What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-20 compared with 2025-11-14 · 177 added, 243 removed, 25 unchanged (94% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Regarding Forward-Looking Statements

following discussion highlights the current operating environment and summarizes the financial position of Trugolf Holdings, Inc.

its subsidiaries as of September 30, 2025, and should be read in conjunction with (i) the unaudited interim condensed consolidated financial

statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) and (ii) the audited

consolidated financial statements and accompanying notes thereto included in our 2024 Annual Report on Form 10-K for the year ended December

the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results

of Operations” to “we”, “us”, “our”, and “the Company” are intended to refer to

the business and operations of TruGolf.

Form 10-Q contains certain forward-looking statements.

Historical results may not indicate future performance.

Our forward-looking statements

reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties

that could cause actual results to differ materially from those contemplated by these statements.

In some cases, you can identify forward-looking

statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,”

“believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative

of these terms or other comparable terminology.

These statements include statements regarding the intent, belief or current expectations

of us and members of our management team, as well as the assumptions on which such statements are based.

These statements are only predictions

and involve known and unknown risks, uncertainties and other factors, including the risks set forth in the section entitled “Risk

Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the U.S.

Securities and Exchange

Commission (the “SEC”) on April 15, 2025, any of which may cause our company’s or our industry’s actual results,

levels of activity, performance or achievements expressed or implied in our forward-looking statements.

These risks and factors include,

by way of example and without limitation:

the occurrence of any event,

change, or other circumstances, including the outcome of any legal proceedings that may be instituted against us;

the ability to maintain

the listing of our securities on Nasdaq, and the potential liquidity and trading of our securities;

the risk of disruption

to our current plans and operations;

the ability to recognize

the anticipated benefits of our business and the Business Combination, which may be affected by, among other things, competition

and the ability to grow, manage growth profitably, and retain key employees;

costs related to our business;

changes in applicable laws

or regulations;

our ability to meet future

capital requirements to fund our operations, which may involve debt and/or equity financing, and to obtain such debt and/or equity

financing on favorable terms, and our sources and uses of cash;

our ability to maintain

existing license agreements;

our ability to achieve

and maintain profitability in the future;

our financial performance;

other factors disclosed

under the section entitled “Risk Factors”.

Nevada, was formed as a Utah corporation on October 4, 1995, under the name TruGolf Incorporated, and was a subsidiary of Access Software.

On June 9, 1999, TruGolf Nevada changed its name to TruGolf, Inc.

Upon the acquisition of Access Software by Microsoft Corp.

1999, the core programming and graphics team of the LinksTM video game series were spun out to TruGolf Nevada.

on April 26, 2016, TruGolf Nevada filed Articles of Merger with the State of Utah, Department of Commerce, and on April 28, 2016, TruGolf

Nevada filed Articles of Merger with the Secretary of State of Nevada, pursuant to which TruGolf, Inc., a Utah corporation, merged with

and into TruGolf Nevada, pursuant to a Plan of Merger.

TruGolf Nevada was the surviving corporation and, in connection with the Plan

of Merger, TruGolf Nevada affected a four-for-one forward stock split of its outstanding common stock.

Holdings, Inc.

(f/k/a Deep Medicine Acquisition Corp.) (“TruGolf”, and together with its subsidiaries, the “Company”),

was incorporated on July 8, 2020, as a Delaware corporation and formed for the purpose of effecting a business combination, with no material

operation of its own.

March 31, 2023, we entered into an Agreement and Plan Of Merger (the “Merger Agreement”) with TruGolf Nevada, DMAQ Merger

(“Merger Sub”), a Nevada corporation and our wholly-owned subsidiary, Bright Vision Sponsor LLC, a Delaware limited

liability company, in the capacity as representative for our stockholders at the time of the Merger Agreement, Christopher Jones, an

individual, in the capacity as TruGolf Nevada’s representative, and TruGolf Nevada (together, the “Merger Parties”).

On July 21, 2023, the Merger Parties entered into an Amended and Restated Agreement and Plan of Merger (the “Restated Merger Agreement”),

pursuant to which the Merger Agreement was amended and restated to provide, among other things, that (i) contingent earnout shares will

be issued after the Closing, if and when earned, upon the Company meeting the milestones specified in the Restated Merger Agreement,

rather than being issued at the closing of the merger and being placed into escrow subject to potential forfeiture;

and (ii) the share

price of the Company’s common stock used in the calculation of the number of shares to be issued to the Sellers as merger consideration

shall be $10.00, as opposed to the price at which the Company redeems the shares of common stock held by its public stockholders in connection

with the closing of this business combination.

