NWTG

Good afternoon. Thank you for joining us today to discuss Newton Golf Company's first quarter of 2026 operating and financial results. Thank you. Before we begin today's call, I would like to provide the company's safe harbor statement that includes cautions regarding forward-looking statements made during today's call. The information that we have provided in this conference call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the company's ability to support working capital needs, operational scaling initiatives, and future growth opportunities, future revenue, future plans, objectives, expectations and events, assumptions, and estimates. Any forward-looking statements made during this conference call are not guarantees of future performance and involve certain risks, uncertainties, and assumptions which difficult to predict, and actual outcomes and results may differ materially.

For more information about risks and uncertainties associated with the company's business, please refer to the Risk Factors section of the company's SEC filings, including its annual report on the Form 10-K and subsequent quarterly reports on Form 10-Q. The company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement. Hosting the call today is Newton Golf Interim Chief Executive Officer and Chief Technology Officer, Aki Yorihiro, and the company's Chief Financial Officer and Chief Operating Officer, Jeff Clayborne. Following their remarks, we will open the call to your questions. At any time during the call, you may join the Q&A queue by pressing star 1 on your keypad. I'd like to remind everyone that today's call is being recorded, and it will be made available for telecom replay.

Please see the instructions in today's press release that has been posted to the investor relations section of the company's website. I'd like to turn the call over to Newton's Golf Interim CEO, Aki Yorihiro. Sir, please go ahead.

Good afternoon, everyone, and thank you for joining us. We believe Newton Golf remains in the early stages of scaling the Newton Motion Shaft platform across additional product categories, professional fitting channels, retail relationships, and international distribution opportunities. Following record net sales growth of 136% in 2025, we continued executing strategic initiatives during the first quarter intended to support long-term growth, production scalability, and broader market adoption. These initiatives included investments intended to support future production capacity and manufacturing efficiency as demand for the Newton Motion platform continues to expand. While these initiatives temporarily impacted shipment timing and near-term financial performance during the quarter, demand for Newton Golf products remained strong throughout the period.

As of quarter end, delayed shipments represented approximately $1.2 million of customer deposits and open sales orders that we expect to convert into revenue as fulfillment activities continue improving during the current quarter. During the quarter, we continued expanding our domestic and international distribution channels. We strengthened our international presence through an exclusive Voice Caddie distribution agreement in South Korea, one of the world's leading premium golf equipment markets. We also secured a $136,000 opening order under the partnership, which exceeded the minimum order requirement, and we expect to recognize that revenue in the second quarter of 2026.

We also expanded our professional club fitter network to approximately 235 accounts, an increase of 99% from the first quarter of 2025, continuing to strengthen our presence within the premium fitting market and broaden golfer access to the Newton Motion platform. At the 2026 PGA Show, we introduced the Fast Motion fairway wood shaft and hybrid shafts, which are expected to launch commercially in the third quarter of 2026. These product introductions extend the Newton Motion platform and the DOT fitting system across additional club categories and support a more integrated multi-club fitting approach. Because golfers typically carry a driver, multiple fairway woods, and multiple hybrid clubs, we believe this platform strategy creates the opportunity for multiple Newton shaft placements within a single golf bag rather than a single driver replacement.

Over time, we believe this may support increased average revenue opportunities per golfer and per fitting transaction as adoption of the Newton Motion platform continues to expand. With that, I'll turn the call over to Jeff to review our financial results.

Thank you, Aki, and good afternoon, everyone. In Q1, revenue decreased 18% to $1 million. The decrease primarily reflected temporarily reduced manufacturing capacity and delayed order fulfillment associated with operational initiatives implemented during the quarter to support future growth opportunities. Importantly, customer demand remained stronger in the quarter, with approximately $1.2 million of customer deposits and open sales orders at quarter end that we expect to convert into revenue as fulfillment activities continue improving. Gross profit totaled $628,000 or 63% of net sales compared to $852,000 or 70% of net sales in the prior year quarter. Gross margin was temporarily impacted by lower production volumes during the quarter, which reduced fixed cost absorption and manufacturing utilization. Total operating expenses increased 15% to $3.2 million.

The increase primarily reflected approximately $0.2 million of bonus accruals and higher labor and manufacturing-related costs associated with the temporary production inefficiencies during the quarter, as well as research and development activities supporting operational scaling initiatives. These increases were partially offset by disciplined expense management, including reductions of approximately $0.2 million in sales and marketing expenses and approximately $0.1 million in professional service expenses. Net loss for the quarter of 2026 totaled $2.7 million, or -$0.58 per share, compared to a net loss of a half a million, or -$0.55 per share in the prior year quarter. Turning to our balance sheet, cash and cash equivalents totaled $593,000 at March 31st, 2026.

