After seven years as a leader in virtual reality cardio fitness systems, Expresso Fitness has contacted its dealers saying it is going through a "close-down process" and 100 people have been let go or furloughed in the last month.
The home page of the company's website reported a "financial hiccup" in an open letter on the home page as of Sept. 24, 2009. The letter read:
"During the last week a number of rumors have circulated regarding the status of Expresso Fitness. The truth is that Expresso had a financial hiccup last week. However, Expresso is still operating and continues to support its customers. Expresso is considering all of its options including the sale of the Company to a party who will maintain customer service and support. Please note that supporting its customers is Expresso's number one priority."
According to its website (www.expressofitness.com), inquiries about customer service and accounts receivable and by creditors can be made by calling 888-528-8589 or by emailing email@example.com. Phone lines on Sept. 28 remained unanswered by a live person, and recorded phone greetings sounded as if it were business as usual at the Silicon Valley-based company. A recorded message on Sept. 28 on its toll-free number said calls would be returned within 24 hours. Other telephone numbers had messages that sounded as if the company were still operating, while direct line of a key executive was disconnected.
No bankruptcy proceedings have been filed at this time as far as SNEWS® can determine. SNEWS made repeated attempts to track down Expresso Fitness senior executives and board members for comment via phone or email, but calls were not returned by deadline.
“A particularly challenging time”
SNEWS® received various versions of email notices sent in the last few days to dealers by Mark Urlage, vice president of sales for Expresso Fitness. One of the emails noted that economic conditions caused the bank to pull current investment dollars, that 100 people at the company are now either unemployed or furloughed, and that the company “appears” as if it is going through a close-down process. That email stated, in part:
"2009 has been a particularly challenging time for all in the fitness manufacturing industry, with all the leading players showing a year on year decrease in sales of around 30%. During these tough times, Expresso has been able to achieve double digit growth. However, the company has not been immune to the global financial turmoil and lending conditions…. Currently we are not shipping product or parts and are effectively closed for business."
The email went on to say “a group” is interested in buying Expresso Fitness' intellectual property and assets, but "they will only do this if we receive enough industry enthusiasm for the 'new company.'" Urlage did not indentify the “group” in the email.
As recently as Aug. 14, 2009, the company had closed a Series D equity investment in excess of $6 million from Sierra Ventures, Physic Ventures and Enterprise Partners Venture Capital. A release said the new funding was to be used for product R&D, as well as supporting sales efforts and marketing initiatives.
At the time of the new funding, David Grenewetzki was also named as CEO and president of Expresso, and William Potts, former president of Precor, was "stepping up his involvement in the day-to-day operations of the company as a senior advisor" to Grenewetzki. As reported in SNEWS, Potts joined the board in April 2007. Click here to see that SNEWS Industry News Release.
In related news, Icon Health & Fitness according to court documents filed on Sept. 8, 2009, an amended complaint against Expresso Fitness in the U.S. District Court, District of Utah, alleging infringement of a pair of its patents that protect technology used in computerized exercise. Court documents reported counter claims were filed by Expresso Fitness the same day. In those documents Expresso denied all allegations and asked the court for relief.
SNEWS® View: SNEWS recalls vividly the launch of the company in 2003. Bubbling with enthusiasm, founding executives in a tiny booth not much larger than 10-x-20 showed off a couple of prototypes – basically LifeCycles with a screen attached to try to show what the concept would become. We continued to follow Expresso at the shows through the years, including the launch of a bike sized for younger children at the 2009 IHRSA show. Many years ago the Tectrix VR Bike was ahead of its time although it had great cutting-edge technology. We hope Expresso will be able to return – or that whoever may acquire the company doesn’t end up killing it off, as happened to Tectrix. Virtual reality exercise and other entertainment technologies are too important to the future of fitness.