Innventure, Inc. 10-K

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA TABLE OF CONTENTS Consolidated Financial Statements Page No. Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; PCAOB ID# 243 ) 59 Consolidated Balance Sheets as of December 31, 2024 and 2023 61 Consolidated Statements of Operations and Comprehensive Income (Loss) for the period October 2, 2024 through December 31, 2024 (Successor), January 1, 2024 through October 1, 2024 (Predecessor) and the year ended December 31, 2023 (Predecessor) 62 Consolidated Statement of Changes in Mezzanine Capital for the period January 1, 2024 through October 1, 2024 (Predecessor) and the year ended December 31, 2023 (Predecessor). 63 Consolidated Statement of Changes in Stockholders’ Equity for the period October 2, 2024 through December 31, 2024 (Successor), January 1, 2024 through October 1, 2024 (Predecessor) and the year ended December 31, 2023 (Predecessor) 64 Consolidated Statements of Cash Flows for the period October 2, 2024 through December 31, 2024 (Successor), January 1, 2024 through October 1, 2024 (Predecessor) and the year ended December 31, 2023 (Predecessor) 66 Notes to Consolidated Financial Statements 68 58 Report of Independent Registered Public Accounting Firm Stockholders and Board of Directors Innventure, Inc. Orlando, FL Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Innventure, Inc. and Subsidiaries (the “Company”) as of December 31, 2024, (“Successor”) and Innventure, LLC and Subsidiaries as of December 31, 2023 (“Predecessor”), the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for the period from October 2, 2024 through December 31, 2024 (“Successor”), and the consolidated statements of operations and comprehensive income (loss), changes in mezzanine capital, stockholders’ equity, and cash flows for the period January 1, 2024 through October 1, 2024 (“Predecessor”) and the year ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 (“Successor”) and 2023 (“Predecessor”), and the results of its operations and its cash flows for the period from October 2, 2024 through December 31, 2024 (Successor), the period from January 1 2024 through October 1, 2024 (“Predecessor”) and the year ended December 31, 2023 (“Predecessor”), in conformity with accounting principles generally accepted in the United States of America. Going Concern Uncertainty 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 suffered recurring losses from operations and has working capital deficiencies that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these 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. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 59 Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ BDO USA, P.C. We have served as the Company's auditor since 2022. Raleigh, North Carolina April 14, 2025 60 Table of Contents Innventure, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands, except share and per share amounts) Successor Predecessor December 31, 2024 December 31, 2023 Assets Cash, cash equivalents and restricted cash $ 11,119 $ 2,575 Accounts receivable 283 — Due from related parties 4,536 2,602 Inventories 5,178 — Prepaid expenses and other current assets 3,170 487 Total Current Assets 24,286 5,664 Investments 28,734 14,167 Property, plant and equipment, net 1,414 637 Intangible assets, net 182,153 — Goodwill 667,936 — Other assets 766 1,096 Total Assets $ 905,289 $ 21,564 Liabilities and Stockholders' Deficit Accounts payable $ 3,248 $ 93 Accrued employee benefits 9,273 3,779 Accrued expenses 2,478 1,009 Related party payables — 347 Related party notes payable - current 14,000 1,000 Notes payable - current 625 912 Patent installment payable - current 1,225 775 Obligation to issue equity 4,158 — Warrant liability 34,023 — Other current liabilities 317 253 Total Current Liabilities 69,347 8,168 Notes payable, net of current portion 13,654 999 Convertible promissory note, net — 1,120 Convertible promissory note due to related party, net — 3,381 Embedded derivative liability — 1,994 Earnout liability 14,752 — Stock-based compensation liability 1,160 — Patent installment payable, net of current 12,375 13,075 Deferred income taxes 27,353 — Other liabilities 355 683 Total Liabilities 138,996 29,420 Commitments and Contingencies (Note 19) Mezzanine Capital Redeemable Class I Units, no par value, 1,000,000 units authorized, issued and outstanding as of December 31, 2023 — 2,912 Redeemable Class PCTA Units, no par value, 3,982,675 units authorized, issued and outstanding as of December 31, 2023 — 7,718 Stockholders' Equity / Unitholders' Deficit Class B Preferred Units, no par value, 4,639,557 units authorized, and 4,109,961 units issued and outstanding as of December 31, 2023 — 38,122 Class B-1 Preferred Units, no par value, 2,600,000 units authorized, and 342,608 units issued and outstanding as of December 31, 2023 — 3,323 Class A Units, no par value, 10,975,000 units authorized, and 10,875,000 units issued and outstanding as of December 31, 2023 — 1,950 Class C Units, no par value, 1,585,125 units authorized, and 1,570,125 units issued and outstanding as of December 31, 2023 — 844 Preferred Stock, $ 0.0001 par value, 25,000,000 shares authorized, and 1,102,000 shares issued and outstanding as of December 31, 2024 — — Common Stock, $ 0.0001 par value, 250,000,000 shares authorized, and 44,597,154 shares issued and outstanding as of December 31, 2024 4 — Additional paid-in capital 502,865 — Accumulated other comprehensive gain (loss) 909 — Accumulated deficit ( 78,262 ) ( 64,284 ) Total Innventure, Inc., Stockholders’ Equity/ Innventure LLC Unitholders' Deficit 425,516 ( 20,045 ) Non-controlling interest 340,777 1,559 Total Stockholders' Equity/ Unitholders' Deficit 766,293 ( 18,486 ) Total Liabilities, Mezzanine Capital and Equity $ 905,289 $ 21,564 See accompanying notes to consolidated financial statements. 61 Table of Contents Innventure, Inc. and Subsidiaries Consolidated Statements of Operations and Comprehensive Income (Loss) (in thousands, except share and per share amounts) Successor Predecessor October 2, 2024 through December 31, 2024 January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Revenue $ 456 $ 764 $ 1,117 Operating Expenses Cost of sales 3,752 777 — General and administrative 29,652 26,608 17,589 Sales and marketing 2,009 4,178 3,205 Research and development 5,340 5,978 4,001 Total Operating Expenses 40,753 37,541 24,795 Loss from Operations ( 40,297 ) ( 36,777 ) ( 23,678 ) Non-operating (Expense) and Income Interest expense, net ( 1,132 ) ( 1,300 ) ( 1,224 ) Net gain (loss) from investments — 11,547 ( 6,448 ) Net (loss) gain on investments - due to related parties — ( 468 ) 232 Change in fair value of financial liabilities ( 20,946 ) ( 478 ) 766 Equity method investment (loss) income ( 902 ) 893 ( 632 ) Loss on conversion of promissory notes — ( 1,119 ) — Write-off of loan commitment fee asset ( 10,041 ) — — Miscellaneous other expense ( 57 ) ( 64 ) — Total Non-operating (Expense) Income ( 33,078 ) 9,011 ( 7,306 ) Loss before Income Taxes ( 73,375 ) ( 27,766 ) ( 30,984 ) Income tax expense (benefit) ( 3,282 ) 432 — Net Loss ( 70,093 ) ( 28,198 ) ( 30,984 ) Less: net loss attributable to Non-redeemable non-controlling interest ( 8,339 ) ( 11,762 ) ( 139 ) Net Loss Attributable to Innventure, Inc. Stockholders / Innventure LLC Unitholders ( 61,754 ) ( 16,436 ) ( 30,845 ) Basic and diluted loss per share $ ( 1.41 ) Basic and diluted weighted average common shares 43,951,279 Other comprehensive income, net of taxes: Unrealized gain on available-for-sale debt securities - related party 909 62 — Total other comprehensive loss, net of taxes 909 62 — Total comprehensive loss, net of taxes ( 69,184 ) ( 28,136 ) ( 30,984 ) Less: comprehensive income attributable to Non-redeemable non-controlling interest ( 8,339 ) ( 11,762 ) ( 139 ) Net Comprehensive Loss Attributable to Innventure, Inc. Stockholders / Innventure LLC Unitholders $ ( 60,845 ) $ ( 16,374 ) $ ( 30,845 ) See accompanying notes to consolidated financial statements. 62 Table of Contents Innventure, Inc. and Subsidiaries Consolidated Statements of Changes in Mezzanine Capital (Predecessor) (in thousands, except share and per share amounts) Class I Amount Class PCTA Amount Total December 31, 2022 $ 2,984 $ 12,882 $ 15,866 Proceeds from capital calls to unitholders 130 — 130 Accretion of redeemable units to redemption value ( 202 ) ( 5,164 ) ( 5,366 ) December 31, 2023 2,912 7,718 10,630 Accretion of redeemable units to redemption value 1,565 10,385 11,950 October 1, 2024 $ 4,477 $ 18,103 $ 22,580 See accompanying notes to consolidated financial statements. 63 Table of Contents Innventure, Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders' Equity (in thousands, except share and per share amounts) Class B Preferred Class B-1 Preferred Class A Class C Accumulated Deficit Accumulated OCI Non-Controlling Interest Total Unitholders' Deficit December 31, 2022 (Predecessor) $ 20,803 $ 3,323 $ 1,950 $ 639 $ ( 38,564 ) $ — $ 656 $ ( 11,193 ) Net loss — — — — ( 30,845 ) — ( 139 ) ( 30,984 ) Non-controlling interest acquired — — — — — — 337 337 Issuance of units, net of issuance costs 17,319 — — — — — — 17,319 Unit-based compensation — — — 205 — — 705 910 Distributions to unitholders — — — — ( 241 ) — — ( 241 ) Accretion of redeemable units to redemption value — — — — 5,366 — — 5,366 December 31, 2023 (Predecessor) 38,122 3,323 1,950 844 ( 64,284 ) — 1,559 ( 18,486 ) Net loss — — — — ( 16,436 ) — ( 11,762 ) ( 28,198 ) Other comprehensive loss, net of taxes — — — — — 62 — 62 Units issued to non-controlling interest — — — — — — 13,921 13,921 Issuance of units, net of issuance costs 13,561 — — — — — — 13,561 Unit-based compensation — — — 137 — — 919 1,056 Issuance of units to non-controlling interest in exchange of convertible promissory notes — — — — — — 8,443 8,443 Accretion of redeemable units to redemption value — — — — ( 11,950 ) — — ( 11,950 ) October 1, 2024 (Predecessor) $ 51,683 $ 3,323 $ 1,950 $ 981 $ ( 92,670 ) $ 62 $ 13,080 $ ( 21,591 ) See accompanying notes to consolidated financial statements. 64 Table of Contents Innventure, Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders' Equity (in thousands, except share and per share amounts) Series B Preferred Stock Common Stock Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated OCI Non-Controlling Interest Total Stockholders' Equity October 2, 2024 (Successor) — $ — — $ — $ 11,342 $ ( 15,845 ) $ — $ — $ ( 4,503 ) Effect of acquisition of Innventure LLC — — 43,589,850 4 461,064 — — 343,030 804,098 Reclassification of warrants from liability to equity — — — — 1,265 — — — 1,265 Issuance of common shares, net of issuance costs — — 160,000 — 2,083 — — — 2,083 Issuance of preferred shares, net of issuance costs 1,102,000 — — — 9,965 — — — 9,965 Issuance of common shares from warrant exercises — — 259,309 — 2,982 — — — 2,982 Net loss — — — — — ( 61,754 ) — ( 8,339 ) ( 70,093 ) Other comprehensive gain, net of taxes — — — — — — 909 — 909 Non-controlling interest acquired — — — — — — — 4,129 4,129 Distributions to Stockholders — — — — — ( 663 ) — — ( 663 ) Vesting of contingent at risk sponsor shares — — 587,995 — — — — — — Stock-based compensation — — — — 14,381 — — 1,957 16,338 Accrued preferred dividends — — — — ( 217 ) — — — ( 217 ) December 31, 2024 (Successor) 1,102,000 $ — 44,597,154 $ 4 $ 502,865 $ ( 78,262 ) $ 909 $ 340,777 $ 766,293 See accompanying notes to consolidated financial statements. 65 Table of Contents Innventure, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands, except share and per share amounts) Successor Predecessor October 2, 2024 through December 31, 2024 January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Cash Flows Used in Operating Activities Net loss $ ( 70,093 ) $ ( 28,198 ) $ ( 30,984 ) Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: Stock-based compensation 16,338 1,056 910 Interest income on debt securities - related party ( 106 ) ( 110 ) — Change in fair value of financial liabilities 20,946 478 ( 766 ) Change in fair value of payables due to related parties — 468 ( 232 ) Write-off of loan commitment fee asset 10,041 — — Non-cash interest expense on notes payable 248 351 487 Net (gain) loss on investments — ( 11,547 ) 6,448 Equity method investment gain (loss) 902 ( 893 ) 632 Loss on conversion of promissory notes — 1,119 — Deferred income taxes ( 3,301 ) 432 — Depreciation and amortization 5,455 146 8 Payment of patent installment — ( 250 ) — Non-cash rent costs 64 185 192 Accrued unpaid interest on note payable 69 930 — Changes in operating assets and liabilities: Accounts receivable ( 166 ) ( 117 ) — Prepaid expenses and other current assets ( 1,301 ) ( 1,353 ) ( 218 ) Inventory ( 2,354 ) ( 2,824 ) — Accounts payable ( 11,211 ) 6,013 9 Accrued employee benefits 1,656 3,838 3,181 Accrued expenses ( 484 ) 674 1,230 Stock-based compensation liability 1,160 — — Other current liabilities ( 77 ) ( 146 ) ( 155 ) Obligation to issue equity 3,000 10,920 — Other assets — ( 20 ) ( 218 ) Net Cash Used in Operating Activities ( 29,214 ) ( 18,848 ) ( 19,476 ) Cash Flows Provided by (Used in) Investing Activities Purchase of shares in equity method investee — — ( 2,000 ) Contributions to equity method investee — — ( 130 ) Investment in debt securities - equity method investee — ( 7,400 ) ( 2,600 ) Advances to equity method investee ( 4,240 ) ( 135 ) — Acquisition of property, plant and equipment ( 266 ) ( 736 ) ( 645 ) Acquisition of intangible assets ( 30 ) — — Acquisition of net assets, net of cash acquired, through business combination 16 — — Proceeds from sale of investments — 2,314 708 Cash withdrawn from trust as a result of business combination 11,342 — — Net Cash Provided by (Used in) Investing Activities 6,822 ( 5,957 ) ( 4,667 ) Cash Flows Provided by Financing Activities Proceeds from issuance of equity, net of issuance costs 15,383 13,122 16,009 Proceeds from the issuance of equity to non-controlling interest, net of issuance costs 4,169 13,859 337 Proceeds from the issuance of convertible promissory note — — 2,000 Proceeds from issuance of debt securities, net of issuance costs 19,455 — — Payment of debts ( 250 ) ( 540 ) ( 65 ) Receipt of Capital from Class I Unitholder — — 130 Distributions to Stockholders ( 663 ) — ( 241 ) Proceeds from the issuance of promissory notes to related parties — 12,000 1,004 Repayment of promissory note ( 4,628 ) — — Cash Flows Provided by Financing Activities 33,466 38,441 19,174 Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash 11,074 13,636 ( 4,969 ) Cash, Cash Equivalents and Restricted Cash Beginning of period 45 2,575 7,544 Cash, Cash Equivalents and Restricted Cash End of period $ 11,119 $ 16,211 $ 2,575 66 Table of Contents Innventure, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands, except share and per share amounts) Successor Predecessor October 2, 2024 through December 31, 2024 January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Supplemental Cash Flow Information Cash paid for interest $ 991 $ 1,070 $ 297 Supplemental Disclosure of Noncash Financing Information Accretion of redeemable units to redemption value — 11,950 5,366 Debt discount and embedded derivative upon issuance — — 1,119 Issuance of units to non-controlling interest in exchange of convertible promissory notes — 7,324 — Conversion of working capital loans to equity method investees into investments in debt securities - related party — 2,600 — Transfer of liability warrants to equity warrants in the Business Combination 1,265 — — Initial recognition of loan commitment fee 16,190 — — Transfer of loan commitment fee asset 6,694 — — See accompanying notes to consolidated financial statements. 