What changed in this filing

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Item 9A. Controls and Procedures

2026-03-26 compared with 2025-03-31 · 807 added, 724 removed, 1503 unchanged (50% of the section changed)

15 unchanged sentences

Changes in Internal Control over Financial Reporting

During the quarter ended December 31, 2024, several of our subsidiaries successfully completed an implementation of a new Enterprise Resource Planning ("ERP") system, which replaced operating and financial systems and resulted in changes to internal controls over financial reporting.

We have taken steps to ensure that appropriate controls are in place and operating effectively in the new system environment.

These changes have been and will continue to be subject to our evaluation of the operating effectiveness of internal controls over financial reporting.

Other than as disclosed above, there have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

36 unchanged sentences

3.1 Fourth Amended and Restated By-Laws of INNOVATE Corp (f/k/a HC2 Holdings, Inc.) dated February 21, 2019 (incorporated by reference to Exhibit 3.1 to INNOVATE's Current Report on Form 8-K, filed on February 25, 2019) (File No.

3.2 Amendment #1 to Fourth Amended and Restated By-Laws of INNOVATE Corp., (f/k/a HC2 Holdings Inc.) effective September 20, 2021 (incorporated by reference to Exhibit 3.

2 to the Current Report on Form 8-K filed on August 19, 2021) (File No.

0 0 1-3 5 210)

3.2 Amendment #1 to Fourth Amended and Restated By-Laws of INNOVATE Corp., (f/k/a HC2 Holdings Inc.) effective September 20, 2021 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on August 19, 2021) (File No.

3.3 Third Amended and Restated Certificate of Incorporation of INNOVATE Corp., dated September 30, 2024 (incorporated by reference to Exhibit 4.1 to INNOVATE's Form S-8 Registration Statement, filed with the SEC on October 30, 2024 (File No.

5 unchanged sentences

("HC2 Intermediate") (the "Intermediate Parent"), HC2 Broadcasting Holdings (the "Parent Borrower" and, together with the Intermediate Parent and the Subsidiary Borrowers, the "Borrowers"), and MSD PCOF Partners XVIII, LLC ("MSD") (incorporated by reference to Exhibit 4.12 to INNOVATE's Annual Report on Form 10-K, filed on March 16, 2020) (File No.

4.3 Amended and Restated Secured Note dated October 24, 2019, by and among HC2 Station, HC2 LPTV, HC2 Broadcasting, HC2 Network (collectively, the "Subsidiary Borrowers"), HC2 Intermediate (the "Intermediate Parent), HC2 Broadcasting Holdings (the "Parent Borrower" and, together with the Intermediate Parent and the Subsidiary Borrowers, the "Borrowers", Great American Life Insurance Company ("GALIC") and Great American Insurance Company ("GAIC" ) (collectively, the "Subsidiary Borrowers"), HC2 Intermediate (the "Intermediate Parent), HC2 Broadcasting Holdings (the "Parent Borrower" and, together with the Intermediate Parent and the Subsidiary Borrowers, the "Borrowers", Great American Life Insurance Company ("GALIC") and Great American Insurance Company ("GAIC") (incorporated by reference to Exhibit 4.13 to INNOVATE's Annual Report on Form 10-K, filed on March 16, 2020) (File No.

4.4 First Omnibus Amendment to Secured Notes and Intercreditor Agreement dated as of February 21, 2020, by and among Station Group, LPTV, Broadcasting, Network, and HC2 Broadcasting Inc., Intermediate Parent, Parent Borrower, and MSD PCOF Partners, XVIII, LLC ("MSD"), GALIC and GAIC (incorporated by reference to Exhibit 4.1 to INNOVATE’s Quarterly Report on Form 10-Q, filed on May 11, 2020) (File No.

4.5 Second Omnibus Amendment to Secured Notes dated as of August 31, 2020, by and among Station Group, LPTV, Broadcasting, Network, and HC2 Broadcasting Inc., Intermediate Parent, Parent Borrower, and MSD PCOF Partners, XVIII, LLC ("MSD"), GALIC and GAIC (incorporated by reference to Exhibit 10.33 to the Annual Report on Form 10-K filed on March 9, 2022) (File No.

