How are the increased professional fees and interest expense expected to affect cash flow and the company’s balance sheet going forward?
Impact on cash flow
The jump in professional‑service fees and the newly‑recorded interest expense are non‑cash‑generating items that will further erode operating cash. In Q2‑25 TruGolf’s net loss widened to $3.3 MM (vs. $1.6 MM a year earlier) even though the EPS loss narrowed, indicating that the bulk of the loss is now coming from higher SG&A and financing costs rather than product‑related margins. Because interest expense is tied to existing debt, the company will have to service that debt out of operating cash, leaving less free cash for working‑capital needs, inventory build‑up, or growth‑capex. Unless the firm can offset these outflows with the 11.3 % sales lift, cash‑burn will likely accelerate and could push the cash‑balance down to a level that triggers covenant breaches or a need for additional financing.
Balance‑sheet ramifications
Higher professional fees are expensed directly to the income statement, reducing retained earnings and thus equity on the balance sheet. The interest charge, meanwhile, increases accrued liabilities and the outstanding debt principal (if not fully amortized). Together, they expand the liability side while compressing assets, widening the net‑loss gap and deteriorating the equity cushion. A weaker equity base may force TruGolf to raise capital through equity dilutions (e.g., secondary offerings) or higher‑cost debt, which could further pressure the share‑price. From a technical standpoint, the stock is already testing the lower‑half of its 2024‑25 range; a continued cash‑flow squeeze could accelerate a break below the 20‑day moving average and invite short‑covering rallies if any upside catalyst (e.g., a new product launch) materialises.
Trading implication
Given the upside in sales is being out‑run by the cash‑drain from professional fees and interest, the fundamentals point to a near‑term downside pressure on both cash and balance‑sheet health. Until TruGolf demonstrates a sustainable margin improvement or secures a clear financing runway, the stock remains a bearish play. Short‑positions or defensive long‑holds with a tight stop just above the recent 20‑day low (~$1.10) would be prudent; a breakout above the 20‑day EMA with volume could be the only trigger for a contrarian rebound.