What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-19 compared with 2025-05-15 · 223 added, 215 removed, 25 unchanged (95% of the section changed)

Discussion and Analysis of Financial Condition and Results of Operations

Note Regarding Forward-Looking

The following discussion highlights

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

and its subsidiaries as of March 31,

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 31, 2024.

Unless 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

This Form 10-Q contains certain

forward-looking statements.

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 June 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”.

Company Overview

Corporate History

TruGolf 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.

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:

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”.

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.

in August 1999, the core programming

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

Effective 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.

TruGolf Holdings, Inc.

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

On March 31, 2023, we entered

into an Agreement and Plan Of Merger (the “Merger Agreement”) with Deep Medicine Acquisition Corp.

Delaware Corporation, DMAQ Merger Sub Inc.

(“Merger Sub”), a Nevada corporation and a wholly-owned subsidiary of DMAQ, Bright

Vision Sponsor LLC, a Delaware limited liability company, in the capacity as DMAQ’s representative, Christopher Jones, an individual,

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

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.

On January 31, 2024, we consummated

the business combination (the “Closing”) contemplated by the Restated Merger Agreement and Merger Agreement, dated as of July

21, 2023, by and among the Merger Parties.

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.

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

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

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, Inc.

TruGolf’s Class A common stock commenced trading

on the Nasdaq Global Market LLC under the ticker “TRUG” on February 1, 2024.

Business Overview

Since 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.

Our team has built award-winning

video games (including Links, a popular sports game for PC), innovative hardware solutions, and an all-new e-sports platform to connect

golfers around the world with TruGolf E6 Connect Software, our premier software engine.

Since TruGolf’s beginning, we have continued

to define and redefine what is possible with golf technology.

In 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.

Class A common stock commenced trading on the Nasdaq Global Market LLC under the ticker “TRUG” on February 1, 2024.

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.

Our 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).

TruGolf 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 per day.

Connect Software is both PC and iOS compatible and can be used both indoors and outdoors.

TruGolf 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).

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.

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.

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.

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.

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.

In 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.

The Company derives our revenue

through the sales of our golf simulators, perpetual software licenses, content software subscriptions, and franchising.

Results of Operations

Comparison of the Three Months

Ended March 31, 2025 to the Three Months Ended March 31, 2024

Our financial results for the

three months ended March 31, 2025 are summarized as follows in comparison to the three months ended March 31, 2024.

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.

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 Six Months Ended June 30, 2025 to the Six Months Ended June 30, 2024

financial results for the six months ended June 30, 2025 are summarized as follows in comparison to the six months ended June 30, 2024.

Cost of revenue

9 unchanged sentences

$ (3,120,600 )

Revenues increased by $377,208,

or 8%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

The increase is primarily attributable

to the increase of our product acceptance and greater penetration in the industry market.

In addition, we began the roll out of our franchise

model during the three months ended March 31, 2025.

Cost of Revenues

Cost of revenues decreased by

$232,824, or 12%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

The decrease is primarily

attributable to a decrease in inventory adjustments of $100,237 and a decrease in shipping costs of approximately $160,000.

increased by $814,909, or 9%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024.

is primarily attributable to the increase of our product acceptance and greater penetration in the industry market.

of revenues increased by $865,924, or 27%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024.

The increase is primarily attributable to an increase in inventory adjustments of $170,982 and an increase in costs related to the Company’s

TruTrack product of approximately $830,541.

operating expenses increased by $1,324,509, or 18%, for the six months ended June 30, 2025, as compared to the six months ended June

Selling, general and administrative expenses increased by $1,519,387, or 40%, due primarily to an increase in amortization expense related to capitalized software

of $296,138, an increase in marketing expense of $336,859, and an increase in professional fees of $601,256.

Income (Expenses)

income (expenses) increased by $1,745,076, or 153%, for the six months ended June 30, 2025, as compared to the six months ended June

The increase is primarily attributable to 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 June 30, 2025 to the Three Months Ended June 30, 2024

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

Cost of revenue

Total gross profit

Operating Expenses:

Total operating expenses increased

by $900,571, or 23%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

Selling, general

and administrative expenses increased by $899,918, or 49%, due primarily to an increase in contracted labor of approximately $364,000,

an increase in marketing of approximately $160,000, and an increase in professional fees of approximately $180,000.

Salaries, wages and benefits

Selling, general and administrative

Operating loss

Other income (expenses)

Other income (expenses) increased

by $1,077,919, or 301%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

is primarily attributable to 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.

Liquidity and Capital Resources

As of March 31, 2025, we had

cash on hand of $12,615,820 and a working capital surplus of $29,551, 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 a result of the $2,250,000 gross

proceeds received from the PIPE Convertible Notes issued during the three months ended March 31, 2025.

The increase was partially offset

by an increase in deferred revenue of approximately $1,000,000.

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 executed

its development plans for 2025, 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.

