TRNR 8-K/A
Interactive Strength, Inc. (TRNR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
(Exact name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction |
(Commission File Number) |
(IRS Employer |
||
|
|
|
|
|
|
||||
|
||||
(Address of Principal Executive Offices) |
|
(Zip Code) |
||
Registrant’s Telephone Number, Including Area Code: |
|
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
|
|
Trading |
|
|
|
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
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.
Item 2.01 Completion of Acquisition or Disposition of Assets.
This amendment No. 1 to Form 8-K amends our Form 8-K dated July 1, 2025, originally filed with the Securities Exchange Commission ("SEC") on July 8, 2025 (the "Original Report"). We filed the Original Report to report the 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 identified in the Purchase Agreement (the “Shareholders”) and holders of certain promissory notes (the “Notes’) issued by Wattbike (the “Noteholders”) to acquire the entire issued share capital and Notes of Wattbike (the “Transaction”).
This Current Report on Form 8-K/A is being filed by the Company to amend the Original Report solely to provide the financial statement and financial information required by Item 9.01 of Form 8-K that were not filed with the Original Report.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
The consolidated balance sheets of Wattbike (Holdings) Limited and subsidiaries as of September 30, 2024 and September 30, 2023 and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the years ended September 30, 2024 and September 30, 2023 and the auditor's report required by this Item 9.01(a) are filed as Exhibit 99.2 to this Current Report on Form 8-K/A.
The unaudited consolidated balance sheets of Wattbike (Holdings) Limited and subsidiaries as of June 30, 2025 and September 30, 2024, and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the nine months ended June 30, 2025 required by this Item 9.01(a) are attached hereto as Exhibit 99.3 and are incorporated herein by reference.
(b) Pro Forma Financial Information.
The unaudited pro forma combined financial information required by Item 9.01(b) and the notes related thereto pursuant to Article 11 of Regulation S-X are filed as Exhibit 99.1.
(d) Exhibits
Exhibit No. |
|
Description |
|
|
|
23.1 |
|
Consent of UHY LLP, independent auditor's of Wattbike (Holdings) Limited |
99.1 |
|
|
|
|
|
|
|
|
99.2 |
|
|
|
|
|
|
|
|
99.3 |
|
|
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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 hereunto duly authorized.
|
|
|
Interactive Strength Inc. |
|
|
|
|
Date: |
September 17, 2025 |
By: |
/s/ Michael J. Madigan |
|
|
|
Chief Financial Officer |
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the inclusion of our report dated September 17, 2025 in this Form 8-K/A of Interactive Strength Inc. with respect to our audits of the consolidated balance sheets of Wattbike (Holdings) Limited as of September 30, 2024 and 2023, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended that appear in the Form 8-K/A. Our report contained an explanatory paragraph regarding substantial doubt about the Company’s ability to continue as a going concern.
/s/ UHY LLP
New York, New York
September 17, 2025
Exhibit 99.1
SELECTED HISTORICAL FINANCIAL DATA AND UNAUDITED PRO
FORMA COMBINED FINANCIAL INFORMATION
Selected Historical Consolidated Financial Data of Interactive Strength Inc.
The following tables summarize financial data of Interactive Strength Inc., a Delaware corporation (“Interactive”, “TRNR”, or the “Company”). The statement of operations data for the six months ended June 30, 2025 and balance sheet data as of June 30, 2025, have been derived from the unaudited financial statements included in Interactive’s Quarterly Report on Form 10-Q for the second quarter ended June 30, 2025, filed with the Securities and Exchange Commission (the "SEC") on August 14, 2025. The statement of operations data for the year ended December 31, 2024 and the balance sheet data as of December 31, 2024 have been derived from the audited financial statements included in Interactive’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 31, 2025. You should read the following selected financial data together with “Interactive’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Interactive’s financial statements and the related notes included in Interactive’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and Quarterly Report on Form 10-Q for the second quarter ended June 30, 2025, filed with the SEC on March 31, 2025 and August 14, 2025, respectively. Interactive’s historical results are not necessarily indicative of results that should be expected in any future period.
Historical Consolidated Financial Statements of Interactive Strength Inc.
|
|
Six Months |
|
|
Year |
|
||
|
|
Ended |
|
|
Ended |
|
||
Amounts in thousands (except share and per share amounts) |
|
30-Jun-25 |
|
|
31-Dec-24 |
|
||
Revenue: |
|
|
|
|
|
|
||
Fitness product revenue |
|
$ |
1,988 |
|
|
$ |
3,973 |
|
Membership revenue |
|
|
340 |
|
|
|
783 |
|
Training revenue |
|
|
248 |
|
|
|
624 |
|
Total revenue |
|
|
2,576 |
|
|
|
5,380 |
|
Cost of revenue: |
|
|
|
|
|
|
||
Cost of fitness product revenue |
|
|
(1,613 |
) |
|
|
(3,798 |
) |
Cost of membership |
|
|
(843 |
) |
|
|
(3,318 |
) |
Cost of training |
|
|
(617 |
) |
|
|
(1,042 |
) |
Total cost of revenue |
|
|
(3,073 |
) |
|
|
(8,158 |
) |
Gross loss |
|
|
(497 |
) |
|
|
(2,778 |
) |
Operating expenses: |
|
|
|
|
|
|
||
Research and development |
|
|
2,050 |
|
|
|
6,988 |
|
Sales and marketing |
|
|
461 |
|
|
|
1,080 |
|
General and administrative |
|
|
9,126 |
|
|
|
18,339 |
|
Total operating expenses |
|
|
11,637 |
|
|
|
26,407 |
|
Loss from operations |
|
|
(12,134 |
) |
|
|
(29,185 |
) |
Other income (expense), net: |
|
|
|
|
|
|
||
Other income (expense), net |
|
|
(1,038 |
) |
|
|
(956 |
) |
Interest expense |
|
|
(6,254 |
) |
|
|
(7,727 |
) |
Interest income |
|
|
387 |
|
|
|
- |
|
Gain (loss) upon extinguishment of debt and accounts payable |
|
|
4,459 |
|
|
|
(1,527 |
) |
Loss on issuance of warrants |
|
|
- |
|
|
|
(5,551 |
) |
Change in fair value of convertible notes |
|
|
6,629 |
|
|
|
(128 |
) |
Change in fair value of earnout |
|
|
- |
|
|
|
1,300 |
|
Change in fair value of derivatives |
|
|
(1,949 |
) |
|
|
(460 |
) |
Change in fair value of digital assets |
|
|
125 |
|
|
|
- |
|
Change in fair value of warrants |
|
|
993 |
|
|
|
9,300 |
|
Total other income (expense), net |
|
|
3,352 |
|
|
|
(5,749 |
) |
Loss before provision for income taxes |
|
|
(8,782 |
) |
|
|
(34,934 |
) |
Income tax expense |
|
|
- |
|
|
|
- |
|
Net loss attributable to common stockholders |
|
|
(8,782 |
) |
|
|
(34,934 |
) |
Net loss per share - basic and diluted (1) |
|
$ |
(12.49 |
) |
|
$ |
(1,632.85 |
) |
Weighted average common stock outstanding - basic and diluted (1) |
|
|
703,048 |
|
|
|
21,395 |
|
Exhibit 99.1
Selected Condensed Balance Sheet Data:
|
|
June 30, |
|
|
December 31, |
|
||
Amounts in thousands |
|
2025 |
|
|
2024 |
|
||
Cash and cash equivalents |
|
$ |
582 |
|
|
$ |
138 |
|
Working Capital (1) |
|
|
(7,250 |
) |
|
|
(18,663 |
) |
Total Assets |
|
|
86,240 |
|
|
|
34,170 |
|
Total liabilities |
|
|
69,966 |
|
|
|
27,055 |
|
Accumulated deficit |
|
|
(211,963 |
) |
|
|
(202,586 |
) |
Total stockholders' equity |
|
|
16,274 |
|
|
|
7,115 |
|
(1) Working capital is defined as current assets less current liabilities.
Selected Historical Consolidated Financial Data of Wattbike (Holdings) Limited
The consolidated balance sheet data as of June 30, 2025 and statement of operations data for the six months ended June 30, 2025, have been derived from Wattbike Holdings Limited (“Wattbike”) unaudited condensed consolidated financial statements included as Exhibit 99.3 to this Current Report on Form 8-K/A. The consolidated statement of operations data for the year ended September 30, 2024 and balance sheet data as of September 30, 2024, have been derived from Wattbike’s audited consolidated financial statements included as Exhibit 99.2 to this Current Report on Form 8-K/A. You should read the following selected financial data together with Wattbike’s consolidated financial statements and related notes included as Exhibit 99.2 and Exhibit 99.3 to this Current Report on Form 8-K/A.
Wattbike historical results are not necessarily indicative of results that should be expected for any future period.
Historical Consolidated Financial Statements of Wattbike (Holdings) Limited
|
Six-month ended June 30, 2025 |
|
Year ended September 30, 2024 |
|
||
Sales |
|
9,203 |
|
|
15,907 |
|
Cost of sales |
|
5,299 |
|
|
10,567 |
|
Gross profit |
|
3,904 |
|
|
5,340 |
|
Operating expenses |
|
|
|
|
||
Research and development |
|
190 |
|
|
502 |
|
Sales and marketing |
|
1,831 |
|
|
1,976 |
|
General and administrative |
|
2,892 |
|
|
7,238 |
|
Total operating expense |
|
4,913 |
|
|
9,716 |
|
Operating loss |
|
(1,009 |
) |
|
(4,376 |
) |
Other expenses |
|
|
|
|
||
Interest expense |
|
1,537 |
|
|
1,687 |
|
Loss before income taxes |
|
(2,546 |
) |
|
(6,063 |
) |
Income tax expense |
|
- |
|
|
5 |
|
Net loss |
|
(2,546 |
) |
|
(6,068 |
) |
Selected Condensed Balance Sheet Data:
|
|
June 30, |
|
|
September 30, |
|
||
Amounts in thousands |
|
2025 |
|
|
2024 |
|
||
Cash and cash equivalents |
|
$ |
727 |
|
|
$ |
1,022 |
|
Working Capital (1) |
|
|
(2,177 |
) |
|
|
(1,590 |
) |
Total Assets |
|
|
6,238 |
|
|
|
7,231 |
|
Total liabilities |
|
|
25,365 |
|
|
|
23,834 |
|
Accumulated deficit |
|
|
(30,679 |
) |
|
|
(27,577 |
) |
Total stockholders' deficit |
|
|
(19,127 |
) |
|
|
(16,603 |
) |
(1) Working capital is defined as current assets less current liabilities.
Exhibit 99.1
The Acquisition
On July 1, 2025 (the “Closing”), the Company completed the acquisition of all of the outstanding equity interests of Wattbike, pursuant to the Agreement for the Sale and Purchase of the Entire Issued Share Capital and Loan Notes of Wattbike Holdings Limited (the “Wattbike Agreement”) entered into on April 8, 2025 (the “Acquisition”). The aggregate purchase price for the Acquisition was $4.0 million, which consisted of the issuance of 1.3 million convertible Series E Preferred Stock (the “Series E Convertible Preferred Stock”) with an aggregate fair value of $2.6 million, effective settlement of preexisting relationships of $0.4 million, bridge financing of $0.8 million, contingent consideration of $0.2 million, and cash consideration of $1.37.
The following unaudited pro forma condensed combined financial information presents the financial formation of Interactive and Wattbike after giving effect to the Acquisition. The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X.
The following unaudited pro forma condensed combined financial information presents the combination of the historical consolidated financial statements of Interactive and Wattbike and is intended to provide you with information about how the Acquisition might have affected Interactive’s historical financial statements.
