TruGolf Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –NATURE OF THE ORGANIZATION AND BUSINESS

Organization and Business

TruGolf Holdings, Inc. (including its subsidiaries, “the Company,” “we,” “us,” or “our”) designs, develops, manufactures, and sells golf simulators and related software for residential and commercial applications. Our product offerings include portable, professional, commercial, and custom simulators, as well as standalone software products including E6 Connect and E6 GOLF. We also offer multi-sport gaming applications.

Our operations are conducted through our wholly-owned subsidiary, TruGolf, Inc., a Nevada corporation (“TruGolf Nevada”), which has been developing indoor golf software and hardware since 1999. On January 31, 2024, we consummated a business combination pursuant to which TruGolf Nevada became our wholly-owned subsidiary, and our name was changed from Deep Medicine Acquisition Corp. to TruGolf Holdings, Inc.

On May 10, 2024, the Company formed TruGolf Links Franchising, LLC (“Links”), a wholly-owned subsidiary, to establish and sell franchises utilizing the Company’s indoor golf and recreational sports simulators. As of December 31, 2025, Links had received $1,104,375 in franchise deposits, recorded as deferred revenue.

The Company is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to comply with certain reduced public company reporting requirements.

Reverse Stock Split

On June 23, 2025, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of the State of Delaware to effect a 1-for-50 reverse stock split of the Class A and Class B shares of the Company’s issued and outstanding common stock, effective as of 12:01 a.m. Eastern Time on June 23, 2025 (the “2025 Reverse Stock Split”) and began trading on a 2025 Reverse Stock Split-adjusted basis on Nasdaq on June 23, 2025. As a result of the Reverse Stock Split, the number of Class A common shares outstanding was reduced from 40,532,150 to 810,617 and the number of Class B common shares outstanding was reduced from 10,000,000 to 199,999, and the number of authorized shares of common stock remained unchanged.

On March 25, 2026, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of the State of Delaware to effect a 1-for-10 reverse stock split of the Class A shares of the Company’s issued and outstanding common stock, effective as of 12:01 a.m. Eastern Time on March 27, 2026 (the “2026 Reverse Stock Split”, and together with the 2025 Reverse Stock Split, the “Reverse Stock Split”) and began trading on a 2026 Reverse Stock Split-adjusted basis on Nasdaq on March 27, 2026. As a result of the 2026 Reverse Stock Split, the number of Class A common shares outstanding as of December 31, 2025, was reduced from 4,228,985 to 422,899 and the number of Class B common shares outstanding was reduced from 199,999 to 19,999, and the number of authorized shares of common stock remained unchanged. All share amounts have been retroactively adjusted for the Reverse Stock Split.

Proportionate adjustments for the Reverse Stock Split were made to the exercise prices and number of shares issuable under the Company’s equity incentive plans, and the number of shares underlying outstanding equity awards and warrants, as applicable. See Note 16 - Stockholders’ Equity (Deficit) for information and disclosures relating to adjustments related to the Reverse Stock Split.

Nasdaq Compliance

On July 15, 2024, the Company received a deficiency letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying the Company that since it failed to file its Form 10-Q for the period ended March 31, 2024, it no longer complied with Nasdaq Listing Rule 5250(c)(1). The deficiency letter did not result in the immediate delisting of the Company’s common stock from the Nasdaq Capital Market. On August 14, 2024, the Company filed its Quarterly Report in the Form 10-Q for the period ended March 31, 2024, and the Company regained compliance with the applicable Nasdaq rule.

On August 19, 2024, the Company received a delist notice from the staff of the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the listing of its Class A common stock was not in compliance with: (i) the minimum Market Value of Publicly Held Shares requirement set forth in Nasdaq Listing Rule 5450(b)(2)(C); and (ii) the minimum shareholders’ equity requirement set forth in Nasdaq Listing Rule 5450(b)(1)(A).

On November 5, 2024, the Company received a delist notice from the Staff notifying the Company that the listing of its Class A common stock was not in compliance with the minimum bid price requirement of $1.00 per share set forth in Nasdaq Listing Rule 5450(a)(1).

The Company requested a hearing before a Nasdaq hearing panel (the “Panel”) to present a plan to regain compliance with all the continued listing requirements of Nasdaq and such hearing was held May 15, 2025. On May 30, 2025, the Panel provided the Company an exception with various milestones to regain compliance, including with Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”) until July 8, 2025 and the minimum Market Value of Publicly Held Shares requirement and minimum shareholders’ equity requirement until July 30, 2025. In addition, the Panel directed that the Company’s listing be transferred to the Nasdaq Capital Market, effective at the open of business on June 3, 2025.

On July 17, 2025, the Staff confirmed that the Company had regained compliance with the Bid Price Rule as required by the Panel’s decision.

On August 1, 2025, the Company received a letter from Nasdaq notifying the Company that it had demonstrated compliance with Nasdaq Listing Rule 5550(b)(1) (the “Equity Rule”), as required by the Panel’s decision, and, following the Company’s phase down to the Nasdaq Capital Market on June 3, 2025, the Company demonstrated compliance with the minimum market value of publicly held securities required by Nasdaq Listing Rule 5550(a)(5).

Pursuant to the letter, in application of Listing Rule 5815(d)(4)(B), the Company will be subject to a Mandatory Panel Monitor for a period of one year from the date of the letter. If, within that one-year monitoring period, the Staff finds the Company again out of compliance with the Equity Rule, notwithstanding Rule 5810(c)(2), the Company will not be permitted to provide the Staff with a plan of compliance with respect to that deficiency and Staff will not be permitted to grant additional time for the Company to regain compliance with respect to that deficiency, nor will the company be afforded an applicable cure or compliance period pursuant to Rule 5810(c)(3). Instead, Staff will issue a delist determination letter and the Company will have an opportunity to request a new hearing.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States of America (“GAAP”) and in conformity with the instructions on Form 10-K and Article 8 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (the “SEC”). The consolidated financial statements include the amounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements reflect all adjustments consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of such statements.

Reclassifications

Certain reclassifications have been made to the financial statements for the year ended December 31, 2024, to conform to the financial statement presentation for the year ended December 31, 2025. These reclassifications had no effect on net loss or cash flows as previously reported.

Use of Estimates

The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities, at the date of and during the reported period of the consolidated financial statements. Actual results could differ from those estimates. The Company evaluates estimates and assumptions on an ongoing basis.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less. The Company maintains deposits in several financial institutions, which may at times exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation (“FDIC”). The Company has not experienced any losses related to amounts in excess of FDIC limits. As of December 31, 2025 and 2024, the Company had cash in excess of FDIC limits of approximately $11,468,910 and $9,662,000, respectively.

Accounts Receivable, net

Accounts receivable consist of trade receivables arising from credit sales to customers in the normal course of business. Accounts receivable are recorded at the time of sale, net of an allowance for current expected credit losses (“CECL”) in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 326, “Financial Instruments – Credit Losses”, The Company estimates CECL using a rate loss model based on delinquency. The estimated loss rate is based on historical experience with specific customers, understanding of the Company’s current economic circumstances, reasonable and supportable forecasts, and the Company’s judgment as to the likelihood of ultimate payment based upon available data. Management believes the Company’s credit risk is mitigated by the geographically diverse customer base and its credit evaluation procedures. Accounts receivable balances are written off when they are determined to be uncollectible. As of December 31, 2025 and 2024, the Company estimated an allowance for CECL of $1,553,000 and $1,470,868, respectively.