January 31, 2024, we consummated the business combination (the “Closing”).

As a result of the Closing and the transactions

contemplated by the Merger Agreement, (i) Merger Sub merged with and into TruGolf Nevada, with TruGolf Nevada surviving the Merger as

a wholly-owned subsidiary of TruGolf, and (ii) TruGolf’s name was changed from Deep Medicine Acquisition Corp.

to TruGolf Holdings,

TruGolf’s Class A common stock commenced trading on the Nasdaq Global Market LLC under the ticker “TRUG” on February

1983, the Company has been passionate about driving the golf industry with innovative, indoor golf solutions.

We build products that

capture the spirit of golf.

Our mission is to help grow the game by making it more available, more approachable and more affordable,

through technology – because we believe golf is for everyone.

team has built award-winning video games (including Links, a popular sports game for PC), innovative hardware solutions, and an all-new

e-sports platform to connect golfers around the world with TruGolf E6 Connect Software, our premier software engine.

Since TruGolf’s

beginning, we have continued to define and redefine what is possible with golf technology.

addition to offering a variety of custom, professional, and portable golf simulators, TruGolf’s latest launch monitor, Apogee,

was created to improve accuracy and to make using the launch monitor easier.

Features of Apogee include:

a unique Apogee Voice Assistant,

a voice command system that allows users to navigate their TruGolf E6 Connect Software gameplay within rounds and practice sessions;

Laser Launchpad, a laser indicator that shows users where to place the ball and when the system is ready to record a swing and Point-of-Impact

(POI) slow-motion replay video.

suite of hardware offerings in the golf technology space is expansive, offering something for virtually everyone from gamers to beginners

to professionals, and all consumers in between.

Hardware offerings are sold through a global network of authorized resellers, retail

outlets and direct-to-consumer through a dedicated TruGolf sales team.

Our suite of hardware offerings ranges from entry level pricing

at just under $400, to well over $100,000 for custom projects, creating a wide range of pricing options for nearly all consumers, and

providing TruGolf with a competitive advantage in creating a wide consumer base as compared to its competitors (who often only focus

in a narrow consumer price range).

creates top golf technology software in the marketplace through its TruGolf E6 Connect and E6 Apex Software.

Importantly, TruGolf’s

software is designed not only for use with our suite of hardware offerings in the golf technology space, but also integrates with more

than twenty-four third party golf technology hardware manufacturers, translating to a market integration coverage equal to roughly 90%

of golf technology hardware in the global market space, which allows peer-to-peer play across these golf technology hardware manufacturers,

allowing for a unification of the golf technology space.

TruGolf’s software records, on average, over 725,000 indoor golf shots

TruGolf’s E6 Connect Software is both PC and iOS compatible and can be used both indoors and outdoors.

has leveraged its unique position as one of the industry leaders in both hardware and software golf technology solutions to organize

and found the Virtual Golf Association (VGA).

The VGA is a gamified virtual economy that takes place inside the TruGolf E6 Connect Software.

Users have a chance to earn points through play, practice, and more – providing a worldwide leaderboard of connected indoor golfers.

Each shot users take rewards them with points.

These points can be used to purchase in-game enhancements, or to enter virtual golf tournaments

with real world prizes.

The VGA is broken into three models:

Game Analysis – rewards

TruGolf software users who measure their game.

Users can set specific goals (e.g., shots hit per month, speed and distance gains,

dispersion reduction) and earn points for hitting milestones.

At the end of each month, users can see how they compared against all

other users utilizing the Game Analysis features.

Connected Golf –

rewards users for joining with their friends and playing golf online.

Earn points for playing a new course or linking up to play

nine holes with another player utilizing TruGolf software.

Virtual Golf Association

Events – events are worldwide leaderboard format, flighted by handicap, where users play and compete to shoot the lowest score.

These contests include stroke play, closest to the pin, match play, stableford, and more.

Users earn points based on how they finish

in their division.

totality, TruGolf’s business model is designed to be positioned as the hub of golf technology, with groundbreaking hardware technologies

that we believe can become the industry standard and unify the industry as a whole by serving as the leader of golf technology software

solutions through its TruGolf’s software.