The unaudited pro forma condensed combined balance sheet as of June 30, 2025 combines the historical balance sheets of Interactive and Wattbike on a pro forma basis as if the Acquisitions had occurred on such date. The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2025 and year ended December 31, 2024 combines the historical statements of operations of Interactive and Wattbike for such periods on a pro forma basis as if the Acquisitions had been consummated on January 1, 2024. Interactive’s fiscal year ends on December 31 and Wattbike’s fiscal year ends on September 30. The pro forma condensed combined financial information is presented on the basis of Interactive’s fiscal year and combines the historical results of each company’s fiscal periods.
Assumptions and estimates underlying the unaudited pro forma adjustments included in the unaudited pro forma condensed combined financial statements are described in the accompanying notes. The unaudited pro forma adjustments are based on available preliminary information and certain assumptions that the Company believes are reasonable under the circumstances.
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the aforementioned Acquisition had been completed on the dates indicated, nor is it indicative of future operating results or financial position. The pro forma adjustments are based upon available preliminary information and certain assumptions that the Company believes are reasonable under the circumstances. Actual results and valuations may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial statements. In addition, the unaudited pro forma condensed combined financial statements do not reflect any revenue enhancements, anticipated synergies, operating efficiencies, or cost savings that may be achieved related to the Acquisition, nor do they reflect any costs or expenditures that may be required to achieve any possible synergies. In addition, the unaudited pro forma condensed combined financial statements are not necessarily indicative of Interactive’s results of operations and financial position for any future period. The unaudited pro forma condensed combined financial statements constitute forward-looking information and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated.
The following unaudited pro forma condensed combined financial information gives effect to the following:
The Acquisition will be accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). Under the acquisition method of accounting, the total estimated purchase price will be allocated to the tangible and intangible assets acquired and liabilities assumed of Wattbike based on a preliminary estimate of their fair value. The preliminary allocation of the estimated purchase price is based upon management’s estimates based on information currently available and is subject to revision as a more detailed analysis is completed, additional information on the fair value of the assets and liabilities become available, and final appraisals and analyses are completed. Differences between these preliminary estimates and the final acquisition accounting could occur and these differences could be material. A change in the fair value of the net assets of Wattbike may change the amount of the purchase price allocable to goodwill for such Acquisition and could have a material impact on the accompanying unaudited pro forma condensed combined statements of operations.
Exhibit 99.1
The unaudited pro forma condensed combined financial information was derived from and should be read together with the accompanying notes to the unaudited pro forma condensed combined financial information, Interactive’s historical consolidated financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in its annual report on Form 10-K for the year ended December 31, 2024, and interim report on Form 10-Q as of and for the three and six months ended June 30, 2025. The unaudited pro forma condensed combined financial information should also be read together with both Wattbike’s historical audited combined statements of operations for the year ended September 30, 2024, and unaudited combined financial statements as of and for the nine months ended June 30, 2025 and the related notes filed as exhibits to this Current Report on Form 8-K/A as Exhibits 99.2, and 99.3, respectively.
Exhibit 99.1
INTERACTIVE STRENGTH, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2025
(Amounts in thousands, except per share amounts)
|
|
|
|
Pro Forma |
|
||||||||||||
|
Interactive |
|
|
Watt Bike |
|
|
Watt Bike |
|
|
|
|
|
|
||||
|
Strength |
|
|
(as reclassified) |
|
|
Transaction |
|
|
|
|
Pro Forma |
|
||||
|
(Historical) |
|
|
(Note 2) |
|
|
Adjustments |
|
|
Notes |
|
Combined |
|
||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
$ |
582 |
|
|
|
727 |
|
|
|
- |
|
|
|
|
$ |
1,309 |
|
Restricted cash |
|
2,250 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
2,250 |
|
Accounts receivable, net |
|
1,761 |
|
|
|
935 |
|
|
|
- |
|
|
|
|
|
2,696 |
|
Inventories, net |
|
2,560 |
|
|
|
3,062 |
|
|
|
90 |
|
|
4(d) |
|
|
5,712 |
|
Derivative assets |
|
98 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
98 |
|
Vendor deposits |
|
1,055 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
1,055 |
|
Loan receivable |
|
5,887 |
|
|
|
- |
|
|
|
(1,175 |
) |
|
4(b) |
|
|
4,712 |
|
Prepaid expenses and other current assets |
|
763 |
|
|
|
959 |
|
|
|
- |
|
|
|
|
|
1,722 |
|
Total current assets |
|
14,956 |
|
|
|
5,683 |
|
|
|
(1,085 |
) |
|
|
|
|
19,554 |
|
Property and equipment, net |
|
66 |
|
|
|
365 |
|
|
|
- |
|
|
|
|
|
431 |
|
Right-of-use assets |
|
260 |
|
|
|
190 |
|
|
|
- |
|
|
|
|
|
450 |
|
Intangible assets, net |
|
5,277 |
|
|
|
- |
|
|
|
3,295 |
|
|
4(c) |
|
|
8,572 |
|
Long-term inventories, net |
|
3,024 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
3,024 |
|
Vendor deposits long term |
|
1,268 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
1,268 |
|
Digital assets |
|
45,125 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
45,125 |
|
Goodwill |
|
13,220 |
|
|
|
- |
|
|
|
1,145 |
|
|
4(g) |
|
|
14,365 |
|
Other assets |
|
3,044 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
3,044 |
|
Total assets |
$ |
86,240 |
|
|
|
6,238 |
|
|
|
3,355 |
|
|
|
|
$ |
95,833 |
|
LIABILITIES AND STOCKHOLDER'S EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts payable |
|
4,667 |
|
|
|
1,688 |
|
|
|
|
|
|
|
|
6,355 |
|
|
Accrued expenses and other current liabilities |
|
6,981 |
|
|
|
2,540 |
|
|
|
149 |
|
|
4(b) |
|
|
9,670 |
|
Operating lease liability, current portion |
|
127 |
|
|
|
126 |
|
|
|
- |
|
|
|
|
|
253 |
|
Deferred revenue |
|
62 |
|
|
|
256 |
|
|
|
- |
|
|
|
|
|
318 |
|
Loan payable |
|
8,118 |
|
|
|
3,250 |
|
|
|
(1,175 |
) |
|
4(e) |
|
|
10,193 |
|
Income tax payable |
|
7 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
7 |
|
Derivative liabilities |
|
383 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
383 |
|
Convertible note payable |
|
1,861 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
1,861 |
|
Total current liabilities |
|
22,206 |
|
|
|
7,860 |
|
|
|
(1,026 |
) |
|
|
|
|
29,040 |
|
Operating lease liabilities, net of current portion |
|
138 |
|
|
|
67 |
|
|
|
- |
|
|
|
|
|
205 |
|
Other long-term liabilities |
|
1,878 |
|
|
|
- |
|
|
|
92 |
|
|
4(b) |
|
|
1,970 |
|
Warrant liabilities |
|
590 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
590 |
|
Loan payable non-current |
|
1,498 |
|
|
|
14,955 |
|
|
|
(14,955 |
) |
|
4(f) |
|
|
1,498 |
|
Convertible note payable, noncurrent |
|
43,656 |
|
|
|
2,483 |
|
|
|
(2,483 |
) |
|
4(f) |
|
|
43,656 |
|
Total liabilities |
$ |
69,966 |
|
|
|
25,365 |
|
|
|
(18,372 |
) |
|
|
|
$ |
76,959 |
|
Series E preferred stock, par value $0.0001; 1,300,000 and 0 shares authorized as of June 30, 2025 and December 31, 2024; 0 shares issued and outstanding as of June 30, 2025 and December 31, 2024 respectively. |
|
- |
|
|
|
- |
|
|
|
2,600 |
|
|
4(b) |
|
|
2,600 |
|
Stockholder's equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Series A preferred stock, par value $0.0001; 10,000,000 shares authorized as of June 30, 2025 and December 31, 2024; 4,799,867 and 4,658,737 shares issued and outstanding as of June 30, 2025 and December 31, 2024 respectively. |
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
1 |
|
Series B preferred stock, par value $0.0001; 1,500,000 shares authorized as of June 30, 2025 and December 31, 2024; 408,775 and 1,500,000 shares issued and outstanding as of June 30, 2025 and December 31, 2024 respectively. |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
Series C preferred stock, par value $0.0001; 5,000,000 shares authorized as of June 30, 2025 and December 31, 2024; 1,210,155 and 2,861,128 shares issued and outstanding as of June 30, 2025 and December 31, 2024 respectively. |
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
1 |
|
Common stock, par value $0.0001; 900,000,000 shares authorized as of June 30, 2025 and December 31, 2024; 1,409,044 and 140,210 shares issued and outstanding as of June 30, 2025 and December 31, 2024 respectively. |
|
10 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
10 |
|
Additional paid-in capital |
|
227,998 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
227,998 |
|
Accumulated other comprehensive income |
|
227 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
227 |
|
Accumulated deficit |
|
(211,963 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
(211,963 |
) |
Historical Wattbike equity |
|
|
|
|
(19,127 |
) |
|
|
19,127 |
|
|
4(a) |
|
|
- |
|
|
Total stockholders' equity |
|
16,274 |
|
|
|
(19,127 |
) |
|
|
19,127 |
|
|
|
|
|
16,274 |
|
Total liabilities, preferred stock and stockholders' equity |
$ |
86,240 |
|
|
|
6,238 |
|
|
|
3,355 |
|
|
|
|
|
95,833 |
|
See Notes to Unaudited Pro Forma Condensed Combined Financial Information
Exhibit 99.1
INTERACTIVE STRENGTH, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2025
(Amounts in thousands, except per share amounts)
|
|
|
|
|
|
|
|
Pro Forma |
|
|||||||||
|
|
Interactive Strength Historical |
|
|
Wattbike Historical |
|
|
Transaction Accounting Adjustments |
|
|
Notes |
|
Pro Forma Combined |
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fitness product revenue |
|
$ |
1,988 |
|
|
$ |
9,203 |
|
|
$ |
- |
|
|
|
|
$ |
11,191 |
|
Membership revenue |
|
|
340 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
340 |
|
Training revenue |
|
|
248 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
248 |
|
Total revenue |
|
|
2,576 |
|
|
|
9,203 |
|
|
|
- |
|
|
|
|
|
11,779 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of fitness product revenue |
|
|
(1,613 |
) |
|
|
(5,299 |
) |
|
|
(96 |
) |
|
5(a) |
|
|
(7,008 |
) |
Cost of membership |
|
|
(843 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
(843 |
) |
Cost of training |
|
|
(617 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
(617 |
) |
Total cost of revenue |
|
|
(3,073 |
) |
|
|
(5,299 |
) |
|
|
(96 |
) |
|
|
|
|
(8,468 |
) |
Gross profit (loss) |
|
|
(497 |
) |
|
|
3,904 |
|
|
|
(96 |
) |
|
|
|
|
3,311 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