Inventory, net

The Company’s inventory consists of raw materials and are valued at the lower of historical cost or net realizable value, where net realizable value is considered to be the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. Historic inventory costs are calculated on an average or specific cost basis. The Company records inventory write-downs for excess or obsolete inventories based upon assumptions on current and future demand forecasts. As of December 31, 2025 and 2024, the Company had $248,312 and $448,360, respectively, reserved for obsolete inventory.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated over the estimated useful lives of the related assets using the straight-line method. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term (including renewals that are reasonably assured) or the estimated useful lives of the improvements. For internal-use software, external costs and employee payroll expenses directly associated with developing new or enhancing existing software applications are capitalized subsequent to the preliminary stage of development. Internal-use software costs are amortized using the straight-line method over the estimated useful life of the software when the project is substantially complete and ready for its intended use.

Expenditures for major additions and improvements are capitalized, and minor replacements, maintenance, and repairs are expensed as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gains or losses are included in the Company’s results of operations for the respective period.

Capitalized Software Development Costs

The Company capitalizes certain costs related to the development of our software used in our simulators. In accordance with authoritative guidance, including ASC 985-20,Software – Costs of Software to be Sold, Leased, or Marketed, the Company began to capitalize these costs when the technological feasibility was established and preliminary development efforts were successfully completed, management authorized and committed project funding, and it was probable that the project would be completed and the software would be used as intended. Such costs are amortized when placed in service, on a straight-line basis over the estimated life of the related asset, estimated to be three years beginning on February 1, 2024. Costs incurred prior to meeting these criteria together with costs incurred for training and maintenance are expensed as incurred and recorded in selling, general and administrative expenses on our consolidated statements of operations. The Company does not capitalize any testing or maintenance costs. The accounting for these capitalized software costs requires management to make significant judgments, assumptions and estimates related to the timing and amount of recognized capitalized software development costs. The balance of capitalized software development costs, net of accumulated amortization, at December 31, 2025 and 2024, was $3,633,661 and $1,540,121, respectively.

Advertising and Marketing Costs

The Company expenses advertising and marketing costs as they are incurred. Advertising and marketing expenses were $776,316 and $736,744 for the years ended December 31, 2025 and 2024, respectively, and are recorded in operating expenses on the consolidated statements of operations.

Debt with Warrants

In accordance with ASC 470-20-25, when the Company issues debt with warrants, the Company treats the fair value of the warrants as a debt discount, recorded as a contra-liability against the debt, and amortizes the balance over the life of the underlying debt as amortization of debt discount expense in the consolidated statements of operations using the straight-line method. The offset to the contra-liability is recorded as either equity or liability in the Company’s consolidated balance sheets depending on the accounting treatment of the warrants. If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt discount expense in the consolidated statements of operations.

Fair Value Measurements

The fair value of a financial instrument is the amount the Company would receive to sell an asset, or pay to transfer a liability, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In the absence of such data, fair value is estimated using internal information consistent with what market participants would use in a hypothetical transaction.

According to ASC Topic 820, “Fair Value Measurement,” the fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The Company uses appropriate valuation techniques based on available inputs to measure the fair value of its assets and liabilities. The fair value hierarchy is defined in the following three categories:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, inventories, prepaid expenses, accounts payable and accrued expenses, and customer deposits approximate fair value, given their short-term nature. The carrying value of lease obligations and notes payable also approximates fair value given these instruments bear prevailing market interest rates.

Leases

The Company accounts for leases in accordance with ASC Topic 842, “Leases.” The Company determines whether a contract is a lease at contract inception or for a modified contract at the modification date. Contracts containing a lease are further evaluated for classification as a ROU operating lease or a finance lease.

At inception or modification, the Company recognizes ROU assets and related lease liabilities on the balance sheet for all leases greater than one year in duration. Lease liabilities and their corresponding ROU assets are initially measured at the present value of the unpaid lease payments as of the lease commencement date. If the lease contains a renewal and/or termination option, the exercise of the option is included in the term of the lease if the Company is reasonably certain that a renewal or termination option will be exercised. As the Company’s leases do not provide an implicit rate, the Company uses an estimated incremental borrowing rate (“IBR”) based on the information available at the commencement date of the respective lease to determine the present value of future payments. The IBR is determined by estimating what it would cost the Company to borrow a collateralized amount equal to the total lease payments over the lease term based on the contractual terms of the lease and the location of the leased asset.

Operating lease payments are recognized as an expense on a straight-line basis over the lease term in equal amounts of rent expense attributed to each period during the term of the lease, regardless of when actual payments are made. This generally results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in later years. The difference between rent expense recognized and actual rental payments is typically represented as the spread between the ROU asset and lease liability.

When calculating the present value of minimum lease payments, the Company accounts for leases as one single lease component if a lease has both lease and non-lease components. Variable lease and non-lease components are expensed as incurred. The Company does not recognize ROU assets and lease liabilities for short-term leases that have an initial lease term of 12 months or less.

Income Taxes

Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company utilizes ASC 740,Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely than not” that a deferred tax asset will not be realized. At December 31, 2025 and 2024, the Company’s net deferred tax asset has been fully reserved.

For uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the consolidated financial statements. The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the consolidated statements of operations when a determination is made that such expense is likely.

Revenue Recognition

The Company records revenue in accordance with FASB ASC Topic 606, “Revenue from Contracts with Customers.” Revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To achieve this core principle, the Company applies the following five-step approach: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied.

The Company primarily recognizes revenue from: (i) golf simulators, (ii) content software subscriptions, and (iii) franchise operations, including regional developer territory fees, initial franchise fees, and ongoing royalty fees.

Performance obligations under our contracts consist of hardware, software consisting of perpetual licenses and subscription licenses, support, and franchise rights within a single operating segment.

Golf Simulators – Substantially all the Company’s sales are multiple performance obligation arrangements for its golf simulators, for which the transaction price is equivalent to the stated price of the product or service, net of any stated discounts applicable at a point in time. Golf simulators are bundled and are comprised of both hardware, a software license (for the software to operate the simulator), and a content software subscription license. Revenue from golf simulators is recognized at the point in time when installation (hardware and software) has occurred and has been accepted by the customer. For transactions where the Company utilizes a third-party to complete the installation, the Company recognizes revenue solely for the simulator hardware upon delivery to the customer or third-party installer and then recognizes the remainder of the revenue upon installation and customer acceptance.

Perpetual License – Golf simulators require specific proprietary software to run the simulations. The Company records revenue from the proprietary software products under perpetual licenses. Revenue from the perpetual licenses is recognized at the time of installation and customer acceptance.

Content Software Subscriptions – The Company offers content software subscriptions for one and twelve months. We recognize revenue from these transactions when control has passed to the customer and the performance obligations have been satisfied. Control is considered to have passed to the customer when the software license has been delivered and accepted by the customer. The content software subscription revenue is recognized over the term of the contract.

