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Item 7. Management’s Discussion and Analysis

2026-03-26 compared with 2025-03-31 · 485 added, 377 removed, 402 unchanged (68% of the section changed)

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Our Business and Our Operations

We are a diversified holding company with principal operations conducted through three operating platforms or reportable segments:

We are a diversified holding company with principal operations conducted through three operating platforms or reportable segments as of December 31, 2025:

Infrastructure ("DBMG"), Life Sciences ("Pansend"), and Spectrum, plus our Other segment, which includes businesses that do not meet the separately reportable segment thresholds.

For additional information on our business, refer to Note 1.

Organization and Business included in the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference.

Organization and Business to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference.

Cyclical Patterns

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weather or project site conditions;

customer spending patterns and the financial condition of our customers and their access to capital;

margins of projects performed during any particular period;

customer spending patterns, including seasonal trends, and the financial condition of our customers and their access to capital;

our profit margins on projects performed during any particular period;

rising interest rates and inflation;

7 unchanged sentences

In the event we were to enter into a strategic transaction to sell any of our existing operations, our intention is to use available proceeds from such transaction to address our capital structure.

During 2024, including subsequent to year end, as part of our strategic process, we engaged in several transactions that had or will have an effect on the results of operations and financial condition of our business and individual segments.

Rights Offering and Concurrent Private Placement

On March 8, 2024, the Company commenced a $19.0 million rights offering ("Rights Offering") for its common stock.

Pursuant to the Rights Offering, the Company distributed to each holder of the Company’s common stock, Series A-3 Convertible Participating Preferred Stock, Series A-4 Convertible Participating Preferred Stock and the 2026 Convertible Notes as of March 6, 2024 (the “rights offering record date”), transferable subscription rights to purchase 2.86 shares (0.2858 shares on a pre Reverse Stock Split basis) of the Company’s common stock at a price of $7.00 per whole share ($0.70 per whole share on a pre Reverse Stock Split basis).

Per the concurrent investment agreement entered into with Lancer Capital (the "Investment Agreement"), the Rights Offering was backstopped by Lancer Capital, an investment fund led by Avram A.

Glazer, the Chairman of the Board and the Company’s largest stockholder.

Due to limitations on the common stock that can be issued to Lancer Capital under the rules of the New York Stock Exchange ("NYSE"), in lieu of exercising its subscription rights, pursuant to the Investment Agreement, Lancer Capital would purchase up to $19.0 million of the Company’s newly issued Series C Non-Voting Participating Convertible Preferred Stock (the “Series C Preferred Stock”), for an issue price of $1,000 per share.

In connection with the backstop commitment, and as a result of limitations in the amount common equity that can be raised under the Company’s effective shelf registration statement on Form S-3, Lancer Capital also agreed to purchase an additional $16.0 million of Series C Preferred Stock in a private placement transaction ("Concurrent Private Placement") which was to close concurrently with the settlement of the Rights Offering.

Lancer Capital did not receive any compensation or other consideration for entering into or consummating the Investment Agreement.

As the Rights Offering had not yet settled by March 28, 2024, in accordance with the Investment Agreement, Lancer Capital purchased $25.0 million of Series C Preferred Stock, referred to as the "equity advance." On April 24, 2024, the Company completed and closed on the Rights Offering and issued a total of 530,611 shares of common stock (5,306,105 shares of common stock on a pre Reverse Stock Split basis) for $3.7 million.

Based on the number of shares of common stock actually sold upon exercise of the rights to third party investors, there were no excess shares of Series C Preferred Stock purchased by Lancer Capital under the equity advance that the Company was required to redeem, and Lancer Capital purchased an additional approximately 6,286 Series C Preferred Stock for $6.3 million under the backstop commitment.

In total, the Company received $35.0 million in aggregate gross proceeds related to the Rights Offering and Concurrent Private Placement and incurred $1.8 million in dealer manager fees and other related costs which have been capitalized into Additional paid in capital ("APIC").

INNOVATE has been utilizing and expects to continue to use the net proceeds from the Rights Offering and Concurrent Private Placement for general corporate purposes, including debt service and working capital.

In addition, as a result of the closing of the Rights Offering and Concurrent Private Placement, a mandatory prepayment was required on the CGIC Unsecured Note, and consequently, on April 26, 2024, INNOVATE redeemed $4.1 million of the CGIC Unsecured Note.

Under the rules of the NYSE, because the shares purchased by Lancer Capital were greater than 20% of the Company's common stock outstanding before the issuance of the Series C Preferred Stock, those shares of Series C Preferred Stock were not allowed to be converted until stockholder approval of such issuance was obtained.

On June 18, 2024, the Company held its annual shareholder meeting where Company's shareholder's approved the conversion of the Series C Preferred Stock into common stock.

As a result, approximately 31,286 shares of Series C Preferred Stock, which were held by Lancer Capital, were converted into 4,469,390 shares of common stock (44,693,895 shares of common stock on a pre Reverse Stock Split basis).

The Company waived its Tax Benefits Preservation Plan to permit persons exercising rights to acquire 4.9% or more of the outstanding common stock upon the exercise thereof without becoming an Acquiring Person (as defined in the Tax Benefits Preservation Plan).

INNOVATE has utilized the net proceeds from the Rights Offering and Concurrent Private Placement for general corporate purposes, including debt service and for working capital.

As a result of the closing of the Rights Offering and Concurrent Private Placement, a mandatory prepayment was required on the CGIC Unsecured Note, in the amount of the greater of $3.0 million or 12.5% of the net proceeds.

On April 26, 2024, INNOVATE redeemed $4.1 million of the CGIC Unsecured Note.

Reverse Stock Split

On August 8, 2024, the Company effected a 1-for-10 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”) following stockholder approval.

The Reverse Stock Split became effective at 5:00 p.m.

Eastern Standard Time.

The Reverse Stock Split was implemented for the primary purpose of regaining compliance with the minimum bid price requirement for continued listing of the Company’s common stock on the NYSE.

As a result of the Reverse Stock Split, every ten shares of the Company’s common stock issued and outstanding were automatically reclassified and changed into one new share of the Company’s common stock, with whole shares issued for fractional shares.

Proportionate adjustments were made to the exercise prices and the number of shares underlying the Company’s outstanding equity awards, as applicable, as well as to the number of shares issuable under the Company’s equity incentive plans and conversion of the Company’s outstanding convertible securities.

The common stock issued pursuant to the Reverse Stock Split will remain fully paid and non-assessable.

The Reverse Stock Split did not change the $0.001 par value per share of the common stock or the authorized number of shares of common stock or preferred stock.

As a result of the Reverse Stock Split, the number of outstanding common shares was reduced from 130,529,931 to 13,166,057, inclusive of an additional 113,064 incremental whole shares issued for fractional shares.

Unless noted, all common shares and per share amounts of common stock, options and restricted stock and any associated debt or preferred stock conversion rates contained in the historical periods presented within this Management’s Discussion and Analysis of Financial Condition and Results of Operations and within the Consolidated Financial Statements have been retroactively adjusted to reflect the one-for-ten Reverse Stock Split.

Stockholders’ Rights Agreement - Tax Benefits Preservation Plan

On May 6, 2024, the Company terminated its Tax Benefits Preservation Plan entered into on April 1, 2023 (the “2023 Preservation Plan”) because the Company’s Board of Directors determined that the 2023 Preservation Plan was no longer necessary or desirable for the preservation of the Company’s ability to use its tax net operating losses and other certain tax assets.

In connection with the termination of the 2023 Preservation Plan, the Company has taken routine actions to deregister the related preferred stock purchase rights under the Securities Exchange Act of 1934, and to delist the preferred stock purchase rights from the NYSE.

These actions were administrative in nature and had no effect on the Company’s common stock, which will continue to be listed on the NYSE.

Amendment to Second and Restated 2014 Omnibus Equity Award Plan and Interim CEO Equity Awards

On September 30, 2024, the Board adopted, subject to stockholder approval, an amendment to the Company's Second Amended and Restated 2014 Omnibus Equity Award Plan ("Second A&R 2014 Plan") to increase the number of shares of the Company's common stock, par value $0.001 per share, available for issuance thereunder to 1,300,000 (the “Plan Amendment”).

The Plan Amendment was approved by holders of a majority in voting power on October 4, 2024, by written consent in lieu of a special meeting, and was effective as of October 29, 2024.

On October 29, 2024, when the Plan Amendment became effective, the following awards which were previously awarded to the Company's Interim CEO subject to stockholder approval of the Plan Amendment to increase the number of shares of common stock available thereunder to satisfy the settlement of the grant became effective:

(i) 95,322 of restricted stock unit awards ("RSU's"), which were awarded on October 11, 2023;

(ii) 100,000 option awards with a strike price of $25.00 (as retroactively adjusted for the Reverse Stock Split in 2024) and an expiration date of September 15, 2033, which were awarded on September 15, 2023;

(iii) 142,857 of RSUs, which were awarded on August 19, 2024;

and (iv) 100,000 option awards with a strike price of $4.22 and an expiration date of September 15, 2034, which were awarded on September 15, 2024.

During 2025, as part of our strategic process, we have engaged in several transactions that had or will have an effect on the results of operations and financial condition of our business and individual segments.

Debt Obligations and Financing

In addition to the Rights Offering and Concurrent Private Placement at the Non-Operating Corporate segment discussed above, during 2024 and subsequent to year end, we have refinanced some of our debt and obtained new capital financing at the subsidiary level.

This financing helped us provide needed capital for our operations and the operations of our subsidiaries.

During 2025, we refinanced our debt, including at the Corporate and subsidiary level.

This financing helped us provide needed capital for our operations and the operations of our subsidiaries, and the refinancing of the debt, which, among other things, extended the maturities of the debt, allows us to continue to pursue our strategic plans.

Infrastructure

On June 28, 2024, DBM and UMB entered into the Third Amendment to the UMB Credit Agreement, which added an incremental separate term loan of $25.0 million to the existing credit facility, with the same interest rate as the Revolving Line with UMB and the same maturity date as the initial UMB term loan which had an outstanding balance of $74.6 million as of December 31, 2024.