2,050 |
|
|
|
190 |
|
|
|
- |
|
|
|
|
|
2,240 |
|
Sales and marketing |
|
|
461 |
|
|
|
1,831 |
|
|
|
143 |
|
|
5(a) |
|
|
2,435 |
|
General and administrative |
|
|
9,126 |
|
|
|
2,892 |
|
|
|
327 |
|
|
5(c) |
|
|
12,345 |
|
Total operating expenses |
|
|
11,637 |
|
|
|
4,913 |
|
|
|
470 |
|
|
|
|
|
17,020 |
|
Loss from operations |
|
|
(12,134 |
) |
|
|
(1,009 |
) |
|
|
(566 |
) |
|
|
|
|
(13,709 |
) |
Other income (expense), net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense), net |
|
|
(1,038 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
(1,038 |
) |
Interest expense |
|
|
(6,254 |
) |
|
|
(1,537 |
) |
|
|
- |
|
|
|
|
|
(7,791 |
) |
Interest income |
|
|
387 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
387 |
|
Gain (loss) upon extinguishment of debt and accounts payable |
|
|
4,459 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
4,459 |
|
Change in fair value of convertible notes |
|
|
6,629 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
6,629 |
|
Change in fair value of derivatives |
|
|
(1,949 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
(1,949 |
) |
Change in fair value of digital assets |
|
|
125 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
125 |
|
Change in fair value of warrants |
|
|
993 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
993 |
|
Total other income (expense), net |
|
|
3,352 |
|
|
|
(1,537 |
) |
|
|
- |
|
|
|
|
|
1,815 |
|
Loss before provision for income taxes |
|
|
(8,782 |
) |
|
|
(2,546 |
) |
|
|
(566 |
) |
|
|
|
|
(11,894 |
) |
Income tax expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
5(d) |
|
|
- |
|
Net loss attributable to common stockholders |
|
|
(8,782 |
) |
|
|
(2,546 |
) |
|
|
(566 |
) |
|
|
|
|
(11,894 |
) |
Net loss per share - basic and diluted |
|
$ |
(12.49 |
) |
|
|
|
|
|
|
|
|
|
$ |
(16.92 |
) |
||
Weighted average common stock outstanding - basic and diluted |
|
|
703,048 |
|
|
|
|
|
|
|
|
|
|
|
703,048 |
|
||
See Notes to Unaudited Pro Forma Condensed Combined Financial Information
Exhibit 99.1
INTERACTIVE STRENGTH, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2024
(Amounts in thousands, except per share amounts)
|
|
|
|
|
|
|
|
Pro Forma |
|
|||||||||
|
|
Interactive Strength Historical |
|
|
Wattbike Historical |
|
|
Transaction Accounting Adjustments |
|
|
Notes |
|
Pro Forma Combined |
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fitness product revenue |
|
$ |
3,973 |
|
|
$ |
15,907 |
|
|
$ |
- |
|
|
|
|
$ |
19,880 |
|
Membership revenue |
|
|
783 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
783 |
|
Training revenue |
|
|
624 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
624 |
|
Total revenue |
|
|
5,380 |
|
|
|
15,907 |
|
|
|
- |
|
|
|
|
|
21,287 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of fitness product revenue |
|
|
(3,798 |
) |
|
|
(10,567 |
) |
|
|
(282 |
) |
|
5(a) 5(b) |
|
|
(14,647 |
) |
Cost of membership |
|
|
(3,318 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
(3,318 |
) |
Cost of training |
|
|
(1,042 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
(1,042 |
) |
Total cost of revenue |
|
|
(8,158 |
) |
|
|
(10,567 |
) |
|
|
(282 |
) |
|
|
|
|
(19,007 |
) |
Gross profit (loss) |
|
|
(2,778 |
) |
|
|
5,340 |
|
|
|
(282 |
) |
|
|
|
|
2,280 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
6,988 |
|
|
|
502 |
|
|
|
- |
|
|
|
|
|
7,490 |
|
Sales and marketing |
|
|
1,080 |
|
|
|
1,976 |
|
|
|
286 |
|
|
5(a) |
|
|
3,342 |
|
General and administrative |
|
|
18,339 |
|
|
|
7,238 |
|
|
|
327 |
|
|
5(c) |
|
|
25,904 |
|
Total operating expenses |
|
|
26,407 |
|
|
|
9,716 |
|
|
|
613 |
|
|
|
|
|
36,736 |
|
Loss from operations |
|
|
(29,185 |
) |
|
|
(4,376 |
) |
|
|
(895 |
) |
|
|
|
|
(34,456 |
) |
Other income (expense), net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense), net |
|
|
(956 |
) |
|
|
(1,687 |
) |
|
|
- |
|
|
|
|
|
(2,643 |
) |
Interest expense |
|
|
(7,727 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
(7,727 |
) |
Gain (loss) upon extinguishment of debt and accounts payable |
|
|
(1,527 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
(1,527 |
) |
Loss on issuance of warrants |
|
|
(5,551 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
(5,551 |
) |
Change in fair value of convertible notes |
|
|
(128 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
(128 |
) |
Change in fair value of earnout |
|
|
1,300 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
1,300 |
|
Change in fair value of derivatives |
|
|
(460 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
(460 |
) |
Change in fair value of warrants |
|
|
9,300 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
9,300 |
|
Total other income (expense), net |
|
|
(5,749 |
) |
|
|
(1,687 |
) |
|
|
- |
|
|
|
|
|
(7,436 |
) |
Loss before provision for income taxes |
|
|
(34,934 |
) |
|
|
(6,063 |
) |
|
|
(895 |
) |
|
|
|
|
(41,892 |
) |
Income tax expense |
|
|
- |
|
|
|
5 |
|
|
|
- |
|
|
5(d) |
|
|
5 |
|
Net loss attributable to common stockholders |
|
|
(34,934 |
) |
|
|
(6,068 |
) |
|
|
(895 |
) |
|
|
|
|
(41,897 |
) |
Net loss per share - basic and diluted (1) |
|
$ |
(1,632.85 |
) |
|
|
|
|
|
|
|
|
|
$ |
(1,958.30 |
) |
||
Weighted average common stock outstanding - basic and diluted (1) |
|
|
21,395 |
|
|
|
|
|
|
|
|
|
|
|
21,395 |
|
||
See Notes to Unaudited Pro Forma Condensed Combined Financial Information
Exhibit 99.1
INTERACTIVE STRENGTH INC.
UNAUDITED NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The unaudited pro forma condensed combined financial information has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and Article 11 of Regulation S-X. The accompanying pro forma financial information is based on the historical consolidated financial statements of Interactive and the historical consolidated financial statements of Wattbike after giving effect to the Acquisition, as well as certain reclassifications (see Note 2).
The pro forma financial information was prepared using the acquisition method of accounting in accordance with ASC 805 with the Company as the acquirer of Wattbike. Under the acquisition method of accounting, the Company will record the preliminary estimated fair value of assets acquired and liabilities assumed from Wattbike upon acquisition date, July 1, 2025. Fair value is defined in ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements can be highly subjective, and it is possible the application of reasonable judgment could result in different assumptions resulting in a range of alternative estimates using the same facts and circumstances. The preliminary allocation of the estimated purchase price is based upon management’s estimates based on information currently available and is subject to revision as a more detailed analysis is completed and as additional information on the fair value of the assets and liabilities become available and final appraisals and analysis are completed. The Company is still evaluating the fair value of intangible assets and income taxes, in addition to ensuring all other assets and liabilities and contingencies have been identified and recorded. Differences between these preliminary estimates and the final acquisition accounting could occur and these differences could be material. A change in the fair value of the net assets of Wattbike may change the amount of the purchase price allocable to goodwill, and could have a material impact on the accompanying unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined balance sheet as of June 30, 2025 combines the historical balance sheets of Interactive and Wattbike on a pro forma basis, as if the Acquisition had occurred on such date. The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2025 combines the historical statements of operations of Interactive and Wattbike for such periods on a pro forma basis as if the Acquisition had been consummated on January 1, 2024, the beginning of the earliest period presented. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2024, combines the historical statement of operations for each fiscal year of Interactive and Wattbike, for the year ended December 31, 2024 and September 30, 2024, respectively, as permitted by Rule 11-02(c)(3) of Regulation S-X, which allows the combination of financial information for companies if their fiscal years end within one fiscal quarter of each other. To comply with SEC rules and regulations for companies with different fiscal year ends, the pro forma condensed combined financial information has been prepared utilizing periods that differ by less than one fiscal quarter.
The unaudited pro forma condensed combined balance sheet as of June 30, 2025 and unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2025, has been prepared using, and should be read in conjunction with, the following:
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2024 has been prepared using, and should be read in conjunction with, the following:
The foregoing historical financial statements have been prepared in accordance with GAAP. The unaudited pro forma condensed combined financial information has been prepared based on the aforementioned historical financial statements and the assumptions and adjustments as described in the notes to the unaudited pro forma condensed combined financial information. Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.
Exhibit 99.1
The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations would have been had the Acquisition taken place on the date indicated, nor are they indicative of the future consolidated results of operations or financial position of the post-combination company. The unaudited pro forma condensed combined financial information does not give effect to any synergies, operating efficiencies, tax savings or cost savings that may be associated with the Acquisition.
During the preparation of the unaudited pro forma condensed combined financial information, Interactive performed a preliminary analysis to identify differences in Interactive’s and the Wattbike's historical financial statement presentation and significant accounting policies. Based on its initial analysis, Interactive did not identify any differences in accounting policies that would have a material impact on the unaudited pro forma condensed combined financial information. However, certain reclassification adjustments have been made to conform the Wattbike historical financial statement captions to Interactive’s financial statement captions in the unaudited pro forma condensed combined financial statements.
Following the completion of the Acquisition, or as more information becomes available, Interactive will finalize its comprehensive review of financial statement presentation and accounting policies. Therefore, the pro forma financial information may not reflect all reclassifications necessary to conform the Wattbike presentation to that of Interactive due to limitations on the availability of information as of the date of this Current Report on Form 8-K/A. Accounting policy differences and additional reclassification adjustments may be identified as more information becomes available.