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 “Reverse Stock Split”)

and began trading on a 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 200,000, and the number of authorized shares of common stock remained unchanged.

following discussion and analysis provide information which we believe relevant to an assessment and understanding of our financial condition

and results of operations.

The following financial information is derived from our financial statements and should be read in conjunction

with such financial statements and notes thereto set forth elsewhere herein.

Note Regarding Forward Looking Statements

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.

forward-looking statements in this Form 10-Q are not guarantees of future performance, conditions or results, and involve a number of

known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside of the Company’s control,

that could cause the actual results or outcomes to differ materially from those discussed in the forward-looking statements.

These forward-looking

statements speak only as of the date of this Form 10-Q and are subject to numerous risks, including, but not limited to the following:

occurrence of any event, change, or other circumstances, including the outcome of any legal proceedings that may be instituted against

ability to maintain the listing of our securities on Nasdaq, and the potential liquidity and trading of our securities;

risk of disruption to our current plans and operations;

ability to recognize the anticipated benefits of our business and the Business Combination, which may be affected by, among other

things, competition and the ability to grow, manage growth profitably, and retain key employees;

related to our business;

in applicable laws or regulations;

ability to meet future capital requirements to fund our operations, which may involve debt and/or equity financing, and to obtain

such debt and/or equity financing on favorable terms, and our sources and uses of cash;

ability to maintain existing license agreements;

ability to achieve and maintain profitability in the future;

financial performance;

factors disclosed under the section entitled “Risk Factors”.

forward looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk

Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the U.S.

Securities and

Exchange Commission (“SEC”) on April 15, 2026 (the “Form 10-K”).

Moreover, we operate in a very competitive and

rapidly changing environment.

New risks emerge from time to time.

It is not possible for our management to predict all risks, nor can

we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results

to differ materially from those contained in any forward-looking statements we may make.

In light of these risks, uncertainties and assumptions,

the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely

from those anticipated or implied in the forward-looking statements.

we believe that the expectations reflected in the forward-looking statements are reasonable and the information included in this report

is accurate, we cannot guarantee that the future results, level of activity, performance or events and circumstances reflected in the

forward-looking statements will be achieved or occur.

We undertake no obligation to update publicly any forward-looking statements for

any reason after the date of this report to confirm these statements to actual results or changes in our expectations.

We qualify all

of our forward-looking statements by these cautionary statements.

following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited

condensed consolidated financial statements and related notes appearing elsewhere in this Form 10-Q (the “Financial Statements”),

and also with our audited consolidated financial statements and notes thereto included in our Form 10-K.

design, develop, manufacture, and sell golf simulators and related software for residential and commercial applications.

offerings include portable, professional, commercial, and custom simulators, as well as standalone software products including E6 Connect

We also offer multi-sport gaming applications.

Our franchise operations are conducted through our wholly-owned subsidiary, TruGolf Links Franchising, LLC, (“Links”)

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.

Company derives our revenue through the sales of our golf simulators, perpetual software licenses, content software subscriptions, and

of Operations

of the Nine Months Ended September 30, 2025 to the Nine Months Ended September 30, 2024

financial results for the nine months ended September 30, 2025 are summarized as follows in comparison to the nine months ended September

$ (1,315,921 )

of the Three Months Ended March 31, 2026 to the Three Months Ended March 31, 2025

Cost of revenue

8 unchanged sentences

$ (2,670,322 )

$ (10,338,666 )

decreased by $1,315,921, or 9%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024.

The decrease is primarily attributable to the change in how the Company sold its content subscription licenses during the nine months

ended September 30, 2025 as compared to prior years leading to an increase in deferred revenues.

of revenues increased by $200,458, or 4%, for the nine months ended September 30, 2025, as compared to the nine months ended September

The increase is primarily attributable to an increase in simulator costs of $338,627 and a decrease in other costs of $163,184.

operating expenses increased by $1,844,917, or 17%, for the nine months ended September 30, 2025, as compared to the nine months ended

September 30, 2024.

This was primarily due to (i) an increase of professional fees of $1,011,516, or 55%, due to an increase in fees

related to the PIPE Exchange Agreements and other SEC filing requirements, and (ii) an increase in other selling, general and administrative

expenses of $1,932,682, or 105%, due primarily to an increase in amortization expense related to capitalized software of $472,965, which

is offset by a decrease in salaries, wages and benefits of $1,136,910, due primarily to an increase in salaries being capitalized for

time spent on developing new versions of the Company’s platform software.