4.6 Third Omnibus Amendment to Secured Notes and Second Amendment to Intercreditor Agreement dated as of September 25, 2020 , by and among Station Group, LPTV, Broadcasting, Network, and HC2 Broadcasting Inc., Intermediate Parent, Parent Borrower, and MSD PCOF Partners, XVIII, LLC ("MSD"), GALIC and GAIC (incorporated by reference to Exhibit 10.3 on INNOVATE's Current Report on Quarterly Report on Form 10-Q filed on November 9, 2020) (File No.

4.6 Third Omnibus Amendment to Secured Notes and Second Amendment to Intercreditor Agreement dated as of September 25, 2020, by and among Station Group, LPTV, Broadcasting, Network, and HC2 Broadcasting Inc., Intermediate Parent, Parent Borrower, and MSD PCOF Partners, XVIII, LLC ("MSD"), GALIC and GAIC (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed on November 9, 2020) (File No.

4.7 Fourth Omnibus Amendment to Secured Notes and Third Amendment to Intercreditor Agreement, dated as of November 25, 2020, by and among Station Group, LPTV, Broadcasting, Network, and HC2 Broadcasting Inc., Intermediate Parent, Parent Borrower, and MSD PCOF Partners, XVIII, LLC ("MSD"), GALIC and GAIC (incorporated by reference to Exhibit 10.34 to the Annual Report on Form 10-K filed on March 9, 2022) (File No.

4 unchanged sentences

4.12 Ninth Omnibus Amendment to Secured Notes, dated as of November 9, 2023, by and among, HC2 Station Group, Inc., HC2 Broadcasting Inc., HC2 Network Inc., DTV America Corporation, HC2 Broadcasting Intermediate Holdings Inc., HC2 Broadcasting Holdings Inc., MSD PCOF Partners XVIII, LLC, MassMutual Ascend Life Insurance Company and Great American Insurance Company (incorporated by reference to Exhibit 10.11 to the Quarterly Report on Form 10-Q filed by INNOVATE on November 9, 2023) (File No.

4.13 Side Letter to Ninth Omnibus Amendment to Secured Notes, dated as of November 9, 2023, by and among,HC2 Station Group, Inc., HC2 Broadcasting Inc., HC2 Network, Inc., DTV America Corporation, HC2 Broadcasting Intermediate Holdings, Inc., HC2 Broadcasting Holdings, Inc., and MassMutual Life Insurance Company and Great American Insurance Company (incorporated by reference to Exhibit 10.12 to the Quarterly Report on Form 10-Q filed by INNOVATE on November 9, 2023) (File No.

4.13 Ninth Amended and Restated Agreement Re:

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Bank National Association (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed by INNOVATE on February 1, 2021) (File No.

4.18 Form of 7.5% convertible senior notes due 2026 (incorporated by reference to Exhibit 4.4 (included in E xhibit 4.3) to the Current Report on Form 8-K filed by INNOVATE on February 1, 2021) (File No.

4.19 Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.1 7 to the Annual Report on Form 10-K filed on March 9, 2022) (File No.

4.17 Form of 7.5% convertible senior notes due 2026 (incorporated by reference to Exhibit 4.4 (included at p.15 of Exhibit 4.3) to the Current Report on Form 8-K filed by INNOVATE on February 1, 2021) (File No.

4.18 Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (fi led herewith)

4.19 Agreement Re:

Secured Notes, dated January 22, 2019, by and among HC2 Station, HC2 LPTV and the Institutional Investors (incorporated by reference to Exhibit 10.1 to INNOVATE's Current Report on Form 8-K, filed on January 23, 2019) (File No.

4.21 Registration Rights Agreement dated as of September 9, 2020, by and between INNOVATE Corp and Lancer Capital LLC (incorporated by reference to Exhibit 10.2 ( filed herewith )

Secured Notes, dated January 22, 2019, by and among HC2 Station, HC2 LPTV, GALIC and GAIC (incorporated by reference to Exhibit 10.1 to INNOVATE's Current Report on Form 8-K, filed on January 23, 2019) (File No.

4.20 Registration Rights Agreement dated as of September 9, 2020, by and between INNOVATE Corp and Lancer Capital LLC (incorporated by reference to Exhibit 4 .21 to INNOVATE's Annual Report on Form 10-K, filed on March 31, 2025) (File No.