Foreign currency translation
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions. At each year end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Exhibit 99.1
The following sets forth the reclassification adjustments made to conform the Wattbike presentation to Interactive’s presentation in the unaudited pro forma condensed combined balance sheet as of June 30, 2025 (in thousands):
|
|
|
|
Historical |
|
|
|
|
|
|
|
|||
Wattbike caption |
|
Interactive caption |
|
Wattbike as Reported |
|
|
Reclassification Adjustment |
|
|
Wattbike as Reclassified |
|
|||
ASSETS |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|||
Current Assets: |
|
Current Assets: |
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents |
|
Cash and cash equivalents |
|
|
727 |
|
|
|
|
|
|
727 |
|
|
Accounts receivable, net |
|
Accounts receivable, net |
|
|
935 |
|
|
|
|
|
|
935 |
|
|
Inventories, net |
|
Inventories, net |
|
|
3,062 |
|
|
|
|
|
|
3,062 |
|
|
|
|
Derivative assets |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
Vendor deposits |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
Loan receivable |
|
|
- |
|
|
|
|
|
|
- |
|
|
Prepaid expenses |
|
Prepaid expenses and other current assets |
|
|
217 |
|
|
|
742 |
|
|
|
959 |
|
Other current assets |
|
|
|
|
742 |
|
|
|
(742 |
) |
|
|
- |
|
Total current assets |
|
Total current assets |
|
|
5,683 |
|
|
|
|
|
|
5,683 |
|
|
Property and equipment, net |
|
Property and equipment, net |
|
|
365 |
|
|
|
|
|
|
365 |
|
|
Right-of-use assets |
|
Right-of-use assets |
|
|
190 |
|
|
|
|
|
|
190 |
|
|
|
|
Intangible assets, net |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
Long-term inventories, net |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
Vendor deposits long term |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
Goodwill |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
Other assets |
|
|
- |
|
|
|
|
|
|
- |
|
|
Total assets |
|
Total assets |
|
|
6,238 |
|
|
|
|
|
|
6,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
LIABILITIES |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|||
Current Liabilities: |
|
Current Liabilities: |
|
|
|
|
|
|
|
|
|
|||
Accounts payable |
|
Accounts payable |
|
|
2,863 |
|
|
|
(1,175 |
) |
|
|
1,688 |
|
Accrued expenses and other payable |
|
Accrued expenses and other current liabilities |
|
|
2,796 |
|
|
|
(256 |
) |
|
|
2,540 |
|
Current portion of operating lease liability |
|
Operating lease liability, current portion |
|
|
126 |
|
|
|
|
|
|
126 |
|
|
|
|
Deferred revenue |
|
|
- |
|
|
|
256 |
|
|
|
256 |
|
|
|
Loan payable |
|
|
- |
|
|
|
3,250 |
|
|
|
3,250 |
|
|
|
Income tax payable |
|
|
- |
|
|
|
|
|
|
- |
|
|
Short-term debt |
|
|
|
|
2,075 |
|
|
|
(2,075 |
) |
|
|
- |
|
|
|
Derivative liabilities |
|
|
- |
|
|
|
|
|
|
- |
|
|
Other current liabilities |
|
Convertible note payable |
|
|
- |
|
|
|
|
|
|
- |
|
|
Total current liabilities |
|
Total current liabilities |
|
|
7,860 |
|
|
|
|
|
|
7,860 |
|
|
Operating lease liabilities, net of current portion |
|
Operating lease liabilities, net of current portion |
|
|
67 |
|
|
|
|
|
|
67 |
|
|
|
|
Warrant liabilities |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
Other long-term liabilities |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other payable - related parties, non-current |
|
|
|
|
6,073 |
|
|
|
(6,073 |
) |
|
|
- |
|
Notes payable - related parties, non-current |
|
|
|
|
11,365 |
|
|
|
(11,365 |
) |
|
|
- |
|
|
|
Loan payable non current |
|
|
|
|
|
14,955 |
|
|
|
14,955 |
|
|
|
|
Convertible note payable, noncurrent |
|
|
- |
|
|
|
2,483 |
|
|
|
2,483 |
|
Total liabilities |
|
Total liabilities |
|
|
25,365 |
|
|
|
|
|
|
25,365 |
|
|
Exhibit 99.1
The following sets forth the reclassification adjustments made to conform the Wattbike presentation to Interactive’s presentation in the unaudited pro forma statement of income for the year ended September 30, 2024 (in thousands):
|
|
|
|
For the Twelve Months Ended September 30, 2024 |
|
|||||||||||
Wattbike caption |
|
Interactive caption |
|
Wattbike |
|
|
Reclassifications |
|
|
Note |
|
Wattbike as Reclassified |
|
|||
Revenue: |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|||
Sales |
|
|
|
$ |
15,907 |
|
|
$ |
(15,907 |
) |
|
|
|
$ |
- |
|
|
|
Fitness product revenue |
|
|
|
|
|
15,907 |
|
|
|
|
|
15,907 |
|
|
|
|
Membership revenue |
|
|
|
|
|
|
|
|
|
|
- |
|
||
|
|
Training revenue |
|
|
|
|
|
|
|
|
|
|
- |
|
||
|
|
Total revenue |
|
|
15,907 |
|
|
|
|
|
|
|
|
15,907 |
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|||
Cost of sales |
|
|
|
|
10,567 |
|
|
|
(10,567 |
) |
|
|
|
|
- |
|
|
|
Cost of fitness product revenue |
|
|
|
|
|
10,567 |
|
|
|
|
|
10,567 |
|
|
|
|
Cost of membership |
|
|
|
|
|
|
|
|
|
|
- |
|
||
|
|
Cost of training |
|
|
|
|
|
|
|
|
|
|
- |
|
||
|
|
Total cost of revenue |
|
|
10,567 |
|
|
|
|
|
|
|
|
10,567 |
|
|
Gross profit (loss) |
|
Gross profit (loss) |
|
|
5,340 |
|
|
|
|
|
|
|
|
5,340 |
|
|
Operating expenses: |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
Research and development |
|
|
502 |
|
|
|
|
|
|
|
|
502 |
|
|
Sales and marketing |
|
Sales and marketing |
|
|
1,976 |
|
|
|
|
|
|
|
|
1,976 |
|
|
General and administrative |
|
General and administrative |
|
|
7,238 |
|
|
|
|
|
|
|
|
7,238 |
|
|
Total operating expenses |
|
Total operating expenses |
|
|
9,716 |
|
|
|
|
|
|
|
|
9,716 |
|
|
Loss from operations |
|
Loss from operations |
|
|
(4,376 |
) |
|
|
|
|
|
|
|
(4,376 |
) |
|
Other income (expense), net: |
|
Other income (expense), net: |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
Other income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
Interest expense |
|
|
1,687 |
|
|
|
|
|
|
|
|
1,687 |
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
|
|
- |
|
||
|
|
Gain (loss) upon extinguishment of debt and accounts payable |
|
|
|
|
|
|
|
|
|
|
- |
|
||
|
|
Loss on issuance of warrants |
|
|
|
|
|
|
|
|
|
|
- |
|
||
|
|
Change in fair value of convertible notes |
|
|
|
|
|
|
|
|
|
|
- |
|
||
|
|
Change in fair value of earnout |
|
|
|
|
|
|
|
|
|
|
- |
|
||
|
|
Change in fair value of derivatives |
|
|
|
|
|
|
|
|
|
|
- |
|
||
|
|
Change in fair value of digital assets |
|
|
|
|
|
|
|
|
|
|
- |
|
||
|
|
Change in fair value of warrants |
|
|
|
|
|
|
|
|
|
|
- |
|
||
Total other income (expense), net |
|
Total other income (expense), net |
|
|
1,687 |
|
|
|
|
|
|
|
|
1,687 |
|
|
Loss before provision for income taxes |
|
Loss before provision for income taxes |
|
|
(6,063 |
) |
|
|
|
|
|
|
|
(6,063 |
) |
|
Income tax benefit (expense) |
|
Income tax expense |
|
|
5 |
|
|
|
|
|
|
|
|
5 |
|
|
Net loss attributable to common stockholders |
|
Net loss attributable to common stockholders |
|
|
(6,068 |
) |
|
|
|
|
|
|
|
(6,068 |
) |
|
Exhibit 99.1
The following sets forth the reclassification adjustments made to conform the Wattbike presentation to Interactive’s presentation in the unaudited pro forma statement of income for the six months ended June 30, 2025 (in thousands):
|
|
|
|
For the Six Months Ended June 30, 2025 |
|
|||||||||
Wattbike caption |
|
Interactive caption |
|
Wattbike |
|
|
Reclassifications |
|
|
Wattbike as Reclassified |
|
|||
Revenue: |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|||
Sales |
|
|
|
|
9,203 |
|
|
|
(9,203 |
) |
|
|
- |
|
|
|
Fitness product revenue |
|
|
|
|
|
9,203 |
|
|
|
9,203 |
|
|
|
|
Membership revenue |
|
|
|
|
|
|
|
|
- |
|
||
|
|
Training revenue |
|
|
|
|
|
|
|
|
- |
|
||
|
|
Total revenue |
|
|
9,203 |
|
|
|
|
|
|
9,203 |
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|||
Cost of sales |
|
|
|
|
5,299 |
|
|
|
(5,299 |
) |
|
|
- |
|
|
|
Cost of fitness product revenue |
|
|
|
|
|
5,299 |
|
|
|
5,299 |
|
|
|
|
Cost of membership |
|
|
|
|
|
|
|
|
- |
|
||
|
|
Cost of training |
|
|
|
|
|
|
|
|
- |
|
||
|
|
Total cost of revenue |
|
|
5,299 |
|
|
|
|
|
|
5,299 |
|
|
Gross profit (loss) |
|
Gross profit (loss) |
|
|
3,904 |
|
|
|
|
|
|
3,904 |
|
|
Operating expenses: |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
Research and development |
|
|
190 |
|
|
|
|
|
|
190 |
|
|
Sales and marketing |
|
Sales and marketing |
|
|
1,831 |
|
|
|
|
|
|
1,831 |
|
|
General and administrative |
|
General and administrative |
|
|
2,892 |
|
|
|
|
|
|
2,892 |
|
|
Total operating expenses |
|
Total operating expenses |
|
|
4,913 |
|
|
|
|
|
|
4,913 |
|
|
Loss from operations |
|
Loss from operations |
|
|
(1,009 |
) |
|
|
|
|
|
(1,009 |
) |
|
Other income (expense), net: |
|
Other income (expense), net: |
|
|
|
|
|
|
|
|
|
|||
|
|
Other income (expense), net |
|
|
|
|
|
|
|
|
- |
|
||
Interest expense |
|
Interest expense |
|
|
1,537 |
|
|
|
|
|
|
1,537 |
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
- |
|
||
|
|
Gain (loss) upon extinguishment of debt and accounts payable |
|
|
|
|
|
|
|
|
- |
|
||
|
|
Loss on issuance of warrants |
|
|
|
|
|
|
|
|
- |
|
||
|
|
Change in fair value of convertible notes |
|
|
|
|
|
|
|
|
- |
|
||
|
|
Change in fair value of earnout |
|
|
|
|
|
|
|
|
- |
|
||
|
|
Change in fair value of derivatives |
|
|
|
|
|
|
|
|
- |
|
||
|
|
Change in fair value of digital assets |
|
|
|
|
|
|
|
|
- |
|
||
|
|
Change in fair value of warrants |
|
|
|
|
|
|
|
|
- |
|
||
Total other income (expense), net |
|
Total other income (expense), net |
|
|
1,537 |
|
|
|
|
|
|
1,537 |
|
|
Loss before provision for income taxes |
|
Loss before provision for income taxes |
|
|
(2,546 |
) |
|
|
|
|
|
(2,546 |
) |
|
Income tax benefit (expense) |
|
Income tax expense |
|
|
- |
|
|
|
|
|
|
- |
|
|
Net loss attributable to common stockholders |
|
Net loss attributable to common stockholders |
|
|
(2,546 |
) |
|
|
|
|
|
(2,546 |
) |
|
Interactive will account for the Acquisition as a business combination in accordance with GAAP. Accordingly, for purposes of preparing the unaudited pro forma condensed combined financial information, the estimated purchase price attributable to the Acquisition has been allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values. Upon the closing of the Acquisition, Interactive paid aggregate consideration of $4.0 million, primarily consisting of $2.6 million of Interactive’s Series E Preferred Stock, effective settlement of preexisting relationships of $0.4 million, bridge financing of $0.8 million and contingent consideration of $0.2 million. The estimated purchase consideration is preliminary and subject to additional customary adjustments.
The following table sets forth the preliminary allocation of the estimated purchase price to the tangible and intangible assets acquired and liabilities assumed based on a preliminary estimate of the fair values, as if the Acquisition had been completed on June 30, 2025 (in thousands):
Exhibit 99.1
|
As of June 30, 2025 |
|
|
Estimated fair value of consideration transferred |
$ |
4,016 |
|
Estimated fair value of assets acquired and liabilities assumed |
|
|
|
Cash & cash equivalents |
|
727 |
|
Accounts receivable |
|
935 |
|
Inventory |
|
3,152 |
|
Prepaid expenses |
|
217 |
|
Other current assets |
|
742 |
|
Property and equipment, net |
|
365 |
|
Right of use asset |
|
190 |
|
Intangible assets |
|
3,295 |
|
Accounts payable |
|
(1,688 |
) |
Accrued expenses and other payables |
|
(2,796 |
) |
Short-term debt |
|
(2,075 |
) |
Current portion of operating lease liability |
|
(126 |
) |
Operating lease liabilities, net of current portion |
|
(67 |
) |
Total estimated fair value of net assets acquired |
|
2,871 |
|
Estimated goodwill |
$ |
1,145 |
|
The pro forma purchase price allocation is preliminary and the estimated fair value of the assets acquired and liabilities assumed are based upon available information and certain assumptions. The final determination of the purchase price allocation will be completed as soon as practicable and will be based on the fair value of the assets acquired and liabilities assumed as of the closing date. Accordingly, the pro forma purchase price allocation is subject to revision as a more detailed analysis is completed and additional information on the fair value of the assets and liabilities become available, including receipt of final appraisals of the net assets acquired. A change in the fair value of the net assets may change the amount of purchase price allocable to the goodwill, and could have a material impact on the amount of expense included in the accompanying unaudited pro forma condensed combined statements of income.