On May 20, 2025, DBMG entered into an Amended and Restated Credit agreement (the "DBMG Credit Agreement"), with the lenders which are party thereto from time to time (each a “Lender” and collectively the “Lenders”) and UMB BANK, N.A.

The DBMG Credit Agreement provides DBMG with senior secured debt financing in an amount up to $220.0 million in the aggregate, consisting of (i) a senior secured revolving credit facility (the “DBMG Revolving Facility”) in an aggregate amount of $135.0 million and (ii) a senior secured term loan facility in the amount of $85.0 million.

The DBMG Credit Agreement also contains an accordion feature to increase the allowable size of the DBMG Revolving Facility by an additional $50.0 million.

The DBMG Revolving Facility and term loan facility will mature on May 20, 2030.

DBMG entered into the DBMG Credit Agreement to fully repay DBMG’s existing debt obligations and provide additional working capital capacity.

Refer to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference for additional information.

As of December 31, 2025, DBMG had a total outstanding balance of $15.0 million under its new revolving facility and the effective interest rate on DBMG's revolving loans was 6.80%.

Interest on the new revolving facility is paid monthly, and the new revolving facility has an unused commitment fee of 0.50% per annum times the average daily unused availability under the line.

As of December 31, 2025, the total outstanding balance of DBMG's term loan was $72.6 million.

Principal payments and interest on DBMG's term loan are paid monthly, and the effective interest rate was 7.4% as of December 31, 2025.

The indenture governing INNOVATE’s 2027 Senior Secured Notes required us to meet certain milestones with respect to strategic alternatives for our operating subsidiaries, including asset sales generating at least $150 million in net proceeds, such that by September 1, 2025 we needed to have a bona fide bid or term sheet related to a potential sale, a fully executed purchase or equity agreement by November 1, 2025, and an executed transaction with applied proceeds to the 2027 Senior Secured Notes Indenture no later than February 1, 2026, and in the event of the failure to achieve these milestones, the mandatory commencement of a sales process for DBMG.

We did not achieve these milestones and accordingly we have commenced a sales process for DBMG.

The covenants contained in the DBMG Credit Agreement contain a Change in Control clause, which would constitute an Event of Default, both as defined in the DBMG Credit Agreement, which could accelerate the maturity of our Infrastructure segment's debt in the future upon certain events, including a sale of DBMG.

Refer to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference.

Life Sciences

R2 Technologies had various short-term notes with Lancer Capital, which expired on January 31, 2024, and, effective January 31, 2024, a new 20% note with an aggregate original principal amount of $20.0 million was issued, which was comprised of all prior outstanding principal amounts and unpaid accrued interest of $2.6 million which was capitalized into the new principal balance.

Interest on the note accrues at 20% per annum and is payable monthly in arrears, in cash or, if not paid in cash, accrued and unpaid interest is capitalized monthly into the principal balance.

As of December 31, 2024, the total principal outstanding, including capitalized interest was $24.0 million.

The maturity date of the 20% $20.0 million note, as subsequently amended, was December 31, 2024, or within five business days of the date on which R2 Technologies receives an aggregate $20.0 million from the consummation of a debt or equity financing or has a change in control, as defined in the agreement, with an optional prepayment of the entire then-outstanding and unpaid principal and accrued interest upon five-days written notice to Lancer Capital.

The 20% $20.0 million note also includes various exit fees, as amended.

As of December 31, 2024, the exit fee, as amended, was equal to 11.90% of the principal amount being repaid, and effective July 31, 2024, an additional exit fee of $1.0 million was incurred each month until the end of November 2024.

As of December 31, 2024, total exit fees payable were $7.9 million.

The exit fees are payable on the earliest of the maturity date, the date of the acceleration of the principal amount of the note for any reason or, if any portion of the note is prepaid at any time, the date of such prepayment of the note.

Subsequent to year end, with an effective date of December 31, 2024, the maturity date of the note was extended to August 1, 2025.

In addition, the exit fee continues to increase by 0.17% each month until maturity and an additional exit fee of $1.0 million was incurred under the amendment, which also continues to increase by $1.0 million each month until maturity.

A new $5.0 million default fee will be payable on August 1, 2025, in the event all obligations under the note, including principal, any accrued and unpaid interest, and exit fees, are not repaid in full prior to the August 1, 2025, maturity date.

On August 4, 2025, Lancer Capital, a related party, and R2 Technologies entered into an Amended and Restated Senior Secured Promissory Note, which was previously amended multiple times, and which, among other things, extended the maturity of the note to the earlier of August 1, 2026, or the occurrence of (i) a Change of Control (as defined in the amended note) or (ii) the sale of all or substantially all of the assets of R2 Technologies.

The amended note has an interest rate of 12% and removed certain exit and default fees.

Accrued and unpaid interest is capitalized monthly into the principal balance.

The total new initial principal amount of the amended note on August 4, 2025 was $43.5 million, which incorporated the $20.0 million principal amount of the note as previously amended effective January 31, 2024 (which was comprised of a principal amount of $17.4 million and unpaid accrued interest of $2.6 million), accrued interest of $7.0 million and $16.5 million in accrued exit fees which had been incurred from January 31, 2024 through August 4, 2025.

In addition, a new 5% extension fee of $2.2 million was capitalized into the principal amount on August 4, 2025.

The amended note had a principal balance of $47.9 million as of December 31, 2025.

Refer to Note 11.

Debt Obligations included in the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on the note and the various amendments during the years ended December 31, 2024 and 2023.

On June 20, 2024, Pansend closed on a new Series D Preferred Stock ("Series D") investment in R2.

As part of the transaction, R2 Technologies converted its intercompany notes and accrued interest with Pansend, together with an additional cash investment from Pansend, into new Series D convertible participating preferred stock, for a total new additional investment of $21.3 million, which is also eliminated on consolidation and increased Pansend's ownership in R2 Technologies to 81.4% as compared to 56.8% prior to the transaction.

Pansend's ownership in R2 Technologies was 81.4% and 56.6%, as of December 31, 2024 and 2023, respectively.

Subsequent to year end, on February 20, 2025, Pansend closed on a new $3.5 million convertible 13.0% note instrument with R2 Technologies, which is convertible, together with any accrued interest at the time of conversion, into a new Series E Preferred Stock ("Series E") in R2 Technologies upon written notice to R2 Technologies and has a maturity date of the earlier of July 31, 2025, or a change in control, as defined in the agreement.

The transaction is eliminated on consolidation.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on the note and its various amendments.

During the year ended December 31, 2025, Pansend closed on several intercompany convertible 13.0% note instruments with R2 Technologies, and funded a total of $7.5 million to R2 Technologies.

The outstanding principal amounts of the notes, together with any interest then accrued and unpaid, is convertible at the option of Pansend into shares of a new Series E Convertible Preferred Stock ("Series E") or new Series F Convertible Preferred Stock ("Series F") in R2 Technologies, as applicable to each note, upon written notice to R2 Technologies and the notes have a maturity date, of the earlier of July 31, 2026, or a change in control of R2 Technologies, as defined in the notes.

These notes and related intercompany interest are eliminated on consolidation.

Subsequent to year end, in February and March 2026, an additional $0.3 million in intercompany convertible 13.0% notes with R2 Technologies was funded.

Refer to Note 16.

Equity and Temporary Equity included in the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on R2 Technologies' convertible preferred stock and convertible notes.

Equity and Temporary Equity to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on R2 Technologies' convertible preferred stock and convertible notes.

On August 4, 2025, Spectrum entered into a Tenth Omnibus Amendment to Secured Notes and Limited Consent to MSD Secured Note and Intercreditor Agreement with the note holders of Spectrum’s $69.7 million 8.50% and 11.45% Notes (the “Spectrum Notes”) to, among other things, extend the maturity of such notes from August 15, 2025 to September 30, 2026 (the “Spectrum Notes Extension”).

Interest is payable upon maturity of the notes.

As a result of Spectrum Notes Extension, additional exit fees of $9.9 million were incurred.

The total exit fees associated with the notes of $25.8 million is payable on the earlier of maturity or repayment of the principal, and is reflected within Accrued liabilities in the Consolidated Balance Sheet as of December 31, 2025.

Refer to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on our Spectrum debt.

Non-Operating Corporate

On May 6, 2024, we extended the maturity date of our Revolving Line of Credit with MSD from March 16, 2025, to May 16, 2025.

Subsequent to year end, on March 6, 2025, the maturity date of the Revolving Line of Credit was extended to August 1, 2025, with all other terms substantially unchanged.

During the year ended December 31, 2024, we repurchased $2.9 million principal amount of our 2026 Convertible Notes at a market discount for $1.1 million, which is inclusive of accrued interest of $0.1 million, and recognized a $1.9 million gain on debt repurchase within Other income, net in the Consolidated Statement of Operations included in this Annual Report on Form 10-K, which is incorporated herein by reference.

In August 2025, the Company closed on a series of indebtedness refinancing transactions that extended certain of INNOVATE's debt maturities.

These refinancing transactions included:

(i) the closings of an exchange offer and consent solicitation with respect to the Company’s senior secured notes;

(ii) privately negotiated exchanges of certain of the Company’s convertible senior notes;

(iii) amendment and extension of the Company’s 2020 Revolving Credit Agreement to September 15, 2026;

and (iv) amendment and extension of the Company’s CGIC note to April 30, 2027, as well as the exchange of a portion of the Company’s preferred stock held by CGIC and accrued preferred stock dividends in exchange for increasing the principal amount of that note (the "Preferred Stock Exchange")

The Company issued $360.4 million aggregate principal amount of 10.50% 2027 Senior Secured Notes as consideration for the exchange of $328.1 million aggregate principal amount of the 8.50% 2026 Senior Secured Notes.

The new principal amounts also include fees payable to the lenders and amounts in lieu of interest payments in respect of the 8.50% 2026 Senior Secured Notes that were due August 1, 2025.

The 10.50% 2027 Senior Secured Notes mature on February 1, 2027 and accrue interest at a rate of 10.50% per year, payable semi-annually on February 1 st and August 1 st of each year, commencing on February 1, 2026.

For the first interest period only, interest has been paid in kind.

All subsequent interest payments are payable in cash.

The Company exchanged $48.7 million of aggregate principal amount of the 2026 Convertible Notes for $53.5 million aggregate principal amount of newly issued 9.5% Convertible Senior Secured Notes due 2027 (the “2027 Convertible Notes”).