4.21 Second Amended and Restated Registration Rights Agreement, dated as of January 5, 2015, by and among INNOVATE Corp (f/k/a HC2 Holdings, Inc.), the initial purchasers of the Series A Preferred Stock, the initial purchasers of the Series A -1 Preferred Stock and the purchasers of the Series A-2 Preferred Stock (incorporated by reference to Exhibit 10.2 on INNOVATE's Current Report on Form 8-K, filed on January 9, 2015) (File No.

001-35210 ) .

4.22 Registration Rights Agreement dated as of March 5, 2024 by and between INNOVATE Corp.

and Lancer Capital LLC (incorporated by reference to Exhibit 10.71 to the Annual Report on Form 10-K filed on March 6, 2024 (File No.

4.23 Indenture governing the 10.500% senior secured notes due 2027, dated as of August 4, 2025, by and among INNOVATE Corp., the guarantors party thereto and U.S.

Bank Trust Company, National Association (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on August 5, 2025) (File No.

4.24 Form of 10.500% senior secured notes due 2027 (incorporated by reference to Exhibit A of Exhibit 4.1 to the Current Report on Form 8-K filed on August 5, 2025) (File No.

4.25 First supplemental indenture dated as of August 4 , 2025, to the indenture governing the 8.500% senior secured notes due 2026, dated as of Februar y 1, 2021 , by and among HC2 Holdings, Inc., the guarantors party thereto and U.S.

Bank National Association (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed on August 5, 2025) (File No.

4.26 Indenture governing the 9.500% convertible senior secured notes due 2027, dated as of August 4, 2025, by and among INNOVATE Corp., the guarantors party thereto and U.S.

Bank Trust Company, National Association (incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K filed on August 5, 2025) (File No.

4.27 Form of 9.500% convertible senior secured notes due 2027 (incorporated by reference at page 35 to Exhibit 4.4 to the Current Report on Form 8-K filed on August 5, 2025) (File No.

4.28 First supplemental indenture dated as of August 4 , 2 025, to the indenture governing the 7.5% convertible senior notes due 2026, dated as of February 1, 2021, by and between HC2 Holdings, Inc.

Bank National Association (incorporated by reference to Exhibit 4.6 to the Current Report on Form 8-K filed on August 5, 2025) (File No.

4.29 Seventh Amendment to Credit Agreement, dated as of July 31, 2025, among INNOVATE Corp., the guarantors party thereto and MSD PCOF Partners IX, LLC (incorporated by reference to Exhibit 4.7 to the Current Report on Form 8-K filed on August 5, 2025) (File No.

4.30 Eighth Amendment to Credit Agreement, dated as of August 4, 2025, among INNOVATE Corp.

, the guarantors party thereto and MSD PCOF Partners IX, LLC (incorporated by reference to Exhibit 4.8 to the Current Report on Form 8-K filed on August 5 , 2025) (File No.

4.31 Tenth Omnibus Amendment to Secured Notes, dated as of August 4, 2025, by and among HC2 Station Group, Inc., HC2 Broadcasting Inc., HC2 Network Inc., DTV America Corporation, HC2 Broadcasting Intermediate Holdings Inc., HC2 Broadcasting Holdings Inc., MSD PCOF Partners XVIII, LLC, Mass Mutual Ascend Life Insurance Company and Great American Insurance Company (incorporated by reference to Exhibit 4.9 to the Current Report on Form 8-K filed on August 5, 2025) (File No.

4.32 Side Letter to Tenth Omnibus Amendment to Secured Notes, dated as of August 4, 2025, by and among Innovate Corp., MassMutual Ascend Life Insurance Company, Great American Insurance Company and MSD PCOF Partners XVIII, LLC (incorporated by reference to Exhibit 4.10 to the Current Report on Form 8-K filed on August 5, 2025) (File No.

INNOVATE Corp.

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(f/k/a HC2 Holdings, Inc.) Amended and Restated 2014 Omnibus Equity Award Plan (incorporated by reference to Exhibit B to the INNOVATE Definitive Proxy Statement filed on April 26, 2017) (File No.

