, with $(449,119) used in operating activities for Q1 2025, a significant shift from $2,668,617 provided in Q1 2024.
• TruGolf received multiple deficiency letters from Nasdaq for non-compliance with minimum Market Value of Publicly Held Shares, minimum bid price ($1.00), and minimum shareholders' equity ($10,000,000) requirements.
• A Nasdaq hearing panel granted a temporary exception for compliance until July 8, 2025 (bid price) and July 30, 2025 (MVPHS and Equity Rule), and the company's listing was transferred to the Nasdaq Capital Market effective June 3, 2025.
• The company is registering up to 420,825,000 shares of Class A Common Stock for resale by selling securityholders, which represents a substantial multiple of the 40,532,790 shares outstanding as of June 12, 2025, and could lead to significant dilution.
• The company entered into an Equity Purchase Facility Agreement (EPFA) on May 14, 2025, allowing it to sell up to $20 million in newly issued Class A common stock to an institutional investor, subject to stockholder approval.
• Approximately $3.9 million in outstanding dividend notes payable (including accrued interest) were converted into 8,283,139 Class B common stock and 4,233,077 Class A common stock on April 21, 2025, at a conversion price of $0.31204 per share.
• The company has an accumulated deficit of approximately $23.8 million as of March 31, 2025, and expects to incur further operating losses through the end of 2025.

Sentiment

Score: 2

Explanation: The company is in a precarious financial position with significant accumulated losses, ongoing negative operating cash flow, and multiple Nasdaq listing deficiencies. While revenue is growing, net losses are increasing, and the potential for massive dilution from the registered share offering presents a severe risk to existing shareholders. The 'going concern' warning and reliance on future capital raises underscore the high financial instability.

Positives

• Net revenue increased by 8% for the three months ended March 31, 2025, and by 6% for the year ended December 31, 2024, indicating product acceptance and market penetration.
• Gross profit increased by $610,032 in Q1 2025 and by $1,829,269 in FY 2024, demonstrating improved efficiency in cost of revenues.
• The company achieved a working capital surplus of $29,551 as of March 31, 2025, a significant improvement from a deficiency of $(982,237) at December 31, 2024.
• The indoor golf market is experiencing significant growth, with off-course golf activities eclipsing on-course play for the first time in 2022, presenting a large addressable market for TruGolf's products.
• TruGolf's E6 Connect software is compatible with 90% of golf technology hardware in the global market, providing broad customer access and a competitive advantage.
• The company is launching a franchise solution for indoor golf entertainment venues, aiming to capitalize on commercial demand with a pre-sales requirement to ensure profitability.
• TruGolf is developing a Virtual Golf Association (VGA) to leverage networked gameplay and online golf simulations, including future integration with metaverse technologies, and has operational infrastructure for events.
• The company plans to monetize its extensive swing data collected since 2017, offering insights into performance trends and consumer behavior.
• TruGolf has diversified its supply chain for raw materials and parts, including multiple suppliers for critical components like cameras, projectors, and PCs, to mitigate supply risks.
• The new Apogee launch monitor offers enhanced accuracy, ease-of-use (auto-calibration, Laser Launchpad), and features like Instant Impact Replay and Apogee Voice Accelerator to improve pace of play and user experience.
• The company has secured an Equity Purchase Facility Agreement for up to $20 million, providing a potential source of future capital.

