Newton Golf Company, Inc. (NWTG) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. Newton Golf Company, Inc. designs, manufactures, and sells performance golf equipment, primarily the Newton Motion shaft platform and Newton Gravity putters. The company operates a single manufacturing facility in St. Joseph, Missouri, and sells through direct-to-consumer and wholesale channels. The company is classified as a non-accelerated filer, smaller reporting company, and emerging growth company.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Net Sales | $991,000 | $1,210,000 |
| Gross Profit | $628,000 | $852,000 |
| Gross Margin | 63.4% | 70.4% |
| Operating Loss | $(2,615,000) | $(1,971,000) |
| Net Loss | $(2,659,000) | $(525,000) |
| Loss Per Share (Basic/Diluted) | $(0.58) | $(0.55) |
| Cash and Equivalents (End of Period) | $593,000 | $5,871,000 |
| Stockholders' Equity (Deficiency) | $(1,521,000) | $6,198,000 |
| Total Debt (Convertible Notes) | $429,000 (Net) | $0 |
Material Changes vs. Prior Period
- Revenue Decline: Net sales decreased 18% to $991,000. Management attributes this to temporary reductions in production throughput and manufacturing utilization due to "manufacturing transition activities," including recalibration of machining and changes to shaft recipes.
- Margin Compression: Gross margin fell from 70.4% to 63.4% as fixed production costs were absorbed over lower volumes.
- Increased Operating Expenses: Total operating expenses rose to $3.24 million (from $2.82 million), driven by labor cost increases, stock-based compensation, and idle manufacturing capacity costs.
- Warrant Liability Impact: The prior year included a $1.4 million non-cash gain from warrant liability revaluation. The current quarter recorded a $40,000 loss on the same item, significantly widening the net loss.
- Liquidity Deterioration: Cash balances dropped from $1.3 million at year-end 2025 to $593,000. The company moved from positive equity ($926,000) to a stockholders' deficit of $1.5 million.
Guidance, Outlook, Risks, and Unusual Items
- Going Concern Warning: The filing explicitly states that the company's net loss, cash burn, and stockholders' deficit raise substantial doubt about its ability to continue as a going concern within one year. Additional financing is required to support operations.
- Nasdaq Compliance: On April 6, 2026, the company received a deficiency notice from Nasdaq for failing to maintain the required $2.5 million in stockholders' equity. The company has until May 21, 2026, to submit a compliance plan.
- Financing Activities: The company entered a Purchase Agreement on March 16, 2026, to issue up to $2.0 million in convertible notes. $500,000 was issued to a related party during the quarter, and an additional $850,000 was issued to third parties subsequent to the quarter-end.
- Operational Outlook: Management expects production volumes and gross margins to improve in subsequent quarters as manufacturing transition activities conclude. New products (Fast Motion fairway/hybrid shafts) are expected to launch in Q3 2026.
- Controls: Management concluded that disclosure controls and procedures were not effective as of March 31, 2026.
Investor Verification Checklist
- Capital Adequacy: Verify the status of the $2.0 million convertible note facility and the timeline for the remaining $1.5 million drawdown to assess runway.
- Nasdaq Plan: Monitor the submission and acceptance of the compliance plan to regain stockholders' equity requirements by the May 21, 2026 deadline.
- Production Recovery: Confirm the completion of manufacturing transition activities and the resumption of full production throughput to validate revenue recovery projections.
- Warrant Liability Volatility: Review the terms of Series A and Series B warrants, as their fair value adjustments continue to materially impact net income/loss.
- Customer Deposits: Assess the $929,000 in customer deposits to understand the backlog of revenue expected to be recognized once production constraints are lifted.