67 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Note 1. Nature of Business Unless the context otherwise requires, references herein to "Innventure", "we", "us", "our" and "the Company" refer to the business and operations of Innventure LLC and its consolidated subsidiaries (the “Predecessor”) for all periods prior to the Closing (as defined below) and to the business and operations of Innventure, Inc. and its consolidated subsidiaries (the “Successor”) for all periods after Closing. Innventure founds, funds, and operates companies with a focus on transformative, sustainable technology solutions that we acquire or license from technology innovators, which are typically Multinational Corporations (‘‘MNCs’’). As owner-operators, our goal is to take what we believe to be breakthrough technologies from evaluation to scaled commercialization utilizing an approach designed to help mitigate risk in collaboration with the MNCs (our channel partner(s)), as we build disruptive companies that we believe have the potential to achieve a target enterprise value of at least $1 billion. We define ‘‘disruptive’’ as innovations that, in our opinion, have the ability to significantly change the way businesses, industries, markets, and/or consumers operate. Innventure, Inc., is headquartered in Orlando, Florida. Business Combination On October 24, 2023, Learn SPAC HoldCo, Inc. (“Holdco”), a Delaware corporation and direct, wholly-owned subsidiary of Learn CW Investment Corporation (“Learn CW”), a Cayman Islands exempted company, LCW Merger Sub, Inc. (“LCW Merger Sub”), a Delaware corporation and direct, wholly-owned subsidiary of Holdco, and Innventure Merger Sub, LLC (“Innventure Merger Sub” and together with LCW Merger Sub, the “Merger Subs”), a Delaware limited liability company and direct, wholly-owned subsidiary of Holdco entered into a Business Combination Agreement (the “Business Combination Agreement”) with Innventure LLC, a Delaware limited liability company. As further discussed below and in Note 8. Business Combinations, on October 2, 2024 (the “Closing Date” or “Closing”), Learn CW and Innventure LLC consummated a business combination (the “Business Combination”) pursuant to the terms of the Business Combination Agreement. Following the Closing, both Learn CW and Innventure LLC became subsidiaries of Holdco, Holdco changed its name to “Innventure, Inc.” and became a publicly traded company. Holdco was determined to be the accounting acquirer. Both Learn CW and Holdco, a direct wholly-owned subsidiary of Learn CW prior to the Business Combination, were created for the purpose of consummating a business combination. Innventure, Inc. and its subsidiaries is the successor to Innventure LLC following the Business Combination and is a Delaware corporation, whose common stock is listed and traded on the Nasdaq Global Market (“Nasdaq”). Following the Business Combination, the Company continues the business of Innventure LLC. The information provided in this Annual Report on Form 10-K reflects two distinct periods, the period up to the Closing Date labeled as the Predecessor and the period including and after that date labeled as the Successor. The Business Combination was accounted for using the acquisition method of accounting and the Successor financial statements reflect a new basis of accounting that is based on the fair value of the net assets acquired. As a result of the application of the acquisition method of accounting as of the Closing Date, the accompanying Consolidated Financial Statements include a black line division which indicates that the Predecessor and Successor reporting entities shown are presented on a different basis and are therefore, not comparable. Note 2. Accounting Policies Basis of Presentation The consolidated financial statements of the Company are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The Successor consolidated financial statements include the accounts of the Company, its wholly owned or majority-owned subsidiaries and entities in which the Company is deemed to have a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. The 68 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Predecessor consolidated financial statements include all amounts of Innventure LLC and its consolidated subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Reclassifications Certain amounts reported previously have been reclassified to conform to the current year presentation with no effect on total stockholders' deficit, or net income as previously reported. Going Concern As of December 31, 2024, the Company had cash balance of $ 11,119 , accumulated deficit of $ 78,262 and a working capital deficit of $ 45,061 . During the year ended December 31, 2024, the Company incurred a net loss of $ 70,093 for the Successor period from October 2, 2024 through December 31, 2024 and $ 28,198 for Predecessor period from January 1, 2024 through October 1, 2024. Management believes the Company will continue to incur losses and negative cash flows from operating activities for the foreseeable future and will need additional capital or debt financing to proceed with its business plans. Additionally, the future value of investments held is unpredictable and subject to market events outside of the Company’s control. Subsequent to December 31, 2024, the Company secured additional gross proceeds of $ 925 through Common Stock issuances as part of the Company’s Standby Equity Purchase Agreement. The Company entered into preferred stock purchase agreements (each, a “Series C Purchase Agreement”, and collectively, the “Series C Purchase Agreements”) on March 24, 2025 to receive gross proceeds of $ 2,750 . Additionally, the Company converted Related party notes into Series C equity, with aggregate principal of $ 14,000 , as discussed in Note 5. Borrowings. The conversion was not determined to be a trouble debt restructuring. Further, the Company entered into a financing agreement on March 25, 2025 to receive up to $ 30,000 in exchange for convertible debentures, contingent upon certain reporting requirements. For further details on these events, refer to Note 21. Subsequent Events. In connection with the Company’s assessment of going concern considerations, management has determined that in order to maintain its current level of operations, the Company will require additional working capital from cash flows from operations, the sale of its capital and/or issuance of debt. The Company intends to obtain additional financing in the future to proceed with its business plans. If the Company is unable to acquire additional working capital, it will be required to significantly reduce its current level of operations. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern within one year after the date of the accompanying consolidated financial statements are issued; however, the above conditions raise substantial doubt about the Company’s ability to do so. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. There can be no assurance that management will be successful in implementing its business plan or that the successful implementation of such business plan will improve our operating results. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Management bases its estimates on historical experience and on various other factors it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Accordingly, actual results could differ from those estimates. Fair Value Measurements The Company measures the fair value of assets and liabilities on a recurring and nonrecurring basis according to a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company 69 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) categorizes each of its fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 – Unobservable inputs that are supported by little or no market activity and reflect management’s best estimate of what market participants would use in pricing the asset or liability. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Investments Equity Method Investments Equity method investments are investments where the Company does not consolidate the investee, but can exert significant influence over the financial and operating policies of the investee. The carrying value of our equity method investments is determined based on amounts invested by the Company, adjusted for the Company’s share in the earnings or losses of each investee, after consideration of contractual arrangements that govern allocations of income or loss, less distributions received. For investments where the specified allocations of income or loss are different from the allocation of cash from operations and on liquidation, the Company utilizes the hypothetical liquidation book value method to allocate income or loss from the equity method investment. The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. Cash distributions received as a result of the Company’s share of cumulative earnings are classified as operating activities. Cash distributions, if any, received that are in excess of the Company’s share of cumulative earnings or losses are classified as investing activities. Exchange-traded Investments Exchange-traded equity investments are generally carried at fair value on the consolidated balance sheets with changes in the fair value recorded through net income (“FVTNI”) within non-operating income (expense). Variable Interest and Voting Interest Entities The Company performs an analysis of its investments to determine if they are either a Variable Interest Entity (“VIE”) or a Voting Interest Entity (“VOE”). Factors considered in this analysis include the entity’s legal organization; the entity’s capital structure and sufficiency of equity at risk; the rights of equity investment holders; the Company’s contractual involvement with, and economic interest in, the entity; and any related party or de facto agent implications of the Company’s involvement with the entity. Entities that are determined to be VIEs are consolidated if the Company is the primary beneficiary (“PB”) of the entity. If the Company is not deemed to be the PB of a VIE, the Company accounts for the investment or other variable interests in a VIE as either an equity method investment or other investment, as applicable. VOEs are typically consolidated if the Company holds the majority voting interest. Upon the occurrence of certain events (such as changes in the investment or the governance structure), management reviews and reconsiders its previous conclusion regarding the status of an entity as a VIE or VOE, and when applicable, whether the Company continues to qualify as the PB of a VIE. Refer to Note 3. Investments for further discussion on investments in VIEs. Impairments of Investments 70 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Management periodically assesses equity method investments for impairment. If impairment exists, an impairment charge would be recorded for the excess of the carrying amount of the investment over its estimated fair value in the consolidated statements of operations and comprehensive income (loss). Impairment evaluation considers qualitative factors, including the financial conditions and specific events related to an investee, that may indicate the fair value of the investment is less than its carrying value. Available-for-Sale Investments Available-for-sale (“AFS”) debt securities are generally reported at estimated fair value, with unrealized gains and losses recorded in accumulated other comprehensive loss which is included within stockholders’ deficit. AFS debt securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of that difference, if any, is caused by expected credit losses. Allowance for credit losses on AFS debt securities are recognized as a charge in other loss on our consolidated statements of income, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders' equity. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents primarily consist of cash, money market funds and short-term highly liquid investments with original maturities of three months or less. The Company has concentrated credit risk for cash and cash equivalents by maintaining deposits in banks, which may, at times, exceed amounts covered by insurance provided by the US Federal Deposit Insurance Corporation and management continues to monitor the financial condition of the major financial institutions where these funds are held. Cash that is restricted and not available for general operations is considered restricted cash. The Company's restricted cash is related to cash received through the Company's Class B Preferred Units capital raise and held in escrow prior to finalization of the Class B Preferred Units investment. As of December 31, 2024 and 2023, the Company had restricted cash related to the capital raise of $ — and $ 100 , respectively. Additionally, the Company maintains certain compensating balances that may be withdrawn, but the availability of short-term lines of credit is dependent upon the maintenance of such compensating balances. As of December 31, 2024 and 2023, the Company had compensating balances of $ 100 and $ 300 , respectively. Inventory Inventories are stated at the lower of cost or net realizable value. Cost is determined principally under the average cost method. Property, Plant and Equipment Property, plant and equipment is recorded at cost less accumulated depreciation. The Company depreciates the cost of property, plant and equipment using the straight-line method with depreciable lives of 10 years for Machinery & equipment, 3 years for Computers & office equipment and the lesser of useful life or lease terms for Leasehold improvements. The Company expenses normal maintenance and repair costs as incurred. Impairment of Long-Lived Assets The Company assesses its property, plant and equipment and other long lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. In the event such an asset is considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the asset exceeds the estimated fair value of the asset. If such assets are not impaired, but their useful lives have decreased, the remaining net book value is 71 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) depreciated over the revised useful life. Assets to be disposed of are reported at the lower of the carrying value of estimated fair value less estimated costs to sell. Intangible Assets Intangible assets with finite lives are amortized over their estimated useful lives and reviewed for impairment whenever events or other changes in circumstances indicate that the carrying amount may not be recoverable. If required, recoverability of these assets is determined by comparison of their carrying value to the estimated future undiscounted cash flows the assets are expected to generate over their remaining estimated useful lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the assets exceeds their estimated fair value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique. Goodwill Goodwill reflects the excess purchase price over the fair value of net tangible and intangible assets acquired in a business combination. Goodwill is evaluated for impairment annually, or more frequently if circumstances indicate a possible impairment. The Company compares the fair value of its reporting unit to its carrying value. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of its reporting unit, the Company would record an impairment loss equal to the difference. The Company operates in one operating segment which the Company considers to be its only reporting unit. There were no impairments of goodwill recognized for the year ended December 31, 2024. Stock and Warrants Stock may be classified as a liability, temporary capital (i.e., mezzanine capital) or permanent stockholders' equity. In order to determine the appropriate classification, an evaluation of the cash redemption and other features is required. Where there exists an absolute right of redemption presently or in the future, the units in question would be classified as a liability. If units are contingently redeemable upon the occurrence of an event that is outside of the issuer’s control, the units are classified as mezzanine capital. The probability that the redemption event will occur is irrelevant. If no redemption features exist, or if a contingent redemption feature is within the Company’s control, the capital unit would be considered permanent stockholders' equity. The Company accounts for warrants to acquire stock as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms. In order to determine the appropriate classification, consideration is given as to whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require net cash settlement in a circumstance outside of the Company’s control, among other conditions. This assessment requires the use of judgement and is conducted at the time of warrant issuance and as of each reconsideration and balance sheet date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for stockholders' equity classification, the warrants are recorded as a component of additional paid-in capital at fair value at the time of issuance. For issued or modified warrants that do not meet all of the criteria for stockholders' equity classification, the warrants are recorded as a liability at their initial fair value on the date of issuance and remeasured at fair value as of each reconsideration and balance sheet date thereafter. The change in fair value is recognized in the Company’s consolidated statements of operations and comprehensive income (loss). Revenue Recognition The Company’s product sales arrangements contain performance obligations satisfied at a point in time when control of the product transfers to the customer, based on the contractual terms. This typically occurs when title and risk and rewards of ownership have transferred to the customer. Revenue is recorded net of sales taxes, discounts, and expected returns. Sales discounts and other incentives are treated as variable consideration when estimating the revenue to be recognized. 72 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) The Company earns management fees, consulting revenue and carried interest allocations from investment advisory services it provides to its customers. The Company considers the investment advisory services represent a single performance obligation. Management fees, generally 1 - 2 % of capital committed to the ESG Fund I, L.P. (the “ESG Fund”), are recognized over time using the time-elapsed method, resulting in straight-line revenue recognition over the performance period. These fees are calculated and paid quarterly in advance based on the capital commitments at the start of each quarter. Management fees are considered variable consideration but are typically fully recognized at the end of each reporting period as they are not subject to clawback. Carried interest allocations, typically 10 - 20 %, are recognized based on cumulative fund performance and are subject to achieving minimum return levels, usually 8 %. These allocations are considered variable consideration and are recognized when a significant reversal is no longer probable. Stock-Based Compensation The Company participates in multiple stock-based compensation plans which are further discussed in Note 14. Stock-based Compensation. The fair value of stock-based awards is measured on the grant date of the award and recognized as compensation expense over the period of service that generally coincides with the vesting period of the award. Service-based awards vest over the period defined in each individual grant agreement. For equity awards with a graded vesting schedule, compensation cost is recognized on a straight-line basis over the requisite service period of the entire award. Expense related to grants of stock-based awards is included in the respective expense category in which the employee serves in the consolidated statements of operations and comprehensive income (loss). The Company recognizes forfeitures as they occur. Income Taxes Prior to the Business Combination, Innventure LLC qualified as a partnership for federal income tax purposes that consolidated financial results with corporate subsidiaries within the financial statements. Consequently, federal income taxes were not payable or provided by Innventure LLC but various corporate subsidiaries were subject to corporate federal, state, and local taxes. There was no federal income tax recorded by Innventure LLC for the year ended December 31, 2023, but corporate income taxes were recorded for the period from January 1, 2024 through October 1, 2024. On October 2, 2024, the Business Combination occurred which merged Innventure LLC into Innventure Merger Sub, LLC, a wholly owned subsidiary of the Company. The Company became a publicly traded entity and is being taxed as a corporation. The Company accounts for income taxes pursuant to the asset and liability method of ASC 740, Income Taxes, which requires the recognition of current tax liabilities or receivables for the amount of taxes that are estimated as payable or refundable for the current year, and deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts and their respective tax bases of assets and liabilities and the expected benefits of net operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period enacted. A valuation allowance is provided when it is more likely than not that a portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. The Company follows the provisions of ASC 740-10 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740-10 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be 73 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) taken in income tax returns. The benefit of tax positions taken or expected to be taken in our income tax returns is recognized in the financial statements if such positions are more likely than not of being sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits”. A liability is recognized (or amount of net operating loss carryover or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740-10. Interest costs and related penalties related to unrecognized tax benefits are required to be calculated, if applicable. As of December 31, 2024 and 2023, no liability for unrecognized tax benefits was required to be reported. The Company does not expect any significant changes in unrecognized tax benefits in the next year. Recently Adopted Accounting Pronouncements In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ("ASU 2022-03"). ASU 2022-03 clarifies that contractual sale restrictions should not be considered in measuring the fair value of equity securities. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, including interim periods therein, with early adoption permitted. The Company adopted this ASU on January 1, 2024, and the adoption did not have a material impact on the Company’s consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which enhances prior reportable segment disclosure requirements in part by requiring entities to disclose significant expenses related to their reportable segments. The amendments in ASU 2023-07 are effective on a retrospective basis for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company has made the required disclosures related to this ASU within Note 20. Business Segment Data. Recently Issued But Not Yet Adopted Accounting Standards In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). This standard modifies the disclosure or presentation requirements of a variety of topics and aligns requirements with the SEC’s existing disclosure requirements. ASU 2023-06 is effective on the date each amendment is removed from Regulation S-X or Regulation S-K with early adoption prohibited. The Company will monitor the removal of various requirements from the current regulations in order to determine when to adopt the related amendments, but does not anticipate the adoption of the new guidance will have a material impact on the Company’s consolidated financial statements. The Company will continue to evaluate the impact of this guidance on its consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this ASU are effective for annual periods beginning after December 15, 2024 on a prospective basis. The Company is currently evaluating the impact that the adoption of this accounting standard will have on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). In January 2025, the FASB issued Clarifying the Effective Date (“ASU 2025-01”) to add some clarity around the effective date of the guidance. ASU 2024-03 requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The new standard is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively, to financial statements issued after the effective date, or retrospectively, to all prior periods presented. The Company is currently evaluating the impact that the adoption of this accounting standard will have on its consolidated financial statements. 74 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Note 3. Investments Successor Predecessor December 31, 2024 December 31, 2023 Equity-method investments $ 17,547 $ 4,482 Exchange-traded investments at fair value — 9,685 Investment in debt securities - AFS 11,187 — Total Investments $ 28,734 $ 14,167 Equity-method investments ESG Fund During the Predecessor period, the Company’s equity-method investment in the ESG Fund reflects the Company’s general partner interest which represents approximately 5 % of the ESG Fund’s total capital commitments and limited partner interests which were received in exchange for shares of Innventure LLC and Accelsius Holdings LLC prior to October 1, 2024. As of December 31, 2024, the Company’s equity-method investment in the ESG Fund solely reflects interests held by the Company as a limited partner due to the deconsolidation of certain SILOs as further discussed in Note 8. The Predecessor period general partner interest is not consolidated because the ESG Fund is not considered a VIE and the Company does not hold a controlling financial interest in the ESG Fund under the VOE model. The ESG Fund is an investment company that follows a specialized basis of accounting established by GAAP. The Company’s partnership interests in the ESG Fund are substantially illiquid. While the ESG Fund’s holdings are accounted for at fair value, the equity-method investment in the ESG Fund is adjusted to reflect the fair value of the underlying investments of the ESG Fund as of December 31, 2024 and 2023. The fair value of the underlying investments in the ESG Fund is based on the Company’s assessment, which takes into account expected cash flows, earnings multiples and/or comparisons to similar market transactions, among other factors. Valuation adjustments reflecting consideration of credit quality, concentration risk, sales restrictions and other liquidity factors are integral to valuing these instruments. AeroFlexx The Company determined that AeroFlexx has insufficient equity at risk to fund its operations, as of December 31, 2024 and therefore will meet the definition of a VIE. The Company does not have power to direct AeroFlexx's operations. AeroFlexx’s core operations are not closely associated with the Company and it was not created specifically to provide substantially all benefits to Innventure. Therefore, the Company is not considered the primary beneficiary and does not consolidate AeroFlexx as a VIE. The Company accounts for its investments in AeroFlexx under the equity method and held a 34 % and 31 % interest in AeroFlexx as of December 31, 2024 and 2023, respectively. The Company’s carrying amounts and maximum exposure relating to AeroFlexx, were as follows: Successor Predecessor December 31, 2024 December 31, 2023 Asset type Carrying Amount Maximum Exposure to Loss Carrying Amount Maximum Exposure to Loss Equity method investment in AeroFlexx $ 16,930 $ 16,930 $ 1,570 $ 1,570 Investments in debt securities - AFS 11,187 11,187 — — Due from related party 4,472 4,472 2,600 2,600 Total $ 32,589 $ 32,589 $ 4,170 $ 4,170 75 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Summarized financial information: Balance sheets ESG Fund AeroFlexx December 31, December 31, 2024 2023 2024 2023 Total Assets $ 97,445 $ 58,022 $ 17,002 $ 10,780 Total Liabilities 93 107 27,861 8,031 Total Equity (Deficit) $ 97,352 $ 57,915 $ ( 10,859 ) $ 2,749 Statements of operation ESG Fund AeroFlexx Years ended December 31, Years ended December 31, 2024 2023 2024 2023 Revenue $ 202 $ 320 $ 38 $ 16 Gross (Loss) Profit ( 735 ) ( 709 ) ( 57 ) 1 Net Income (Loss) $ 39,437 $ ( 4,557 ) $ ( 13,663 ) $ ( 8,221 ) Exchange-traded investments The Company previously invested in PureCycle Technologies (“PCT”) as the first company formed in partnership with a multinational corporation. In 2021, PCT merged with a special purpose acquisition company and became a publicly-traded entity. The shares of PCT's common stock held by the Company are classified as an Exchange-traded investment at FVTNI. During the Predecessor period from January 1, 2024 through October 1, 2024, the Company sold 400,000 PCT shares for aggregate net proceeds of $ 2,302 . The PCT shares were measured at their fair value immediately prior to the transactions. All remaining PCT shares were derecognized as a result of the Business Combination. Investment in debt securities - AFS On July 1, 2024, the Company entered into a loan agreement with AeroFlexx under which the Company will lend up to $ 10,000 to AeroFlexx. As of July 1, 2024, the aggregate outstanding principal of working capital interest-free advances to AeroFlexx, amounting to $ 7,635 were included as outstanding term loans under this agreement. During the Predecessor period from January 1, 2024 through October 1, 2024, the Company lent AeroFlexx the remaining principal balance of $ 2,365 under this agreement. The term loans and any unpaid accrued interest are required to be repaid by the maturity date, which is the earlier of (i) December 31, 2026 or (ii) the date of the sale, transfer or other disposition all of AeroFlexx’s assets or AeroFlexx's stock. After any full or partial repayment of the term loans, AeroFlexx may borrow additional funds up to the $ 10,000 limit until the maturity date. The loans bear interest at the applicable federal rate published by the Internal Revenue Service and is adjusted on a quarterly basis. The Company has an option to convert the outstanding principal amount of the term loans and any unpaid accrued interest into shares or units in connection with the next issuance of equity securities by AeroFlexx, at a price equal to 100 % of the price per share or unit and on the same terms and conditions as apply to such issuance. If, by January 1, 2025, AeroFlexx has not raised equity financing equal to or more than a target of $ 10,000 , then on January 2, 2025, the outstanding principal and any unpaid accrued interest on the term loans will automatically convert into Class D preferred units of AeroFlexx at the same price per unit and on the same terms and conditions as the Class D preferred unit of AeroFlexx purchased by the Company prior to the date of this loan agreement, up to the amount necessary to reach the $ 10,000 target. 76 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) The Company accounted for the loans as an investment in debt securities and classified them as available for sale debt securities. Based on the AFS classification, the Company records this investment at fair value at each reporting date and as such recorded the changes in fair value of these loans (including the adjustment to fair value at inception date) in Other Comprehensive Income ("OCI"). The amortized cost, gross unrealized gains and losses, and fair value of AFS debt securities as of December 31, 2024 is represented in the table below: Amortized cost Gross unrealized gains Fair value Investment in Debt Securities - AFS $ 10,278 $ 909 $ 11,187 At December 31, 2024, there was no allowance for credit loss related to the available for sale securities portfolio. Accrued interest receivable on available for sale debt securities totaled $ 216 at December 31, 2024. The amortized cost and fair value of debt securities, by contractual maturity, as of December 31, 2024 is shown below. Expected maturities can differ from contractual maturities. Amortized cost Fair value Due within one year $ — $ — Due after one year through five years 10,278 11,187 Due after five years — — $ 10,278 $ 11,187 As the contractual maturity of the loan is in 2026, it is included in the non-current line item Investments of the consolidated balance sheets. The change in fair value of this investment in debt securities of $ 909 for the Successor period from October 2, 2024 through December 31, 2024 is included as Unrealized gain on available-for-sale debt securities - related party in the consolidated statements of operations and comprehensive income (loss). As this investment was acquired at fair value as part of the Business Combination there is no activity for the Predecessor periods. Note 4. Fair Value Fair Value Hierarchy The following tables present the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 (Successor) and December 31, 2023 (Predecessor): 77 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) December 31, 2024 (Successor) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets: Investment in debt security - AFS $ — $ — $ 11,187 $ 11,187 Liabilities: Earnout liability $ — $ — $ 14,752 $ 14,752 WTI warrant liability 17,230 17,230 Private placement warrant liability — 16,793 — 16,793 December 31, 2023 (Predecessor) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs( Level 3) Total Assets: Exchange-traded investments at FVTNI $ 9,685 $ — $ — $ 9,685 Liabilities: Embedded derivative liability $ — $ — $ 1,994 $ 1,994 Related party payables 347 — — 347 Gains and losses for such assets and liabilities categorized within the Level 3 table set forth may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). Changes in the estimated fair value of Level 3 financial assets and liabilities that are measured on a recurring basis for the Successor period from October 2, 2024 through December 31, 2024, the Predecessor period from January 1, 2024 through October 1, 2024 and the Predecessor year ended December 31, 2023, respectively, are as follows: 78 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Forward Contract Embedded Derivative Liability Investment in debt securities - AFS Earnout Liability WTI Warrant Liability Balance as of January 1, 2023 (Predecessor) $ — $ 1,641 $ — $ — $ — Additions — 1,119 — — — Change in fair value — ( 766 ) — — — Balance as of December 31, 2023 (Predecessor) $ — $ 1,994 $ — $ — $ — Additions — — 10,110 — — Settlement — ( 2,472 ) — — — Change in fair value — 478 62 — — Balance as of October 1, 2024 (Predecessor) — — 10,172 — — Balance as of October 2, 2024 (Successor) — — 10,172 11,352 — Additions 54 — 106 15,690 Settlement ( 99 ) — — — — Change in fair value 45 — 909 3,400 1,540 Balance as of December 31, 2024 (Successor) $ — $ — $ 11,187 $ 14,752 $ 17,230 There were no transfers in or out of levels during the Successor period from October 2, 2024 through December 31, 2024, the Predecessor period from January 1, 2024 through October 1, 2024, or for the Predecessor year ended December 31, 2023. Standby Equity Purchase Agreement On October 24, 2023, the Company entered into the Standby Equity Purchase Agreement (“SEPA”) with Yorkville, as further described in Note 13. Stockholders' Equity with applicable terms defined. The SEPA became effective concurrently with the Business Combination. The SEPA includes two components subject to fair value measurement: the Purchased Put Option and Forward Contract. These are considered freestanding financial instruments not indexed to the Company’s stock. The Purchased Put Option is accounted for as a derivative asset, initially measured at fair value upon Closing and subsequently measured at fair value each reporting period with changes in fair value recorded in the consolidated statements of operations and comprehensive income (loss). The Purchased Put Option fair value is considered de minimis upon Closing due to the exercise price being at a discount to market prices and remains de minimis as of December 31, 2024. The Forward Contract is initially measured at fair value upon any Advance Notice and subsequently remeasured with changes in fair value recorded in the consolidated statements of operations and comprehensive income (loss). A derivative liability or asset will be recorded when there is an Advance Notice outstanding as of a reporting period. There were no outstanding Advance Notices as of December 31, 2024. Derivative Liabilities Embedded derivative liabilities contained within the 2025 Notes (as defined and further described in Note 5. Borrowings) are stated at fair value. Fair value is determined utilizing discounted cash flows, using unobservable market data inputs, and an option pricing model based on a probability-weighted expected outcome with respect to a 79 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) financing or a change of control. The derivatives associated with the 2025 Notes were settled in March 2024 due to conversion of the 2025 Notes in a qualified financing. A summary of the significant unobservable inputs utilized to estimate the fair value is as follows: Embedded derivative within 2025 Note issued August 18, 2022 with a principal balance of $ 4,000 Settlement December 31, 2023 Discount Rate 35 % 35 % - 36 % Probability of Expected Outcomes Financing 100 % 95 % Change in control — % 3 % Other — % 2 % Embedded derivative within 2025 Notes issued June 7 & July 3, 2023 with an aggregate principal balance of $ 2,000 Discount Rate 71 % - 87 % 71 % - 88 % Probability of Expected Outcomes Financing 100 % 95 % Change in control — % 3 % Other — % 2 % Significant increases or decreases to any of these inputs would result in a significantly higher or lower liability. Investment in debt securities - AFS The investment in debt securities is stated at fair value as described in Note 3. Investments. The terms of the securities are such that they are highly likely to convert into Class D Units of AeroFlexx. The fair value of the debt securities is estimated on an as-converted basis using a Black-Scholes model incorporating breakpoints upon which each tranche of AeroFlexx equity participates in distributions. October 2, 2024 December 31, 2024 Volatility 120.00 % 120.00 % Time to liquidity 2 years 2 years Discount for lack of marketability 18.00 % 31.00 % Weighted average cost of capital 45.00 % 45.00 % Risk-free rate 3.51 % 4.23 % Earnout Shares Upon Closing of the Business Combination, Earnout Shares were issued to previous Innventure Members and contingently issued to Sponsors (as defined and further described in Note 10. Earnout Shares). The fair value of the Earnout Shares was determined using a Monte Carlo valuation model that utilizes significant assumptions, including expected volatility, expected term, and risk-free rate, to determine the probability of achieving common share price and revenue milestones. The shares may vest upon either the achievement of the common share price milestone or revenue or event-based milestone specific to each of three tranches. Specifically, the future stock price of the Company and revenues of Accelsius and AeroFlexx are simulated assuming a Geometric Brownian Motion (GBM) in a risk-neutral framework. The Earnout Share payoff is calculated based on the contractual terms, and then discounted at the term-matched risk-free rate. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the Earnout Shares. Discounting conventions of revenue-based milestones are mid-period assuming annual revenue forecasts are earned 80 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) on average at the mid-period of the forecast period. The value of the Earnout Shares is calculated as the average present value over all future modeled payoffs. The inputs used in simulating the Company’s stock price include, the term, stock price, volatility, risk-free rate and dividend yield. Prior to the Business Combination, the Company never paid or declared dividends, thus the dividend yield is estimated to be 0 % as of December 31, 2024. The following table summarizes the inputs used in simulating the Company’s stock price for purposes of valuing the Earnout Shares: October 2, 2024 December 31, 2024 Term 7 years 6.8 years Stock price $ 10.87 $ 13.85 Volatility 56.00 % 56.00 % Risk-Free Rate 3.62 % 4.42 % Dividend Yield — % — % The Milestone One and Milestone Two Earnout Shares are equity classified and the Milestone Three Earnout Shares are liability classified, as further described in Note 10. Earnout Shares. The assumptions used in measuring fair value of Milestone One and Milestone Three are considered Level 3 inputs, which include weighted average cost of capital risk premium, operational leverage ratio, revenue risk premium and revenue volatility. Milestone One The following table summarizes the unobservable inputs used in estimating the fair value of the Earnout Shares based on revenue for Accelsius (Milestone One): October 2, 2024 Revenue risk premium 6.10 % Revenue volatility 44.00 % Milestone Two Milestone Two is contingent on the Company’s formation of a new subsidiary, in partnership with an MNC, as determined using the Innventure LLC's “DownSelect” process, within the Vesting Period. The probability of achievement based on the Company’s analysis was 98 % on October 2, 2024. Milestone Three The following table summarizes the unobservable inputs used in estimating the fair value of the Earnout Shares based on revenue for AeroFlexx (Milestone Three): October 2, 2024 December 31, 2024 Revenue risk premium 30.60 % 36.10 % Revenue volatility 165.00 % 176.00 % For further information on the Earnout Shares, refer to Note 10. Earnout Shares. Warrants The Company issued freestanding warrants to the WTI Lenders in connection with the WTI Facility (as defined and further described in Note 5. Borrowings and Note 11. Warrants). The fair value measurement of WTI Warrants is based on unobservable inputs (Level 3 fair value measurement). 81 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) The fair value of the WTI Warrants was determined using a Monte Carlo valuation model in which the future stock price is simulated assuming a GBM in a risk-neutral framework. The model utilizes significant assumptions including stock price, stock price volatility, and credit spread. The credit spread relates to estimated counterparty credit risk of Innventure being able to make payments related to the WTI Lenders’ put right, in which the WTI Lenders may exchange the WTI Warrants for a total cash payment of $ 15,000 after the four-year anniversary of issuance. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve. October 22, 2024 December 31, 2024 Stock Price $ 11.50 $ 13.85 Stock Price Volatility 56.00 % 56.00 % Credit Spread 18.60 % 18.80 % Other Our financial instruments that are not re-measured at fair value include prepaid expenses and other current assets, due from related parties, other assets, accounts payable, accrued expenses, accrued employee benefits, other current liabilities and other liabilities as the carrying amounts approximate fair value due to the short maturity terms of these instruments. Note 5. Borrowings Successor Predecessor Maturities December 31, 2024 Interest Rates December 31, 2023 Interest Rates Series 1 promissory notes 2025 - 2026 $ 725 12 % - 15 % $ 1,911 9 % - 15 % Related party notes 2024 - 2025 14,000 8 % - 15.99 % 1,000 —% Convertible promissory notes — 6,634 8 % WTI Facility 2028 20,000 13.50 % — Total Notes Payable 34,725 9,545 Less: unamortized debt discount ( 6,446 ) ( 2,133 ) Less: current portion of related party notes payable ( 14,000 ) ( 1,000 ) Less: current portion of notes payable ( 625 ) ( 912 ) Total Long-term Notes $ 13,654 $ 5,500 The Company's debt is carried on a historical cost basis net of unamortized discounts and premiums. Costs associated with acquiring debt are presented in the consolidated balance sheets as a direct deduction from the carrying amount of the debt as a debt discount. Discounts on debt are amortized over the contractual life of the related debt instrument using the effective interest method (unless otherwise specified below) and are included in Interest expense, net in the consolidated statements of operations and comprehensive income (loss). The Company’s notes payable, excluding debt issuance costs, and notes payable to related parties mature as follows: 82 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Year Ending December 31, Amount 2025 $ 14,625 2026 7,295 2027 8,244 2028 4,561 Total Debt $ 34,725 Series 1 Promissory Notes In 2018, the Company authorized the issuance and sale of unsecured promissory notes to investors up to $ 35,000 . From 2018 to 2021, the Company issued promissory notes with a total principal amount of $ 4,936 . The notes require monthly interest payments, have an original maturity period of 36 - 48 months, and bear interest at 9 %- 12 % per annum. The notes contain two term extension options, at the Company’s election, which can extend the notes’ maturity period to 60 months in total. If the Company elects its first term extension option, the note will bear interest at 12 % for months 36 through 48 . If the Company elects its second term extension option, the notes will bear interest at 15 % for months 48 through 60 . In the event of a change of control or a portfolio company sale, the notes are required to be repaid. In the event of a default, noteholders may elect to convert notes into common units of the Company equal to two times the unpaid principal balance plus accrued but unpaid interest at the time of conversion at a pre-money valuation agreed to by a majority of the converting noteholders. If the Company is in default due to lack of payment and the noteholders do not elect repayment, notes will accrue interest at the default rate. During the first 36 months, the default interest rate is 12 % and increases to 18 % thereafter. Noteholders converted their Series 1 promissory notes into Class B Preferred Units as follows: Successor Predecessor October 2, 2024 through December 31, 2024 January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Principal amount $ — $ 396 $ 1,310 Number of shares — 40,829 135,133 The conversion rate was based on the Class B Preferred Unit issuance price of $ 9.6992 per unit. The noteholders elected to receive the last interest payment due and waive the prepayment fee, if applicable, in connection with the transaction. The Company accounted for the conversion of promissory notes as an extinguishment of debt, the impact of which is immaterial to the Company’s financial statements. Upon Closing of the Business Combination, the option for noteholders to convert their Series 1 promissory notes into Class B Preferred Units is no longer available. Extensions on Series 1 promissory notes were as follow: Successor Predecessor Interest Rate December 31, 2024 December 31, 2023 Principal amount of 1st extension promissory notes 12 % $ 122 $ 829 Principal amount of 2nd extension promissory notes 15 % $ 603 $ 890 Interest expense on Series 1 promissory notes was as follows: 83 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Successor Predecessor October 2, 2024 through December 31, 2024 January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Interest attributable to contractual interest $ 29 $ 138 $ 297 Interest attributable to amortization of issuance costs — — 32 Total interest expense $ 29 $ 138 $ 329 Related Party Notes The Company entered into unsecured promissory notes with two related parties, the first on August 20, 2024, for a principal amount of $ 10,000 , and the second on August 22, 2024, for a principal amount of $ 2,000 . The Company entered into amended and restated agreements to amend the terms of these unsecured promissory notes on October 1, 2024. As per the original agreements, the note with the first party contained a loan fee of $ 1,000 which was payable with the repayment of the principal amount of the note and the note with the second party contained interest at the rate of 11.50 % per annum. The principal amounts, loan fees and accrued interest were repayable at the earlier of October 15, 2024 and the first business day following the date of consummation of the Business Combination. As per the amended note with the first party, the maturity date was extended to the earlier of (i) January 31, 2025 and (ii) the first business day following the date on which the Company has sufficient capital to be able to repay all amounts outstanding under the note and otherwise meet its expected working capital needs as determined by the Company in its reasonable discretion. The loan fee of $ 1,000 , required under the original agreement, became due on or around the amendment date but as of December 31, 2024 has not yet been paid and interest will accrue at the rate of 15.99 % per annum until paid. The amendment was accounted for as a troubled debt restructuring as the Company was provided a concession through a decrease in the effective interest rate. However, no gain or loss was recognized as a result. As per the amended note with the second party, the maturity date was extended to January 31, 2025 and the interest rate was increased to 13.50 % per annum. Additionally, $ 1,000 of the principal amount became due on or around the amendment date but as of December 31, 2024 has not yet been paid. Interest expense on the related party notes was as follows: Successor Predecessor October 2, 2024 through December 31, 2024 January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Total interest expense $ 611 $ 932 $ — In addition to the related party notes above, the Company also has a related party note for $ 1,000 that had no stated interest or maturity at issuance. The Company formally came to terms on the related party note by executing an unsecured promissory note with the related party on May 2, 2024. As per the terms of the executed agreement, the principal amount became due on December 21, 2024 but as of December 31, 2024 has not yet been paid and interest will now accrue at the rate of 8.00 % per annum. Upon maturity, the Company is required to repay the outstanding principal amount of $ 1,000 and a loan fee equal to approximately $ 63 . There is no stated interest as per the terms of the executed agreement but it provides for interest at the rate of 8.00 % per annum on the outstanding amount from the maturity date if the Company fails to pay any amount due on the maturity date. 84 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Convertible Promissory Notes The Company previously issued 8 % convertible promissory notes (the “2025 Notes”) that can be converted into equity units at the later of a qualified financing event or upon maturity, which is 36 -months. A qualified financing event is one or more transactions that results in gross proceeds of at least $ 2,000 . Upon the occurrence of a qualified financing event, the 2025 Notes convert to the series of stock issued in that financing at the lesser of (a) a 20 percent discount or (b) $ 200 million divided by the number of fully diluted units outstanding immediately prior to the financing. This conversion option is accounted for as a derivative instrument and the fair value of such is discussed in Note 4. Fair Value. On March 31, 2024, the 2025 Notes with a $ 6,000 principal balance and $ 755 of accrued interest were converted into 693,480 Accelsius Series A units at a conversion price of $ 9.74 per share. The conversion was pursuant to the occurrence of a qualified financing event. The related embedded derivative liability was extinguished in connection with the conversion, resulting in a loss on conversion of $ 1,119 recorded on the consolidated statements of operations and comprehensive income (loss) in the Predecessor period from January 1, 2024 through October 1, 2024. Interest expense on the 2025 Notes was as follows: Successor Predecessor October 2, 2024 through December 31, 2024 January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Interest attributable to contractual interest $ — $ 120 $ 583 Interest attributable to amortization of implied discounts — 231 456 Total interest expense $ — $ 351 $ 1,039 The Company has accrued interest of $ — and $ 634 in convertible promissory notes as of December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, the unamortized discount was $ — and $ 2,133 , respectively. WTI Facility On October 22, 2024, the Company entered into a term loan with WTI Fund X, Inc. and WTI Fund XI, Inc., (collectively, “WTI Lenders”). The terms of the loan provides for a term loan facility in the aggregate principal amount of up to $ 50,000 (the "WTI Facility"), of which (i) up to $ 20,000 is made available after October 22, 2024 and through November 15, 2024 (the "First Tranche"); (ii) up to $ 15,000 is made available after November 1, 2024 and through November 30, 2024 (the "Second Tranche"); and (iii) up to $ 15,000 will be made available after December 31, 2024 and through January 31, 2025 (the "Third Tranche") (provided that up to $ 7,500 of the Third Tranche will be made available until March 31, 2025), in each case, subject to the satisfaction of certain conditions, including, with respect to each of the Second Tranche and the Third Tranche, satisfaction of certain financial conditions and the WTI Lenders’ satisfaction with the Company’s forward-looking plan at such time. Borrowings under the WTI Facility will accrue interest at a rate per annum equal to the greater of (i) the “prime rate” of interest, as published by The Wall Street Journal on the date that the WTI Lenders prepare the promissory notes for the borrowings under such tranche, plus 5 % and (ii) 13.50 % and will amortize, after an interest-only period of twelve months in the case of the First Tranche and six months in the case of each of the Second Tranche and the Third Tranche, in equal monthly installments over a period of thirty months . Obligations are secured by a lien on the majority of the assets of Innventure LLC and Innventure, Inc. The Company received all $ 20,000 of the First Tranche on November 15, 2024. The First Tranche, principal and interest, shall be repaid over a period of 30 months in equal, monthly installments, commencing after an initial 12 -month period of interest-only monthly payments, resulting in a total term of 42 months. The interest rate on the 85 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) outstanding principal amounts under the WTI Facility for the Successor period ended December 31, 2024 was 13.50 %. In connection with the WTI Facility, the Company issued WTI Warrants to the WTI Lenders (as further defined and described in Note 11. Warrants). The Company accounted for each of the WTI Warrants as detachable warrants at their fair value. The fair value of the WTI Warrants was recorded as a liability and as a discount to the WTI Facility on the consolidated balance sheets. The Company is amortizing the discount over the term of the WTI Facility using the straight-line method. On October 22, 2024, when the Company entered into the WTI Facility, the Company recognized $ 16,735 as a commitment fee asset on the consolidated balance sheets. On November 15, 2024, when the Company received the First Tranche in the amount of $ 20,000 , the prorated portion of the commitment fee asset of $ 6,694 was reclassified to a debt issuance cost within Notes payable, net of current portion and began amortizing over the term of the First Tranche. On November 30, 2024 and December 31, 2024, management determined that the Second and Third Tranche, respectively, could not be drawn upon due to certain operational thresholds which had not been met for these Tranches. Therefore, the Company wrote off $ 5,021 and $ 5,021 , respectively on these dates, to Write-off of loan commitment fee asset on the consolidated statements of operations and comprehensive income (loss) as the commitment fee asset could no longer benefit the Company in receiving debt financing capital. Interest expense on this facility was as follows: Successor Predecessor October 2, 2024 through December 31, 2024 January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Interest attributable to contractual interest $ 352 $ — $ — Interest attributable to amortization of issuance costs 248 — — Total interest expense $ 600 $ — $ — Note 6. Inventories Successor Predecessor December 31, 2024 December 31, 2023 Raw materials $ 2,974 $ — Work in process 50 — Finished goods 2,154 — Total inventories $ 5,178 $ — 86 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Note 7. Property, Plant and Equipment Successor Predecessor December 31, 2024 December 31, 2023 Leasehold improvements $ 548 $ 38 Machinery & equipment 664 86 Computers & office equipment 14 19 Construction in progress 266 502 Property, Plant and Equipment, Gross 1,492 645 Less: Accumulated depreciation ( 78 ) ( 8 ) Property, Plant and Equipment, Net $ 1,414 $ 637 Total depreciation expense on property, plant and equipment was as follows: Successor Predecessor Period from October 2, 2024 through December 31, 2024 Period from January 1 2024 through October 1, 2024 Year ended December 31, 2023 Depreciation Expense $ 78 $ 148 $ 8 Note 8. Business Combinations As discussed in Note 1. Nature of Business, the Closing of the Business Combination occurred on October 2, 2024 pursuant to the terms of the Business Combination Agreement. Upon Closing, 250,000,000 shares of the Company’s common stock (“Common Stock”), par value $ 0.0001 per share, and 25,000,000 shares of the Company’s preferred stock, par value $ 0.0001 per share, were authorized. Of the 25,000,000 shares of preferred stock authorized, the Company designated 3,000,000 shares as Series B preferred stock ("Series B Preferred Stock"). As a result of the Business Combination, (a) each Learn CW Class A ordinary share and Class B ordinary share issued and outstanding immediately prior