F orm of Employee Nonqualified Option Award Agreement (incorporated by reference to Exhibit 10.4 o n INNOVATE's Quarterly Report on Form 10-Q, filed on August 9, 2016 (File No.

Form of Employee Nonqualified Option Award Agreement (incorporated by reference to Exhibit 10.4 on INNOVATE's Quarterly Report on Form 10-Q, filed on August 9, 2016 (File No.

10.6 Securities Purchase Agreement dated as of June 27, 2017 among DTV Holding Inc., John N.

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Dagen, Trustees of the Kim Ann Dagen Revocable Living Trust Agreement dated March 2, 1999, Madison Avenue Ventures, LLC, Paul Donner, Reeves Callaway, Don Shalhub, Shalhub Medical Investments PA, Tipi Sha, LLC, Luis O.

Suau, Irwin Podhajser and Humberto Garriga (incorporated by reference to Exhibit 10.1 to INNOVATE's Current Report on Form 8-K, filed on June 28, 2017) (File No.

Suau, Irwin Podhajser , Humberto Garriga and DT V Holding Inc.

(incorporated by reference to Exhibit 10.1 to INNOVATE's Current Report on Form 8-K, filed on June 28, 2017) (File No.

INNOVATE Corp (f/k/a HC2 Holdings, Inc.) Second Amended and Restated 2014 Omnibus Equity Award Plan (incorporated by reference to Exhibit A to INNOVATE's Definitive Proxy Statement, filed on April 30, 2018) (File No.

10.8 Credit Agreement, dated as of May 27, 2021, by and among DBM Global Inc., the other Borrowers listed on Schedule 1.1 thereto, the Lenders, which are party thereto from time to time and UMB Bank, n.a., a national banking association, as Letter of Credit Issuer and as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by INNOVATE on May 27, 2021) (File No.

10.9 Form of Exchange Agreement, dated July 1, 2021, by and among INNOVATE Corp.

(f/k/a HC2 Holdings, Inc.) and the investors party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by INNOVATE on July 7, 2021) (File No.

Executive Severance Guidelines effective October 21, 2021 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by INNOVATE on October 27, 2021) (File No.

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Form of Director Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.38 to the Annual Report on Form 10-K filed on March 9, 2022) (File No.

10.15 First Amendment to Credit Agreement dated as of August 2, 2022, among DBM Global Inc.

and the Other Borrowers, the Lenders, UMB Bank, as Administrative Agent and BMO Harris Bank N.A., as Syndication Agent (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on November 2, 2022) (File No.

10.13 Letter Agreement with Continental General Insurance Company dated December 30, 2022 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by INNOVATE on January 5, 2023) (File No.

10.17 Mutual Release and Termination Agreement dated as of December 31, 2022, by and among Azteca International Corporation and TV Azteca, S.A.B.

de C.V., HC2 Network, Inc.

and TV Azteca, S.A.B.

(incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by INNOVATE on January 5, 2023) (File No.

10.14 Stock Purchase Agreement dated as of May 9, 2023 by and between INNOVATE Corp.

5 unchanged sentences

(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by INNOVATE on October 11, 2023) (File No.

10.21 Amended and Restated Senior Secured Promissory Note dated as of January 31, 2024 by and between R2 Technologies, Inc.

and Lancer Capital LLC (incorporated by reference to Exhibit 10.72 to the Annual Report on Form 10-K filed by INNOVATE on March, 6, 2024) (File No.

10.17 INNOVATE Corp.

Clawback Policy effective November 2, 2023 (incorporated by reference to Exhibit 10.66 to the Annual Report on Form 10-K filed by INNOVATE on March 6, 2024) (File No.

10.18 INNOVATE Corp Second Amended and Restated 2014 Omnibus Equity Award Plan, as amended (incorporated by reference to Exhibit A to INNOVATE’s Information Statement on Schedule 14C, filed with the SEC on October 7, 2024) (File No.

10.19 Third Amended & Restated Limited Liability Company Agreement of Pansend Life Sciences, LLC, dated as of November 21, 2019, by and among INNOVATE 2 Corp.

(f/k/a HC2 Holdings 2, Inc.), David Present and Cherine Plumaker (incorporated by reference to Exhibit 10.32 to the Annual Report on Form 10-K filed on March 31, 2025) (File No.

