A Compelling History of Innovation

NEWTON GOLF, formerly known as Sacks Parente Golf, was founded in 2018 as a Delaware limited liability company, Sacks Parente Golf Company, LLC. In March 2022, the company converted into a Delaware corporation, setting the stage for its strategic expansion and public market debut.

The company's origins can be traced back to its founders' passion for golf and their relentless pursuit of technological advancements that could enhance the sport. Recognizing the need for innovative golf products, NEWTON GOLF set out to develop a growing portfolio of high-performance equipment, including putting instruments, golf shafts, golf grips, and other golf-related accessories.

In April 2022, the company took a significant step forward by expanding its manufacturing capabilities to include the production of advanced premium golf shafts. This move aligned with the company's goal of manufacturing and assembling substantially all of its products in the United States, a testament to its commitment to quality and craftsmanship. To achieve this, NEWTON GOLF opened a new shaft manufacturing facility in St. Joseph, Missouri, further solidifying its commitment to domestic production.

Nasdaq Challenges and Successful Reverse Stock Split

NEWTON GOLF's journey has not been without its challenges. In December 2023, the company received a deficiency letter from the Nasdaq, notifying it that the closing bid price of its common stock had remained below the minimum $1.00 per share requirement for continued listing on the Nasdaq Capital Market. This triggered a compliance period, during which the company had to regain compliance with the Bid Price Requirement.

Faced with this obstacle, NEWTON GOLF's management team took decisive action. In July 2024, the company effected a 1-for-10 reverse stock split, which allowed it to maintain its Nasdaq listing. This strategic move demonstrated the company's agility and its dedication to providing shareholders with a platform for long-term value creation.

Impressive Financial Performance and Growth Trajectory

NEWTON GOLF's financial results have been equally impressive, showcasing the company's ability to capitalize on the growing demand for its innovative golf products. In the third quarter of 2024, the company reported revenue of $1.21 million, a staggering 1,175% increase compared to the same period in the previous year. This remarkable growth was primarily driven by the successful launch and rapid adoption of the company's Newton Motion shaft product line, which accounted for 96.7% of total revenue during the quarter.

The company's gross margin also saw a significant improvement, rising from 41% in the third quarter of 2023 to 66.5% in the third quarter of 2024. This expansion in gross margin was largely attributable to increased manufacturing volume and operational efficiencies, underscoring NEWTON GOLF's ability to optimize its production capabilities and drive profitability.

Looking ahead, the company's management has provided preliminary financial results for the fourth quarter of 2024, further highlighting the company's growth trajectory. Revenue is expected to be between $1.1 million and $1.3 million, representing an impressive 882% increase at the midpoint of the range compared to the fourth quarter of 2023. Gross margin is also projected to increase from 36% in the fourth quarter of 2023 to a range of 72-74% in the fourth quarter of 2024.

For the full year of 2024, NEWTON GOLF's revenue is expected to grow from $349,000 in fiscal 2023 to a range of $3.4 million to $3.6 million, reflecting nearly a 10-fold increase. The company's strong financial performance and momentum have positioned it for continued growth and market share expansion in the years to come.

Global Expansion and Product Diversification

NEWTON GOLF's success has not been limited to the domestic market. The company has strategically expanded its global footprint, with the recent launch of its Newton Motion shafts in Japan, one of the world's largest golf markets. By making its products available in 50 of Japan's largest retail golf stores and through the country's leading e-commerce platform, GDO, NEWTON GOLF has strengthened its international presence and tapped into new growth opportunities.

In addition to its shaft product line, NEWTON GOLF has also continued to diversify its portfolio, leveraging its expertise in golf equipment innovation. The company's recent introduction of the Newton Gravity putter line has further strengthened its position in the highly competitive golf equipment market, catering to the needs of discerning golfers worldwide.

Weathering Industry Challenges and Looking Ahead

The golf industry, like many other sectors, has faced its share of challenges in recent years. The COVID-19 pandemic, for instance, had a significant impact on golf participation and overall industry dynamics. However, NEWTON GOLF has demonstrated its resilience and agility in navigating these turbulent times.

Despite the industry-wide disruptions, the company has managed to capitalize on the surge in golf participation, leveraging its innovative product offerings and manufacturing capabilities to drive impressive growth. As the broader golf market continues to evolve, NEWTON GOLF is well-positioned to adapt and capitalize on emerging trends, solidifying its position as a leading force in the industry.

Looking ahead, the company's strategic initiatives, including its focus on domestic manufacturing, global expansion, and product diversification, position it for continued success. With a strong financial foundation, a talented team, and a relentless commitment to innovation, NEWTON GOLF is poised to solidify its place as a disruptive force in the golf equipment market, delivering enhanced experiences and performance for golfers worldwide.