Reseller Subscription Royalties – The Company has entered into reseller arrangements under which authorized resellers distribute and facilitate the sale or renewal of the Company’s content software subscriptions through their platforms. Pursuant to these arrangements, the Company pays each reseller a royalty calculated as a percentage of net subscription revenue attributable to subscriptions sold or renewed through the reseller’s platform. In accordance with ASC 606, these royalty payments represent consideration payable to a customer and are recorded as a reduction of content software subscription revenue (contra revenue) rather than as an operating expense, as the payments are not made in exchange for a distinct good or service transferred to the Company that has a reliably estimable fair value separate from the subscription revenue to which the royalty relates. The Company has determined that recognizing these royalties upon the occurrence of the related subscription purchase or renewal event does not produce a result that is materially different from ratable recognition over the related subscription terms, given the short settlement cycle and immaterial amounts involved. Accordingly, reseller subscription royalties are recognized as contra revenue in the period the related subscription purchase or renewal occurs. Royalty amounts payable but not yet remitted to the reseller are accrued as a liability within accrued expenses on the consolidated balance sheet.

Regional Developer Territory Fees – The Company enters into Regional Developer Agreements (“RDAs”) that grant Regional Developers exclusive territorial rights to solicit and support franchisees within defined geographic areas in exchange for a nonrefundable upfront RD Territory Fee. Because the RDA prohibits subfranchising, the territorial exclusivity cannot be utilized independently of opening individual franchise locations. Accordingly, the upfront fee is recorded as deferred revenue and allocated on a pro rata basis to each franchise location contemplated in the Development Schedule. The allocated amount for each location is recognized as revenue on a straight-line basis over the term of the RDA, commencing upon execution of that agreement.

Initial Franchise Fees – the Company enters into unit franchise agreements with individual franchisees for the operation of TruGolf Links Centers. Each agreement requires payment of a nonrefundable Initial Franchise Fee, which together with any allocated RD Territory Fee amount, is deferred upon receipt and recognized as revenue on a straight-line basis over the term of the franchise agreement. The franchise right constitutes a license of symbolic intellectual property whose value is derived from the Company’s ongoing brand, marketing, and system support activities.

Franchise Royalty Fees – The Company earns ongoing royalties from franchisees as a percentage of franchisee gross sales. Royalty revenue is recognized when the underlying franchisee sales occur, consistent with the sales-based royalty exception under ASC 606. The Company estimates royalty revenue when franchisee sales data is unavailable at period end and records a true-up in the subsequent period.

Regional Developer Compensation – Under each RDA, the Company remits to the Regional Developer a contractual percentage of Initial Franchise Fees collected (Sales Services Compensation) and Franchise Royalty Fees collected (Support Services Compensation) from franchisees within the territory. Sales Services Compensation is recognized as an operating expense ratably over the term of the related unit franchise agreement. Support Services Compensation is recognized as an operating expense in the same period as the related royalty revenue.

Deferred Revenue

Deferred revenue represents either customer advance payments or performance obligations that have not yet been met.

Revenue from golf simulators and perpetual software licenses is deferred and primarily recognized upon the installation of the golf simulators and acceptance from the customer. Revenue from content software subscriptions is deferred and recognized ratably over the life of the subscription (one or twelve months).

Revenue from franchise operations is deferred upon receipt. RD Territory Fees are recognized as the allocated portion of each material right is earned over the term of the corresponding RDA. Initial Franchise Fees are recognized on a straight-line basis over the term of each unit franchise agreement.

During the years ended December 31, 2025 and 2024, the Company recognized $3,113,010 and $1,704,224 of golf simulator and subscription services revenue, respectively, that was included in deferred revenue balances at the beginning of the year. Revenue recognized from franchise deferred balances during the year ended December 31, 2025 was $13,125.

Remaining Performance Obligations

As of December 31, 2025, approximately $4.5 million of revenue is expected to be recognized from remaining performance obligations. The Company expects to recognize 100% of this revenue over the next 12 months. Deferred revenue associated with franchise operations totaling approximately $1.1 million is expected to be recognized over the terms of the applicable franchise and regional developer agreements, which range up to ten years.

Cost of Revenues

Cost of revenue includes direct materials, labor, manufacturing overhead costs and reserves for estimated warranty cost (excluding depreciation). Cost of revenues also includes direct costs incurred to deliver its software products, content subscriptions, and integrated simulator solutions to customer, charges to write down the carrying value of the inventory when it exceeds its estimated net realizable value and to provide for on-hand inventories that are either obsolete or in excess of forecasted demand, as consistently reviewed by the Company. During the years ended December 31, 2025 and 2024, the Company recorded an expense of $295,547 and $0 in inventory write-down, respectively.

Content Licensing Royalties – The Company pays royalties to third-party golf course owners and licensors for the right to include licensed course content in its software products and subscriptions. These royalties are recognized as cost of revenue in the period the related software or subscription revenue is recognized, as they represent direct costs of delivering licensed content to customers. Royalty rates and terms vary by course licensor and are governed by individual license agreements.

Loss Per Share

Basic loss per share is calculated by dividing net loss by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share is calculated by adjusting the weighted average number of shares of common stock outstanding for the dilutive effect, if any, of common stock equivalents. Common stock equivalents whose effect would be antidilutive are not included in diluted loss per share. The Company uses the treasury stock method to determine the dilutive effect, which assumes that all common stock equivalents have been exercised at the beginning of the period and that the funds obtained from those exercises were used to repurchase shares of common stock of the Company at the average closing market price during the period. All outstanding convertible notes are considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method.

Stock-based Compensation

The Company has the ability to grant employees a number of different stock-based awards, including restricted shares of common stock, restricted stock units, stock options, and stock appreciation rights to purchase common stock, under the TruGolf Holdings, Inc. 2024 Incentive Plan (the “2024 Plan”).

Stock-based awards granted to qualified employees, non-employee directors and consultants are measured at fair value and recognized as an expense in accordance with ASC Topic 718, “Share-Based Payments.” For service-based awards, stock-based compensation is recognized on a straight-line basis over the requisite service period, which is generally the vesting period. The fair value of stock options is estimated using a Black-Scholes option valuation model. Restricted stock awards are valued based on the closing stock price on the date of grant. The Company has elected to recognize forfeitures as they occur.

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (i) no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The JOBS Act does not preclude an emerging growth company from early adopting new or revised accounting standards. The Company expects to use the extended transition period for any new or revised accounting standards during the period which the Company remains an emerging growth company.

Segment Reporting

The Company identifies reporting segments based on how the chief operating decision maker (“CODM”) regularly reviews financial information to allocate resources and assess performance. Our CODM, who is our Chief Executive Officer, reviews financial information presented on a consolidated basis accompanied by disaggregated information about revenues and operating income by our sole reportable segment.

As of December 31, 2025, the Company operates as one business segment, which is also the sole reportable segment, focusing on the manufacturing and sales of indoor golf simulators. The Company’s business offerings have similar economic and other characteristics, including the nature of products, manufacturing, types of customers, and distribution methods.

The Company measures segment performance based on operating income, which includes revenues and operating expenses directly attributable to each segment. Certain corporate expenses, including executive management, corporate finance, legal, compliance, information technology, and human resources, are allocated to the segments based on relative revenues, headcount, and management’s assessment of resources consumed by each segment. Corporate assets, including cash and cash equivalents, deferred tax assets, and corporate facilities, are not allocated to the reportable segments. There are no intersegment revenues or transfers between the Company’s reportable segments.