During the quarter, we completed the initial 500,000 convertible note closing under our previously disclosed securities purchase agreement dated March 16th, 2026, which included a fixed conversion price of $1.60 per share, together with warrants to purchase 50,000 shares of common stock at an exercise price of $1.75 per share. Subsequent to the quarter end, we issued an additional 850,000 of convertible promissory notes to unrelated third-party investors pursuant to the same financing agreement. We believe these financings, together with our existing ATM facility, provide additional flexibility to support working capital needs, operational scaling initiatives, and future growth opportunities while maintaining what we believe are relatively shareholder-aligned financing terms, including fixed conversion pricing and limited warrant coverage. I'll now turn the call back over to Aki.

Thank you, Jeff. As I mentioned in my opening remarks, at the 2026 PGA Show, we introduced the Fast Motion fairway wood shaft and hybrid shafts, which are expected to launch commercially in the third quarter of 2026. These launches build on our momentum within the professional fitting channel, where Newton shafts ranked as the number 1 selling shaft for both drivers and fairway woods at Club Champion in 2025. These product introductions expand the Newton Motion platform and extend our DOT fitting system across additional club categories. The DOT system is designed to provide golfers and professional club fitters with a more consistent fitting structure across driver, fairway wood, and hybrid configurations, supporting a more integrated multi-club fitting approach.

More than 60 professional golfers currently play Newton Motion and Fast Motion shaft across the PGA Tour, PGA Tour Champions, LPGA, and Korn Ferry Tour, supporting continued brand awareness and fitting adoption among golfers and professional club fitters. Because golfers typically carry a driver, multiple fairway woods, and multiple hybrid clubs, we believe this platform strategy creates the opportunity for multiple Newton shaft placements within a single golf bag rather than a single driver replacement. As adoption of the Newton Motion platform continues to expand, we believe this structure may support increased average revenue opportunities per golfer and per fitting transaction over time. We also continue expanding our international distribution presence through our Voice Caddie partnership in South Korea and believe the relationship supports continued growth opportunities within one of the world's leading premium golf equipment markets.

Operationally, we continued enhancing manufacturing management and production planning processes intended to support long-term scalability and future growth opportunities. During the quarter, we expanded operational oversight within management and in April hired a manufacturing executive with more than 25 years of experience to support production scaling initiatives and future product launches. As fulfillment activities continue improving and production volumes normalize, we believe the underlying demand trends for the Newton Motion platform remain strong. With approximately $1.2 million of customer deposits and open sales order at the quarter end, expanding distribution relationships, continued growth within the professional fitting channel, and upcoming product launches across additional club categories, we believe the company remains well-positioned for continued growth in 2026.

Following record net sales growth of 136% in 2025, we believe the investments made during the quarter strengthened the Company's foundation for future scaling opportunities. While we are not providing formal guidance, we currently anticipate 2026 will represent another record year for Newton Golf. With that, we'll open the call for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you'd like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. For participants who are listening on the website, you may type your question in the ask a question box. One moment, please, while we poll for questions. We take the first question from the line of David Marsh from Emerging Growth. Please go ahead.

Hey, thank you guys for taking the questions. Just wanted to start out with a capacity question. With your current, you know, with your current operational capabilities, what do you think your production capacity is on an annual run rate basis at this, at this point?

Well, I would say that's an evolving question, David, and I appreciate the question. Our capacity within that building is over 200,000 shafts a year. That would require us staggering some additional shifts. Our capacity as a steady state, not adding additional resources, is between 60,000 and 70,000 shafts right now.

Got it.

We did commercially, we sold just over 40,000 shafts last year. We have room to grow before we need to begin adding some additional shifts on a full-time basis.

Okay. Just turning to kind of adoption at the Tour Pro level. You guys had announced the prior quarter something between 60 and 70. I mean, do you have any major signings in the most recent quarter that you could highlight and kind of provide an update of where you are in terms of Tour Pros playing your shafts at this point?

Yes. There are, you know, probably another a dozen players that are playing the shaft for the first time this year, which is fantastic. Many of them, I can't mention the name today, because we do not have an NIL relationship with them yet. What I will say is that, you know, as it relates to the current, you know, the investment that we made in the factory to improve our production, that also leads to higher performance out of the shafts. We've gotten tremendous reception on the tour and also from amateurs, you know, when I do demo days and so forth. We really see that coming through. You know, so far it's been an exciting year. We haven't had a win yet, unfortunately, but we've had numerous top tens and, I think it's, hopefully, it's gonna be a great year.

Sounds good. Just kind of my last question, and I'll get back in the queue, is, you know, I guess the, you know, kind of the holy grail for you guys would be to get the, you know, the original equipment manufacturers to adopt your shafts in their manufacturing. Can you guys give us an update today in terms of conversations that you may be having and any progress and any, you know, kind of indications of interest from any of these major manufacturers in terms of potentially, you know, bringing your shafts into their, you know, kind of production facilities and such?

