Forme

Kurta Law is investigating high-risk investments underwritten by Aegis Capital Corp. Because brokerage firms profit from underwriting stocks, they create a conflict of interest when they recommend those same stocks.

If you lost money on your investment in Forme, consider contacting a securities attorney. You may be required to pursue FINRA arbitration rather than a civil suit. Contact (877) 600-0098 or email info@kurtalawfirm.com to speak to a securities attorney for free today.

What is Forme?

According to the prospectus, Interactive Strength Inc., doing business as Forme (TRNR), is a digital fitness platform that provides virtual personal training and coaching through its app and fitness hardware products.

The prospectus states that the Forme platform offers video-on-demand content, live personal training, fitness programming, and other health and fitness-related services available for download or streaming.

The company also states that it sells its Forme Studio fitness mirror and Forme Studio Lift, which incorporates a fitness mirror and cable resistance arms. These mirrors consist of high-definition touchscreens and cameras to allow for immersive interaction with trainers.

Nasdaq Delisting Notice

On August 22, 2023, the Nasdaq Capital Market sent Forme a letter warning that the stockholders’ equity disclosed in its Quarterly Report on Form 10-Q filed with the SEC was insufficient to meet the Nasdaq listing requirements.

Nasdaq requires companies to maintain stockholders’ equity of at least $10 million. Forme had reported approximately $5 million in stockholders’ equity as of June 30.

In response, Forme submitted a plan to achieve compliance, which involved acquiring CLMBR, a fitness company selling climbing machines. Forme also””converted a number of its promissory notes to equity,” to return to compliance.

What are the Risks Associated with Forme?

Launched in May 2017, Forme is a relatively young business with a limited operating history. This may make it harder for investors to judge the company’s prospects.  Investors should be aware, however, that Forme’s stock prospectus disclosed significant risks related to investing with the company.

History of Losses and Doubts About Future

Forme states in its prospectus that it has incurred multi-million dollar losses every year since its inception, and expects this to continue “for the foreseeable future,” with an accumulated deficit of $115.5 million as of December 31, 2022.

The company expects increased operating expenses as it pursues a growth-oriented business plan, expanding its marketing, adding content to its platform, and investing in new additions to its platform and suite of products.

Additionally, the company had outstanding loans with a principal and accumulated interest totaling approximately $6.7 million.

Because of these financial factors, Forme’s management “concluded that there is substantial doubt about our ability to continue as a going concern.”

Revenue Dependence on Hardware Sales

Forme states that its “membership revenue is largely dependent on our ability to sell our Forme Studio equipment,” rendering the company reliant on physical sales of hardware to drive engagement with its other services. If the company fails to sufficiently expand Forme Studio equipment sales or to otherwise increase membership, it could suffer financially.

Rising Interest Rates

According to Forme, a “significant percentage” of platform members finance their Forme Studio equipment via third-party credit providers. Rising interest rates could have a negative effect on Forme’s business by placing pressure on consumers, potentially delaying payments.

Higher interest rates would also affect Forme’s ability to obtain financing on reasonable terms, and these costs could be passed on to consumers in the form of price increases.

Aegis Capital Corp. Underwriting  

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm.

Do You Have Concerns About Your Shares of Forme?

If you believe Forme stock was excessively risky for your risk profile, consider contacting one of our experienced securities attorneys.  Kurta Law attorneys have 5-star reviews on Google and regularly take on cases of unsuitable investment recommendations. Call (877) 600-0098 or email info@kurtalawfirm.com.