to Closing (and not cancelled or redeemed) was converted into the right to receive one share of Common Stock; (b) each Learn CW public warrant and private placement warrant outstanding immediately prior to Closing was assumed and converted into a Company warrant ("Warrant"); (c) the Innventure LLC equity units (other than the Innventure LLC Class PCTA units ("Class PCTA Units") and Class I units ("Class I Units")) issued and outstanding immediately prior to Closing were converted into the right to receive shares of Common Stock; and (d) the Class PCTA Units and the Class I Units of Innventure LLC remained outstanding. The Business Combination has been accounted for using the acquisition method of accounting. Holdco was determined to be the accounting acquirer as Innventure LLC was determined to be a VIE and Holdco was determined to be the primary beneficiary. In applying the VIE model, the Class I and Class PCTA Units and associated assets and liabilities are considered silos within Innventure LLC for which Holdco is not considered the primary beneficiary; therefore such silos were not acquired and are omitted from the Company’s consolidated financial statements. Accordingly, the Company recorded all assets acquired and liabilities assumed that Holdco was determined to be the primary beneficiary of at their acquisition date fair values, with any excess recognized as goodwill. Consideration Transferred The aggregate consideration for the Business Combination (the “Purchase Consideration”) paid to the holders of Innventure LLC’s outstanding equity and profits interests and warrants, other than the Class PCTA Units and the 87 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Class I Units (such holders, the “Innventure Members”), consisted of 43,494,999 shares of Common Stock. A portion of this Purchase Consideration to be delivered to Innventure Members consists of a contingent right to receive up to 5,000,000 (the “Company Earnout Shares”) shares of Common Stock. Refer to Note 10. Earnout Shares for more details on the Company Earnout Shares. Immediately after giving effect to the Business Combination (including as a result of the conversions described above), there were 43,589,850 shares of Common Stock and 18,645,997 Warrants issued and outstanding. As of the Closing, the Innventure Members owned approximately 88.3 % of the Company’s outstanding shares of Common Stock and the former shareholders of Learn CW, including (i) Learn CW's sponsor, CWAM LC Sponsor LLC (the “Sponsor”) and (ii) Learn CW's independent directors, owned approximately 13.7 % of the Company’s outstanding shares of Common Stock. The number of shares of Common Stock issued and outstanding at the Closing of the Business Combination were: Innventure LLC Units Immediately Prior to Closing Common Stock Conversion Ratio Common Stock Upon Closing Class B Preferred Units 10,875,000 2.09 22,754,664 Class B-1 Preferred Units 5,609,951 2.09 11,738,165 Class A Units 342,608 2.09 716,867 Class C Units 1,570,125 2.09 3,285,303 Total 18,397,684 38,494,999 Learn CW Shares Learn CW Public shareholders 1,027,674 1.00 1,027,674 Learn CW Class B Shareholders 5,000,000 1.00 5,000,000 Total 6,027,674 6,027,674 Less: Learn CW shares subject to clawback provisions ( 932,823 ) Total Common Stock Issued and Outstanding at Closing 43,589,850 The consideration transferred for the Business Combination is summarized as follows: Holdco Common Stock transferred to Innventure Members (1) $ 418,441 Contingent consideration (2) 53,980 Consideration transferred 472,421 Non-controlling interest (3) 343,030 Total business enterprise value $ 815,451 (1) Represents the fair value of the 38,494,999 of aggregate consideration paid in shares (excluding the Company Earnout shares) at a Closing share price of $ 10.87 . (2) Represents the fair value of the Company Earnout Shares issued and contingently issuable to Innventure Members. Refer to Note 10. Earnout Shares for more details. (3) The non-controlling interest represents the fair value of equity in Accelsius held by non-controlling parties. The fair value is calculated using a discounted cash flow methodology to determine the Accelsius equity value which is pro rated by the non-controlling ownership percentage (Level 3). Significant inputs used to measure the fair value of the non-controlling interest include the long-term growth rate of 3 %, normalized tax rate of 27.9 %, normalized net working capital of 18 %, and weighted average cost of capital of 17.6 %. Investing cash flow activity as a result of the Business Combination is summarized as follows: 88 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Amount Cash consideration transferred $ — Add: Cash and cash equivalents acquired 16 Investing cash flow activity as a result of the Business Combination $ 16 On the Closing Date, Innventure settled certain obligations using cash from the Learn CW trust account that was released at Closing and financing secured through Series B Preferred Stock. The financing secured through Series B Preferred Stock is discussed in Note 13. Stockholders' Equity. Amount Cash proceeds from Learn CW trust account $ 11,342 Net cash proceeds from Series B Preferred Stock issuance 10,572 Total Innventure, Inc. cash sources $ 21,914 Payment of Learn CW accounts payable and accrued expenses $ 9,233 Payment of Learn CW promissory note due to Sponsor 4,628 Payment of Innventure LLC transaction costs at Closing 6,206 Total cash uses $ 20,067 Net cash proceeds $ 1,847 The Business Combination has been accounted for as a business combination using the acquisition method of accounting. The total purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values on the acquisition date. The purchase consideration was allocated to the following assets and liabilities: 89 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Amount Assets acquired: Cash and cash equivalents $ 16 Accounts receivable 117 Due from related parties 210 Inventory 2,824 Prepaid expenses and other current assets 1,955 Equity method investments 18,449 Investment in debt securities - AFS 10,172 Property, plant, and equipment 1,227 Intangible assets 187,500 Other assets 829 Total assets acquired: $ 223,299 Liabilities assumed: Accounts payable $ 6,286 Accrued employee benefits 7,617 Accrued expenses 1,972 Related party payable 13,932 Notes payable 975 Patent installment payable 13,600 Deferred tax liability 30,654 Other liabilities 748 Total liabilities assumed: $ 75,784 Net identifiable assets acquired $ 147,515 Goodwill $ 667,936 The assessment of fair value is preliminary and is based on information that was available to management and through the end of the fiscal year. If additional information of events or circumstances that existed at Closing becomes available to management related to assets acquired or liabilities assumed subsequent to this preliminary assessment of fair value but not later than one year after Closing, measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the Closing Date. Goodwill is recognized as the excess of consideration over the net assets acquired of Innventure LLC and represents the value derived by Innventure LLC’s strong market position and assembled workforce. Goodwill arising from the Business Combination is attributable to the Company’s Technology segment and is not deductible for tax purposes. The fair value of definite-lived intangible assets as of the Closing Date included: 90 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Amount Trade names 17,800 Customer relationships 4,600 Developed technology 165,100 Total $ 187,500 Refer to Note 9. Goodwill and Intangible Assets for additional information. The Predecessor financial statements for the year ended December 31, 2023, include $ 3,452 transaction costs from Innventure LLC and for the period from January 1, 2024 to October 1, 2024 include $ 9,627 of transaction costs from Innventure LLC. These transaction costs are recorded within General and administrative expenses within the consolidated statements of operations and comprehensive income (loss). Prior to the Closing Date, Learn CW incurred $ 9,233 of transaction costs related to the Business Combination, which are not reported in the Predecessor consolidated statements of operations and comprehensive income (loss) since Learn CW is not the Predecessor; these transaction costs are included within Accumulated deficit for the Successor period beginning October 2, 2024. Innventure LLC contributed revenues of $ 455 and net loss of $ 18,333 in the consolidated statements of operations and comprehensive income (loss) for the Successor period from October 2, 2024 through December 31, 2024. Innventure LLC incurred certain acquiree expenses contingent solely upon the consummation of the Business Combination. Such costs consisted of $ 5,292 in transaction costs and $ 223 of expense related to share-based award accelerated vesting. Such costs are presented “on the line” and are not reflected in either Predecessor or Successor financial statement periods. “On the line” describes those expenses triggered by the consummation of a business combination that are not recognized in the consolidated statements of operations and comprehensive income (loss) as they are not directly attributable to either period but instead were contingent on the Business Combination. Pro Forma Financial Information (Unaudited) The following unaudited pro forma financial information summarizes the results of operations for the Company as though the Business Combination had occurred as of the beginning of the comparable prior annual reporting period. The Successor and Predecessor Periods for the year ended December 31, 2024 have been combined. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the Business Combination taken place on the date indicated, or the future consolidated results of operations of the Company. The unaudited pro forma results reflect the step-up amortization adjustments for the fair value of intangible assets acquired, transaction expenses, public warrant reclass from liabilities to equity, removal of Learn CW investment income, and accelerated vesting of equity-based compensation. The amounts of revenue for the years ended December 31, 2024 and 2023 are $ 1,219 and $ 1,117 , respectively. The amounts of net loss for the years ended December 31, 2024 and 2023 are $ 105,972 and $ 74,165 , respectively. Note 9. Goodwill and Intangible Assets There was no goodwill on the consolidated balance sheets during the Predecessor periods. For the Successor period from October 2, 2024 through December 31, 2024, there was $ 667,936 of goodwill recognized in connection with the Business Combination and no change to this value as of December 31, 2024. Refer to Note 8. Business Combinations for details. The following table summarizes intangible assets, net: 91 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) December 31, 2024 (Successor) Intangible Asset Weighted-Average Amortization Period (years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Trade names 16.0 17,800 ( 277 ) 17,523 Customer relationships 3.0 4,600 ( 382 ) 4,218 Developed technology 9.1 165,100 ( 4,718 ) 160,382 Other finite-lived intangible assets 3.0 30 — 30 Total intangible assets $ 187,530 $ ( 5,377 ) $ 182,153 There were no intangible assets on the consolidated balance sheets during the Predecessor periods; therefore, no amortization expense was recognized. Amortization expense was $ 5,377 for the Successor period from October 2, 2024 through December 31, 2024 and is recorded on the consolidated statements of operations and comprehensive income (loss). Estimated future amortization expense is as follows: Amortization Expense 2025 $ 21,616 2026 21,616 2027 21,234 2028 20,073 2029 18,853 Thereafter 78,761 Total $ 182,153 Note 10. Earnout Shares Upon Closing of the Business Combination, 5,000,000 Company Earnout Shares were contingently issuable to Innventure Members. Additionally, 344,828 earnout shares were issued to the Sponsor who received consideration in the Business Combination. These shares, referred to as "Sponsor Earnout Shares," are subject to clawback. The Company Earnout Shares and the Sponsor Earnout Shares are collectively referred to as the “Earnout Shares”. The Earnout Shares will vest upon the following milestone conditions: • 40 % of the Earnout Shares will vest upon Accelsius having entered into binding contracts providing for revenue for the Company (as defined in the Business Combination Agreement) within 7 years following the Closing (the “Vesting Period”) in excess of $ 15,000 in revenue ("Milestone One"); • 40 % of the Earnout Shares will vest upon the Company’s formation of a new subsidiary, in partnership with an MNC, as determined using the Innventure LLC's “DownSelect” process, within the Vesting Period ("Milestone Two"); and • 20 % of the Earnout Shares will vest upon AeroFlexx having received in excess of $ 15,000 revenue within the Vesting Period ("Milestone Three"). The Sponsor Earnout Shares have a vesting provision that occurs upon a change of control event or upon the occurrence of the VWAP of the shares of Innventure, Inc. Common Stock exceeding $ 11.50 per share for at least twenty days in any immediately preceding thirty day period (the "VWAP Completion Event"). These vesting conditions are not effective on the Company Earnout shares until 6 months following the Business Combination. 92 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) The Earnout Shares related to Milestone One and Milestone Two were determined to be classified as equity. At Closing, 4,275,862 equity-classified Earnout Shares were fair valued at $ 46,350 , inclusive of 2,137,931 Milestone One shares fair valued at $ 23,175 and 2,137,931 Milestone Two shares fair valued at $ 23,175 which are presented in Additional paid-in capital on the consolidated balance sheets. The Earnout Shares related to Milestone Three are classified as a liability. At Closing, 1,068,966 liability-classified Earnout Shares were fair valued at $ 11,352 and subsequently fair valued at $ 14,752 as of December 31, 2024. The Company recognized a loss of $ 3,400 in Change in fair value of financial liabilities on the consolidated statements of operations and comprehensive income (loss) for the Successor period from October 2, 2024 through December 31, 2024. Note 11. Warrants Number of Public Warrants Number of Private Warrants Number of WTI Warrants Outstanding, October 2, 2024 (Successor) 11,499,997 7,146,000 — Exercised ( 259,309 ) — — Issued — — 2 Outstanding, December 31, 2024 (Successor) 11,240,688 7,146,000 2 There were no warrants outstanding during the Predecessor period from January 1, 2024 through October 1, 2024 nor the Predecessor year ended December 31, 2023. Public and Private Placement Warrants Upon the consummation of the Business Combination, 11,499,997 Learn CW public warrants and 7,146,000 private placement warrants outstanding immediately prior to Closing was assumed by the Company and each converted into Company warrant ("Warrant"). All references to “Class A ordinary shares” of Learn CW in Learn CW’s prior agreement were amended to shares of Common Stock of the Company. The Warrants will become exercisable on November 1, 2024 and will expire on October 2, 2029 or earlier upon redemption or liquidation. The Warrants are exercisable for $ 11.50 per share. The private placement warrants are identical to the public warrants, except that the private placement warrants and the Common Stock issuable upon the exercise of the private placement warrants will not be transferable, assignable or salable until 30 days after the completion of the Business Combination, subject to certain limited exceptions. Additionally, the private placement warrants will be exercisable on a cashless basis and will be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the private placement warrants are held by someone other than the initial purchasers or their permitted transferees, the private placement warrants will be redeemable by Learn CW and exercisable by such holders on the same basis as the public warrants. Public Warrants The Company determined the public warrants are equity-classified and are presented as permanent equity on the consolidated balance sheets. As such, the public warrants are measured at fair value at Closing using the warrant price at Closing multiplied by the number of public warrants and will not be subsequently re-measured. At Closing, the fair value of the equity classified public warrants was $ 1,265 and is presented in the consolidated balance sheets. See Note 4. Fair Value for details on valuation. The public warrants expire on October 2, 2029. During the Successor period from October 2, 2024 through December 31, 2024, 259,309 public warrants were exercised. Each public warrant that was exercised was converted into one share of Common Stock for an exercise price of $ 11.50 , amounting to a total of $ 2,982 cash proceeds. Private Placement Warrants 93 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) The private placement warrants are liability classified and are not eligible for an exception from derivative accounting. The private placement warrants are presented as a current liability on the consolidated balance sheets given their exercisable term, which is 30 days from Closing. The private placement warrants are measured at fair value based on the price of the public warrants (Level 2 fair value measurement). As of Closing and December 31, 2024, the fair value of the liability-classified private placement warrants is $ 786 and $ 16,793 , respectively, and is presented in the consolidated balance sheets. For the Successor period from October 2, 2024 through December 31, 2024, the company recognized a loss of $ 16,007 in Change in fair value of financial liabilities on the consolidated statements of operations and comprehensive income (loss). There were no private warrants exercised for the year ended December 31, 2024. Successor December 31, 2024 Number of Warrants Exercise Price Expiration Date Balance Private Warrants 7,146,000 $ 11.50 10/2/2029 $ 16,793 WTI Warrants On October 22, 2024, in connection with the WTI Facility, the Company issued warrants (the "WTI Warrants") to the WTI Lenders. The WTI Warrants allow the holders to acquire shares of the Company’s Common Stock or any future equity securities issued by the Company ("Subsequent Round Stock") for cash, at a purchase price equal to $ 0.01 per