Sure. Jeff, you want me to take that or you wanna take that?

No, you can take it.

Okay

There's anything I can sort of add, I'll.

David, this is a very, you know, large bucket that we have been trying to open. I think that process, you know, is here now. We're talking to multiple OEMs out there right now. One is a very large one. Again, I can't give you the name, but we are pretty far along with them. We are in their, you know, the headquarters. We're getting into their national fitting program that they have. We are also in their tour program officially. Where our shafts are carried by their tour van as opposed to us being, you know, on the ground distributing the shafts. That's where we are.

It's, you know, we have received, you know, we have actively been shipping products to them, you know, to further that relationship. I mentioned a little bit a month ago, I think the flow on the OEM relationship will probably look like, you know, the first stage is getting into their fitting program, and that would be at their main location or satellite locations if they have them, and then certainly the national fitter network that they operate themselves. That's very exciting because we know that our shafts are really easy to fit, and they perform really great, and, it's new, you know, and everybody likes to see the new offering. Very, very excited about that.

There is another OEM relationship that we are talking to where we could potentially go straight into their web offering. You know, those are the opportunities we're looking at and it seems like things are progressing nicely.

Yeah. The piece I would add, connecting the dots related to that is, you know, we have been mentioning it for the past couple of quarters that this part of the business has been heating up. You know, Q1 being typically the slowest quarter for the company since there's a little bit of seasonality related to the golf business. In order to facilitate making major strides and taking the next steps with these OEMs, it was important for us to improve, make some adjustments in the factory, which is why we did what we did to accelerate those relationships. Otherwise, we could remain status quo.

I think that sounds pretty encouraging, guys. Keep up the good work, and, look forward to the progress. I'll jump back in the queue and let someone else have an opportunity here.

Yeah. Thank you, David.

Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one.

All right. We have some in the Q&A written, I'll read some of these. Aki and I will take turns answering, depending whose lane they fall into. The first question is: What is the current lead time for ordering a shaft? Have you seen any order cancellations from this $1.2 million backlog? Our current lead time, which factors in their existing backlog plus new orders that we will be receiving, is somewhere between six to eight weeks overall. If you're part of the backlog, you're gonna be receiving your shafts faster than six to eight weeks. As far as the cancellations are concerned, we had roughly $300,000 canceled that were part of the $1.2 millon, the initial orders was $1.5 million, roughly 20%.

Overall, considering we've had some significant delays, the fact that we've only had 20% cancellations, I think really shows the demand and the strength of the brand that people are willing to wait a little extra time to secure a new shaft for their golf season. The next question: Are you actively looking for a new CEO? Yes, I think Aki and I can both take two different angles on that. We have been actively looking for a new CEO. We have quite a few really good candidates. I would probably leave it at that. Aki can add a little more. As a founder of the company, and a board member, maybe you can add some specifics of what that candidate may look like.

Sure. Again, to confirm, we're very active. I think one of the principal decisions that, you know, we are kinda looking at and discussing and trying to make decision on is the overall, you know, long-term strategy for the business, and that obviously affects the profile of the CEO and vice versa. You know, it's an exciting time, but we certainly want a great candidate, and I think we want to all be aligned on where we want to be in the long-term and having somebody who can help us execute those longer, you know, broader vision. That is where we are.

Did we have any putter sales? A few, nothing significant. The putter business will continue to take a back seat to the company, primarily because the shaft side is so robust. The putter business is to put it together, we're selling a complete putter. There's a lot more to the manufacturing process. The other part is you really need to touch and feel a putter to secure a purchase. You know, the putters are around $400-$600. Once we begin securing OEMs, getting additional floor space in the retail world, that would be a good time for us to introduce putters since it is such a personal touch. A golfer's relationship with a putter is completely different. Did we see any revenue from the Japanese e-commerce platform?

Yes, we didn't report any revenue in Q1 related to Japan as we didn't ship them product, but we have some revenue coming in, not to the extent of what Korea was able to secure in their first order with us. When will we see the actual payment for the $136,000 from Voice Caddie? That's in motion, so I have no doubt that that would be funded here in Q2. Again, you saw the initial order. They already blew through their minimum, so I expect another reorder sometime later this year. Obviously, the factory delays impacted that a little bit, but overall, we feel pretty bullish about them. Our relationship with them is they need to pay in advance prior to them receiving product.

Is the new equipment able to run lights out? I'm not sure what that refers to.

I can take a guess. Yeah.

-again.

Just, I'm gonna take a guess, and I think, you know, it, I'm interpreting that question to be, you know, is the factory or the equipment fully automated? Meaning that, you know, you can set it up, press the switch button, press the, you know, on button, and then leave for the night, and then come in the morning, and you have finished shafts. If that is the intent of the question, the answer is no. The way we manufacture our shaft, we certainly use a lot of machinery. There's also a human being component to it at pretty much every step of the way, other than the oven. You know, when we put shaft in the oven, only the shaft goes in. The humans don't go in, obviously.

