Bowflex (BFXXQ) 8-KBowFlex Inc. Files for Voluntary Chapter 11 Protection and Reaches Stalking Horse Agreement to Facilitate Sale

The information set forth below under Item 1.03 of this Current Report on Form 8-K regarding the Stalking Horse Asset Purchase Agreement, DIP Amendment, and SLR Credit Agreement (each as defined below) is incorporated herein by reference.

The Company Parties will continue to operate their business as debtors in possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Company Parties are seeking approval of various “first day” motions with the Bankruptcy Court, requesting customary relief intended to enable them to continue their ordinary course operations and facilitate an orderly transition of their operations into chapter 11. In addition, the Company Parties filed with the Bankruptcy Court a motion seeking approval of the Stalking Horse Asset Purchase Agreement (as defined and described below). The Debtors intend to sell substantially all of their assets during the Chapter 11 Cases.

The Company cannot be certain that holders of the Company’s common stock (the “Common Stock”) will receive any payment or other distribution on account of those shares following the Chapter 11 Cases.

On March 4, 2024, prior to the filing of the Bankruptcy Petitions, the Company entered into a “stalking horse” asset purchase agreement (the “Stalking Horse Asset Purchase Agreement”) with Johnson Health Tech Retail, Inc. (the “Bidder”) to sell the assets of the Company (the “Acquired Assets”) identified in the Stalking Horse Asset Purchase Agreement, representing substantially all of the assets of the Company, for a total of $37,500,000 in cash at the closing of the transaction, including a deposit of $3,750,000 paid into an escrow account on March 4, 2024, but less closing adjustment amounts for accounts receivable, inventory and certain transfer taxes.

Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Stalking Horse Asset Purchase Agreement.

The Stalking Horse Asset Purchase Agreement contains customary representations and warranties of the parties and is subject to customary closing conditions, including, among others, (i) the accuracy of representations and warranties of the parties; (ii) material compliance with the obligations of the parties set forth in the Stalking Horse Asset Purchase Agreement; and (iii) the delivery of certain customary closing deliverables.

In addition to the forfeiture of the Deposit, in the event that Bidder is not selected as the winning bidder in the auction for the Acquired Assets, the Stalking Horse Asset Purchase Agreement requires the Company to reimburse Bidder for up to $600,000 of the Bidder’s expenses incurred in connection with the bid by the Bidder for the Acquired Assets, and to pay a break up fee of 3.5% of the Purchase Price under the Stalking Horse Asset Purchase Agreement.

The foregoing terms of the Stalking Horse Asset Purchase Agreement remain subject to approval by the Bankruptcy Court, is not complete, and is qualified in its entirety by reference to the full text of the Stalking Horse Asset Purchase Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1, and is incorporated herein by reference.

The foregoing description of the DIP Amendment and the SLR Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text DIP Amendment, a copy of which will be filed with the U.S Securities and Exchange Commission.

On March 4, 2024, the Company issued a press release announcing, among other things, the commencement of the Chapter 11 Cases. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.

The information in this Item 7.01 of the Form 8-K, including Exhibit 99.1, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

The Company’s securityholders are cautioned that trading in the Company’s Common Stock during the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks. Trading prices for the Company’s Common Stock may bear little or no relationship to the actual recovery, if any, by holders thereof in the Company’s Chapter 11 Cases. Accordingly, the Company urges extreme caution with respect to existing and future investments in its Common Stock.

This Current Report on Form 8-K includes forward-looking statements (statements which are not historical facts) within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, express or implied forward-looking statements relating to the Company’s statements regarding the process and potential outcomes of the Company’s Chapter 11 Cases, the Company’s expectations regarding the Stalking Horse Asset Purchase Agreement and related bidding procedures and the Bankruptcy Court’s approval thereof, and the Company’s ability to continue to operate as usual during the Chapter 11 Cases. You are cautioned that such statements are not guarantees of future performance and that our actual results may differ materially from those set forth in the forward-looking statements. All of these forward-looking statements are subject to risks and uncertainties that may change at any time. Factors that could cause the Company’s actual expectations to differ materially from these forward-looking statements also include: weaker than expected demand for new or existing products; our ability to timely acquire inventory that meets our quality control standards from sole source foreign manufacturers at acceptable costs; risks associated with current and potential delays, work stoppages, or supply chain disruptions, including shipping delays due to the severe shortage of shipping containers; an inability to pass along or otherwise mitigate the impact of raw material price increases and other cost pressures, including unfavorable currency exchange rates and increased shipping costs; experiencing delays and/or greater than anticipated costs in connection with launch of new products, entry into new markets, or strategic initiatives; our ability to hire and retain key management personnel; changes in consumer fitness trends; changes in the media consumption habits of our target consumers or the effectiveness of our media advertising; a decline in consumer spending due to unfavorable economic conditions; risks related to the impact on our business of the COVID-19 pandemic or similar public health crises; softness in the retail marketplace; availability and timing of capital for financing our strategic initiatives, including being able to raise capital on favorable terms or at all; changes in the financial markets, including changes in credit markets and interest rates that affect our ability to access those markets on favorable terms and the impact of any future impairment. Additional assumptions, risks and uncertainties that could cause actual results to differ materially from those contemplated in these forward-looking statements are described in detail in our registration statements, reports and other filings with the Securities and Exchange Commission, including the “Risk Factors” set forth in our Annual Report on Form 10-K, as supplemented by our quarterly reports on Form 10-Q. Such filings are available on our website or at www.sec.gov. We undertake no obligation to publicly update or revise forward-looking statements to reflect subsequent developments, events, or circumstances, except as may be required under applicable securities laws.