Key Highlights

● TruGolf Holdings faces a securities class action lawsuit centered on preferred-stock dilution.

● The lawsuit lands just as the company's first flagship venue opens, a significant commercial milestone.

● TruGolf has built golf simulators since 1982, pairing them with its E6 Connect and E6 Apex software, and has spent the past year pursuing physical venue expansion.

● The company is running two storylines simultaneously that point in opposite directions: legal and dilution risk against commercial expansion momentum.

TruGolf Holdings, Inc. (NASDAQ: TRUG) is running two storylines at once, and they point in opposite directions. The Utah company has built golf simulators since 1982, pairs them with its E6 Connect and E6 Apex software, and has spent the past year pushing into franchised venues under the TruGolf Links banner.

The other storyline is financial. On 12 August 2026, law firm Pomerantz LLP announced a securities class action against TruGolf and certain officers over how it disclosed dilution from its Series A Convertible Preferred Stock. The lead plaintiff deadline is 28 September 2026.

That landed less than three weeks after TruGolf Links opened its first flagship location in Cherry Hill, New Jersey. The operating Business is expanding while the Equity underneath it is reshaped by conversions and reverse splits.

What Happened

According to Pomerantz's notice, the complaint alleges that defendants misrepresented or failed to disclose that holders of the Series A Convertible Preferred Stock were continuously converting into Class A shares at floating and ratcheting conversion prices, and that the resulting dilution was presented as contingent or hypothetical even though the company held real-time conversion data.

The notice further alleges that TruGolf's Form 10-K filed on 15 April 2026 overstated the Class A share count by roughly 52%, and that the economic terms of the preferred stock and the consumption of the share reserve were incompletely disclosed.

Pomerantz states the Class A share count more than doubled in under five months, that two reverse splits followed, and that the split-adjusted share price fell more than 98%. These allegations are untested in court.

Why It Matters

The mechanics are worth translating. A floating conversion price means the preferred holder converts into common stock at a price that resets periodically, usually downward if the shares have fallen, so the lower the stock goes the more shares each dollar of preferred becomes.

TruGolf's own first-quarter report described the structure plainly: the Series A conversion price reset to $2.76 on 22 April 2026, with make-whole and floor-price mechanics that can significantly increase the number of Class A shares issued over time. The next reset is scheduled for 22 October 2026.

That frames the share-count arithmetic. The 1-for-10 reverse split effective 27 March 2026 left roughly 535,563 Class A shares outstanding. A 10-K amendment filed 17 April 2026 corrected the count to 914,267. Market data now shows about 1.11 million. A 1-for-50 split had already occurred in June 2025.

The Numbers

For full-year 2025, TruGolf reported Revenue of $18.9 million, down 11.3% from $21.3 million, as hardware sales rose 7.1% and software licence revenue fell. Gross Margin dropped to 50.4% from 65.2%; excluding $2.2 million of non-recurring inventory charges, the company put adjusted margin at 62.1%.

The 2025 net loss widened to $15.8 million from $8.8 million, including a $6.1 million non-cash loss on Debt extinguishment. Total liabilities fell to $15.9 million from $21.8 million, and stockholders' equity swung to a positive $4.3 million from a $4.6 million deficit.

First-quarter 2026 revenue, reported 21 May 2026, was $5.02 million against $5.24 million a year earlier, with simulator sales down 4.4%. Gross margin fell to 53.0% from 68% on higher Warehouse labour and shipping costs. Net loss narrowed to $1.45 million from $2.67 million.

Cash, equivalents and restricted cash stood at $10.94 million at 31 March 2026, including $2.1 million restricted, down from $12.6 million at year-end, with a $1.28 million Working Capital deficit. TRUG closed at $0.8483 on 31 July 2026, a Market Capitalisation under $1 million.

What It Means for the Company

Strategically, TruGolf is moving from selling simulators one at a time toward Recurring Revenue from a franchised network. TruGolf Links uses a Regional Developer model aimed at metropolitan markets above one million people, with developers in New Jersey, New York and Illinois and commitments the company says cover more than 100 locations.

The Cherry Hill flagship, opened 23 July 2026, spans 6,045 square feet with five simulator bays, a 17-foot Horizon screen, a restaurant, full bar and multisport arcade. Two more sites are slated for autumn 2026: a 5,000 square-foot venue in Romeoville, Illinois, and a 4,000 square-foot centre in Miller Place, New York.

On product, TruGolf previewed TruGolf RANGE at the January 2026 PGA Show, letting seven golfers hit onto one cinematic screen with an AI coaching layer, and has introduced D3 wagering software. Neither has yet shown a measurable contribution in results.

Risks Investors Should Watch

Dilution is the dominant risk. With the Series A conversion price subject to reset and make-whole and floor-price mechanics still live, the share count can keep expanding regardless of how the venues perform. Shareholders also approved lifting the Class A authorisation toward one billion shares, and an equity line with SZOP Opportunities I LLC was sanctioned under Nasdaq Rule 5635(d).

Financial reporting is a second concern. TruGolf disclosed that its disclosure controls were not effective as of 31 March 2026 because of a material weakness in internal control over financial reporting, and it filed late-filing notices for both the 2025 Annual Report and the Q1 2026 quarterly report.

Listing status is a third. TruGolf moved to the Nasdaq Capital Market in 2025 after a hearings panel process tied to stockholders' equity and bid-price shortfalls, then announced regained compliance that August. With the stock again below $1, the bar remains close. Add litigation costs and Class B shares carrying 25 votes each.

What Comes Next

Second-quarter 2026 results had not been published as of 14 August 2026; the company released its Q2 2025 figures on 20 August 2025, so a comparable window is approaching. The question is whether simulator revenue stabilised and Franchise fees began to register.

The lead plaintiff deadline is 28 September 2026 and the next Series A conversion-price reset is 22 October 2026. The Romeoville and Miller Place venues are targeted to open in autumn 2026.

Two Storylines, One Pivotal Moment

TruGolf is a small manufacturer with a recognisable product, a narrowing loss and a franchise concept that has proved it can open a venue. It is also a company whose Capital Structure has overwhelmed its operating story, leaving a Market Value smaller than one quarter of revenue.

The class action does not change the simulators, the software or the leases already signed. It does put a legal spotlight on the disclosure of the dilution that has defined the stock's past year. The next two months should show whether the business can outgrow its share count.