The new principal amounts also include fees payable to the lenders and amounts in lieu of interest payments in respect of the 2026 Convertible Notes that were due on August 1, 2025.

The 2027 Convertible Notes mature on March 1, 2027 and interest on the 2027 Convertible Notes is paid semi-annually on February 1 st and August 1 st of each year, commencing on February 1, 2026.

For the first interest period only, interest has been paid in kind.

All subsequent interest payments are payable in cash.

The amended CGIC Note has a fixed interest rate of 16.0%.

Interest on the amended CGIC Note will be paid on a monthly basis and in kind through August 31, 2026.

All interest payments thereafter will be payable in cash, in arrears.

The additional principal amount incurred under the Preferred Stock Exchange was $9.6 million (reflective of the $9.1 million accrued value of the Series A-4 Preferred Stock and $0.5 million in accrued dividends on the Series A-3 and A-4 Preferred Stock).

In addition, an extension fee and accrued interest of $2.4 million on the CGIC Note through July 31, 2025, were capitalized to the new principal amount of the CGIC Note, for a total new aggregate outstanding principal amount of $43.0 million.

As of December 31, 2025, the total carrying amount related to the CGIC Note was $46.8 million, inclusive of $45.9 million of principal (including capitalized interest), and a net unamortized premium of $0.9 million.

Refer to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on our Non-Operating Corporate segment debt.

Equity Method Investments

During the year ended December 31, 2024, MediBeacon issued an aggregate $2.3 million of 12% convertible notes payable to Pansend, increasing the total outstanding principal due to Pansend to $12.0 million.

As a result of these note issuances by MediBeacon during the year ended December 31, 2024, Pansend recognized $2.3 million of equity method losses which were previously unrecognized because Pansend's carrying amount of its investment in MediBeacon had been previously reduced to zero.

As of December 31, 2024, Pansend's carrying amount of its investment in MediBeacon remains at zero, inclusive of the $12.0 million in outstanding notes which have been offset against recognized losses, and has cumulative unrecognized equity method losses relating to MediBeacon of $17.0 million.

Subsequent to year end, in January 2025, MediBeacon received approval from the U.S.

On January 17, 2025, MediBeacon received approval from the U.S.

Food and Drug Administration ("FDA") for its Transdermal GFR Measurement System ("TGFR").

Pursuant to the terms of MediBeacon's convertible notes, upon the FDA approval, Pansend's convertible notes and the related accrued interest together totaling $12.9 million were converted into Series 3 Preferred Stock.

In addition, pursuant to its amended commercial partnership with Huadong and, as a result of FDA approval, a $7.5 million milestone investment in its preferred stock by Huadong was in process.

This will decrease Pansend's ownership in MediBeacon from approximately 45.9% prior to the transaction to approximately 44.7% subsequent to the transaction.

On a fully diluted basis, Pansend's ownership in MediBeacon will decrease from 40.1% to 39.7%.

Pursuant to the terms of MediBeacon's convertible notes, upon the FDA approval, Pansend's convertible notes of $11.4 million and the related accrued interest of $1.5 million, together totaling $12.9 million, were converted into Series 3 Preferred Stock.

In addition, pursuant to its amended commercial partnership with Huadong and, as a result of FDA approval, a $7.5 million milestone payment from Huadong Medicine Co.

Ltd ("Huadong"), a publicly traded company on the Shenzhen Stock Exchange, to MediBeacon for MediBeacon preferred stock was received in the first quarter of 2025.

As a result of these transactions, Pansend's ownership in MediBeacon decreased from 45.9% prior to the transactions to 44.7% subsequent to the transactions.

On a fully diluted basis, Pansend's ownership in MediBeacon decreased from 40.1% prior to the transactions to 39.7% subsequent to the transactions.

Refer to Note 6.

Investments, which is incorporated herein by reference, for additional information.

In February 2025, China's National Medical Products Administration (“NMPA”) approved MediBeacon's TGFR Monitor and TGFR Sensor.

Full regulatory approval from China's NMPA occurred in October 2025, following its approval for the categorization of the Lumitrace (relmapirazin) injection as a drug in China.

On December 16, 2025, MediBeacon received approval from the FDA for its next generation MediBeacon TGFR System including the latest TGFR Reusable Sensor.

The latest TGFR Reusable Sensor has been designed for patient comfort, ease of application, and reusability.

It also lowers the cost compared to the single use TGFR Sensor previously approved by the FDA.

Financial Presentation Background

29 unchanged sentences

$ (60.6) $ (34.6) $ (26.0)

Preferred dividends 1.2 2.4 (1.2)

Preferred stock dividends 3.4 1.2 2.2

Net loss attributable to common stockholders and participating preferred stockholders $ (64.0) $ (35.8) $ (28.2)

Revenue for the year ended December 31, 2024, decreased $315.9 million to $1,107.1 million from $1,423.0 million for the year ended December 31, 2023.

The decrease was driven by our Infrastructure segment, which was partially offset by increases at our Life Sciences and Spectrum segments.

The decrease at our Infrastructure segment was primarily driven by the timing and size of projects, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business, at Banker Steel and DBMG's commercial structural steel fabrication and erection business, both of which had increased activity in the prior year on certain large commercial construction projects that have since been completed in the current year.

This was partially offset by an increase at the industrial maintenance and repair business as a result of an increase in project work.

The increase at our Life Sciences segment was attributable to R2 Technologies, primarily driven by an increase in sales in North America and worldwide of all R2 Technologies' products, including Glacial systems and consumables.

The increase at our Spectrum segment was primarily driven by network launches and expanded coverage with existing customers.

Revenue for the year ended December 31, 2025, increased $138.9 million to $1,246.0 million from $1,107.1 million for the year ended December 31, 2024.

The increase was primarily driven by our Infrastructure segment, and to a lesser extent our Life Sciences segment, which was partially offset by a decrease at our Spectrum segment.

The increase at our Infrastructure segment was primarily driven by the timing and size of projects at DBMG's commercial structural steel fabrication and erection business, which had increased activity subsequent to the comparable year on certain large commercial construction projects, which was partially offset by timing and size of projects at the industrial maintenance and repair business, Banker Steel and the construction modeling and detailing business, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business in the comparable year, which also had increased activity in the prior year on certain large commercial construction projects that have since been completed.

The increase at our Life Sciences segment was attributable to R2 Technologies, primarily driven by increases in Glacial Spa and Glacial fx unit sales outside North America, as well as an increase in consumable sales in North America, which was partially offset by a decrease in Glacial fx unit sales in North America.

The decrease at our Spectrum segment was primarily driven by the termination of certain customers in the current year and a downturn in the direct response advertising market, which was partially offset by the launch of new networks subsequent to the comparable year.

Income from operations :

Income from operations for the year ended December 31, 2024, increased $13.5 million to $40.0 million from $26.5 million for the year ended December 31, 2023.

The improvement was due to an increase in other operating income of $10.3 million, a decrease in selling, general and administrative ("SG&A") expenses of $7.8 million, a decrease in depreciation and amortization of $2.6 million, which were partially offset by a net decrease in gross profit of $7.2 million.

The net increase in other operating income was driven by our Infrastructure segment, primarily as a result of a gain on a lease modification and net gains on disposals of fixed assets.

The overall decrease in SG&A was primarily driven by unrepeated severance and reductions in compensation-related expenses at both our Non-Operating Corporate and Spectrum segments, unrepeated transaction expenses at our Other segment related to the sale of New Saxon's 19.0% investment in HMN International Co., Ltd., formerly known as Huawei Marine Networks Co.

(“HMN”) in the prior year, as well as by our Infrastructure segment as a result of an unrepeated accounts receivable write-off in 2023, a decrease in expenses related to a foreign office closure in the prior year, and a decrease in legal fees and facility-related expenses.

The decrease in SG&A was partially offset by an increase in compensation-related expenses and expenses related to a domestic plant closure and other initiatives announced and executed during the current year to evaluate and realign internal operations and back-office functions at our Infrastructure segment and by R2 Technologies as a result of increases in share-based compensation expense, selling costs, and sales commissions due to an increase in system sales.

The overall decrease in depreciation and amortization was primarily driven by our Infrastructure segment, as certain customer contract intangibles became fully amortized in the second quarter of 2023.

The decrease in gross profit was primarily driven by our Infrastructure segment due to timing and size of projects that have since been completed in the current year, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business.

This was partially offset by increases in gross profit at our Spectrum and Life Sciences segments.

The increase in gross profit at Spectrum was primarily driven by network launches and expanded coverage with existing customers.

The increase in gross profit at our Life Sciences segment was driven by R2 Technologies as a result of incremental Glacial system sales over the comparable year.

Income from operations for the year ended December 31, 2025, decreased $11.3 million to $28.7 million from $40.0 million for the year ended December 31, 2024.

The decrease was primarily due to a net decrease in gross profit of $9.1 million, and a net decrease in other operating income of $9.4 million, partially offset by a net decrease in SG&A expenses of $7.1 million.

The net decrease in gross profit, despite an increase in revenue, was primarily driven by our Infrastructure segment due to timing and size of projects in the comparable year that have since been completed, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business in the comparable year and our Spectrum segment primarily due to the termination of certain customers in the current year and a downturn in the direct response advertising market.

The decrease in other operating income was primarily driven by our Infrastructure segment as a result of an unrepeated gain on lease modification and unrepeated gains on the sale of various properties in the comparable year, as well as various losses on the sale of properties and a loss on lease modification in the current year, which was partially offset by our Spectrum segment primarily due to a favorable legal settlement in the current year, and unrepeated lease termination settlement costs incurred in the comparable year.

The decrease in SG&A was primarily driven by our Infrastructure segment primarily due to a decrease in compensation-related expenses, and, to a lesser extent, decreases in consulting fees and travel expenses, and a decrease at our Life Sciences segment due to a reduction in compensation-related expenses at Pansend and R2 Technologies.

These decreases in SG&A were partially offset by an increase in SG&A at our Non-Operating Corporate segment primarily due to the debt refinancing costs and expenses in the current year related to potential dispositions, which were partially offset by decreases in other legal fees and insurance expense as well as a net decrease in employee-related expenses.