share. The number of shares acquirable is determined by dividing $ 10,000 by the applicable exercise price, which varies depending on the type of stock acquired and certain other conditions. • If the WTI Lenders choose to exercise the warrants for Common Stock, the exercise price is $ 10.00 per share; however, if the volume-weighted average price (VWAP) of the Company's Common Stock is less than $ 10.00 per share as of the date which is eighteen months after the Company's Common Stock began trading, then the exercise price shall be reduced to such lower VWAP. • If the WTI Lenders choose to exercise the warrants for Subsequent Round Stock, the exercise price shall be the lowest price per share paid by any person for the Company's equity securities issued in a corresponding subsequent round. The WTI Warrants are exercisable at the option of the holders until March 31, 2035, and may be exchanged for a cash amount of $ 15,000 (subject to ratable reduction for partial exercises) upon the occurrence of certain liquidity events or at any time from and after October 22, 2028. The holders also have the right to participate in future equity or convertible debt offerings up to an aggregate amount of $ 5,000 or to maintain their pro rata ownership, subject to customary exclusions. The WTI Warrants are considered freestanding financial instruments and are recorded at fair value on the consolidated balance sheets as a warrant liability. The fair value of the WTI Warrants upon issuance was $ 15,690 . For the period from issuance to December 31, 2024, the Company recognized a loss of $ 1,540 in Change in fair value of financial liabilities on the consolidated statements of operations and comprehensive income (loss). See Note 4. Fair Value for details on the valuation. Successor December 31, 2024 Number of Warrants Exercise Price Expiration Date Balance WTI Warrants 2 varies 3/31/2025 $ 17,230 Note 12. Mezzanine Capital 94 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Predecessor period The redemption of Class PCTA Units or Class I Units is not solely in control of the Company and, as such, both classes of units are considered redeemable at the option of the holder. The Class PCTA Units are probable of becoming redeemable and the Class I Units are currently redeemable. As such, these units are accreted to redemption value at each reporting date. Valuation Class PCTA Units are valued on a monthly basis to align with the underlying value of the PCT stock. Changes in the redemption value (e.g., fair value) are recognized immediately as they occur and the carrying value of the instrument is adjusted to equal the redemption value at the end of each reporting period. Class I Units are valued on a quarterly basis based on the underlying fair value of the ESG Fund. Voting Class PCTA Units carry the right to hold, vote and dispose of the Company’s investment in the related shares of PCT common stock. All Class PCTA Units are held by Innventure1 LLC (“Innventure1”). Class I Units carry the right to hold, vote and dispose of the Company’s partnership interest in the ESG Fund with respect to its General Partner (“GP”) affiliated commitment. Class I Units are held by WE-INN LLC. The holders of units of any other class are not permitted to vote on matters specific to the Class PCTA or Class I Units. Liquidation Preference Distributions to Class PCTA and Class I Unit holders are based on their ownership percentage of the respective class. Redemption The Company will distribute unencumbered shares of PCT common stock, held in connection with the Class PCTA Units back to Innventure1, as the original contributing member, and at the election of Innventure1. When this occurs, Innventure1 is obligated to either invest the after-tax net proceeds into the Company or contribute the shares of PCT common stock (an in-kind capital contribution) back to the Company in exchange for Class B-1 Preferred Units. With respect to up to 1,000,000 Class PCTA Units, Innventure1 is obligated to acquire Class B-1 Preferred Units after the achievement of certain operational milestones at PCT. The in-kind capital contributions will correspond to the release of the Company’s obligations under a contractual lock-up agreement related to PCT's common stock and will be equal to the product of the weighted average per share closing price for one share of PCT common stock for each full trading day during the 30 -day period ending on the date of such transfer and multiplied by 0.8 . There is no maximum amount the Company could be required to pay if the instrument is redeemed. The Company will distribute the Class I investments held by Innventus ESG Fund I, L.P., to the investor in-kind at the election of WE-INN LLC. There is no maximum amount that the Company could be required to pay if the instrument is redeemed. Note 13. Stockholders' Equity For periods prior to the Closing, the Predecessor had Class B Preferred Units, Class B-1 Preferred Units, Class A Units and Class C Units issued and outstanding. In connection with the Business Combination on October 2, 2024, as described in Note 8. Business Combinations, the Successor acquired all membership interests that were in existence for the Predecessor. Series B Preferred Stock 95 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) The Company is authorized to issue 25,000,000 shares of preferred stock with a par value of $ 0.0001 per share. Of which, 3,000,000 of the shares of preferred stock are designated as Series B Preferred Stock. Immediately following the Business Combination, Innventure issued 1,102,000 of Series B Preferred Stock at a purchase price of $ 10.00 per share (the “Original Issue Price”) for a total amount of $ 11,020 . Series B Preferred Stock are subject to: (i) a mandatory conversion on the date that is five years after original issuance (the “Maturity Date”); and (ii) an optional conversion, at the election of the holder, at any time prior to the Maturity Date upon the effectiveness of a registration statement by the Company registering the underlying shares of Common Stock issuable upon conversion. The number of shares of Common Stock that each holder of Series B Preferred Stock will receive upon conversion will be the number of Series B Preferred shares multiplied by the Conversion Rate, subject to a threshold amount. The conversion rate (“Conversion Rate”) will equal a fraction whose numerator is $ 10.00 and whose denominator is the lesser of: (i) $ 12.50 and (ii) the Reset Conversion Price, where the “Reset Conversion Price” means the greater of: (a) $ 5.00 and (b) the 10 -trading day volume-weighted average closing price of the Common Stock. Any fractional shares resulting from conversion will be rounded up to the next whole share. Holders of Series B Preferred Stock are entitled to cast the number of votes equal to: (i) $ 10.00 , divided by (ii) the Minimum Price (which shall have the meaning assigned in Nasdaq Listing Rule 5635(d)) of Common Stock as of the initial issue date of the Series B Preferred Stock. Holders of Series B Preferred Stock will vote with the holders of Common Stock as a single class and on an as-converted basis, except as provided by law or applicable to Nasdaq Listing Rules. The voting power of Series B Preferred Stock holders cannot exceed 19.99 % of the total outstanding voting power. Series B Preferred Stock will rank senior to the Common Stock, which is junior stock when compared to Series B Preferred Stock. Dividends for Series B Preferred Stock will accrue annually at the rate of 8.0 % of the Original Issue Price of $ 10.00 per share. All dividends are prior to and in preference over any dividend on any junior stock or parity stock and shall be declared and fully paid before any dividends are declared and paid, or any other distributions are made, on any junior stock or parity stock. When dividends are declared by the Company’s board of directors, dividends will be due and payable annually in arrears as payment in kind on the last day of the last quarter in each fiscal year. Holders of Series B Preferred Stock are also eligible to receive dividends and distributions declared on Common Stock, as though their shares were converted into Common Stock, based on the Conversion Rate, using assets legally available for distribution by the Company. The preferred dividends that became due on December 31, 2024, were recorded within Obligation to issue equity on the consolidated balance sheets. As of December 31, 2024, the cumulative dividends on Series B Preferred Stock were $ 217 . Common Stock The Company is authorized to issue 250,000,000 shares of Common Stock with a par value of $ 0.0001 per share. Holders of the Company’s common stock are entitled to one vote for each share. Immediately following the Business Combination, there were 43,589,850 shares of Common Stock issued and outstanding as further discussed in Note 8. Business Combinations. As of December 31, 2024 there were 44,597,154 shares of Common Stock issued and outstanding due to the issuance of Common Stock, exercise of Public Warrants, the issuance of Common Stock in relation to the Standby Equity Purchase Agreement, and the vesting of Earnout Shares that occurred prior to year end. Standby Equity Purchase Agreement In October 2023, we entered into the SEPA with YA II PN, LTD., an exempt limited partnership from the Cayman Islands (“Yorkville”). Concurrently with the Business Combination, this agreement became effective. Pursuant to the SEPA, the Company shall have the right, but not the obligation, to sell to Yorkville up to $ 75,000 of Common Stock, par value $ 0.0001 per share, at the Company’s request any time during the commitment period commencing on the Closing and continuing for a term of 3 years (“Purchased Put Option”). As consideration, Innventure agreed and paid, to YA Global II SPV, LLC, a subsidiary of Yorkville, (i) a structuring fee in the amount 96 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) of $ 25 and (ii) a commitment fee of $ 375 . The commitment fee was expensed in full immediately following the consummation of the Business Combination, according to ASC 815, and recorded within the General and administrative expense line item in the consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2024. Each advance that Innventure issues in writing to Yorkville under the SEPA (each, an “Advance,” and notice of such request, and “Advance Notice”) may be in an amount of Common Stock up to the greater of: (i) $ 10,000 or (ii) the aggregate daily trading volume of Common Stock for the five trading days prior to Innventure requesting an Advance. The purchase price for the shares of Common Stock set forth in the Advance is determined by multiplying the market price of Common Stock by either (a) 95 % of the daily volume weighted average price (“VWAP”) during the applicable one-day pricing period or (b) 97 % of the lowest daily VWAP during the applicable three consecutive trading day pricing period. The applicable pricing period depends on the type of Advance Notice selected by the Company under the SEPA. Additionally, the Company may establish a minimum acceptable price in each Advance Notice below which the Company will not be obligated to make any sales to Yorkville. Once the Company draws on the SEPA, the related number of shares issuable constitutes a forward contract to issue common stock (“Forward Contract”). The SEPA will automatically terminate on the earlier to occur of (i) November 01, 2027 and (ii) the date on which Yorkville shall have made payment of advances pursuant to the SEPA for Common Stock equal to the commitment amount of $ 75,000 . On December 24, 2024, the Company issued and sold 60,000 shares of Common Stock in amount of $ 770 , based on the settlement date closing stock price. Additionally, on December 30, 2024, the Company issued and sold 75,000 shares of Common Stock in an amount of $ 965 . For the year ended December 31, 2024, the Company sold 135,000 shares of Common Stock under the SEPA, raising $ 1,735 which is classified within Issuance of common shares, net of issuance costs in the consolidated statements of changes in stockholders' equity (deficit). At Risk Sponsor Shares In connection with the Business Combination Agreement, the Company entered into the Sponsor Support Agreement under which 5,000,000 shares were issued to the Sponsor at the Closing, as follows: 2,775,172 Fixed Shares, 344,828 Sponsor Earnout Shares, and 1,880,000 At Risk Sponsor Shares. The Fixed Shares issued to the sponsor are not subject to any contingencies or forfeiture provisions. The Sponsor Earnout Shares are issued until they are deemed forfeited due to non-achievement of the associated Milestones. See Note 10. Earnout Shares for more discussion on the Sponsor Earnout Shares. The At Risk Sponsor Shares are issued, but a portion of such shares are subject to forfeiture in case the Company is not able to secure additional financing based on the calculation within the Sponsor Support Agreement. As per the discussion of additional financing per the Sponsor Support Agreement, the number of shares subject to forfeiture were calculated to be 587,995 . The rest of the At-Risk Sponsor Shares, 1,292,005 , were free from any forfeiture conditions or contingencies. When the Company received the First Tranche of the WTI Facility on November 15, 2024, the additional financing condition was met and all the remaining At-Risk Sponsor Shares were considered non-forfeitable and free from any contingencies. See Note 5. Borrowings for more discussion over the First Tranche of the WTI Facility. Similar to the Sponsor Earnout Shares, all the At-Risk Sponsor Shares were entitled to non-forfeitable dividends or distributions along with other common stockholders of the Company, from their issuance date. Service Provider Shares 97 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) In December 2023, the Company entered into an agreement to receive financial advisory services in exchange for equity. Upon Closing of the Business Combination, the Company became liable for $ 441 of Common Stock divided by the conversion price of $ 10.87 , resulting in 40,552 shares. In connection with the closing of the WTI Facility mentioned in Note 5. Borrowings, the Company became liable for $ 500 worth of Common Stock calculated as the volume-weighted average price of the Common Stock over the five consecutive trading days ending on the trading day immediately preceding November 15, 2024, $ 11.13 , for a total of 44,919 shares. The resulting liabilities for these unissued securities are included within Liability for future equity issuance on the consolidated balance sheets. In October 2023, the Company entered into an agreement to receive financial advisory services in exchange for equity. Upon Closing of the Business Combination, the Company is obligated to pay a success fee in cash in an amount of $ 600 and equity success fee in $ 3,000 of Series C Preferred Stock, par value $ 0.0001 per share, of the Company (the “Series C Preferred Stock”) at $ 10.00 per share. As of December 31, 2024, the Company has no Series C Preferred Stock outstanding and, therefore, has not yet issued this 300,000 Series C Preferred Stock. The resulting liabilities for these unissued securities are included within Obligation to issue equity on the consolidated balance sheets. Note 14. Stock-based Compensation Capital Incentive Plan The Predecessor’s capital incentive plan (the “Capital Incentive Plan”), as amended, permitted the grant of 1,585,125 shares of Class C Units to its employees, directors, and consultants, as designated by the Board of Directors. Upon Closing of the Business Combination, the vesting of all Innventure LLC unvested Class C Capital Incentive Plan units was accelerated, resulting in 203,651 units vested and additional compensation expense of $ 223 . The Class C Capital Incentive Plan units were then immediately exchanged as part of the Business Combination for Common Stock. The Company recognized compensation costs related to the Capital Incentive Plan as follows: Successor Predecessor Period from October 2, 2024 through December 31, 2024 Period from January 1 2024 through October 1, 2024 Year ended December 31, 2023 Compensation expense $ — $ 137 $ 205 2024 Equity and Incentive Compensation Plan On October 2, 2024, the Company entered into the 2024 Equity and Incentive Compensation Plan (the “Plan”), wherein the Company is permitted to grant awards to employees, directors, consultants, and former service providers of the Company. The Plan provides for the granting of awards including, restricted stock units (“RSUs”), stock options, and stock appreciation rights (“SARs”). The number of shares of Common Stock available under the Plan is initially limited to 11,022,894 . The share limit will automatically increase by 3 % on the first day of each fiscal year, beginning in 2025, unless a smaller number of shares is determined by the Board of Directors. On December 9, 2024, the Company granted 975,409 stock options and 2,036,476 restricted stock units (together the “Awards”) to certain directors, employees and consultants. The Awards vest over the service periods defined in each individual grant agreement, which is generally accelerated upon a change in control. All RSUs will be vested by 98 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) May 1, 2027 and all stock options will be vested by April 30, 2027. The fair value of the Awards issued to employees is recognized as compensation expense on a straight-line basis over the requisite service period. Restricted Stock Units Each RSU represents the right to receive one share of Common Stock upon vesting of such RSU. The fair value of RSUs is determined based on the closing market price of the Company’s Common Stock at the date of the grant. If a cash dividend is declared on the Company’s Common Stock before the RSUs have vested, holders of RSUs are entitled to received dividends in the form of a cash credit, and shall be paid in cash at the same time as the RSUs are settled. The summary of RSU activity for the Successor period from October 2, 2024 through December 31, 2024 is as follows: Number of Shares Weighted Average Grant Date Fair Value (per share) Granted on December 9, 2024 2,036,476 $ 12.20 Vested 131,468 12.20 Forfeited — — Non-vested at December 31, 2024 1,905,008 $ 12.20 During the Successor period from October 2, 2024 through December 31, 2024, the Company recognized compensation