Pretty much every other process, there's a human touch to it that accompanies the machine. It is not able to run lights out if that's the meaning of it. What I would like to point out is that's one of the elements that differentiates us with a lot of our competitors, which is that, you know, we're producing in the United States. We have our own QC over everything, whether it's, you know, materials coming in or equipment coming in, obviously operating the machinery, you know, wrapping the shafts every day. All those things we do our internal QC. Everything is real time.

One of the big focus during our, you know, the first quarter, investment in the infrastructure is, yes, definitely new equipment that's gonna help us scale, but also upping the technique, the craftsmanship, the professionalism of the staff in our factory. As I think we have come a huge way since the beginning of the year when we started this process. I'm actually in Missouri today, this week, and it's great. It's really great. I hope that answers that question.

I can kind of finish it with a follow-up. What do you expect when we're back to normal operations, the lead time to be two to three weeks? No, it's gonna be substantially better than that. The real end goal is that we'd like our products to be going out the door 48 hours from the time of order. As part of the change in the factory, we brought in a new leader, as Aki mentioned in his script. It's over 25 years experience. It's actually 28. 18 of them have been at the Vice President running a factory level. This gentleman has scaled factories from zero revenue to companies much bigger than ours.

The goal, what we'll achieve during this year is to maintain a minimum of one month to two months supply of inventory using all the capabilities of demand planning, AI, to tighten in what we predict to be our forecast, allowing us the ability to ship things immediately once the order came in. As it relates to the factory, that was one of the things. We had that tough decision in Q1. Do we start with this rework and fix everything now or wait till we build up the inventory?

The decision we made was to take advantage of Q1 to do this because the reality is we wanted to come out of Q1 with a much stronger factory, virtually optimized to really grow and maximize the opportunity of this brand, and equally important, be able to send shafts from the new improved factory to our potential OEM partners during this year's golf season. It may have taken us a little bit more time to build up that inventory supply. We thought over the long-term, the short-term is, it's terrible. No one wanted to, you know, have $1.2 million of back orders. When we look at the longer time horizon, it was the best decision for the company and the investor, to make the changes we did in Q1.

This will be yours, Aki. You've kinda answered some. Can you elaborate more on the manufacturing challenges? Are the issues you encounter fully resolved?

Sure. I'll start with the conclusion first. The issues have been resolved. We're very happy with it. It's a simple question, but it's somewhat complicated to answer. I'll take a crack at this. Where we were before the, you know, before this revamp, our shafts were pretty good, you know. I think it was evidenced by the tour usage, it was evidenced by our very fast growth, and all that. It's, to me, right, and I'm the founder, so I've been here since day one, I wanted more. I think many of our key customers require more, whether that's an OEM. Japanese and the South Koreans, they're very picky. It's also a very lucrative market. We had to get better.

The success of our, you know, 2025 and before success, that's largely, I think, the designs that we have come up with. The improved factory, what it does is it enables more of the potential of the design to come out. Let's say, you know, last year we were at certain percentage of the actual performance from the design. This year, I think we will add significant improvement to that potential of the designs, and I think that's what really excites us. It was a very difficult decision, you know, and I hope that, you know, we don't get beat up too much over this, you know, because of the first quarter financials. It was the right thing to do.

We chose to do all of it, as opposed to doing some band-aids and then maybe tackling it, you know, later in the year or possibly next year. I really wanted excellent products to be going out in 2026, and for 2026 to be, you know, a banner year for us, whether through all the, you know, additional channels that we're developing, tour performance, reviews, all of those things. You know, it's a lot. In our business, we say every little thing matters, but every little thing adds up to a big thing, and you see it out in the performance, and you see it in customer satisfaction. You know, on this platform, I'll kinda keep it at that. You know, if you have 24 hours, I can run it, you know, all of this through. Jeff, anything to add?

No, that was pretty good. Next question. Do we need more Angelos out there selling and having any plans for more staff here? The short answer is yes. We hired a East Coast manager. We'll hire someone else to the West Coast and the Midwest, basically our hot markets, as we continue to wanna open up doors. Those doors, not only will help us sell shafts, but ultimately start to begin selling a putter, which is ultimately a completely separate business for us because it's not a shaft. You know, you have the shaft, but there's a lot of revenue opportunities there for putters, as we've seen with L.A.B. Golf. Do we have separate lines for the two types of shafts, or is there a long changeover time? This feels just up your alley, Aki.

I can take that. Yep, that would be me. We do not have separate designated lines for the different products. There is pretty much zero changeover time. If you think about the fact that, you know, on the Motion side, we have one through six dots up until now. We're going to expand that to six and a half and seven dots as well. We have the Fast Motion from one to seven dots. We'll be adding the fairways and the hybrids. The way we operate our production is we have production planning. Based off of the production planning, we will cut the materials. We use different mandrels, and they're slightly different techniques for different shafts and certainly different layouts.

