UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE
14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
| Filed by the Registrant ☒ |
| Filed by a Party other than the Registrant ☐ |
| |
| Check the appropriate box: |
| |
| ☐
Preliminary Proxy Statement |
| ☐ Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2) |
| ☒
Definitive Proxy Statement |
| ☐ Definitive Additional Materials |
| ☐ Soliciting Material Pursuant to §240.14a-12 |
TruGolf
Holdings, Inc.
(Name
of Registrant as Specified in its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
| Payment
of Filing Fee (Check the appropriate box): |
| |
| |
☒
No fee required. |
| |
☐
Fee paid previously with preliminary materials. |
| |
☐
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11 |
TRUGOLF
HOLDINGS, INC.
60
North 1400
West
Centerville, Utah 84014
February
26, 2024
Dear
Fellow Stockholder:
On
behalf of the Board of Directors (the “Board”) and management of TruGolf Holdings, Inc. (the “Company”), you
are cordially invited to attend the Special Meeting of Stockholders of the Company to be held online at https://www.cleartrustonline.com/trugolf,
on March 11, 2024, at 10:00 a.m., Eastern Time (the “Special Meeting”).
The
attached Notice of the Special Meeting (the “Notice”) and proxy statement (“Proxy Statement”) describe in greater
detail all of the formal business that will be transacted at the Special Meeting. There will not be a physical location for the Special
Meeting. You will be able to attend the Special Meeting online, vote your shares electronically, and submit your questions during the
meeting by visiting https://www.cleartrustonline.com/trugolf. Directors and officers of the Company will be available at the Special
Meeting to respond to any questions that you may have regarding the business to be transacted.
The
Company’s Board has determined that each of the proposals that will be presented to the stockholders for their consideration at
the Special Meeting are in the best interests of the Company and its stockholders, and unanimously recommends and urges you to vote “FOR”
the proposals set forth in this Proxy Statement. If any other business is properly presented at the Special Meeting, the proxies
will be voted in accordance with the recommendations of the Company’s Board.
We
encourage you to attend the Special Meeting online, but if you are unable to attend, it is important that you vote in advance via the
Internet, by telephone, or sign, date and return the enclosed proxy card in the enclosed postage-paid envelope. Your cooperation is appreciated
since a majority of the common stock entitled to vote must be represented, either in person or by proxy, to constitute a quorum for the
transaction of business at the Special Meeting.
On
behalf of the Board and all of the employees of the Company, we thank you for your continued support.
| Sincerely, |
|
| |
|
| /s/ Christopher Jones |
|
| Christopher Jones |
|
| Chief Executive Officer |
|
TRUGOLF
HOLDINGS, INC.
60
North 1400
West
Centerville, Utah 84014
NOTICE
OF SPECIAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 11, 2024
NOTICE
IS HEREBY GIVEN that a Special Meeting of Stockholders (the “Special Meeting”) of TruGolf Holdings, Inc. (the “Company”)
will be held online at https://www.cleartrustonline.com/trugolf, on March 11, 2024, at 10:00 a.m., Eastern Time, for the following
purposes:
Proposal
1. To approve, for purposes of complying with Nasdaq Listing Rule 5635(d), our issuance of all of the shares of our Class A common
stock upon conversion of the PIPE Convertible Notes (defined herein) and upon exercise of the PIPE Warrants (defined herein), without
regard to any limitations on conversion or exercise set forth in the PIPE Convertible Notes or PIPE Warrants, respectively, and assuming
all Additional Notes (defined herein) have been issued and all adjustments with respect to such issuances shall have been made to the
PIPE Convertible Notes and PIPE Warrants, as applicable (collectively, the “Nasdaq Proposal”).
Proposal
2. To approve an adjournment of the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes
in favor of the Nasdaq Proposal (the “Adjournment Proposal”).
Please
refer to the proxy statement for the Special Meeting (the “Proxy Statement”) for detailed information on the Nasdaq Proposal
and Adjournment Proposal.
The
Board of Directors (the “Board”) is not aware of any other business that will be presented for consideration at the Special
Meeting. If any other matters should be properly presented at the Special Meeting or any adjournments or postponements of the Special
Meeting for action by stockholders, the persons named in the form of proxy will vote the proxy in accordance with their best judgment
on that matter.
The
Board recommends that you vote “FOR” the Nasdaq Proposal and “FOR” the Adjournment Proposal.
Only
stockholders of record as of the close of business on February 15, 2024 are entitled to receive notice of, to attend and to vote at the
Special Meeting. If you are a beneficial owner as of that date, you will receive communications from your broker, bank or other nominee
about the Special Meeting and how to direct the vote of your shares, and you are welcome to attend the Special Meeting online, all as
described in more detail in the attached Proxy Statement.
Important
Notice Regarding the Availability of Proxy Materials for the Special Meeting to Be Held on March 11, 2024. The Proxy Statement and
form of Proxy are available on the Internet at https://www.cleartrustonline.com/trugolf and on our corporate website at www.trugolf.com
under “Investor Relations—SEC Filings.”
By
Order of the Board of Directors,
| /s/ Christopher Jones |
|
| Christopher Jones |
|
| Chief Executive Officer |
|
| February 26, 2024 |
|
TABLE
OF CONTENTS
TRUGOLF
HOLDINGS, INC.
60
North 1400
West
Centerville, Utah 84014
PROXY
STATEMENT
GENERAL
INFORMATION
For
the Special Meeting of Stockholders
To
Be Held on March 11, 2024
Our
Board of Directors is soliciting proxies to be voted at the Special Meeting of Stockholders (the “Special Meeting”) to be
held virtually on March 11, 2024, at 10:00 a.m., Eastern Time, for the purposes set forth in the attached Notice of Special Meeting
of Stockholders (the “Notice”) and in this Proxy Statement. This Proxy Statement and the proxies solicited hereby are being
first sent or delivered to stockholders of the Company on or about February 26, 2024.