Form of Restricted Stock Unit Award Agreement ( i n corporated by reference to Exhibit 10.33 to the Annual report on Form 10-K filed on March 31 , 2025 ) (File No.

10.21 Subordinated Secured Promissory Note dated August 4, 2025 by and between INNOVATE Corp.

and Continental General Insurance Company (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on August 5, 2025 (File No.

10.22 Amended and Restated Senior Secured Promissory Note dated as of August 4, 2025 by and between R2 Technologies, Inc.

and Lancer Capital LLC (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on August 5, 2025 (File No.

10.23 C ollateral Trust Agreement dated August 4, 2025 among INNOVATE Corp .

, the other Grantors from time to time party thereto, U.S.

Bank Trust Company, National Association, as Trustee under the Indenture, MSC PCOF Partners IX, LLC, as First-Out Lender under the First-Out Credit Agreement and a Fixed Out Authorized Representative, and U.S.

Bank Trust Company, National Association, as Collateral Trustee (filed herewith)

10.24 Amended and Restated Credit Agreement, dated as of May 20, 2025, by and among DBM Global Inc., the other Borrowers listed on Schedule 1.1 thereto, the Lenders, which are party thereto from time to time and UMB Bank, n.a., a national banking association, as Letter of Credit Issuer and as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on May 21, 2025) (File No.

19 INNOVATE Corp.

Insider Trading Policy effective November 2, 2023 (incorporated by reference to Exhibit 10.67 to the Annual Report on Form 10-K filed by INNOVATE on March 6, 2024) (File No.

10.24 Second Amendment to Credit Agreement, dated as of December 12, 2023, among DBM Global Inc.

and the other Borrowers, the Lenders, UMB Bank, n.a., as Administrative Agent and BMO Harris Bank N.A., as Syndication Agent (incorporated by reference to Exhibit 10.68 to the Annual Report on Form 10-K filed by INNOVATE on March 6, 2024) (File No.

10.25 Amendment of Senior Secured Promissory Note dated effective as of April 30, 2024 by and between R2 Technologies, Inc.

and Lancer Capital LLC (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed on May 5, 2024) (File No.

10.26 Collateral Trust Agreement dated as of November 20, 2018 among HC2 Holdings, Inc., the other Grantors from time to time party hereto, U.S.

Bank National Association, as Trustee under the Indenture and U.S.

Bank National Association, as Collateral Trustee (incorporated by reference to Exhibit 10.

3 to the Quarterly Report on Form 10-Q filed on August 7 , 2024) (File No.

10.27 Amendment No.

1 to Collateral Trust Agreement, dated as of February 1, 2021, to the Collateral Trust Agreement, dated as of November 20, 2018 (the "Collateral Trust Agreement") (incorporated by reference to Exhibit 10.

4 to the Quarterly Report on Form 10-Q filed on August 7 2024) (File No.

10.28 Collateral Trust Joinder - Additional Pari Passu Obligations dated February 1, 202 1 (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q filed on August 7, 2024) (File No.

10.29 Third Amendment to Credit Agreement dated as of June 28, 2024, by and among DBM Global Inc., the other Borrowers listed on Schedule 1.1 hereto and UMB BANK, N.A.

((incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q filed on August 7, 2024) (File No.

10.30 Amendment No.

2 of Senior Secured Promissory Note dated effective as of May 17, 2024 by and between R2 Technologies, Inc.

and Lancer Capital LLC ((incorporated by reference to Exhibit 10.7 to the Quarterly Report on Form 10-Q filed on August 7, 2024) (File No.

10.31 INNOVATE Corp Second Amended and Restated 2014 Omnibus Equity Award Plan , as amended (incorporated by reference to Exhibit A to INNOVATE’s Information Statement on Schedule 14C, filed with the SEC on October 7, 2024) (File No.