We have a system whereby at every changeover, basically, it's delivering the new patterns that we're gonna be wrapping, and then what I call the flight plan for that for that for that shaft. Meaning that for this particular shaft that we're gonna be running a batch, these are the mandrels that we're using. These are the procedures. These are the, you know, the flags. These are the orders in which we'll be, you know, making the wraps. You know, it's a pretty fluid process. You know, these guys are pretty used to doing that makes it very efficient for us in terms of production planning. There's literally zero changeover inefficiency.

You know, that's something that we're going to, as we enhance our marketing beyond Facebook and Google, Aki and I have been working pretty rigorous to change the way we get our message out there, both PR, marketing, paid media. You know, it's one of the things we haven't really done a good job of informing people that our shafts truly are handcrafted. Not just American-made, but they're handcrafted, and the difference shows up in the performance. Because they're all handcrafted, also required some of the changes that Aki and team implemented in the factory during this past quarter. All right. What type of progress are we making on complying with our Nasdaq listing on the minimum listing requirement?

I will be submitting a plan to them next week that is always been near and dear to my heart as we go through this. It has been a matter of, because of the demand, because of the brand, raising capital and achieving the Nasdaq compliance has never been the issue. The issue is making sure we do deals and terms that are favorable, or I should say acceptable to the company, which is good for the existing investor. The financing we did back in December of 2024 wasn't a very good finance. It was really important for us to show to the investor community that we're not just gonna take any money that's thrown in front of us. That's why you see these converts.

Those of you who have been in this game long enough and joining these calls are aware we've raised just under $1.4 million with a fixed conversion rate of $1.60. A warrant, be it basically a pro rata basis, but the warrant coverage is roughly 16%-18%, depending on which valuation model you use, with no OID. That is a company-friendly deal. We're looking at other avenues. We got a lot of opportunities to get into compliance and maintain compliance with Nasdaq, 'cause obviously, we need to maintain our listing. That's critical. At the same time, it's really about growing and having a creative shareholder value, which is well beyond maintaining that minimal requirement. We will be submitting this week.

We would look forward to hearing back to Nasdaq in a couple weeks after that. Obviously, we would be posting a Form 8-K letting you know the outcome of that. All right, those were all the questions thus far. If anyone has additional questions, now would be the time to tee them up or hit star one.

All right, I don't see anything else coming in. All right. At this time, this concludes our question and answer session. I did like to turn the call back over to Akinobu Yorihiro. Sir, please go ahead.

Ryan, thank you. I'd like to just thank everybody again for joining us today and to discuss our results for the quarter, and in particular our stockholders for their continued confidence in Newton Golf. We look forward to talking with you again soon and presenting our second quarter of 2026 results in August. Please take care and have a great rest of the day. Ryan, please go ahead and wrap this up.

Thank you. Participants, I would like to remind everyone that this call will be available for replay starting later this evening. Please refer to today's earnings release for dial-in replay instructions available via the company's website at newtongolfir.com. Thank you for attending today's presentation. This concludes the conference call. You may now disconnect.

Good afternoon. Thank you for joining us today to discuss Newton Golf Company's 2025 full year operating and financial results. Thank you. Before we begin today's call, I would like to provide the company's Safe Harbor statement that includes cautions regarding forward-looking statements made during today's call. The information that we have provided in this conference call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the company's future revenue, future plans, objectives, expectations and events, assumptions and estimates. Any forward-looking statement made during this conference call are not guarantees of future performance and involves certain risks, uncertainties, and assumptions which are difficult to predict, and actual outcomes and results may differ materially.

For more information about risks and uncertainties associated with the company's business, please refer to the Risk Factors section of the company's SEC filings, including its annual report on the Form 10-K. The company expressly disclaims any obligations or undertaking to update or revise any forward-looking statements. Hosting the call today is the Interim Chief Executive Officer of Newton Golf, Akinobu Yorihiro, and the company's Chief Financial Officer and Chief Operating Officer, Jeff Clayborne. Following the remarks, we'll open the call to your questions. At any time during the call, you may join the Q&A queue by pressing star one on your keypad. You may press star two to remove yourself from the question queue. I'd like to remind everyone that today's call is being recorded and will be made available for telecom replay.

Please see the instructions in today's press release that has been posted to the investor relations section of the company's website. Now, I'd like to turn the call over to Newton Golf's Interim CEO, Akinobu Yorihiro. Sir, please go ahead.