As
used in this Proxy Statement, the terms “Company,” “we,” “us,” “our” and “TruGolf”
refer to TruGolf Holdings, Inc., and the terms “Board of Directors” and “Board” refers to the Board of Directors
of the Company.
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING
What
information is contained in this Proxy Statement?
This
information relates to the proposals to be voted on at the Special Meeting, the voting process, and certain other required information.
Can
I access the Company’s proxy materials electronically?
Yes.
The Proxy Statement and form of Proxy are available at https://www.cleartrustonline.com/trugolf. To view this material, you must have
available the control number located on the proxy card or, if shares are held in the name of a broker, bank or other nominee, the voting
instruction form.
What
does it mean if I receive more than one set of proxy materials?
It
means your shares are registered differently or are in more than one account. Please provide voting instructions for each account for
which you have received a set of proxy materials.
Who
is soliciting my vote pursuant to this Proxy Statement?
Our
directors and employees may solicit proxies in person, by telephone, fax, electronic transmission or other means of communication. We
will not pay these directors and employees any additional compensation for these services. We will ask banks, brokerage firms, and other
institutions, nominees, and fiduciaries to forward these proxy materials to their principal, and to obtain authority to execute proxies,
and will reimburse them for their expenses.
Who
is entitled to vote?
Only
stockholders of record at the close of business on the Record Date will be entitled to vote at the Special Meeting.
How
many shares are eligible to be voted?
As
of the Record Date, we had 13,255,112 shares of common stock outstanding, of which 11,538,252 shares are Class A common stock and 1,716,860
shares are Class B common stock. Each outstanding share of our Class A common stock will entitle its holder to one vote on each of the
matters to be voted on at the Special Meeting, and each outstanding share of our Class B common stock will entitle its holder to 25 votes
on each proposal at the Special Meeting.
What
am I voting on?
You
are voting on the following matters:
1. Nasdaq
Proposal. To approve, for purposes of complying with Nasdaq Listing Rule 5635(d), our issuance of all of the shares of our Class
A common stock upon conversion of the PIPE Convertible Notes (defined herein) and upon exercise of the PIPE Warrants (defined herein),
without regard to any limitations on conversion or exercise set forth in the PIPE Convertible Notes or PIPE Warrants, respectively, and
assuming all Additional Notes (defined herein) have been issued and all adjustments with respect to such issuances shall have been made
to the PIPE Convertible Notes and PIPE Warrants, as applicable (collectively, the “Nasdaq Proposal”).
2. Adjournment
Proposal. To approve an adjournment of the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient
votes in favor of the Nasdaq Proposal (the “Adjournment Proposal”).
How
does the Board recommend that I vote?
The
Board unanimously recommends that you vote your shares as follows:
| |
☐ |
“FOR”
the Nasdaq Proposal; and |
| |
☐ |
“FOR”
the Adjournment Proposal |
None
of our directors have informed us in writing that he or she intends to oppose any action intended to be taken by us at the Special Meeting.
How
many votes are required to hold the Special Meeting and what are the voting procedures?
Quorum
Requirement: As of the Record Date, 13,255,112 shares of the Company’s common stock were issued and outstanding, of
which 11,538,252 shares are Class A common stock and 1,716,860 shares are Class B common stock. The shares of Class B common stock are
entitled to 25 votes per share. The holders of a majority in voting power of the issued and outstanding shares entitled to vote at the
Special Meeting, present or represented by proxy, constitutes a quorum for the purpose of adopting proposals at the Special Meeting.
If you submit a properly executed proxy, then you will be considered part of the quorum.
Required
Votes: Each outstanding share of our Class A common stock is entitled to one vote on each proposal at the Special Meeting,
and each outstanding share of our Class B common stock is entitled to 25 votes on each proposal at the Special Meeting. If there is a
quorum at the Special Meeting, the matters to be voted upon by the stockholders require the following votes for such matter to be approved:
| |
☐ |
Approval
of the Nasdaq Proposal: The affirmative vote of the holders of at least the majority of the voting power of the votes cast
(in person or by proxy) at the Special Meeting is necessary to approve the Nasdaq Proposal. Abstentions and broker non-votes will
have no effect on the outcome of this proposal. |
| |
☐ |
Approval
of the Adjournment Proposal: The affirmative vote of the holders of at least the majority of the voting power of the votes
cast (in person or by proxy) at the Special Meeting is necessary to approve the Adjournment Proposal. Abstentions and broker non-votes
will have no effect on the outcome of this proposal. |
If
a broker indicates on its proxy that it submits to the Company that it does not have authority to vote certain shares held in “street
name,” the shares not voted are referred to as “broker non-votes.” Broker non-votes occur when brokers do not have
discretionary voting authority to vote certain shares held in “street name” on particular proposals under the rules of the
New York Stock Exchange, and the “beneficial owner” of those shares has not instructed the broker how to vote on those proposals.
If you are a beneficial owner and you do not provide instructions to your broker, bank or other nominee, your broker, bank or other nominee
is permitted to vote your shares for or against “routine” matters. Brokers are not permitted to exercise discretionary voting
authority to vote your shares for or against “non-routine” matters.
How
can I vote my shares in person and participate at the Special Meeting?
The
Special Meeting will be held entirely online. Stockholders may participate in the Special Meeting by visiting the following website:
https://www.cleartrustonline.com/trugolf. To participate in the Special Meeting, you will need the control number included on your proxy
card or on the instructions that accompanied your proxy materials. Shares held in your name as the stockholder of record may be voted
electronically during the Special Meeting. Shares for which you are the beneficial owner but not the stockholder of record also may be
voted electronically during the Special Meeting in accordance with the instructions from your broker, bank or other nominee. However,
even if you plan to attend the Special Meeting online, the Company recommends that you vote your shares in advance, so that your vote
will be counted if you later decide not to attend the Special Meeting.
How
can I vote my shares without attending the Special Meeting?