costs related to the RSUs of $ 1,604 within General and administrative expense in the consolidated statements of operations and comprehensive income (loss). As of December 31, 2024, the Company had $ 23,241 in stock-based compensation expense remaining to be recognized over approximately 1.65 years. Stock Options The stock options were granted with an exercise price of $ 12.20 , which aligns with the Company’s closing share price on December 9, 2024. Using the Black-Scholes option pricing model, the estimated grant date fair value of stock options was $ 6,468 based on an expected volatility of 56 %, an expected option term of approximately 5.28 - 5.62 years, and risk-free rate of return of 4.0 - 4.1 %. The stock options have a maximum contractual life, and a weighted average remaining contractual term, of 10 years from the grant date. 99 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Stock options activity for the Successor period from October 2, 2024 through December 31, 2024 is as follows: Number of Shares Weighted Average Exercise Price Weighted Average Grant Date Fair Value (per share) Granted on December 9, 2024 975,409 $ 12.20 $ 6.63 Vested 61,560 12.20 6.63 Exercised — — — Forfeited — — — Outstanding at December 31, 2024 913,849 $ 12.20 $ 6.63 Exercisable at December 31, 2024 — — — During the Successor period from October 2, 2024 through December 31, 2024, the Company recognized compensation costs related to the stock options of $ 405 within General and administrative expense in the consolidated statements of operations and comprehensive income (loss). As of December 31, 2024, the Company had $ 6,063 in compensation expense remaining to be recognized over approximately 1.68 years. Stock Appreciation Rights On December 31, 2024 the Company granted 350,000 stock appreciation rights with respect to the equity of Accelsius Holdings LLC. The SARs were awarded to certain Innventure directors, officers, and former service providers of the Company and its affiliates (the “Participants”). The SARs entitle the Participants to shares of Common Stock, or cash, equal to the value of the appreciation in Accelsius’ stock price over the base price of $ 12.175 . Two Participants, who were considered non-employees, were granted cash-settled SARs and three Participants were granted stock-settled SARs. The cash-settled SARs are considered liability-classified and the stock-settled SARs are considered equity-classified Both the cash-settled SARs and stock-settled SARs will be automatically exercised upon the two-year anniversary of the date of grant. The weighted average contractual term is 2 years. The estimated grant date fair value of the cash-settled SARs and the stock-settled SARs was $ 1,160 and $ 12,371 , respectively. The SARs were valued using the Black-Scholes option-pricing model based on an expected volatility of 70 %, an expected term of approximately 2 years, and risk-free rate of return of 4 %. The SARs are considered fully vested at the date of grant and compensation cost for both SARs was recognized immediately at the date of grant. During the Successor period from October 2, 2024 through December 31, 2024, the Company recorded $ 13,531 in compensation expense related to the SARs within General and administrative expense in the consolidated statements of operations and comprehensive income (loss). The summary of SARs activity for the Successor period from October 2, 2024 through December 31, 2024 is as follows: 100 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Cash-settled SARs Stock-settled SARs Number of Shares Weighted Average Exercise Price Weighted Average Grant Date Fair Value (per share) Number of Shares Weighted Average Exercise Price Weighted Average Grant Date Fair Value (per share) Granted on December 9, 2024 30,000 $ 12.18 $ 38.66 320,000 $ 12.18 $ 38.66 Vested — — — — — — Exercised — — — — — — Forfeited — — — — — — Outstanding at December 31, 2024 30,000 $ 12.18 $ 38.66 320,000 $ 12.18 $ 38.66 Exercisable at December 31, 2024 — — — — — — Subsidiary Equity Plans Accelsius Subsidiary Equity Plan Accelsius, a subsidiary of the Company, adopted an equity incentive plan on March 24, 2022 (the “Accelsius Subsidiary Equity Plan”). In March 2023, the Accelsius Subsidiary Equity Plan was amended to permit the grant of 3,300,000 Class C units of the subsidiary to the subsidiary’s employees, directors, and consultants, as designated by the Board of Directors. The awards vest over the period defined in each individual grant agreement which is generally accelerated upon a change of control event. Accelsius has the option to repurchase all vested units upon an employee’s termination of employment or service. The summary of Accelsius Subsidiary Equity Plan activity is as follows: Successor Period Predecessor Period Period from October 2, 2024 through December 31, 2024 Period from January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Compensation expense $ 1,341 $ 918 $ 705 Class C units granted 168,500 110,000 365,500 Weighted average grant date fair value per share $ 46.38 $ 4.41 $ 3.80 Note: The grant date fair value per share for the year ended December 31, 2023 is an average amount. The Company recognizes compensation costs within General and administrative, Sales and marketing and Research and development expense in the consolidated statements of operations and comprehensive income (loss). As of December 31, 2024, the Company had $ 8,103 in unit-based compensation expense remaining to be recognized over approximately 2.42 years. The grant date fair value was estimated using an Option Pricing Model to allocate the total equity value of Accelsius to the Class C Units. The total equity value was estimated using the Discounted Cash Flow method and Management’s projections. The resulting values of Class C Units were then discounted for lack of marketability ( 20 %). Series A Issuance 101 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) On October, 18 2024, Accelsius issued 16,427 equity classified Series A Preferred Units to an employee of the Company which was determined to be stock based payment. The grant date fair value of $ 616 was recognized as compensation cost (within General and administrative expense in the consolidated statements of operations and comprehensive income (loss)), immediately at the date of grant as there is no requisite service period or vesting period. The fair value of the awards was estimated using a Black-Scholes model with a discount for lack of marketability of 20 % applied. Note 15. Revenues In 2024, the Company began selling products and services in its technology segment. The Company provides investment management services to the ESG Fund, a related party, through which it earns revenue from management fees. Management fee revenue is affected by economic factors related to the asset class composition of the holdings and the contractual terms such as the basis for calculating the management fees and investors’ ability to redeem. The Company did not recognize any carried interest allocation during the Successor period from October 2, 2024 through December 31, 2024, the Predecessor period from January 1, 2024 through October 1, 2024 and the Predecessor year ended December 31, 2023, as the amounts were probable of significant reversal given the consideration is highly susceptible to factors outside the Company's influence. Cumulative carried interest allocation amounts that are subject to restraint and as such are not yet recognized were $ 11,282 and $ 5,880 as of December 31, 2024 and 2023, respectively. The Company also provides management services to AeroFlexx, which do not have a carried interest feature. The following table represents the breakout of revenue by source: Successor Predecessor October 2, 2024 through December 31, 2024 January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Product revenue $ 233 $ 95 $ — Management fees - related party 223 669 892 Consulting revenue — — 225 Total revenue $ 456 $ 764 $ 1,117 The following table represents major customer concentration of revenue: Successor Predecessor October 2, 2024 through December 31, 2024 January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Customer A - Related Party 43.0 % 77.0 % 70.7 % Customer B - Related Party 5.9 % 10.6 % 9.2 % Customer C — % — % 20.1 % Customer D — % 12.4 % — % Customer E 48.9 % — % — % Total Revenue Concentration of Major Customers 97.8 % 100.0 % 100.0 % 102 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Note 16. Income Taxes The Company is subject to federal and state income taxes with respect to any income or loss generated as well as the allocable share of any taxable income or loss of Innventure LLC and other partnership subsidiaries. The partnership subsidiaries within the consolidated group generally do not pay income taxes in most jurisdictions. Instead, taxable income or loss of the partnership subsidiaries is passed through to its members, including the Company. The partnership subsidiaries are liable for income taxes in those states not recognizing its pass-through status and for certain of its subsidiaries not taxed as pass-through entities. Through Innventure LLC, the Company acquired ownership interest in various domestic entities taxed as corporations. Where required or allowed, the corporation subsidiaries file and pay tax in a standalone basis for federal and state income tax purposes. The Company anticipates this structure to remain in existence for the foreseeable future. The provision for income taxes was as follows: Successor Predecessor October 2, 2024 through December 31, 2024 January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Current Expense: Federal — — — State 18 — — Foreign — — — Total Current Expense 18 — — Deferred Expense: Federal ( 3,301 ) 432 — State — — — Foreign — — — Total Deferred Expense ( 3,301 ) 432 — Total Expense: $ ( 3,282 ) $ 432 $ — A reconciliation of the expected statutory federal tax and the total income tax expense (benefit) was as follows: 103 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Successor Predecessor October 2, 2024 through December 31, 2024 January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Pre-tax book loss $ ( 73,375 ) $ ( 27,766 ) $ ( 30,984 ) Income taxes at federal statutory rate ( 15,405 ) — — State taxes, net of federal benefit ( 1,801 ) — — Tax on pre-tax earnings of corporate subsidiaries — ( 3,022 ) ( 2,229 ) Warrant liability 3,685 — — Non-deductible expenses 6 6 631 Change in earnout fair value ( 714 ) — — Other permanent differences ( 423 ) — ( 4 ) Change in valuation allowance 11,664 3,448 1,602 R&D credit ( 294 ) — — Total provision (benefit) for income taxes $ ( 3,282 ) $ 432 $ — Entities within the consolidated group that are considered a corporation for federal income tax purposes, recognize deferred income tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using currently enacted tax rates in effect for the year in which the differences are expected to reverse. Significant components of deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows: December 31, 2024 December 31, 2023 Deferred Tax Assets: Deferred lease liabilities $ 138 $ 189 Capitalized R&D expense 2,562 766 Fixed assets and intangibles 3,113 3,614 Reserves and other accruals 4,873 178 Loss carry-forwards and other tax attributes 15,682 1,663 Total Deferred Tax Assets 26,368 6,410 Less: Valuation allowance ( 11,664 ) ( 5,910 ) Net Deferred Tax Assets $ 14,704 $ 500 Deferred Tax Liabilities: Amortization $ ( 38,443 ) $ ( 323 ) Investment in Partnerships ( 3,505 ) — Right of use assets ( 109 ) ( 177 ) Total Deferred Tax Liabilities ( 42,057 ) ( 500 ) Net Deferred Tax Liabilities $ ( 27,353 ) $ — Deferred tax assets are regularly reviewed for recoverability and a valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon future taxable income during the periods in which those temporary differences become deductible. In assessing the need for a valuation allowance, management considers all available positive and negative evidence, including the ability to carryback operating losses to prior periods and the expected future 104 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) utilization of net operating loss carryforwards, the reversal of deferred tax liabilities, projected taxable income, and tax-planning strategies. Valuation allowances are established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. The valuation allowance on deferred tax assets was $ 11,664 as of December 31, 2024 and $ 5,910 as of December 31, 2023, resulting in a net change of $ 5,754 . The increase in valuation allowance of $ 15,115 during the period mainly relates to U.S. federal and state operating loss carryforwards and equity based compensation deferred tax assets that were deemed unrealizable. During this period, Accelsius recognized significant deferred tax liabilities from acquired intangible assets as part of the Business Combination. The deferred tax liability provided a new source of income to realize the existing deferred tax assets, which provided enough positive evidence to release the valuation allowance of $ 9,361 . The Company and the remaining corporate subsidiaries maintained the valuation allowance as the entities have been in a pre-tax loss position, with insufficient projected taxable income (exclusive of reversing taxable temporary differences) to recognize the benefit of net deferred tax assets as of the end of the year. As of December 31, 2024, the taxable entity had net operating loss carryforwards for income tax purposes of approximately $ 62,653 related to federal taxes, all of which may be carried forward indefinitely. The Company and certain subsidiaries also have state net operating loss (“NOL”) carryforwards in the amount of $ 39,262 . The state NOL carryforwards begin to expire in 2038, however, some state NOL’s are able to be carried forward indefinitely. As of December 31, 2024 and 2023, the Company had no material unrecognized income tax benefits or uncertain tax positions. Also, we do not expect to incur interest charges or penalties related to our tax positions, but if such charges or penalties are incurred, our policy is to account for interest charges as interest expense and penalties as tax expense in the consolidated statements of operations. As of December 31, 2024, tax years 2022 through 2024 remain open and subject to examination by the Internal Revenue Service and the states where the Company has nexus. Note 17. Net Loss Per Share The Company follows the two-class method when computing net loss per common share when shares are issued that meet the definition of participating securities. The two-class method requires income available to common shareholders for the period to be allocated between common shares and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The two-class method also requires losses for the period to be allocated between common shares and participating securities based on their respective rights if the participating security contractually participates in losses. As holders of Series B preferred shares and WTI warrants, which are determined to be participating securities, do not have a contractual obligation to fund losses, undistributed net losses are not allocated to them for purposes of the loss per share calculation. Given the historical structure of the Predecessor, the Company determined that the calculation of earnings per membership unit results in values that are not a valuable metric to users of these consolidated financial statements. Therefore, earnings per share (“EPS”) information is omitted for the Predecessor periods. Presented in the table below is a reconciliation of the numerator and denominator for the EPS calculations for the Successor period from October 2, 2024 through December 31, 2024: 105 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Successor October 2, 2024 through December 31, 2024 Numerator: Net loss attributable to Innventure, Inc. shareholders $ ( 61,754 ) Less: Cumulative earnings to participating securities 217 Undistributed loss for participating securities ( 61,971 ) Less: Undistributed loss attributable to participating securities — Net Loss attributable to common shareholders, basic and diluted $ ( 61,971 ) Denominator: Weighted average number of units outstanding, basic and diluted 43,951 Net loss per share attributable to common shareholders, basic and diluted $ ( 1.41 ) Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential common stock outstanding would have been anti-dilutive. The following table presents the potential common stock outstanding that was excluded from the computation of diluted net loss per share of common stock for the periods presented because including them would have been antidilutive: Successor December 31, 2024 Public warrants 11,500,000 Private placement warrants 7,146,000 WTI warrants 1,000,000 Series B preferred shares 1,011,869 Share options 975,409 RSUs 2,036,476 SARs 320,000 Note 18. Related Party Transactions As more fully described in Note 5. Borrowings, the Company has various notes with affiliates, including short-term notes with three separate related parties. In addition, the Company had a convertible note to the ESG Fund as part of the 2025 Notes which was converted during the Predecessor period from January 1, 2024 through October 1, 2024. Transactions with Directors As more fully described in Note 14. Stock-based Compensation, the Company issued various equity awards to related parties throughout 2024. On December 9, 2024, the Company issued 1,246,722 RSUs with a grant date fair value of $ 15,210 , and 590,163 stock options with a grant date fair value of $ 3,913 to a cumulative of 8 directors. On December 31, 2024, the Company issued 200,000 SARs with a grant date fair value of $ 7,820 to 4 directors and former directors. On March 22, 2024, the Company issued 100,000 Class C Units with a grant date fair value of $ 441 to 1 director under the Accelsius Subsidiary Equity Plan. 106 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Transactions with Innventure1 In 2022, Innventure1 assigned its ownership interest in a portion of the Company’s PCT common stock to investors who are considered related parties of Innventure1 and the Company. The related party liability established in connection with this assignment was revalued to $ 53 on December 31, 2023. The change in value was included in Net gain on investments - due to related parties in the consolidated