Negatives

• The net loss significantly increased to $(2,670,322) for the three months ended March 31, 2025, compared to $(1,301,864) in the prior year period.
• Operating expenses increased by 23% in Q1 2025, outpacing revenue growth and contributing to the increased operating loss.
• Other expenses surged by 301% in Q1 2025, primarily due to substantial interest expense and debt discount amortization related to PIPE Convertible Notes.
• The company continues to have an accumulated deficit of approximately $23.8 million as of March 31, 2025, indicating a history of unprofitability.
• Cash flows from operating activities were negative $(449,119) in Q1 2025, a reversal from positive cash flow in Q1 2024, indicating ongoing cash burn from operations.
• The company has received multiple Nasdaq deficiency letters for failing to meet minimum Market Value of Publicly Held Shares, minimum bid price, and minimum shareholders' equity requirements, posing a significant risk to its listing.
• The Nasdaq hearing panel granted only a temporary exception for compliance, with deadlines in July 2025, and transferred the company to the Nasdaq Capital Market, indicating continued listing uncertainty.
• The registration of up to 420,825,000 shares for resale by selling securityholders represents a massive potential dilution (over 10x current outstanding shares) for existing shareholders.
• The company expects to incur further operating losses through the end of 2025, indicating continued financial challenges.
• The conversion of $3.9 million in dividend notes payable into common stock, while reducing debt, adds to the share count and potential future dilution.
• The company has a material weakness in its internal controls, which could lead to unreliable financial reporting and misinformation.
• The cost of being a public company is estimated to be in excess of $250,000 per year, which could be a significant burden given the company's financial state.
• The company relies on a single vendor for turf and another for screen supplies, creating supply chain concentration risk.
• The dual-class stock structure concentrates voting power with the founders, limiting the influence of other investors on corporate decisions.

Risks

• Dependence on the strength and reputation of its brands, which could be harmed by product defects, recalls, counterfeits, or ineffective marketing.
• Need to raise additional capital to fund its business plan and growth strategy, which may result in significant dilution to existing stockholders or involve restrictive covenants.
• Increasing costs for raw materials, labor, and freight could negatively affect gross margins and profitability.
• Heavy reliance on supply chain reliability and predictability, with continued disruptions potentially having a material adverse impact on operations.
• Inability to effectively respond to changes in market trends and consumer preferences, which could adversely affect market share, net sales, and profitability.
• Difficulty in appealing to new consumers (e.g., female and young golfers) while maintaining the loyalty of core consumers.
• Dependence on existing members of management and key employees, with failure to retain or attract qualified new personnel (including a CFO) potentially hindering growth strategy.
• Reliance on online advertising and social media for marketing, with potential adverse effects if these channels are unsuccessful or if traditional advertising is required at higher costs.
• Significant reliance on information technology systems, with security breaches or system failures potentially damaging reputation, brands, and business operations.
• Intense competition in the sports equipment and technology industries, requiring continuous technical innovation and high-quality products.
• Failure to obtain or maintain high-quality endorsers, or negative actions by endorsers, could harm brand image and financial condition.
• Seasonality of business operations, leading to fluctuations in operating results and challenges in accurately forecasting demand.
• Potential for excess inventories or inventory shortages due to inaccurate demand forecasting, impacting operating margins and cash flows.
• Risks associated with operating in international markets, including foreign currency exchange rates, economic instability, and changes in trade policies.
• Material weakness in internal controls over financial reporting, which could lead to unreliable financial reporting and loss of investor confidence.
• The cost of being a public company, which could be significant and potentially impact the company's ability to continue as a going concern.
• Dependence on the quality of technical support, with failure to deliver high-quality services potentially harming sales and reputation.
• Customers experiencing difficulty integrating E6 Connect or E6 Apex with third-party applications, which would inhibit sales.
• Failure to adequately protect intellectual property and curb the sale of counterfeit merchandise, injuring the brand and negatively affecting sales.
• Exposure to product liability lawsuits or claims, which could harm financial condition and liquidity.
• Fluctuations in tax obligations and effective tax rate, and potential changes in tax laws or additional tax liabilities.
• Compliance with endorsement and testimonial regulations (e.g., FTC Endorsement Guides) to avoid investigations and penalties.
• Reduced disclosure requirements as a smaller reporting company potentially making common shares less attractive to investors.
• The dual-class stock structure concentrating voting power with founders, limiting other investors' influence and potentially delaying or preventing a change of control.
• Stock price volatility, which could lead to significant loss of investment regardless of operating performance.
• Risk of Nasdaq delisting due to non-compliance with listing rules (MVPHS, bid price, shareholders' equity).
• Sales of a substantial number of securities in the public market by selling securityholders could cause the price of Class A Common Stock to decrease significantly.