If
you are the stockholder of record, you may vote by one of the following four methods:
| |
☐ |
Online
at the Special Meeting; |
| |
|
|
| |
☐ |
Via
the Internet; |
| |
|
|
| |
☐ |
By
telephone; or |
| |
|
|
| |
☐ |
By
mail. |
If
you elect to vote by mail and you requested and received a printed set of proxy materials, you may mark, sign, date and mail the proxy
card you received from us in the return envelope. If you did not receive a printed proxy card and wish to vote by mail, you may do so
by requesting a paper copy of the proxy materials (as described below), which will include a proxy card.
Whichever
method of voting you use, the proxies identified on the proxy card will vote the shares of which you are the stockholder of record in
accordance with your instructions. If you submit a proxy card properly voted and returned through available channels without giving specific
voting instructions, the proxies will vote the shares as recommended by our Board.
If
you own your shares in “street name,” that is, through a brokerage account or in another nominee form, you must provide instructions
to the broker or nominee as to how your shares should be voted. Your broker or nominee will usually provide you with the appropriate
instruction forms at the time you receive the proxy materials. If you own your shares in this manner, you cannot vote in person at the
Special Meeting unless you receive a proxy to do so from the broker or the nominee.
How
may I cast my vote over the Internet or by Telephone?
Voting
over the Internet: If you are a stockholder of record, you may use the Internet to transmit your vote up until 11:59 P.M., Eastern
Time, March 10, 2024 (the day before the Special Meeting). Visit https://www.cleartrustonline.com/trugolf and have your proxy card in
hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
Voting
by Telephone: If you are a stockholder of record, you may call 1-813-235-4490, toll-free in the United States, U.S. territories
and Canada, and use any touch-tone telephone to transmit your vote up until 11:59 P.M., Eastern Time, March 10, 2024 (the day before
the Special Meeting). Have your proxy card in hand when you call and then follow the instructions.
If
you hold your shares in “street name,” that is through a broker, bank or other nominee, that institution will instruct you
as to how your shares may be voted by proxy, including whether telephone or Internet voting options are available.
How
may a stockholder bring any other business before the Special Meeting?
The
Company’s bylaws (the “Bylaws”) provide that the only matters that may be brought before a special meeting are the
matters specified in the notice of meeting, and, as such, stockholders shall not be permitted to propose business at the Special Meeting.
How
may I revoke or change my vote?
If
you are the record owner of your shares, and you completed and submitted a proxy card, you may revoke your proxy at any time before it
is voted at the Special Meeting by:
| |
☐ |
submitting
a new proxy card with a later date; |
| |
☐ |
delivering
written notice to our Corporate Secretary on or before 10:00 a.m. Eastern Time on, March 11, 2024 (the Special Meeting date
and time), stating that you are revoking your proxy; |
| |
☐ |
attending
the Special Meeting and voting your shares online; or |
| |
☐ |
if
you are a record owner of your shares and you submitted your proxy by telephone or via the Internet, you may change your vote or
revoke your proxy with a later telephone or Internet proxy, as the case may be. |
Please
note that attendance at the Special Meeting will not, in itself, constitute revocation of your proxy.
If
you own your shares in “street name,” you may later revoke your voting instructions by informing the bank, broker or other
holder of record in accordance with that entity’s procedures.
Who
is paying for the costs of this proxy solicitation?
The
Company will bear the cost of preparing, printing, and mailing the materials in connection with this solicitation of proxies. In addition
to mailing these materials, officers and regular employees of the Company may, without being additionally compensated, solicit proxies
personally and by mail, telephone, facsimile or electronic communication.
Are
there any rights of appraisal?
The
Board of Directors is not proposing any action for which the laws of the State of Delaware, our Third Amended and Restated Certificate
of Incorporation or our Bylaws provide a right of a stockholder to obtain appraisal of or payment for such stockholder’s shares.
Who
will count the votes?
The
inspector of election appointed for the Special Meeting will receive and tabulate the ballots and voting instruction forms. The Board
has appointed ClearTrust, LLC, or its designee, to serve as the inspector of election.
Where
do I find the voting results of the Special Meeting?
The
voting results will be disclosed in a Current Report on Form 8-K that we will file with the SEC within four (4) business days after the
Special Meeting.
How
can I obtain the Company’s corporate governance information?
Our
corporate governance information is available on our website at www.trugolf.com under “Investor Relations—Corporate Governance.”
Our stockholders may also obtain written copies at no cost by writing to us at TruGolf Holdings, Inc., 60 North 1400 West Centerville,
Utah 84014, Attention: Corporate Secretary, or by calling (917) 289-2776.
How
do I request electronic or printed copies of this and future proxy materials?
You
may request and consent to delivery of electronic or printed copies of this and future proxy statements, annual reports and other stockholder
communications by visiting www.cleartrustonline.com/trugolf:
When
requesting copies of proxy materials and other stockholder communications, you should have available the control number located on the
proxy card or, if shares are held in the name of a broker, bank or other nominee, the voting instruction form.
BENEFICIAL
OWNERSHIP OF COMMON STOCK
The
following table sets forth information regarding the beneficial ownership of our common stock as of February 14, 2024:
| |
☐ |
each
person or group known by us to own beneficially more than five percent (5%) of the outstanding shares of common stock; |
| |
☐ |
each
of our executive officers and directors; and |
| |
☐ |
all
of our directors and executive officers as a group. |
We
have determined beneficial ownership in accordance with the rules of the SEC. These rules generally provide that a person is the beneficial
owner of securities if such person has or shares the power to vote or direct the voting of securities, or to dispose or direct the disposition
of securities, or has the right to acquire such powers within 60 days through (i) the exercise of any option or warrant, (ii) the conversion
of a security, (iii) the power to revoke a trust, discretionary account or similar arrangement or (iv) the automatic termination of a
trust, discretionary account or similar arrangement.