statements of operations and comprehensive income (loss). Transactions with the ESG Fund In the normal course of business, the Company advances certain expenses on behalf of the ESG Fund. Certain expenses paid by the Company, which meet certain criteria, are reimbursed to the Company by the ESG Fund. Amounts paid by the Company and reimbursable by the ESG Fund were $ 105 for the Successor period from October 2, 2024 through December 31, 2024, and $ 50 for the Predecessor period from January 1, 2024 through October 1, 2024, and $ 48 for the Predecessor year ended December 31, 2023. There was a receivable of $ 64 and $ 2 as of December 31, 2024 and 2023, respectively, related to those expenses included in Due from related parties in the consolidated balance sheets. As more fully described in Note 2. Accounting Policies, the Company earns a 1 - 2 % management fee for administrative, finance and accounting, and other back-office functions from the ESG Fund. Management fees earned from the ESG Fund were $ 196 for the Successor period from October 2, 2024 through December 31, 2024, and $ 588 for the Predecessor period from January 1, 2024 through October 1, 2024. Management fees earned from the ESG Fund totaled $ 789 for the Predecessor year ended December 31, 2023, which is recorded as Revenue in the consolidated statements of operations and comprehensive income (loss). In March 2021, the Company entered into a purchase option agreement with the ESG Fund to sell 145,161 shares of PCT common stock with an exercise price of $ 1 . The option period would have expired on July 22, 2024 and the Company measured the derivative liability at fair value, as further described in Note 4. Fair Value. The option was exercised in March 2022 and the shares are subject to the lock-up provisions. The liability due to the ESG Fund as of December 31, 2023 was $ 294 and is included in Related party payables in the consolidated balance sheets. In 2023, the Company sold 23,712 of Accelsius Class A Series 2 Units to the ESG Fund for aggregate proceeds of approximately $ 104 . This amount is reflected in Non-controlling interests in the consolidated statements of changes in stockholders' equity (deficit). Transactions with AeroFlexx The Company’s related party transactions with AeroFlexx are described in Note 3. Investments. Additionally, in the normal course of business, the Company advances certain expenses on behalf of AeroFlexx. Amounts paid by the Company and reimbursable by AeroFlexx were $ 27 for the Successor period from October 2, 2024 through December 31, 2024, and $ 84 for the Predecessor period from January 1, 2024 through October 1, 2024, and $ 116 for the Predecessor year ended December 31, 2023. There was a receivable of $ 97 and $ — as of December 31, 2024 and 2023, respectively, related to those expenses included in Due from related parties in the consolidated balance sheets. Note 19. Commitments and Contingencies PCT Guaranty On April 22, 2020, the Company entered into a guaranty with a counterparty to unconditionally guarantee PCT’s obligation to reimburse a $ 5,000 pre-payment upon PCT’s failure to meet certain performance thresholds. Performance thresholds include the commission and construction of a plant. The guaranty has no expiration. The total amount paid by the Company under the guaranty is $ 0 and total interest paid is $ 0 . As of December 31, 2024 and 2023, there was no principal outstanding under the guaranty. 107 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Patent Agreement Contingent Fees In 2022, the Company entered into two agreements with an MNC to purchase in-process research and development consisting of patents, technology, and knowledge transfer related to cooling technology for critical electronic equipment in a transaction that was determined to be an asset acquisition. Under the terms of the agreements, the Company is required to make minimum installment payments, as disclosed below, for each year of the agreement through February 1, 2040. Each installment payment shall be credited towards and set off against any royalty payments (described below) which may become due. As such, these installment payments serve as minimum amounts due to the MNC each calendar year. Minimum royalties included in Patent installment payables on the consolidated balance sheets are due as follows: Years Ending December 31, Amount 2025 $ 1,225 2026 825 2027 825 2028 825 2029 825 Thereafter 9,075 Total $ 13,600 The Company is committed to make royalty payments on direct revenue generated from the subject technology and indirect revenue generated including additional incentives based on the volume of units sold at percentage rates in the single digits to mid-teens as defined within the respective agreement. Each year the Company will pay such royalties at the higher of: (i) the minimum amount due (noted in the table above) and (ii) the royalty calculated amount based on revenue and units sold. License and Royalty Commitments On December 12, 2024, the Company entered into a license agreement (the “Technology License”) with a third party to obtain exclusive rights to use certain know-how, patents, and data relating to processes for the gasification of plastic waste (the “Technology”). Ownership of the Technology will transfer to the Company for a fee of $ 500 contingent upon achievement of a commercial milestone, which is not yet probable. The Company incurred a nonrefundable upfront fee of $ 500 under the Technology License, which is immediately expensed as incurred on December 12, 2024 and presented as an expense in the consolidated statements of operations and comprehensive income (loss) for the period ended December 31, 2024. Additionally, the Company committed to pay a semi-annual fee of $ 65 until ownership transfers or the Technology is no longer licensed, which is accrued on a monthly basis. During the Successor period from October 2, 2024 through December 31, 2024, $ 11 was recognized within General and administrative expense in the consolidated statements of operations and comprehensive income (loss). Under the Technology License, the Company is committed to pay annual royalties based on Refinity related gross sales and licensing revenue starting in 2025. As of December 31, 2024, no royalty payments were made to the third party. Note 20. Business Segment Data The Company’s Chief Executive Officer is the Chief Operating Decision Maker (“CODM”) of the Company. The CODM makes operating decisions, allocates resources and assesses performance based on review of historical and potential future product sales, operating expenses, and net income (loss). 108 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) Based on the information utilized by the CODM to operate the Company, there is one operating segment and reportable segment, Technology. The Technology segment includes the business activities of Accelsius, a consolidated subsidiary focused on development and manufacture of data center cooling products. Other components of the Company’s consolidated information primarily include operations relating to the original platform business, service activities, Refinity, and equity method investment activities (“Other”). The following table presents information about the Company’s Technology segment for the Successor period from October 2, 2024 through December 31, 2024, the Predecessor period from January 1, 2024 through October 1, 2024, and for the Predecessor year ended December 31, 2023. The information includes the significant expense categories and amounts regularly provided to the CODM for the reportable segment, which may reflect a different presentation than amounts presented elsewhere in the consolidated financial statements. Inter-segment transactions are not eliminated from segment results when management considers those transactions in assessing the results of the Technology segment. Successor Predecessor October 2, 2024 through December 31, 2024 January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Revenue from external customers $ 233 $ 95 $ — Interest income — 7 14 Cost of sales $ 3,752 $ 777 $ — Employee costs 3,933 8,076 6,849 Facilities, equipment & supplies 121 581 499 General and administrative 751 398 296 Outside services 390 842 844 Research and development 3,224 2,711 1,443 Sales and marketing 193 442 288 Depreciation expense * 6 99 8 Interest expense 90 564 1,039 Income tax expense (benefit) ( 3,637 ) 432 — Other ** 168 1,832 ( 635 ) Total Expenses $ 8,991 $ 16,754 $ 10,631 Net Loss $ ( 8,758 ) $ ( 16,652 ) $ ( 10,617 ) * Represents depreciation not already included in Cost of sales. ** Other - change in fair value of financial liabilities, loss on conversion of promissory notes, travel and other miscellaneous expenses. 109 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) The following table reconciles the reportable segment to amounts reflected in our consolidated financial statements. Successor Predecessor October 2, 2024 through December 31, 2024 January 1, 2024 through October 1, 2024 Year ended December 31, 2023 Revenues: Technology $ 233 $ 95 $ — Other 250 750 1,198 Elimination of management services provided to Technology ( 27 ) ( 81 ) ( 81 ) Consolidated Revenues $ 456 $ 764 $ 1,117 Interest Expense: Technology $ 90 $ 564 $ 1,039 Other 1,240 1,069 328 Consolidated Interest Expense $ 1,330 $ 1,633 $ 1,367 Interest Income: Technology $ — $ 7 $ 14 Other 198 326 129 Consolidated Interest Income $ 198 $ 333 $ 143 Depreciation and Amortization Expense: Technology $ 5,455 $ 146 $ 8 Other — — — Consolidated Depreciation and Amortization Expense $ 5,455 $ 146 $ 8 Net Loss: Technology $ ( 8,758 ) $ ( 16,652 ) $ ( 10,617 ) Other ( 61,335 ) ( 11,546 ) ( 20,367 ) Consolidated Net Loss $ ( 70,093 ) $ ( 28,198 ) $ ( 30,984 ) Capital Expenditures: Technology $ 266 $ 736 $ 645 Other — — — Consolidated Capital Expenditures $ 266 $ 736 $ 645 All long-lived assets are located entirely in the United States of America (USA). Segment assets are not reviewed by the CODM and therefore are not disclosed. Note 21. Subsequent Events In connection with the preparation of the consolidated financial statements and related disclosures for the period ended December 31, 2024, management has evaluated events through April 14, 2025, which is the date the consolidated financial statements were available to be issued. Events occurring after December 31, 2024 are: 110 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) The Company sold 422,999 of Accelsius Series A Units for aggregate proceeds of approximately $ 5,150 . This amount will be reflected in non-controlling interests in the consolidated statements of changes in stockholders' equity (deficit) in future periods. As part of the term loan agreement with AeroFlexx, AeroFlexx did not raise equity financing up to the target amount by January 1, 2025 as discussed in Note 3. Investments. Therefore, on January 2, 2025, $ 7,250 of outstanding principal and accrued interest was subject to mandatory conversion. Using the price per unit of $ 6.83 , the Company obtained 1,060,747 Class D preferred units through the mandatory conversion. Based on the increase of Class D preferred units, the Company’s updated ownership percentage in AeroFlexx is 38 %. On January 7, 2025, the VWAP Completion Event, as discussed in Note 10. Earnout Shares, occurred and 344,828 Sponsor Earnout Shares vested and were no longer subject to contingencies. As part of the Company’s SEPA with Yorkville, on January 7, 2025, the Company sold 50,000 shares of Common Stock to Yorkville for aggregate proceeds of approximately $ 633 . On January 22, 2025, the Company issued and sold 4,617 Common Shares for aggregate proceeds of approximately $ 57 . On January 30, 2025, the Company issued and sold 19,376 Common Shares for aggregate proceeds of approximately $ 235 . The remaining shares that could be sold to Yorkville are 4,209,314 . The Board determined that as of January 8, 2025, the creation of Refinity, a consolidated subsidiary of the Company, satisfied the vesting condition applicable to Milestone 2 of the Company Earnout Shares. As such, 2,000,000 shares of common stock were issued on February 4, 2025 as a result of the satisfaction of the Milestone. On January 22, 2025, Refinity entered into a framework agreement with a third party for research services focusing on the further development and optimization of licensed technology, as well as the enhancement and improvement of plastic recycling through pyrolysis. As part of this agreement, Refinity has agreed to pay a minimum fee of € 5,000 during the period beginning May 1, 2025, and ending April 30, 2027, with the stipulation that € 2,000 be paid in the first 12-month period and € 3,000 in the second 12-month period. On February 1, 2025, the Company entered into a consulting agreement with a third party for services in respect of public relations and investor communications. The agreement includes monthly compensation of 2,500 shares of the Company's common stock issued each month services are provided. The initial term of the agreement is for one year and may be terminated by either party upon seven days ’ notice. On February 3, 2025, and February 27, 2025, two of the Company’s Series 1 Promissory Notes, discussed in Note 5. Borrowings, matured in an aggregate amount of $ 300 and were paid as they became due. On February 3, 2025, the Company issued 85,471 shares of Common Stock for financial advisory and investment banking services rendered. On February 26, 2025, the Company entered into two Nonqualified Stock Option Agreements, which granted 140,000 nonqualified option rights (the “Option”) to two individuals, pursuant to the terms of the Plan. According to the Nonqualified Stock Option Agreements, and subject to the terms and conditions of the Nonqualified Stock Option Agreements and the Plan, upon vesting of the Options, the holders will have the option to purchase Common Stock of the Company, at an exercise price of $ 8.84 per share (which is equal to the Fair Market Value of the stock on the grant date). The Options have a term of ten years and will vest and become exercisable with respect to 25 % of the shares of Common Stock underlying the Option on February 26, 2026 and 75 % of the shares of Common Stock underlying the Option in eight substantially equal installments on each three-month anniversary thereafter. On March 19, 2025, the Company distributed 21,808 shares of Series B Preferred Stock to represent $ 218 in cumulative dividends for Series B Preferred Stock, covering the period from the initial issue date, as defined in the Certificate of Designation, to December 31, 2024, as a payment in kind at the specified rate. This action follows the terms outlined in the Certificate of Designation dated October 2, 2024, with a record date for the dividend set for 111 Table of Contents Innventure, Inc. and Subsidiaries Notes to Consolidated Financial Statements (in thousands, except share or per share data) March 5, 2025. Approved by the Board of Directors, this dividend payment is in accordance with the Investment Agreement dated September 27, 2024. On March 20, 2025, the Company converted and repaid the $ 14,000 aggregate principal of Related party notes, as discussed in Note 5. Borrowings. The Company issued 1,732,554 of Series C Preferred Stock and paid $ 375 to the respective parties to settle the Related party notes. Additionally, the Company issued 578,294 of Series C Preferred Stock to settle outstanding debt for AeroFlexx. On March 24, 2025, the Company entered into the Series C Purchase Agreements with certain purchasers (the “Purchasers”), pursuant to which the Company agreed to issue and sell to the Purchasers an aggregate of up to 275,000 shares of Series C Preferred Stock in a private placement, at a price of $ 10.00 per share of Series C Preferred Stock, resulting in an aggregate purchase price of approximately $ 2,750 before deducting fees and other estimated offering expenses. These shares are issued with an 8.0 % annual cumulative dividend, a mandatory conversion to Common Stock five years after issuance, and an optional conversion, at the election of the holder, at any time prior to the Maturity Date upon the effectiveness of a registration statement by the Company registering the underlying shares of Common Stock issuable upon conversion. In connection with the Series C Purchase Agreements, the Company received an aggregate amount of $ 1,500 in advanced funds. In consideration of these funds, the Company issued 150,000 shares of Series C Preferred Stock to the respective parties. On March 24, 2025, the Company issued an aggregate of 300,000 shares of Series C Preferred Stock for financial advisory and merchant banking services rendered. On March 25, 2025, the Company entered into a securities purchase agreement related to the issuance and sale of convertible debentures (“Convertible Debentures”) with an aggregate principal amount of up to $ 30,000 . These Convertible Debentures will be convertible into shares of the Company’s Common Stock (as converted, the “Conversion Shares”). On the first business day after certain closing conditions are met, including the timely filing of this Form 10-K, the Company will issue $ 20,000 in aggregate principal amount of Convertible Debentures (the “First Closing Date”). Additionally, the Company will issue an additional $ 10,000 in aggregate principal amount of Convertible Debentures after both (i) the registration statement filed with the SEC registering the resale of the Conversion Shares is declared effective by the SEC, and (ii) the Company receives stockholder approval. The Convertible Debentures will not bear interest unless an event of default occurs, in which case they will bear interest at an annual rate of 18 %. They will mature 15 months after the First Closing Date and can be converted into shares of the Company’s Common Stock at a conversion price to be determined. These Convertible Debentures were issued at an original issue discount of 10 %. In connection with this agreement, the Company agreed to issue warrants to purchase up to 300,000 shares of Common Stock to the WTI Lenders. These warrants serve as consideration for the WTI Lenders’ consent to the transaction. The warrants have an exercise price of $ 0.01 per share and are exercisable until March 31, 2035, with additional customary rights and protections. 112 Table of C ontents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.