TruGolf Holdings (TRUG) Toxic Convertible Preferred Dilution Case

Attorneys review the case details to decide whether to proceed with a class action.

D. Utah

Court

2:26-cv-00695

Case number

09/10/2025

Class period Start

05/20/2026

Class period End

09/28/2026

Lead Plaintiff motion deadline

$TRUG investors filed a claim against TruGolf Holdings for concealing that a toxic, ratcheting Series A Convertible Preferred Stock financing would drive continuous dilution of its Class A common stock.
The financing's conversion price reset lower every time TruGolf's stock fell, entitling preferred holders to progressively more shares — growing the Class A share count by roughly 159% in months, forcing two reverse stock splits, and pushing TruGolf's stock down approximately 98% on a split-adjusted basis.
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Case Details:

In April 2025, TruGolf entered into a Series A Convertible Preferred Stock financing carrying a ratcheting conversion price: as conversions pushed the market price of TruGolf's Class A shares down, the conversion price reset lower, entitling preferred holders to still more shares. TruGolf's registration statements and periodic reports described this dilution as a contingent, hypothetical risk, even as management received and processed conversion notices in real time.

As conversions continued throughout the Class Period, TruGolf's Class A share count grew from 422,899 shares at December 31, 2025 to 1,093,687 shares by May 15, 2026, an increase of approximately 159%, forcing the company to execute two reverse stock splits (June 2025 and March 2026) to maintain Nasdaq listing compliance. By March 31, 2026, TruGolf's stockholders' equity stood at just $8,089 above Nasdaq's $2.5 million minimum listing requirement, leaving the company on the brink of delisting.

Then, on April 17, 2026, TruGolf amended its fiscal 2025 annual report to correct an overstatement of its own outstanding Class A shares by 480,504 shares, or approximately 52%. 

The company's Form 10-Q for the first quarter of 2026 also contained internally irreconcilable share counts for the same reporting date. 

As the scale of the dilution and the unreliability of TruGolf's capital-structure reporting became apparent, TruGolf's split-adjusted stock price declined by more than 98% over the Class Period, from a trailing-year high above $85 to approximately $1.45.

Based on these events, $TRUG investors filed a claim against TruGolf Holdings, alleging the company:
Concealed the toxic, ratcheting terms of the Series A Preferred financing and the true, then-current scale of shareholder dilution.
Failed to disclose the company's precarious Nasdaq listing compliance position.
Issued inaccurate and repeatedly corrected share count disclosures.
Investors argue TruGolf misled the market about the dilutive risk of its Series A Preferred financing and its deteriorating Nasdaq compliance position, causing losses as continuous conversions drove the stock down approximately 98% over the Class Period.

Case Type

US Securities Class Action

Case Status

Attorney Investigation

Alleged Offence

Mismanagement,

Financial Misrepresentation,

Failure to Disclose,

Breach of Fiduciary duty

Suspected Party

Directors,

Management,

Hedge Fund

Security Type

Stocks

Trade Direction

Long

Shock Event Date

05/20/2026

Filing date

08/24/2026

Lead Plaintiff Deadline

09/28/2026