The following pro forma adjustments are included in the unaudited pro forma condensed combined balance sheet as of June 30, 2025:
4(a) Reflects the elimination of Wattbike’s historical equity balances, including various classes of preferred and ordinary shares, additional paid-in capital, accumulated other comprehensive income, and accumulated deficit, which historical amounts are presented in one line item, “Historical Wattbike equity” on the unaudited pro forma condensed combined balance sheet as of June 30, 2025.
4(b) Reflects the estimated total preliminary consideration for the Acquisition of approximately $4.0 million, comprised of $2.6 million paid in Series E Preferred Stock, the effective settlement of certain preexisting relationships and bridge financing previously recorded as a loan receivable by Interactive of $1.2 million and the contingent consideration fair value of $0.2 million.
4(c) Reflects an adjustment to recognize the estimated fair value of the identifiable intangible assets acquired in the Acquisition. The preliminary estimated fair value and the useful life of the intangible assets is as follows (in thousands):
|
|
|
|
|
|
|
|
Estimated amortization expense |
|
|||||||
|
|
Estimated fair value |
|
|
Estimated useful life (years) |
|
|
For the year ended December 31, 2024 |
|
|
For the six months ended June 30, 2025 |
|
||||
Developed technology - hardware |
|
$ |
961 |
|
|
|
7 |
|
|
$ |
137 |
|
|
$ |
69 |
|
Developed technology - software |
|
|
275 |
|
|
|
5 |
|
|
|
55 |
|
|
|
28 |
|
Customer-related intangible - B2B |
|
|
1,373 |
|
|
|
8 |
|
|
|
172 |
|
|
|
86 |
|
Customer-related intangible - DTC |
|
|
137 |
|
|
|
3 |
|
|
|
46 |
|
|
|
23 |
|
Trademarks and trade name |
|
|
549 |
|
|
|
8 |
|
|
|
69 |
|
|
|
34 |
|
Total estimated fair value of acquired intangible assets |
|
$ |
3,295 |
|
|
|
|
|
$ |
478 |
|
|
$ |
240 |
|
|
The preliminary fair value of the developed technology – hardware, customer-related intangible – Business to Business ("B2B"), customer-related intangible – Direct to Customer ("DTC"), and trademarks and tradenames was estimated using the income approach. The income approach converts future expected cash flows to a discounted amount. The fair value measurement is determined on the basis of the value indicated by current market expectations about such future amounts.
The preliminary fair value of the developed technology – software was estimated using the cost approach, a cost approach that estimates the fair value of an intangible asset based on the estimated costs that would be required currently to replace the service capacity of an asset. This method considers the direct and indirect costs required to develop the asset, as well as adjustments for factors such as obsolescence to arrive at an indication of value.
Exhibit 99.1
4(d) Reflects an adjustment to increase the value of Wattbike’s inventory to its estimated fair value. The inventory was valued using the top-down method, which starts with the inventory’s estimated selling price, adjusting for costs to sell and an approximate normalized profit.
4(e) Reflects elimination of intercompany loan from Interactive to Wattbike for bridge financing of $0.8 million and the effective settlement of the preexisting relationships of $0.4 million.
4(f) Reflects an adjustment to the loan notes which Interactive acquired from a 3rd party as a result of the Acquisition and the issuance of Series E Preferred Stock to the loan note holders. The loan notes are still outstanding and are an intercompany loan due from Wattbike to Interactive and eliminated in consolidation.
4(g) Reflects a net adjustment to recognize the preliminary estimated goodwill expected to arise from the Acquisition. See Note 3 for significant estimates and assumptions used to determine the preliminary estimate of goodwill for the purpose of preparing the unaudited pro forma condensed combined financial information.
The following pro forma adjustments are included in the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2024 and the six months ended June 30, 2025:
5(a) Reflects the estimated amortization expense resulting from the Acquisition related to the acquired finite-lived intangible assets, which is calculated assuming a straight-line method of amortization based on the preliminary estimated fair values and useful lives presented in Note 4(c) above
The amount of amortization expense will ultimately be based on the periods in which the associated economic benefits are expected to be derived and the pattern of benefit for each intangible asset, and therefore, the amount reported after the Acquisition may differ significantly between periods based upon the final values assigned and amortization methodology used for each asset.
A 10% increase or decrease in the estimated fair value of the intangible assets would cause an increase or decrease of $0.5 million and $0.2 million to the amortization amounts as presented in the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2024 and the six months ended June 30, 2025, respectively, assuming the estimated useful lives presented above.
5(b) Reflects an adjustment to record the estimated incremental cost of fitness product revenue related to the fair value adjustment of acquired inventory for the year ended December 31, 2024, as discussed at Note 4(d). The unaudited pro forma condensed combined statement of operations assumes all acquired inventory is sold within the first 12 months following the acquisition. As such, there is no pro forma adjustment related to cost of revenue reflected in the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2025.
5(c) Reflects a non-recurring adjustment to record the estimated transaction costs of approximately $0.32 million incurred by Interactive after June 30, 2025. Direct transaction costs are expensed as incurred and these additional transaction costs are reflected as if incurred on January 1, 2024, the beginning of the earliest period presented. Transaction costs of nil and $0.06 million are reflected in Interactive’s historical statements of income for the year ended December 31, 2024 and six months ended June 30, 2025, respectively.
5(d) The Company has not reflected any estimated income tax impact related to the Acquisition in the accompanying unaudited pro forma condensed combined statement of operations for the year ended December 31, 2024 and the six months ended June 30, 2025 because it does not anticipate the impact to be material due to the Company’s history of losses and it's full valuation allowance maintained against net deferred tax assets.
Pro forma basic and diluted loss per share has been adjusted to reflect the pro forma adjustments herein for the six months ended June 30, 2025 and the year ended December 31, 2024. The following table sets forth the computation of pro forma combined basic and diluted net loss per share (in thousands, except share and per share amounts):
|
For the Year Ended December 31, 2024 |
|
|
For the Six Months Ended June 30, 2025 |
|
||
Pro forma net loss attributable to Interactive Strength, Inc. |
|
(41,897 |
) |
|
|
(11,894 |
) |
|
|
|
|
|
|
||
Interactive historical weighted-average shares of common stock outstanding - basic and diluted |
|
21,395 |
|
|
|
703,048 |
|
Pro forma weighted-average shares of common stock outstanding - basic and diluted |
|
21,395 |
|
|
|
703,048 |
|
|
|
|
|
|
|
||
Pro forma loss per share attributable to Interactive common stockholders |
|
(1,958.30 |
) |
|
|
(16.92 |
) |
Exhibit 99.2
WATTBIKE (HOLDINGS) LIMITED
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023 |
WATTBIKE (HOLDINGS) LIMITED
TABLE OF CONTENTS
Page
Independent Auditor's Report |
1-2 |
Consolidated Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Changes in Stockholders’ Deficit 5
Consolidated Statements of Cash Flows 6
Notes to the Consolidated Financial Statements 7-20
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors of Wattbike (Holdings) Limited
Opinion
We have audited the accompanying consolidated financial statements of Wattbike (Holdings) Limited and subsidiaries (collectively, the “Company”), which comprise the consolidated balance sheets as of September 30, 2024 and 2023, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended, and the related notes to the consolidated financial statements.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the consolidated financial statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has negative equity, negative cash flows from operations, and has suffered recurring operating losses which raise substantial doubt about its ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding those matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to that matter.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Page 1
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or 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 date that the consolidated financial statements are available to be issued.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.
In performing an audit in accordance with generally accepted auditing standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audits.
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
Obtain an understanding of internal control relevant to the audits in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audits.
New York, New York
September 17, 2025
Page 2
CONSOLIDATED Financial Statements
WATTBIKE (HOLDINGS) LIMITED
CONSOLIDATED BALANCE SHEETS
See notes to consolidated financial statements.
Page 3
WATTBIKE (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
See notes to consolidated financial statements.
Page 4
WATTBIKE (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
See notes to consolidated financial statements.
Page 5
WATTBIKE (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
See notes to consolidated financial statements.
Page 6
WATTBIKE (HOLDINGS) LIMITED
NOTES TO FINANCIAL STATEMENTS
September 30, 2024 and 2023
NOTE 1 — NATURE OF BUSINESS AND OPERATING ENVIRONMENT
Wattbike (Holdings) Limited (“Wattbike” or “Holdings” or “the Company”) is a private limited company incorporated in England and Wales and was formed in 2010. The Company designs, manufactures, and sells indoor training bikes. The Company sells its products globally, particularly in Europe, Asia, Australia, and the United States.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Holdings and its wholly owned subsidiaries Wattbike Limited, Wattbike IP Limited, and Wattbike Inc. All significant intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation
The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
Liquidity and Going Concern
The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of and for the years ended September 30, 2024 and 2023, the Company had net losses, negative stockholders’ deficit, and negative cash flows from operations. These issues raise substantial doubt about the Company’s ability to continue as a going concern for twelve months from the date of these consolidated financial statements.
Functional Currency
These consolidated financial statements are presented in U.S. dollars. The functional currency of the Company is Pound Sterling and is translated to U.S. dollars for reporting purposes. Assets and liabilities are translated to U.S. dollars at period-end exchange rates. Exchange rates as of September 30, 2024 and 2023 were 1.3401 and 1.2197, respectively. Income and expense items are translated at average rates of exchange prevailing during the period. Average rates for the years ended September 30, 2024 and 2023 were 1.2679 and 1.2267, respectively. Translation adjustments are included in Accumulated other Comprehensive Loss in the consolidated balance sheets.
Recently Adopted Accounting Pronouncement
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Accounting Standards Codification (“ASC”) 326), which applies a current expected credit loss (“CECL”) model, which is a new impairment model based on expected losses rather than incurred losses. The CECL model is expected to result in more timely recognition of credit losses. The Company adopted the updates on October 1, 2023, using the modified retrospective method, with no material impact on the consolidated financial statements.
Page 7
WATTBIKE (HOLDINGS) LIMITED
NOTES TO FINANCIAL STATEMENTS
September 30, 2024 and 2023
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Such estimates and assumptions impact, among others, the following: allowance for credit losses, inventory reserves, impairment of property and equipment and income taxes. However, actual results could differ from these estimates.
Cash
Cash is maintained in Federal Deposit Insurance Corporation (“FDIC”) insured accounts at credit qualified financial institutions in the United States, and at institutions protected by the Financial Services Compensation Scheme (“FSCS”) in the United Kingdom. FDIC insures up to $250,000 and the FSCS insures up to £85,000 (approximately $113,750 as of September 30, 2024) and at times may exceed insured limits.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable is carried net of allowance for credit losses. The allowance for credit losses is increased by provisions charged to expense and reduced by accounts charged off, net of recoveries. Receivables are written off when management determines their collection is unlikely. The allowance is maintained at a level considered adequate to provide for potential account losses based on management’s evaluation of the anticipated impact on the balance of current economic conditions, changes in character and size of balance, past and expected future loss experience, reasonable and supportable forecasts and other pertinent factors. As of September 30, 2024 and 2023, the allowance for credit losses was $82,668 and $145,363, respectively.