Future Outlook

TruGolf expects to continue incurring operating losses through the end of 2025 as it executes its development plans and strategic initiatives. The company believes its current cash resources and commitments will sustain operations for at least the next twelve months. Future plans include extensive promotion of the Apogee hardware, continued optimization of service and installation teams, new marketing initiatives with brand ambassadors, formalizing international distributor partnerships, establishing a joint venture office in Asia, and launching new VGA online tournaments. The company also plans to release new products like the next generation of Apogee, the Mini Trainer, and portable frame systems, while phasing out legacy launch monitor products.

Management Comments

• "Our mission is to help grow the game by making it more available, more approachable and more affordable, through technology because we believe golf is for everyone."
• "Our team has built award-winning video games (including Links, a popular sports game for PC), innovative hardware solutions, and an all-new e-sports platform to connect golfers around the world with TruGolf E6 Connect Software, our premier software engine."
• "Since TruGolf Nevada's beginning, we have continued to define and redefine what is possible with golf technology."
• "We believe that it is important to understand the macro-economic trends of indoor golf as a sport, as a culture, and as a movement, to better understand the market for our indoor golfing simulators and software."
• "We believe that all of these factors combine to create a significant opportunity to capitalize on a growing sport, a growing segment of that sport, and a convergence of demand and popularity seldom seen in virtual participation athletics indoor golf."
• "Our planned products are aligned directly with these findings as our Apogee launch monitor is an indoor only, and ceiling mounted device ideally for commercial facilities, yet equally beneficial to residential use."
• "Our software, both E6 CONNECT, and APEX have power tools for commercial facilities to make playing, improving and enjoying golf easier than ever."
• "We believe that one of the benefits of our indoor golf franchises will be the reduced space and infrastructure required to create such facilities, which we anticipate being as small as 5,000 square feet and as large as 32,000 square feet and requiring relatively minimal infrastructure and buildouts other than our custom indoor golf hardware."
• "We believe this approach will position each franchise location for profitability upon launch and mitigate the risk of unsuccessful or underperforming franchise operations."
• "We believe this substantial dataset offers significant value to users, equipment manufacturers, and other industry stakeholders by providing insights into performance trends, consumer behavior, purchasing intent, and geographic patterns within a highly engaged and affluent user base."
• "Management believes the plan outlined above provides an opportunity for the Company to continue as a going concern."

Industry Context

The indoor golf market is experiencing significant growth, with off-course golf activities (driving ranges, indoor simulators, entertainment venues) surpassing on-course play for the first time in 2022. This trend is driven by factors such as high costs and environmental challenges of outdoor golf, and limited daylight hours. The total addressable market for golf products was $1.4 billion in 2022, projected to reach $3.8 billion by 2031, with indoor golf simulators comprising 69% of this market and commercial applications dominating sales (78%). TruGolf, with its 4.28% market share, is positioned to capitalize on this shift by offering both hardware and software solutions, including its Apogee launch monitor and E6 Connect/Apex software, which is compatible with 90% of market hardware. The company's move into franchising indoor golf facilities and developing a Virtual Golf Association aligns with the growing demand for accessible and gamified golf experiences.

Comparison to Industry Standards

• TruGolf's E6 Connect software is noted to be compatible with over twenty-four third-party golf technology hardware manufacturers, translating to approximately 90% market integration coverage, which is a significant competitive advantage over hardware-only providers like Trackman, FullSwing, Foresight, and GolfZon.
• The company's Apogee launch monitor is designed as an indoor-only, ceiling-mounted device, contrasting with many competitors (e.g., Trackman, FullSwing, FlightScope, Foresight, Garmin, Voice Caddie) that offer mobile launch monitors placed on the floor, which are prone to being kicked or bumped.
• TruGolf's professional integrated solutions (Signature and Premium simulators) range from $10,000 to $100,000 for custom projects, offering a wider price range compared to competitors like Uneekor, FullSwing, FlightScope, and Foresight, whose integrated solutions generally range from $10,000 to $50,000.
• Standalone portable launch monitors from competitors like Trackman, FullSwing, FlightScope, Foresight, Garmin, and Voice Caddie are typically priced between $600 and $20,000, while TruGolf's offerings span from just under $400 to over $100,000, providing a broader consumer base.
• TruGolf's E6 Apex software, utilizing a new graphics engine for photo-realistic course recreations with accuracy within 2 inches on fairways and 2 centimeters on greens, aims to provide a higher fidelity experience compared to 'lower quality, lower price point, fantasy simulator solutions'.
• The company's proprietary physics and gaming engine, developed over four decades, is highlighted as a foundational element providing precise ball flight and environmental dynamics, with integrated swing analysis and instant impact replay, which management claims is 'unmatched by competitors'.