Warrants

The fair value of the warrants is estimated on the date of issuance using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including the expected term of the warrants, expected stock price volatility, and expected dividends. These estimates involve inherent uncertainties and the application of management’s judgment. Expected volatilities used in the valuation model are based on the average volatility of the comparable publicly traded on recognized stock exchanges. The risk-free rate for the expected term of the option is based on the United States Treasury yield curve in effect at the time of the grant.

Acquisitions

The Company accounts for acquisitions in accordance with ASC 805,“Business Combinations.” The Company evaluates each transaction to determine whether the acquired set of assets and activities constitute a business. If the acquired set meets the definition of a business, the transaction is accounted for as a business combination, and the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest at their respective acquisition date fair values. Any excess of the purchase consideration over the fair value of the net identifiable assets acquired is recorded as goodwill. If the acquired set does not meet the definition of a business, the transaction is accounted for as an asset acquisition, and the cost of the group of assets acquired are allocated to the individual assets acquired or liabilities assumed based on their value without giving rise to goodwill.

Related Parties

The Company identifies related parties and transactions with such parties in accordance with ASC 850,“Related Party Disclosures.” Related parties include affiliates, principal owners, directors, executive officers, and entities under common control. Transactions with related parties are recorded at amounts that are considered to approximate arm’s length terms. The Company discloses all material related party transactions and outstanding balances in the accompanying consolidated financial statements and related footnotes.

Recently Adopted Accounting Pronouncements

In August 2023, the FASB issued ASU 2023-05, “Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement,” which requires a newly-formed joint venture to apply a new basis of accounting to its contributed net assets, resulting in the joint venture initially measuring its contributed net assets at fair value on the formation date. ASU 2023-05 is effective for all joint venture formations with a formation date on or after January 1, 2025. The Company adopted ASU 2023-05 on January 1, 2025. The adoption of ASU 2023-05 did not have a material impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures by requiring; (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. These amendments are to be applied prospectively, with retrospective application permitted. The adoption of ASU 2023-09 did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements

In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which modernizes the guidance for capitalizing internal-use software costs to better reflect contemporary software development practices, including agile and iterative methodologies. The amendments remove all references to prescriptive project stages from the existing three-stage framework and replace them with a principles-based approach under which an entity begins capitalizing software costs when two criteria are met: (1) management has authorized and committed to funding the software project, and (2) it is probable that the project will be completed and the software will be used to perform its intended function. The standard also supersedes the existing guidance on website development costs under Subtopic 350-50 and incorporates those costs into the Subtopic 350-40 framework, and requires capitalized internal-use software costs to comply with the disclosure requirements of ASC 360-10, Property, Plant, and Equipment. ASU 2025-06 is effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted, and the standard may be applied on a retrospective, prospective, or modified retrospective basis. The Company is currently evaluating the impact this standard will have on its financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization included in each relevant expense caption presented on the statement of operations. The standard also requires disclosure of qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity’s definition of selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact this standard will have on its financial statements.

NOTE 3 –BUSINESS COMBINATION

On January 19, 2024, TruGolf Holdings, Inc. (formerly known as Deep Medicine Acquisition Corp., “DMAQ”) completed a business combination (the “Business Combination”) with TruGolf, Inc. (“TruGolf Nevada”) pursuant to the terms of the Agreement and Plan of Merger dated May 26, 2023. Upon closing, TruGolf Nevada became a wholly-owned subsidiary of the Company, and the combined company was renamed TruGolf Holdings, Inc.

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, DMAQ was treated as the acquired company for accounting purposes, with TruGolf Nevada as the accounting acquirer. Accordingly, the consolidated financial statements of the Company represent a continuation of the financial statements of TruGolf Nevada, with the assets and liabilities of DMAQ recognized at their historical carrying values at the closing date. No goodwill or other intangible assets were recorded as a result of the Business Combination.

The aggregate consideration paid to TruGolf Nevada shareholders consisted of 14,934 shares of the Company’s Class A and Class B common stock, determined using an exchange ratio of approximately 1.14:1 based on 13,098 shares of TruGolf Nevada common stock outstanding immediately prior to closing.

For a complete description of the Business Combination, including the purchase price allocation, transaction costs, and the composition of shares issued at closing, refer to Note 3 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

NOTE 4 –DISAGGREGATION OF REVENUES

The Company’s revenues are disaggregated based on revenue type, including (i) golf simulators, (ii) content software subscriptions, (iii) franchise revenue, and (iv) other.

The Company’s net revenues for the years ended December 31, 2025 and 2024, are disaggregated as follows:

NOTE 5 –ACCOUNTS RECEIVABLE, NET

Accounts receivable and allowance for doubtful accounts consisted of the following as of December 31:

NOTE 6 –INVENTORY, NET

The following summarizes inventory as of December 31:

NOTE 7 –PROPERTY AND EQUIPMENT, NET

The following summarizes property and equipment as of December 31:

Total depreciation expense was $38,470 and $76,794 for the years ended December 31, 2025 and 2024, respectively.

The following summarizes capitalized software development costs as of December 31, 2025:

Total amortization expense for the years ended December 31, 2025 and 2024, was $1,137,950 and $161,350, respectively.

NOTE 8 – ACCRUED AND OTHER CURRENT LIABILITIES

Accrued and other current liabilities consist of the following amounts as of December 31:

NOTE 9 –NOTES PAYABLE

Notes payable consisted of the following as of December 31:

Ethos Management Inc.

In January 2023, the Company entered into a financing agreement with Ethos Asset Management Inc. (the “Ethos Loan” or “Ethos”) in the principal amount of up to $10 million. Pursuant to the terms of the Ethos Loan, the Company may draw down financing proceeds equal to $833,333 each month beginning in April 2023, up to the $10 million amount. Interest associated with the Ethos Loan is fixed at 4% per annum and has athree-year grace period for principal and interest payments. Annual principal and interest payments will commence in 2027 and continue through 2034. As a condition to funding, the Company provided Ethos with a $1,875,000 deposit as collateral (the “Deposit Collateral”) for the note.

The Ethos Loan stipulates that fundings should happen approximately every 30 banking days, subject to Ethos completing periodic internal audits to ensure the Company was in compliance with the terms of the loan agreement. In August 2023, Ethos informed the Company that unrelated to the Company, Ethos was undergoing a routine audit of its portfolio, and pending the close of the audit, borrowers may experience delays in drawing on funds when requested. In February 2024, due to the lack of additional fundings and in accordance with the terms of the Ethos Loan, the Company sent Ethos a notice of termination for materially breaching the Ethos Loan agreement. Based on the termination for default clause in the Ethos Loan, the Company was entitled to retain all funds disbursed by Ethos and Ethos must release the Deposit Collateral. At the date of the Ethos Loan termination the principal and accrued interest owed on the Ethos Loan was $2,383,059 and $81,560, respectively. As a result of the Ethos Loan termination, the outstanding principal and accrued interest was offset by the Deposit Collateral leaving $589,619, which is included in Accrued and other current liabilities on the consolidated balance sheets at both December 31, 2025 and 2024, respectively (See Note 8 – Accrued and Other Current Liabilities).

Mercedes-Benz

In November 2020, the Company entered into a $59,545,5.90% annual interest rate note payable with Mercedez-Benz for a delivery van. The note matures on November 20, 2026, and is secured by the van. The Company makes a monthly payment of $908, which includes both principal and interest. The outstanding principal on the note at December 31, 2025 and 2024, was $9,733 and $19,733, respectively.

