Interactive Strength (TRNR) Q1 2026 revenue jumps as debt and going concern risks mount
Interactive Strength Inc. reported sharply higher revenue but deeper losses and serious liquidity pressure for the quarter ended March 31, 2026. Total revenue rose to $5.1 million from $1.4 million a year earlier, driven largely by Wattbike and the Ergatta acquisition.
Despite higher sales, the company posted a net loss attributable to common stockholders of $10.7 million versus $6.6 million in the prior-year quarter, as interest expense, fair-value adjustments and transaction-related costs weighed on results. Cash and cash equivalents increased to $4.7 million from $0.5 million at December 31, 2025, helped by loan repayments from Sportstech, new convertible notes and at-the-market equity issuance.
Management discloses that recurring losses, limited liquidity and approximately $18.2 million of debt maturing within twelve months after the financial statement issuance date raise substantial doubt about the company’s ability to continue as a going concern. As of May 15, 2026, common shares outstanding were 2,330,936, after multiple reverse stock splits and significant debt-for-equity exchanges.
Positive
- None.
Negative
- Substantial doubt about going concern: Management cites recurring losses, limited liquidity of roughly $1.3 million beyond the issuance date, and dependence on outside capital as factors that raise substantial doubt about the company’s ability to continue operating.
- Heavy near-term debt maturities: The company discloses total outstanding debt of about $20.3 million at the issuance date, with approximately $18.2 million scheduled to mature within twelve months, far exceeding currently available liquidity.
Insights
Revenue is growing, but leverage, looming maturities and going concern risk dominate.
Interactive Strength more than tripled quarterly revenue to $5.1 million, aided by Wattbike and Ergatta, and turned a positive gross profit of $1.6 million. However, operating loss was still $4.0 million, and total net loss reached $10.7 million, reflecting heavy interest, fair value changes and deal costs.
Total liabilities climbed to $52.7 million against $60.6 million of assets, with multiple secured and unsecured facilities, convertible notes and warrant-linked instruments. The filing states about $20.3 million of total debt at the issuance date, of which roughly $18.2 million is scheduled to mature within twelve months, while available unrestricted cash beyond the issuance date was about $1.3 million.
Management explicitly concludes these conditions “raise substantial doubt” about the ability to continue as a going concern under ASU 205‑40. They note the business remains dependent on external capital and that no additional financing was secured or deemed probable as of the issuance date. The company outlines potential alternatives such as refinancing, equity settlements, asset sales or even bankruptcy protection if capital cannot be raised or terms amended.
Key Figures
Key Terms
going concern financial
reverse stock split financial
contingent consideration financial
Monte-Carlo simulation financial
emerging growth company regulatory
fair value option financial
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ________
Commission File Number:
(Exact name of registrant as specified in its charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of May 15, 2026, the registrant had
Unless otherwise indicated, all share numbers and per share totals have been adjusted to reflect the 1-for-40 reverse stock split that was effective on June 14, 2024, the 1-for-100 reverse stock split that was effective on November 11, 2024, the 1-for-10 reverse stock split that was effective on June 26, 2025 and the 1-for-10 reverse stock split that was effective on February 24, 2026.
TABLE OF CONTENTS
Part I. Financial Information |
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Item 1 Financial Statements |
1 |
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Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations |
31 |
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Item 3 Quantitative and Qualitative Disclosures About Market Risk |
45 |
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Item 4 Controls and Procedures |
45 |
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Part II. Other Information |
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Item 1 Legal Proceedings |
48 |
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Item 1A Risk Factors |
48 |
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Item 5 Other Information |
49 |
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Item 6 Exhibits |
50 |
i
Item 1. Financial Statements
INTERACTIVE STRENGTH INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands, except share amounts)
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March 31, |
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December 31, |
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2026 |
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2025 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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Accounts receivable, net |
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Inventories, net |
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Vendor deposits |
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Loan receivable |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Right-of-use-assets |
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Intangible assets, net |
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Long-term inventories, net |
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Vendor deposits long term |
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Goodwill |
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Other assets |
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Total assets |
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$ |
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Liabilities and stockholders' equity |
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Current liabilities: |
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Accounts payable |
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$ |
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Accrued expenses and other current liabilities |
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Operating lease liability, current portion |
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Deferred revenue |
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Loan payable |
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Derivatives |
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Convertible notes payable, net |
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Total current liabilities |
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Operating lease liability, net of current portion |
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Mandatorily redeemable Series D convertible preferred stock |
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Other long term liabilities |
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Warrant liabilities |
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Loans payable non current, net |
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Convertible notes payable non current, net |
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Total liabilities |
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$ |
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$ |
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Commitments and contingencies (Note 15) |
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Series E convertible preferred stock, par value $ |
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Stockholders' equity |
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Series A convertible preferred stock, par value $ |
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Series B convertible preferred stock, par value $ |
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Series C convertible preferred stock, par value $ |
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Common stock, par value $ |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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Total stockholders' equity |
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Total liabilities, preferred stock and stockholders' equity |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
1
INTERACTIVE STRENGTH INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
(In thousands, except share and per share amounts)
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Three Months Ended March 31, |
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2026 |
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2025 |
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Revenue: |
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Fitness product revenue |
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$ |
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$ |
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Membership revenue |
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Training and other revenue |
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Total revenue |
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Cost of revenue: |
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Cost of fitness product revenue |
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Cost of membership |
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Cost of training and other revenue |
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Total cost of revenue |
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Gross profit (loss) |
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Operating expenses: |
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Research and development |
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Sales and marketing |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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Other income (expense), net: |
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Other expense, net |
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Interest expense |
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Interest income |
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(Loss) gain upon extinguishment of debt and accounts payable |
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Change in fair value of convertible notes |
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Change in fair value of earnout |
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Change in fair value of derivatives |
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Change in fair value of warrants |
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Total other (expense), net |
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Loss before provision for income taxes |
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Income tax expense |
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Net loss attributable to common stockholders |
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$ |
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$ |
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Net loss per share - basic and diluted |
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$ |
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$ |
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Weighted average common stock outstanding—basic and diluted |
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Three Months Ended March 31, |
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2026 |
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2025 |
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Net loss |
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$ |
( |
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$ |
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Other comprehensive (loss) gain: |
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Foreign currency translation (loss) gain |
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Total comprehensive loss |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
2
INTERACTIVE STRENGTH INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(unaudited)
(In thousands, except share amounts)
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Convertible Preferred Stock Series E |
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Convertible Preferred Stock Series A |
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Convertible Preferred Stock Series B |
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Convertible Preferred Stock Series C |
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Common Stock |
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Additional Paid-In Capital |
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Accumulated Other Comprehensive Income |
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Accumulated Deficit |
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Total Stockholders' (Deficit) Equity |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Balances at December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Series A Preferred dividends declared and paid in kind |
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— |
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Series C Preferred dividends declared and paid in kind |
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( |
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Issuance of Common stock from At the Market offering |
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Issuance of Common stock upon conversion of convertible notes |
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Issuance of Common stock upon conversion of preferred stock |
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Issuance of Series C Preferred stock upon settlement of loss restoration agreement |
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— |
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— |
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— |
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— |
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— |
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Gain on extinguishment of related party promissory notes |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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Foreign currency translation gain |
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Net loss |
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— |
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( |
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Balances at March 31, 2025 |
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$ |
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$ |
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$ |
— |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
3
INTERACTIVE STRENGTH INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
(unaudited)
(In thousands, except share amounts)
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Convertible Preferred Stock Series E |
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Convertible Preferred Stock Series A |
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Convertible Preferred Stock Series B |
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Convertible Preferred Stock Series C |
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Common Stock |
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Additional Paid-In Capital |
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Accumulated Other Comprehensive Income |
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Accumulated Deficit |
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Total Stockholders' Equity |
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Amount |
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Amount |
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Amount |
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Amount |
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Balances at December 31, 2025 |
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$ |
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$ |
- |
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$ |
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$ |
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$ |
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$ |
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$ |
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Issuance of Common stock from At the Market offering |
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Issuance of Common stock upon conversion of convertible notes |
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Issuance of Series C Preferred stock under settlement agreement |
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Reverse stock split retirement of fractional shares |
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Issuance of Common stock upon settlement of debt |
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Stock-based compensation |
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Foreign currency translation gain |
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( |
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Net loss |
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Balances at March 31, 2026 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
— |
|
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
|||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
INTERACTIVE STRENGTH INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
(In thousands)
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash Flows From Operating Activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Foreign currency |
|
|
|
|
|
( |
) |
|
Depreciation |
|
|
|
|
|
|
||
Amortization |
|
|
|
|
|
|
||
Non-cash lease expense |
|
|
|
|
|
|
||
Inventory step up amortization |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Loss on disposal of assets |
|
|
|
|
|
|
||
Loss (gain) on extinguishment of debt and accounts payable |
|
|
|
|
|
( |
) |
|
Loss on settlement of accounts payable |
|
|
|
|
|
|
||
Change in fair value of preferred stock |
|
|
|
|
|
|
||
Non-cash interest income |
|
|
|
|
|
( |
) |
|
Interest paid in kind and non-cash interest expense |
|
|
|
|
|
|
||
Amortization of debt discount |
|
|
|
|
|
|
||
Credit loss on loan receivable |
|
|
|
|
|
|
||
Change in fair value of convertible notes |
|
|
|
|
|
|
||
Non-cash charge from settlement agreement |
|
|
|
|
|
|
||
Change in fair value of earnout |
|
|
|
|
|
|
||
Change in fair value of derivatives |
|
|
|
|
|
|
||
Change in fair value of warrants |
|
|
( |
) |
|
|
( |
) |
Changes in operating assets and liabilities |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
( |
) |
|
Inventories |
|
|
( |
) |
|
|
|
|
Prepaid expenses and other current assets |
|
|
|
|
|
( |
) |
|
Vendor deposits |
|
|
( |
) |
|
|
( |
) |
Other assets |
|
|
( |
) |
|
|
|
|
Accounts payable |
|
|
|
|
|
( |
) |
|
Accrued expenses and other current liabilities |
|
|
( |
) |
|
|
( |
) |
Deferred revenue |
|
|
( |
) |
|
|
( |
) |
Operating lease liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Cash Flows From Investing Activities: |
|
|
|
|
|
|
||
Repayment from (advances to) Sportstech |
|
|
|
|
|
( |
) |
|
Purchase of property and equipment |
|
|
( |
) |
|
|
|
|
Proceeds from the sale of property and equipment |
|
|
|
|
|
|
||
Acquisition of internal use software |
|
|
( |
) |
|
|
|
|
Acquisition of business, cash paid, net of cash acquired |
|
|
( |
) |
|
|
|
|
Acquisition of software and content |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used) in investing activities |
|
|
|
|
|
( |
) |
|
Cash Flows From Financing Activities: |
|
|
|
|
|
|
||
Payments of loans |
|
|
( |
) |
|
|
|
|
Proceeds from issuance of convertible notes, net of issuance costs |
|
|
|
|
|
|
||
Proceeds from issuance of common stock from At the Market Offering, net of issuance costs |
|
|
|
|
|
|
||
Net cash provided by financing activities |
|
|
|
|
|
|
||
Effect of exchange rate on cash |
|
|
( |
) |
|
|
|
|
Net Change In Cash and Cash Equivalents |
|
|
|
|
|
|
||
Cash at beginning of the period |
|
|
|
|
|
|
||
Cash at end of period |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these consolidated financial statements.
5
INTERACTIVE STRENGTH INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business and Basis of Presentation
Description and Organization
Interactive Strength Inc. (the "Company") is an acquisition-focused company seeking to accelerate growth via acquisitions and deploy capital into sectors that are considered undervalued due to temporary factors, operational or misunderstood industry trends. The Company's current portfolio consists of four leading brands serving the commercial and at-home markets with specialty fitness equipment and virtual training: Wattbike, Ergatta, CLMBR and FORME. Wattbike, acquired on July 1, 2025, offers a range of high-performance indoor bikes and has built a reputation as the training tool trusted by the world's top athletes, teams and military programs. CLMBR manufactures vertical climbing equipment and provides a unique digital and on-demand training platform. FORME is a hardware manufacturer and digital fitness service provider that combines award-winning smart gyms with live 1:1 personal training (from real humans) to deliver an immersive experience. The combination of technology with expert training leads to better outcomes for both consumers and trainers alike. Wattbike, CLMBR and FORME offer unique fitness solutions for both the commercial and at-home markets.
Reverse Stock Split
On February 23, 2026, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a reverse stock split of the Company’s common stock, $
On June 26, 2025, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a reverse stock split of the Company’s common stock, $
The February 2026 Reverse Stock Split and the June 2025 Reverse Stock Split (collectively, the "Reverse Stock Splits") both resulted in each holder of Common Stock owning fewer shares of Common Stock. However, the Reverse Stock Splits affected all holders of Common Stock uniformly and did not affect any stockholder’s percentage ownership interest in the Company. Therefore, voting rights and other rights and preferences of the holders of Common Stock were not affected by the Reverse Stock Splits. Common stock issued pursuant to the Reverse Stock Splits remains fully paid and nonassessable, without any change in the par value per share. Pursuant to the Charter Amendment, no fractional shares were issued in connection with the Reverse Stock Splits. Stockholders who otherwise would be entitled to receive fractional shares received cash for each fraction of a share held. Proportionate adjustments were made to the number of shares of Common Stock underlying the Company's outstanding equity awards and warrants, and the number of shares issuable under the Company's equity incentive plans, convertible notes and other existing agreements, as well as their corresponding exercise or conversion price, as applicable. There was no change to the number of authorized shares or the par value per share of the Company's common stock.