Except
as otherwise indicated, we believe that the beneficial owners of common stock listed below, based on the information each of them has
given to us, have sole investment and voting power with respect to their shares, except where community property laws may apply. Except
as otherwise noted below, the address for each person or entity listed in the table is c/o TruGolf Holdings, Inc., 60 North 1400 West
Centerville, Utah 84014.
| Name of Beneficial Owner | |
Class A Common Stock | | |
Percent of
Class A
Common Stock (%) | | |
Class B Common Stock | | |
Percent of
Class B
Common Stock (%) | | |
Total Voting Power (%) | |
| Directors and Executive Officers | |
| | | |
| | | |
| | | |
| | | |
| | |
| Christopher Jones (4) | |
| 2,352,113 | | |
| 20.4 | % | |
| 860,082 | | |
| 50.1 | % | |
| 43.0 | % |
| Lindsay Jones | |
| 15,000 | | |
| * | | |
| | | |
| | | |
| * | |
| Brenner Adams | |
| 141,832 | | |
| 1.2 | % | |
| - | | |
| - | | |
| * | |
| Nathan E. Larson | |
| 206,832 | | |
| 1.8 | % | |
| - | | |
| - | | |
| * | |
| B. Shaun Limbers | |
| 293,443 | | |
| 2.5 | % | |
| - | | |
| - | | |
| * | |
| Steven R. Johnson | |
| 1,353,134 | | |
| 11.7 | % | |
| - | | |
| - | | |
| 2.5 | % |
| Humphrey P. Polanen | |
| 125,000 | | |
| 1.1 | % | |
| - | | |
| - | | |
| * | |
| Riley Russell | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| AJ Redmer | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| All directors and executive officers as a group (9 individuals) | |
| 4,487,354 | | |
| 38.9 | % | |
| 439,952 | | |
| 25.6 | % | |
| 28.4 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| 5% Beneficial Owners | |
| | | |
| | | |
| | | |
| | | |
| | |
| David Ashby (2) | |
| 988,253 | | |
| 8.6 | % | |
| 439,952 | | |
| 25.6 | % | |
| 22.0 | % |
| Steven R. Johnson (3) | |
| 936,308 | | |
| 8.1 | % | |
| 416,826 | | |
| 24.3 | % | |
| 20.9 | % |
| Christopher Jones (4) | |
| 1,931,983 | | |
| 16.7 | % | |
| 860,082 | | |
| 50.1 | % | |
| 43.0 | % |
| Bright Vision Sponsor LLC (1) | |
| 2,492,566 | | |
| 21.6 | % | |
| - | | |
| - | | |
| 4.6 | % |
| * |
Less
than 1%. |
| |
|
| (1) |
Mr.
Li served as the managing member of the sponsor. Mr. Li disclaims beneficial ownership of these securities. |
| |
|
| (2) |
Includes
439,952 shares of Class B Common Stock, which are entitled to 25 votes per share and are convertible into shares of Class A Common
Stock on a one-for-one basis. |
| (3) |
Includes
416,826 shares of Class B Common Stock, which are entitled to 25 votes per share and are
convertible into shares of Class A Common Stock on a one-for-one basis.
|
| (4) |
Includes
860,082 shares of Class B Common Stock, which are entitled to 25 votes per share and are convertible into shares of Class A Common
Stock on a one-for-one basis. |
PROPOSAL
1: THE NASDAQ PROPOSAL
Background
and Overview
On
February 2, 2024, the Company executed a securities purchase agreement (the “Purchase Agreement”) with certain investors
(the “PIPE Investors”) pursuant to which the PIPE Investors agreed to purchase from the Company (i) senior convertible notes
in the aggregate principal amount of up to $15,500,000 (the “PIPE Convertible Notes”), (ii) Series A warrants to initially
purchase 1,409,091 shares of the Company’s Class A common stock (the “Series A Warrants”); and (iii) Series B warrants
to initially purchase 1,550,000 shares of the Company’s Class A common stock (the “Series B Warrants,” and collectively
with the Series A Warrants, the “PIPE Warrants”) (the “PIPE Financing”).
The
Purchase Agreement contemplates funding of the investment (the “Investment”) across multiple tranches. At the first closing
(the “Initial Closing”), which occurred on February 6, 2024, an aggregate principal amount of $4,650,000 of PIPE Convertible
Notes were issued in exchange for aggregate gross proceeds of $4,185,000, representing an original issue discount of 10%. On such date
(the “Initial Closing Date”), the Company also issued the PIPE Investors the Series A Warrants and the Series B Warrants.
Subject
to satisfying certain conditions, the Company has the right under the Purchase Agreement, but not the obligation, to require that the
PIPE Investors purchase additional PIPE Convertible Notes at up to two additional closings. Upon notice at any time after the 2nd trading
day following the Initial Closing Date, the Company may require that the PIPE Investors purchase an additional aggregate principal amount
of $4,650,000 of PIPE Convertible Notes, in exchange for aggregate gross proceeds of $4,185,000, if (i) the registration statement (the
“Registration Statement”) required to be filed pursuant to registration rights agreement (the “Registration Rights
Agreement”) between the parties has been filed (which filing occurred on February 14, 2024); and (ii) certain customary closing
conditions are satisfied (the “First Mandatory Additional Closing”). Upon notice at any time after the 2nd trading day following
the date that the First Mandatory Additional Closing is consummated, the Company may require that the PIPE Investors purchase an additional
aggregate principal amount of $6,200,000 of PIPE Convertible Notes, in exchange for aggregate gross proceeds of $5,580,000, if (i) the
Company’s shareholders approve this Proposal 1 at the Special Meeting; (ii) the Registration Statement has been declared effective
by the SEC; and (iii) certain customary closing conditions are satisfied (the “Second Mandatory Additional Closing”).
