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Interactive Strength (TRNR) - 2024 Q3 - Quarterly Report
TRNRInteractive Strength (TRNR)2024-11-14 22:20

Revenue Growth - Total revenue for Q3 2024 was 2,014,000,asignificantincreasefrom2,014,000, a significant increase from 306,000 in Q3 2023, representing a growth of 558%[4] - Fitness product revenue reached 1,617,000inQ32024,comparedto1,617,000 in Q3 2024, compared to 206,000 in Q3 2023, marking a growth of 684%[4] - Membership revenue increased to 224,000inQ32024from224,000 in Q3 2024 from 38,000 in Q3 2023, reflecting a growth of 489%[4] - Revenue for the three months ended September 30, 2024, was 2,014,000,comparedto2,014,000, compared to 652,000 for the same period in 2023, representing a significant increase of 208%[176] Net Loss and Financial Performance - The company reported a net loss of 7,141,000forQ32024,animprovementfromanetlossof7,141,000 for Q3 2024, an improvement from a net loss of 10,408,000 in Q3 2023, indicating a reduction of 31%[5] - The net loss for the three months ended September 30, 2024, was (7,141,000),animprovementfrom(7,141,000), an improvement from (11,918,000) in the same period last year, indicating a reduction in losses by approximately 40%[176] - The company reported an operating loss of (7,754,000)forthethreemonthsendedSeptember30,2024,comparedto(7,754,000) for the three months ended September 30, 2024, compared to (11,203,000) for the same period in 2023, reflecting a 30% decrease in operating losses[176] - The company reported a net loss of 29,172,000fortheninemonthsendedSeptember30,2024,comparedtoanetlossof29,172,000 for the nine months ended September 30, 2024, compared to a net loss of 39,971,000 for the same period in 2023, representing a 27% improvement[9] Assets and Liabilities - Total assets as of September 30, 2024, were 37,753,000,upfrom37,753,000, up from 16,802,000 as of December 31, 2023, representing a growth of 125%[2] - Total liabilities increased to 31,961,000asofSeptember30,2024,comparedto31,961,000 as of September 30, 2024, compared to 22,354,000 as of December 31, 2023, an increase of 43%[2] - The company’s accumulated deficit increased to 196,621,000asofSeptember30,2024,from196,621,000 as of September 30, 2024, from 166,911,000 as of December 31, 2023[3] - Total current assets increased to 10,240,000asofSeptember30,2024,upfrom10,240,000 as of September 30, 2024, up from 5,356,000 as of December 31, 2023, marking an increase of 91%[2] Stockholder Equity and Compliance - The company’s total stockholders' equity improved to 5,792,000asofSeptember30,2024,fromadeficitof5,792,000 as of September 30, 2024, from a deficit of 5,552,000 as of December 31, 2023[3] - The Company received a deficiency letter from Nasdaq on August 20, 2024, regarding the closing bid price of its common stock being below the minimum 1.00persharerequirement[16]−TheCompanyhasuntilNovember14,2024,todemonstratecompliancewithNasdaq′sstockholders′equityrequirementfollowingitsdebtconversionandacquisition[16]−TheCompany′sstockholders′equityasofSeptember30,2024,wasapproximately1.00 per share requirement[16] - The Company has until November 14, 2024, to demonstrate compliance with Nasdaq's stockholders' equity requirement following its debt conversion and acquisition[16] - The Company's stockholders' equity as of September 30, 2024, was approximately 5.8 million, exceeding the minimum requirement by over 3million[16]ResearchandDevelopment−ResearchanddevelopmentexpensesforQ32024were3 million[16] Research and Development - Research and development expenses for Q3 2024 were 2,212,000, slightly down from 2,357,000inQ32023[4]−Thecompanyrecordedtotalresearchanddevelopmentexpensesof2,357,000 in Q3 2023[4] - The company recorded total research and development expenses of 1,206,000 for the three months ended September 30, 2024, down from 1,347,000inthesameperiodof2023[148]Stock−BasedCompensation−Stock−basedcompensationforthequarterwas1,347,000 in the same period of 2023[148] Stock-Based Compensation - Stock-based compensation for the quarter was 4.951 million, indicating a significant investment in employee incentives[7] - Stock-based compensation decreased to 9,448,000fortheninemonthsendedSeptember30,2024,downfrom9,448,000 for the nine