Working Capital

Loss before income taxes

$ (3,321,470 )

$ (1,569,329 )

$ (1,752,141 )

increased by $437,701, or 11%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

is primarily attributable to the increase of our product acceptance and greater penetration in the industry market.

of revenues increased by $1,098,747, or 85%, for the three months ended June 30, 2025, as compared to the three months ended June 30,

The increase is primarily attributable to an increase in inventory adjustments of $248,624 and an increase in costs related to

the Company’s TruTrack product of approximately $739,425.

operating expenses increased by $423,938, or 13%, for the three months ended June 30, 2025, as compared to the three months ended June

Selling, general and administrative expenses increased by $619,470, or 31%, due primarily to an increase in marketing of $113,970,

an increase in professional fees of $377,379, and an increase in amortization expense related to capitalized software of $130,169.

was offset by a decrease in salaries, wages and benefits of $111,077, or 10%, 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 $667,157, or 85%, for the three months ended June 30, 2025, as compared to the three months ended June

The increase is primarily attributable to 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.

and Capital Resources

of June 30, 2025, we had cash on hand of $10,159,359 and a working capital surplus of $6,554,656, 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 the recognition of the $5,651,310 current asset related to the fair value of Series A Preferred Stock and related Series A warrants

issued in connection with the bundled PIPE Exchange Agreement transaction.

These instruments are classified as current assets because

they are expected to be used in the settlement of outstanding obligations within the next twelve months.

The fair value was determined

at the time of issuance based on the observable market price of the Company’s common stock and the contractual conversion provisions

of the Series A Preferred Stock.

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.

In addition, the Company has had and expects to have negative cash flows from operations, at least into the near future.

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 assets

Current liabilities

Working capital deficiency

The increase in current assets

is primarily due to the increase in cash on hand of $1,733,743 and an increase in inventory of $1,503,632.

The increase in current liabilities

is primarily due to an increase in deferred revenue of $1,028,780 and accrued and other liabilities of $1,823,760.

For the Three Months Ended March 31,

Working capital surplus (deficiency)

increase in current assets is primarily due to the recording of the $5,651,310 asset related to the fair value of Series A Preferred

Stock and Series A Warrants as noted above.

The increase in current liabilities is primarily due to the reclass of

$3,734,900 in PIPE Convertible Notes from non-current liabilities to current liabilities as a result of the PIPE Convertible Notes being

extinguished on July 21, 2025 as part of the April 22, 2025 PIPE Exchange Agreements.

For the Six Months Ended June 30,

Net cash provided by (used in) operating activities

$ (1,354,546 )

Net cash used in investing activities

$ (1,614,778 )

$ (1,433,513 )

Net cash provided by financing activities

Operating Activities

Net cash used in operating activities

was $449,119 for the three months ended March 31, 2025, which was primarily due to the net loss of $2,670,322 and an increase in inventory

of $1,503,632, which was partially offset by non-cash expenses of $1,526,448, an increase in deferred revenue of $1,028,780, and an increase

in accrued and other current liabilities of $1,823,760.

Net cash provided by operating

activities was $2,668,617 for the three months ended March 31, 2024, which was primarily due to the liquidation of the marketable securities

account of $2,478,953 and an increase in accounts payable of $1,146,347.

The change in the remaining operating assets and liabilities

was $224,013 and non-cash expenses of $121,168.

Investing Activities

Net cash used in investing activities

was $334,690 for the three months ended March 31, 2025, which was the result of an increase in capitalized software of $270,531 and the

purchase of equipment of $64,159.

Net cash used in investing activities

was $332,342 for the three months ended March 31, 2024, which was the result of the purchasing of equipment.

Financing Activities

Net cash provided by financing

activities was $2,517,552 for the three months ended March 31, 2025, which was primarily due to $2,520,000 of net proceeds from PIPE Convertible

Net cash provided by financing

activities was $92,128 for the three months ended March 31, 2024, the Company received net proceeds from the Merger of $2,237,213, paid

off the variable rate line of credit of $1,980,937 and made debt payments of $270,795.

Quantitative and

Qualitative Disclosures About Market Risk

There 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.

cash used in operating activities was $1,354,546 for the six months ended June 30, 2025, which was primarily due to the net loss of $5,991,792

and an increase in accounts receivable, net of $861,552, which was partially offset by non-cash expenses of $3,201,997, an increase in

deferred revenue of $1,896,218, and an increase in accrued and other current liabilities of $773,570.

cash provided by operating activities was $2,615,975 for the six months ended June 30, 2024, which was primarily due to the net loss

of $2,871,192 which was offset by the liquidation of the marketable securities account of $2,478,953 and an increase in accounts payable

of $1,149,909, an increase in deferred revenue of $1,274,900, and an increase in accrued interest payable of $785,306.

The change in

the remaining operating assets and liabilities was $567,271 and non-cash expenses of $365,370.

cash used in investing activities was $1,614,778 for the six months ended June 30, 2025, which was the result of an increase in capitalized

software of $1,568,778 and the purchase of equipment of $45,966.

cash used in investing activities was $1,433,513 for the six months ended June 30, 2024, which was the result of an increase in capitalized

software of $1,433,438.

cash provided by financing activities was $2,246,572 for the six months ended June 30, 2025, which was primarily due to $2,520,000 of

net proceeds from PIPE Convertible Notes.

cash provided by financing activities was $71,246 for the six months ended June 30, 2024, the Company received net proceeds from the

Merger of $2,325,315, received net proceeds from PIPE Convertible Notes of $4,185,000, paid off the variable rate line of credit of $1,980,937

and made debt payments of $268,500.

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.

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