All share and per share information, including earnings per share, in this Form 10-Q have been retroactively adjusted to reflect the Reverse Stock Splits, and certain items in prior period financial statements have been revised to conform to the current presentation (see Note 2).
Acquisition of Ergatta, Inc.
On February 18, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Ergatta, Inc., a Delaware corporation ("Ergatta"), Ergatta Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Company ("Merger Sub"), and Tom Aulet, solely in his capacity as the securityholders’ representative (the “Securityholders’ Representative”), pursuant to which Merger Sub merged with and into Ergatta (the “Merger”), with Ergatta surviving as a wholly owned subsidiary of the Company (the "Ergatta Acquisition"). At the effective time of the Merger, each issued and outstanding share of preferred stock and common stock of Ergatta (other than excluded and dissenting shares) was cancelled and, in the case of the preferred stock, converted into the right to receive, subject to the terms of the Merger Agreement, the merger consideration more fully described in Note 23. The Merger closed on March 11, 2026, and the accompanying condensed consolidated financial statements reflect the operations of Ergatta subsequent to that date (see Note 23 for further information).
6
Acquisition of Wattbike Holdings Limited
On April 8, 2025, the Company entered into an Agreement for the Sale and Purchase of the Entire Issued Share Capital and Loan Notes of Wattbike (Holdings) Limited (“Wattbike”) (the “Purchase Agreement”) with the shareholders of Wattbike (the “Shareholders”) and holders of certain promissory notes (the “Notes") issued by Wattbike (the “Noteholders,” and together with the Shareholders, the “Sellers”) to acquire the entire issued share capital and Notes of Wattbike. On July 1, 2025, pursuant to the Purchase Agreement, the Company completed the acquisition for a total purchase price of approximately $
The Wattbike Acquisition was accounted for under the acquisition method of accounting under Accounting Standards Codification ("ASC") 805, Business Combinations. Assets acquired and liabilities assumed were recorded in the condensed consolidated balance sheet at their estimated fair values as of July 1, 2025, with the remaining unallocated purchase price recorded as goodwill.
Liquidity and Capital Resources
In accordance with Accounting Standards Update ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), or ASU 205-40, management evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance date of the accompanying financial statements.
As an emerging growth company, the Company is subject to certain inherent risks and uncertainties associated with the development of an enterprise. In this regard, since the Company’s inception, substantially all of management’s efforts have been devoted towards the development of its brands and services, their penetration in the marketplace, and the development of a commercial organization, all at the expense of short-term profitability.
As of the date the accompanying consolidated financial statements were issued (the “issuance date”), management evaluated the following adverse conditions and events present at the Company in accordance with ASU 205-40:
7
These uncertainties raise substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements have been prepared on the basis that the Company will continue to operate as a going concern, which contemplates that the Company will be able to realize assets and settle liabilities and commitments in the normal course of business for the foreseeable future. Accordingly, the accompanying consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.
2. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (the “FASB”).
The accompanying unaudited condensed consolidated financial statements include the accounts of Interactive Strength Inc. and its subsidiaries in which the Company has a controlling financial interest, and should be read in conjunction with the annual audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2026. The accompanying consolidated balance sheet as of December 31, 2025 was derived from the audited financial statements as of and for the year ended December 31, 2025. These condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X, and therefore omit or condense certain footnotes and other information normally included in complete consolidated financial statements prepared in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of March 31, 2026 and its results of operations, comprehensive loss, changes in stockholders’ equity and cash flows for the three months ended March 31, 2026 and 2025. In addition, certain prior year balances have been reclassified to conform to the current presentation. Specifically, Income tax payable as of December 31, 2025 in the amount of $
The financial data and other information disclosed in these notes related to the three months ended March 31, 2026 and 2025 are unaudited. The results for the three months ended March 31, 2026 and 2025 , are not necessarily indicative of results to be expected for the year ending December 31, 2026 , any other interim periods, or any future year or period.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. On an ongoing basis, the Company evaluates its estimates, including, among others, those related to the realizability of inventory, fair value measurements, useful lives of long lived assets, including property and equipment and finite lived intangible assets, product warranty, stock-based compensation expense, warrant liabilities, accrual of acquisition earn-outs, valuation of deferred taxes, valuation of derivatives, fair value of goodwill and other intangible assets, fair value of preferred stock in connection with acquisitions and debt extinguishments, and commitments and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable. Actual results may differ from these estimates.
Segment Information
Operating segments are defined as components of an enterprise for which separate and discrete information is available for evaluation by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and assess performance. The Company has one operating segment, the development and sale of its at-home fitness technology platform. The Company’s CODM is its chief executive officer, who manages the Company’s operations on a consolidated basis for the purpose of allocating resources. As the Company has one reportable segment, all required segment financial information is presented in the consolidated financial statements (See Note 3). The Company currently operates in the United States, the United Kingdom, and Taiwan. As of March 31, 2026 and December 31, 2025, substantially all of the Company's long-lived assets were held in the United States.
8
Significant Accounting Policies
During the three months ended March 31, 2026, there were no significant changes to the Company’s significant accounting policies as described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2025, except as described below.
Loan Receivable
Loan receivable as of December 31, 2025 consisted of a loan agreement entered into with Sportstech Brands Holding GmbH ("Sportstech") and Mr. Ali Ahmad, the sole shareholder of Sportstech, which was intended as a form of bridge financing until a pending acquisition transaction could be closed. The Transaction did not close as the Company and Sportstech were unable to come to terms on a final subscription and shareholders' agreement, and the loan was not paid back at the maturity date of December 30, 2025. The balance on the loan receivable from Sportstech as of December 31, 2025, including accrued interest and fees, was $
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s condensed consolidated financial statements upon adoption. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and has elected not to “opt out” of the extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company has the option to adopt the new or revised standard at the time private companies adopt the new or revised standard and may do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. As noted below, certain new or revised accounting standards were early adopted.
Accounting Pronouncements Recently Adopted
ASU 2025-05
In July 2025, the FASB issued ASU 2025-05, “Financial Instruments – Credit Losses (Topic 326).” In developing forecasts as part of estimating expected credit losses, the ASU allows entities to elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. This ASU is effective for annual and interim periods beginning in 2026. The Company adopted ASU 2025-05 effective January 1, 2026. Adoption of the new standard did not have a material impact on the Company's consolidated financial statements.
Accounting Pronouncements Not Yet Adopted
ASU 2024-03
In November 2024, the FASB issued ASU 2024-03, as amended by ASU 2025-01, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses". The amendments in ASU 2024-03 address investor requests for more detailed expense information and require additional disaggregated disclosures in the notes to financial statements for certain categories of expenses that are included on the face of the income statement. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating this guidance to determine the impact it may have on its condensed consolidated financial statements.
ASU 2025-06
In September 2025, the FASB issued ASU 2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40).” The ASU updates the guidance on accounting for internal-use software costs by (i) removing all references to software development stages, and (ii) requiring that an entity capitalize software costs when both management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. This ASU is effective for annual and interim periods beginning in 2028. Early adoption is permitted. The Company is currently evaluating the impact of the new standard.
3. Segment Reporting
9
The Company is organized into
The following table presents revenue and significant segment expenses that are included within net loss:
|
|
Three Months Ended March 31, |
|
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
|
||
Total Revenues |
|
$ |
|
|
$ |
|
|
||
Less: |
|
|
|
|
|
|
|
||
Cost of fitness product revenue (excluding depreciation and amortization) |
|
|
|
|
|
|
|
||
Cost of membership (excluding depreciation and amortization) |
|
|
|
|
|
|
|
||
Cost of training |
|
|
|
|
|
|
|
||
Research and development (excluding stock based compensation) |
|
|
|
|
|
|
|
||
General and administrative (excluding stock based compensation, depreciation and amortization) |
|
|
|
|
|
|
|
||
Interest expense |
|
|
|
|
|
|
|
||
Interest income |
|
|
|
|
|
( |
) |
|
|
Change in fair value of earnout |
|
|
|
|
|
|
|
||
(Gain) loss upon extinguishment of debt and accounts payable |
|
|
|
|
|
( |
) |
|
|
Change in fair value of convertible notes |
|
|
|
|
|
|
|
||
Change in fair value of derivatives |
|
|
|
|
|
|
|
||
Change in fair value of warrants |
|
|
( |
) |
|
|
( |
) |
|
Depreciation and amortization expense |
|
|
|
|
|
|
|
||
Stock-based compensation expense |
|
|
|
|
|
|
|
||
Transaction related expenses (1) |
|
|
|
|
|
|
|
||
Vendor Settlements |
|
|
|
|
|
|
|
||
Other segment items (2) |
|
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
||
Reconciliation of net loss |
|
|
|
|
|
|
|
||
Adjustments and reconciling items |
|
|
|
|
|
|
|
||
Consolidated net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
(1)
(2)
The following tables present a summary of revenues by geographic area:
|
|
Three Months Ended March 31, 2026 |
|
|
|||||||||||||||||
(in thousands) |
|
CLMBR |
|
|
FORME |
|
|
Wattbike |
|
|
Ergatta |
|
|
Total |
|
|
|||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fitness Product Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|||||
Membership Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Training and other revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fitness Product Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Membership Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Asia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fitness Product Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fitness Product Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Membership Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|||||
10
|
|
Three Months Ended March 31, 2025 |
|
|
|||||||||||||||||
(in thousands) |
|
CLMBR |
|
|
FORME |
|
|
Wattbike |
|
|
Ergatta |
|
|
Total |
|
|
|||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fitness Product Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|||||
Membership Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Training and other revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fitness Product Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Asia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fitness Product Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|||||
4. Revenue Recognition
The Company’s revenue is mainly derived from the sales of its Connected Fitness Products in Europe and the United States and associated recurring Membership revenue, along with sales of personal training services and license revenue recorded within Training and other revenue.
The Company determines revenue recognition through the following steps:
Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company’s revenue is reported net of sales returns, discounts and incentives as a reduction of the transaction price.
The Company applies the practical expedient as per ASC 606-10-50-14 and does not disclose information related to remaining performance obligations due to their original expected terms being one year or less.
Connected Fitness Products
Connected Fitness Products include the Company’s portfolio of Connected Fitness Products and related accessories, delivery and installation services, and extended warranty agreements. The Company recognizes Connected Fitness Product revenue net of sales returns and discounts on the date the product has been delivered to the customer or at shipping point if the customer is responsible for shipping, except for extended warranty revenue which is recognized over the warranty period. The Company allows customers to return products within thirty days of purchase, as stated in its return policy.
Amounts paid for payment processing fees for credit card sales for Connected Fitness Products are included as a reduction to fitness product revenue in the Company’s condensed consolidated statements of operations and comprehensive loss.
Membership
The Company’s memberships provide unlimited access to content in its library of on-demand fitness classes. The Company’s memberships are offered on a month-to-month basis.
Amounts paid for membership fees are included within deferred revenue on the Company’s condensed consolidated balance sheets and recognized ratably over the membership term. The Company records payment processing fees for its monthly membership charges within cost of membership in the Company’s condensed consolidated statements of operations and comprehensive loss.
Training and other
The Company’s training services are personal training services delivered through its Connected Fitness Products and third-party mobile devices. Training revenue is recognized at the time the services are delivered. Other revenue mainly includes third-party license revenue for Ergatta.
Standard Product Warranty
11
The Company offers a standard product warranty that its Connected Fitness Products and related accessories will operate under normal, non-commercial use for a period of one year which covers the touchscreen, frame and all incorporated elements, and related accessories from the date of original delivery. The Company has the obligation, at its option, to either repair or replace the defective product. At the time revenue is recognized, an estimate of future warranty costs are recorded as a component of cost of revenue. Factors that affect the warranty obligation include historical as well as current product failure rates, service delivery costs incurred in correcting product failures, and warranty policies and business practices.
The Company also offers the option for customers in some markets to purchase a third-party extended warranty and service contract that extends or enhances the technical support, parts, and labor coverage offered as part of the base warranty included with the Connected Fitness Product for an additional period of
For third-party extended warranty service sold along with the Company’s Connected Fitness Products, the Company does not obtain control of the warranty before transferring it to the customers. Therefore, the Company accounts for revenue related to the fees paid to the third-party extended warranty provider on a net basis, by recognizing only the net commission it retains. The Company considers multiple factors when determining whether it obtains control of third-party products including, but not limited to, evaluating if it can establish the price of the product, retains inventory risk for tangible products or has the responsibility for ensuring acceptability of the product.