Good afternoon, everyone, and thank you for joining us. As disclosed in our Form 8-K filed yesterday, I am serving as Interim Chief Executive Officer following Greg Campbell's termination on March 27. I'm excited about the opportunities ahead for the company, and I'm focused on maintaining execution momentum. Brett Hoge is now serving as Chairman of the Board, and Dr. Campbell will remain on the board of directors. As outlined in our earnings release issued earlier today, we reported record revenue growth of 136% to $8.1 million in 2025. This performance was driven primarily by continued expansion of our direct-to-consumer channel, increased adoption by professional club fitters, and growth of our Newton Motion shaft platform. Direct-to-consumer revenue increased 157% to $7.4 million, supported by improvements in digital marketing efficiency, higher conversion rates, and repeat customer purchases.

Repeat customers represented 26.7% of gross direct-to-consumer orders in 2025, up 36% from 2024. We also achieved the highest single day sales total in company history on Black Friday, reflecting strong demand across our shaft product families. We also expanded our professional club fitter network to approximately 230 locations, an increase of 130% from 2024, strengthening our channel presence across the premium fitting market. Importantly, Newton Shafts ranked as the number one selling shafts for both drivers and fairway woods at Club Champion in 2025, which reflects increasing traction within the professional fitting channel. Alongside this adoption, we continued expanding the Newton Motion shaft platform.

Fast Motion, introduced in 2025, has become our best-selling shaft product and represents an important extension of our driver shaft lineup. Before discussing our outlook and recent developments, I'll turn the call over to Jeff to review our financial results.

Thank you, Aki, and good afternoon, everyone. As Aki mentioned, we generated record revenue of $8.1 million in 2025, an increase of 136% compared to 2024. The growth was primarily driven by strong demand for our Motion shaft product line and continued expansion of our direct-to-consumer sales channel. Gross profit totaled $4.6 million, or 56% of net sales, compared to $2.3 million or 66% of net sales in 2024. The decrease in gross margin was primarily attributed to additional labor costs driven by incremental full-time employees, an increase in temporary labor, and overtime to meet increased demand. The company is enhancing its manufacturing management and operational planning processes to support continued scaling of production and operations.

In January 2026, the company expanded my operational responsibilities to include oversight of manufacturing and operational functions, strengthening coordination between financial management and factory operations. Operating expenses increased to $12.1 million, compared to $7.3 million in 2024. The increase primarily reflected higher marketing, personnel costs, and public company operating costs, supporting the company's sales growth and business development initiatives, as well as continued investment in research and development related to the company's shaft technology platform.

Operating expenses also included increased professional services related to optimization and enhancement of enterprise systems, including NetSuite, AfterShip, demand planning tools, and related system integrations intended to improve inventory accuracy, operational efficiency, and support future scalability. Net loss for 2025 totaled $6 million or -$1.63 per share, compared to $11.8 million in 2024, or -$178.33 per share. Cash and equivalents totaled $1.3 million at December 31, 2025. Subsequent to year-end, the company entered into a securities purchase agreement for the sale in one or more closings of up to $2 million of convertible notes and warrants to purchase shares of our common stock at an exercise price of $75 per share.

On March 16, 2026, the company completed the initial closing and issued a $500,000 convertible note bearing interest at 10% per annum and maturing in 18 months, together with a warrant to purchase 50,000 shares of common stock and exercise price of $75 per share. The note, including accrued interest, is convertible into common stock at $60 per share at maturity. We believe our existing cash resources will fund operations for a limited period and that additional financing will be required to support ongoing operations. During 2025, holders exercised substantially all of the Series B warrants that were issued in connection with our December 2024 financing. These exercises resulted in the issuance of approximately 4.2 million shares of common stock and strengthened stockholders' equity.

During the year, we also retired 200,400 shares previously repurchased in the open market. As of today, approximately 16,849 Series B warrants remain outstanding, representing the potential issuance of roughly 288,000 additional shares if exercised. I'll now turn the call back over to Aki.

Thank you, Jeff. Subsequent to year-end, we introduced several new shaft configurations at the 2026 PGA Show, including the Fast Motion fairway wood shafts, dedicated hybrid shafts across our product lineup, and updated versions of our existing Motion and Fast Motion driver and fairway models. These introductions extend the Newton Motion platform across additional club categories and support a more integrated system-based fitting approach. A central element of this strategy is our proprietary dot system, which replaces traditional flex categories with a standardized numerical structure that applies consistently across drivers, fairway woods, and hybrids. In traditional aftermarket shaft fitting, golfers typically select from multiple bend profiles and then choose flex and weight within each profile. By contrast, the dot system provides a unified stiffness and performance framework, enabling golfers and professional club fitters to match shaft characteristics across club types using a single fitting system.