Inventory
Inventory, which consists of training bikes, accessories and parts, is stated at the lower of cost (first in, first out) or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably estimated costs to complete the sale. All inventory is purchased and sold as finished goods. The Company monitors its inventory to identify excess or obsolete items on hand. The Company reviews inventory quantities on-hand and records a provision for excess and obsolete inventory based primarily on selling prices, indications from customers based upon current price negotiations and purchase orders. In addition, and as necessary, specific reserves for future known or anticipated events may be established. As of September 30, 2024 and 2023, the reserve for obsolete inventory was approximately was $399,158 and $500,998, respectively.
Concentrations of Credit Risk
The Company extends credit generally without collateral based on an evaluation of a customer’s financial condition. Exposure to losses on receivables is principally dependent upon each customer’s financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses when necessary. Substantially all of the Company’s receivables are expected to be collected within one year.
Page 8
WATTBIKE (HOLDINGS) LIMITED
NOTES TO FINANCIAL STATEMENTS
September 30, 2024 and 2023
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentrations of Credit Risk (Continued)
The Company relies on one supplier for all training bike inventory purchases. For the years ended September 30, 2024 and 2023, this supplier represented 41% and 30% of the Company’s accounts payable, respectively. The supplier concentration creates risks to the Company’s business operations and financial condition. Any disruption in the supplier’s ability to deliver inventory, whether due to operational challenges, financial difficulties, supply chain interruptions, natural disasters, geopolitical issues, or other unforeseen events, could materially impair its ability to meet customer demand. Additionally, any significant change in the relationship with this supplier, including termination of the supply agreement or unfavorable changes in pricing or terms, could adversely affect the Company’s operations, cash flows, and financial performance. The lack of diversified suppliers heightens these risks, and there can be no assurance that the Company will be able to mitigate them effectively.
Prepaid Expense and Other Current Assets
Prepaid expense and other current assets consist of prepayments made to suppliers and other receivables. As of September 30, 2024, the Company recorded an impairment of $490,950 for prepaid expenses related to components to be used in production from a supplier with whom the Company will no longer conduct business, as recovery of the prepayment for the purchase of the equipment is deemed unlikely.
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over estimated useful lives of the related asset. See Note 3 - Property and Equipment for estimated useful lives of each class of property and equipment. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the related assets. Maintenance and repairs are charged to expense as incurred and significant renewals and improvements are capitalized. Upon disposition or retirement of property and equipment, the cost and related accumulated depreciation and amortization is removed from the accounts and any resulting gain or loss is recorded in current operations.
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment is recognized to the extent that the sum of undiscounted estimated cashflows expected to result from the use of the assets, less the carrying value. If impairment is recognized, the carrying value of the impaired asset is reduced to carrying value. The Company recorded a long-lived asset impairment charge of $45,714 and $724,492 for the years ended September 30, 2024 and 2023, respectively, which is included in the general and administrative expense.
Page 9
WATTBIKE (HOLDINGS) LIMITED
NOTES TO FINANCIAL STATEMENTS
September 30, 2024 and 2023
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Leases
The Company determines if an arrangement is a lease at inception by determining whether the agreement conveys the right to control the use of the identified asset for a period of time, whether the Company has the right to obtain substantially all of the economic benefits from use of the identified asset, and the right to direct the use of the asset. Lease liabilities are recognized at the commencement date based upon the present value of the remaining future minimum lease payments over the lease term using the rate implicit in the lease or the Company's risk-free rate. The risk-free rate is defined as the daily treasury par yield curve rate for a period of time that approximates the lease term. The Company's lease terms include options to renew or terminate the lease when it is reasonably certain that it will exercise the option.
Share-Based Compensation
The Company accounts for share-based compensation arrangements whereby the measurement and recognition of compensation expense for all share-based payment awards to employees and directors based on estimated fair values on the grant date. Compensation cost for awards is recognized using the straight-line method over the vesting period or the graded vesting method if awards with market or performance conditions include graded vesting features, or if an award includes both a service condition and a market or performance condition. Stock-based compensation is included in operating expense in the consolidated statements of operations and comprehensive loss. The Company accounts for forfeitures for awards as they occur.
Income Taxes
The Company accounts for income taxes using of the asset and liability method of accounting for income taxes. Accordingly, deferred tax assets and liabilities are determined based on the difference between the financial statement and income tax basis of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is required if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are based on the current period taxable income for Federal, state, local, and foreign income tax reporting purposes.
Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statement equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. The Company has elected to record income tax related interest and penalties as a component of the provision for income tax expense. As of September 30, 2024 and 2023, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
Page 10
WATTBIKE (HOLDINGS) LIMITED
NOTES TO FINANCIAL STATEMENTS
September 30, 2024 and 2023
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition
The Company recognizes revenue from the sale of products at the time of passage of title, generally when the products are shipped, in an amount that reflects the consideration which it expects to receive in exchange for those goods or services. In determining when and how revenue is recognized from contracts with customers, the Company performs the following five step analysis: (1) identification of contract with customer, (2) determination of performance obligations, (3) measurement of the transactions price, (4) allocation of the transaction price to the performance obligation, and (5) recognition of revenue when or as the Company satisfies each performance obligation.
Revenue is primarily generated from the sale of finished products to customers. The Company satisfies its performance obligation at the point in time when control of the product is transferred to the customer typically through delivery to the shipper. The Company has elected to account for shipping and handling activities related to its contracts with customers as costs to fulfill its promise to transfer the associated products. Accordingly, amounts billed for shipping are recorded as a component of net sales, while shipping costs are classified as a component of cost of sales. The Company invoices customers at the time the title and risk has transferred, and collection generally occurs within the payment terms agreed to by the customers. Accordingly, there is no financing component to the Company’s arrangements with customers. Revenue recorded is presented net of sales and other taxes collected on behalf of governmental authorities. Trade promotions, consisting primarily of customer pricing discounts, advertising and other promotional activities, are offered through various programs to customers and consumers. Sales are recorded net of trade promotion spending, which is recognized as incurred at the time of the sale. Consumer financing costs may be incurred for certain promotions, and those costs are recorded in costs of sales.
The Company offers a standard product warranty for its training bikes, covering most components including screens where applicable. 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 is recorded as a component of cost of sales. 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’s products are manufactured by contract manufacturers, and, in certain cases, the Company may have recourse to such contract manufacturers.
Defined Contribution Pension
The Company contributes up to 5% of an employee’s salary into personal pension funds held by individual employees under the laws of the United Kingdom. These personal pension funds are the responsibility of the individual employees. The Company contributed $96,875 and $113,786 to personal pension funds for the years ended September 30, 2024 and 2023, respectively.
Subsequent Events
For purposes of preparing these consolidated financial statements the Company considered events through September 17, 2025, the date these consolidated financial statements were available for issuance. See Note 11 - Subsequent Events.
Page 11
WATTBIKE (HOLDINGS) LIMITED
NOTES TO FINANCIAL STATEMENTS
September 30, 2024 and 2023
NOTE 3 — PROPERTY AND EQUIPMENT
Property and equipment, together with their estimated useful lives, consists of the following:
Depreciation and amortization expense was $200,135 and $293,274 for the years ended September 30, 2024 and 2023, respectively.
NOTE 4 — SHORT-TERM DEBT
On October 11, 2023, the Company signed a working capital facility (“the facility”) with a lender to obtain a revolving working capital loan facility of up to £3,400,000 (approximately $4,550,000 as of September 30, 2024). The maturity date of the facility was twelve calendar months from the date of the agreement. The interest of the of the facility is 11% above the Bank of England Base Rate (5% and 5.25% as of September 30, 2024 and 2023, respectively). Before the original maturity date both parties extended the maturity date to March 31, 2025, and then monthly for three months to June 30, 2025. As of September 30, 2024, the Company’s outstanding balance of the facility is $2,618,000 million, and accrued interest payable is $0.4 million. On July 1, 2025, the Company extended the facility to June 30, 2026, and the amount available under the facility was reduced to £2,000,000 (approximately $2,676,000 as of September 30, 2024). For the years ended September 30, 2024 and 2023 all interest was paid-in-kind.
NOTE 5 – SHARE-BASED COMPENSATION
The Company operates a share-based compensation plan under which equity-settled options are granted to eligible employees noted as an Enterprise Management Incentive (“EMI”). The EMI Plan was adopted by the Company on December 16, 2020.
Page 12
WATTBIKE (HOLDINGS) LIMITED
NOTES TO FINANCIAL STATEMENTS
September 30, 2024 and 2023
NOTE 5 – SHARE-BASED COMPENSATION (Continued)
Options are granted to employees at no cost and at an exercise price that is not less than the fair market value of the Company’s shares at the date of grant, and the options granted consisted of Ordinary C and D shares. The options are generally subject to service-based and/or performance-based vesting conditions as determined by the Board at the time of grant. Options typically vest over a three-to-four-year period, although alternative vesting schedules or performance milestones may apply. Unvested options generally lapse upon termination of employment, with different outcomes depending on leaver classification (e.g., Good Leaver, Intermediate Leaver, Bad Leaver). Vested options may remain exercisable for a limited time following termination (typically 90 days for Good and Intermediate Leavers), and all options lapse ten years from the grant date.
The EMI Plan limits participation to qualifying employees who meet working time requirements and do not hold a material interest in the Company. At the time of grant, the aggregate fair value of shares subject to EMI options granted to any individual may not exceed £250,000 (approximately $334,500 as of September 30, 2024). The Company-wide cap on the value of shares under outstanding EMI options is £3,000,000 (approximately $4,015,000 as of September 30, 2024). Any grants exceeding these thresholds are treated as non-qualifying options for tax purposes.
In connection with an exit event (e.g., sale or listing), options may vest and become exercisable in full, subject to Board discretion and satisfaction of any performance conditions. In certain circumstances, options may also be exchanged for equivalent options in an acquiring company.
The fair value of each option grant is estimated on the grant date using an appropriate option pricing model and is recognized as compensation expense over the vesting period. The Company used Private Company Price Index (“PCPI”) to identify Enterprise Value (“EV”)/EBIDTA multiple, which is then applied to the Company’s EBIDTA to estimate the Enterprise Value. The amount recognized reflects management’s best estimate of the number of awards expected to vest and is adjusted for changes in actual and expected forfeitures.
No share-based compensation expense was recognized for years ended September 30, 2024 and 2023.
As of September 30, 2024, all share options became fully vested and lapsed due to the termination of employee relationships as no options were exercised as of the termination date. Accordingly, the Company recorded the full amount of stock compensation expense of $225,428 to equity.
NOTE 6 — EQUITY
The Company has various classes of stock. The Ordinary A, B1, B2, C, D and preferred shares are only entitled to dividends subject to investor approval. The Ordinary A, B1, B2, F and preferred shares are entitled to one vote per share. The Ordinary C and D shares are not entitled to any voting rights.
In the event of liquidation, after the return of assets, the surplus assets remaining after payment of its debts and liabilities will be distributed as follow order: first, holders of preferred shares will be paid pro rata to the number of preferred shares respectively held by them; then, holders of B ordinary shares (including B1 and B2 ordinary shares), holders of A and F ordinary shares, and then, holders of C ordinary shares, and finally the holders of D ordinary shares.
Page 13
WATTBIKE (HOLDINGS) LIMITED
NOTES TO FINANCIAL STATEMENTS
September 30, 2024 and 2023
NOTE 7 — LEASES
The Company leases warehouse and office facilities under two operating lease agreements, expiring on December 4, 2025 and September 3, 2028. The Company's lease terms include options to renew the lease when it is reasonably certain that it will exercise the option.