Interest expense :

Interest expense for the year ended December 31, 2025, increased $14.5 million to $89.0 million from $74.5 million for the year ended December 31, 2024.

The increase was primarily attributable to increases in exit fees and a higher outstanding principal balance at our Life Sciences segment as a result of the capitalization of unpaid interest into the principal balance subsequent to the prior year, an increase in interest expense on our Non-Operating Corporate segment's CGIC Unsecured Note which was issued in May 2023 and had five months of interest in the prior year compared to a full year of interest in the current year, an increase in interest expense on our Corporate Revolving Line of Credit as a result of a higher outstanding balance drawn during the current year, and, to a lesser extent, an increase in interest at our Spectrum segment due to increased amortization from additional exit fees from refinancings during the second half of the prior year.

This was partially offset by our Infrastructure segment due to a net decrease in outstanding principal balances and a slight decrease in interest rates.

The increase in interest expense was primarily driven by our Non-Operating Corporate and Life Sciences segments, and to a lesser extent by our Spectrum segment.

The increase at our Non-Operating Corporate segment was due to the indebtedness refinancing transactions completed during the current year, which resulted in increased principal balances due to the capitalization of fees and interest, and certain increases in interest rates, leading to increased interest expense including amortization of fees.

Interest at our Life Sciences segment increased due to a higher outstanding principal amount resulting from the capitalization of unpaid interest and exit fees into the principal amount subsequent to the comparable year.

The increase at our Spectrum segment was due to the refinancing transactions and increased fees subsequent to the comparable year.

These increases in interest expense were slightly offset by a decrease at our Infrastructure segment due to a net decrease in outstanding principal balances.

Refer to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on the indebtedness refinancing transactions.

Loss from equity investees:

Loss from equity investees for the year ended December 31, 2024, decreased $7.1 million to $2.3 million from $9.4 million for the year ended December 31, 2023.

The decrease in loss was due to a decrease in losses recognized from MediBeacon, Triple Ring and HMN.

During the year ended December 31, 2024, as a result of additional convertible note investments in MediBeacon by Pansend, Pansend's basis in MediBeacon increased by $2.3 million and Pansend recognized $2.3 million of equity method losses that were previously unrecognized, whereas during the year ended December 31, 2023, as a result of $4.7 million convertible note investments in MediBeacon by Pansend and a $3.8 million equity transaction with Huadong, Pansend's basis in MediBeacon had increased by $8.5 million and Pansend had recognized $8.5 million of equity method losses that were previously unrecognized.

Loss from equity investees for the year ended December 31, 2025, increased $3.6 million to $5.9 million from $2.3 million for the year ended December 31, 2024.

The increase in loss was due to an increase in losses recognized from MediBeacon.

During the year ended December 31, 2025, as a result of the first quarter equity transactions that occurred upon FDA approval of MediBeacon's TGFR, Pansend's basis in MediBeacon increased by $5.9 million, consisting of a $4.4 million step-up gain and $1.5 million from the conversion of accrued interest on Pansend's convertible notes with MediBeacon, resulting in Pansend recognizing $5.9 million of equity method losses that were previously unrecognized.

During the year ended December 31, 2024, Pansend's basis in MediBeacon had increased by $2.3 million due to the issuance of additional convertible note investments in the comparable year, resulting in Pansend recognizing $2.3 million of equity method losses that were previously unrecognized.

As of both December 31, 2025 and 2024, Pansend's net carrying amount of its investment in MediBeacon was zero, and Pansend had unrecognized losses from this investment.

The partial sale of Triple Ring was completed during the fourth quarter of 2023, which resulted in Pansend's investment in Triple Ring no longer being accounted for under the equity method of accounting.

Our previous investment in HMN was sold on March 6, 2023 and had losses for the approximately two months of ownership in 2023.

Thus, no equity method losses from either Triple Ring or HMN were recognized in the current year.

Refer to Note 6.

Investments included in the Consolidated Financial Statements of this Annual Report on Form 10-K for additional information on our equity investments.

Investments to the Consolidated Financial Statements of this Annual Report on Form 10-K.

which is incorporated herein by reference, for additional information on our equity investments.

Other income, net:

Other income, net for the year ended December 31, 2024, decreased $13.3 million to $3.4 million from $16.7 million for the year ended December 31, 2023.

The decrease was primarily driven by the unrepeated $12.2 million gain on the sale of our equity investment in HMN of in the prior year, an unrepeated $3.8 million equity investment step-up gain from an increase in Pansend's carrying amount as a result of MediBeacon issuing $7.5 million of its preferred stock to Huadong in the prior year, and a $2.2 million loss on debt extinguishment at R2 Technologies in the current year.

These decreases were partially offset by a $1.9 million gain on debt repurchase at our Non-Operating Corporate segment related to the partial repurchase of the 2026 Convertible Notes in 2024, an increase in foreign currency translation gains from our Infrastructure segment, an increase in interest income earned at our Life Sciences segment resulting from an increase in Pansend's convertible note receivable balance from MediBeacon subsequent to the prior year, and our Non-Operating Corporate segment which earned additional interest income on its money market accounts due to an increase in the outstanding deposited balances as compared to the prior year.

Other income, net for the year ended December 31, 2025, increased $1.3 million to $4.7 million from $3.4 million for the year ended December 31, 2024.

The increase was primarily driven by the $4.4 million step-up gain following MediBeacon's FDA approval in January 2025, and an increase in fair value gains on marketable securities at our Non-Operating Corporate segment.

These increases were partially offset by an increase in foreign currency translation losses from our Infrastructure segment, a decrease in interest income at our Life Sciences and Non-Operating Corporate segments, and a legal settlement expense at our Non-Operating Corporate segment in the current year.

Net loss on repurchase or extinguishment of debt remained consistent as compared to the prior year;

however, the net loss was comprised of a loss on extinguishment of debt of $0.3 million related to a refinancing at our Infrastructure segment during the year ended December 31, 2025, as compared to a $2.2 million loss on debt extinguishment at R2 Technologies in the comparable year, which was largely offset by a $1.9 million gain on debt repurchase at our Non-Operating Corporate segment related to the partial repurchase of the 2026 Convertible Notes in the comparable year.

Refer to Note 21.

Supplementary Financial Information to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on other income, net.

Income tax expense :

Income tax expense for the year ended December 31, 2024, increased $1.8 million to $6.3 million from $4.5 million for the year ended December 31, 2023.

The increase was primarily driven by the tax expense of INNOVATE's U.S.

consolidated group utilizing its remaining unlimited NOLs in 2024 and due to the Tax Cuts and Jobs Act's 80% limitation on net operating losses incurred after 2017 and the unrepeated $1.1 million tax benefit, consisting of a current tax expense of $4.4 million related to a foreign tax payment and a deferred tax benefit of $5.5 million related to the reversal of the deferred tax liability associated with the $11.3 million put option, both of which were related to the sale of New Saxon's 19.0% investment in HMN on March 6, 2023.

Income tax expense for the year ended December 31, 2025, decreased $3.8 million to $2.5 million from $6.3 million for the year ended December 31, 2024.

The decrease was primarily driven by the decrease in pre-tax results, as well as the limitations on the utilization of net operating losses ("NOL") by INNOVATE's U.S.

consolidated group in the comparable year.

These limitations arose from Internal Revenue Code Section 382 and the Tax Cuts and Jobs Act's 80 percent limitation on NOLs incurred after 2017.

The Organization for Economic Cooperation and Development ("OECD") has announced an Inclusive Framework on Base Erosion and Profit Shifting including a Pillar Two Model to provide for a 15% global minimum tax on the earnings of multinational corporations with consolidated revenue over €750 million.

Many jurisdictions have enacted Pillar Two legislation that starts to become effective in 2024.

Many jurisdictions have enacted Pillar Two legislation that started to become effective in 2024.

The OECD, and its member countries, continue to release new guidance and legislation on Pillar Two.

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We will continue to evaluate the impact on our financial position as new legislation or guidance is introduced which could change our current assessment.

On July 4, 2025, the One Big Beautiful Bill Act "OBBBA") was enacted into law, introducing various changes to U.S.

federal income tax provisions, including modifications to bonus depreciation, interest expense limitations, and the treatment of research and development expenditures.

Under ASC 740, the effects of newly enacted tax legislation must be recognized in the period that includes the enactment date.

Management has evaluated the provisions of the OBBBA and their current and potential impact on the financial statements.

Based on this evaluation, the Company does not expect the OBBBA to have a material effect on the current or deferred income tax balances, effective tax rate, or overall financial position.

The effects of the legislation have been reflected in the Company's income tax provision for the year ended December 31, 2025.

The Company will continue to monitor developments and assess the impact of the OBBBA as additional guidance becomes available and as facts and circumstances evolve.

Segment Results of Operations

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(iii) asset impairment expense;

(iv) accretion of asset retirement obligations;

and (v) Federal Communications Commission (the "FCC") reimbursements.

and (iv) accretion of asset retirement obligations;

as applicable.

Each table summarizes the results of operations of our operating segments (in millions).

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Depreciation and amortization 12.1 12.0 0.1

Other operating income

Other operating loss (income)

1.4 (9.6) 11.0

Income from operations $ 55.4 $ 65.7 $ (10.3)

Revenue for the year ended December 31, 2024, decreased $325.6 million to $1,071.6 million from $1,397.2 million for the year ended December 31, 2023.

The decrease was primarily driven by the timing and size of projects, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business, at Banker Steel and DBMG's commercial structural steel fabrication and erection business, both of which had increased activity in the prior year on certain large commercial construction projects that that have since been completed.

This was partially offset by an increase at the industrial maintenance and repair business as a result of an increase in project work.

Revenue for the year ended December 31, 2025, increased $138.7 million to $1,210.3 million from $1,071.6 million for the year ended December 31, 2024.

The increase was primarily driven by the timing and size of projects at DBMG's commercial structural steel fabrication and erection business, which had increased activity subsequent to the comparable year on certain large commercial construction projects.

The increase was partially offset by the timing and size of projects at the industrial maintenance and repair business, Banker Steel, and, the construction modeling and detailing business, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business in the comparable year, which also had increased activity in the prior year on certain large commercial construction projects that have since been completed.