Financials

NEWTON GOLF's financial performance has been marked by significant growth and strategic expansion. In the most recent fiscal year (2023), the company reported annual revenue of $349,000, reflecting its early stage of development. However, the company also incurred a net loss of $4.63 million for the year, indicative of the substantial investments made in research, development, and scaling operations. The annual operating cash flow stood at -$5.05 million, while the annual free cash flow was -$5.34 million, underscoring the company's focus on growth and market penetration over immediate profitability.

The company's growth trajectory became increasingly evident in the third quarter of 2024, with revenue soaring to $1.21 million, representing a remarkable 1,175% increase compared to the same period in the previous year. This explosive growth was primarily driven by the introduction of the company's Newton Motion shaft products, which generated $1.18 million in revenue in Q3 2024 and accounted for 96.7% of total revenue. Despite this impressive top-line growth, the company reported a net loss of $1.06 million for the quarter, reflecting ongoing investments in growth initiatives.

For the first nine months of 2024, NEWTON GOLF reported revenues of $2.37 million, a substantial increase from the $232,000 reported in the same period of 2023. This significant growth can be attributed in large part to the successful launch of the Newton Motion driver and fairway wood shaft products in late 2023 and early 2024. The company's gross profit for this nine-month period was $1.50 million, representing a gross margin of 63%.

NEWTON GOLF's product portfolio is dominated by its Newton shafts, which generated $2.12 million in net sales for the nine months ended September 30, 2024, accounting for approximately 89% of total net sales. The Sacks Parente line of premium golf putters contributed $254,000 in net sales, representing the remaining 11% of total net sales for the same period.

In terms of geographic performance, NEWTON GOLF primarily sells in the United States, with approximately 95% of revenue coming from the US market in the first nine months of 2024. The remaining 5% of revenue was derived from international markets, highlighting the company's potential for further global expansion.

Liquidity

NEWTON GOLF's liquidity position reflects both the challenges and opportunities inherent in its growth stage. As of September 30, 2024, the company reported cash and cash equivalents of $1.31 million. The debt-to-equity ratio stood at 0.016, indicating a relatively low level of debt financing. The company's current ratio of 3.62 and quick ratio of 2.69 suggest a healthy short-term liquidity position, with the ability to cover its current liabilities.

However, the company's cash burn rate remains a concern. For the nine months ended September 30, 2024, NEWTON GOLF used $3.43 million in cash from operations. Management expects the current cash reserves to last for at least the next three months, highlighting the need for additional financing to support ongoing operations and growth initiatives.

To bolster its financial position, NEWTON GOLF completed a $732,000 underwritten public offering of shares of common stock in October 2024. This capital injection provides additional resources for continued expansion and product development, while also demonstrating investor confidence in the company's growth prospects.

Business Overview A Focused Strategy for Growth

NEWTON GOLF operates as a technology-forward golf company with a growing portfolio of golf products. The company's product line includes putting instruments, golf shafts, golf grips, and other golf-related items, all designed to enhance golfer performance and experience. NEWTON GOLF operates in a single reportable segment, focusing its efforts on innovation and quality across its product range.

A significant milestone in the company's history was the introduction of the Newton business division in November 2023, marking its entry into the golf club shaft market. The Newton Motion driver shaft, the first product in this line, is a carbon fiber shaft designed to promote straighter and longer shots with reduced effort. In April 2024, the company expanded this product line with the introduction of the Newton Motion fairway wood shaft, sharing the same design goals as the driver shaft.

NEWTON GOLF's manufacturing strategy emphasizes domestic production, with a shaft manufacturing facility opened in St. Joseph, Missouri, in April 2022. This facility has been instrumental in the company's ability to produce its innovative Newton shafts and maintain quality control over its products.

The company's sales strategy encompasses multiple channels, including resellers, its own websites, and distributors. NEWTON GOLF has established a presence in key golf markets, including the United States, Japan, and South Korea, positioning itself for further international expansion.

As NEWTON GOLF continues to evolve and grow, it has maintained a clean corporate record with no reported major scandals, short seller reports, or CEO departures. This stability in leadership and corporate governance provides a solid foundation for the company's ambitious growth plans.

Conclusion

NEWTON GOLF's transformation from Sacks Parente Golf to a premier golf equipment manufacturer has been nothing short of remarkable. The company's unwavering focus on innovation, its strategic expansion, and its ability to navigate industry challenges have all contributed to its impressive growth trajectory. With its strong product portfolio, expanding market presence, and dedication to technological advancement, NEWTON GOLF is well-positioned to capitalize on future opportunities and continue its trajectory of growth and success in the competitive golf equipment market. As the company moves forward, balancing its aggressive growth strategy with prudent financial management will be crucial in achieving long-term success and delivering value to shareholders.