TruGolf Holdings, Inc.

NOTE 1 –NATURE OF THE ORGANIZATION AND BUSINESS

Organization and Business

TruGolf Holdings, Inc. (including its subsidiaries, “TruGolf”, “the Company,” “we,” “us,” or “our”) designs, develops, manufactures, and sells golf simulators and related software for residential and commercial applications.

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.

On March 10, 2026, the Company completed its redomestication from Delaware to Nevada (the “Redomestication”). In connection with the Redomestication, the Company adopted new articles of incorporation and bylaws governed by Nevada law. At the effective time of the Redomestication, each outstanding share of the Company’s common stock and preferred stock converted into an equivalent corresponding share of the Nevada corporation, with no change in par value.

Reverse Stock Split

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 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 shares to 1,000,000 shares. 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.

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies of ours are described in Note 2 to the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. The following policies are either new to the Company or have been updated to reflect changes in the current period.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of TruGolf have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with Article 8 of Regulation S-X and the related rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). These interim unaudited condensed financial statements should be read in conjunction with those audited financial statements included in the Form 10-K, as filed with the SEC on April 15, 2026 (“Form 10-K”). In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, consisting of normal recurring accruals, have been made. Operating results for the three and six months ended June 30, 2026, are not necessarily indicative of the results that may be expected for the entire year.

Reclassifications

Certain reclassifications within the balance sheets and statements of operations have been made to the prior period’s financial statements to conform to the current period financial statement presentation. There is no impact in total on the results of operations and cash flows in all periods presented.

Recently Issued Accounting Pronouncements Not Yet Adopted

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 –NET LOSS PER SHARE

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is the same as basic net loss per share for the periods presented because all potentially dilutive securities were anti-dilutive.

Potentially dilutive securities excluded from the computation of diluted net loss per share consisted of the following:

NOTE 4 –CAPITALIZED SOFTWARE

Capitalized software development costs consist primarily of costs incurred to develop and enhance of the Company’s proprietary software platform E6 GOLF® software platform. Software development costs are capitalized when the capitalization criteria are met and are amortized using the straight-line method over their estimated useful lives beginning when the related software is placed into service.

The components of capitalized software development costs were as follows:

Amortization expense related to capitalized software development costs was $286,513 and $755,726 for the three and six months ended June 30, 2026, respectively, compared with $332,758 and $433,058 for the three and six months ended June 30, 2025, respectively.

NOTE 5–RELATED PARTY TRANSACTIONS

Related party notes payable consisted of the following:

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, 2026. 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, 2026. The Company is required to make monthly interest-only payments of $1,063.

The Company made interest-only payments of $13,812 during the six months ended June 30, 2026 and 2025, respectively. The principal balance of the notes was $650,000 at June 30, 2026 and December 31, 2025.

Chief Executive Officer

During the year ended December 31, 2024, the Company’s Chief Executive Officer loaned the Company an aggregate of $2.0 million to fund operating expenses. The loan bears no interest and has no stated maturity date. During the six months ended June 30, 2026, the Company repaid an additional $150,000 of principal. The outstanding principal balance of the loan was $1,450,000 as of June 30, 2026, compared to the $1,600,000 as of December 31, 2025.

NOTE 6 –STOCKHOLDERS’ EQUITY

Series A Convertible Preferred Stock

On April 22, 2025, in connection with the execution of certain exchange agreements, the Company designated 50,000 shares of authorized and unissued preferred stock as Series A Convertible Preferred Stock. Upon completion of the Redomestication, these shares were converted into Series A Convertible Preferred Stock of the redomesticated entity on substantially the same terms (“Series A Preferred”).

Each share of Series A Preferred has an initial stated value of $1,000 per share, subject to adjustment pursuant to the Company’s Articles of Incorporation for stock splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations, subdivisions and similar events. The Series A Preferred ranks senior to the Company’s Class A common stock with respect to dividends, distributions, and upon liquidation, dissolution, and winding up.

