TruGolf Holdings, Inc.

Previous wording

This Quarterly Report on Form 10-Q for the three months ended March 31, 2026 (“Form 10-Q”) contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). All statements other than statements of historical facts contained in this Form 10-Q, including statements regarding the financial position, business strategy and the plans and objectives of management for our future operations, are forward-looking statements. These forward-looking statements are based on the beliefs of management, as well as assumptions made by and information currently available to us. When used in this Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” “forecasts,” “may,” “will,” “should,” “seek,” “scheduled,” “intend,” “plan,” and “expect” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements.

Current wording

This Quarterly Report on Form 10-Q for the three and six months ended June 30, 2026 (“Form 10-Q”) contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). All statements other than statements of historical facts contained in this Form 10-Q, including statements regarding the financial position, business strategy and the plans and objectives of management for our future operations, are forward-looking statements. These forward-looking statements are based on the beliefs of management, as well as assumptions made by and information currently available to us. When used in this Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” “forecasts,” “may,” “will,” “should,” “seek,” “scheduled,” “intend,” “plan,” and “expect” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements.

Previous wording

On March 27, 2026, the Company completed a 1-for-10 reverse stock split of the Class A common stock and Class B common stock of the Company’s issued and outstanding common stock, effective as of 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 stock outstanding as of December 31, 2025, was reduced from 5,355,626 to approximately 535,563 and the number of Class B common stock outstanding was reduced from 199,999 to 19,999, and the number of authorized shares of common stock was reduced from 1,000,000,000 shares to 100,000,000 shares. All share amounts have been retroactively adjusted for the Reverse Stock Split.

Current wording

On March 27, 2026, the Company completed a 1-for-10 reverse stock split of the Class A common stock and Class B common stock of the Company’s issued and outstanding common stock, effective as of 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 stock outstanding as of December 31, 2025, was reduced from 5,355,626 to approximately 535,563 and the number of Class B common stock outstanding was reduced from 199,999 to 19,999, and the number of authorized shares of Class A common stock was reduced from 1,000,000,000 shares to 100,000,000 shares, and the number of authorized shares of Class B common stock was reduced from 10,000,000 to 1,000,000. All share amounts have been retroactively adjusted for the Reverse Stock Split.

Previous wording

Cost of revenues increased by $537,152, or 29.8%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was partially attributable to (i) the allocation of salaries and wages of warehouse employees of $229,649, during the three months ended March 31, 2026, compared to its absence during the prior year period and (ii) the increase in shipping costs of $165,199 during the three months ended March 31, 2026 as compared to the prior year period.

Current wording

Cost of revenue decreased by $211,372, or 8.3% for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The decrease was partially attributable to (i) the allocation of salaries and wages of warehouse employees of $330,204 during the three months ended June 30, 2026, compared to its absence during the prior year period, (ii) the increase in shipping costs of $192,590 during the three months ended June 30, 2026 as compared to the prior year period, (iii) inventory adjustments decreased by $328,276, reflecting reduced inventory write-downs and other inventory-related adjustments, and (iv) other product cost variances decreased by $405,890 as compared to the prior year period.

Previous wording

Other income (expenses) decreased by $1,283,383, or 89.4%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The decrease was primarily attributable to the elimination of interest obligations associated with the PIPE Convertible Notes following their exchange for Series A Preferred Stock in July 2025 as well as the settlement of the dividend notes payable in April 2025.

Current wording

Other expenses, net decreased by $1,225,642, or 84.4%, for the three months ended June 30, 2026, compared with the three months ended June 30, 2025. The decrease was primarily attributable to the elimination of interest expense associated with the PIPE convertible notes following their exchange for Series A Preferred Stock in July 2025 as well as the settlement of the dividend notes payable in April 2025.

Previous wording

Salaries, Wages and Benefits: Salaries, wages and benefits decreased by $1,153,405, or 59.2%, to $793,411 for the three months ended March 31, 2026, compared to $1,946,816 for the prior year period. The decrease reflects a significant increase in the portion of employee compensation capitalized as software development costs during the period. During the three months ended March 31, 2026, the Company capitalized $1,066,064 in software development costs associated with employee compensation, compared to $270,531 during the prior year period.