In
addition, pursuant to the Purchase Agreement, each PIPE Investor has the right, but not the obligation, to require that, upon notice,
the Company sell to such PIPE Investor at one or more additional closings such PIPE Investor’s pro rata share of up to a maximum
aggregate principal amount of $10,850,000 in additional PIPE Convertible Notes (each such additional closing, an “Additional Optional
Closing”); provided that, the principal amount of the additional PIPE Convertible Notes issued at each Additional Optional Closing
must equal at least $250,000. If a PIPE Investor has not elected to effect an Additional Optional Closing on or prior to August 2, 2024,
such PIPE Investor shall have no further right to effect an Additional Optional Closing under the Purchase Agreement. We refer to the
PIPE Convertible Notes that may be issued pursuant to a First Mandatory Additional Closing,
Second Mandatory Additional Closing or Additional Optional Closing as the “Additional Notes.”
Description
of the PIPE Convertible Notes
General.
The PIPE Convertible Notes will mature on the date that is five years from each respective issuance date (the “Maturity Date”),
unless earlier converted (only upon the satisfaction of certain conditions). The Maturity Date may be extended at the sole option of
the holders, under certain circumstances specified therein. The PIPE Convertible Notes will
have an original issue discount of 10%.
Ranking.
The PIPE Convertible Notes
will be our senior unsecured obligations and not the financial obligations of our subsidiaries. Until such date no PIPE Convertible
Notes remain outstanding, all payments due under the PIPE Convertible Notes
will be senior to all of our subordinated indebtedness and subordinated indebtedness of any of our subsidiaries and equal in right of
payment with all of our other indebtedness and other indebtedness of any of our subsidiaries.
Interest.
The PIPE Convertible Notes
bear interest at the rate of 10.0% per annum that (a) shall commence accruing on the date of issuance, (b) shall be computed on the basis
of a 360-day year and twelve 30-day months, and (c) shall be payable in shares of the Company’s Class A common stock so long as
certain conditions are met, provided that the Company may at its option pay such interest in cash or a combination of cash and shares
of the Company’s Class A common stock; provided further that if such interest is being paid in shares of the Company’s Class
A common stock it shall bear interest at the rate of 15.0% per annum. If a holder elects to convert or redeem all or any portion of a
Note prior to the Maturity Date, all accrued and unpaid interest, any make-whole amount, and any late charges on the amount being converted
or redeemed will also be payable.
The
interest rate of the PIPE Convertible Notes
will automatically increase to 15% per annum (the “Default Rate”) upon the occurrence and continuance of an event of default
(See “— Events of Default” below).
Conversion
Rights.
Conversion
at Option of Holder. Each holder of PIPE Convertible Notes may convert all, or any part,
of the outstanding PIPE Convertible Notes, at any time at such holder’s option, into
shares of the Company’s Class A common stock at an initial “Conversion Price”
of $10.00 per share, which is subject to proportional adjustment upon the occurrence of any stock split, stock dividend, stock combination
and/or similar transactions. Upon the voluntary conversion by the holders of the PIPE Convertible Notes, in addition to the issuance
of the Class A common stock issuable upon conversion of the principal amount of PIPE Convertible Notes, the Company shall issue to the
holders in Class A common stock the sum of (A) all accrued interest on the PIPE Convertible Notes to date plus (B) all interest that
would otherwise accrued on such principal amount of the PIPE Convertible Notes if such converted principal would be held to the Maturity
Date at the Conversion Price (the “Make Whole Amount”).
With
limited exceptions, if the Company at any time while a PIPE Convertible Note is outstanding, issues any Class A common stock or securities
entitling any person or entity to acquire shares of Class A common stock (upon conversion, exercise or otherwise), at an effective price
per share less than the Conversion Price then the Conversion Price shall be reduced to the same price as the new investment.
Limitations
on Conversion. A holder shall not have the right to convert any portion of a PIPE Convertible Note to the extent that, after giving
effect to such conversion, the holder (together with certain related parties) would beneficially own in excess of 4.99%, or the “Maximum
Percentage”, of shares of the Company’s Class A common stock outstanding immediately
after giving effect to such conversion. The Maximum Percentage may be raised or lowered to any other percentage not in excess of 9.99%,
at the option of the holder, except that any increase will only be effective upon 61 days’ prior notice to the
Company.
Voluntary
Adjustment Right. Subject to the rules and regulations of the Nasdaq, the Company has the
right, at any time, with the written consent of certain holders of the PIPE Convertible Notes,
to lower the fixed conversion price to any amount and for any period of time deemed appropriate by the
Company’s board of directors. Any voluntary reduction of the conversion price would proportionately increase the number
of shares of Class A common stock that would be issuable upon conversion.
Alternate
Conversion Upon Event of Default. Following the occurrence and during the continuance of an Event of Default (as defined below),
each holder may alternatively elect to convert all or any portion of such holder’s PIPE Convertible Notes at the “Alternate
Conversion Price” equal to the lesser of (i) the Conversion Price, and (ii) 90% of the lowest VWAP of the Class A common stock
during the five consecutive trading days immediately prior to such conversion.
Other
Adjustments. The initial conversion price (the “Conversion Price”) of the PIPE Convertible Notes is $10.00 per share;
provided that the Conversion Price will be automatically reduced to the applicable Adjustment Price (as defined below) if on (i) the
45th calendar day after the initial issuance date, and/or (ii) the date the Registration Statement (as described below) is declared effective
by the SEC (each, an “Adjustment Measuring Date”), the greater of (A) $2.00 with respect to $5.0 million in principal amount
of PIPE Convertible Notes and $2.50 with respect to the remainder of the PIPE Convertible Notes (as adjusted for stock splits, stock
dividends, stock combinations, recapitalizations and similar events), and (B) the lowest volume weighted average price (“VWAP”)
on any trading day during the five trading day period ended, and including, the trading day immediately prior to such applicable Adjustment
Measuring Date (each, an “Adjustment Price”), is less than the Conversion Price then in effect.
Redemption
Rights.
Holder
Event of Default Redemption. Upon an Event of Default, each holder may elect to redeem all or any portion such holder’s PIPE
Convertible Notes in cash at a redemption premium of 25% to the greater of (i) the amount then outstanding under such notes, and (ii)
the equity value of the Company’s Class A common stock underlying the PIPE Convertible
Notes. The equity value of the Company’s Class A common stock underlying the PIPE
Convertible Notes is calculated using the greatest closing sale price of the Company’s Class
A common stock on any trading day immediately preceding such event of default and the date it makes the entire payment required.
