Fair Value Measurements

6 Months Ended

Jun. 30, 2025

Fair Value Disclosures [Abstract]

Fair Value Measurements

13. Fair Value Measurements

The Company’s financial instruments consist of derivatives, convertible notes held at fair value, and warrants.

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024 were as follows:

	June 30, 2025						December 31, 2024
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
	(in thousands)						(in thousands)
Assets
Cash and cash equivalents	$	582	$	—	$	—	$	138	$	—	$	—
Restricted cash		2,250		—		—		—		—		—
Derivatives		—		—		98		—		—		—
Digital assets		45,125		—		—		—		—		—
Total	$	47,957	$	—	$	98	$	138	$	—	$	—
Liabilities
Derivatives	$	—	$	—	$	383	$	—	$	—	$	73
Convertible Notes		—		—		44,339		—		—		2,557
Warrants		—		—		590		—		—		4
Total	$	—	$	—	$	45,312	$	—	$	—	$	2,634

During the six months ended June 30, 2025, there were no transfers between Level 1 and Level 2, nor into and out of Level 3. The carrying values of the Company’s prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

Restricted Cash

Pursuant to the Purchase Agreement, the Company will use 94.5% (approximately $47.3 million) of the proceeds from the Initial Note sale, less a 10% original issue discount to purchase FET for the benefit of Interactive Strength Treasury LLC, a Company subsidiary. As of June 30, 2025, restricted cash in the amount of $2.25 million which must be used to purchase FET in the future remained with the Custodian acting as an agent to purchase FET on behalf of the Company.

Digital assets

In June 2025, the Company invested in digital assets to diversify its treasury investment strategy. Under ASC 350-60, the Company’s digital assets are measured at fair value based on quoted prices on active exchanges, and are therefore categorized as Level 1 investments in the fair value hierarchy. The Company recognizes changes in the fair value of its digital assets as gains or losses in Change in fair value of digital assets on the Company's condensed consolidated statements of operations during the period in which they occur. For the three and six months ended June 30, 2025, the Company recognized a $0.1 million gain related to the change in fair value in its digital assets holding recognized as a Change in fair value of digital assets in its condensed consolidated statements of operations.

The following summarizes the activity for the Company Level 3 assets and liabilities measured at fair value on a recurring basis for the six months ended June 30, 2025.

Derivatives

	Loss Restoration			Jan 2025			Mar 2025			Total			Total
(in thousands)	Derivative			Derivative			Derivative			Derivative Liabilities			Derivative Assets
Fair value at December 31, 2024	$	73		$	—		$	—		$	73		$	—
Issuance of derivatives		—			963			1,141			2,104			—
Derivative settlement		(2,800	)		—			—			(2,800	)		—
Change in estimated fair value of derivatives		2,727			(741	)		(404	)		1,582			95
Fair value at March 31, 2025	$	—		$	222		$	737		$	959		$	95
Issuance of derivatives		—			—			—			—			—
Derivative settlement		(1,041	)		—			—			(1,041	)		—
Change in estimated fair value of derivatives		1,041			120			(696	)		465			3
Fair value at June 30, 2025	$	—		$	342		$	41		$	383		$	98

The Company recorded the derivatives as a derivative asset or liability in the Company’s condensed consolidated balance sheet in accordance with FASB ASC 815, Derivatives and Hedging. For the outstanding derivatives as June 30, 2025 and December 31, 2024, the fair value of the derivatives were determined using a Monte Carlo simulation. The Monte Carlo Simulation valuation model incorporates assumptions as to stock price volatility, discount rate, dividend rate and risk-free interest rate.

The following table outlines the key inputs for the Monte Carlo Simulation models:

	June 30,	December 31,
	2025	2024
Weighted-average risk-free interest rate	3.7% - 4.3%		4.2	%
Weighted-average expected term (in years)	0.50 - 2.70		1.00
Weighted-average expected volatility	95.0% - 150.0%		111.7	%
Expected dividend yield	0.0% - 15.0%	0.0% - 15.0%

Convertible Notes

February 2024 Convertible Notes

The Company entered into a convertible note arrangement in February 2024. The amendment to the Note represents the addition of a substantive conversion feature and as a result the Company recorded a loss on extinguishment upon issuance and the remaining unamortized discount was written off upon extinguishment. The Company elected the fair value option for the February 2024 Convertible Notes under ASC 825, Financial Instruments, with changes in fair value recorded in earnings each reporting period. The fair value of the February 2024 Convertible Notes were determined using a discounted cash flow analysis at a discount rate of 16.3%.