Income (Expenses)

income (expenses) increased by $6,977,370, or 336%, for the nine months ended September 30, 2025, as compared to the nine months ended

September 30, 2024.

The increase is primarily attributable to a loss on extinguishment of debt of $6,135,160 that resulted from the PIPE

Exchange Agreements and an increase in interest expense, amortization expense of the PIPE Convertible Notes debt discount, the write-off

of remaining debt discounts upon the conversion of related to the PIPE Convertible Notes, and the make-good interest expense upon the

conversion of related PIPE Convertible Notes.

of the Three Months Ended September 30, 2025 to the Three Months Ended September 30, 2024

financial results for the three months ended September 30, 2025 are summarized as follows in comparison to the three months ended September

$ (2,130,830 )

Cost of revenue

Total gross profit

Operating Expenses:

remained relatively consistent for the three months ended March 31, 2026, decreasing by $217,563, or 4.2%, compared to the three months

ended March 31, 2025.

The decrease was primarily attributable to the decrease in golf simulator revenue, which decreased by $228,321, to $3,664,866 during the three months ended March 31, 2026, as compared to the

prior year period.

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

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.

operating expenses decreased by $694,360, or 14.9%, for the three months ended March 31, 2026, as compared to the three months ended

March 31, 2025.

Salaries, Wages and Benefits:

Selling, general and administrative

Operating loss

Other income (expenses)

Loss before income taxes

$ (7,278,244 )

$ (7,218,069 )

decreased by $2,130,830, or 34%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

The decrease is primarily attributable to the change in how the Company sold its content subscription licenses during the three months

ended September 30, 2025 as compared to prior years leading to an increase in deferred revenues.

of revenues decreased by $665,465, or 35%, for the three months ended September 30, 2025, as compared to the three months ended September

The decrease is primarily attributable to the decrease in revenue.

The gross profit margin remained consistent for the three

months ended September 30, 2025 as compared to the three months ended September 30, 2024.

operating expenses increased by $520,410, or 15%, for the three months ended September 30, 2025, as compared to the three months ended

September 30, 2024.

Selling, general and administrative expenses increased by $1,761,630, or 111%, due primarily to an increase in professional

fees of $410,260, an increase in contract labor of $269,653, and an increase in amortization expense related to capitalized software

This was offset by a decrease in salaries, wages and benefits of $1,131,054, or 67%, due primarily to an increase in salaries

being capitalized for time spent on developing new versions of the Company’s platform software.

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

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.

General and Administrative :

SG&A increased by $459,045, or 16.8%, to $3,184,164 for the three months ended March 31, 2026, compared

to $2,725,119 for the prior year period.

The increase was primarily driven by the following:

(i) amortization expense related to capitalized

software costs increased to $469,213 in 2026 from $100,000 in 2025, (ii) an increase in rent expense of $104,644 during the three months

ended March 31, 2026, as compared to the prior year period, primarily related to a lease modification during the year ended December

31, 2025, which resulted in an increase in the associated monthly rent, and (iii) an increase in professional fees of $166,634 primarily driven by $149,890 in legal fees related to the

Company’s franchising efforts that were not active during the prior year period.

Income (Expenses)

income (expenses) increased by $5,232,069, or 561%, for the three months ended September 30, 2025, as compared to the three months ended

September 30, 2024.

The increase is primarily attributable to a loss on extinguishment of debt of $6,135,160 that resulted from the PIPE

Exchange Agreements and is offset by a decrease in interest expense, amortization expense of the PIPE Convertible Notes debt discount,

the write-off of remaining debt discounts upon the conversion of related to the PIPE Convertible Notes, and the make-good interest expense

upon the conversion of related PIPE Convertible Notes due to the PIPE Convertible Notes being exchanged for Series A Preferred Convertible

Stock and Series A Preferred Warrants as part of the PIPE Exchange Agreements.

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

and Capital Resources

of September 30, 2025, we had cash on hand of $13,535,121 and a working capital surplus of $4,159,517, as compared to cash on hand of

$10,882,077 and a working capital deficiency of $982,237 as of December 31, 2024.

The increase in working capital surplus is primarily

attributable to an increase in cash on hand of $2,653,044, an increase of accounts receivable, net of $847,603, an increase in prepaid

expenses and other current assets of $584,504 and a decrease in dividend notes payable of $3,905,561 which was offset primarily by an

increase in deferred revenue of $3,073,610.