Cost of revenue :

Cost of revenue for the year ended December 31, 2024, decreased $312.2 million to $880.4 million from $1,192.6 million for the year ended December 31, 2023.

The decrease was primarily driven by the decrease in revenues at Banker Steel and DBMG's commercial structural steel fabrication and erection business from the timing of project activity on certain large commercial construction projects and decreases in costs as they wind down or have since been completed, which was partially offset by an increase in costs associated with the industrial maintenance and repair business as a result of an increase in project work.

Selling, general and administrative expense for the year ended December 31, 2024, decreased $2.9 million to $123.1 million from $126.0 million for the year ended December 31, 2023.

The decrease was primarily driven by an unrepeated accounts receivable write-off of $2.2 million related to a customer bankruptcy in the prior year, a decrease in expenses related to a foreign office closure in the comparable year, a decrease in legal fees and facility-related expenses, which was partially offset by an increase in compensation-related expenses, expenses related to a domestic plant closure and other initiatives announced and executed during the current year to evaluate and realign DBMG's internal operations and back-office functions.

Depreciation and amortization:

Depreciation and amortization for the year ended December 31, 2024, decreased $2.4 million to $12.0 million from $14.4 million for the year ended December 31, 2023.

The decrease was primarily driven by Banker Steel, as certain customer contract intangibles became fully amortized in the second quarter of 2023, which was partially offset by an increase in depreciation at DBMG's commercial structural steel fabrication and erection business as a result of additional depreciable fixed assets placed into service.

Other operating income :

Other operating income for the year ended December 31, 2024, increased $9.4 million to $9.6 million from $0.2 million for the year ended December 31, 2023.

Other operating income for the year ended December 31, 2024, related to a gain on a lease modification and net gains on the sales of various properties in the current year, which were partially offset by a loss related to a plant closure in the first quarter of 2024.

Cost of revenue for the year ended December 31, 2025, increased $145.8 million to $1,026.2 million from $880.4 million for the year ended December 31, 2024.

The increase was primarily driven by the increase in revenues at DBMG's commercial structural steel fabrication and erection business due to the increased activity subsequent to the comparable year on certain large commercial construction projects, which was partially offset by decreases as a result of the decrease in revenues at the industrial maintenance and repair business and Banker Steel from the timing of project activity on certain large commercial construction projects and decreases in costs as they were completed in the current year.

Selling, general and administrative:

S elling, general and administrative expense for the year ended December 31, 2025, decreased $7.9 million to $115.2 million from $123.1 million for the year ended December 31, 2024.

The decrease was primarily driven by a decrease in compensation-related expenses, and, to a lesser extent, decreases in consulting fees and travel expenses.

Other operating loss (income) :

Other operating loss (income) for the year ended December 31, 2025, decreased by $11.0 million to a loss of $1.4 million from income of $9.6 million for the year ended December 31, 2024.

The decrease was primarily driven by an unrepeated gain on lease modification and unrepeated gains on the sale of various properties in the comparable year, as well as various losses on the sale of properties and a loss on lease modification in the current year.

Life Sciences Segment

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Revenue for the year ended December 31, 2025, increased $2.7 million to $12.5 million from $9.8 million for the year ended December 31, 2024.

The increase in revenue was attributable to R2 Technologies, primarily due to incremental unit sales of Glacial fx systems in North America and worldwide, which launched during the second half of 2023 in North America and in 2024 outside North America, as well as from an increase in consumable sales in both North America and worldwide.

In addition, the increase in revenue as compared to the prior year was partially driven by an increase in Glacial Rx units sold in North America and an increase in Glacial Spa units sold outside North America.

The increase in revenue was attributable to R2 Technologies, primarily driven by increases in Glacial Spa and Glacial fx unit sales outside North America, as well as an increase in consumable sales in North America.

The increases were partially offset by a decrease in Glacial fx unit sales in North America.

Cost of revenue :

Cost of revenue for the year ended December 31, 2025, increased $2.0 million to $8.4 million from $6.4 million for the year ended December 31, 2024.

The increase in cost of revenue was attributable to R2 Technologies, primarily driven by the increase in revenue from the additional system and consumables sales noted above, and, to a lesser extent, increases in royalty expenses, warranty expenses and freight costs driven by the additional systems sold.

The increase in cost of revenue was partially offset by changes in product mix sold as the Glacial fx and Glacial Spa systems have a lower production cost per system compared to the Glacial Rx.

The increase in cost of revenue was attributable to R2 Technologies, primarily driven by the increase in revenue from the additional unit system and consumables sales noted above and, to a lesser extent, the related increases in warranty expenses, freight costs, and royalty expenses.

Selling, general and administrative :

Selling, general and administrative expense for the year ended December 31, 2024, increased $1.9 million to $17.1 million from $15.2 million for the year ended December 31, 2023.

The increase was primarily driven by R2 Technologies as a result of an increase in share-based compensation expense and increases in selling costs and sales commissions resulting from an increase in system sales.

Selling, general and administrative expense for the year ended December 31, 2025, decreased $2.5 million to $14.6 million from $17.1 million for the year ended December 31, 2024.

The decrease was primarily driven by a reduction in compensation-related expenses at Pansend and R2 Technologies.

Spectrum Segment

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Depreciation and amortization 5.0 5.1 (0.1)

Other operating loss (income)

Other operating (income) loss

(1.0) 0.4 (1.4)

Income (loss) from operations

(Loss) income from operations

$ (0.1) $ 1.4 $ (1.5)

Revenue for the year ended December 31, 2024, increased $3.2 million to $25.7 million from $22.5 million for the year ended December 31, 2023.

The increase was primarily driven by network launches and expanded coverage with existing customers, which was partially offset by the termination of a number of smaller networks in the prior year.

Revenue for the year ended December 31, 2025, decreased $2.5 million to $23.2 million from $25.7 million for the year ended December 31, 2024.

The decrease was primarily driven by the termination of certain customers in the current year and a downturn in the direct response advertising market, which was partially offset by the launch of new networks subsequent to the comparable year.

Cost of revenue:

Cost of revenue for the year ended December 31, 2024, decreased $0.3 million to $11.5 million from $11.8 million for the year ended December 31, 2023.

The decrease was primarily driven by decreased costs as a result of the renegotiation of broadcast tower- related contracts during the current year.

Selling, general and administrative:

Selling, general and administrative expense for the year ended December 31, 2024, decreased $1.7 million to $7.3 million from $9.0 million for the year ended December 31, 2023.

The decrease was primarily driven by unrepeated severance expense in the prior year and a decrease in salaries and benefits expense as a result of a reduction in headcount.

Other operating loss (income) :

Other operating loss (income) for the year ended December 31, 2024, decreased $0.5 million to a loss of $0.4 million from income of $0.1 million for the year ended December 31, 2023.

The decrease in other operating income was primarily driven by a decrease in reimbursements received from the FCC for certain station modification costs and an increase in lease termination costs, which was partially offset by a decrease in asset impairment charges which in the prior year had primarily related to the write-off of certain redundant equipment and associated capitalized costs.

Cost of revenue for the year ended December 31, 2025, increased $0.2 million to $11.7 million from $11.5 million for the year ended December 31, 2024.

The majority of our Spectrum segment's costs are relatively fixed in nature and do not fluctuate significantly with changes in revenue.

Other operating (income) loss :

Other operating (income) loss for the year ended December 31, 2025, increased $1.4 million to income of $1.0 million from a loss of 0.4 million for year ended December 31, 2024.

The increase in income was primarily driven by a favorable legal settlement in the current year and unrepeated lease termination settlement costs incurred in the comparable year.

Non-Operating Corporate

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Other operating loss

0.2 0.5 (0.3)

Loss from operations $ (15.6) $ (13.0) $ (2.6)

Selling, general and administrative :

Selling, general and administrative expenses for the year ended December 31, 2024, decreased $3.1 million to $12.7 million from $15.8 million for the year ended December 31, 2023, primarily driven by unrepeated severance expense related to the Company's former Chief Operating Officer in the prior year, a decrease in salaries and benefits from a reduced headcount, decreases in accounting, consulting and legal fees, and a decrease in rent expense primarily as a result of the termination of leases in the current year.

Other operating loss:

Other operating loss for the year ended December 31, 2024, decreased $0.3 million to $0.2 million from $0.5 million for the year ended December 31, 2023.

Other operating loss in the current period consisted of lease termination costs for two leases the Company exited in the current year, while other operating loss in the prior year primarily consisted of an impairment of leasehold improvements for unutilized office space.

Selling, general and administrative expenses for the year ended December 31, 2025 increased 2.9 million to $15.6 million from $12.7 million for the year ended December 31, 2024.

The increase was primarily driven by $4.3 million of debt refinancing costs and $0.4 million of expenses in the current year related to potential dispositions, which were partially offset by a decrease in other legal fees due to legal matters settled in or subsequent to the comparable year, as well as a decrease in insurance expense and a net decrease in employee-related expenses.

Loss from Equity Investees

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Life Sciences $ (5.9) $ (2.3) $ (3.6)

Other — (0.3) 0.3

Loss from equity investees $ (5.9) $ (2.3) $ (3.6)

Life Sciences:

Loss from equity investees within our Life Sciences segment for the year ended December 31, 2024, decreased $6.8 million to $2.3 million from $9.1 million for the year ended December 31, 2023.

The decrease in loss was due to a decrease in losses recognized from MediBeacon and Triple Ring.

Loss from equity investees within our Life Sciences segment for the year ended December 31, 2025, increased $3.6 million to $5.9 million from $2.3 million for the year ended December 31, 2024.

The increase in loss was due to an increase in losses recognized from MediBeacon.

As of both December 31, 2025 and 2024, Pansend's net carrying amount of its investment in MediBeacon was zero, and Pansend had unrecognized losses from this investment.

Also contributing to the decrease in loss from equity investees was the partial sale of Triple Ring which was completed during the fourth quarter of 2023 and resulted in Pansend's investment in Triple Ring no longer being accounted for under the equity method of accounting.

Thus, no equity method losses were recognized from Triple Ring in the current year.

Loss from equity investees within our Other segment for the year ended December 31, 2024, decreased $0.3 million to zero from a loss of $0.3 million for the year ended December 31, 2023.

