TruGolf(TRUG) - 2024 Q3 - Quarterly Report

Product and Technology - TruGolf's latest launch monitor, Apogee, features a voice command system and a laser indicator, enhancing user experience and accuracy[170]. - TruGolf E6 Connect Software records over 725,000 indoor golf shots per day, integrating with approximately 90% of global golf technology hardware[172]. - The company offers a wide range of hardware products priced from just under $400 to over$100,000, catering to various consumer segments[171]. - TruGolf's business model aims to unify the golf technology industry through innovative hardware and software solutions[176]. - The Virtual Golf Association (VGA) allows users to earn points through gameplay, enhancing user engagement and competition[173]. Financial Performance - Revenues for the three months ended September 30, 2024, were $6,236,795, an increase of$2,805,060 or 81.74% compared to $3,431,735 for the same period in 2023[210]. - Gross profit for the same period was$4,312,702, reflecting an increase of $2,414,658 or 127.22$1,898,044 in 2023[210]. - Revenues for the nine months ended September 30, 2024, were $15,121,980, an increase of$1,333,280 or 9.67% compared to $13,788,700 for the same period in 2023[220]. - Net loss for the nine months ended September 30, 2024, was$2,931,370, a reduction of $5,080,519 or 63.41$8,011,889 for the same period in 2023[219]. Operating Expenses and Costs - Operating expenses decreased by $781,334 or 18.51$3,440,421 for the three months ended September 30, 2024, compared to $4,221,755 in 2023[214]. - Operating expenses decreased by$5,279,827 or 32.85% to $10,795,100 for the nine months ended September 30, 2024, due to management's efforts to reduce payroll and other expenses[222]. - The cost of revenues increased by$390,402 or 25.46% to $1,924,093 for the three months ended September 30, 2024, from$1,533,691 in 2023[213]. - Cost of revenues increased by $651,899 or 14.39$5,183,328 for the nine months ended September 30, 2024, primarily due to increased shipping costs and inflationary pressures on materials[221]. Capital and Financing - On January 31, 2024, TruGolf completed a business combination, changing its name from Deep Medicine Acquisition Corp. to TruGolf Holdings, Inc.[177]. - The PIPE Financing includes up to $15,500,000 in senior convertible notes and warrants, with the first closing generating gross proceeds of$4,185,000[179][181]. - The company has the right to require additional purchases of PIPE Convertible Notes, potentially raising an additional $10,850,000[183]. - The company received proceeds of approximately$2,237,213 from a business combination on January 31, 2024, and recorded a PIPE Convertible Note of $4,650,000[227]. Cash and Liquidity - As of September 30, 2024, the company had$7,452,185 in cash and cash equivalents, compared to $5,397,564 as of December 31, 2023[230]. - The company expects significant cash requirements of$7,000,000 to $8,000,000 for employee salaries and$1,000,000 to $1,200,000 for software and hardware development over the next 12 months[242]. - The company may need to raise additional capital or issue debt to support ongoing operations due to continued net losses and negative operating cash flows[238]. - The company maintains a balance of$802,738 in variable rate lines of credit compared to total fixed rate debt of $14,509,137 as of September 30, 2024[251]. Cybersecurity and Compliance - The company has established an incident response plan and team to address cybersecurity risks and has engaged a third party to enhance its cybersecurity practices[253]. - The company has completed regular testing of its systems' resiliency, including penetration and disaster recovery testing[253]. - There is no assurance that the company's cybersecurity mitigation efforts will fully prevent incidents from occurring[253]. - TruGolf's management emphasizes the importance of maintaining compliance with Nasdaq listing requirements to ensure liquidity and trading of its securities[177]. Market and Distribution - The company has established a global network of authorized resellers and retail outlets for its hardware offerings[171]. - The simulator/screen golf market has seen a surge, with 6.2 million Americans using golf simulators in the past year, a 73$1,967,418 in software development costs for the nine months ended September 30, 2024, with an amortization of $279,001 during the same period[188]. - As of September 30, 2024, the balance of capitalized software was$1,738,417 net of accumulated amortization[188]. - Deferred revenue recorded by the company as of September 30, 2024, was $575,000[187]. Interest and Debt - Interest expense increased by$911,035 or 71.97% to $2,176,810 for the nine months ended September 30, 2024, primarily due to interest on PIPE convertible notes[225]. - A hypothetical 10$6,125,053 as of September 30, 2024[252]. Regulatory Status - The company is classified as an emerging growth company under the JOBS Act, allowing it to delay adopting new accounting standards[249].