NOTE 10 –PIPE CONVERTIBLE NOTES

On February 2, 2024, the Company executed a securities purchase agreement (the “Purchase Agreement”) with various investors (together, the “PIPE Investors”). Pursuant to the terms and conditions of the Purchase Agreement, the PIPE Investors agreed to purchase from the Company (i) senior convertible notes in the aggregate principal amount of up to $15.5 million (the “PIPE Convertible Notes”), (ii) Series A warrants to initially purchase 140,909 shares of the Company’s Class A common stock (the “Series A Warrants”), and (iii) Series B warrants to initially purchase 155,000 shares of the Company’s Class A common stock (the “Series B Warrants,” and collectively with the Series A Warrants, the “PIPE Warrants”) (the “PIPE Financing”).

During 2024, the Company completed additional closings under the Purchase Agreement, resulting in the issuance of PIPE Convertible Notes with aggregate principal amounts of $4.65 million (February 6, 2024), $3.3 million (November 7, 2024), and $2.1 million (December 16, 2024). The notes carried an Original Issue Discount of 10% and bore interest at rates specified in the respective note agreements.

On January 8, 2025, certain PIPE Investors agreed to purchase an additional $2.8 million in principal amount of PIPE Convertible Notes with an Original Issue Discount of $280,000 for gross proceeds of $2.52 million.

During the year ended December 31, 2025, the Company converted an aggregate principal amount of $1,558,000 and $1,082,194 in accrued and make-whole interest related to the PIPE Convertible Notes into 14,230 shares of the Company’s Class A common stock. Conversions were made at the “Alternate Conversion Price” defined as the lesser of the fixed conversion price or 90% of the lowest volume weighted average price (“VWAP”) of the Company’s Class A common stock over the five consecutive trading days prior to conversion.

On July 21, 2025, pursuant to the PIPE Exchange Agreements (see below), the Company exchanged the entire outstanding principal balance of $3,938,311 related to the PIPE Convertible Notes in exchange for (i)3,938 shares of the Company’s Series A Preferred Stock and (ii) an agreement to extend the expiration date of the Series A Preferred Warrants held by such holders bytwo years. This exchange was accounted for as an extinguishment of debt, and as a result, the outstanding principal and accrued interest balance of the PIPE Convertible Notes was reduced to $0 as of December 31, 2025.

PIPE Convertible Notes payable consisted of the following as of December 31, 2025:

During the years ended December 31, 2025 and 2024, amortization expense related to the Original Issue Discount of the PIPE Convertible Notes was $359,037 and $728,278, respectively. The principal balance of the PIPE Convertible Notes, net of Debt Discounts, and accrued interest related to the PIPE Convertible Notes at December 31, 2025, was $0 and $0, respectively. The principal balance of the PIPE Convertible Notes, net of Debt Discounts, and accrued interest related to the PIPE Convertible Notes at December 31, 2024, was $4,068,953 and $154,500, respectively.

PIPE Exchange Agreements

On April 22, 2025, the Company entered into Exchange Agreements, (the “Exchange Agreements” and each, an “Exchange Agreement”), by and among the Company and each of the PIPE Convertible Note holders (the “Holders”)., pursuant to which each such Holder would exchange (i) the amounts remaining outstanding under the PIPE Convertible Notes and certain other amounts outstanding with respect thereto in the aggregate amount (the “Note Exchange”), and (ii) the PIPE Warrants. Pursuant to the Exchange Agreements, on the effective date of the Exchange Agreements, which was April 22, 2025, the PIPE Warrants were exchanged, in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), into an aggregate of 1,885 shares of the Company’s newly created Series A preferred stock (the “Series A Preferred Stock”, and (ii) warrants to purchase up to 37,033 shares of Series A Preferred Stock (the “Series A Preferred Warrants”). As a result of the exchange of the PIPE Warrants on April 22, 2025, the derivative liability previously associated with the PIPE Warrants was fully extinguished, and no derivative liabilities existed as of or during the year ended December 31, 2025.

Pursuant to the Exchange Agreements, on the closing of the Note Exchange the amounts owing under the PIPE Convertible Notes were to be exchanged into share of the Company’s Series A Preferred Stock. From the date of the Exchange Agreements until the date of the Note Exchange, the conversion price of the PIPE Convertible Notes was reduced to $1.00 per share, which was then adjusted to $50.00 per share and then again to $500.00 per share as a result of the Reverse Stock Split. See Note 16 – Stockholders’ Equity (Deficit) for the impact on the Company’s equity instruments.

NOTE 11 –RELATED PARTY NOTES AND LOANS PAYABLE

Related party notes payable consisted of the following as of December 31:

Future maturities of related party notes and loan payables as of December 31, 2025:

ARJ Trust

In December 2008, the Company entered into a note payable with ARJ Trust, a trust that is indirectly controlled by the Company’s chief executive officer. The note had a principal amount of $500,000, an interest rate of 8.50% per annum, and an amended maturity date of September 30, 2025. The Company is required to make monthly interest-only payments of $3,541.

In June 2010, the Company entered into a second note payable with ARJ Trust. The note has a principal amount of $150,000, an interest rate of 8.50% per annum, and an amended maturity date of September 30, 2025. The Company is required to make monthly interest-only payments of $1,063.

On September 30, 2025, the maturity date of the notes was extended to September 30, 2026.

The Company made interest-only payments of $55,248 during the years ended December 31, 2025 and 2024, respectively. The principal balance of the notes was $650,000 at December 31, 2025 and 2024.

McKettrick

In May 2019, the Company entered into a $1,750,000, zero interest rate note payable with a former shareholder to repurchase all their owned shares in the Company. The note is payable in annual installments of $250,000 due on December 21 of each year. The note matures on December 1, 2027. If the annual installment is not paid within 10 days of the due date a late fee of 5% is charged. During the year ended December 31, 2025, the Company paid the December 2025 installment. During the year ended December 31, 2024, the Company paid the December 2024 and 2023 installments totaling $500,000 and $50,000 in a negotiated extension fee for the 2023 installment. During the year ended December 31, 2025, the Company paid the required installment of $250,000. The principal balance of the note payable was $500,000 and $800,000 at December 31, 2025 and 2024, respectively.

Carver

In January 2021, the Company entered into a $222,000, zero interest rate note payable with a former shareholder to repurchase all their owned shares in the Company. The note is payable in semi-annual installments of $18,500 due on March 31 and September 30 each year and matures on October 1, 2027. The Company made the required installments totaling $37,000 for the years ended December 31, 2025 and 2024. The principal balance of the note payable was $74,000 and $111,000 at December 31, 2025 and 2024, respectively.

Chris Jones

During the year ended December 31, 2024, the Company chief executive officer loaned the Company an aggregate of $2 million for operating expenses. The loaned amount has azero interest rate and no stated maturity date. The Company made no payments towards the loan during the year ended December 31, 2024. The Company made $400,000 in payments towards the loan during the year ended December 31, 2025. The principal balance of the loan payable was $1,600,000 and $2,000,000 at December 31, 2025 and 2024.

NOTE 12 –LINES OF CREDIT

JPMorgan Chase

In December 2023, the Company entered into a $2,000,000 variable rate line of credit with JPMorgan. The purpose of the new line of credit was to consolidate the balances outstanding on the note payable and the previous line of credit, which had matured. The line of credit matures on December 31, 2025. The line of credit has an annual interest rate of the Adjusted SOFR (Secured Overnight Financing Rate) Rate plus 3.50%.

