TruGolf Holdings enters $20 million equity deal

TruGolf Holdings, Inc. (NASDAQ:TRUG), a Delaware-incorporated company with a market capitalization of $10.41 million and currently trading at $0.24 per share, announced on Thursday that it has entered into an Equity Purchase Facility Agreement (EPFA) with an institutional investor. According to InvestingPro analysis, the company appears slightly undervalued based on its Fair Value metrics. Under the terms of the EPFA, TruGolf Holdings has the right, but not the obligation, to sell up to $20 million of its Class A common stock to the investor. This financing move comes as InvestingPro data shows the company is quickly burning through cash, with negative EBITDA of $1.8 million in the last twelve months.

The agreement stipulates that the company can only issue shares after obtaining stockholder approval as required by the Nasdaq Stock Market rules. A special meeting of stockholders must be convened within 90 days of the EPFA to seek this approval.

The price per share sold under the EPFA will be at 93% of the market price at the time of each advance notice issued by the company to the investor. Additionally, TruGolf Holdings agreed to issue shares equal to 1% of the $20 million commitment amount as a commitment fee, with half due upon stockholder approval and the other half upon the first advance notice, provided it is within six months of the agreement’s effective date.

Concurrently, TruGolf Holdings has entered into a Registration Rights Agreement (RRA) with the investor, committing to register the resale of the shares issued under the EPFA. If the company fails to meet specific filing or effectiveness deadlines, it will be subject to liquidated damages.

The shares will be offered and sold to the investor in reliance upon an exemption from the registration requirements under Section 4(a)(2) of the Securities Act of 1933, as amended.

This strategic move allows TruGolf Holdings to access additional capital as needed while providing the investor with the opportunity to acquire equity in the company. The transaction is subject to stockholder approval and other customary closing conditions. With annual revenue of $21.86 million and a weak overall financial health score according to InvestingPro, which offers 12 additional exclusive insights about the company’s performance, this capital raise could be crucial for the company’s future operations.

This report is based on a press release statement.

In other recent news, TruGolf Holdings, Inc. has embarked on a significant financial restructuring by converting its outstanding convertible notes into Series A Preferred Stock. This strategic move aims to streamline its financial obligations and potentially generate $15.1 million in gross proceeds if investors exercise their new warrants. The restructuring also includes converting approximately $3.9 million in outstanding notes payable into shares of Class B common stock. Concurrently, the company is facing a delisting risk from the Nasdaq Stock Market due to not meeting the required stockholders’ equity threshold. TruGolf has announced its intention to appeal this decision, temporarily halting the delisting process. In a separate development, TruGolf Links Franchising, LLC, a subsidiary of TruGolf, has partnered with entrepreneur John Young to establish 40 new indoor golf centers across Tennessee. This expansion will begin with a flagship center in Knoxville, featuring advanced golf simulators and upscale facilities. These recent developments reflect TruGolf’s efforts to improve its financial standing and expand its market presence.

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