Holder
Bankruptcy Event of Default Mandatory Redemption. Upon any bankruptcy Event of Default, the
Company shall immediately redeem in cash all amounts due under the PIPE Convertible Notes at a 25% premium unless the holder waives
such right to receive such payment.
Holder
Change of Control Redemption. Upon a change of control of the Company, each holder may require the
Company to redeem in cash all, or any portion, of the PIPE Convertible Notes at a 5% redemption premium to the greater of the
amount then outstanding under the PIPE Convertible Notes to be redeemed, and the equity value of the
Company’s Class A common stock underlying the PIPE Convertible Notes. The equity value of the
Company’s Class A common stock underlying the PIPE Convertible Notes is calculated using the greatest closing sale price
of the Company’s Class A common stock on any trading day immediately preceding the
earlier of (i) the public announcement of such change of control and (ii) the consummation of such change of control, and ending on the
date the Company makes the entire payment required.
Company
Optional Redemption. At any time, the Company shall have the right to redeem in cash all, but not less than all, of the PIPE Convertible
Notes at price equal to the greater of (i) the amount outstanding under such PIPE Convertible Note, and (ii) the equity value of the
Company’s Class A common stock underlying the PIPE Convertible Notes. The equity value of the
Company’s Class A common stock underlying the PIPE Convertible Notes is calculated using the greatest closing sale price
of the Company’s Class A common stock on any trading day immediately preceding the
date that the Company delivers notice of such redemption and the date the
Company makes the entire payment required.
Events
of Default. The PIPE Convertible Notes contain standard and customary events of defaults (each, an “Event of Default”),
including but not limited: (i) the suspension from trading or the failure to list the Company’s
Class A common stock within certain time periods; (ii) failure to pay to the holder any amount of principal, Make-Whole Amount,
interest, late charges or other amounts when due; (iii) the failure to timely file or make effective a registration statement on Form
S-3 pursuant to the Registration Rights Agreement, (iv) the Company’s failure to cure
a conversion failure or failure to deliver shares of its Class A common stock under the PIPE Warrants, or notice of the
Company’s intention not to comply with a request for conversion of any PIPE Convertible Note or a request for exercise of
any PIPE Warrants, and (iv) bankruptcy or insolvency of the Company.
Purchase
Rights. If at any time the Company grants, issues or sells any options, convertible securities, or rights to purchase stock, warrants,
securities or other property pro rata to all or substantially all of the record holders of any class of its common stock (the “Purchase
Rights”), then each holder of PIPE Convertible Notes will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such holder had held the number of shares of Class A common stock
acquirable upon complete conversion of all the PIPE Convertible Notes held by such holder immediately prior to the date as of which the
record holders of shares of Class A common stock are to be determined for the grant, issue or sale of such Purchase Rights; subject to
certain limitations on beneficial ownership.
Fundamental
Transaction. The PIPE Convertible Notes prohibit the Company from entering specified
fundamental transactions (including, without limitation, mergers, business combinations and similar transactions) unless the
Company (or its successor) assumes in writing all of the Company’s obligations
under the PIPE Convertible Notes and the other transaction documents in the PIPE Financing.
Description
of the Warrants
As
additional consideration for the purchase of the PIPE Convertible Notes, the Company issued to the PIPE Investors, the Series A Warrants
and the Series B warrants.
Series
A Warrants.
Exercise
Period; Number of Shares. The Series A Warrants shall expire five years after issuance and shall initially be exercisable for an
aggregate of 1,409,091 shares of Class A common stock, which number of shares shall be increased each time the holder exercises any Series
B Warrants in an amount equal to 91% of the shares of Class A common stock issued pursuant to such Series B Warrant exercise.
Exercise
Price. The initial exercise price of the Series A Warrants shall be $13.00 per share; provided that if on (A) the 45th
calendar day after issuance, and/or (B) the date the Registration Statement (as described below) is declared effective by the SEC (each,
a “Warrant Adjustment Measuring Date”), the exercise price then in effect is greater than the greater of (i) $4.00 (as adjusted
for stock splits, stock dividends, stock combinations, recapitalizations and similar events), and (ii) the lowest VWAP on any trading
day during the five trading day period ended, and including, the trading day immediately prior to such applicable Warrant Adjustment
Measuring Date, the exercise price shall automatically lower to such price.
Cashless
Exercise. If at the time of exercise of the Series A Warrants, there is no effective registration statement registering the shares
of the Company’s Class A common stock underlying such warrants, such warrants may
be exercised on a cashless basis pursuant to their terms.
Series
B Warrants
Exercise
Period. The Series B Warrants shall expire 30 months after issuance and shall initially be exercisable for an aggregate of 1,550,000
shares of Class A common stock.
Exercise
Price. The initial exercise price of the Series B Warrants shall be $10.00 per share.
Adjustments.
If at any time the sum of (i) the product of (x) the shares underlying the Series B Warrants then remaining and (y) the greater of (A)
$4.00 (as adjusted for stock split, stock dividends, stock combinations, recapitalizations and similar events) and (B) the exercise price
then in effect and (ii) the sum of the amounts in aggregate exercise price received from prior exercises is less than $15.5 million (the
amount of such difference, if any, each a “Deficiency Amount”), the shares underlying the Series B Warrants shall be increased
by the quotient of (I) such applicable Deficiency Amount, divided by (II) the exercise price then in effect; provided that the number
of shares underlying the Series B Warrants shall not be increased an amount greater than 250% of the original number of shares underlying
the Series B Warrants.
Participation
Rights. If the Company issues options, convertible securities, warrants, shares, or
similar securities to holders of the Company’s shares of our Class A common stock,
each Series B Warrant holder has the right to acquire the same as if the holder had exercised its warrant.