Loss from equity investees for the year ended December 31, 2023 was driven by our previous investment in HMN, which was sold on March 6, 2023, and had losses for the approximately two months of ownership in 2023.

Refer to Note 6.

Investments included in the Consolidated Financial Statements of this Annual Report on Form 10-K, for additional information on our equity investments.

Investments to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on our equity investments.

Non-GAAP Financial Measures and Other Information

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Using Adjusted EBITDA as a performance measure has inherent limitations as an analytical tool as compared to net income (loss) or other U.S.

GAAP financial measures, as this non-GAAP measure excludes certain items, including items that are recurring in nature, which may be meaningful to investors.

GAAP financial measures, as this non-U.S.

GAAP measure excludes certain items, including items that are recurring in nature, which may be meaningful to investors.

As a result of the exclusions, Adjusted EBITDA should not be considered in isolation and does not purport to be an alternative to net income (loss) or other U.S.

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depreciation and amortization;

other operating (income) loss, which is inclusive of (gain) loss on sale or disposal of assets, lease termination costs, (gains) losses on lease modifications, asset impairment expense and FCC reimbursements;

other operating (income) loss, which is inclusive of (gain) loss on sale or disposal of assets, lease termination costs, (gains) losses on lease modifications, asset impairment expense;

interest expense;

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share-based compensation expense;

legacy accounts receivable write-offs;

realignment and exit costs;

debt refinancing costs;

and acquisition and disposition costs.

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Adjusted EBITDA $ 67.2 $ 71.3 $ (4.1)

The tables below provide reconciliations of net income (loss) attributable to INNOVATE Corp to Adjusted EBITDA for the years ended December 31, 2024 and 2023:

The tables below provide reconciliations of net income (loss) attributable to INNOVATE Corp.

to Adjusted EBITDA for the years ended December 31, 2025 and 2024:

(in millions) Year Ended December 31, 2025

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Depreciation and amortization (included in cost of revenue) 12.9 — — — — 12.9

Other operating (income) loss

Other operating loss (income)

1.4 — (1.0) — — 0.4

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Realignment and exit costs 4.9 — 0.2 — — 5.1

Debt refinancing costs 0.1 — 0.2 4.3 — 4.6

Acquisition and disposition costs 0.8 — — 0.4 — 1.2

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Other operating (income) loss

(9.6) — 0.4 0.2 — (9.0)

Interest expense 10.3 9.8 14.3 40.1 — 74.5

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Share-based compensation expense — 1.2 — 2.2 — 3.4

Legacy accounts receivable write-off 2.2 — — — — 2.2

Realignment and exit costs 5.2 — — — — 5.2

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Infrastructure:

Net income from our Infrastructure segment for the year ended December 31, 2024, increased $11.6 million to $40.3 million from $28.7 million for the year ended December 31, 2023.

Net income from our Infrastructure segment for the year ended December 31, 2025, decreased $10.8 million to $29.5 million from $40.3 million for the year ended December 31, 2024.

Adjusted EBITDA from our Infrastructure segment for the year ended December 31, 2025, decreased $1.6 million to $87.5 million from $89.1 million for the year ended December 31, 2024.

The decrease in Adjusted EBITDA was primarily driven by decrease in revenue at Banker Steel, due to timing of completion of certain large commercial construction projects and decreased gross margins at the construction modeling and detailing business.

These decreases were partially offset by an increase in revenue at the industrial maintenance and repair businesses, higher gross margins on certain large commercial construction projects that have since been completed at DBMG's commercial structural steel fabrication and erection, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business, despite the decrease in revenue, as well as a decrease in recurring SG&A, primarily as a result of a decrease in legal fees, which was partially offset by an increase in compensation-related expenses.

The decrease in Adjusted EBITDA was primarily driven by a decrease in gross profit, despite the increase in revenue, at DBMG's commercial structural steel fabrication and erection business resulting from favorable close-outs of projects in the comparable year.

The decrease was also driven by a decrease in revenue and gross profit at Banker Steel, as well as the industrial maintenance and repair business due to timing of certain large construction projects in the comparable year that have since been completed.

These decreases were partially offset by a decrease in recurring SG&A expenses, primarily driven by a decrease in compensation-related expenses, and to a lesser extent, decreases in consulting fees and travel expenses.

Life Sciences:

Net loss from our Life Sciences segment for the year ended December 31, 2025, increased $2.5 million to $22.2 million from $19.7 million for the year ended December 31, 2024.

Adjusted EBITDA loss from our Life Sciences segment for the year ended December 31, 2024, decreased $8.6 million to $14.5 million from $23.1 million for the year ended December 31, 2023.

The decrease in Adjusted EBITDA loss was primarily due to a decrease in equity method losses recognized from MediBeacon and Triple Ring, as discussed in the Loss from Equity Investees section above.

Additionally contributing to the decrease in Adjusted EBITDA loss was an increase in gross profit at R2 Technologies, driven by an increase in sales in North America and worldwide of all R2's products, including Glacial systems and consumables, which was partially offset by increases in selling costs and sales commissions due to the increase in system sales.

Net loss from our Spectrum segment for the year ended December 31, 2024, decreased $2.2 million to $20.0 million from $22.2 million for the year ended December 31, 2023.

Adjusted EBITDA from our Spectrum segment for the year ended December 31, 2024, increased $5.1 million to $7.1 million from $2.0 million for the year ended December 31, 2023.

The increase in Adjusted EBITDA was primarily due to an increase in revenue primarily driven by network launches and expanded coverage with existing customers, unrepeated severance in the prior year, as well as a decrease in salaries and benefits expense and a decrease in tower-related costs.

This was partially offset by the termination of a number of smaller networks and individual markets in the prior year.

Adjusted EBITDA loss from our Life Sciences segment for the year ended December 31, 2025, increased $1.6 million to $16.1 million from $14.5 million for the year ended December 31, 2024.

The increase in Adjusted EBITDA loss was primarily due to an increase in equity method losses recognized from MediBeacon, as discussed in the Loss from Equity Investees section above.

The increase in Adjusted EBITDA loss was partially offset by a decrease in SG&A expenses primarily driven by a reduction in compensation-related expenses at Pansend and R2 Technologies and an increase in gross profit at R2 Technologies, driven by increased revenue (as discussed in the Revenue section above).

Net loss from our Spectrum segment for the year ended December 31, 2025, increased $3.5 million to $23.5 million from $20.0 million for the year ended December 31, 2024.

Adjusted EBITDA from our Spectrum segment for the year ended December 31, 2025, decreased $2.7 million to $4.4 million from $7.1 million for the year ended December 31, 2024.

The decrease in Adjusted EBITDA was primarily driven by the net decrease in revenue as a result of the termination of certain customers in the current year and a downturn in the direct response advertising market, which was partially offset by the launch of new networks subsequent to the comparable year.

Non-Operating Corporate:

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Adjusted EBITDA loss from our Non-Operating Corporate segment for the year ended December 31, 2025, decreased $1.9 million to $8.5 million from $10.4 million for the year ended December 31, 2024.

The decrease in Adjusted EBITDA loss was primarily driven by an unrepeated severance expense related to the Company's former Chief Operating Officer in the prior year, a decrease in salaries and benefits from a reduced headcount, decreases in accounting and consulting fees, and a decrease in rent expense primarily as a result of the termination of leases in the current year.

Other and Eliminations:

Net income from our Other segment and Eliminations for the year ended December 31, 2024, decreased $6.9 million to $0.1 million from $7.0 million for the year ended December 31, 2023.

Adjusted EBITDA loss from our Other segment for the year ended December 31, 2024, decreased $1.0 million to zero from an Adjusted EBITDA loss of $1.0 million for the year ended December 31, 2023.

The decrease in Adjusted EBITDA loss was driven primarily by unrepeated severance expense at TIC Holdco, Inc.

in the prior year and our previous investment in HMN, which was sold on March 6, 2023, and had equity method losses for the approximately two months of ownership in 2023.

The decrease in Adjusted EBITDA loss was primarily driven by a decrease in non-refinancing related legal fees due to legal matters settled in or subsequent to the comparable year, as well as decreases in employee-related expenses and insurance expense.

Backlog is our estimate of the U.S.

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If one or more of these projects terminate or reduce their scope, DBMG’s backlog could decrease substantially.

DBMG includes an additional $13.6 million in its backlog that is not included in the remaining unsatisfied performance obligations disclosed in Note 3.

DBMG has included an additional $12.5 million in its backlog that is not included in the remaining unsatisfied performance obligations disclosed in Note 3.

Revenue and Contracts in Process.

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Liquidity and Capital Resources

2025 Debt Refinancing

In August 2025, the Company closed on a series of indebtedness refinancing transactions that extended certain of the Company’s debt maturities.

The refinancing transactions included:

(i) the closings of an exchange offer and consent solicitation with respect to the Company’s senior secured notes;

(ii) privately negotiated exchanges of certain of the Company’s convertible senior notes;

(iii) amendment and extension of the Company’s 2020 Revolving Credit Agreement;

(iv) amendment and extension of the Company’s CGIC note, as well as the exchange of a portion of the Company’s preferred stock held by CGIC and accrued preferred stock dividends in exchange for increasing the principal amount of that note;

(v) amendment and extension of the Spectrum debt;

and (vi) amendment and extension of the R2 Technologies debt.

In addition, on May 20, 2025, DBMG entered into an Amended and Restated Credit Agreement.

Total third-party fees expensed related to the refinancing transactions were $4.6 million for the year ended December 31, 2025, respectively, and total third-party fees capitalized were $0.5 million for the year ended December 31, 2025, respectively.

Refer to “ Indebtedness ” below and to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information.

Non-Operating Corporate

10.50% Senior Secured Notes due 2027

In August 2025, we closed on an exchange offer and consent solicitation to eligible holders of our 8.50% senior secured notes due 2026 ("8.50% 2026 Senior Secured Notes") to exchange such notes for newly issued 10.50% senior secured notes due 2027 (the “10.50% 2027 Senior Secured Notes”).

The Company, the guarantors party thereto from time to time and U.S.