Management Changes

Corporate Governance

Legal Proceedings

• As of the date of this filing, the Company is not a party to any legal proceedings that, in the opinion of management, if determined adversely, would individually or in the aggregate have a material adverse effect on the Company's business, operating results, financial condition, or cash flows.

Related Party Transactions

• The company has a $500,000 note payable (8.50% annual interest) and a $150,000 note payable (8.50% annual interest) with ARJ Trust, which is indirectly controlled by the CEO, Christopher Jones. Both notes' maturity dates were extended to September 30, 2025.
• A $1,750,000 zero-interest note payable with former shareholder McKettrick, with an outstanding principal balance of $800,000 as of March 31, 2025. The company made $500,000 in cash payments in 2024.
• A $222,000 zero-interest note payable with former shareholder Carver, with an outstanding principal balance of $111,000 as of March 31, 2025. The company has not made the required $18,500 installment for Q1 2025.
• The CEO, Christopher Jones, loaned the company an aggregate of $2,000,000 for operating expenses during 2024, with a zero interest rate and no stated maturity date.
• On April 21, 2025, approximately $3.9 million in outstanding dividend notes payable (including accrued interest) originally issued in November 2022, including those held by officers and directors, were converted into 8,283,139 shares of Class B common stock and 4,233,077 shares of Class A common stock at $0.31204 per share.

Stakeholder Impact

• **Shareholders:** Face significant potential dilution from the registration of 420,825,000 shares for resale, which is over 10 times the currently outstanding Class A shares. The dual-class stock structure limits the voting power of Class A shareholders. Ongoing losses and Nasdaq delisting risk pose a threat to investment value.
• **Employees:** The company employs approximately 72 individuals (71 full-time, 1 part-time) and continues to hire to support growth, indicating job stability for existing staff, but the company's financial struggles could impact future hiring or stability.
• **Customers:** Benefit from continued product development (Apogee, E6 Apex) and expansion of services (franchises, VGA), but potential financial instability could impact long-term support or product availability.
• **Suppliers:** The company relies on key suppliers for raw materials and components, and any financial distress or supply chain issues could impact their business relationship.
• **Creditors:** Holders of PIPE Convertible Notes and other debt instruments have seen conversions into equity and waivers of defaults, indicating a complex and potentially risky debt profile. The company's ability to repay debt depends on future profitability and capital raises.

Next Steps

• Regain compliance with Nasdaq's minimum bid price requirement by July 8, 2025.
• Regain compliance with Nasdaq's minimum Market Value of Publicly Held Shares and minimum shareholders' equity requirements by July 30, 2025.
• Hold a special meeting of stockholders no later than 90 calendar days following May 14, 2025, to seek approval for the issuance of shares under the Equity Purchase Facility Agreement.
• Continue extensive promotion of the Apogee hardware.
• Optimize service and installation teams through organizational realignment and resource allocation.
• Implement new marketing initiatives, including a redesigned website, expanded paid social media campaigns, and new brand ambassadors.
• Open a regional office serving Europe, the Middle East, and Africa (EMEA).
• Formalize two additional international distributor partnerships.
• Establish the newly announced joint venture office in Asia.
• Launch a series of new Virtual Golf Association (VGA) online tournaments in collaboration with new strategic partners.
• Release new products, including the next generation of Apogee, the Mini Trainer, and portable frame systems.
• Continue phasing out legacy launch monitor products (TruTrack and TruFlight).
• File 2024 federal and state corporate income tax returns as soon as practicable.

Key Dates

Recommendation

Keywords

Indoor Golf, Golf Simulators, E6 Connect, E6 Apex, Golf Technology, Virtual Golf Association, Franchising, SEC Filing, S-1, Nasdaq, Dilution, Convertible Notes, Warrants, Financial Performance, Risk Factors, TRUG