months ended September 30, 2024, down from 23,773,000 in the same period of 2023, indicating a reduction of approximately 60%[9] - The company recognized stock compensation expense of 3.2millionforthethreemonthsendedSeptember30,2024,comparedto3.2 million for the three months ended September 30, 2024, compared to 9.6 million for the same period in 2023[153] Acquisition and Related Costs - The Company completed the acquisition of CLMBR, Inc. for a total purchase price of approximately 16.1million,whichincluded16.1 million, which included 30,000 in cash and the issuance of 1,428,922 shares of common stock valued at 1.0million[13]−Thecompanyrecordedacquisition−relatedcostsof1.0 million[13] - The company recorded acquisition-related costs of 0.9 million and 1.4millionforthethreeandninemonthsendedSeptember30,2024,respectively[173]−Acontingentliabilityof1.4 million for the three and nine months ended September 30, 2024, respectively[173] - A contingent liability of 1.3 million was recorded related to earn-out shares based on CLMBR sales through the B2B channel, but was later marked to 0duetotheremotelikelihoodofachievingthesalestarget[175]CashFlowandLiquidity−Cashandrestrictedcashattheendoftheperiodwas0 due to the remote likelihood of achieving the sales target[175] Cash Flow and Liquidity - Cash and restricted cash at the end of the period was 2,269,000, a significant increase from 30,000attheendofthepreviousperiod[9]−Thecompanyexperiencedanetcashusedinoperatingactivitiesof30,000 at the end of the previous period[9] - The company experienced a net cash used in operating activities of 8,909,000 for the nine months ended September 30, 2024, compared to 13,561,000intheprioryear,reflectingimprovedcashflowmanagement[9]−Thecompanyraised13,561,000 in the prior year, reflecting improved cash flow management[9] - The company raised 4,510,000 from the issuance of common stock and pre-funded warrants during the financing activities, down from 10,820,000inthepriorperiod[9]ForeignCurrencyImpact−Thecompanyreportedaforeigncurrencytranslationlossof10,820,000 in the prior period[9] Foreign Currency Impact - The company reported a foreign currency translation loss of (136) thousand for the quarter ending June 30, 2023[7] - The company reported a foreign currency translation gain of 172thousandforthequarterendingSeptember30,2023,indicatingfavorablecurrencymovements[7]−ForeigncurrencytranslationlossforthethreemonthsendedSeptember30,2024,was172 thousand for the quarter ending September 30, 2023, indicating favorable currency movements[7] - Foreign currency translation loss for the three months ended September 30, 2024, was 242,000, compared to a gain of 172,000inthesameperiodof2023[5]LegalandComplianceIssues−ThecompanyresolvedalegaldisputewithDKCitythroughaConfidentialSettlementAgreement,whichincludedtotalpaymentsgreaterthanoneyearfromSeptember30,2024,of172,000 in the same period of 2023[5] Legal and Compliance Issues - The company resolved a legal dispute with DK City through a Confidential Settlement Agreement, which included total payments greater than one year from September 30, 2024, of 1.1 million included in other long-term liabilities[132] - The Company may face delisting from Nasdaq if it fails to regain compliance with listing requirements, which could adversely affect its ability to raise capital and the liquidity of its common stock[16] Inventory and Asset Management - Total inventories increased to 7,971,000asofSeptember30,2024,upfrom7,971,000 as of September 30, 2024, up from 5,515,000 on December 31, 2023, representing a 44.5% increase[42] - The company’s inventory valuation loss was 141,000fortheninemonthsendedSeptember30,2024,downfrom141,000 for the nine months ended September 30, 2024, down from 261,000 in the same period of 2023, showing better inventory management[9] Share Structure Changes - The company completed a reverse stock split at a rate of 1-for-40, reducing the number of shares from 26,581,056 to 664,526 shares[11] - The company issued 12,036,139 shares of common stock from At the Market offerings between June 2024 and September 2024[138] - As of September 30, 2024, the company had 17,170,456 shares of common stock outstanding, a significant increase from 354,802 shares as of December 31, 2023[137]