The Company sells connected fitness equipment and digital fitness services across Business to Business ("B2B") and Business to Customer ("B2C") channels in the United States, Europe and Asia.
|
|
|
|
Three Months Ended March 31, |
|
|||||
|
|
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
(in thousands) |
|
|||||
CLMBR |
|
|
|
$ |
|
|
$ |
|
||
FORME |
|
|
|
|
|
|
|
|
||
Ergatta |
|
|
|
|
|
|
|
|
||
Wattbike |
|
|
|
|
|
|
|
|
||
Total Fitness Product Revenue |
|
|
|
|
|
|
|
|
||
CLMBR |
|
|
|
|
|
|
|
|
||
FORME |
|
|
|
|
|
|
|
|
||
Ergatta |
|
|
|
|
|
|
|
|
||
Wattbike |
|
|
|
|
|
|
|
|
||
Total Membership Revenue |
|
|
|
|
|
|
|
|
||
Ergatta |
|
|
|
|
|
|
|
|
||
CLMBR |
|
|
|
|
|
|
|
|
||
FORME |
|
|
|
|
|
|
|
|
||
Total Training and other revenue |
|
|
|
|
|
|
|
|
||
Total Revenue |
|
|
|
$ |
|
|
$ |
|
||
5. Inventories, net
Inventories consist of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Finished products |
|
$ |
|
|
$ |
|
||
Finished products - Long Term |
|
|
|
|
|
|
||
Manufactured components and accessories |
|
|
|
|
|
|
||
Raw materials - Long Term |
|
|
|
|
|
|
||
Total inventories, net |
|
$ |
|
|
$ |
|
||
Manufactured components and accessories generally represent purchased components that later get integrated into a finished rower by the Company's contract manufacturer.
Finished products - Long Term represents inventory not expected to be sold in the next twelve months. Raw materials - Long Term represents the components and parts currently being stored in the Company's Taiwan facility that will be shipped to the Company's manufacturing partners and will not be used within one year.
12
6. Property and Equipment, net
Property and equipment consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Pre-production tooling |
|
$ |
|
|
$ |
|
||
Machinery and equipment |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Furniture and fixtures |
|
|
|
|
|
|
||
Exercise equipment |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
Less: Accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Total property and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation expense amounted to approximately $
7. Goodwill, Intangible Assets, net and Digital Assets
Goodwill
Goodwill and intangible assets of $
Changes in goodwill for the three months ended March 31, 2026 are as follows:
(in thousands) |
|
Goodwill |
|
|
Balance as of December 31, 2025 |
|
$ |
|
|
Goodwill acquired |
|
|
|
|
Foreign currency translation adjustments |
|
|
( |
) |
Balance as of March 31, 2026 |
|
$ |
|
|
Intangible Assets, Net
Identifiable intangible assets, net consist of the following:
|
|
As of March 31, |
|
|
As of December 31, |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
(in thousands) |
|
Cost |
|
Accumulated Amortization |
Net Book Value |
|
|
Cost |
|
|
Accumulated Amortization |
|
|
Net Book Value |
|
|||||||||
Internal-use software |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Developed technology |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Customer related |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Trademark and trade name |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total identifiable intangible assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Amortization expense amounted to $
13
As of March 31, 2026, estimated annual amortization expense for each of the next five fiscal years is as follows:
Fiscal Years Ending December 31, |
|
|||
(in thousands) |
|
|
|
|
2026 (remaining) |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
2031 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
8. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Security deposit |
|
|
|
|
|
|
||
Prepaid licenses |
|
|
|
|
|
|
||
Research and development tax credit |
|
|
|
|
|
|
||
Other receivables |
|
|
|
|
|
|
||
Insurance |
|
|
|
|
|
|
||
Other prepaid |
|
|
|
|
|
|
||
Total prepaid expenses and other current assets |
|
$ |
|
|
$ |
|
||
9. Other Assets, net
Other assets, net consisted of the following:
|
|
As of March 31, |
|
|
As of December 31, |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
(in thousands) |
|
Cost |
|
Accumulated Amortization |
Net Book Value |
|
|
Cost |
|
Accumulated Amortization |
Net Book Value |
|
||||||||||||
Capitalized content costs |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Capitalized software |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Security deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total other assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Amortization expense amounted to $
14
10. Accrued Expenses and Other Current Liabilities
Accrued expenses consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Accrued bonus |
|
$ |
|
|
$ |
|
||
Accrued payroll |
|
|
|
|
|
|
||
Accrued PTO |
|
|
|
|
|
|
||
Accrued legal settlements |
|
|
|
|
|
|
||
Accrued royalties |
|
|
|
|
|
|
||
Accrued professional fees |
|
|
|
|
|
|
||
Customer deposits |
|
|
|
|
|
|
||
Vendor settlements |
|
|
|
|
|
|
||
Accrued state and local taxes |
|
|
|
|
|
|
||
Accrued VAT |
|
|
|
|
|
|
||
Other accrued expenses and current liabilities |
|
|
|
|
|
|
||
Total accrued expenses and other current liabilities |
|
$ |
|
|
$ |
|
||
Accrued legal settlement of $
11. Debt
At March 31, 2026 and December 31, 2025, debt consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
Convertible Notes (in thousands) |
|
2026 |
|
|
2025 |
|
||
Secured convertible notes |
|
$ |
|
|
$ |
|
||
Discount on senior secured convertible notes |
|
|
( |
) |
|
|
( |
) |
June 2025 convertible preferred note |
|
|
|
|
|
|
||
Discount on June 2025 convertible preferred note |
|
|
( |
) |
|
|
( |
) |
Remainder notes recorded at fair value |
|
|
|
|
|
|
||
Related party convertible notes |
|
|
|
|
|
|
||
Other convertible notes recorded at fair value |
|
|
|
|
|
|
||
Total convertible notes payable |
|
|
|
|
|
|
||
Less: current portion |
|
|
( |
) |
|
|
( |
) |
Convertible notes payable - long-term |
|
|
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Loans Payable (in thousands) |
|
|
|
|
|
|
||
Promissory notes - related parties |
|
|
|
|
|
|
||
Term loan, net of discount |
|
|
|
|
|
|
||
Working capital facility |
|
|
|
|
|
|
||
Other notes payable |
|
|
|
|
|
|
||
Discount on other notes payable |
|
|
( |
) |
|
|
( |
) |
Total loans payable |
|
|
|
|
|
|
||
Less: current portion |
|
|
( |
) |
|
|
( |
) |
Loans payable - long-term |
|
$ |
|
|
$ |
|
||
Secured Convertible Notes
On January 28, 2025, the Company entered into a Securities Purchase Agreement (the "January 2025 SPA") with an accredited investor (the "Investor"). Pursuant to the January 2025 SPA, the Company sold and the Investor purchased, (a) a senior secured convertible note (the "January 2025 Convertible Note") in the amount of $
The January 2025 Convertible Note and the Class A Incremental Notes carry a
15
rate of
During the three months ended March 31, 2026, the Company issued additional Class A Incremental Notes with substantially the same terms as the January 2025 Convertible Note as follows:
In connection with the Ergatta Acquisition, the Investor agreed to subordinate its security interest in the Company's assets to that of the holders of the Ergatta Note, as defined below. During the three months ended March 31, 2026, the Investor converted previously issued Class A Incremental Notes with an aggregate principal balance, including accrued interest, in the amount of $
During the three months ended March 31, 2025, the Investor converted a total of $
Interest recognized on the Secured Convertible Notes is as follows:
|
|
Three Months Ended March 31, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Contractual interest expense |
|
$ |
|
|
$ |
|
||
Amortization of debt issuance costs |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
June 2025 Convertible Preferred Note
On June 4, 2025, the Company issued a convertible promissory note in the principal amount of $
The carrying value of the June 2025 Convertible Preferred Note as of March 31, 2026 and December 31, 2025 was $
Remainder Notes
In connection with the sale of the Company's FET and other collateral tokens in October and December of 2025, the Company issued the Remainder Notes to ATW Partners and DWF Labs in the principal amount of $
16
Notes, and the aggregate fair value for these notes as of March 31, 2026 and December 31, 2025 was $
Related Party Convertible Notes
On February 18, 2020, the Company entered into a $
Other Convertible Notes
On February 1, 2024, the Company entered into a Senior Secured Convertible Promissory Note (the "February 2024 Convertible Note") with Treadway Holdings LLC ("Treadway"), a lender, in the aggregate principal amount of $
The original maturity date of the February 2024 Convertible Note was
On December 13, 2024, the Company and Treadway entered into a Letter Agreement (the “Letter Agreement”) that, among other things, extended the Maturity Date to January 14, 2025. On January 14, 2025, Treadway sold the Amended and Restated Note to Woodway USA, Inc. (“Woodway”), a customer of the Company. On March 3, 2025, Woodway sold the Amended and Restated Note to TR Opportunities II LLC (the “Current Holder”). On April 18, 2025, the Company and the Current Holder entered into a Letter Agreement to lower the conversion price to $
The September 2025 Exchange Note accrued interest at a rate of
The September 2025 Exchange Note was convertible (in whole or in part) at any time prior to the Maturity Date into the number of shares of Common Stock equal to (x)
The September 2025 Exchange Note is also convertible (each, an “Alternate Conversion”) into shares of Common Stock at a conversion rate equal to the quotient of (x) the Conversion Amount, divided by (y) the Alternate Conversion Price (as defined below); provided, that if an event of default has occurred and is continuing, the September 2025 Exchange Note is convertible at a conversion rate equal to the quotient of (x)
The fair value of this note was $
17
of common stock, and the Company recognized a loss on change in fair value of this note of $
Promissory Notes - Related Parties
On March 5, 2025, the Company entered into an agreement to settle outstanding liabilities with its former legal counsel by issuing to them an unsecured promissory note in the principal amount of $
On November 7, 2025, the Company's former legal counsel sold
Term Loan
On February 1, 2024, the Company entered into a Credit Agreement (the "Term Loan") with Vertical Investors LLC, (the “Lender”) pursuant to which the Company agreed to borrow from the Lender a term loan in the aggregate principal amount of approximately $
On April 24, 2024, (the “Effective Date”) the Company entered into a Loan Modification Agreement (the “Modification Agreement”) with the Lender reducing the outstanding debt by $
The carrying value of the Term Loan is as follows:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Principal and interest |
|
$ |
|
|
$ |
|
||
Guarantee fees |
|
|
|
|
|
|
||
Aggregate carrying value |
|
$ |
|
|
$ |
|
||
Working Capital Facility
In connection with the acquisition of Wattbike, the Company assumed the obligations under a working capital facility for a total of $
Other Notes Payable
As part of the purchase price for the Ergatta Acquisition, the Company issued a senior secured note (the "Ergatta Note") to the sellers in the principal amount of $
As previously discussed, on November 7, 2025, Woodway purchased the New Woodway Note from the Company's former legal counsel in the principal amount of $
18
On May 21, 2025, the Company issued an unsecured promissory note in the principal amount of $
On May 1, 2025, the Company entered into an agreement to settle outstanding liabilities with a third-party by issuing to the third-party an unsecured promissory note in the principal amount of $
Scheduled maturities on the Company's outstanding indebtedness as of March 31, 2026 is as follows:
Fiscal Years Ending December 31, |
|
|
|
|
||||
(in thousands) |
|
Convertible Notes |
|
|
Loans Payable |
|
||
2026 (remaining) |
|
$ |
|
|
$ |
|
||
2027 |
|
|
|
|
|
|
||
2028 |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
12. Warrants
The following is a schedule of changes in warrants issued and outstanding from December 31, 2025 to March 31, 2026:
|
|
Outstanding as of |
|
|
|
|
|
|
|
|
|
|
Outstanding as of |
|
||||||
|
December 31, 2025 |
Issued |
|
|
Exercised |
|
|
Canceled |
|
March 31, 2026 |
|
|||||||||
February 2024 Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Woodway February 2024 Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Registered Direct Placement Agent Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Registered Direct Offering Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Best Efforts Offering A-1 Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Best Efforts Offering A-2 Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Best Efforts Placement Agent Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
January 2025 Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Woodway May 2025 Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Class A Incremental Notes Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Common Stock Purchase Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
The warrants are classified as other long-term liabilities within the condensed consolidated balance sheets and are carried at fair value, with changes in fair value recorded in earnings.
Class A Incremental Notes Warrants
In connection with the January 28, 2025 Securities Purchase Agreement (see Note 11), the Company issued warrants to purchase an aggregate of
January 2025 Warrants
On January 28, 2025, the Company issued warrants to purchase
13. Fair Value Measurements
The Company’s financial instruments consist of derivatives, convertible notes held at fair value, and warrants.
19
|
|
March 31, 2026 |
|
|
December 31, 2025 |
||||||||||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
||||||
|
|
(in thousands) |
(in thousands) |
||||||||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivatives |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||||
Series D convertible preferred stock |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
||||||
Contingent consideration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Convertible notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||||
During the three months ended March 31, 2026, there were
The following summarizes the activity for the Company Level 3 assets and liabilities measured at fair value on a recurring basis for the three months ended March 31, 2026.
Derivatives
(in thousands) |
|
Class A Incremental Notes Derivative |
|
|
|
|
|
|
|
Fair value at December 31, 2025 |
|
$ |
|
|
Issuance of derivatives |
|
|
|
|
Change in estimated fair value of derivatives |
|
|
|
|
Fair value at March 31, 2026 |
|
$ |
|
|
The Company recorded the derivatives as a derivative asset or liability in the Company’s condensed consolidated balance sheet in accordance with FASB ASC 815, Derivatives and Hedging. For the outstanding derivatives as of March 31, 2026 and December 31, 2025, the fair value of the derivatives were determined using a Monte Carlo simulation. The Monte Carlo Simulation valuation model incorporates assumptions as to stock price volatility, discount rate, dividend rate and risk-free interest rate.