10.32 Third Amended & Restated Limited Liability Company Agreement of Pansend Life Sciences, LLC, dated as of November 21, 2019, by and among INNOVATE Corp 2 (f/k/a HC2 Holdings 2, Inc.), David Present and Cherine Plumaker (filed herewith)

Form of Restricted Stock Unit Award Agreement (filed herewith)

10.34 Amendment No.

3 of Senior Secured Promissory Note dated, effective as of December 31, 2024, by and between R2 Technologies, Inc.

and Lancer Capital LLC (filed herewith)

21.1 Subsidiaries of INNOVATE (filed herewith)

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101 The following materials from the registrant’s Annual Report on Form 10-K for the fiscal years ended December 31, 2025 and 2024, formatted in extensible business reporting language (XBRL);

(i) Consolidated Statements of Operations for the years ended December 31, 2024 and 2023 , (ii) Consolidated Statements of Comprehensive Loss for the years ended December 31, 2024 and 2023 , (iii) Consolidated Balance Sheets a s of December 31, 2024 and 2023 , (iv) Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2024 and 2023 , (v) Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 , and (vi) Notes to Consolidated Financial Statements (filed herewith).

(i) Consolidated Statements of Operations (ii) Consolidated Statements of Comprehensive ( Loss ) , (iii) Consolidated Balance Sheets , (iv) Consolidated Statements of Stockholders’ Deficit , (v) Consolidated Statements of Cash Flows , and (vi) Notes to Consolidated Financial Statements (filed herewith).

104 The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, formatted in Inline XBRL (included as Exhibit 101).

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm ( BDO USA, P.C.

R eport of Inde pendent Registered Pu blic Accoun ting Firm ( BDO USA, P.C.

, New York, NY ;

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(13) Commitments and Contingencies

(14) Employee Retir e ment Plans

(14) Employee Retirement Plans

(15) Share-Based Compensation

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INNOVATE Corp.

New York, New York

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of INNOVATE Corp.

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders’ deficit, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

(the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

1 unchanged sentence

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the consolidated financial statements, the Company has maturities of certain debt obligations that exceed its current and forecasted cash balances within one year from the date of this report.

These conditions raise substantial doubt about its ability to continue as a going concern.

As discussed in Note 2 to the consolidated financial statements, the Company has significant upcoming maturities of its debt obligations and is subject to certain cross-default provisions.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 2.

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Revenue Recognition - Estimated Costs to Complete for the Infrastructure Segment

As described in Note 3 to the consolidated financial statements, revenue for the Company’s Infrastructure Segment (“DBMG”) was $1.072 billion for the year ended December 31, 2024.

As described in Note 3 to the consolidated financial statements, revenue for the Company’s Infrastructure Segment (“DBMG”) was approximately $1.21 billion for the year ended December 31, 2025.

DBMG performs its services primarily under fixed-price contracts and recognizes revenue over time using the input method to measure progress for its projects.

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We identified the estimate of certain costs to be incurred towards delivery of projects for specific revenue contracts at DBMG as a critical audit matter.

Estimating future direct materials, labor, and subcontractor costs included in the measurement of progress of projects for specific revenue contracts at DBMG required significant judgment.

Estimating future direct materials, direct labor, and subcontractor costs included in the measurement of progress of projects for specific revenue contracts at DBMG required significant management judgment.

Auditing these elements involved especially challenging auditor judgment in evaluating the reasonableness of the estimated direct materials, labor, and subcontractor costs over the duration of these contracts.

The primary procedures we performed to address this critical audit matter included:

• Assessing the reasonableness of the estimated direct materials, labor, and subcontractor costs included in the measurement of the progress of projects for specific revenue contracts at DBMG through:

(i) evaluating the reasonableness of project budgets through performing gross margin analysis using subsequently available information, (ii) assessing the reasonableness of revisions in the estimated direct materials, labor, and subcontractor costs and investigating reasons for changes in expected costs and project margins, and (iii) evaluating the reasonableness of project cost estimates to complete by performing inquiries of project management personnel and assessing the nature of activities required to complete open projects.

The primary procedures we performed to address this critical audit matter included assessing the reasonableness of the estimated direct materials, direct labor, and subcontractor costs included in the measurement of the progress of projects for specific revenue contracts at DBMG through:

• Evaluating the reasonableness of project budgets for specific revenue contracts through (i) performing gross margin analysis using subsequently available information, and (ii) for a sample of cost of sales transactions, verifying the related cost types are included in the project’s budget.

• Assessing the reasonableness of revisions in the estimated direct materials, direct labor, and subcontractor costs and investigating reasons for changes in expected costs and project margins.