The weighted average discount rates of the operating leases as of September 30, 2024 were 2.84%. The weighted average remaining lease term of the operating leases as of September 30, 2024 was 3.28 years. The components of lease costs for the year ended September 30, 2024 and 2023 are as follows:
Minimum future lease payments under non-cancellable operating leases, net of amortized tenant improvement allowance payments as of September 30, 2024 are as follows:
NOTE 8 — COMMITMENTS AND CONTINGENCIES
Litigation
The Company is periodically involved in various litigation matters arising in the normal course of business. Management does not expect that the outcome of such issues will have a material adverse effect on its financial position or results of operations.
Page 14
WATTBIKE (HOLDINGS) LIMITED
NOTES TO FINANCIAL STATEMENTS
September 30, 2024 and 2023
NOTE 9 — INCOME TAXES
The provision for income tax benefit consisted of the following:
The effective tax rates for the years ended September 30, 2024, and 2023 were (0.07) % and (0.05) % respectively. The Company’s effective tax rate differs from the federal statutory rate primarily due to the reversal of a majority of the Company’s valuation allowance on its deferred tax assets in the United States and in the United Kingdom.
The tax effects of temporary differences which give rise to a significant portion of deferred tax assets and liabilities are as follows:
Page 15
WATTBIKE (HOLDINGS) LIMITED
NOTES TO FINANCIAL STATEMENTS
September 30, 2024 and 2023
NOTE 9 — INCOME TAXES (Continued)
As of September 30, 2024 and 2023, the Company has generated a federal and state net operating loss carryforward in the United States of approximately $499,856 and $449,803. The current year loss is carried forward indefinitely and can be used to offset up to 80% of future income.
As of September 30, 2024 and 2023, the Company also has gross net operating losses in the United Kingdom, totaling $3,664,558 and $2,755,209, respectively. The majority of these net operating losses have an unlimited carry forward period.
The Company evaluates the realizability of its deferred tax assets on annual basis and establishes a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset may not be realized. The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended September 30, 2024, as well as significant deferred tax assets in excess of deferred tax liabilities. As a result, the Company determined that it is not more likely than not that it will generate sufficient future taxable income in the United States and in the United Kingdom to realize its deferred tax assets and, therefore, recorded valuation allowances against the net deferred tax assets. The total amount of the valuation allowance was approximately $5,580,191 and $4,111,514 as of September 30, 2024 and 2023, respectively. The net change for the valuation allowance was $1,468,677 as of September 30, 2024.
As of September 30, 2024 and 2023, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
None of the Company’s Federal or state income tax returns are currently under examination by the Internal Revenue Service or state authorities.
Page 16
WATTBIKE (HOLDINGS) LIMITED
NOTES TO FINANCIAL STATEMENTS
September 30, 2024 and 2023
NOTE 10 — RELATED PARTY TRANSACTIONS
The Company is controlled by its board of directors alongside Piper PE LLP by virtue of funds under their management together holding a majority of the issued common stock of the Company. The Company raised operational funds by issuing loan notes to shareholders.
Stepped Rate Secured Loan Note
On December 16, 2020, the Company issued a stepped rate secured loan note (“the secured note”). The aggregate principal amount of the secured note is £8,000,000 (approximately $10,706,000 as of September 30, 2024). The maturity date of the note is December 16, 2028. The interest rates are structured as 10% per annum for the first six years from the note issue date, 15% per annum from year six to year seven, and 20% per annum thereafter to the maturity date.
On December 16, 2020, the noteholder Piper Nominee IV Limited as Nominee for Piper Private Equity Fund VI LP registered approximately £5,093,000 (approximately $6,830,000 as of September 30, 2024) of the secured note, the noteholder Piper Investment IV Limited registered about £499,500 (approximately $718,300 as of September 30, 2024) of the secured note, and the former non-executive chairman registered approximately £40,000 (approximately $53,600 as of September 30, 2024) of the secured note. On March 20, 2023, the noteholder former non-executive chairman transferred all his loan note to Piper Nominee IV Limited. After the transfer, the noteholder Piper Nominee IV Limited hold approximately £5,133,000 (approximately $6,880,000 as of September 30, 2024) of the secured note. The two noteholders are Company shareholders accordingly, the Company recorded the outstanding balance due to these noteholders as note payable – related parties, non-current, and recorded the interest payable in other payable–related parties, non-current. As of September 30, 2024 and 2023, the total outstanding balance of the note payable and accrued interest is $10,987,441 and $9,072,428, respectively.
Stepped Rate Convertible Loan Note
On September 29, 2022, the Company issued a stepped rate secured convertible loan note (“the convertible note”). The aggregate principal amount of the convertible note is £1,000,000 (approximately $1,338,000 as of September 30, 2024), and the initial interest rate of the convertible note is 15% per annum. The Company has reserved 847,458 A ordinary shares for the convertible note. On March 30, 2023, all noteholders converted the existing convertible note with an outstanding principal amount and accrued interest amount of £1,090,010 (approximately $1,340,000 as of September 30, 2024) to a secured note with a 25% of annual interest rate, which matures on December 16, 2028.
Since all of the noteholders are also shareholders, the Company recorded the outstanding balance due to these noteholders as note payable – related parties, non-current, and recorded accrued interest payable in other payable–related parties, non-current. As of September 30, 2024 and 2023, the total outstanding balance of the convertible note and accrued interest is $2,039,091 and $1,465,465, respectively.
Page 17
WATTBIKE (HOLDINGS) LIMITED
NOTES TO FINANCIAL STATEMENTS
September 30, 2024 and 2023
NOTE 10 — RELATED PARTY TRANSACTIONS (Continued)
Fixed Rate Secured Loan Note
On March 13, 2023, the Company issued a 10% fixed rate secured loan note (“the 2028 note”). The aggregate principal amount of the 2028 note is £1,081,000 (approximately $1,447,000 as of September 30, 2024). The maturity date of the 2028 note is December 16, 2028. There are six holders of the 2028 note, including three related parties: Piper Nominee IV Limited, Piper Investment IV Limited, and Dusan Adamovic, who each registered £910,678 (approximately $1,219,000 as of September 30, 2024), £89,322 (approximately $119,500 as of September 30, 2024), and £40,000 (approximately $53,500 as of September 30, 2024), respectively.
On March 19, 2024, the Company issued a 25% fixed rate secured note (“the 2025 note”). The aggregate principal amount of the 2025 note is £1,500,000 (approximately $2,007,000 as of September 30, 2024). The maturity date of the note is December 31, 2025. If the 2025 note is redeemed or repaid on a date that falls twelve months after their issue, then the Company shall pay the holder of the note redemption premium. The amount of redemption premium equal to the principal amount of the note being redeemed or repaid, and any paid-in-kind of note issued in respect of the payment of interest, and any accrued but unpaid interest up to the repayment date. There are no notes redeemed or repaid for the twelve months after the issue date, so the Company did not pay redemption premium as of March 19, 2025. Four shareholders registered the note, and two major noteholders are Piper Nominee IV Limited, and Piper Investment IV Limited, who registered £496,438 (approximately $664,000 as of September 30, 2024), and £53,562 (approximately $72,000 as of September 30, 2024), respectively.
The Company recorded the outstanding principal balance due to these noteholders as note payable – related parties, non-current, and recorded accrued interest payable in other payable–related parties, non-current. As of September 30, 2024 and 2023, the total outstanding balance of the note payable and accrued interest is $2,515,493 and $1,343,656, respectively.
Page 18
WATTBIKE (HOLDINGS) LIMITED
NOTES TO FINANCIAL STATEMENTS
September 30, 2024 and 2023
NOTE 10 — RELATED PARTY TRANSACTIONS (Continued)
The following table presents amounts due to related parties as of September 30, 2024 and 2023:
Page 19
WATTBIKE (HOLDINGS) LIMITED
NOTES TO FINANCIAL STATEMENTS
September 30, 2024 and 2023
NOTE 11 — SUBSEQUENT EVENTS
On April 8, 2025, Interactive Strength Inc. (the "purchaser") entered into an agreement for the sale and purchase of the entire issued share capital and loan notes of the Company (the “purchase agreement”) with the shareholders of Wattbike to the purchase agreement (the “shareholders”) and holders of certain promissory notes (the “notes’) issued by the Company (the “noteholders,” and together with the shareholders, the “sellers”) to acquire the entire issued share capital and notes of the Company (the “transaction”).
On July 1, 2025 (the “closing date”), the parties consummated the transaction. Pursuant to the terms of the purchase agreement, on the closing date, the purchaser acquired all of the issued and outstanding shares of Wattbike held by the shareholders in exchange for £1. In addition, the purchaser acquired the notes in exchange for paying the noteholders 1,300,000 shares of the purchaser’s series E Convertible Preferred Stock, par value $0.0001 per share. The noteholders will receive additional consideration subject to the satisfaction of applicable milestones.
Page 20
Exhibit 99.3
WATTBIKE (HOLDINGS) LIMITED
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE NINE-MONTHS ENDED JUNE 30, 2025 AND 2024 |
WATTBIKE (HOLDINGS) LIMITED
TABLE OF CONTENTS
Page
Independent Accountant's Review Report |
1-2 |
UNAUDITED Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets 3
Unaudited Condensed Consolidated Statements of Operations 4
Unaudited Condensed Consolidated Statements of Changes in
Stockholders’ Deficit 5
Unaudited Condensed Consolidated Statements of Cash Flows 6
Notes to the Unaudited Condensed Consolidated Financial Statements 7-14
|
INDEPENDENT ACCOUNTANT’S REVIEW REPORT
To the Board of Directors of Wattbike (Holdings) Limited
We have reviewed the accompanying condensed consolidated financial statements of Wattbike (Holdings) Limited and subsidiaries (the “Company) (an England and Wales private limited company), which comprise the condensed consolidated balance sheets as of June 30, 2025 and 2024, and the condensed consolidated related statements of operations, stockholders’ deficit and cash flows for the nine-month periods then ended, and the related notes to the condensed consolidated financial statements (collectively, the “financial statements”). A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has negative equity, negative cash flows from operations, and has suffered recurring operating losses which raise substantial doubt about its ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding those matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our conclusion is not modified with respect to that matter.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error.
Accountant’s Responsibility
Our responsibility is to conduct the review engagements in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion.
We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our reviews.
Page 1
Accountant’s Conclusion
Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America.
New York, New York
September 17, 2025
Page 2
UNAUDITED CONDENSED CONSOLIDATED Financial Statements
WATTBIKE (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
See notes to condensed consolidated financial statements.
Page 3
WATTBIKE (HOLDINGS) LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
See notes to condensed consolidated financial statements.
Page 4
WATTBIKE (HOLDINGS) LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
See notes to condensed consolidated financial statements.
Page 5
WATTBIKE (HOLDINGS) LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
See notes to condensed consolidated financial statements.
Page 6
WATTBIKE (HOLDINGS) LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — NATURE OF BUSINESS AND OPERATING ENVIRONMENT
Wattbike (Holdings) Limited (“Wattbike” or “Holdings” or “the Company”) is a private limited company incorporated in England and Wales and was formed in 2010. The Company designs, manufactures, and sells indoor training bikes. The Company sells its products globally, particularly in Europe, Asia, Australia, and the United States.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements (the “financial statements”) include the accounts of Holdings and its wholly-owned subsidiaries Wattbike Limited, Wattbike IP Limited, and Wattbike Inc. All significant intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
These financial statements have been prepared pursuant to US GAAP for interim reporting. Certain information and disclosures normally included in financial statements and notes prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules. These interim financial statements should be read in conjunction with the financial statements and notes included in the Company’s annual financial statements for the year ended September 30, 2024.
Liquidity and Going Concern
The financial statements have been prepared assuming that the Company will continue as a going concern. As of and for the nine-months ended June 30, 2025 and 2024, the Company had net losses, negative stockholders’ deficit, and negative cash flows from operations. These issues raise substantial doubt about the Company’s ability to continue as a going concern for twelve months from the date of these financial statements.