The following table outlines the key inputs for the Monte Carlo Simulation models:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Weighted-average risk-free interest rate |
|
|
|
|
||||
Weighted-average expected term (in years) |
|
|
|
|
||||
Weighted-average expected volatility |
|
|
% |
|
|
% |
||
Expected dividend yield |
|
|
% |
|
|
% |
||
Convertible Notes
September 2025 Exchange Note
The Company entered into a convertible note arrangement in February 2024. The Company elected the fair value option for this note under ASC 825, Financial Instruments, with changes in fair value recorded in earnings each reporting period. During the three months ended March 31, 2026, the entire remaining principal and interest balance was converted into shares of Common Stock and the Company recorded a change in fair value for the difference between the $
20
|
|
Sep-25 |
|
|
(in thousands) |
|
Exchange Note |
|
|
Fair value at December 31, 2025 |
|
$ |
|
|
Conversion to common stock |
|
|
( |
) |
Change in estimated fair value of convertible notes |
|
|
|
|
Fair value at March 31, 2026 |
|
$ |
|
|
Remainder Notes
The Company also elected the fair value option for the Remainder Notes (see Note 11). These notes were valued using a Monte Carlo Simulation model using a discount rate of
(in thousands) |
|
Remainder Notes |
|
|
Fair value at December 31, 2025 |
|
$ |
|
|
Change in estimated fair value of convertible notes |
|
|
|
|
Fair value at March 31, 2026 |
|
$ |
|
|
January 2025 Exchange Notes
On February 4, 2025, the Company and the Exchange Agreement Investor entered into an Exchange Agreement (the “Exchange Agreement”), pursuant to which the Company and the Exchange Agreement Investor exchanged the Former Principal Stockholder Notes for five new secured promissory notes of the Company secured by the Company’s assets (the “January 2025 Exchange Notes”). The amendment to the Note represents the addition of a substantive conversion feature and as a result the Company recorded a gain on extinguishment included in condensed consolidated statement of stockholders' equity. The Company elected the fair value option for the January 2025 Exchange Notes under ASC 825, Financial Instruments, with changes in fair value recorded in earnings each reporting period. The fair value of the January 2025 Exchange Notes was determined using a discounted cash flow analysis at a discount rate of
|
|
January 2025 |
|
|
(in thousands) |
|
Exchange Notes |
|
|
Carrying amount at February 4, 2025 |
|
$ |
|
|
Conversion to common stock |
|
|
( |
) |
Gain on extinguishment of debt with related party |
|
|
( |
) |
Change in estimated fair value of convertible notes |
|
|
|
|
Fair value at March 31, 2025 |
|
$ |
|
|
Warrants
The following table summarizes the activity for the Company Level 3 warrant liabilities measured at fair value on a recurring basis for the three months ended March 31, 2026:
(in thousands) |
|
|
Class A Incremental Notes Warrants |
|
|
Fair value at December 31, 2025 |
|
|
$ |
|
|
Issuance of warrants |
|
|
|
|
|
Change in estimated fair value of warrants |
|
|
|
( |
) |
Fair value at March 31, 2026 |
|
|
$ |
|
|
The following table outlines the key inputs for the Black-Scholes option-pricing models:
|
|
March 31, |
|
|
December 31, |
|
|
||
|
|
2026 |
|
|
2025 |
|
|
||
Weighted-average risk-free interest rate |
|
|
|
|
|
||||
Weighted-average expected term (in years) |
|
|
|
|
|
||||
Weighted-average expected volatility |
|
|
% |
|
|
% |
|
||
Expected dividend yield |
|
|
% |
|
|
% |
|
||
21
Series D Convertible Preferred Stock
In connection with the acquisition of Ergatta (see Note 23) on March 11, 2026, the Company issued the Series D Convertible Preferred Stock, which was initially valued $
(in thousands) |
|
Series D Preferred Stock |
|
|
|
|
|
|
|
Fair value at December 31, 2025 |
|
$ |
|
|
Ergatta acquisition |
|
|
|
|
Change in estimated fair value of preferred stock |
|
|
|
|
Stock-based compensation |
|
|
|
|
Fair value at March 31, 2026 |
|
$ |
|
|
Accrued Earnout
The Merger Agreement with Ergatta provides for additional cash consideration payable to the sellers on April 30, 2027 of up to $
(in thousands) |
|
Accrued Earnout |
|
|
Fair value at December 31, 2025 |
|
$ |
|
|
Ergatta acquistion on March 11, 2026 |
|
|
|
|
Change in estimated fair value of contingent consideration |
|
|
|
|
Fair value at March 31, 2026 |
|
$ |
|
|
14. Leases
Lease Obligations
The Company has made certain assumptions and judgments when applying ASC 842 including the adoption of the package of practical expedients available for transition. The practical expedients allowed the Company to not reassess (i) whether expired or existing contracts contained leases, (ii) lease classification for expired or existing leases and (iii) previously capitalized initial direct costs. The Company also elected not to recognize right-of-use assets and lease liabilities for short-term leases (leases with a term of twelve months or less).
As of March 31, 2026 and December 31, 2025, the weighted average discount rate for operating leases was
The Company has entered into various short-term operating leases for office and warehouse space, with an initial term of twelve months or less. These short-term leases are not recorded on the Company’s condensed consolidated balance sheets.
22
|
|
Three Months Ended March 31, |
|
|
|||||
|
|
2026 |
|
|
2025 |
|
|
||
|
|
(in thousands) |
|
|
|||||
Operating lease costs |
|
$ |
|
|
$ |
|
|
||
Variable lease costs |
|
|
|
|
|
|
|
||
Short-term lease costs |
|
|
|
|
|
|
|
||
Total lease costs |
|
|
|
|
|
|
|
||
Other information: |
|
|
|
|
|
|
|
||
Cash paid for amounts included in the measurement of operating lease liability |
|
$ |
|
|
$ |
|
|
||
The following represents the Company’s minimum annual rental payments under operating leases for each of the next five years and thereafter:
Fiscal Year Ending December 31, |
|
Operating |
|
|
|
|
(in thousands) |
|
|
2026 (remaining) |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Thereafter |
|
|
|
|
Total future minimum lease payments |
|
|
|
|
Less: imputed interest |
|
|
( |
) |
Present value of operating lease liability |
|
$ |
|
|
|
|
|
|
|
Current portion of lease liability |
|
|
|
|
Non-current portion of lease liability |
|
|
|
|
Present value of operating lease liability |
|
$ |
|
|
15. Commitments and Contingencies
Royalty Agreement
In 2017, the Company entered into a royalty agreement with Fuseproject and agreed to pay
Legal Proceedings
On March 7, 2024, a petition was filed by Tung Keng Enterprise Co., Ltd. d/b/a DK City Co., Ltd. (“DK City”) against CLMBR, Inc. and the Company in the United States District Court for the District of Colorado to enforce a monetary arbitration award of approximately $
The total amount outstanding as of March 31, 2026 and December 31, 2025 was $
On or about February 20, 2025, the Company was sued in the Superior Court of Massachusetts, Suffolk County, by one of its former financial services consultants (“the Plaintiff”), alleging a breach of an agreement between the parties for financial services Plaintiff allegedly provided to the Company. The dispute was fully resolved and on June 12, 2025, the parties filed a joint stipulation of dismissal with prejudice and the settlement amount was $
23
portion as of March 31, 2026 and December 31, 2025 of $
The Company is involved in legal proceedings in the normal course of business. The Company currently believes that any ultimate liability arising out of such proceedings will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.
16. Stockholders’ Equity (Deficit)
Common Stock
The Company’s authorized Common Stock consisted of
During the three months ended March 31, 2026, the Company issued
On February 27, 2026, Woodway exchanged $
On February 26, 2026, a related party noteholder of the Company exchanged $
Between February 17, 2026 and February 26, 2026 Vertical Investors, LLC exchanged $
In January of 2026, the Current Holder of the September 2025 Exchange Note converted the remaining $
During the three months ended March 31, 2026, the holder of the Company's secured convertible notes converted an aggregate of $
In February 2025, the Company issued
From January 2025 through March 2025, the Company issued
From January 2025 through March 2025, the Company issued
On March 20, 2026, the Company announced that its Board of Directors (the "Board") approved a stock repurchase program of up to $
Preferred Stock
In January 2024, the Board authorized the proposed issuance of shares of non-voting Series A and Series B convertible preferred stock. The Company's authorized preferred stock consists of
On March 31, 2026, the Company entered into a settlement agreement with the Lender under the Term Loan (see Note 11) valued at $
Upon the closing of the Ergatta Acquisition (see Note 23), the Company filed a certificate of designation with the Secretary of State of
24
the State of Delaware, creating three new series of preferred stock designated as (i) Series D-1 Convertible Preferred Stock, par value $
The remaining unissued shares of the Company's authorized preferred stock are undesignated.
On January 23, 2025 the Board declared a dividend on the shares of Series A Preferred Stock issued and outstanding as of the record date for such dividend, as a dividend in kind, in the form of
On March 31, 2025, the Company issued
On January 23, 2025, the Board declared a dividend on the shares of Series C Preferred Stock issued and outstanding as of the record date for such dividend, as a dividend in kind, in the form of
17. Equity-Based Compensation
2023 and 2020 Equity Incentive Plan
Presented below is a summary of the compensation cost recognized in the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2026 and 2025.
|
|
Three Months Ended March 31, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Research and development |
|
$ |
|
|
$ |
|
||
Sales and marketing |
|
|
|
|
|
|
||
General and administrative |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
The table above includes approximately $
During the three months ended March 31, 2026, the Company did
The following summary sets forth the stock option activity under the 2023 and 2020 Plan:
25
|
|
Number of options |
|
|
Weighted average exercise price |
|
|
Weighted average remaining contractual term (in years) |
|
|
Aggregate intrinsic value (in thousands) |
|
||||
Outstanding as of December 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Exercised |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Cancelled or forfeited |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Outstanding as of March 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options exercisable as of March 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options unvested as of March 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
As of March 31, 2026 and December 31, 2025, the Company had $
18. Concentration of Credit Risk and Major Customers and Vendors
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company’s cash and cash equivalents are maintained with high-quality financial institutions, the compositions and maturities of which are regularly monitored by management.
For the three months ended March 31, 2026, there were
At March 31, 2026,
The Company had
19. Benefit Plans
The Company established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Matching contributions to the plan may be made at the discretion of the Board. During the three months ended March 31, 2026 and 2025, the Company did
20. Loss Per Share
The computation of loss per share is as follows:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
(in thousands, except share and per share amounts) |
|
|
|
|||||
Numerator: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss attributable to common stockholders |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator: |
|
|
|
|
|
|
||
Weighted average common stock outstanding - |
|
|
|
|
|
|
||
Net loss per share attributable to common |
|
$ |
( |
) |
|
$ |
( |
) |
26
The following potentially dilutive shares were not included in the calculation of diluted shares outstanding as the effect would have been anti-dilutive:
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Warrants to purchase common stock |
|
|
|
|
|
|
||
Series A Convertible Preferred Stock conversion to common stock |
|
|
|
|
|
|
||
Series B Convertible Preferred Stock conversion to common stock |
|
|
|
|
|
|
||
Series C Convertible Preferred Stock conversion to common stock |
|
|
|
|
|
|
||
Notes payable conversion to common stock |
|
|
|
|
|
|
||
Stock options to purchase common stock |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
The Company's Series D Convertible Preferred Stock and Series E Convertible Preferred Stock are also potentially convertible into Common Stock, however the conversion price is unknown as of March 31, 2026.
21. Related Party Transactions
In the ordinary course of business, we may enter into transactions with directors, principal officers, their immediate families, and affiliated companies in which they are principal stockholders (commonly referred to as “related parties”).
Related Party Convertible Notes
See Note 11 for discussion.
Principal Stockholder Promissory Notes
As further discussed in Note 11, On January 29, 2025, the Former Principal Stockholder assigned the Former Principal Stockholder Notes of $
Other Related Party Transactions
In 2017, the Company entered into a royalty agreement with Fuseproject and agreed to pay
22. Supplemental Disclosure of Cash Flow Information
Supplemental cash flow information for the three months ended March 31, 2026 and 2025 is as follows:
27
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Supplemental Disclosure Of Cash Flow Information: |
|
|
|
|
|
|
||
Cash paid for Interest |
|
|
|
|
|
|
||
Non-Cash Investing and Financing Information: |
|
|
|
|
|
|
||
Property & equipment in accounts payable |
|
|
|
|
|
|
||
Inventories in accounts payable and accrued expenses |
|
|
|
|
|
|
||
Non-cash consideration for acquisition of Ergatta |
|
|
11,335 |
|
|
|
— |
|
Issuance and offering costs in accounts payable and accrued expenses |
|
|
|
|
|
|
||
Gain on extinguishment of debt with related party |
|
|
|
|
|
|
||
Issuance of common stock upon conversion of convertible notes |
|
|
|
|
|
|
||
Issuance of Series C Preferred Stock upon settlement of loss restoration agreement |
|
|
|
|
|
|
||
Issuance of warrants with convertible notes |
|
|
|
|
|
|
||
Issuance of embedded derivatives with convertible notes |
|
|
|
|
|
|
||
Series A Dividends Paid in Kind |
|
|
|
|
|
|
||
Series C Dividends Paid in Kind |
|
|
|
|
|
|
||
Non-cash settlement of debt through issuance of common stock |
|
|
|
|
|
|
||
Stock-based compensation capitalized in intangible asset and other assets |
|
|
|
|
|
|
||
23. Acquisitions
Ergatta Acquisition
On March 11, 2026, the Company completed the Ergatta Acquisition (see Note 1) for a total purchase price of approximately $
At the closing, the Company entered into a registration rights agreement with the Securityholders' Representative, on behalf of the parties entitled to receive equity consideration under the Merger Agreement, pursuant to which the Company granted customary registration rights with respect to equity consideration issuable under the Merger Agreement.
The Acquisition was accounted for under the acquisition method of accounting under ASC 805, Business Combinations. Assets acquired and liabilities assumed were recorded in the condensed consolidated balance sheet at their estimated fair values as of March 11, 2026, with the remaining unallocated purchase price recorded as goodwill.
(in thousands) |
|
Ergatta |
|
|
Cash |
|
$ |
|
|
Senior secured note |
|
|
|
|
Series D-1 preferred stock |
|
|
|
|
Contingent consideration |
|
|
|
|
Other liabilities assumed |
|
|
|
|
Total consideration |
|
$ |
|
|
Ergatta is a connected fitness company with an emphasis on game-based fitness content. The Ergatta Acquisition was a strategic acquisition intended to help accelerate the Company’s commercialization path and achieve immediate scale, resulting in a high growth, profitable platform that sells connected fitness equipment and digital fitness services across B2B and B2C channels.
The Series D-1 preferred stock was recorded at its estimated fair value and recognized as a long-term liability in the accompanying condensed consolidated balance sheet. Settlement of this liability is based on Ergatta's free cash flow, as defined below, and the settlement value will be a minimum of $
The purchase price allocation is preliminary and subject to change, including the valuation of intangible assets. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date.
28
(in thousands) |
|
As of March 11, 2026 |
|
|
Cash |
|
$ |
|
|
Accounts receivable |
|
|
|
|
Inventories |
|
|
|
|
Prepaid expenses and other current assets |
|
|
|
|
Vendor deposits |
|
|
|
|
Property and equipment |
|
|
|
|
Other assets |
|
|
|
|
Intangible assets |
|
|
|
|
Total assets acquired |
|
$ |
|
|
Accounts payable |
|
|
( |
) |
Accrued expenses and other current liabilities |
|
|
( |
) |
Deferred revenue |
|
|
( |
) |
Total identifiable net assets acquired |
|
|
|
|
Goodwill |
|
|
|
|
Total identifiable net assets acquired and goodwill |
|
|
|
|
The identified intangible assets of $
Earn Out
As part of the Ergatta Acquisition, the sellers are entitled to receive a cash contingent payment on April 30, 2027 that is secured by the $
The following unaudited pro forma summary presents condensed consolidated information of the Company including Ergatta and Wattbike, acquired on July 1, 2025, as if these acquisitions had occurred as of January 1, 2025, the earliest year presented herein:
|
|
Proforma |
|
|||||
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
Revenue |
|
$ |
|
|
$ |
|
||
Operating Loss |
|
|
( |
) |
|
|
( |
) |
Net Loss |
|
|
( |
) |
|
|
( |
) |
Net loss per share – basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
Weighted average common stock outstanding – basic |
|
|
|
|
|
|
||
The unaudited pro forma consolidated results for the three months ended March 31, 2026 and 2025 were prepared using the acquisition method of accounting and are based on the historical financial information of Ergatta and the Company. The unaudited pro forma consolidated results incorporate historical financial information for all significant acquisitions pursuant to SEC regulations since January 1, 2025. The historical financial information has been adjusted to give effect to pro forma adjustments that are: (i) directly attributable to the acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results. The unaudited pro forma consolidated results are not necessarily indicative of what the Company’s consolidated results of operations actually would have been had it completed these acquisitions on January 1, 2025.
The following unaudited condensed consolidated results of operations for Ergatta are included in the condensed consolidated statements of loss for the three months ended March 31, 2026.
29
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|
|
2026 |
|
|
Revenue |
|
$ |
|
|
Operating Loss |
|
|
( |
) |
Net Loss |
|
|
( |
) |
24. Subsequent Events
Share Repurchases
Between May 5, 2026 and May 15, 2026, the Company repurchased
Conversion of Convertible Notes and Loans Payable
On April 7, 2026, the Lender under the Company's term loan dated February 1, 2024 (see Note 11) converted $
In April of 2026, the holder of one of the Company's senior convertible notes (see Note 11) converted approximately $
30
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information included in Part I, Item 1. of this Form 10-Q, and together with our audited consolidated financial statements, the related notes thereto and other information set forth in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 31, 2026 (the "2025 10-K"). Historic results are not necessarily indicative of future results.
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “trajectory” or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. Forward-looking statements include, but are not limited to, statements regarding:
31
These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include those discussed below and under Item 1A. Risk Factors, as well as the risks discussed in the Company’s other filings with the Securities and Exchange Commission (the “SEC”). All forward-looking statements set forth in this Quarterly Report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. Forward-looking statements set forth in this Quarterly Report speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law. You should carefully read the “Risk Factors” section to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.
Overview
Interactive Strength Inc. is the parent company of four leading brands serving the commercial and at-home markets with specialty fitness equipment and virtual training: Wattbike, Ergatta, CLMBR and FORME. Wattbike, acquired in July of 2025, offers a range of high-performance indoor bikes that set the global standard in cycling. Known for unmatched accuracy, realistic ride feel, and advanced performance tracking, Wattbike is trusted by elite athletes, national teams, and fitness enthusiasts around the world. Ergatta, acquired in March 2026, is a game-based connected fitness company. CLMBR offers a premium vertical climbing experience through its patented open-frame design and immersive touchscreen, delivering a high-intensity, low-impact workout that’s both efficient and effective. FORME delivers strength, mobility, and recovery training through immersive content, performance-grade hardware, and expert coaching. Its wall-mounted systems include the Studio, a smart fitness mirror for guided programming and live 1:1 personal training, and the Lift, which adds smart resistance cable training—ideal for high-performance environments and sport-specific development. The combination of technology with expert training leads to better outcomes for both consumers and trainers alike. Wattbike, CLMBR and FORME each offer unique fitness solutions for both the commercial and at-home markets.
Key milestones in our growth history include:
Our revenue is primarily generated from the sale of our connected fitness hardware products and associated recurring membership revenue.
During the three months ended March 31, 2026 and 2025, we generated total revenue of $5.1 million and $1.4 million, respectively, and incurred net losses of $10.7 million and $6.6 million, respectively. As we generated recurring net losses and negative operating cash flow since inception, we have funded our operations primarily with gross proceeds from the issuance of convertible notes, the issuance of promissory notes to unrelated and related parties, and the issuance of common stock.
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Business Model and Growth Strategy
Acquire complementary businesses that generate attractive synergies
We acquired CLMBR, Inc. in February 2024 and Wattbike on July 1, 2025. In addition, on March 11, 2026, we completed the acquisition of Ergatta, a connected fitness company that is considered a pioneer in game-based connected fitness. We expect that we will be able to acquire additional revenue-generating businesses, which would generate higher earnings and cashflows through synergies with our existing business. Our team brings significant experience with M&A transactions and we are one of the few companies in our industry with publicly traded equity securities, which we believe makes us an attractive acquirer.
Leverage well established equipment distributors to scale in commercial channels
We have high value partnerships with numerous fitness equipment distributors around the world, including Woodway, to sell CLMBR, FORME and Wattbike products into a variety of commercial environments. These relationships allow us to leverage the sales knowledge, relationships and specialization of third parties to accelerate our sales initiatives. Importantly, this construct allows us to make the vast majority of our sales related expenses variable, as we typically pay commissions only when units are sold.
Expand into new geographies
We intend to expand the international reach of our existing brands by leveraging in-market relationships and sales infrastructure across the brands in our portfolio. For example, with Wattbike, which is based in the United Kingdom, we are currently evaluating potential expansion of that brand in the US, where FORME, CLMBR and Ergatta have well established routes to market in both commercial and residential markets, although we have not yet made any definitive plans regarding such expansion or the potential timing thereof. We plan to pursue disciplined international expansion by targeting countries with sound macroeconomic conditions, favorable growth trends and stable regulatory environments, and importantly, those where we have footholds and low risk routes to market through our existing brand relationships and in market presence.
Build out partnership ecosystem
We intend to continue to build our strategic partner ecosystem with a focus on relationships that enable us to extend our platform to new audiences. We are pursuing opportunities in a number of attractive verticals, including sports, physical therapy and rehabilitation, and telemedicine. We are continuously identifying and evaluating opportunities to apply our coaching know-how in new and innovative ways to expand our reach and impact.
Expand B2B Channel
We intend to expand our sales and marketing efforts into a variety of light commercial settings, including multifamily buildings, hotels, country clubs, universities and performance centers.
Factors Affecting Our Performance
Our financial condition and results of operations have been, and will continue to be, affected by a number of factors, including the following:
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We have experienced, and expect to continue to experience, some disruptions to parts of our supply chain, including procuring necessary components or parts in a timely fashion, with suppliers increasing lead times or placing products on allocation and raising prices. In addition, disruptions to commercial transportation infrastructure have increased delivery times for materials and components or parts for our fitness equipment, and has impacted, and could in the future impact, our ability to timely deliver our products to customers. While these supply chain disruptions have resulted in operational challenges, including extended customer order lead times and periodic product allocation, they have not had a material adverse effect on our revenue or liquidity or capital resources for the three months ended March 31, 2026, and we have not implemented any significant mitigation efforts to date as a result. However, we cannot predict the impact to us of any future or prolonged supply chain disruptions or any mitigation efforts we may take going forward. For example, as a result of these supply chain disruptions, we may be required to increase customer order lead times and place some products on allocation. In addition, we may consider additional or alternative third-party manufacturing and logistics providers or suppliers. Such mitigation efforts may result in cost increases and any attempts to offset such increases with price increases may result in reduced sales, increased customer dissatisfaction, or otherwise harm our reputation. Further, if we were to elect to transition or add manufacturing or logistics providers or suppliers, it may result in temporary or additional delays in product delivery or risks related to consistent product quality or reliability. This in turn may limit our ability to fulfill customer orders and we may be unable to satisfy all of the demand for our products. We may in the future also purchase components further in advance, which in return can result in less capital being allocated to other activities such as marketing and other business needs. We cannot quantify the impact of such disruptions at this time or predict the impact of any mitigation efforts we may take in response to supply chain disruptions on our business, financial condition, and results of operations.
In addition, customer demand for our products may be impacted by weak economic conditions, inflation, weak growth, recession, equity market volatility, or other negative economic factors in the United States or other nations. The United States has recently experienced historically high levels of inflation. If the inflation rate continues to increase, it will likely affect our expenses, including, but not limited to, employee compensation expenses, increased manufacturing and supplier costs, and increasing market prices of certain components, parts, supplies, and commodity raw materials, which are incorporated into our products or used by our suppliers to manufacture our products. These components, parts, supplies, and commodities may from time to time become restricted, or general market factors and conditions may affect pricing of such components, parts, supplies and commodities, such as inflation or supply chain constraints. Given our limited operating history, we cannot predict how ongoing or increasing recessionary or inflationary pressures may impact our business, financial condition, and results of operations in the future.
RESULTS OF OPERATIONS
Critical Accounting Policies and Estimates
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate these estimates and assumptions, including those described below. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions.
Some of the estimates and assumptions we have to make under U.S. GAAP require very difficult, subjective and/or complex judgments about matters that are inherently uncertain and, as a result, we have identified those as critical accounting estimates, which are considered critical to an understanding of our historical financial condition and results of operations and are reasonably likely to have a material impact on our future results of operations and financial condition. Critical accounting estimates include those used in estimating the fair value of our convertible notes, warrants issued in conjunction with the issuance of such convertible notes, assumptions used in determining the valuation allowance for our deferred tax assets and the impairment of goodwill and intangible assets and estimates and assumptions used in determining the fair value of consideration paid and liabilities assumed in business combinations. For a description of our significant accounting policies, see Note 2 to the Consolidated Financial Statements.
The critical accounting policies that reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements include those noted below.
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Fair Value Measurements
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Subsequent changes in fair value of these financial assets and liabilities are recognized in earnings when they occur. Our financial instruments that are carried at fair value in our consolidated financial statements consist of convertible notes, warrants and embedded derivative liabilities associated with the issuance of convertible notes and contingent consideration related to acquisition transactions. The fair value of these instruments that are measured at each accounting period are generally determined using Monte Carlo simulations or discounted cash flow analyses and are largely based on unobservable inputs to the valuation methodology (Level 3 inputs - see Note 13 to the Consolidated Financial Statements).
Goodwill and Intangible Assets
Our annual goodwill impairment assessment at October 1, 2025 was performed based on our determination that Wattbike, CLMBR and FORME comprise a single reporting unit based on the guidance provided in Accounting Standards Codification ("ASC") 350, and we performed a quantitative analysis using a combination of income and market approaches. Our reporting unit had fair values in excess of their carrying values, resulting in no impairment of goodwill.
We estimate the fair value of intangible assets acquired in business combinations based on an income approach. Where applicable, we utilize the relief-from-royalty method, which assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. This approach is dependent on a number of factors, including estimates of future growth and trends, royalty rates for this category of intellectual property, discount rates and other variables. For the periods presented, we did not recognize any impairment of intangible assets.
Contingent Consideration
In accordance with ASC 805, Business Combinations, liabilities for contingent consideration assumed in business acquisitions are recorded at fair value at the date of acquisition, with changes in the fair value recorded through earnings at each reporting period. We assess the fair value of this liability based on our estimate of the likelihood that sales projections or forecasted free cash flow, as defined, will be achieved and that the contingent payment will be earned. For the three months ended March 31, 2026 and 2025, we recorded losses on changes in fair value of contingent consideration of $26,000 and $0, respectively, and for the years ended December 31, 2025 and 2024, we recorded gains on changes in fair value of contingent consideration of $0.2 million and $1.3 million, respectively.
Convertible Notes
As permitted under ASC Topic 825, Financial Instruments, we have elected the fair value option to account for some of our convertible notes that were issued in 2025 and 2024 (see Note 11 to the Consolidated Financial Statements). In accordance with ASC Topic 825, we record these convertible notes at fair value with changes in fair value recorded as a component of other income (expense), net in the accompanying consolidated statements of operations and comprehensive loss. The convertible notes for which we elected the fair value option are valued using a discounted cash flow analysis or Monte Carlo Simulation model, and the assumptions used therein are discussed in Note 13 to the Consolidated Financial Statements. For the three months ended March 31, 2026 and 2025, we recorded losses on the change in fair value of convertible notes of $1.4 million and $0.6 million, respectively, and for the years ended December 31, 2025 and 2024, we recognized a gain (loss) on changes in fair value of convertible notes of $28.6 million and ($0.1 million), respectively.
Warrants and Derivative Liabilities
In connection with convertible notes that we issued in 2026 and 2025 for which we did not elect the fair value option, we issued warrants to purchase our Common Stock which did not meet the requirements for equity classification, and are therefore classified as long-term liabilities in the accompanying consolidated balance sheets with changes in fair value recognized in earnings at each reporting period. We generally utilize a Black-Scholes option pricing model to determine the fair value of these liabilities. For the three months ended March 31, 2026 and 2025 we recognized gains on changes in the fair values of warrants of $0.7 million and $0.4 million, respectively, and for the years ended December 31, 2025 and 2024, we recognized gains on changes in fair value of warrants of $2.8 million and $9.3 million, respectively.
We also recognized derivative liabilities related to these convertible notes for the embedded conversion options contained in the notes, which are also measured at fair value with changes in fair value recorded in earnings in each reporting period. The fair value of these liabilities are generally determined using a Monte Carlo Simulation model, and the key inputs into the model are disclosed in Note 13 to the consolidated financial statements. For the three months ended March 31, 2026 and 2025, we recognized a loss on the changes in
35
fair values of derivatives of $0.3 million and $1.5 million, respectively, and for the years ended December 31, 2025 and 2024, we recognized a gain and loss on changes in fair value of derivatives of $0.5 million and $0.5 million, respectively.
Income Taxes
We maintain a full valuation allowance against all of our net deferred tax assets, and as a result we have historically not recorded an income tax benefit in the accompanying consolidated financial statements despite continued losses since inception. This valuation allowance reflects our assessment of whether it is more likely than not that we will generate sufficient taxable income in the future to be able to utilize our deferred tax assets. In determining whether a valuation allowance is warranted, we evaluate factors such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies. Evaluation of these factors requires our management to make certain estimates, assumptions and judgments. We consider all positive and negative evidence to estimate if sufficient future taxable income will be generated to realize our deferred tax assets, and we consider cumulative losses in recent years to be a significant type of negative evidence. As of March 31, 2026 and 2025, we determined that it is more-likely-than-not that our federal and state deferred tax assets will not be realized.
Recent Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies, of the notes to our consolidated financial statements included in the 2025 10-K for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the dates of the statement of financial position included in this quarterly report on Form 10-Q.
Emerging Growth Company and Smaller Reporting Company Status
Under Section 107(b) of the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, an “emerging growth company” can delay the adoption of new or revised accounting standards until such time as those standards would apply to private companies. We have elected this exemption to delay adopting new or revised accounting standards until such time as those standards apply to private companies. Where allowable, we have early adopted certain standards as described in Note 2 to our consolidated financial statements included in the 2025 10-K. As a result, our consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. We will continue to remain an “emerging growth company” until the earliest of the following: (i) the last day of the fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (ii) the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.235 billion; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC. We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Components of Our Operating Results
Revenue
Connected Fitness Products
Connected Fitness Product revenue consists of sales of our connected fitness products and related accessories, delivery and installation services, and extended warranty agreements offered through a third-party. Fitness Product revenue is recognized at the time of delivery, except for extended warranty revenue which is recognized over the warranty period. For the third-party extended warranty service sold along with the connected fitness products, we do not obtain control of the warranty before transferring it to the customers. Therefore, we account for revenue related to the fees paid to the third-party extended warranty provider on a net basis, by recognizing only the net commission we retain. Connected fitness product revenue represented 87% and 77% of total revenue for the three months ended March 31, 2026 and 2025, respectively.
Membership
Membership revenue consists of revenue generated from our monthly Connected Fitness membership. Membership revenue represented 12% and 13% of total revenue for the three months ended March 31, 2026 and 2025, respectively. With the recent acquisition of Ergatta, we expect our membership revenue to increase overall and as a percentage of total revenue during the remainder of 2026.
Training and Other Revenue
36
Training and other revenue consists of sales of our personal training services delivered through our connected fitness products and third-party mobile devices, and also includes license revenue generated by Ergatta. Training revenue is recognized at the time of delivery. Training and other revenue represented 2% and 10% of total revenue for the three months ended March 31, 2026 and 2025, respectively.
Cost of Revenue
Connected Fitness Product
Connected Fitness Product cost of revenue consists of Wattbike, Ergatta, CLMBR, Studio and Studio Lift and accessories product costs, including manufacturing costs, duties and other applicable importing costs, shipping and handling costs, packaging, warranty replacement costs, fulfillment costs, warehousing costs, and certain allocated costs related to management and facilities expenses associated with supply chain logistics.
Membership
Membership cost of revenue includes costs associated with personnel related expenses, filming and production costs, hosting fees, music royalties, amortization of capitalized content and amortization of capitalized software development costs.
Training and Other
Training and other revenue cost of revenue includes costs associated with personnel related expenses and rent expense.
Operating Expenses
Research and Development
Research and development expense primarily consists of personnel and facilities-related expenses, engineering costs, consulting and contractor expenses, tooling and prototype materials, and software platform expenses. We capitalize certain qualified costs incurred in connection with the development of internal-use software and software to be sold or marketed which may also cause research and development expenses to vary from period to period.
Sales and Marketing
Sales and marketing expense consists of performance marketing media spend, brand creative expenses, amortization of customer-related and trademark intangible assets, all showroom expenses and related lease payments and sales and marketing personnel-related expenses.
General and Administrative
General and administrative expenses include personnel-related expenses and facilities-related costs primarily for our executive, finance, accounting, legal, human resources, and IT functions. General and administrative expenses also include fees for professional services, principally comprised of legal, audit, tax and accounting services, insurance and depreciation of internal use software.
We expect to incur additional general and administrative expenses as a result of operating as an acquisition-focused public company, including expenses related to compliance and reporting obligations required of public companies, and increased costs for insurance, investor relations expenses, and professional services. As a result, we expect that our general and administrative expenses will increase in absolute dollars in future periods and vary from period to period as a percentage of revenue, but we expect to leverage these expenses over time as we grow our revenue and member base.
Other (Expense) Income, Net
Other (expense) income, net consists of expenses associated with the issuance of convertible notes that were recognized at fair value, unrealized currency gains and losses, and expense recognized in connection with a settlement agreement.
Interest Expense
Interest expense consists of interest associated with our convertible notes and loans payable.
Interest Income
Interest income in 2025 consists of interest associated with the loan receivable.
(Loss) gain upon extinguishment of debt and accounts payable
(Loss) gain on debt extinguishment and accounts payable is primarily the result of gains or losses incurred upon conversion of convertible notes and loans payable into equity, or an exchange of debt instruments.
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Change in Fair Value of Convertible Notes
The change in fair value of convertible notes consists of the change in the fair value of the outstanding convertible notes since the previous reporting period.
Change in Fair Value of Earn Out
The change in fair value of earn out consists of the change in the fair value of outstanding contingent consideration liabilities since the previous reporting period.
Change in Fair Value of Derivatives
The change in fair value of derivatives consists of the change in the fair value of the outstanding derivatives since the previous reporting period.
Change in Fair Value of Warrants
The change in fair value of warrants consists of the change in the fair value of the outstanding warrants since the previous reporting period.
Results of Operations
The following tables set forth our consolidated results of operations for the periods presented.
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Results of Operations for the Three Months Ended March 31, 2026 and 2025
The following tables set forth our condensed consolidated results of operations for the periods presented. The period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future.
|
|
Three Months Ended March 31, |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
||||
Revenue: |
|
(in thousands) |
|
|
(in thousands) |
|
|
|
|
|||||||
Fitness product revenue |
|
$ |
4,453 |
|
|
$ |
1,050 |
|
|
$ |
3,403 |
|
|
|
324 |
% |
Membership revenue |
|
|
605 |
|
|
|
176 |
|
|
|
429 |
|
|
|
244 |
% |
Training revenue |
|
|
83 |
|
|
|
130 |
|
|
|
(47 |
) |
|
|
(36 |
%) |
Total revenue |
|
|
5,141 |
|
|
|
1,356 |
|
|
|
3,785 |
|
|
|
279 |
% |
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of fitness product revenue (2) |
|
|
(3,043 |
) |
|
|
(917 |
) |
|
|
(2,126 |
) |
|
|
232 |
% |
Cost of membership (2) |
|
|
(365 |
) |
|
|
(423 |
) |
|
|
58 |
|
|
|
(14 |
%) |
Cost of training |
|
|
(124 |
) |
|
|
(320 |
) |
|
|
196 |
|
|
|
(61 |
%) |
Total cost of revenue |
|
|
(3,532 |
) |
|
|
(1,660 |
) |
|
|
(1,872 |
) |
|
|
113 |
% |
Gross profit (loss) |
|
|
1,609 |
|
|
|
(304 |
) |
|
|
1,913 |
|
|
|
(629 |
%) |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development (1) |
|
|
438 |
|
|
|
1,271 |
|
|
|
(833 |
) |
|
|
(66 |
%) |
Sales and marketing (1) (2) |
|
|
1,034 |
|
|
|
250 |
|
|
|
784 |
|
|
|
314 |
% |
General and administrative (1) (2) |
|
|
4,127 |
|
|
|
4,487 |
|
|
|
(360 |
) |
|
|
(8 |
%) |
Total operating expenses |
|
|
5,599 |
|
|
|
6,008 |
|
|
|
(409 |
) |
|
|
(7 |
%) |
Loss from operations |
|
|
(3,990 |
) |
|
|
(6,312 |
) |
|
|
2,322 |
|
|
|
(37 |
%) |
Other income (expense), net: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other expense, net: |
|
|
(2,477 |
) |
|
|
(111 |
) |
|
|
(2,366 |
) |
|
|
2,132 |
% |
Interest expense |
|
|
(1,530 |
) |
|
|
(1,764 |
) |
|
|
234 |
|
|
|
(13 |
%) |
Interest income |
|
|
— |
|
|
|
158 |
|
|
|
(158 |
) |
|
|
100 |
% |
Gain (loss) upon extinguishment of debt and accounts payable |
|
|
(1,710 |
) |
|
|
3,037 |
|
|
|
(4,747 |
) |
|
|
(156 |
%) |
Change in fair value of convertible notes |
|
|
(1,350 |
) |
|
|
(573 |
) |
|
|
(777 |
) |
|
|
136 |
% |
Change in fair value of earn out |
|
|
(26 |
) |
|
|
— |
|
|
|
(26 |
) |
|
n/a |
|
|
Change in fair value of derivatives |
|
|
(327 |
) |
|
|
(1,487 |
) |
|
|
1,160 |
|
|
|
(78 |
%) |
Change in fair value of warrants |
|
|
667 |
|
|
|
449 |
|
|
|
218 |
|
|
|
49 |
% |
Total other income (expense), net |
|
|
(6,753 |
) |
|
|
(291 |
) |
|
|
(6,462 |
) |
|
|
2,221 |
% |
Loss before provision for income taxes |
|
|
(10,743 |
) |
|
|
(6,603 |
) |
|
|
(4,140 |
) |
|
|
63 |
% |
Income tax benefit (expense) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
- |
|
Net loss |
|
$ |
(10,743 |
) |
|
$ |
(6,603 |
) |
|
$ |
(4,140 |
) |
|
|
63 |
% |
|
|
|
Three Months Ended March 31, |
|
|
Change |
|
||||||||||
|
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
||||
|
|
|
(in thousands) |
|
|
(in thousands) |
|
||||||||||
Research and development |
|
|
$ |
55 |
|
|
$ |
699 |
|
|
$ |
(644 |
) |
|
|
(92 |
%) |
General and administrative |
|
|
|
339 |
|
|
|
1,390 |
|
|
|
(1,051 |
) |
|
|
(76 |
%) |
Total stock-based compensation expense |
|
|
$ |
394 |
|
|
$ |
2,089 |
|
|
$ |
(1,695 |
) |
|
|
(81 |
%) |
For the three months ended March 31, 2026 and 2025, $0 and $0.3 million, respectively, of stock-based compensation was capitalized as software costs.
|
|
Three Months Ended March 31, |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
||||
|
|
(in thousands) |
|
|
(in thousands) |
|
||||||||||
Cost of membership |
|
$ |
328 |
|
|
$ |
423 |
|
|
$ |
(95 |
) |
|
|
(22 |
%) |
Cost of fitness product revenue |
|
|
145 |
|
|
|
158 |
|
|
|
(13 |
) |
|
|
(8 |
%) |
General and administrative |
|
|
66 |
|
|
|
300 |
|
|
|
(234 |
) |
|
|
(78 |
%) |
Sales and marketing |
|
|
315 |
|
|
|
131 |
|
|
|
184 |
|
|
|
140 |
% |
Total depreciation and amortization expense |
|
$ |
854 |
|
|
$ |
1,012 |
|
|
$ |
(158 |
) |
|
|
(16 |
%) |
39
Comparison of the three months ended March 31, 2026 and 2025
Revenue
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% Change |
|||
Revenue: |
|
(in thousands) |
|
|
|
|
|
|
||||||
Fitness product |
|
$ |
4,453 |
|
|
$ |
1,050 |
|
|
$ |
3,403 |
|
|
324% |
Membership |
|
|
605 |
|
|
|
176 |
|
|
|
429 |
|
|
244% |
Training and other |
|
|
83 |
|
|
|
130 |
|
|
|
(47 |
) |
|
(36%) |
Total revenue |
|
|
5,141 |
|
|
|
1,356 |
|
|
|
3,785 |
|
|
279% |
Percentage of revenue |
|
|
|
|
|
|
|
|
|
|
|
|||
Fitness product |
|
|
87 |
% |
|
|
77 |
% |
|
|
|
|
|
|
Membership |
|
|
12 |
% |
|
|
13 |
% |
|
|
|
|
|
|
Training |
|
|
2 |
% |
|
|
10 |
% |
|
|
|
|
|
|
Total |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
Fitness product revenue increased by $3.4 million, or 324%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase in Fitness Product revenue was the result of $4.2 million of revenue associated with Wattbike, which was acquired on July 1, 2025, partially offset by a decrease in CLMBR revenue in 2026.
Membership revenue increased $0.4 million, or 244%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase is attributable to Ergatta, acquired on March 11, 2026.
Training and other revenue decreased by $47,000, or 36%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was a result of a decrease in Live 1:1 training sessions.
Cost of Revenue and Gross Profit (Loss)
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% Change |
|||
Cost of Revenue: |
|
(in thousands) |
|
|
|
|
|
|
||||||
Fitness product |
|
$ |
3,043 |
|
|
$ |
917 |
|
|
$ |
2,126 |
|
|
232% |
Membership |
|
|
365 |
|
|
|
423 |
|
|
|
(58 |
) |
|
(14%) |
Training and other |
|
|
124 |
|
|
|
320 |
|
|
|
(196 |
) |
|
(61%) |
Total cost of revenue |
|
|
3,532 |
|
|
|
1,660 |
|
|
|
1,872 |
|
|
113% |
Gross Profit (Loss): |
|
|
|
|
|
|
|
|
|
|
|
|||
Fitness product |
|
|
1,410 |
|
|
|
133 |
|
|
|
1,277 |
|
|
960% |
Membership |
|
|
240 |
|
|
|
(247 |
) |
|
|
487 |
|
|
n/a |
Training and other |
|
|
(41 |
) |
|
|
(190 |
) |
|
|
149 |
|
|
78% |
Total gross profit (loss) |
|
|
1,609 |
|
|
|
(304 |
) |
|
|
1,913 |
|
|
n/a |
Gross Margin: |
|
|
|
|
|
|
|
|
|
|
|
|||
Fitness product |
|
|
32 |
% |
|
|
13 |
% |
|
|
|
|
|
|
Membership |
|
|
40 |
% |
|
|
(140 |
%) |
|
|
|
|
|
|
Training and other |
|
|
(49 |
%) |
|
|
(146 |
%) |
|
|
|
|
|
|
Total |
|
|
31 |
% |
|
|
(22 |
%) |
|
|
|
|
|
|
Fitness product cost of revenue increased by $2.1 million, or 232%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase is due to the cost of revenue associated with Wattbike, which was acquired on July 1, 2025.
Membership cost of revenue decreased by $58,000, or 14%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease is primarily related to the decrease in content amortization expense, partially offset by Ergatta membership cost of revenue not present in 2025.
Training and other cost of revenue decreased $0.2 million, or 61%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease is mainly due to the decline in Live 1:1 training sessions.
Our gross profit/loss improved from a loss of $0.3 million for the three months ended March 31, 2025 to gross profit of $1.6 million for the three months ended March 31, 2026. The improvement is mainly due to the Wattbike acquisition.
40
Operating Expenses
|
|
Three Months Ended March 31, |
|
|
Change |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
|||
Operating Expenses: |
|
(in thousands) |
|
|
|
|
|
|
|
||||||
Research and development |
|
$ |
438 |
|
|
$ |
1,271 |
|
|
$ |
(833 |
) |
|
(66%) |
|
Sales and marketing |
|
|
1,034 |
|
|
|
250 |
|
|
|
784 |
|
|
314% |
|
General and administrative |
|
|
4,127 |
|
|
|
4,487 |
|
|
|
(360 |
) |
|
(8%) |
|
Total operating expenses |
|
$ |
5,599 |
|
|
$ |
6,008 |
|
|
$ |
(409 |
) |
|
(7%) |
|
Research and Development
Research and development expense decreased by $0.8 million, or 66%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to decreases in stock-based compensation and other personnel-related costs of $0.6 million and $0.2 million, respectively.
Sales and Marketing
Sales and marketing expense increased by approximately $0.8 million, or 314%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, driven by increases in personnel-related expenses of $0.5 million and advertising expense $0.1 million, both of which are attributable to the Wattbike acquisition, and amortization of intangibles of $0.2 million associated with Ergatta.
General and Administrative
General and administrative expense decreased by $0.4 million, or 8%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The decrease was mainly due to decreases in stock-based compensation expense of $1.1 million and vendor settlements of $0.3 million, largely offset by Wattbike and Ergatta expenses of $0.8 million and $0.1 million, respectively, in 2026 with no comparable amount for 2025.
Other Income (Expense), net
|
|
Three Months Ended March 31, |
|
|
Change |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
|||
Other income (expense), net |
|
(in thousands) |
|
|
|
|
|
|
|
||||||
Other expense, net: |
|
$ |
(2,477 |
) |
|
$ |
(111 |
) |
|
$ |
(2,366 |
) |
|
2132% |
|
Interest expense |
|
|
(1,530 |
) |
|
|
(1,764 |
) |
|
|
234 |
|
|
(13%) |
|
Interest income |
|
|
— |
|
|
|
158 |
|
|
|
(158 |
) |
|
(100%) |
|
(Loss) gain upon extinguishment of debt and accounts payable |
|
|
(1,710 |
) |
|
|
3,037 |
|
|
|
(4,747 |
) |
|
(156%) |
|
Change in fair value of convertible notes |
|
|
(1,350 |
) |
|
|
(573 |
) |
|
|
(777 |
) |
|
136% |
|
Change in fair value of earn out |
|
|
(26 |
) |
|
|
— |
|
|
|
(26 |
) |
|
n/a |
|
Change in fair value of derivatives |
|
|
(327 |
) |
|
|
(1,487 |
) |
|
|
1,160 |
|
|
(78%) |
|
Change in fair value of warrants |
|
|
667 |
|
|
|
449 |
|
|
|
218 |
|
|
49% |
|
Total other income (expense), net |
|
$ |
(6,753 |
) |
|
$ |
(291 |
) |
|
$ |
(6,462 |
) |
|
2221% |
|
Other Expense, net
Other expense, net for the three months ended March 31, 2026 is mainly comprised of expense recognized under a settlement agreement in the amount of $2.2 million and the credit loss of $0.2 million recognized upon the settlement of the Sportstech loan receivable. Other expense, net for the three months ended March 31, 2025 is mainly comprised of losses on the settlement of a Loss Restoration Agreement.
Interest Expense
Interest expense decreased by $0.2 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The decrease mainly attributable to the conversion of certain higher interest debt into equity, partially offset by an increase in amortization of debt discount.
Interest Income
Interest income decreased by $0.2 million for the three months ended March 31, 2026 as compared to the same period of a year ago due to the repayment of the loan receivable from Sportstech in early 2026.
41
(Loss) Gain on extinguishment of debt and accounts payable
The loss on extinguishment of debt and accounts payable for the three months ended March 31, 2026 was mainly the result of the conversion of Class A Incremental Notes into equity (see Note 11 to the Consolidated Financial Statements) resulting in a loss on extinguishment of $2.8 million, partially offset by gains on extinguishment of $1.1 million resulting from other indebtedness that was converted to equity. For the three months ended March 31, 2025, we recorded a gain on extinguishment of $3.0 million in connection with the conversion of debt to equity.
Change in Fair Value of Convertible Notes
We recorded losses on the change in fair value of convertible notes for the three months ended March 31, 2026 and 2025 of $1.4 million and $0.6 million due to the increase in fair value of these notes.
Change in Fair Value of Derivatives
The loss on the change in fair value of derivatives for the three months ended March 31, 2026 of $0.3 million reflects the increase in the fair value of the Company's derivative instruments, which are mainly the result of the issuance of convertible promissory notes. For the three months ended March 31, 2025, we recorded a loss of $1.5 million related to the increases in fair value of these instruments.
Change in Fair Value of Warrants
The gain on the change in fair value of warrants issued in conjunction with the issuance of convertible notes was $0.7 million and $0.4 million, respectively.
Liquidity and Capital Resources
At March 31, 2026, we had a working capital deficit of $22.4 million, mainly consisting of cash and cash equivalents of $4.7 million, accounts receivable of $2.5 million, inventory of $4.5 million and vendor deposits and other current assets of $2.3 million, more than offset by accounts payable and accrued expenses of $14.5 million, the current portion of convertible notes and loans payable of $16.3 million and other current liabilities of $5.6 million. We have incurred an accumulated deficit of $238.3 million since inception, and we had negative cash flows from operations of $2.6 million and $3.5 million for the three months ended March 31, 2026 and 2025, respectively, and $10.4 million and $14.8 million for the years ended December 31, 2025 and 2024, respectively. We also incurred operating losses of $4.0 million and $6.3 million for the three months ended March 31, 2026 and 2025, respectively, and $19.9 million and $29.2 million for the years ended December 31, 2025 and 2024, respectively. We have funded our operations for the last few years through the sale of our debt and equity securities. Our material cash requirements are primarily comprised of:
As an emerging growth company, we are subject to certain inherent risks and uncertainties associated with the development of an enterprise. Since our inception, substantially all of management’s efforts have been devoted towards the development of its brands and services, their penetration in the marketplace, and the development of a commercial organization, all at the expense of short-term profitability.
In order to execute our growth strategy, we have been heavily dependent on financing from lenders and capital from private and public investors (collectively “outside capital”) since our inception and we expect to remain heavily dependent on outside capital for the foreseeable future until such time that our operations reach a scale of profitability that allows us to fund our obligations with cash inflows from operations. However, management can provide no assurance that we will ever be able to generate sufficient cash inflows to reduce or eliminate our reliance on outside capital.
Our available liquidity to fund our operations over the next twelve months beyond the issuance date was limited to approximately $1.3 million of cash and cash equivalents However, based on our anticipated liquidity needs, the foregoing available liquidity will not be sufficient to meet our obligations as they become due over the next year beyond the issuance date absent management’s ability to secure additional outside capital, which may not be available on commercially acceptable terms, or at all. The Securities Purchase Agreement that we entered into on January 28, 2025 with an accredited investor allows the investor to purchase up to $20.0 million of additional senior secured convertible notes from us, and we also have an At The Market Offering Agreement in place under which we may issue
42
additional shares of Common Stock of approximately $6.0 million, however these do not represent firm commitments for additional capital. We currently have no firm commitments in place for securing additional outside capital.
Included in our anticipated liquidity needs is approximately $18.2 million of outstanding debt that is scheduled to mature over the next twelve months beyond the issuance date, and we do not have sufficient liquidity to repay such debt if a cash settlement is required. In the event we are unable to refinance our outstanding debt, settle some or all of the debt with shares of our common or preferred stock, secure additional outside capital, and/or secure amendments or waivers from its lenders to defer or modify their repayment terms, management will be required to seek other strategic alternatives to settle this indebtedness, which may include, among others, a significant curtailment of the Company’s operations, a sale of certain of the Company’s assets, a sale of the entire Company to strategic or financial investors, and/or allowing the Company to become insolvent by filing for bankruptcy protection under the provisions of the U.S. Bankruptcy Code. These uncertainties raise substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements have been prepared on the basis that we will continue to operate as a going concern, which contemplates that we will be able to realize assets and settle liabilities and commitments in the normal course of business for the foreseeable future. Accordingly, the accompanying consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.