The Series A Preferred accrues cash dividends at a rate of 10% per annum. Dividends may be paid in cash, shares of the Company’s Class A common stock at a rate of 15% per annum, through increases to the stated value of the Series A Preferred (“Capitalized Dividends”), or in a combination thereof, subject to the terms of the Articles of Incorporation. The conversion amount of the Series A Preferred may also include certain additional amounts, make-whole amounts and other amounts payable pursuant to the Articles of Incorporation. The increase in the gross stated value of the Series A Preferred primarily relates to capitalized dividends and other adjustments pursuant to the Articles of Incorporation.

The conversion price of the Series A Preferred is subject to periodic reset provisions based on the market price of the Company’s Class A common stock. The Series A Preferred also contains anti-dilution and stock combination event adjustment provisions, including adjustments based on an “Event Market Price,” as defined in the Articles of Incorporation, which may affect the conversion price and the number of shares issuable upon conversion. In connection with the Company’s 2026 reverse stock split, the conversion price was proportionately adjusted to $21.60 per share. On April 22, 2026, the conversion price was adjusted to $2.76 per share pursuant to the reset provisions.

Upon the voluntary conversion by the holders of the Series A Preferred, in addition to the issuance of Class A common stock issuable upon conversion of the stated value of the Series A Preferred, the Company shall issue to the holders of Class A common stock all dividends that would otherwise have accrued on such Series A Preferred if such share were held until the five-year anniversary of issuance (the “Make-Whole Amount”). The Make-Whole Amount is convertible into Class A common stock at the “Alternate Conversion Price” which is equal to the lesser of (i) the conversion price, and (ii) 90% of the lowest volume weighted average price (“VWAP”) of the Class A common stock during the five consecutive trading days immediately prior to such conversion (subject to the Floor Price of $35.00 (the “Floor Price”)) (the “Alternate Conversion Price”). If at the time of a conversion the Alternate Conversion Price is determined to be the Floor Price because such Floor Price is greater than 90% of the then five-day VWAP of a share of Class A common stock, then the Conversion Amount, is automatically increased pro rata, by the applicable Alternate Conversion Floor Amount. The “Conversion Amount” means, on any date, the sum of (1) the stated value plus (2) any declared and unpaid dividends on the Series A Preferred plus (3) the Make-Whole Amount, if any, plus (4) any other amounts owed to such holder. The “Alternate Conversion Floor Amount” means an amount equal to the product obtained by multiplying (A) the higher of (I) the highest price that the Class A common stock trades at on the trading day immediately preceding the relevant date and (II) the applicable Alternate Conversion Price and (B) the difference obtained by subtracting (I) the number of shares of Class A common stock delivered to such holder from (II) the quotient obtained by dividing (x) the applicable Conversion Amount, by (y) the applicable Alternate Conversion Price without giving effect to the Floor Price.

Conversion of Series A Preferred Stock

During the three months ended June 30, 2026, the Company issued an aggregate of 928,528 shares of Class A common stock upon conversion of 1,331 shares of Series A Preferred. During the six months ended June 30, 2026, the Company issued an aggregate of 1,058,144 shares of Class A common stock upon conversion of 2,680 shares of Series A preferred. The shares issued had fair values ranging from $8.08 to $21.60 per share.

During the six months ended June 30, 2026, the Company issued an aggregate of 97,212 shares of Class A common stock to holders of Series A Preferred in satisfaction of accrued dividends in lieu of cash. No such shares were issued during the three months ended June 30, 2026.

The Company also reversed the conversion of 62 shares of Series A Preferred that had previously been reflected as converted as of December 31, 2025. The related issuance of 8,721 shares of Class A common stock was subsequently cancelled because the shares were not issued or delivered to the holders. Accordingly, the Company reinstated the related preferred stock balances and reversed the previously recorded conversion entries, resulting primarily in reductions to Class A common stock and additional paid-in capital, with a corresponding adjustment to accumulated deficit related to amounts previously recognized under the make-whole provisions.

