Financial Performance - Total revenue for the year ended December 31, 2023, was $1.0 million, an increase from $0.7 million in 2022, while net losses were $51.4 million compared to $58.2 million in the previous year[439]. - Total revenue for 2023 was $962,000, a 41% increase from $681,000 in 2022, driven by growth in all revenue segments[486]. - Annual Recurring Revenue (ARR) grew to $493,690 in 2023, up from $291,129 in 2022, indicating significant growth in recurring revenue[461]. - The Net Dollar Retention Rate reached 181% in 2023, reflecting strong revenue retention and growth from existing members[461]. - Fitness product revenue accounted for 59% of total revenue in 2023, down from 78% in 2022, while membership revenue increased to 15% from 11%[470][491]. - Training revenue surged by 219% to $246,000 in 2023, primarily due to the launch of Live 1:1 personal training services[471][492]. - The Company reported a net loss of $51,373,000 in 2023, an improvement from a net loss of $58,225,000 in 2022[486]. Cost Management - Research and development expenses were $10,044,000 in 2023, a decrease from $19,960,000 in 2022, indicating a focus on cost management[486]. - Total cost of revenue decreased by $3.1 million, or 32%, to $6.5 million for the year ended December 31, 2023, compared to $9.5 million in 2022[493]. - Gross loss decreased by $3.3 million, or 38%, to $5.5 million for the year ended December 31, 2023, compared to $8.9 million in 2022[496]. - Sales and marketing expenses decreased by $4.6 million, or 74%, to $1.6 million for the year ended December 31, 2023, compared to $6.2 million in 2022[499]. - General and administrative expenses increased by $18.0 million, or 93%, to $37.3 million for the year ended December 31, 2023, compared to $19.3 million in 2022[500]. Strategic Initiatives - The company aims to increase the uptake of add-on services by enhancing the member experience, which is expected to drive overall service revenues over time[440]. - The company plans to reduce personal training costs and expand its addressable market by leveraging technology and maintaining high-quality coaching services[441]. - Forme intends to build a strategic partner ecosystem to extend its platform into new verticals such as sports, physical therapy, and telemedicine[443]. - The company is expanding its corporate wellness initiative to provide customized coaching solutions for hybrid workforces, enhancing employee engagement regardless of work location[444]. - Forme is evaluating international expansion opportunities, particularly in the United Kingdom and Canada, targeting markets with high fitness penetration[445]. Financing Activities - The company entered into an Equity Line Purchase Agreement allowing it to sell up to $20 million in common stock to an accredited investor[449]. - On February 2, 2024, Forme completed the acquisition of CLMBR for an enterprise value of approximately $15.4 million, which included the issuance of common and preferred stock[457]. - The company issued 2,377,258 shares of Series A Convertible Preferred Stock upon the conversion of promissory notes totaling approximately $4.3 million[458]. - The Company received a deficiency letter from Nasdaq on January 26, 2024, indicating that the closing bid price for its common stock has been below the minimum $1.00 per share for 30 consecutive business days[518]. - The Company issued secured promissory notes in November 2023 with an aggregate principal amount of approximately $1.9 million, due November 10, 2024, with an initial interest rate of 3% per annum[527]. - The Company issued convertible notes in December 2023 with an aggregate principal amount of $2.2 million, carrying an original issue discount of 8.0% and accruing interest at a rate of 7.0% per annum[529]. Operational Challenges - Supply chain disruptions and inflationary pressures may impact the company's ability to deliver products and manage costs effectively[447][448]. - The company has no assurance of securing additional outside capital, which raises substantial doubt about its ability to continue as a going concern[518]. - The Company has until July 24, 2024, to regain compliance with Nasdaq listing requirements, or it may face delisting[518]. Cash Flow and Liquidity - Net cash used in operating activities was $15.4 million for the year ended December 31, 2023, a decrease from $35.5 million in 2022, primarily due to a net loss of $51.4 million[554][555]. - Net cash provided by financing activities was $17.1 million for the year ended December 31, 2023, compared to $41.8 million in 2022, driven by proceeds from the issuance of common stock and convertible notes[558][559]. Internal Controls and Compliance - The company identified material weaknesses in its internal control over financial reporting, including insufficient trained professionals and system limitations[605]. - The company plans to implement an accounting software system in the 2024 fiscal year to improve internal controls and segregate incompatible accounting duties[606]. Stock and Equity - The expected dividend yield is 0.0% as the company has not paid and does not anticipate paying dividends on its common stock[594]. - The company’s stock-based awards are measured at the grant date based on the fair value of the award and recognized as expense over the requisite service period[595].
Interactive Strength (TRNR) - 2023 Q4 - Annual Report