• Evaluating the reasonableness of project cost estimates to complete by performing inquiries of project management personnel and assessing the nature of activities required to complete open projects.

/s/ BDO USA, P.C.

We have served as the Company's auditor since 2011.

New York, New York

March 26, 2026

9 unchanged sentences

Depreciation and amortization 17.5 17.6

Other operating (income) loss ( 9.0 ) 1.3

Other operating loss (income) 0.4 ( 9.0 )

Income from operations 28.7 40.0

9 unchanged sentences

( 60.6 ) ( 34.6 )

Preferred dividends 1.2 2.4

Preferred stock dividends 3.4 1.2

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

3 unchanged sentences

13,217,593 10,696,274

(1) Basic and diluted loss per common share and weighted-average common shares outstanding for the year ended December 31, 2023, have been retroactively adjusted to reflect the 1-for-10 reverse stock split effected on August 8, 2024.

The accompanying notes are an integral part of these consolidated financial statements.

4 unchanged sentences

Net loss $ ( 64.0 ) $ ( 39.7 )

Other comprehensive loss

Other comprehensive income (loss)

Foreign currency translation adjustment, net of tax 1.2 ( 2.3 )

Disposition of equity method investment, net of tax — ( 9.1 )

Other comprehensive loss $ ( 2.3 ) $ ( 9.7 )

Other comprehensive income (loss) $ 1.2 $ ( 2.3 )

Comprehensive loss ( 62.8 ) ( 42.0 )

37 unchanged sentences

Shares issued and outstanding:

6,125 of Series A-3 and 10,000 of Series A-4

Redeemable non-controlling interest ( 0.5 ) ( 1.0 )

6,125 and 6,125 of Series A-3;

1,937 and 10,000 of Series A-4, respectively.

Redeemable non-controlling interests 1.6 ( 0.5 )

Total temporary equity 10.9 15.6

2 unchanged sentences

Shares authorized:

250,000,000 and 160,000,000 , respectively

Shares issued:

4 unchanged sentences

Treasury stock, at cost:

148,800 (1) shares

163,842 and 148,800 shares, respectively

( 5.6 ) ( 5.4 )

3 unchanged sentences

stockholders’ deficit ( 240.1 ) ( 180.4 )

Non-controlling interest 21.1 13.8

Non-controlling interests 13.9 21.1

Total stockholders’ deficit ( 226.2 ) ( 159.3 )

Total liabilities, temporary equity and stockholders’ deficit $ 950.1 $ 891.1

(1) Common stock, Shares issued, Shares outstanding, Additional paid-in capital, and Treasury stock as of December 31, 2023, have been retroactively adjusted to reflect the 1-for-10 reverse stock split effected on August 8, 2024.

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

(in millions, except share amounts)

Temporary Equity

Stockholders' (Deficit) Equity

Preferred Stock and Redeemable Non-Controlling Interest

Additional Paid-In Capital Treasury Stock Accumulated Deficit Accumulated Comprehensive Income (Loss) (b)

Total INNOVATE Stockholders' (Deficit) Equity Non-controlling Interest Total Stockholders' (Deficit) Equity

Balance as of December 31, 2022 $ 61.0 7,878.8 $ — $ 330.2 $ ( 5.3 ) $ ( 452.1 ) $ 5.9 $ ( 121.3 ) $ 30.7 $ ( 90.6 )

Share-based compensation — — — 2.2 — — — 2.2 — 2.2

Taxes paid in lieu of shares issued for share-based compensation — ( 6.0 ) — — ( 0.1 ) — — ( 0.1 ) — ( 0.1 )

Preferred stock dividends ( 1.3 ) — — ( 1.3 ) — — — ( 1.3 ) — ( 1.3 )

Issuance of common stock — 50.7 — — — — — — — —

Distributions to non-controlling interests ( 5.2 ) — — — — — — — ( 10.7 ) ( 10.7 )

Transactions with non-controlling interests — — — ( 2.8 ) — — — ( 2.8 ) 2.9 0.1

Other 9.0 — — — — — — — ( 9.0 ) ( 9.0 )