On December 17, 2025, the maturity date of the line of credit was extended to December 31, 2026. Upon the maturity date extension the annual interest rate was increased to the Adjusted SOFR Rate plus 3.50%.

The line of credit is secured by a pledge of $2,100,000 in the Company’s deposit accounts (restricted cash) at JPMorgan. The outstanding principal balance on the line of credit was $802,738 at December 31, 2025 and 2024.

Morgan Stanley

During February 2023, the Company entered into a variable rate line of credit with Morgan Stanley which was secured by the marketable securities held in our brokerage account. The Company terminated the brokerage agreement during the year ended December 31, 2024, liquidated the vast majority of its investments and has $10,114 recorded in cash and cash equivalents on its balance sheet as of December 31, 2025 and 2024.

NOTE 13 –DIVIDEND NOTES PAYABLE

Prior to the Merger, TruGolf Nevada filed its tax returns as an S Corporation. Historically, all income tax liabilities and benefits of TruGolf Nevada are passed through to the shareholders annually through distributions. No dividends were declared during 2023 or 2022. During 2021, the Board of Directors declared $7,395,694 in dividends to the shareholders, payable in cash as the Company’s liquidity allows. During 2022, TruGolf Nevada paid the shareholders an aggregate amount of $1,965,706. In November 2022, each shareholder agreed to defer the accrued dividends payable by entering into 6.00% interest rate dividend notes payable. All outstanding and accrued interest is due and payable when the dividend notes payable mature on December 31, 2025. Interest commenced accruing on January 1, 2023.

On April 21, 2025, the Company entered into agreements with the shareholders owed approximately $3.9 million in outstanding dividends notes payable, pursuant to which each shareholder converted all of their outstanding amounts payable into (i)8,466 shares of the Company’s Class A common stock, with respect to approximately $1.3 million in principal and interest and (ii)16,566 shares of the Company’s Class B common stock with respect to approximately $2.6 million in principal and interest.

Dividends declared, distributed, and accrued are as follows as of December 31:

NOTE 14 –GROSS SALES ROYALTY PAYABLE

In June 2015, the Company entered into a Royalty Purchase Agreement (the “Royalty Agreement”) with a purchaser (“Purchaser”) pursuant to which the Purchaser paid $1,000,000 to acquire a perpetual gross sales royalty. The Royalty Agreement has no stated maturity date and bears no fixed interest rate. Monthly royalty payments are equal to the greater of $20,833 or a percentage of monthly revenues based on trailing twelve-month revenue levels, currently fixed at 2.4% of applicable revenues.

The Royalty Agreement contains a one-time buy down option, exercisable after the Purchaser has received aggregate payments equal to two times the original $1,000,000 purchase price. Upon exercise, the Company would pay $750,000 to extinguish 75% of all future obligations, reducing the ongoing royalty rate to 0.6%. the Royalty Agreement also provided that in connection with a change of control transaction, if required by the acquirer as a condition to closing, the Company must purchase and extinguish all amounts owing to the Purchaser at a price equal to the greater of two times the original purchase price or a formula based on the net equity value of the Company at the time of the transaction.

Because the gross sales royalty payable has no stated fixed interest rate or maturity date, it is classified as variable interest perpetual debt and the periodic variable payments are recorded as interest expense. The outstanding balance at December 31, 2025 and 2024, was $1,000,000. During the years ended December 31, 2025 and 2024, the Company incurred interest expense related to the variable payments of $663,014 and $545,268, respectively.

NOTE 15 –FAIR VALUE MEASUREMENTS

Fair value measurements discussed herein represent management’s best estimate of fair value as of and during the year ended December 31, 2025. Fair value represents the price that would be received to sell the investment in an orderly transaction in the principal market at the measurement date.

The Company holds investments in money market funds which are classified as cash and cash equivalents. The fair value of money market funds is based on quoted prices in active markets, specifically the published net asset value of which the funds transact. Due to the fair value being derived from observable and unadjusted quoted prices in active markets for identical assets, the measurement is classified within Level 1 of the fair value hierarchy.

The following tables present the Company’s assets measured at fair value on a recurring basis as of December 31, 2025:

There were no transfers between Level 1, Level 2, or Level 3 during the periods presented.

NOTE 16 –STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred Stock

The Company has authorized preferred stock of 10,000,000 shares with a par value of $0.0001.

Series A Convertible Preferred Stock

On April 22, 2025, in connection with the signing of the Exchange Agreements, see Note 10 – PIPE Convertible Notes, the Company designated 50,000 shares of the Company’s authorized and unissued preferred stock as Series A Convertible Preferred Stock (Series A Preferred).

Each share of Series A Preferred has a stated value of $1,000 per share. The Series A Preferred, with respect to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company, ranks senior to all capital stock of the Company. The holders of Series A Preferred will be entitled to 10% per annum dividends, payable in cash or shares of Class A common stock, provided that if the shares of Class A common stock are utilized to pay the dividends then the dividend rate will be recalculated to 15%. The Series A Preferred had a conversion rate of $6.31 per share and convert into Class A common stock. On each six-month anniversary of the initial issuance date of the Series A Preferred conversion price adjusted to the closing price of the Class A common stock on such date. On October 22, 2025, the conversion price was adjusted to $2.16 pursuant to such provisions. As a result of the 2026 Reverse Stock Split, the conversion price was adjusted to $21.60.

As of December 31, 2025 and December 31, 2024, there were 5,427 and 0 shares of Series A Preferred issued and outstanding.

Common Stock

Class A Common Stock

The Class A Common Stock has voting rights of 1 vote per share and votes as a single class together with the Class B Common Stock.

Class B Common Stock

The Class B Common stock has voting rights of 25 votes per share, and votes as a single class together with the Class A Common Stock.

Equity Transactions

Series A Convertible Preferred Stock

On April 22, 2025, in connection with the signing of the Exchange Agreements, see Note 10 – PIPE Convertible Notes, the Company issued an aggregate of 1,885 shares of Series A Convertible Preferred Stock with a fair value of $2,742 per share.

On July 21, 2025, in connection with the Exchange Agreements, the Company issued an aggregate of 3,938 shares of Series A Convertible Preferred Stock to PIPE Convertible Note holders for the exchange of PIPE Convertible Notes with an aggregate stated value of $3,938,311 (representing 100% of the remaining PIPE Convertible Notes).

On July 21, 2025, the Company issued 5,555 shares of Series A Convertible Preferred Stock for the exercise of Series A Preferred Warrants and cash proceeds of $5 million.

Class A Common Stock

During the year ended December 31, 2025, the Company issued an aggregate of 4,440 shares of Class A Common Stock with fair values ranging from $500.00 - $1,250.00 per share to PIPE Convertible Note holders for the conversion of an aggregate principal amount of $1,655,000 in PIPE Convertible Notes (See Note 10 – PIPE Convertible Notes).

During the year ended December 31, 2025, the Company issued an aggregate of 15,920 shares of Class A Common Stock with fair values ranging from $88.00 - $300.00 per share to PIPE Convertible Note holders in lieu of cash for interest and make good provisions (See Note 10 – PIPE Convertible Notes).