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.

Company’s operating activities consume the majority of its cash resources.

The Company anticipates that it will continue to incur

operating losses as it executed its development plans for 2025, as well as other potential strategic and business development initiatives.

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.

3 unchanged sentences

as a going concern.

September 30,

Current assets

Current liabilities

Working capital surplus (deficiency)

increase in current assets is primarily due to an increase in cash on hand of $2,653,044, an increase of accounts receivable, net of

$847,603, and an increase in prepaid expenses and other current assets of $584,504.

The decrease in current liabilities is primarily

due to a decrease in dividend notes payable of $3,905,561 which was offset primarily by an increase in deferred revenue of $3,073,610.

For the Nine Months Ended

September 30,

Net cash provided by (used in) operating activities

$ (1,978,411 )

Net cash used in investing activities

$ (2,493,600 )

$ (1,967,533 )

Net cash provided by financing activities

cash used in operating activities was $1,978,411 for the nine months ended September 30, 2025, which was primarily due to the net loss

of $13,270,036 and an increase in accounts receivable, net of $922,416, which was partially offset by non-cash expenses of $9,766,236,

an increase in deferred revenue of $3,073,610, and an increase in accrued and other current liabilities of $595,020.

cash provided by operating activities was $3,071,781 for the nine months ended September 30, 2024, which was primarily due to the net

loss of $2,931,370 and an increase in accounts receivable, net of $2,143,225, which was partially offset by non-cash expenses of $974,145

and the liquidation of the marketable securities account of $2,478,953.

cash used in investing activities was $2,493,600 for the nine months ended September 30, 2025, which was due to the increase in capitalized

software of $2,395,596 and the purchase of equipment of $98,004.

cash used in investing activities was $1,967,533 for the nine months ended September 30, 2024, which was the result of an increase in

capitalized software of $1,967,418.

cash provided by financing activities was $7,125,055 for the nine months ended September 30, 2025, which was primarily due to $2,520,000

of net proceeds from PIPE Convertible Notes and $4,999,500 of proceeds from the exercise of Series A Preferred Warrants.

cash provided by financing activities was $950,373 for the nine months ended September 30, 2024, the Company received net proceeds from

the Merger of $2,325,315, made debt payments of $294,005, paid $15,716 of assumed liabilities, paid $100,000 on a loan assumed in the

Merger, and paid off the line of credit of $1,980,937.

The Company received proceeds of $1,000,000 from the Company’s chief executive

the three months ended March 31, 2026, our net cash used in operating activities was $122,196 as compared to $449,119 during the three

months ended March 31, 2025.

The period over period change was primarily attributable to favorable changes in working capital,

including increases in deferred revenue and accounts payable, partially offset by changes in inventory and accounts receivable.

The current period also reflected $1,087,513 and $231,940 lower non-cash adjustments related to stock issued for

make-whole provisions on debt conversion and amortization of convertible note discounts, respectively, compared to the prior year period.

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.

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.

Accounting Estimates

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.

for Current Expected Losses

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%.

rate reflects the concentration of our receivables among a limited number of commercial customers and the extended payment terms common

in our industry.

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.

carry inventory at the lower of cost or net realizable value.

Estimating net realizable value requires management to assess product demand,

technological obsolescence, and the expected selling prices of inventory on hand.

During the three months ended March 31, 2026, we recorded

$64,343 in inventory valuation adjustments in connection with our transition to a new accounting system, which required a comprehensive

reconciliation of physical inventory counts to book records.

These adjustments demonstrate the inherent uncertainty in this estimate.

forward, our inventory valuation is subject to risk from rapid changes in product technology and customer demand, particularly as we

continue to evolve our simulator hardware lineup.

A deterioration in demand for existing hardware models or the introduction of new products

that render current inventory obsolete could require additional write-downs beyond those already recorded.

Management reviews inventory

for impairment indicators on a quarterly basis.

Software Development Costs and Technological Feasibility and Useful Life

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.

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.

$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.

Accounting Developments

a discussion of recently issued accounting developments and their impact on our unaudited condensed consolidated financial

statements, refer to Note 2—Summary of Significant Accounting Policies in our Financial Statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

have been no material changes in market risk from the information provided in Item 7A “Quantitative and Qualitative Disclosures

About Market Risk” of TruGolf Holdings Inc.’s Annual Report on Form 10-K for the year ended December 31, 2024.

reporting companies are not required to provide the information required by this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis