10-K: Interactive Strength Reports 114% Revenue Growth Amidst Going Concern Doubts

Interactive Strength Inc. reported a significant 114% revenue increase for fiscal year 2025, primarily driven by strategic acquisitions, yet faces substantial doubt about its ability to continue as a going concern due to ongoing losses and liquidity challenges.

Summary

• Total revenue increased by 114% to $11.5 million for the year ended December 31, 2025, up from $5.4 million in 2024, primarily due to the acquisition of Wattbike.
• Net loss improved to $24.0 million in 2025 from $34.9 million in 2024, a 31% reduction.
• The company achieved a gross profit of $0.9 million in 2025, a significant improvement from a gross loss of $2.8 million in 2024.
• Fitness product revenue surged by 160% to $10.3 million in 2025, largely attributable to the Wattbike acquisition, which contributed $8.2 million (71% of consolidated revenue) since its acquisition on July 1, 2025.
• Membership revenue decreased by 7% to $0.7 million in 2025, attributed to a focus on commercial channel hardware sales with lower subscription attach rates.
• Training revenue decreased by 26% to $0.5 million in 2025, mainly due to declines associated with Forme Connected Fitness products.
• Operating expenses decreased by 21% to $20.8 million in 2025, driven by a 58% reduction in research and development expenses and a 15% decrease in general and administrative expenses, partially offset by a 110% increase in sales and marketing expenses due to Wattbike.
• The company incurred negative cash flows from operations of $10.4 million in 2025 and had an accumulated deficit of $227.5 million as of December 31, 2025.
• A loan receivable from Sportstech of $6.6 million (including accrued interest and fees) as of December 31, 2025, was settled on March 4, 2026, with the company receiving $6.4 million in cash, resulting in a $0.2 million loss in Q1 2026.
• The company completed the acquisition of Ergatta, Inc. on March 11, 2026, for up to $7.0 million in cash and up to $9.5 million in Series D-1 Preferred Stock, plus equity incentives for Ergatta's senior management.
• Multiple reverse stock splits were effected: 1-for-10 on February 24, 2026; 1-for-10 on June 26, 2025; 1-for-100 on November 11, 2024; and 1-for-40 on June 14, 2024, to maintain Nasdaq listing compliance.
• Material weaknesses in internal control over financial reporting were identified, including insufficient trained professionals, system limitations, and inadequate processes for complex transactions and stock-based compensation.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing with significant concern due to the explicit 'going concern' warning, severe liquidity issues, and material weaknesses in internal controls, despite revenue growth from acquisitions. The multiple reverse stock splits further underscore the company's precarious financial position.

Positives

• Total revenue increased by 114% to $11.5 million in 2025, primarily driven by strategic acquisitions.
• Net loss decreased by 31% to $24.0 million in 2025, showing an improvement in profitability compared to the prior year.
• The company achieved a gross profit of $0.9 million in 2025, a significant turnaround from a gross loss of $2.8 million in 2024.
• The acquisition of Wattbike in July 2025 contributed $8.2 million (71%) to consolidated revenue for fiscal 2025, demonstrating successful M&A execution.
• The acquisition of Ergatta in March 2026 is expected to be accretive to earnings and further expand the product portfolio.
• Operating expenses decreased by 21% in 2025, indicating some cost management efforts.
• Successful recovery of $6.4 million in cash from the Sportstech loan receivable, mitigating a larger potential loss.

Negatives

• The company has incurred significant operating losses and negative cash flows from operations since inception, with an accumulated deficit of $227.5 million as of December 31, 2025.
• Substantial doubt exists about the company's ability to continue as a going concern due to limited liquidity ($4.4 million unrestricted cash) and $14.8 million of debt maturing within the next twelve months.
• Membership revenue decreased by 7% and training revenue decreased by 26% in 2025, indicating challenges in these recurring revenue streams.
• Multiple reverse stock splits (June 2024, November 2024, June 2025, February 2026) were necessary to maintain Nasdaq listing compliance, reflecting sustained low stock prices.
• Identified material weaknesses in internal control over financial reporting, including inadequate segregation of duties, system limitations, and insufficient technical accounting expertise, pose risks to financial reporting accuracy and timeliness.
• The Sportstech loan settlement resulted in a $0.2 million loss in Q1 2026, despite recovering most of the principal.
• The company remains heavily dependent on outside capital for the foreseeable future and has no firm commitments for additional capital as of the filing date.

Risks

• Incurring operating losses in the future and inability to achieve or maintain profitability.
• Past financial results may not be a reliable indicator of future performance, and revenue growth rate is likely to slow as the business matures.
• Limited operating history with which to evaluate and predict the profitability of the subscription model, and new revenue models may be unsuccessful.
• Negative cash flows from operations, history of losses, and significant accumulated deficit raise substantial doubt about the ability to continue as a going concern.
• Failure to compete successfully against existing and future competitors may result in failure to obtain meaningful market share.
• Results of operations and other financial metrics may fluctuate due to various factors beyond control, making prior periods unreliable indicators of future performance.
• Significant majority of revenue derived from Wattbike, CLMBR, and FORME Studio equipment sales, making the company vulnerable to declines in these product sales.
• Membership revenue is largely dependent on the ability to sell connected fitness equipment and retain subscribers.
• Inability to accurately forecast consumer demand for products and services and adequately manage inventory could adversely affect results.
• Inability to sustain competitive pricing levels for premium connected fitness hardware and memberships could adversely affect the business.
• Changes in marketing strategies could adversely affect marketing expenses and membership levels.
• The smart home gym and connected fitness market is in early stages of growth, and failure to grow or gain market acceptance could adversely affect the business.
• Revenue could decline if customers are unable to finance purchases due to changes in credit markets and decisions by credit providers.
• Inability to attract and retain members could have an adverse effect on business and growth rate.
• Failure to attract or retain qualified trainers, health coaches, and fitness instructors could harm the business.
• Inability to cost-effectively attract new members, provide high-quality support, or increase utilization of platforms by existing members could harm the business.
• Changes to pricing methodologies or business model could adversely affect the ability to attract or retain members and qualified personnel.
• Inability to anticipate consumer preferences and successfully develop and introduce new products and services in a timely manner could adversely affect the business.
• Failure to successfully expand the commercial and corporate wellness business could negatively impact growth and market share.
• Inability to manage growth effectively could harm brand, company culture, and financial performance.
• Ineffective marketing efforts could hinder business growth and market share.
• Design, manufacturing, or other defects in products, or technical/performance issues, may result in claims and significant expenses, potentially exceeding liability insurance coverage.
• Failure or inability of contract manufacturers to comply with specifications could result in product recalls and significant liability.
• Failure to establish and expand strategic partnerships could hinder market share and business growth.
• Risks related to unforeseen costs and potential liability in connection with content acquired, produced, licensed, or distributed.
• Risks related to the interaction of members, trainers, and fitness instructors.
• Reliance on a limited number of suppliers, manufacturers, and logistics partners, leading to risks of cost increases, long lead times, supply shortages, and supply changes.
• Dependence on third-party payment providers and evolving laws and regulations.
• Major disruption or failure of information technology systems or websites, or failure to implement upgrades effectively, could adversely affect business.
• Disruption of third-party services used for computing, storage, and processing could have an adverse effect.
• Adverse changes to, loss of, or claims regarding necessary music licenses could harm the business.
• Member engagement on mobile devices depends on effective operation with mobile operating systems, networks, and standards not controlled by the company.
• Reliance on third parties to drive website traffic, and changes in their algorithms or pricing could damage the business.
• Inability to accurately predict future capital needs and obtain additional financing to fund operations.
• Failure to remediate material weaknesses in internal control over financial reporting or maintain effective internal control could lead to inaccurate financial reporting and stock price decline.
• Risks related to intellectual property, privacy, cybersecurity, infrastructure, tax, and accounting matters, as well as international operations and other regulatory matters.
• Risks related to being a public company, including delisting from Nasdaq if listing requirements are not met.
• Sales of currently issued and outstanding stock may become freely tradable, diluting the market and depressing stock price.
• An active trading market for Common Stock may not develop or be sustained, and stockholders may not be able to sell shares at or above purchase price.
• Stock price and trading volume are likely to be volatile.
• Focus on high-quality member experience may not maximize short-term financial results, conflicting with market expectations.
• If shares are delisted from Nasdaq and become subject to penny stock rules, it would be more difficult to trade shares.
• Substantial future sales of Common Stock could cause the market price to decline.
• Downgrades by securities analysts or failure to publish reports could cause share price and trading volume to decline.
• Actual results may not meet guidance and investor expectations, causing share price to decline.
• No expectation to declare or pay dividends on Common Stock for the foreseeable future.
• Certain provisions in charter documents and Delaware law could make an acquisition more difficult, limit stockholder attempts to replace management, and limit stock price.
• Designation of Delaware Court of Chancery and federal district courts as exclusive forums for certain actions could limit stockholders' ability to obtain a favorable judicial forum.
• Risks related to recession, inflation, weak growth, and other economic conditions impacting customer demand and operating costs.
• Adverse developments affecting the financial services industry could adversely affect business.
• Increasing scrutiny and evolving expectations regarding environmental, social, and governance (ESG) practices may impose additional costs or harm reputation.
• Climate change may have an adverse impact on the business.
• Acquiring businesses, entering licensing arrangements, or making investments may disrupt business, create integration issues, impair results, dilute ownership, incur debt, or divert management resources.
• Dependence on executive officers and other key employees, and loss or inability to attract/retain them could adversely affect the business.
• Officers and directors may encounter conflicts of interest.
• Claims for indemnification by directors and officers may reduce available funds.
• Litigation and other legal proceedings may adversely affect the business.
• Catastrophic events may disrupt the business.
• Regulations related to conflict minerals may cause additional expenses and limit supply/increase costs of certain metals.

Future Outlook

The company expects significant increases in membership revenue in 2026 as a result of the Ergatta acquisition, which is also anticipated to be accretive to earnings. It plans to expand the international reach of its existing brands by leveraging in-market relationships and sales infrastructure, particularly evaluating Wattbike's expansion into the US. The company intends to continue building its strategic partner ecosystem in fitness, wellness, hospitality, sports, and design industries, and expand its B2B channel into light commercial settings. However, the company expects to remain heavily dependent on outside capital for the foreseeable future until it achieves profitability.

Management Comments

• Management believes that Wattbike's continued evolution and recent product launches position the company to capture a significantly larger share of the global fitness market.
• Management states that the company's core philosophy is that employees are its most important resource, dedicating their talents, time, and professional reputations.
• Management believes that the company provides a compelling, cutting-edge, and engaging service to customers, offering a competitive advantage versus traditional fitness and wellness products.
• Management acknowledges that the company has incurred significant operating losses and used net cash flows in its operations since inception, and expects to remain heavily dependent on outside capital for the foreseeable future.
• Management can provide no assurance the company will ever be able to generate sufficient cash inflows to reduce or eliminate its reliance on outside capital.
• Management states that the company is actively seeking to secure additional outside capital, but no additional outside capital has been secured or deemed probable as of the issuance date.

Industry Context

StockSavvy.ai notes that Interactive Strength Inc. operates in the highly competitive and rapidly evolving smart home gym and connected fitness market. The company's strategy of acquiring complementary businesses like Wattbike and Ergatta aligns with industry trends of consolidation and diversification to capture market share. However, the decline in membership and training revenue for its existing FORME and CLMBR brands suggests challenges in organic growth and retention amidst intense competition from established players like Peloton and emerging niche providers. The emphasis on B2B channels and strategic partnerships indicates a shift to less consumer-direct reliance, potentially a response to the saturated B2C market. The company's reliance on M&A for revenue growth, while effective in the short term, highlights the difficulty in achieving sustained organic expansion in this dynamic sector.

Comparison to Industry Standards

• Interactive Strength's 114% revenue growth in 2025, largely acquisition-driven, contrasts with the broader connected fitness market which has seen mixed performance, with some leaders like Peloton experiencing significant slowdowns or declines in hardware sales and subscriber growth in recent periods.
• The company's accumulated deficit of $227.5 million and ongoing operating losses are common for emerging growth companies in capital-intensive tech sectors, but the explicit 'going concern' warning indicates a more severe financial strain compared to more established industry players who have achieved or are closer to sustained profitability.
• The multiple reverse stock splits to maintain Nasdaq listing are a stark indicator of underperformance relative to market expectations and listing standards, a situation not typically seen among healthy, growing industry leaders.
• The identified material weaknesses in internal controls are a significant concern, placing the company behind industry best practices for financial reporting and corporate governance, which could deter institutional investors who prioritize robust internal controls.

Management Changes

Corporate Governance

Legal Proceedings

• A petition was filed by DK City against CLMBR, Inc. and the Company on March 7, 2024, to enforce a $2.25 million arbitration award. The dispute was settled on June 25, 2024, but the Company defaulted on the payment plan. A new petition was filed on September 22, 2025, seeking $2.0 million plus interest and fees. The Company has admitted liability and is in settlement discussions, with $2.1 million (including default interest) reflected as a current liability as of December 31, 2025.
• The Company was sued on February 20, 2025, by a former financial services consultant for breach of agreement. The dispute was resolved on June 12, 2025, with a settlement amount of $2.2 million. The current portion of $0.3 million is in accrued expenses, and the non-current portion of $1.8 million is in other long-term liabilities as of December 31, 2025.
• The Sportstech loan receivable of $6.6 million as of December 31, 2025, which was due by December 30, 2025, was not repaid. The company pursued legal options and settled on March 4, 2026, receiving $6.4 million in cash, resulting in a $0.2 million loss in Q1 2026.