	February 2024
(in thousands)	Convertible Notes
Fair value at December 31, 2024	$	2,557
Cash paid for interest		(88	)
Conversion to common stock		(1,212	)
Change in estimated fair value of convertible notes		284
Fair value at March 31, 2025	$	1,541
Change in estimated fair value of convertible notes		118
Fair value at June 30, 2025	$	1,659

January 2025 Exchange Notes

On February 4, 2025, the Company and the Exchange Agreement Investor entered into an Exchange Agreement (the “Exchange Agreement”), pursuant to which the Company and the Exchange Agreement Investor exchanged the Former Principal Stockholder Notes for five new secured promissory notes of the Company secured by the Company’s assets (the “January 2025 Exchange Notes”). The amendment to the Note represents the addition of a substantive conversion feature and as a result the Company recorded a gain on extinguishment included in condensed consolidated statement of stockholders' equity. The Company elected the fair value option for the January 2025 Exchange Notes under ASC 825, Financial Instruments, with changes in fair value recorded in earnings each reporting period. The fair value of the January 2025 Exchange Notes were determined using a discounted cash flow analysis at a discount rate of 16.3%. The January 2025 Exchange Notes, in the aggregate principal amount of $5.4 million were fully converted into 264,288 shares of Common Stock in February 2025.

	January 2025
(in thousands)	Exchange Notes
Carrying amount at February 4, 2025	$	5,380
Conversion to common stock		(5,391	)
Gain on extinguishment of debt with related party		(279	)
Change in estimated fair value of convertible notes		290
Fair value at March 31, 2025	$	—
Change in estimated fair value of convertible notes		—
Fair value at June 30, 2025	$	—

June 2025 Convertible Exchangeable Notes

The Company entered into senior secured convertible notes in June 2025. The Company elected the fair value option for the June 2025 Convertible Exchangeable Notes under ASC 825, Financial Instruments, with changes in fair value recorded in earnings each reporting period. The fair value of the June 2025 Convertible Exchangeable Notes were determined using a discounted cash flow analysis at a discount rate of 3.82%.

	June 2025
	Convertible
(in thousands)	Exchangeable Notes
Fair value at June 13, 2025	$	50,000
Change in estimated fair value of convertible notes		(7,320	)
Fair value at June 30, 2025	$	42,680

Warrants

(in thousands)	2023 Common Warrants (1)		2024 Common Warrants (2)			2025 Common Warrants (3)			2025 Incremental Warrants (4)		Total Warrants
Fair value at December 31, 2024	$	—	$	4		$	—		$	—	$	4
Issuance of warrants		—		—			1,212			—		1,212
Change in estimated fair value of warrants		—		(4	)		(445	)		—		(449	)
Fair value at March 31, 2025	$	—	$	—		$	767		$	—	$	767
Issuance of warrants		—		—			367			—		367
Change in estimated fair value of warrants		—		—			(544	)		—		(544	)
Fair value at June 30, 2025	$	—	$	—		$	590		$	—	$	590

(1) Includes November 2023 Warrants. The fair value of the warrants were determined using a Monte Carlo Simulation.

(2) Includes February 2024 Warrants, Woodway February 2024 Warrants, Registered Direct Placement Agent Warrants, Registered Direct Offering Warrants, Best Efforts Offering A-1 Warrants, Best Efforts Offering A-2 Warrants, Best Efforts Placement Agent Warrants. The fair value of the warrants were determined using a Black-Scholes-Merton model.

(3) Includes January 2025 Warrants, March 2025 Warrants, Woodway May 2025 Warrants. The fair value of the warrants were determined using a Black-Scholes-Merton model.

(4) Includes January 2025 Class A Incremental Warrants and January 2025 Class B Incremental Warrants. The fair value of the warrants were determined using a Monte Carlo Simulation.

For the outstanding warrants as June 30, 2025 and December 31, 2024, the Company determined the fair value of the warrants using the following significant unobservable inputs: (1) probability and timing of events, (2) expected future equity value of the underlying shares at the time of conversion, (3) dividend yield and (4) a risk free rate.

The following table outlines the key inputs for the Black-Scholes option-pricing models:

	June 30,			December 31,
	2025			2024
Weighted-average risk-free interest rate	3.8% - 4.3%			4.2% - 4.6%
Weighted-average expected term (in years)	0.52 - 10.03			1.02 - 9.27
Weighted-average expected volatility	100.0% - 150.0%			66.6% - 116.7%
Expected dividend yield		—	%		—	%

The following table outlines the key inputs for the Monte Carlo Simulation models:

	June 30,			December 31,
	2025			2024
Weighted-average risk-free interest rate	3.7% - 3.8%				4.4	%
Weighted-average expected term (in years)	2.57 - 3.91				4.42
Weighted-average expected volatility	95.0% - 100.0%				81.2	%
Expected dividend yield		—	%		—	%

The following summarizes the activity for the Company Level 3 assets and liabilities measured at fair value on a recurring basis for the three and six months ended June 30, 2024.