Dilutive
Issuances. With limited exceptions, if the Company at any time while the PIPE Warrants are outstanding, issues any Class A common
stock or securities entitling any person or entity to acquire shares of Class A common stock (upon conversion, exercise or otherwise),
at an effective price per share less than the exercise price of the PIPE Warrants (a “Dilutive Issuance”), then the exercise
price of the PIPE Warrants shall be reduced to the same price as the new investment. The adjustment to the PIPE Convertible Notes described
above on the Adjustment Measuring Date shall be deemed a Dilutive Issuance to the extent the date the Registration Statement (as described
below) is declared effective by the SEC after the 45th day after the issuance of the PIPE Warrants.
Fundamental
Transactions. The PIPE Warrants prohibit the Company from entering into specified fundamental
transactions unless the successor entity assumes all of the Company’s obligations
under the PIPE Warrants under a written agreement before the transaction is completed. Upon specified corporate events, a PIPE Warrant
holder will thereafter have the right to receive upon an exercise such shares, securities, cash, assets or any other property whatsoever
which the holder would have been entitled to receive upon the happening of the applicable corporate event had the PIPE Warrant been exercised
immediately prior to the applicable corporate event.
The
above descriptions set forth some but not all of the material terms of the PIPE Convertible Notes
and the PIPE Warrants. The full text of the foregoing securities are attached as exhibits to the Current Report on Form 8-K the
Company filed with the SEC on February 7, 2024.
Shareholder
Approval Requirement
In
compliance with Nasdaq Listing Rule 5635(d), we will not issue any shares of Class A common stock underlying the PIPE Convertible Notes
or the PIPE Warrants if the issuance of such shares of Class A common stock would exceed the aggregate number of shares of Class A common
stock which we may issue upon conversion of the PIPE Convertible Notes or exercise of the PIPE Warrants without breaching our obligations
under the rules or regulations of the Nasdaq Stock Market. Pursuant to the Purchase Agreement, we agreed to hold a special stockholder
meeting on or before April 1, 2024 seeking stockholder approval of the issuance of all of the Class A common stock underlying the PIPE
Convertible Notes or the PIPE Warrants in compliance with the rules and regulations of the Nasdaq Stock Market (without regard to any
limitations on conversion or exercise set forth in the PIPE Convertible Notes or PIPE Warrants, respectively, assuming all notes have
been issued and all adjustments with respect to such issuances shall have been made to the PIPE Warrants, as applicable). We are holding
this Special Meeting to satisfy the foregoing obligations.
Basis
of Shareholder Approval Requirements – Nasdaq Listing Rule 5635(d)
Summary
of Nasdaq Listing Rule 5635(d)
Our
common stock is listed on the NASDAQ Capital Market, and we are subject to the NASDAQ listing standards set forth in its Listing Rules.
Nasdaq Listing Rule 5635(d) requires stockholder approval for the issuance, other than in a public offering, of securities convertible
into Class A common stock at a price less than the greater of book or market value of the Class A common stock if the securities are
convertible into 20% or more of our Class A common stock.
The
Resolutions Subject to Approval at the Special Meeting
For
purposes of complying with Nasdaq Listing Rule 5635(d), pursuant to the Purchase Agreement, we agreed to hold this Special Meeting of
shareholders for approval of resolutions providing for our issuance of all of the shares of our Class A common stock upon conversion
of the PIPE Convertible Notes and upon exercise of the PIPE Warrants, without regard to
any limitations on conversion or exercise set forth in the PIPE Convertible Notes or PIPE Warrants, respectively, and assuming all Additional
Notes have been issued and all adjustments with respect to such issuances shall have been made to the PIPE Convertible Notes and PIPE
Warrants, as applicable.
Dilutive
Effect of Approval of this Proposal
Potential
Dilutive Effect of the PIPE Convertible Notes
Assuming
we issue all Additional Notes, we may issue up to $15.5 million in aggregate principal amount of PIPE
Convertible Notes. Assuming the PIPE Convertible Notes
are held to maturity or if the holders convert such notes into Class A common stock prior to maturity and receive the Make-Whole
Amount, the maximum amount of aggregate principal and interest convertible into Class A common stock will be $27.125 million. Below is
a table summarizing the number of shares of Class A common stock that are potentially issuable upon conversion of the PIPE Convertible
Notes at various assumed conversion prices. As the Alternate Conversion Price described above is
based on the price of our Class A common stock at the time of the event, and since the conversion price may also be adjusted if
we make a Dilutive Issuance as described above or voluntarily reduce such conversion price, the actual conversion price may be less than
the assumed prices set forth in the table.
| Conversion Price | |
$ | 10.00 | | |
$ | 5.00 | | |
$ | 2.50 | | |
$ | 2.00 | | |
$ | 1.00 | |
| Number of shares of Class A common stock issuable upon conversion | |
| 2,7125,000 | | |
| 5,425,000 | | |
| 10,850,000 | | |
| 13,562,500 | | |
| 27,125,000 | |
Potential
Dilutive Effect of the PIPE Warrants
As
described above in “Description of the Warrants – Series B Warrants – Adjustments,” the maximum number of shares
of Class A common stock issuable upon exercise of the
Series B Warrants is 3,875,000 shares. Assuming the full exercise of the Series B Warrants, the maximum
number of shares of Class A common stock issuable upon exercise of the Series A Warrants is 4,935,341 shares.
Consequences
of Not Approving this Proposal
Repayment
of the PIPE Convertible Notes in Cash
If
the Nasdaq Proposal is not approved, the holders of the PIPE Convertible Notes issued as of the
date of this Special Meeting will be unable to convert such notes into our Class A common stock due the limitations set forth
by Nasdaq Listing Rule 5635(d). To the extent any portions of the PIPE Convertible Notes may not
be converted into shares of our Class A common stock due to the limitations in Nasdaq Listing Rule 5635(d), we will be required
to pay interest on the PIPE Convertible Notes in cash and, upon maturity, we will be required to
repay the PIPE Convertible Notes in cash. Repayment of the PIPE Convertible Notes
in cash would divert resources away from funding our business operations, which could negatively impact our prospects, financial
condition and results of operations.