Bank Trust Company, National Association, as trustee (in such capacity, the “10.50% 2027 Senior Secured Notes Trustee”) and collateral trustee, entered into an indenture (the “10.50% 2027 Senior Secured Notes Indenture”) governing the 10.50% 2027 Senior Secured Notes and we issued $360.4 million aggregate principal amount of 10.50% senior secured notes due 2027 (the "10.50% 2027 Senior Secured Notes") as consideration for the exchange of $328.1 million aggregate principal amount of the 8.50% 2026 Senior Secured Notes.

The new principal amount includes fees payable to the lenders and $52.50 principal amount of 10.50% 2027 Senior Secured Notes per $1,000 principal amount of 8.50% 2026 Senior Secured Notes exchanged, paid to exchanging holders in lieu of the interest payment in respect of the 8.50% 2026 Senior Secured Notes that was due on August 1, 2025.

For the first interest period only, interest has been paid in kind.

All subsequent interest payments are payable in cash.

As of December 31, 2025, the total carrying amount related to the note was $345.5 million, inclusive of $360.4 million aggregate principal outstanding, partially offset by a $13.9 million total unamortized discount and $1.0 million of total unamortized deferred financing fees.

The effective interest rate on the 10.50% 2027 Senior Secured Notes was 14.4% as of December 31, 2025.

Aggregate interest expense for the new 10.50% 2027 Senior Secured Notes, including the contractual interest coupon and amortization of fees was $20.6 million for the year ended December 31, 2025.

Our obligations under the 10.50% 2027 Senior Secured Notes Indenture are irrevocably and unconditionally guaranteed, jointly and severally, by the same guarantors that guarantee the 8.50% 2026 Senior Secured Notes (the “Subsidiary Guarantors”).

The 10.50% 2027 Senior Secured Notes and the related guarantees are senior secured obligations of the Company and the Subsidiary Guarantors.

Asset Sale Offer.

If we complete certain assets sales, we may be required in certain circumstances to make an offer to purchase the 10.50% 2027 Senior Secured Notes with the net cash proceeds from such an asset sale at a price in cash equal to 101% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date of purchase.

Certain Covenants.

The 10.50% 2027 Senior Secured Notes Indenture contains covenants limiting, among other things, our ability, and, in certain cases, our subsidiaries' ability, to incur additional indebtedness;

create liens;

pay dividends or make distributions in respect of capital stock;

make certain restricted payments;

engage in certain transactions with affiliates;

or consolidate or merge with, or sell substantially all of its assets to, another person.

Additionally, the 10.50% 2027 Senior Secured Notes Indenture required us to meet certain milestones with respect to strategic alternatives for our operating subsidiaries, including asset sales generating at least $150 million in net proceeds, to be applied to the 10.50% 2027 Senior Secured Notes, such that by September 1, 2025, we needed to have a bona fide bid or term sheet related to a potential sale.

The September 1, 2025 milestone was not reached, and in accordance with the indenture, we have thus been required to commence a sales process for DBMG.

The sales process for DBMG has separate milestone requirements, which we have either met or extended as of December 31, 2025.

In addition, subsequent to year end, the February 1, 2026 milestone for a final bid or term sheet was extended to March 1, 2026 and was met on this revised date.

The March 1, 2026 milestone for a fully executed purchase agreement, has been extended to April 1, 2026.

As of the date of this Annual Report on Form 10-K, the Company is in compliance with the milestone covenants.

Any failure to comply with the restrictions or covenants in the indentures governing INNOVATE’s 2027 Senior Secured Notes and 2027 Convertible Notes , or any other agreement governing our existing indebtedness or indebtedness we may incur in the future, may result in an event of default under those agreements.

Such default may allow the creditors to accelerate the related debt, which acceleration may trigger cross-acceleration or cross-default provisions in other debt.

Refer to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information.

8.50% Senior Secured Notes due 2026

The original $330.0 million aggregate principal amount of 8.50% senior secured notes due February 1, 2026 (the "8.50% 2026 Senior Secured Notes") were issued in 2021 at 100% of par.

In August 2025, we exchanged $328.1 million aggregate principal amount of the 8.50% 2026 Senior Secured Notes for new 10.50% 2027 Senior Secured Notes, as discussed above.

As of December 31, 2025, we had $1.9 million aggregate principal amount of the 8.50% 2026 Senior Secured Notes remaining with an effective interest rate of 9.3%.

Subsequent to year end, on February 2, 2026, the Company repaid the remaining principal balance and all accrued interest.

Interest was payable semi-annually in arrears on February 1 st and August 1 st of each year.

Aggregate interest expense, including the contractual interest coupon and amortization of the deferred financing fees was $17.9 million for the year ended December 31, 2025.

Refer to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference for additional information.

2027 Convertible Notes

On August 4, 2025, we settled the exchanges (collectively, the “Convertible Notes Exchanges”) under our privately negotiated exchange agreements (collectively, the “Exchange Agreements”) with certain holders of our 7.5% Convertible Senior Notes due 2026 ("the 2026 Convertible Notes").

Pursuant to the Exchange Agreements, we exchanged $48.7 million of the then outstanding aggregate principal amount of the 2026 Convertible Notes for $53.5 million aggregate principal amount of newly issued 9.5% Convertible Senior Secured Notes due 2027 (the “2027 Convertible Notes”), which is the total outstanding as of December 31, 2025.

The 2027 Convertible Notes mature on March 1, 2027 unless earlier converted, redeemed or purchased.

The new principal amount includes fees payable to the lenders and $47.50 principal amount of 2027 Convertible Notes per $1,000 principal amount of 2026 Convertible Notes exchanged, paid to exchanging holders in lieu of the interest payment in respect of the 2026 Convertible Notes that was due on August 1, 2025.

As of December 31, 2025, the total carrying amount related to the notes was $52.5 million, inclusive of $53.5 million aggregate principal outstanding, partially offset by a remaining unamortized net discount of $0.8 million and unamortized deferred financing fees of $0.2 million.

The 2027 Convertible Notes accrue interest at a rate of 9.5% per year.

The effective interest rate on the 2027 Convertible Notes is 11.1%.

Interest on the 2027 Convertible Notes is paid semi-annually on February 1 st and August 1 st of each year, commencing on February 1, 2026.

For the first interest period only, interest has been paid in kind.

All subsequent interest payments are payable in cash.

Aggregate interest expense, including the contractual interest coupon and amortization of the deferred financing fees and net discount was $2.4 million for the year ended December 31, 2025.

The Company, the guarantors party thereto from time to time and U.S.

Bank Trust Company, National Association, as trustee (in such capacity, the “2027 Convertible Notes Trustee”) and collateral trustee, entered into an indenture (the “2027 Convertible Notes Indenture”), dated as of August 4, 2025, governing the 2027 Convertible Notes.

Certain Covenants.

The 2027 Convertible Notes Indenture contains covenants limiting, among other things, our ability, and, in certain cases, our subsidiaries' ability, to incur additional indebtedness;

create liens;

pay dividends or make distributions in respect of capital stock;

make certain restricted payments;

engage in certain transactions with affiliates;

or consolidate or merge with, or sell substantially all of its assets to, another person.

These covenants are subject to a number of important exceptions and qualifications.

Such default may allow the creditors to accelerate the related debt, which acceleration may trigger cross-acceleration or cross-default provisions in other debt.

Refer to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information.

2026 Convertible Notes

The original $51.8 million aggregate principal amount of 7.50% convertible notes (the "2026 Convertible Notes") were issued under an indenture dated February 1, 2021, between the Company and U.S.

Bank, as trustee.

During July 2024, INNOVATE repurchased $2.9 million principal amount of its 2026 Convertible Notes at a market discount for $1.1 million, which was inclusive of accrued interest of $0.1 million.

As discussed above, on August 4, 2025, pursuant to the Exchange Agreements, we exchanged $48.7 million aggregate principal amount of the 2026 Convertible Notes for new 2027 Convertible Notes.

Subsequent to the exchanges and, as of December 31, 2025, we had $0.2 million aggregate principal remaining of the 2026 Convertible Notes.

The 2026 Convertible Notes mature on August 1, 2026, unless earlier converted, redeemed or purchased.

The 2026 Convertible Notes accrue interest at a rate of 7.5% per year, which interest is paid semi-annually in arrears on February 1 st and August 1 st of each year.

As of December 31, 2025, the effective interest rate on the 2026 Convertible Notes was 3.0%.

Aggregate interest expense recognized relating to both the contractual interest coupon and amortization of discount net of premium and deferred financing costs was $0.9 million for the year ended December 31, 2025.

On August 4, 2025, the Company and U.S.

Bank Trust Company, National Association, as trustee (the “2026 Convertible Notes Trustee”) entered into a first supplemental indenture (the “2026 Convertible Notes Supplemental Indenture”) to the indenture, dated as of February 1, 2021, by and among the Company, the guarantors party thereto from time to time and the 2026 Convertible Notes Trustee, governing the 2026 Convertible Notes (the “2026 Convertible Notes Indenture”).

The 2026 Convertible Notes Supplemental Indenture amended the 2026 Convertible Notes Indenture and the 2026 Convertible Notes to effectuate certain proposed amendments with respect to the 2026 Convertible Notes pursuant to the solicitation of consents, which amendments included eliminating substantially all of the restrictive covenants, eliminating certain events of default, modifying covenants regarding mergers and consolidations and modifying or eliminating certain other provisions, contained in the 2026 Convertible Notes Indenture and the 2026 Convertible Notes.

Refer to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference.

Our debt contains customary events of default which could, subject to certain conditions, cause the 2026 Senior Secured Notes and the 2026 Convertible Notes to become immediately due and payable.

Revolving Line of Credit

We have a revolving credit agreement with MSD PCOF Partners IX, LLC ("MSD") which has a maximum commitment of $20.0 million ("Revolving Line of Credit"), of which $20.0 million had been drawn as of December 31, 2025.

Interest on loans under the Revolving Line of Credit accrues at SOFR plus 5.75% and is payable quarterly.

On August 4, 2025, the Company and MSD entered into an Eighth Amendment to Credit Agreement, which among other things, extended the maturity of the 2020 Revolving Credit Agreement to September 15, 2026 and added a new $0.4 million extension fee that is payable on the earlier of the maturity date or the date of prepayment of the debt.

The Revolving Line of Credit has an interest rate margin applicable to loans borrowed under the Revolving Line of Credit of 5.75%, and the benchmark rates for the interest are SOFR-based rates.

