TruGolf Clarifies Nasdaq Compliance Plan and Provides Context to Equity Line of Credit

Rhea-AI Summary

TruGolf Holdings (NASDAQ: TRUG) has outlined its plan to regain Nasdaq compliance after failing to meet the $10 million minimum stockholders' equity requirement. The company's current stockholders' equity stands at ($10,508,104). Key elements of the compliance plan include:

- Converting ⅔ of founders' accrued dividends to common stock
- Converting PIPE note holders' debt to new preferred shares and warrants
- Securing a $20 million Equity Line of Credit
- Potential reverse stock split pending shareholder approval

The company maintains a strong cash position exceeding $10 million for current operations. A special shareholder meeting is scheduled for May 30th, 2025 to vote on the plan. The Nasdaq Hearings panel's decision on the extension request is pending.

Positive

• Strong cash position of over $10 million for current operations
• Secured $20 million Equity Line of Credit for future opportunities
• Plan to convert founders' accrued dividends and PIPE notes to equity, improving balance sheet

Negative

• Negative stockholders' equity of ($10,508,104), violating Nasdaq listing requirements
• Risk of potential delisting if Nasdaq extension not granted
• Potential reverse stock split may be necessary for compliance

Insights

Financial Restructuring Analyst

TruGolf facing Nasdaq delisting due to negative stockholder equity, implementing multi-part compliance plan including debt conversion and $20M credit line.

TruGolf is addressing a serious regulatory challenge with Nasdaq. The company reported negative stockholders' equity of ($10,508,104), significantly below Nasdaq's required $10 million minimum. This creates a substantial compliance gap of over $20.5 million that must be bridged to maintain listing status.

The multi-pronged compliance plan contains several strategic financial maneuvers:

• Converting approximately two-thirds of accrued dividends payable to founders into common stock, effectively transforming a liability into equity
• Restructuring PIPE (Private Investment in Public Equity) notes by exchanging outstanding notes and warrants for preferred shares, which strengthens the balance sheet by reclassifying debt as equity
• Securing a $20 million Equity Line of Credit that provides capital access without increasing debt obligations
• Preparing for a potential reverse stock split if needed to address minimum pricing requirements

The company reports a cash position exceeding $10 million, which management claims is sufficient for current operations. The equity line appears to be a contingency measure rather than an immediate necessity, providing financial flexibility without the burden of debt financing.

This situation underscores the precarious nature of TruGolf's financial structure. The negative stockholders' equity indicates that liabilities exceed assets, a concerning position for any public company. The compliance plan represents a significant restructuring effort that, if successful, would substantially improve the company's balance sheet, but the outcome remains uncertain pending the Nasdaq Hearing panel's decision.

Salt Lake City, Utah, May 27, 2025 (GLOBE NEWSWIRE) -- TruGolf Holdings, Inc. (NASDAQ: TRUG), a leading golf technology company, has clarified its plan to regain compliance with Nasdaq listing rules in response to shareholder inquiries. On August 19, 2024, TruGolf Holdings, Inc. received a written notification from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying the Company that, the Company’s stockholders’ equity was ($10,508,104), and therefore, the Company was not in compliance with Nasdaq’s Listing Rule 5450(b)(1)(A), which requires a $10,000,000 minimum stockholders’ equity standard (the “Equity Rule”). On May 15, 2025, the Company presented a plan to the Nasdaq Hearings panel on how it plans to regain compliance with Nasdaq’s listing rules and requested an extension to execute on the plan. To date the Hearings panel has not rendered a determination. There can be no assurance that it will provide an extension or move to delist. The key provisions of the plan were:

• The Company converted approximately ⅔’s of the accrued dividends payable owed to the company’s founders to common stock.
• The PIPE note holders agreed to exchange their outstanding notes and associated warrants for new preferred shares and warrants. All unissued notes would be canceled.
• The Company has entered into an Equity Line of Credit for $20 million that could provide liquidity without reducing shareholder equity if additional funds to operate the business are required.
• A reverse split would be approved by the Board, subject to shareholder authorization, if necessary to regain compliance with Nasdaq minimum pricing rules.

Chris Jones, CEO of TruGolf, had this to say about the plan. “The Company will be holding a special meeting of shareholders on May 30th to vote on actions relating to this plan. However, since disclosure of all details of the plan, the Company has received multiple inquiries requesting clarification of the purpose of the Equity Line of Credit that was entered into as part of the plan.” As reported in the Company’s first quarter Form 10-Q on May 15th. “TruGolf has a strong cash position of greater than $10 million which is more than adequate to satisfy its current operating needs. The line was put in place in the event that a special situation or opportunity may arise in the future so the Company could avoid debt when financing its actions.” 

About TruGolf Holdings

TruGolf is a golf technology company, committed to making golf, easy. From innovative uses for AI to build content and enhance its image and spatial analysis, to gamified golf improvement plans, TruGolf is an industry leader in the growing technological revolution in the sport of golf. Since its founding, TruGolf has redefined what is possible in golf through technology. TruGolf’s suite of Hardware, Software, and Web Products make it easier to Play, Improve, and Enjoy the game of golf.

Forward-Looking Statements

Some of the statements in this release are forward-looking statements, which involve risks and uncertainties. Forward-looking statements include, without limitation, whether the Company’s compliance plan will be accepted by Nasdaq and the Company’s expected future cash needs. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. The Company has attempted to identify forward-looking statements by terminology including ''believes,'' ''estimates,'' ''anticipates,'' ''expects,'' ''plans,'' ''projects,'' ''intends,'' ''potential,'' ''may,'' ''could,'' ''might,'' ''will,'' ''should,'' ''approximately'' or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors. Any forward-looking statements contained in this release speak only as of its date. The Company undertakes no obligation to update any forward-looking statements contained in this release to reflect events or circumstances occurring after its date or to reflect the occurrence of unanticipated events. More detailed information about the risks and uncertainties affecting the Company is contained under the heading "Risk Factors" in the Company's Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC, which are available on the SEC’s website, www.sec.gov.

For more information about our products and upcoming innovations, please visit TruGolf.com.

Media Contacts:

TruGolf: Michael Bacal: Phone: 917-886-9071; mbacal@darrowir.com Web: TruGolf.com LinkedIn: @TruGolf

FAQ

Why is TruGolf (TRUG) at risk of Nasdaq delisting?

TruGolf is at risk because its stockholders' equity is ($10,508,104), falling below Nasdaq's minimum requirement of $10 million under Rule 5450(b)(1)(A).

What is TruGolf's (TRUG) plan to regain Nasdaq compliance?

TruGolf plans to convert founders' accrued dividends to common stock, exchange PIPE notes for preferred shares, utilize a $20M Equity Line of Credit if needed, and potentially implement a reverse stock split.

What is TruGolf's (TRUG) current cash position in 2025?

TruGolf maintains a strong cash position exceeding $10 million, which the company states is adequate for current operating needs.

When is TruGolf's (TRUG) special shareholder meeting to vote on the compliance plan?

TruGolf's special shareholder meeting is scheduled for May 30th, 2025, to vote on actions relating to the compliance plan.

What is the purpose of TruGolf's (TRUG) $20 million Equity Line of Credit?

The $20 million Equity Line of Credit was established to provide funding for potential future opportunities while avoiding debt, not for current operational needs.