During the year ended December 31, 2025, the Company issued an aggregate of 8,466 shares of Class A Common Stock with a fair value of $165.00 per share to dividend note payable holders in lieu of cash dividends (See Note 13 - Dividend Notes Payable).

Class B Common Stock

During the year ended December 31, 2025, the Company issued an aggregate of 16,566 shares of Class B Common Stock with a fair value of $330.00 per share to dividend note payable holders in lieu of cash dividends (See Note 13 – Dividend Notes Payable).

Warrant and Option Valuation

The Company has computed the fair value of warrants and options granted using the Black-Scholes option pricing model. The expected term for warrants and options issued to non-employees is the contractual life and the expected term used for options issued to employees and directors is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

Warrant Offerings

Series A Preferred Warrants

During the year ended December 31, 2025, in connection with the signing of the Exchange Agreements, see Note 10 – PIPE Convertible Notes, PIPE Warrant holders exchanged their outstanding 2,818 Series A Warrants and 3,100 Series B Warrants for Series A Preferred Warrants to purchase 37,033 shares of Series A Preferred Stock. The Series A Preferred Warrants were immediately vested, have an exercise price of $900, and had a grant date fair value of $482,701.

In applying the Black-Scholes option pricing model to the Series A Preferred Warrants, the Company used the following assumptions:

A summary of the Series A Warrant Activity during the year ended December 31, 2025, is presented below:

Series A Warrants and Series B Warrants

During the year ended December 31, 2024, the Company issued 2 separate series of warrants as part of the PIPE Convertible Notes (see Note 10 – PIPE Convertible Notes); Series A Warrants and Series B Warrants.

In applying the Black-Scholes option pricing model to Series A Warrants granted or issued, the Company used the following assumptions:

On February 2, 2024, the Company issued five-year immediately vested warrants to purchase an aggregate of 2,818 shares of the Company’s Class A Common Stock in association with the issuance of the PIPE Convertible Notes (the “Series A Warrants”). The Series A Warrants have an exercise price of $6,500.00 per share. The Series A Warrants had an aggregate grant date fair value of $126,819. The Series A Warrants met the definition of a liability per ASC 815 – Derivatives and Hedging. During the year ended December 31, 2024, the Company recorded a gain on fair value adjustment of the derivative liability related to the Series A Warrants of $126,819 on the consolidated statements of operations. As part of the Series A Preferred Warrants issuance above the Series A Warrants and the associated derivative liability were derecognized.

The weighted average estimated fair value of the Series A Warrants granted during the year ended December 31, 2024, was approximately $0.09 per share.

In applying the Black-Scholes option pricing model to Series B Warrants granted or issued, the Company used the following assumptions:

On February 2, 2024, the Company issued two-and-a-half-year immediately vested warrants to purchase an aggregate of 3,100 shares of the Company’s Class A Common Stock in association with the issuance of the PIPE Convertible Notes (the “Series B Warrants”). The Series B Warrants have an exercise price of $5,000.00 per share. The Series B Warrants had an aggregate grant date fair value of $15,500. During the year ended December 31, 2024, the Company recorded a gain on fair value adjustment of the derivative liability related to the Series B Warrants of $15,500 on the consolidated statements of operations. As part of the Series A Preferred Warrants issuance above the Series B Warrants and the associated derivative liability were derecognized.

The weighted average estimated fair value of the Series A Warrants granted during the year ended December 31, 2024, was approximately $0.01 per share.

A summary of the warrant activity during the year ended December 31, 2025, is presented below:

NOTE 17 –STOCK-BASED COMPENSATION

2024 Stock Incentive Plan

On October 24, 2024, the Company filed a Form S-8 to register 3,200 shares of the Company’s Class A Common Stock to participants in the TruGolf Holdings, Inc. 2024 Stock Incentive Plan (the “2024 Plan”). Awards to be made under the 2024 Plan consist of covering up to the sum of (i)3,200 shares; and (ii) an annual increase commencing on January 1, 2025 and continuing annually on each anniversary thereof through (and including) January 1, 2035, equal to the lesser of (A) 5% of the shares of Company Common Stock outstanding on a fully diluted basis on the last day of the immediately preceding fiscal year and (B) such smaller number of shares as determined by the Board or the Committee (the “Overall Share Limit”). Shares issued or delivered under the 2024 Plan may consist of authorized but unissued shares of common stock, shares purchased on the open market or treasury shares.

No stock options were granted by the Company during the year ended December 31, 2025.

On October 11, 2024, the Company granted options to purchase an aggregate of 2,262 shares of Class A Common Stock at an exercise price of $465.00 per share and a fair value of $538,323. Vesting terms of these options are as follows: (i) 2,152 options vest upon issuance and (ii) 110 options vest 50% upon issuance and 50% on the one-year anniversary of the grant date. The options were valued using the Black-Scholes option pricing model under the following assumptions as found in the table below.

The weighted average grant date fair value of the options granted and vested during the year ended December 31, 2024, was $538,323 and $524,960, respectively. The weighted average non-vested grant date fair value of non-vested options was $0 and $13,368 at December 31, 2025 and 2024.

The following table summarizes information about options to purchase shares of the Company’s Class A Common Stock outstanding and exercisable at December 31, 2025:

In applying the Black-Scholes option pricing model to stock options granted, the Company used the following assumptions:

Stock-Based Compensation Expense

The following table presents information related to stock-based compensation expense:

NOTE 18 –LEASES

The Company is party to two leases: (i) office space in Centerville, Utah (the “Centerville Lease”) and (ii) a warehouse in North Salt Lake City, Utah (the “SLC Lease”). The Centerville lease is scheduled to expire in May 2028 and the SLC Lease is scheduled to expire in November 2026.

The Company has operating leases for its corporate headquarters and warehouse. The Company determines if an arrangement contains a lease at inception based on the ability to control a physically distinct asset. Operating lease right-of-use assets are recorded in the consolidated balance sheets on the initial measurement of the lease liability as adjusted to include prepaid rent and initial direct costs less any lease incentives received. Lease liabilities are measured at the commencement date based on the present value of the lease payments over the lease term. The Company separately accounts for lease and non-lease components within lease agreements. The Company uses its incremental borrowing rate to present value the lease liability as key inputs to determine the interest rate implicit in the lease are not shared by lessors.

Operating lease expense is recorded on a straight-line basis over the lease term. Right-of-use assets and lease liabilities for short-term leases are not recognized in the consolidated balance sheets. Payments for short-term leases are recognized in the consolidated statements of operations on a straight-line basis over the lease term.

When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated incremental borrowing rate at lease inception point. The weighted average incremental borrowing rate applied was 6.60%. As of December 31, 2025, the Company’s leases had a remaining weighted average term of 1.54 years.

The following table presents net lease cost and other supplemental lease information:

Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the year ended December 31, 2025, are as follows:

Lease Modification

During the year ended December 31, 2025, the Company entered into a lease extension agreement related to its office facility located in Centerville City, Utah. The amendment extended the lease term through November 30, 2026. The extension provides for monthly base rent of approximately $35,696, beginning December 1, 2025. The Company also remains responsible for its proportionate share of certain operating costs of the building, including common area maintenance, property taxes, and insurance, which are treated as variable lease payments and are recognized as expense in the period in which the obligation for those payments is incurred.

The lease extension was accounted for as a modification of the existing lease under ASC 842. Upon execution of the amendment, the Company remeasured the lease liability using the incremental borrowing rate at the modification date and recognized a corresponding adjustment to the right-of-use asset.