Cash Flows
Comparison of the three months ended March 31, 2026 and 2025
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Net cash used in operating activities |
|
$ |
(2,587 |
) |
|
$ |
(3,545 |
) |
Net cash provided by (used) in investing activities |
|
|
4,150 |
|
|
|
(2,191 |
) |
Net cash provided by financing activities |
|
|
2,714 |
|
|
|
7,771 |
|
Effect of exchange rate on cash |
|
|
(51 |
) |
|
|
34 |
|
Net Change In Cash and Cash Equivalents |
|
$ |
4,226 |
|
|
$ |
2,069 |
|
Operating Activities
Net cash used in operating activities was $2.6 million and $3.5 million for the three months ended March 31, 2026 and 2025, respectively. The decrease was mainly due to favorable changes in accounts receivable and accounts payable and accrued expenses. The following table represents the components of cash used in operating activities:
|
|
Three Months Ended March 31, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Net loss |
|
$ |
(10,743 |
) |
|
$ |
(6,603 |
) |
Non-cash expenses, gains and losses (a) |
|
|
8,035 |
|
|
|
3,799 |
|
Changes in accounts receivable |
|
|
249 |
|
|
|
(338 |
) |
Changes in inventory |
|
|
(73 |
) |
|
|
391 |
|
Changes in accounts payable, accrued expenses and other current liabilities |
|
|
112 |
|
|
|
(615 |
) |
Other, net |
|
|
(167 |
) |
|
|
(179 |
) |
Total cash used in operations |
|
$ |
(2,587 |
) |
|
$ |
(3,545 |
) |
|
|
|
|
|
|
|
||
(a) - includes depreciation and amortization, stock-based compensation, non-cash interest expense and gains and losses on changes in fair value of the Company's financial instruments. |
|
|||||||
Investing Activities
Net cash provided by investing activities of $4.2 million for the three months ended March 31, 2026 was mainly comprised of the repayment of the Sportstech loan receivable in the amount of $6.4 million (see Note 2 to the Consolidated Financial Statements), partially offset by $1.7 million of cash paid in the Ergatta acquisition transaction, net of cash acquired and acquisition of software and content of $0.4 million. Net cash used in investing activities of $2.2 million for the three months ended March 31, 2025 were comprised of a loan to Sportstech of $2.0 million and acquisition of software and content of $0.2 million.
Financing Activities
Net cash provided by financing activities of $2.7 million for the three months ended March 31, 2026 was primarily from the issuance of convertible notes of $1.6 million and proceeds from the issuance of common stock from an At the Market Offering of $1.5 million, partially offset by the payment of loans under a line of credit at Wattbike of $0.3 million.
Net cash provided by financing activities of $7.8 million for the three months ended March 31, 2025 was primarily from proceeds from the issuance of convertible notes in the amount of $6.2 million and At the Market Offering proceeds of $1.6 million.
43
44
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Foreign Currency Risk
To date, most of our inventory purchases have been denominated in U.S. dollars. A portion of our operating expenses are incurred outside the United States and are denominated in foreign currencies, which are also subject to fluctuations due to changes in foreign currency exchange rates. In addition, our suppliers incur many costs, including labor and supply costs, in other currencies. While we are not currently contractually obligated to pay increased costs due to changes in exchange rates, to the extent that exchange rates move unfavorably for our suppliers, they may seek to pass these additional costs on to us, which could have a material impact on our gross margins. Our operating results and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates. However, we believe that the exposure to foreign currency fluctuation from operating expenses is relatively small at this time as the related costs do not constitute a significant portion of our total expenses. To date, we have not entered into derivatives or hedging transactions, as our exposure to foreign currency exchange rates has historically been partially hedged as our foreign currency denominated inflows have covered our foreign currency denominated expenses. However, we may enter into derivative or hedging transactions in the future if our exposure to foreign currency should become more significant.
Interest rate risk
Substantially all of our outstanding debt instruments have fixed interest rates. As a result, a hypothetical 100 basis point increase in interest rates would not result in a material impact on our cash flows, liquidity or results of operations for the three months ended March 31, 2026 and 2025.
Inflation Risk
While inflation has contributed to increased manufacturing and supplier costs, higher component prices and elevated employee compensation expenses for the three months ended March 31, 2026 and 2025, we do not believe that these inflationary pressures have had a material effect on our business, financial condition or results of operations. However, if our costs become subject to more significant or sustained inflationary pressures, we may not be able to fully offset such higher costs through price increases or other measures. Our inability or failure to do so could harm our business, financial condition, and operating results.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision, and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in connection with the period ending March 31, 2026. Based on that evaluation, management has concluded that as of the respective period, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting described below.
Notwithstanding the material weaknesses in our internal control over financial reporting, management has concluded that the condensed consolidated financial statements included in this Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act for the Company. Management assessed the effectiveness of internal control over financial reporting as of the three months ended March 31, 2026. In making this assessment, our management used the criteria set forth in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”). Based on this evaluation, our management concluded that our internal control over financial reporting was not effective as of March 31, 2026, because of the material weaknesses described below.
Material Weaknesses
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of our annual or interim consolidated financial statements would not be prevented or detected on a timely basis.
Management concluded that material weaknesses existed as of March 31, 2026. Specifically, management identified deficiencies in the principles associated with the control environment, risk assessment, control activities, information and communication and monitoring components of internal control, based on the criteria established by the COSO Framework, that constitute material weaknesses, either individually or in the aggregate.
45
These material weaknesses could result in a misstatement of the account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or timely detected.
Inherent Limitations on Effectiveness of Controls
Our management, including our principal executive officer and principal financial officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Remediation Plan and Status
We are committed to remediating the control deficiencies that constituted the above material weakness by implementing changes to our internal control over financial reporting. We are in the process of implementing measures designed to improve our internal control over financial reporting to remediate these material weaknesses, including formalizing our processes and internal control documentation and strengthening supervisory reviews by our financial management; hiring additional qualified accounting and finance personnel and engaging financial consultants to enable the implementation of internal control over financial reporting and segregating duties amongst accounting and finance personnel. In addition, we are planning on implementing an accounting software system with the design and functionality to segregate incompatible accounting duties, which we currently expect will be implemented in our 2026 fiscal year.
46
While we are implementing these measures, we cannot assure you that these efforts will remediate our material weaknesses and significant deficiencies in a timely manner, or at all, or prevent restatements of our financial statements in the future. In particular, our material weakness related to our accounting software was not fully remediated for the three months ended March 31, 2026, as we expect to implement new software later in 2026. If we are unable to successfully remediate our material weaknesses, or identify any future significant deficiencies or material weaknesses, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports, and the market price of our common stock may decline as a result.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during the period ended March 31, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
47
Part II - Other Information
Item 1. Legal Proceedings.
For information regarding legal proceedings please refer to Note 15, Commitments and Contingencies, in Part I, Item 1, "Financial Statements" of this Quarterly Report on Form 10-Q. From time to time, we are involved in legal proceedings and subject to claims arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we believe that the resolution of current matters will not have a material adverse effect on our business, financial condition, or results of operations. Even if any particular litigation or claim is not resolved in a manner that is adverse to our interests, such litigation can have a negative impact on us because of defense and settlement costs, diversion of management resources from our business, and other factors.
Item 1A. Risk Factors.
Our business, financial condition, results of operations, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth in the 2025 10-K and in our other filings with the SEC, the occurrence of any one of which could have a material adverse effect on our actual results. Except as set forth below, there have been no material changes to the risk factors previously disclosed in the 2025 10-K. The Company is supplementing the risk factors previously disclosed in the 2025 10-K with the following risk factors.
Our acquisition of Ergatta does not provide assurance that the operations of Ergatta will be accretive to our earnings or otherwise improve our results of operations.
Acquisitions, such as our recent acquisition of Ergatta, involve the integration of previously separate businesses into a common enterprise in which it is envisioned that synergistic operations and economies of scale will result in improved financial performance. However, realization of these envisioned results is subject to numerous risks and uncertainties including but not limited to:
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Diversion of management time and attention from daily operations; |
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Difficulties integrating the acquired business, technologies and personnel into our business; |
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Potential loss of key employees, key contractual relationships or key customers of the acquired business; and |
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Assumption of the liabilities and exposure to unforeseen liabilities of the acquired business. |
Even though our acquisition of Ergatta has been consummated, there is no assurance that the acquisition will be accretive to our earnings or otherwise improve our results of operations.
If we are unable to successfully manage the integration of our acquisitions, we may not benefit from our acquisition strategy.
As part of our growth strategy, we seek to supplement internal growth with targeted acquisitions, including the recent acquisition of Ergatta. We may not be successful in integrating newly acquired companies into our day-to-day operations for a variety of possible reasons, including (a) our inability to retain the skilled managerial, technical, and sales personnel of acquired companies; (b) our inability to retain the customers of acquired companies; (c) our lack of success in integrating the services offered by acquired companies with our services to achieve a single package of service offerings; (d) our inability to establish and maintain uniform standards, controls, policies and procedures throughout our acquired companies; or (e) our inability to devote the management time required to successfully integrate acquired companies due to limited management resources.
Our issuance of convertible debt exposes us to various risks on dilution of our existing stockholders, downward pressure on stock price, impact on future financing and investor confidence.
Our issuance of convertible debt exposes us to various risks, including the following:
Dilution Risk to Existing Shareholders: Our issuance of convertible debt, which may be converted into shares of our common stock, poses a significant risk of dilution to our existing shareholders. Upon conversion, new shares will be issued, increasing the total number of outstanding shares and potentially decreasing the voting power of current shareholders. The extent of dilution will depend on the conversion price and the amount of debt converted.
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Downward Pressure on Stock Price: The potential for future dilution from the conversion of debt can create downward pressure on our stock price. Investors may anticipate the increased supply of shares, leading to a negative impact on market valuation.
Impact on Future Financing: The existence of convertible debt on our balance sheet, and the potential for future dilution, may make it more difficult or expensive for us to raise additional capital through equity or debt offerings in the future. Potential investors may be wary of the existing conversion rights or the perceived debt burden.
Market Perception and Investor Confidence: The market's perception of our financial health and growth prospects can be influenced by our capital structure, including the amount and terms of our convertible debt. Negative perceptions could impact investor confidence and our stock valuation.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On March 31, 2026 we issued 1,088,255 shares of Series C Preferred Stock pursuant to a settlement agreement in connection with the resolution of certain outstanding obligations.
During the three months ended March 31, 2026 we issued 332,118 shares of common stock in the settlement of debt.
The offers, sales and issuances of the securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated under Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions was an accredited investor or institutional accredited investor within the meaning of Rule 501(a) of Regulation D under the Securities Act and had adequate access, through employment, business or other relationships, to information about the Registrant. No underwriter was involved in these transactions.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Our directors and officers (as defined in Rule 16a-1 under the Exchange Act) may from time to time enter into plans or other arrangements for the purchase or sale of our shares that are intended to satisfy the affirmative defense conditions of Rule 10b5–1(c) or may represent a non-Rule 10b5-1 trading arrangement under the Exchange Act. During the quarter ended March 31, 2026, no such plans or arrangements were
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Item 6. Exhibit
Exhibit No. |
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Description |
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2.1** |
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Agreement and Plan of Merger, by and among Interactive Strength Inc., Ergatta Acquisition Corp., Ergatta, Inc. and Tom Aulet, dated as of February 18, 2026 (incorporated by reference from Exhibit 2.1 to the registrant’s Current Report on Form 8-K filed February 23, 2026). |
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3.1 |
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Certificate of Amendment to the Certificate of Incorporation of Interactive Strength Inc. (incorporated by reference from Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed February 25, 2026). |
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3.2 |
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Certificate of Designation of Preferences, Rights and Limitations of Series D1 Convertible Preferred Stock, Series D2 Convertible Preferred Stock and Series D3 Convertible Preferred Stock of Interactive Strength Inc. (incorporated by reference from Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed March 11, 2026). |
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10.1 |
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Exchange Agreement, dated as of December 29, 2025 (incorporated by reference from Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed January 5, 2026). |
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10.2 |
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Settlement Agreement, dated as of December 31, 2025, by and between Interactive Strength Inc. and Vertical Investors, LLC (incorporated by reference from Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed January 7, 2026). |
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10.3 |
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Exchange Agreement, dated as of December 31, 2025, by and between Interactive Strength Inc. and Vertical Investors, LLC (incorporated by reference from Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed January 7, 2026). |
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10.4 |
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Exchange Agreement, dated as of February 19, 2026, by and between Interactive Strength Inc. and Vertical Investors, LLC (incorporated by reference from Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed February 25, 2026). |
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10.5 |
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Settlement Agreement, by and between Interactive Strength Inc. and Sportstech Brands Holding GmbH, dated as of February 27, 2026 (incorporated by reference from Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed March 5, 2026). |
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31.1
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Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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31.2 |
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Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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32.1* |
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Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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32.2* |
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Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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101.INS |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents. |
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104 |
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Cover Page Formatted as Inline XBRL and Contained in Exhibit 101. |
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* In accordance with Item 601(b)(32)(ii) of Regulation S K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933 except to the extent that the registrant specifically incorporates it by reference.
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** The schedules to this Exhibit have been omitted in accordance with Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally to the Securities and Exchange Commission a copy of all omitted exhibits and schedules upon its request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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INTERACTIVE STRENGTH INC. |
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Date: May 20, 2026 |
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By: |
/s/ Trent A. Ward |
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Trent A. Ward |
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Chief Executive Officer |
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(Principal Executive Officer and Duly Authorized Officer) |
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Date: May 20, 2026 |
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By: |
/s/ Caleb Morgret |
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Caleb Morgret |
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Chief Financial Officer |
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(Principal Financial Officer and Principal Accounting Officer) |
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