Current wording

Salaries, wages and benefits decreased by $919,050, or 31.1%, to $2,033,976 for the six months ended June 30, 2026, compared to $2,953,026 for the six months ended June 30, 2025. The decrease was primarily attributable to a lower amount of employee compensation being capitalized as software development costs during the current-year period. The Company capitalized $1,999,668 of employee compensation as software development costs during the six months ended June 30, 2026, compared to $1,568,778 during the corresponding prior year period.

Previous wording

As of March 31, 2026, we had cash on hand of $10,936,670 and a working capital deficit of $1,282,452, as compared to cash on hand of $12,569,263 and a working capital surplus of $1,076,496 as of December 31, 2025. The decrease in working capital is primarily attributable to a decrease in cash on hand of $1,632,593, an increase of accounts receivable, net of $254,128, an increase in inventory of $497,411 which was partially offset by an increase in accounts payable of $419,485 and an increase in deferred revenue of $1,050,144.

Current wording

As of June 30, 2026, we had cash on hand of $8,474,349 and a working capital deficit of $2,345,394 as compared to cash on hand of $12,569,263 and a working capital surplus of $1,076,496 as of December 31, 2025. The decrease in working capital is primarily attributable to a decrease in cash on hand of $4,094,910, an increase of accounts receivable, net of $204,304, an increase in inventory of $528,059, and an increase in prepaid expenses of $72,704, which was partially offset by an increase in accounts payable of $481,822, an increase in other current liabilities of $129,704 and a decrease in deferred revenue of $379,836 and a decrease of $150,000 in note payable to related parties.

Previous wording

The Company’s operating activities consume the majority of its cash resources. The Company anticipates that it will continue to incur operating losses as it executes its development plans for 2026, as well as other potential strategic and business development initiatives. In addition, the Company has had and expects to have negative cash flows from operations, at least into the near future. The Company has previously funded, and plans to continue funding, these losses with the sale of equity and convertible notes. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Current wording

The Company’s operating activities consume the majority of its cash resources. The Company anticipates that it will continue to incur operating losses as it executes its development plans for 2026, as well as other potential strategic and business development initiatives. In addition, the Company has had and expects to have negative cash flows from operations, at least into the near future. The Company has previously funded, and plans to continue funding, these losses primarily with the sale of equity and convertible notes, although no assurances can be given that such financing will be available on acceptable terms or at all. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Previous wording

During the three months ended March 31, 2026, our net cash used in investing activities was $1,144,302 as compared to net cash used in investing activities of $334,690 during the three months ended March 31, 2025. The increase in cash used in investing activities was primarily due to an increase in capitalized costs for software development.

Current wording

During the six months ended June 30, 2026, our net cash used in investing activities was $2,175,802 as compared to net cash used in investing activities of $1,614,744 during the six months ended June 30, 2025. The increase in cash used in investing activities was primarily due to an increase in capitalized costs for software development.

Previous wording

During the three months ended March 31, 2026, our net cash used in financing activities was $366,095 as compared to net cash provided by of $2,517,552 during the three months ended March 31, 2025. The decrease in cash provided by financing activities was primarily due to $2,520,000 in cash proceeds from the Convertible PIPE Notes in 2025.

Current wording

During the six months ended June 30, 2026, our net cash used in financing activities was $518,726 compared to net cash provided of $2,246,572 during the six months ended June 30, 2025. The decrease in cash provided by financing activities was primarily due to repurchase of treasury stock and cash payment of $150,000 for repayment of notes payable to a related party during the six months ended June 30, 2026, compared to $268,500 of such payments during the six months ended June 30, 2025, as well as $2,520,000 in cash proceeds from the convertible PIPE notes in 2025.