Functional Currency
These financial statements are presented in U.S. dollars. The functional currency of the Company is Pound Sterling and is translated to U.S. dollars for reporting purposes. Assets and liabilities are translated to U.S. dollars at period-end exchange rates. Exchange rates as of June 30, 2025 and September 30, 2024 were 1.3706 and 1.3401, respectively. Income and expense items are translated at average rates of exchange prevailing during the period. Average rates for the nine months ended June 30, 2025 and 2024 were 1.2918 and 1.2572, respectively. Translation adjustments are included in Accumulated Other Comprehensive Loss in the unaudited condensed consolidated balance sheets.
Page 7
WATTBIKE (HOLDINGS) LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable and Allowance for Credit Losses
Accounts receivable is carried net of allowance for credit losses. The allowance for credit losses is increased by provisions charged to expense and reduced by accounts charged off, net of recoveries. Receivables are written off when management determines their collection is unlikely. The allowance is maintained at a level considered adequate to provide for potential account losses based on management’s evaluation of the anticipated impact on the balance of current economic conditions, changes in character and size of balance, past and expected future loss experience, reasonable and supportable forecasts and other pertinent factors. As of June 30, 2025 and September 30, 2024, the allowance for credit losses was $89,348 and $82,668, respectively.
Inventory
Inventory, which consists of training bikes, accessories and parts, is stated at the lower of cost (first in, first out) or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably estimated costs to complete the sale. All inventory is purchased and sold as finished goods. The Company monitors its inventory to identify excess or obsolete items on hand. The Company reviews inventory quantities on-hand and records a provision for excess and obsolete inventory based primarily on selling prices, indications from customers based upon current price negotiations and purchase orders. In addition, and as necessary, specific reserves for future known or anticipated events may be established. As of June 30, 2025 and September 30, 2024, the allowance for obsolete and slow-moving inventory was $346,208 and $399,158, respectively.
Concentrations of Credit Risk
The Company relies on one supplier for all training bike inventory purchases. As of June 30, 2025 and September 30, 2024, this supplier represented 63% and 41% of the Company’s accounts payable, respectively. The supplier concentration creates risks to the Company’s business operations and financial condition. Any disruption in the supplier’s ability to deliver inventory, whether due to operational challenges, financial difficulties, supply chain interruptions, natural disasters, geopolitical issues, or other unforeseen events, could materially impair its ability to meet customer demand. Additionally, any significant change in the relationship with this supplier, including termination of the supply agreement or unfavorable changes in pricing or terms, could adversely affect the Company’s operations, cash flows, and financial performance. The lack of diversified suppliers heightens these risks, and there can be no assurance that the Company will be able to mitigate them effectively.
Property and Equipment
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment is recognized to the extent that the sum of undiscounted estimated cashflows expected to result from the use of the assets, less the carrying value. If impairment is recognized, the carrying value of the impaired asset is reduced to carrying value. As of June 30, 2025 and 2024, there were no impairment losses recognized for long-lived assets.
Page 8
WATTBIKE (HOLDINGS) LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the unaudited condensed consolidated financial statement equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. The Company has elected to record income tax related interest and penalties as a component of the provision for income tax expense. As of June 30, 2025 and September 30, 2024 the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
Defined Contribution Pension
The Company contributes up to 5% of an employee’s salary into personal pension funds held by individual employees under the laws of the United Kingdom. These personal pension funds are the responsibility of the individual employees. The Company contributed $87,315 and $87,797 to personal pension funds for the nine-months ended June 30, 2025 and 2024, respectively.
Subsequent Events
For purposes of preparing these financial statements the Company considered events September 17, 2025, the date these financial statements were available for issuance. See Note 8. - Subsequent Events.
NOTE 3 — PROPERTY AND EQUIPMENT
Property and equipment, together with their estimated useful lives, consists of the following:
Depreciation and amortization expense was $146,230 and $171,111 for the nine-months ended June 30, 2025 and 2024, respectively.
Page 9
WATTBIKE (HOLDINGS) LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 — SHORT-TERM DEBT
On October 11, 2023, the Company signed a working capital facility (“the facility”) with a lender to obtain a revolving working capital loan facility of up to £3,400,000 (approximately $4,660,000 as of June 30, 2025). The maturity date of the facility was twelve calendar months from the date of the agreement. The interest of the of the facility is 11% above the Bank of England Base Rate. Before the original maturity date, both parties extended the maturity date to March 31, 2025, and then monthly for three months to June 30, 2025. As of June 30, 2025, the Company’s outstanding balance of the facility is $2,074,547, and accrued interest payable is $181,303. On July 1, 2025, the Company extended the facility to June 30, 2026, and the amount available under the facility was reduced to £2,000,000 (approximately $2,741,000 as of June 30, 2025). For the nine-months ended June 30, 2025, the Company made interest payments about $658,875, and for the nine-months ended June 30, 2024, all interest was paid-in-kind.
NOTE 5 — LEASES
The Company leases warehouse and office facilities under two operating lease agreements, expiring on December 4, 2025 and September 3, 2028. The Company's lease terms include options to renew the lease when it is reasonably certain that it will exercise the option.
The weighted average discount rates of the operating leases as of June 30, 2025 were 2.86%. The weighted average remaining lease terms of the operating leases as of June 30, 2025 were 2.83 years.
The components of lease costs for the nine-month ended June 30, 2025 and 2024 are as follows:
Minimum future lease payments under non-cancellable operating leases, net of amortized tenant improvement allowance payments are as follows:
NOTE 6 — COMMITMENTS AND CONTINGENCIES
Litigation
The Company is periodically involved in various litigation matters arising in the normal course of business. Management does not expect that the outcome of such issues will have a material adverse effect on its financial position or results of operations.
Page 10
WATTBIKE (HOLDINGS) LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 — RELATED PARTY TRANSACTIONS
The Company is controlled by its board of directors alongside Piper PE LLP by virtue of funds under their management together holding a majority of the issued common stock of the Company. The Company raised operational funds by issuing loan notes to shareholders.
Stepped Rate Secured Loan Note
On December 16, 2020, the Company issued a stepped rate secured loan notes (“the secured note”). The aggregate principal amount of the secured loan note is £8,000,000 (approximately $10,965,000 as of June 30, 2025). The maturity date of the note is December 16, 2028. The interest rates are structured as 10% per annum for the first six years from the note issue date, 15% per annum from year six to year seven, and 20% per annum thereafter to the maturity date.
On December 16, 2020, the noteholder Piper Nominee IV Limited as Nominee for Piper Private Equity Fund VI LP registered approximately £5,093,000 (approximately $6,980,000 as of June 30, 2025) of the secured note, the noteholder Piper Investment IV Limited registered about £499,500 (approximately $685,000 as of June 30, 2025) of the secured note, and the former non-executive chairman registered approximately £40,000 (approximately $54,000 as of June 30, 2025) of the secured note. On March 20, 2023, the noteholder former non-executive chairman transferred all his loan note to Piper Nominee IV Limited. After the transfer, the noteholder Piper Nominee IV Limited hold approximately £5,133,000 (approximately $7,035,000 as of June 30, 2025) of the secured note. The two noteholders are Company shareholders, accordingly, the Company recorded the outstanding balance due to these noteholders as note payable – related parties, non-current, and recorded the interest payable in other payable–related parties, non-current. As of June 30, 2025 and September 30, 2024, the total outstanding balance of the note payable and accrued interest is $12,025,101 and $10,987,441, respectively.
Stepped Rate Convertible Loan Note
On September 29, 2022, the Company issued a stepped rate secured convertible loan note (“the convertible note”). The aggregate principal amount of the convertible note is £1,000,000 (approximately $1,370,000 as of June 30, 2025), and the initial interest rate of the convertible note is 15% per annum. The Company has reserved 847,458 A ordinary shares for the convertible note. On March 30, 2023, all noteholders converted the existing convertible note with an outstanding principal amount and accrued interest amount of £1,090,010 (approximately $1,494,000 as of June 30, 2025) to a secured note with a 25% of annual interest rate, which matures on December 16, 2028.
Since all of the noteholders are also shareholders, the Company recorded the outstanding balance due to these noteholders as note payable – related parties, non-current, and recorded accrued interest payable in other payable–related parties, non-current. As of June 30, 2025 and September 30, 2024, the total outstanding balance of the convertible note and accrued interest is $2,482,892 and $2,039,091, respectively.
Page 11
WATTBIKE (HOLDINGS) LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 — RELATED PARTY TRANSACTIONS (Continued)
Fixed Rate Secured Loan Note
On March 13, 2023, the Company issued a 10% fixed rate secured loan note (“the 2028 note”). The aggregate principal amount of the 2028 note is £1,081,000 (approximately $1,481,000 as of June 30, 2025). The maturity date of the 2028 note is December 16, 2028. There are six holders of the 2028 note, including three related parties: Piper Nominee IV Limited, Piper Investment IV Limited, and Dusan Adamovic, who each registered £910,678 (approximately $1,248,000 as of June 30, 2025), £89,322 (approximately $122,000 as of June 30, 2025), and £40,000 (approximately $55,000 as of June 30, 2025), respectively.
On March 19, 2024, the Company issued a 25% fixed rate secured note (“the 2025 note”). The aggregate principal amount of the 2025 note is £1,500,000(approximately $2,055,000 as of June 30, 2025). The maturity date of the note is December 31, 2025. If the 2025 note is redeemed or repaid on a date that falls twelve months after their issue, then the Company shall pay the holder of the note redemption premium. The amount of redemption premium equal to the principal amount of the note being redeemed or repaid, and any paid-in-kind of note issued in respect of the payment of interest, and any accrued but unpaid interest up to the repayment date. There are no notes redeemed or repaid for the twelve months after the issue date, so the Company did not pay redemption premium as of March 19, 2025. Four shareholders registered the note, and two major noteholders are Piper Nominee IV Limited, and Piper Investment IV Limited, who registered £496,438 (approximately $680,000 as of June 30, 2025), and £53,562 (approximately $73,000 as of June 30, 2025),respectively.
The Company recorded the outstanding principal balance due to these noteholders as note payable – related parties, non-current, and recorded accrued interest payable in other payable–related parties, non-current. As of June 30, 2025 and September 30, 2024, the total outstanding balance of the notes and accrued interest is $2,929,692 and $2,515,493, respectively.
Page 12
WATTBIKE (HOLDINGS) LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 — RELATED PARTY TRANSACTIONS (Continued)
The following table presents amounts due to related parties as of June 30, 2025 and September 30, 2024:
Page 13
WATTBIKE (HOLDINGS) LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 — SUBSEQUENT EVENTS
On April 8, 2025, Interactive Strength Inc. (the "purchaser") entered into an agreement for the sale and purchase of the entire issued share capital and loan notes of the Company (the “purchase agreement”) with the shareholders of Wattbike to the purchase agreement (the “shareholders”) and holders of certain promissory notes (the “notes’) issued by the Company (the “noteholders,” and together with the shareholders, the “sellers”) to acquire the entire issued share capital and notes of the Company (the “transaction”).
On July 1, 2025 (the “closing date”), the parties consummated the transaction. Pursuant to the terms of the purchase agreement, on the closing date, the purchaser acquired all of the issued and outstanding shares of Wattbike held by the shareholders in exchange for £1. In addition, the purchaser acquired the notes in exchange for paying the noteholders 1,300,000 shares of the purchaser’s series E Convertible Preferred Stock, par value $0.0001 per share. The noteholders will receive additional consideration subject to the satisfaction of applicable milestones.
Page 14