Derivatives

	December 2023			Loss Restoration Agreement
(in thousands)	Derivatives			Derivatives		Total
Fair value at December 31, 2023	$	122		$	—	$	122
Issuance of derivatives		—			—		—
Change in estimated fair value of derivatives		(54	)		—		(54	)
Fair value at March 31, 2024	$	68		$	—	$	68
Issuance of derivatives		—			61		61
Change in estimated fair value of derivatives		(68	)		877		809
Fair value at June 30, 2024	$	—		$	938	$	938

December 2023 Derivative

In connection with the Company’s issuance of its December 2023 Note, the Company bifurcated the embedded conversion option and redemption rights and recorded embedded conversion option and redemption rights as a short term derivative liability in the Company’s condensed consolidated balance sheet in accordance with FASB ASC 815, Derivatives and Hedging. The fair value of the embedded derivative was determined using a lattice model.

Loss Restoration Derivative

In connection with the Company entering into the Loss Restoration Agreement in April 2024, the Company recorded the Loss Restoration Derivative as a short term derivative liability in the Company’s condensed consolidated balance sheet in accordance with FASB ASC 815, Derivatives and Hedging. The fair value of the Loss Restoration Derivative was determined using a Monte Carlo model.

Accrued Earn Out

As part of the Acquisition of CLMBR, Inc. the Sellers shall be entitled to receive a contingent payment in the form of shares of the Company’s common stock (collectively, the “Earn-Out Shares”) calculated in the manner set forth in the Asset Purchase Agreement based on the 2024 Unit Sales (as defined in the Asset Purchase Agreement) and the volume-weighted average price (“VWAP”) for the Company’s common stock based on the 10 consecutive trading days ending on (and including) December 31, 2024, subject to the VWAP Collar. In addition, in the event the 2024 Unit Sales include at least 2,400 Units sold in the business-to-business channel, the Sellers shall be entitled to an additional number of Earn-Out Shares calculated in the manner set forth in the Asset Purchase Agreement subject to total maximum number of 567 Earn-Out Shares. The Company assessed the fair value as of June 30, 2024 and it was determined based on current sales that achieving the projection was deemed remote and as a result the Company marked the contingent liability to $0. The Company recognized a gain equal to $1.3 million for the three and six months ended June 30, 2024 related to change in fair value of the earn out recorded in the condensed consolidated statements of operations in other expense (income).

November 2023 Bridge Notes

On November 10, 2023, the Company issued the November Bridge Notes. The fair value of the bridge notes was determined using a discounted cash flow analysis at a discount rate of 21.0%. The fair value of the bridge notes of $1.7 million was recorded as a current liability upon issuance. The Company amended the Bridge notes into convertible notes in January 2024 and subsequently converted the notes into Preferred Stock Series A in February 2024 and March 2024.

(in thousands)	Bridge Notes
Fair value at December 31, 2023	$	1,717
Loss on extinguishment of debt upon conversion to convertible notes		275
Change in estimated fair value of financial instruments		316
Conversion to Series A Preferred Stock		(2,308	)
Fair value at March 31, 2024	$	—
Change in estimated fair value of financial instruments		—
Fair value at June 30, 2024	$	—

Warrants

	November 2023			December 2023			February 2024			February 2024 Woodway			Registered Direct			Placement Agent			Total
(in thousands)	Warrants			Warrants			Warrants			Warrants			Warrants			Warrants			Warrants
Fair value at December 31, 2023	$	165		$	426		$	—		$	—		$	—		$	—		$	591
Issuance of warrants		—			—			1,800			345			—			—			2,145
Change in estimated fair value of financial instruments		(124	)		(179	)		(1,245	)		(251	)		—			—			(1,799	)
Fair value at March 31, 2024	$	41		$	247		$	555		$	94		$	—		$	—		$	937
Issuance of warrants		—			—			—			—			721			50			771
Change in estimated fair value of warrants		(39	)		(125	)		(504	)		(89	)		(646	)		(45	)		(1,448	)
Loss on cancelation of warrants		—			358			—			—			—			—			358
Conversion to Series A Preferred Stock		—			(480	)		—			—			—			—			(480	)
Fair value at June 30, 2024	$	2		$	—		$	51		$	5		$	75		$	5		$	138