Because golfers typically carry a driver, multiple fairway woods, and multiple hybrid clubs, this platform approach creates the opportunity for multiple Newton Shaft placements within a single bag rather than a single driver replacement. As adoption of the Newton Motion platform expands, we believe this system-based structure has the potential to increase average revenue per golfer and per fitting transaction over time without relying on price increases. We also expanded our international presence through an exclusive distribution agreement with Voice Caddie in South Korea, an important premium golf equipment market with strong demand for performance technology and fitting-driven purchasing behavior. From a manufacturing perspective, our facility in St. Joseph, Missouri, provides meaningful production flexibility, and we estimate it can support annual production of up to approximately 200,000 shafts annually with incremental operational improvements.

Looking ahead, we believe Newton Golf remains in the early stages of scaling the Newton Motion shaft platform. Continued adoption across professional club fitters, retail partners, international distributors, and additional equipment partners position us to support sustained revenue growth over time. We have recently begun structured product testing and evaluation programs with leading global golf equipment manufacturers. The engagement include tour-level validation and feedback from select professional fitters. While these activities are in early stage and no definitive commercial supply agreements have yet to be finalized, we believe this level of engagement represents meaningful technical validation of our platform. Over time, we believe successful OEM integrations could expand the addressable opportunities for Newton Shafts and support broader adoption across global club fitting channels. With that, we will open the call for questions.

Our first question today comes from Tom Kerr with Zacks SCR. Please state your question.

Good afternoon, guys. Quickly on the gross margins. That inventory adjustment, any more color on that, and was that a one-time thing? Do we expect to get back to the 60%-70% range in 2026?

The inventory adjustment was made in Q4. Basically, we incurred an additional $1 million of labor costs last year. As we staffed up, we incurred a lot of overtime. I would project, I'm not gonna give guidance, but our margins will get back into the 60% range on a prospective basis is the expectation.

It's more of a labor adjustment, not a write-down of inventory or shafts or anything like that?

No, it was a catch-up through our procedures, digging in with the optimization of NetSuite demand planning, reviewing all the bill of materials. There was an inventory adjustment related to improper bill of materials that has since been corrected.

Got it. I know you guys aren't giving guidance at this point, but what can you help us with on the 2026 revenues? I mean, I'm assuming double-digit growth. Is it gonna be strong, or how's the first quarter looking? Anything to help with the revenue growth 2026.

We feel pretty bullish. The Q1 orders have been coming in strong. The orders are significantly higher than they were prior year. Listening to Aki, with the addition of new clubs, finalizing deals with the OEMs, we feel pretty bullish about our revenue in 2026, and we'll look to provide some better guidance when we announce earnings at the end of Q1.

Got it. Perfect. Last question. Is there a CEO search going on, or have you hired a CEO firm, or what are you guys doing in that area?

Yes, we're in the middle of a search.

Okay. All right. Thanks. I'll give back in the queue.

Thank you. Once again, to ask a question, press star one on your phone. You can press star two to remove your question from the queue. Your next question comes from Steve Kruger with Foresight Investing. Please go ahead.

Good afternoon, guys. Can you give us any more color on what the chances are that you'll be on the optional list, you know, with one or more of the major OEMs by the end of the year? You know, I look at Titleist and Callaway and TaylorMade. You go to their website, and currently they already offer about eight or nine different shafts, different manufacturers. What are the chances that you actually have closed the deal to be added to their list? You know, when a player goes to their website, will they see your shaft as an option?

Yeah. It's a great question, and I'll turn it over to Aki in a second. I think the first thing I would say is it's a priority of the organization. Working with the OEMs, a lot of the increase in our cost last year was related to sales and marketing. We spend approximately 70% of our net revenue on sales and marketing. The company is just over two years old, so building a brand, marketing the products, you know, it's an expensive endeavor in early stages, so you know, the marketing over-indexes compared to the revenue in the early days. Establishing deals with these OEMs, Callaway, Titleist, TaylorMade, Srixon, you name it, and to get in their catalog not only provides validation but gives us more touchpoints, allowing us to increase our contribution margin.

What I would say as I turn over to Aki, I don't know if we'll provide a probability. What I can tell you is we've made significant progress with a couple OEMs since we last spoke in November. I think what I would want Aki to tell you about is the changes we made in the shaft of our products, how it's being received by the professionals, and what that would probably mean to OEMs to allow you to connect the dots.

Sure. Great. Thank you so much for the question. It's a great question. I was a math major, so I know better than to give you a probability answer, but I hope to give you some color. We have worked very hard since inception to get to the point where the OEMs would carry our products. You know, that takes time. I think in the first two years, we've done very well, getting play out on the field by amateurs, but also with a lot of professionals. I think when the manufacturers see their top professionals playing or putting into play Newton Shafts, we started to get noticed immediately. I think the credibility came from that.

We have been engaged in various conversations, and we have submitted, you know, various shafts to various departments, including the tour and others, and we hope to progress. I think the progression, there's no particular order, but you know, with a typical manufacturer, you know, we would work with them on the tour. We would work with them on their field fitters, and then you have that website dropdown that you had mentioned. There's probably no set order in the industry. Typically, I would expect you know, I think we're already, you know, we're very much in it on the tour adoption. I think the next step is really the fitting program that each manufacturer has.

