On October 6, 2023, the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) with CLMBR and CLMBR1, LLC (collectively, the “Sellers”) to purchase and acquire substantially all of the assets and assume certain liabilities of the Sellers. On January 22, 2024, the Company and the Sellers entered into an amended and restated Asset Purchase Agreement (the “Amended Agreement”). On February 2, 2024, pursuant to the Amended Agreement, the Company completed the acquisition for a total purchase price of approximately $16.1 million, consisting of (i) cash of $30,000, (ii) 36 shares of the Company’s common stock with an aggregate fair value of $1.0 million, (iii) 1,500,000 shares of the Company’s non-voting Series B preferred stock with an aggregate fair value of $3.0 million, (iv) contingent consideration with a fair value of $1.3 million (as further described below), and (v) the retirement of $9.4 million of senior debt and $1.4 million in related fees, such retirement to be in the form of a $1.4 million cash payment

to the lender of the senior debt and the issuance of an $8.0 million promissory note to such lender (the “Acquisition”).

The CLMBR, acquisition was a strategic acquisition that helped accelerate the Company’s commercialization path and help achieve immediate scale, resulting in a high growth, profitable platform that sells connected fitness equipment and digital fitness services across B2B and B2C channels.

The CLMBR acquisition was accounted for as a purchase business combination in accordance with ASC 805 “Business Combinations.” Assets acquired and liabilities assumed were recorded in the condensed consolidated balance sheet at their estimated fair values as of February 2, 2024, with the remaining unallocated purchase price recorded as goodwill.


(in thousands)	Preliminary Purchase Price Allocation as of February 2, 2024 (a)			Measurement Period Adjustments (b)			Purchase Price Allocation as of February 2, 2024 (a) (as adjusted)
Cash	$	50		$	—		$	50
Accounts receivable, net of allowances		134			(8	)		126
Inventories, net		3,490			70			3,560
Vendor deposits		61			—			61
Prepaid expenses and other current assets		63			—			63
Property and equipment, net		139			—			139
Right-of-use-assets		412			—			412
Other assets		30			200			230
Goodwill		13,165			55			13,220
Intangible assets, net		6,900			(700	)		6,200
Total assets acquired	$	24,444		$	(383	)	$	24,061
Accounts payable		(3,557	)		326			(3,231	)
Accrued expenses and other current liabilities		(2,438	)		163			(2,275	)
Operating lease liability, current portion		(263	)		—			(263	)
Deferred revenue		(261	)		160			(101	)
Loan payable		(1,887	)		—			(1,887	)
Operating lease liability, net of current portion		(179	)		—			(179	)
Net assets acquired	$	15,859		$	266		$	16,125

(a) As previously reported in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2024.

(b) The adjustments to goodwill resulted from finalization of assets acquired and liabilities assumed as the Company obtained additional information during the measurement period. The purchase price allocation period closed as of December 31, 2024.

The Company recorded a step-up in the fair value of inventory of approximately $0.6 million and is being amortized through Cost of Fitness product as the underlying product is sold.

The identified intangible assets of $6.2 million are comprised of hardware developed technology of $1.1 million that have an estimated useful life of 7 years, software developed technology of $0.3 million that have an estimated useful life of 4 years, hardware distribution of $3.7 million that have an estimated useful life of 13 years, direct-to-customer subscription of $0.3 million that have an estimated useful live of 9 years, and trademarks and trade name of $0.8 million that have an estimated useful life of 9 years. Significant assumptions utilized in the valuation of identified intangible assets were based on company specific information and projections which are not observable in the market and are thus considered Level 3 measurements as defined by U.S. GAAP. Estimated annual amortization expense for each of the next five fiscal years is included in Note 7.

As part of the Acquisition of CLMBR, Inc., the Sellers shall be entitled to receive a contingent payment in the form of shares of 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, there were 2 contingent payments (1) based on total CLMBR sales in 2024 (5,000 units sold in 2024) and (2) based on CLMBR sales through B2B channel in 2024 (2,400 in B2B channel in 2024). Contingent payment (1) was determined at inception to be remote and therefore, $0 was recognized for the earn out as of the acquisition date. Contingent payment (2) was probable and a contingent liability of $1.3 million was recorded based on 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 and likelihood of contingent payment (2) was deemed remote and as a result the Company marked the contingent liability to $0 in 2024. 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).

The following unaudited pro forma summary presents condensed consolidated information of the Company, including CLMBR as if the. acquisition had occurred as of January 1, 2024, the earliest year presented herein:


	Proforma
	Three Months Ended June 30,			Six Months Ended June 30,
	2024			2024
	(in thousands)
Revenue	$	621		$	1,094
Operating Loss		(7,882	)		(17,514	)
Net Loss		(10,637	)		(22,245	)
Net loss per share – basic and diluted	$	(17,476.24	)	$	(43,305.68	)
Weighted average common stock outstanding – basic and diluted		609			514

The unaudited pro forma consolidated results for the three and six months ended June 30, 2024 were prepared using the acquisition method of accounting and are based on the historical financial information of CLMBR, Inc. and the Company. The unaudited pro forma consolidated results incorporate historical financial information for all significant acquisitions pursuant to SEC regulations since January 1, 2024. The historical financial information has been adjusted to give effect to pro forma adjustments that are: (i) directly attributable to the acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results. The unaudited pro forma consolidated results are not necessarily indicative of what the Company’s consolidated results of operations actually would have been had it completed these acquisitions on January 1, 2024. The following unaudited condensed consolidated results of operations included in the condensed consolidated statements of loss for the three and six months ended June 30, 2024.