Inability
to Issue PIPE Convertible Notes
Our
ability to require the PIPE Investors to purchase the final tranche of PIPE Convertible Notes pursuant
to the Second Mandatory Additional Closing described above is contingent on our shareholders approving this Nasdaq Proposal. We
would receive $5.58 million upon the closing of the final tranche of PIPE Convertible Notes. Our
inability to draw down on such final tranche would limit the cash available to us to operate our business.
Obligation
to Continue to Seek Approval
If
our shareholders do not approve this Nasdaq Proposal, we will be required to seek stockholder approval of this proposal prior to June
1, 2024, and if we are unsuccessful in receiving stockholder approval at that meeting we will be required to seek stockholder approval
of this proposal every three months until we receive approval of this proposal. We are not seeking the approval of our shareholders to
authorize our issuance of the notes and warrants described above, as we have already entered into the Purchase Agreement and issued the
securities (other than the final tranche of PIPE Convertible Notes), which are binding obligations
on us. The failure of our shareholders to approve the Nasdaq Proposal will not negate the existing terms of the documents governing the
securities, and the terms of the Purchase Agreement and the securities will remain binding obligations. Seeking shareholder approval
multiple times would require us to devote cash and management resources to those special meetings, and would leave less resources for
our business.
Vote
Required and Recommendation of the Board of Directors
The
approval of Proposal 1 requires the affirmative vote of a majority of the voting power of the votes cast (in person or by proxy) at the
Special Meeting. Broker non-votes and abstentions will not be taken into account in determining the outcome of the proposal. The
Board recommends that stockholders vote FOR, for purposes of complying with Nasdaq Listing Rule 5635(d), the approval for our issuance
of all of the shares of our Class A common stock upon conversion of the PIPE Convertible Notes and upon exercise of the PIPE Warrants,
without regard to any limitations on conversion or exercise set forth in the PIPE Convertible Notes or PIPE Warrants, respectively, and
assuming all Additional Notes have been issued and all adjustments with respect to such issuances shall have been made to the PIPE Convertible
Notes and PIPE Warrants, as applicable.
PROPOSAL
2: APPROVAL OF AN ADJOURNMENT OF THE SPECIAL
MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT VOTES IN FAVOR OF THE NASDAQ PROPOSAL
Overview
If
the Special Meeting is convened and a quorum is present, but there are not sufficient votes to approve Proposal 1, one or more of our
proxy holders may move to adjourn the Special Meeting at that time in order to enable our Board to solicit additional proxies.
In
this proposal, we are asking our stockholders to authorize one or more of our proxy holders to adjourn the Special Meeting to another
time and place, if necessary, to solicit additional proxies in the event that there are not sufficient votes to approve Proposal 1. If
our stockholders approve this proposal, one or more of our proxy holders can adjourn the Special Meeting and any adjourned session of
the Special Meeting to allow for additional time to solicit additional proxies, including the solicitation of proxies from our stockholders
that have previously voted. Among other things, approval of this proposal could mean that, even if we had received proxies representing
a sufficient number of votes to defeat Proposal 1, we could adjourn the Special Meeting without a vote on such proposals and seek to
convince our stockholders to change their votes in favor of such proposals.
If
it is necessary to adjourn the Special Meeting, no notice of the adjourned meeting is required to be given to our stockholders, other
than an announcement at the Special Meeting of the time and place to which the Special Meeting is adjourned, so long as the meeting is
adjourned for 30 days or less and no new record date is fixed for the adjourned meeting. At the adjourned meeting, we may transact any
business which might have been transacted at the original meeting.
Vote
Required and Recommendation of the Board of Directors
The
approval of Proposal 2 requires the affirmative vote of a majority of the voting power of the votes cast (in person or by proxy) at the
Special Meeting. Broker non-votes and abstentions will not be taken into account in determining the outcome of the proposal. The
Board recommends that stockholders vote FOR the approval to authorize the adjournment of the Special Meeting, if necessary, to solicit
additional proxies if there are not sufficient votes in favor of the Nasdaq Proposal.
Other
Business
As
of the date of this Proxy Statement, management does not know of any other matters that will be brought before the Special Meeting requiring
action of the shareholders. However, if any other matters requiring the vote of the shareholders properly come before the Special Meeting,
it is the intention of the persons named in the enclosed form of proxy to vote the proxies in accordance with the discretion of management.
The persons designated as proxies will also have the right to approve any and all adjournments of the Special Meeting for any reason.
SHAREholders
Sharing the Same Address
The
SEC has adopted rules that permit companies and intermediaries (such as brokers, banks and other nominees) to implement a delivery procedure
called “householding.” Under this procedure, multiple shareholders who reside at the same address may receive a single copy
of the Proxy Statement and other proxy materials, unless the affected shareholder has provided contrary instructions. This procedure
reduces printing costs and postage fees.
Under
applicable law, if you consented or were deemed to have consented, your broker, bank or other intermediary may send only one copy of
the Proxy Statement and other proxy materials to your address for all residents that own shares of the Company’s common stock in
street name. If you wish to revoke your consent to householding, you must contact your broker, bank or other intermediary. If you are
receiving multiple copies of the Proxy Statement and other proxy materials, you may be able to request householding by contacting your
broker, bank or other intermediary. Upon written or oral request, we will promptly deliver a separate set of the Proxy Statement or other
proxy materials to any beneficial owner at a shared address to which a single copy of any of those documents was delivered. If you wish
to request copies free of charge of the Proxy Statement or other proxy materials, please send your request to Investor Relations, TruGolf
Holdings, Inc., 60 North 1400 West Centerville, Utah 84014 or call the Company with your request at (917) 289-2776.
| By Order of the Board of Directors, |
|
| |
|
| /s/ Christopher Jones |
|
| Christopher Jones |
|
| Chief Executive Officer |
|
| |
|
| February 26, 2024 |
|
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