The Company evaluated the impact of the cancelled conversions on its previously issued financial statements, including earnings per share, and concluded that the effect was not material.

NOTE 7 –REVENUE FROM CONTRACTS WITH CUSTOMERS

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 three and six months ended June 30, 2026 and 2025, are disaggregated as follows:

NOTE 8 –SEGMENT INFORMATION

The Company currently operates as one business segment, which is also its sole reportable segment, focusing on the manufacturing and sale of indoor golf simulators. The Company’s business activities have similar economic and other characteristics, including the nature of its products, manufacturing processes, 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 makers (“CODMs”). The Company’s CODMs consist of its Principal Executive Officer, Director, and Principal Financial Officer, who collectively review and evaluate 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.

NOTE 9 –COMMITMENTS AND CONTINGENCIES

From time to time, the Company may become involved in claims and legal proceedings arising in the ordinary course of business*.* Management is not currently aware of any matters that are expected to have material adverse effect on the Company’s financial position, results of operations, or cash flows.

NOTE 10 –SUBSEQUENT EVENT

Subsequent to June 30, 2026, the Company repaid an additional $6,000 of principal on the loan from its Chief Executive Officer. Following this payment, the outstanding principal balance of the loan was $1,444,000.

Issuance of Common Stock

Subsequent to June 30, 2026, the Company issued an aggregate of 254,619 shares of Class A common stock with fair values ranging from $2.76 to $21.60 per share for the conversion of 115 shares Series A Preferred Convertible Stock.

Legal Proceedings

On July 24, 2026, a putative class action and shareholder derivative complaintcaptioned Parker LaChance, individually and on behalf of all others similarly situated, and derivatively on behalf of TruGolf Holdings, Inc. v. TruGolf Holdings, Inc.; Christopher Jones; B. Shaun Limbers; Humphrey P. Polanen; Riley Russell; AJ Redmer; Haynie & Company; SandTrap Opportunities LLC; ATW Opportunities Master Fund II, L.P.; ATW Partners Opportunities Management, LLC; Kerry Propper; and Antonio Ruiz-Giménezwas filed against the Company and certain of its current and former officers and directors, Haynie & Company, and certain investor entities and individuals in the United States District Court for the District of Utah, Case No. 2:26-cv-00695. The plaintiff, Parker LaChance, purports to bring the action individually and on behalf of a putative class of persons who purchased or otherwise acquired the Company’s Class A common stock between September 10, 2025 and May 20, 2026, and derivatively on behalf of the Company.

The complaint alleges, among other things, that the Company’s registration statements, proxy statements, and periodic reports contained material misstatements and omissions arising from certain financing transactions. The complaint purports to assert claims for violation of Sections 11 and 15 of the Securities Act of 1933 against the Company, certain current and former officers and directors, and Haynie & Company; violation of Section 14(a) of the Securities Exchange Act of 1934 and Rule 14a-9 thereunder against the Company and certain officers and directors in connection with proxy solicitations; violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Section 20(a) of the Exchange Act, against the Company and its Chief Executive Officer; and, derivatively, claims for breach of fiduciary duty against certain officers and directors, aiding and abetting breach of fiduciary duty against certain investor defendants, and unjust enrichment in the alternative.

The complaint seeks, among other relief, class certification, compensatory damages in an amount to be determined at trial together with prejudgment interest, rescission or a rescissory measure of damages under the Securities Act claims to the extent available, damages to the Company (including disgorgement of profits and other benefits) on the derivative claims, corporate governance reforms, an award of costs and attorneys’ fees, and a jury trial.

The Company believes it has meritorious defenses to the allegations and intends to defend the action vigorously. At this stage of the proceeding, the Company is unable to predict the outcome of this matter or estimate a range of reasonably possible loss, if any, and no amounts have been accrued in connection with this matter as of the date of this filing.