Previous wording

The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets, liabilities, revenues, and expenses. The following estimates involve the highest degree of judgment and uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. These descriptions should be read in conjunction with Note 2 — Summary of Significant Accounting Policies, which describes the underlying accounting policies.

Current wording

The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets, liabilities, revenues, and expenses. The following estimates involve the highest degree of judgment and uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. The descriptions should be read in conjunction with Note 2 – Summary of Significant Accounting Policies, which describes the underlying accounting policies.

Previous wording

We estimate our allowance for current expected credit losses on accounts receivable using a rate loss model that considers customer payment history, aging, current economic conditions, and management’s judgment regarding ultimate collectability. As of March 31, 2026, we recorded an allowance of $1,611,930 against gross accounts receivable of $2,926,767, representing a reserve rate of 55.1%. The reserve rate reflects the concentration of our receivables among a limited number of commercial customers and the extended payment terms common in our industry.

Current wording

We estimate our allowance for current expected credit losses on accounts receivable using a rate loss model that considers customer payment history, aging, current economic conditions, and management’s judgment regarding ultimate collectability. As of June 30, 2026, we recorded an allowance of $1,372,500 against gross accounts receivable of $2,637,513, representing a reserve rate of 52.0%. The reserve rate reflects the concentration of our receivables among a limited number of commercial customers and the extended payment terms common in our industry.

Previous wording

This estimate is inherently uncertain because it requires management to predict future customer behavior based on historical patterns that may not be indicative of future collections. A 10% increase or decrease in our reserve rate would change the allowance by approximately $293,000, with a corresponding impact on net income. Given the concentration of our receivable balance, the financial condition of a single significant customer could have a disproportionate effect on this estimate.

Current wording

This estimate is inherently uncertain because it requires management to predict future customer behavior based on historical patterns that may not be indicative of future collections. A 10% increase or decrease in our reserve rate would change the allowance by approximately $264,000, with a corresponding impact on net income. Given the concentration of our receivable balance, the financial condition of a single significant customer could have a disproportionate effect on this estimate.

Previous wording

We capitalize software development costs once technological feasibility is established and cease capitalization when the product is available for general release. As of March 31, 2026, capitalized software development costs, net of accumulated amortization, were $4,230,512, and amortization expense was $469,213 for the three months ended March 31, 2026, compared to $100,000 for the three months ended March 31, 2025.

Current wording

We capitalize software development costs once technological feasibility is established and cease capitalization when the product is available for general release. As of June 30, 2026, capitalized software development costs, net of accumulated amortization, were $4,877,603, and amortization expense was $755,726 for the six months ended June 30, 2026, compared to $433,058 for the six months ended June 30, 2025.

Previous wording

Two estimates embedded in this balance involve significant judgment. First, the determination of when technological feasibility is achieved affects the amount of costs eligible for capitalization versus those that must be expensed as incurred. An earlier or later feasibility determination could materially change the amount capitalized in any given period. Second, we amortize capitalized software costs over an estimated useful life of three years. If the actual useful life of our software products proves shorter than three years due to technological change or loss of market relevance, we would be required to accelerate amortization or record an impairment charge. Conversely, if useful lives are longer than estimated, our amortization expense may be overstated. Given the $4,230,512 net balance subject to this estimate, a change in the estimated useful life from three years to two years would increase annual amortization expense by approximately $702,000, which would be material to our results of operations.

Current wording

Two estimates embedded in this balance involve significant judgment. First, the determination of when technological feasibility is achieved affects the amount of costs eligible for capitalization versus those that must be expensed as incurred. An earlier or later feasibility determination could materially change the amount capitalized in any given period. Second, we amortize capitalized software costs over an estimated useful life of three years. If the actual useful life of our software products proves shorter than three years due to technological change or loss of market relevance, we would be required to accelerate amortization or record an impairment charge. Conversely, if useful lives are longer than estimated, our amortization expense may be overstated. Given the $4,877,603 net balance subject to this estimate, a change in the estimated useful life from three years to two years would increase annual amortization expense by approximately $813,000, which would be material to our results of operations.