As of December 31, 2025, the effective interest rate on the Revolving Line of Credit, as amended, was 10.0%.

Interest is paid quarterly in arrears.

The Revolving Line of Credit also includes a commitment fee at a per annum rate of 1.0% calculated based off the actual daily amount of unused availability under the Revolving Line of Credit with MSD, and also includes a requirement for prepayment using the net cash proceeds received from certain asset sales.

The affirmative and negative covenants governing the Revolving Line of Credit are substantially consistent with the affirmative and negative covenants contained in the indenture that governs the Company's 10.5% Senior Secured Notes.

Refer to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference for additional information.

CGIC Promissory Note

On August 4, 2025, we entered into a Subordinated Secured Promissory Note with CGIC to, among other things, extend the maturity of its existing subordinated unsecured promissory note with CGIC (the “CGIC Note”) from February 28, 2026 to April 30, 2027, and secure the amended CGIC Note by a third priority lien on the same collateral securing the 10.50% 2027 Senior Secured Notes and the 2027 Convertible Notes.

The amended CGIC Note has an interest rate of 16.0%, and an effective interest rate of 14.6% as of December 31, 2025.

Interest on the amended CGIC Note will be paid on a monthly basis and in kind through August 31, 2026.

All interest payments thereafter will be payable in cash, in arrears.

As part of the agreement with CGIC, the accrued value of 8,063 shares of Series A-4 Preferred Stock of the Company held by CGIC, and unpaid accrued cash dividends for the A-3 and A-4 Preferred Stock were exchanged for an additional principal amount of the CGIC Note, on a dollar-for-dollar basis (the “Preferred Stock Exchange”).

As of December 31, 2025 the total carrying amount related to the note was $46.8 million, inclusive of $45.9 million of principal (including capitalized interest), and a net unamortized premium of $0.9 million.

For the year ended December 31, 2025, interest expense recognized relating to the CGIC Note, including the contractual interest coupon and amortization of the deferred financing fees and discounts, was $5.9 million.

Mandatory Prepayment s.

After the indefeasible repayment and satisfaction in full in cash of all obligations under the 10.50% 2027 Senior Secured Notes, the 10.50% 2027 Senior Secured Notes Indenture, the 2027 Convertible Notes, the 2027 Convertible Notes Indenture and all other Senior Debt (or, in each case, under any refinancing indebtedness in respect thereof), the Company must prepay the CGIC Note (together with all accrued and unpaid interest and all other amounts payable under the CGIC Note) upon the occurrence of an Asset Sale (as defined in the agreement), in an amount equal to the Net Cash Proceeds (as defined in the agreement) from such Asset Sale, with such prepayment due no later than two (2) Business Days after the receipt of such Net Cash Proceeds by the Company (or its subsidiary, if applicable) from such Asset Sale.

Refer to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference for additional information.

Infrastructure

As of December 31, 2025, our Infrastructure segment has an aggregate amount of principal outstanding debt, including obligations under finance leases, of $87.7 million.

The DBMG Credit Agreement also contains an accordion feature to increase the allowable size of the DBMG Revolving Facility by an additional $50.0 million.

The DBMG Revolving Facility and the term loan facility will mature on May 20, 2030.

DBMG entered into the DBMG Credit Agreement to fully repay DBMG’s existing debt obligations and provide additional working capital capacity.

The term loan and borrowings under the new DBMG Credit Agreement bear interest at a rate per annum equal to a SOFR Rate plus a variable spread based on a Senior Funded Indebtedness to EBITDA Ratio as defined in the agreement with an interest rate floor of 4.25% per annum.

As of December 31, 2025, DBMG had a total outstanding balance of $15.0 million under its Revolving Facility and the effective interest rate on DBMG's revolving loans was 6.80%.

Interest on the new revolving facility is paid monthly and the new revolving facility has an unused commitment fee of 0.50% per annum times the average daily unused availability under the line.

DBMG had availability for revolving loans of $119.9 million as of December 31, 2025.

As of December 31, 2025, the total outstanding balance of DBMG's term loan was $72.6 million, and the effective interest rate was 7.4%.

Principal payments and interest on DBMG's term loan is paid monthly.

The DBMG Credit Agreement contains usual and customary restrictive and financial covenants related to debt levels and performance, including a Fixed Charge Coverage Ratio;

and a Senior Funded Indebtedness to EBITDA Ratio, both as defined in the DBMG Credit Agreement.

The DBMG Credit Agreement also contains a Change in Control clause, which would constitute an Event of Default, both as defined in the DBMG Credit Agreement, which could accelerate the maturity of our Infrastructure segment's debt in the future upon certain events, including a sale of DBMG.

Refer to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference.

Life Sciences

As of December 31, 2025, our Life Sciences segment has aggregate principal outstanding debt of $47.9 million with Lancer, a related party.

On August 4, 2025, Lancer and R2 Technologies entered into an Amended and Restated Senior Secured Promissory Note (the "Lancer Note"), which was previously amended multiple times as further described below, and which, among other things, extended the maturity of the note to the earlier of August 1, 2026, or the occurrence of (i) a Change of Control (as defined in the amended note) or (ii) the sale of all or substantially all of the assets of R2 Technologies.

The note can be repaid at any time with an optional prepayment of the entire then-outstanding and unpaid principal and accrued interest upon five-days written notice to Lancer Capital.

The amended note has an interest rate of 12% and removed certain exit and default fees.

Accrued and unpaid interest is capitalized monthly into the principal balance.

As of December 31, 2025, the effective interest rate on the note, as amended, was 17.0%.

The total new initial principal amount of the amended Lancer Note on August 4, 2025 was $43.5 million, which incorporated the $20.0 million principal amount of the note as previously amended effective January 31, 2024 (which was comprised of a principal amount of $17.4 million and unpaid accrued interest of $2.6 million), accrued interest of $7.0 million and $16.5 million in accrued exit fees which had been incurred from January 31, 2024 through August 4, 2025.

In addition, a new 5% extension fee of $2.2 million was capitalized into the principal amount on August 4, 2025.

As of December 31, 2025, the total carrying amount relating to the note, which is included within the Current portion of debt obligations in the Consolidated Balance Sheet, was $46.6 million, inclusive of $47.9 million of principal (which includes capitalized interest and fees), partially offset by $1.3 million of the unamortized OID for the extension fee.

Interest expense, including amortization of fees, related to the Lancer Note was $14.7 million for the year ended December 31, 2025.

Refer to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference for additional information.

During the year ended December 31, 2025, Pansend closed on several intercompany convertible 13.0% note instruments with R2 Technologies, and funded a total of $7.5 million to R2 Technologies.

These notes and related intercompany interest are eliminated on consolidation.

Subsequent to year end, in February and March 2026, an additional $0.3 million in intercompany convertible 13.0% notes with R2 Technologies was funded.

Refer to Note 16.

As a result of the Spectrum Notes Extension, additional exit fees of $9.9 million were incurred, and the total exit fees of $25.8 million are reflected within Accrued liabilities in the Consolidated Balance Sheet as of December 31, 2025.

The exit fees are payable on the earlier of maturity or repayment of the principal, were recorded as original issue discount and are being amortized over the remaining life of the notes, which is assumed to be the maturity date.

Interest is payable upon maturity of the notes.

As of December 31, 2025 and 2024, the weighted-average effective interest rates on the notes, as amended, were 25.0% and 22.8%, respectively.

In connection with the Spectrum Notes Extension, INNOVATE entered into a related side letter (the "Spectrum Letter") with the lenders, which required us to meet certain milestones with respect to strategic alternatives for the Spectrum segment, such that, if the Spectrum Notes are not repaid in full in cash on or before November 1, 2025, the side letter provides that we are required to commence an alternative strategic process for HC2B which includes a sale of HC2B with the net proceeds to be applied to the Spectrum Notes.

The November 1, 2025 milestone was not reached and in accordance with the Spectrum letter, management initiated a strategic process for HC2B.

We have met or extended all milestones associated with the sale as of December 31, 2025.

Subsequent to year-end, the December 31, 2025 milestone for a confidential information memorandum and bid process letter was met on the revised date of January 8, 2026.

The February 1, 2026 milestone for the submission of at least one bona fide indication of interest in an HC2B sale was waived.

The March 1, 2026 milestone for an executed letter of intent regarding an HC2B sale was extended to March 27, 2026.

As of the date of this Annual Report on Form 10-K, we are in compliance with the milestone covenants.

The Spectrum Letter also requires us to utilize proceeds from a sale of certain of its existing operations, as allowable under the Company's current agreements and indentures and after all other required payments have been made, for repayment of a portion of the Spectrum Notes.

Assuming there are sufficient proceeds remaining after such repayment, the side letter provides that we are required to purchase the institutional investors' equity interests in HC2B and DTV for an aggregate purchase price of $2.0 million.

The lenders hold 20,408 shares of common stock in HC2B 2,222,222 shares of common stock in DTV, and warrants to purchase 145,825 shares of common stock of HC2B which can be exercised at any time until August 31, 2028, at an exercise price of $0.01 per share.

These redeemable non-controlling interests totaling $2.6 million are reflected at carrying value as redeemable non-controlling interests in the Consolidated Balance Sheet as of December 31, 2025.

As of December 31, 2025, Management has evaluated this redeemable non-controlling interest and determined that redemption is not probable at this time due to the uncertainty of redemption.

Therefore, the carrying amount has not been adjusted to redemption value.

The Company will continue to monitor for any changes in circumstances.

Refer to Note 11.

Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference for additional information.

Restrictive Covenants

Pursuant to the 8.50% 2026 Senior Secured Notes Supplemental Indenture, substantially all of the restrictive covenants for the 8.50% 2026 Senior Secured Notes were eliminated.

The indenture governing the 2027 Senior Secured Notes dated August 4, 2025, by and among INNOVATE, the guarantors party thereto and U.S.

Bank Trust Company, National Association, as trustee (in such capacity, the “10.50% 2027 Senior Secured Notes Trustee”) and collateral trustee (the "10.50% 2027 Senior Secured Notes Indenture"), contains certain affirmative and negative covenants limiting, among other things, the ability of the Company, and, in certain cases, the Company’s subsidiaries, to incur additional indebtedness;