TruGolf Holdings, Inc. Leases Disclosure
NOTE 18 – LEASES
The Company is party to two leases: (i) office space in Centerville, Utah (the “Centerville Lease”) and (ii) a warehouse in North Salt Lake City, Utah (the “SLC Lease”). The Centerville lease is scheduled to expire in May 2028 and the SLC Lease is scheduled to expire in November 2026.
The Company has operating leases for its corporate headquarters and warehouse. The Company determines if an arrangement contains a lease at inception based on the ability to control a physically distinct asset. Operating lease right-of-use assets are recorded in the consolidated balance sheets on the initial measurement of the lease liability as adjusted to include prepaid rent and initial direct costs less any lease incentives received. Lease liabilities are measured at the commencement date based on the present value of the lease payments over the lease term. The Company separately accounts for lease and non-lease components within lease agreements. The Company uses its incremental borrowing rate to present value the lease liability as key inputs to determine the interest rate implicit in the lease are not shared by lessors.
Operating lease expense is recorded on a straight-line basis over the lease term. Right-of-use assets and lease liabilities for short-term leases are not recognized in the consolidated balance sheets. Payments for short-term leases are recognized in the consolidated statements of operations on a straight-line basis over the lease term.
When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated incremental borrowing rate at lease inception point. The weighted average incremental borrowing rate applied was 6.60%. As of December 31, 2025, the Company’s leases had a remaining weighted average term of 1.54 years.
The following table presents net lease cost and other supplemental lease information:
| 2025 | 2024 | |||||||
| Lease cost | ||||||||
| Operating lease cost (cost resulting from lease payments) | $ | 420,548 | $ | 403,109 | ||||
| Net lease costs | $ | 420,548 | $ | 403,109 | ||||
| Operating lease - operating cash flows (fixed payments) | $ | 420,548 | $ | 403,109 | ||||
| Operating lease - operating cash flows (liability increase) | $ | (26,243 | ) | $ | 334,254 | |||
| Non-current leases - right-of-use assets | $ | 682,648 | $ | 634,269 | ||||
| Current liabilities - operating lease liabilities | $ | 502,526 | $ | 363,102 | ||||
| Non-current liabilities - operating lease liabilities | $ | 191,944 | $ | 305,125 | ||||
Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the year ended December 31, 2025, are as follows:
| Fiscal Year | Operating Leases | |||
| 2026 | $ | 532,817 | ||
| 2027 | 144,227 | |||
| 2028 | 60,809 | |||
| Total future minimum lease payments | $ | 737,853 | ||
| Amount representing interest | (43,383 | ) | ||
| Present value of net future minimum lease payments | $ | 694,470 | ||
Lease Modification
During the year ended December 31, 2025, the Company entered into a lease extension agreement related to its office facility located in Centerville City, Utah. The amendment extended the lease term through November 30, 2026. The extension provides for monthly base rent of approximately $35,696, beginning December 1, 2025. The Company also remains responsible for its proportionate share of certain operating costs of the building, including common area maintenance, property taxes, and insurance, which are treated as variable lease payments and are recognized as expense in the period in which the obligation for those payments is incurred.
The lease extension was accounted for as a modification of the existing lease under ASC 842. Upon execution of the amendment, the Company remeasured the lease liability using the incremental borrowing rate at the modification date and recognized a corresponding adjustment to the right-of-use asset.
As a result of the modification, the Company recorded an increase to both the operating lease right-of-use asset and the operating lease liability of approximately $421,334, representing the present value of the additional lease payments associated with the extension.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Apr 15, 2026 | Showing above |
| 2024 | Apr 15, 2025 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.