As a result of the modification, the Company recorded an increase to both the operating lease right-of-use asset and the operating lease liability of approximately $421,334, representing the present value of the additional lease payments associated with the extension.

NOTE 19 –SEGMENT INFORMATION

The Company currently operates asone business segment, which is also the sole reportable segment, focusing on the manufacturing and sales of indoor golf simulators. The Company’s business offerings have similar economic and other characteristics, including the nature of products, manufacturing, types of customers, and distribution methods. The determination of a single business segment is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (“CODM”). The Company’s CODM is its Principal Executive and Financial Officer and Director, who reviews and evaluates consolidated profit and loss and total assets for the purpose of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods.

In addition to the significant expense categories included within net loss presented on the Company’s Consolidated Statements of Operations, see below for disaggregated amounts that comprise consulting, contract labor, personnel, business development, royalty, and marketing expenses:

NOTE 20 –COMMITMENTS AND CONTINGENCIES

Legal Claims

There are 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 of the Company, any owner of record or beneficially of more than 5% of any class of its voting securities, or security holder is a party adverse to the Company, or has a material interest adverse to the Company.

NOTE 21 –INCOME TAXES

The Company adopted ASU 2023-09 on January 1, 2025, on a prospective basis. Accordingly, the enhanced income tax disclosures required under the new standard are presented only for the year ended December 31, 2025. Prior period amounts have not been recast and are therefore not comparable.

Components of Income Tax Expense (Benefit)

The components of income tax expense (benefit) from continuing operations for the years ended December 31, 2025 and 2024, are as follows:

The Company recorded no current or deferred income tax expense for the years ended December 31, 2025 and 2024, primarily due to losses and a full valuation allowance on deferred tax assets.

Enhanced Disclosures (ASU 2023-09 – 2025)

Effective Tax Rate Reconciliation (2025)

The following is a reconciliation of the statutory federal income tax rate applied to pre-tax net loss compared to the income taxes in the statement of operations for the year ended December 31, 2025.

In accordance with ASU 2023-09, reconciling items greater than 5% of the statutory tax rate are presented separately. Amounts below this threshold are aggregated within “Other.” The 2025 reconciliation below is not presented on a comparable basis with prior periods due to the adoption of ASU 2023-09.

Income Taxes Paid (Disaggregated) – 2025

Legacy Disclosures (ASC 740 – 2024)

The following is a reconciliation of the statutory federal income tax rate applied to pre-tax net loss compared to the income taxes in the statement of operations as of December 31, 2024.

Deferred Income Taxes

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table sets forth deferred income tax assets and liabilities as of the date shown:

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future rewrite taxable income during the periods in which the net operating losses and temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and projections for future taxable income over periods in which the deferred tax assets are deductible. Management believes it is more likely than not that the Company will not realize the benefits of these deductible differences. A valuation allowance has been applied to the amount of deferred tax assets management expects will be unrealized.

The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. As of January 1, 2025, the Company had no unrecognized tax benefits and no charge during 2025, and accordingly, the Company did not recognize any interest or penalties during 2025 related to unrecognized tax benefits. There is no accrual for uncertain tax positions as of December 31, 2025.

The Company has federal net operating loss carryforwards of $15,258,608 and $6,580,951 as of December 31, 2025 and 2024, respectively. $15,258,608 of the federal net operating loss has an indefinite carry forward period. The Company has State net operating loss carryforwards totaling $15,530,991 and $6,853,334 at December 31, 2025 and 2024. The Company has various state net operating loss carryforwards. The determination of the state net operating loss carryforwards is dependent upon apportionment percentages and state laws that can change from year to year and impact the amount of such carryforwards. If such net operating loss carryforwards are not utilized, they will begin to expire in 2031.

The following table sets for the tax years subject to examination for the major jurisdictions where the Company conducted business in the prior years and as of December 31, 2025.

Federal and state laws impose substantial restrictions on the utilization of NOL carryforwards in the event of an ownership change for income tax purposes, as defined in Section 382 of the Internal Revenue Code (“IRC”). Pursuant to IRC Section 382, annual use of the Company’s NOL carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. The Company has not completed an IRC Section 382 analysis regarding the limitation of NOL carryforwards.

However, it is possible that past ownership changes will result in the inability to utilize a significant portion of the Company’s NOL carryforward that was generated prior to any change of control. The Company’s ability to use its remaining NOL carryforwards may be further limited if the Company experiences an IRC Section 382 ownership change in connection with future changes in the Company’s stock ownership.

The Tax Cuts and Jobs Act (“TCJA”) requires taxpayers to capitalize and amortize research and experimental expenditures under IRC Section 174 for tax years beginning after December 31, 2021. This rule became effective for the Company during the year ended December 31, 2022 and resulted in the capitalization of research and development costs of $3,231,490 and $2,745,033 during the years ended December 31, 2025 and 2024, respectively. Before the TCJA, businesses have had the option of deducting Section 174 expenses in the year incurred or capitalizing and amortizing the costs over five years. The Company will amortize these costs for tax purposes over five years if the research and development was performed in the U.S. and over 15 years if research and development was performed outside the U.S.

NOTE 22 –CONCENTRATIONS

Accounts Receivable

At December 31, 2025, one customer accounted for approximately 23% of outstanding accounts receivable.

At December 31, 2024, there wereno customer concentrations in accounts receivable.

Purchasing

During the year ended December 31, 2025, two manufacturers accounted for approximately 22% of our purchases.

During the year ended December 31, 2024, six manufacturers accounted for approximately 50% of our purchases.

NOTE 23 –SUBSEQUENT EVENTS

Corporate Redomestication

On March 10, 2026, the Company completed its redomestication from a Delaware corporation to a Nevada corporation (the “Redomestication”) by filing a certificate of conversion with the Secretary of State of the State of Delaware and articles of conversion with the Nevada Secretary of State. The Redomestication was approved by the Company’s stockholders at the annual meeting held on February 17, 2026.

In connection with the Redomestication, the Company adopted new articles of incorporation and bylaws governed by the laws of the State of Nevada. At the effective time of the Redomestication, each outstanding share of Class A Common Stock, Class B Common Stock, and Series A Preferred Stock of the Delaware corporation was automatically converted into one corresponding share of the Nevada corporation, with no change in par value. Stockholders are not required to exchange their existing stock certificates.

The Redomestication did not result in any change to the Company’s business, management, properties, employees, assets, liabilities, or net worth, other than costs incurred in connection with the Redomestication, and did not adversely affect the Company’s existing material contracts.

Stock Repurchase

Subsequent to December 31, 2025, the Company repurchased 67,240 shares of its Class A common stock in two separate transactions for an aggregate purchase price of $532,275, including all fees and commissions, pursuant to the Company’s share repurchase program, under which the Board of Directors has authorized the repurchase of up to $2,000,000 of the Company’s common stock. As of the date of this filing, approximately $1.67 million remains available for future repurchases under the program.

Reverse Stock Split

On March 25, 2026, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of the State of Delaware to effect a 1-for-10 reverse stock split of the Class A shares of the Company’s issued and outstanding common stock, effective as of 12:01 a.m. Eastern Time on March 27, 2026 and began trading on a Reverse Stock Split-adjusted basis on Nasdaq on March 27, 2026.