You know, once we get through that threshold with the fitters and so forth, we hope to get on to the website. How long that would take? Again, it's very difficult to say, but like Jeff says, we're very bullish. One of the things that we work very hard for this year in anticipation of this type of relationship is making sure that what we're making is the best shaft that we can make. We work very hard during the off-season and into the new year in terms of updating our shaft. There's a lot that goes into shaft design, there's a lot that goes into shaft testing, and we've spent a ton of time on that.

I think with respect to the OEMs, you know, you have to have, you know, very tight tolerance in terms of the specs. You have to have consistency, and then you have to have performance, and then you have to meet their delivery schedule. Those are all the things that we're, you know, we have been working and we continue to work on. You know, we waited for this phase of our company to come. That's been a big focus of the company.

That's great color. Now, typically, when the big boys, the OEMs, look at something, they're gonna want to make sure that you've got the capacity to satisfy any demand that might come from them. What level of capacity does a Titleist or a Callaway or a TaylorMade expect from a shaft supplier?

Well, at the current time, we have not received any particular number. I think, you know, Jeff, do you have any thoughts on that? I mean, we just haven't engaged in any number, and we haven't really assumed or presumed any particular level of number.

Yeah. I mean, really what we've been doing is, you know, getting the demand planning in place, understanding the capacity of the warehouse. You know, we can do over 200,000 shafts. Last year, between commercial and free goods, we did just over 41,000. The current facility has the ability to 5X. We feel like we're in really good shape to scale. To scale means that, you know, we're in the process of looking to hire, creating some staggered shifts and evening shift, and then the last case would be an overnight shift, which is the most difficult to execute. We're trying to do everything we possibly can to prepare for when these purchase orders begin to come.

Okay, great. Thanks very much for the commentary.

You know, Aki, you know, the one thing that we just started talking to the world about, which I think it's the OEMs really excited, is the DOT system and what makes us different than the folks that operate in our space.

Sure. I would love to talk about that. You know, not just isolated to drivers, you know, heretofore most, pretty much all the shaft companies and shaft designation, you know, it went with a ladies flex, a senior flex, a regular flex, a stiff flex, an extra stiff flex, and tour flex, right? Those are the designation. Now, let's say you play with a regular shaft for the driver, that doesn't necessarily mean that you would play the same shaft for your three wood or the five wood or the hybrid and so forth. In fact, most of the time, with most manufacturers, you have one driver shaft that you are converting into fairway woods.

Then you would probably have to go to a different series of shaft to get to the hybrid or even different manufacturer shaft to go to a hybrid. The shopping, the research that a consumer has to go through is quite complex, and that's where the fitters come in. We want to obviously address the needs of both of everybody and also to make it easier for everybody. In our case, we separate the driver shaft from a fairway-specific shaft because they are different. A fairway wood, you have to have you hit the ground because you hit it on the ground, you have turf interaction. You need a little bit more torque because it's a little shorter. You need a little weight because the fairway wood heads are heavier, so on and so forth.

What we try to do is to make that ecosystem simple. If you were to play a Fast Motion three dot shaft, our Fast Motion fairway wood shaft, which will be launched later this year, all you do is you match the dot, and you pick out a Fast Motion fairway three dot. You do the same thing with the hybrid. You go to the Fast Motion series, hybrid shaft in the three dot. What we have done is we have done the thinking on behalf of the golfers and consumers. That you really don't have to think, you know, that's your starting point. That can be applied by consumers, and that can be applied by fitters. This match-the-dot concept that we came up with, I think is revolutionary. It makes purchasing decisions very easily.

We have put in so much work so that when you swing the driver, the fairway wood, the hybrids, you're getting a similar feel, and it's consistent. It's a progression that makes sense from a weight to a flex to a bend profile to a feel perspective. That, you know, it's like, it's everything in your bag is just gonna feel great. You know? That's been our goal, and we are super excited to introduce that to the world this year.

Thanks, Aki.

Thank you. At this time, this concludes our telephone question and answer session. I'd like to turn the call back over to Aki. Sir, please go ahead.

Thank you, Diego. I would just like to thank all of you for joining us today again and to discuss our results for the year. In particular, our stockholders for their continued confidence in Newton Golf. We're looking forward to discussing with you again soon and presenting our first quarter of 2026 results in May. As always, please take good care, and we wish you all the great in the great year ahead. Diego, would you please go ahead and wrap up the call?

Thank you. I would like to remind everyone that this call will be available for replay starting later this evening. Please refer to today's earnings release for dial-in replay instructions available via the company's website at newtongolfir.com. Thank you for attending today's presentation. This concludes the conference call. You may now disconnect.