Related Party Transactions

• The company entered into various promissory notes with a then-principal stockholder between 2019 and 2021, totaling $5.3 million (including accrued interest and default interest) as of December 31, 2024. These notes were assigned to an accredited investor on January 29, 2025, and subsequently exchanged for five new secured convertible promissory notes (January 2025 Exchange Notes) on February 4, 2025. This was accounted for as a troubled debt restructuring, resulting in a $0.3 million gain on extinguishment. The January 2025 Exchange Notes were fully converted into 26,428 shares of Common Stock in February 2025, leading to a $2.1 million gain on extinguishment.
• On March 5, 2025, the company issued an unsecured promissory note of $3.9 million to its former legal counsel. On November 7, 2025, the former legal counsel sold 50% of this note to Woodway USA, Inc. (an unrelated party). On December 29, 2025, the remaining 50% ($2.2 million) was sold to two related parties of the company.
• In 2017, the company entered into a royalty agreement with Fuseproject (a related party) to pay 3% of cumulative FORME net sales up to $5.0 million and 1% above $5.0 million, with a maximum total royalty of $1.0 million and a guaranteed minimum payment of $0.2 million. Royalty expense of $20,000 was recorded for both 2025 and 2024.
• In February 2026, a related party noteholder exchanged $0.2 million of principal for 44,000 shares of Common Stock. Another related party noteholder also exchanged $0.2 million of principal for 44,000 shares of Common Stock on the same date.

Stakeholder Impact

• **Shareholders:** Face significant dilution risk from ongoing capital raises and convertible debt conversions. The multiple reverse stock splits indicate a severely depressed share price and potential for further value erosion. The 'going concern' warning poses an existential threat to their investment.
• **Employees:** The company's financial instability and history of headcount reductions (26% in July 2022, 50% in December 2022) create job insecurity. However, the acquisition of Ergatta and plans for international expansion could offer new opportunities. The cancellation of LTI Preferred Stock for no consideration for executive officers and Board members could impact morale.
• **Customers:** May experience disruptions in service or product availability due to supply chain issues, financial instability, or changes in product offerings. The focus on B2B channels might shift attention from B2C customer support or new features for individual users. The company's ability to maintain high-quality content and support is crucial for retention.
• **Suppliers/Creditors:** Face heightened risk due to the company's liquidity challenges and substantial maturing debt. The default on the DK City settlement and the Sportstech loan indicate potential payment delays or losses for creditors. The company's dependence on a limited number of suppliers also creates mutual risk.
• **Management:** Under significant pressure to secure additional financing, remediate internal control weaknesses, and execute growth strategies amidst financial distress. Their limited experience managing a public company adds to the challenge.

Next Steps

• Secure additional outside capital to fund operations and meet maturing debt obligations.
• Implement new accounting software in 2026 to address material weaknesses in internal control over financial reporting.
• Formalize processes and internal control documentation and strengthen supervisory reviews by financial management.
• Hire additional qualified accounting and finance personnel and engage financial consultants to implement internal control over financial reporting and segregate duties.
• Continue integration of Ergatta, Inc. into the company's portfolio.
• Evaluate potential expansion of Wattbike products into the US market.
• Pursue disciplined international expansion by targeting countries with sound macroeconomic conditions and low-risk routes to market.
• Continue to build strategic partner ecosystem in fitness, wellness, hospitality, sports, and design industries.
• Expand sales and marketing efforts into light commercial settings (B2B channel).

Key Dates

Recommendation

The explicit 'substantial doubt about our ability to continue as a going concern,' coupled with significant accumulated losses, negative operating cash flow, and insufficient liquidity to cover maturing debt, presents an extremely high risk profile. The history of multiple reverse stock splits to maintain Nasdaq listing further indicates severe and persistent financial distress. While acquisitions have boosted revenue, the underlying profitability and operational stability remain deeply concerning, making the stock a strong sell for any seasoned investor or institution.

Keywords

Connected Fitness, Smart Home Gym, Wattbike, CLMBR, FORME, Ergatta, Fitness Equipment, Virtual Training, SEC Filing, 10-K, Financial Performance, Acquisitions, Going Concern, Internal Controls, Nasdaq Listing, Capital Raise, Supply Chain, Intellectual Property