DBMGi preferred stock repurchase ( 41.8 ) — — — — — — — — —

Net (loss) income ( 5.9 ) — — — — ( 35.2 ) — ( 35.2 ) 2.2 ( 33.0 )

Other comprehensive loss ( 0.4 ) — — — — — ( 7.0 ) ( 7.0 ) ( 2.3 ) ( 9.3 )

Temporary Equity Stockholders' (Deficit) Equity

Preferred Stock and Redeemable Non-Controlling Interests

Common Stock Additional Paid-In Capital Treasury Stock Accumulated Deficit Accumulated Comprehensive Income (Loss) (a) Total INNOVATE Stockholders' (Deficit) Equity Non-Controlling Interests

Total Stockholders' (Deficit) Equity

(thousands) Amount

Balance as of December 31, 2023 $ 15.4 7,923.5 $ — $ 328.3 $ ( 5.4 ) $ ( 487.3 ) $ ( 1.1 ) $ ( 165.5 ) $ 13.8 $ ( 151.7 )

8 unchanged sentences

Distributions to non-controlling interests

— — — — — — — — ( 0.3 ) ( 0.3 )

Transactions with non-controlling interests — — — ( 0.4 ) — — — ( 0.4 ) 0.2 ( 0.2 )

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Other comprehensive loss

— — — — — — ( 2.1 ) ( 2.1 ) ( 0.2 ) ( 2.3 )

Balance as of December 31, 2024

(a) The number and amount of shares and Additional Paid-in Capital as of December 31, 2022, and as of and for the year ended December 31, 2023, have been retroactively adjusted to reflect the 1-for-10 reverse stock split effected on August 8, 2024.

Refer to Note 2.

Summary of Significant Accounting Policies.

(b) Inclusive of other comprehensive loss, foreign currency cumulative translation adjustments totaled a loss of $ 4.5 million and $ 2.4 million as of December 31, 2024 and 2023, respectively.

$ 15.6 13,261.4 $ — $ 350.1 $ ( 5.4 ) $ ( 521.9 ) $ ( 3.2 ) $ ( 180.4 ) $ 21.1 $ ( 159.3 )

Share-based compensation — — — 2.7 — — — 2.7 — 2.7

Shares withheld to satisfy tax withholdings — ( 15.1 ) — — ( 0.2 ) — — ( 0.2 ) — ( 0.2 )

Dividends 2.2 — — ( 3.4 ) — — — ( 3.4 ) ( 1.6 ) ( 5.0 )

Issuance of common stock, net of forfeitures — 408.8 — — — — — — — —

Exchange of preferred stock for debt ( 9.1 ) — — — — — — — — —

Transactions with non-controlling interests and redeemable non-controlling interests

2.9 — — 0.2 — — — 0.2 ( 3.0 ) ( 2.8 )

Other — — — 0.5 — — — 0.5 — 0.5

Net loss ( 0.7 ) — — — — ( 60.6 ) — ( 60.6 ) ( 2.7 ) ( 63.3 )

Other comprehensive income — — — — — — 1.1 1.1 0.1 1.2

Balance as of December 31, 2025 $ 10.9 13,655.1 $ — $ 350.1 $ ( 5.6 ) $ ( 582.5 ) $ ( 2.1 ) $ ( 240.1 ) $ 13.9 $ ( 226.2 )

(a) Inclusive of other comprehensive income (loss), foreign currency cumulative translation adjustments totaled a loss of $ 3.3 million and $ 4.5 million as of December 31, 2025 and 2024, respectively.

The accompanying notes are an integral part of these consolidated financial statements.

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Depreciation and amortization (including amounts in cost of revenue) 30.4 32.9

Gain on lease modification

Amortization of deferred financing costs and debt discount

Net loss on repurchase or extinguishment of debt

Net loss on extinguishment or repurchase of debt

Loss from equity investees 5.9 2.3

Realized and unrealized losses (gains) on investments

Gains on lease modifications

( 0.1 ) ( 8.7 )

(Gains) losses on investments

Asset impairment expense — 0.1

Deferred income tax expense (benefit)

Deferred income tax (benefit) expense

Other operating activities, net 1.8 ( 2.0 )

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Loans to equity method investee

( 2.3 ) ( 4.0 )

Purchase of investments

Proceeds from sale of equity method investments

( 0.3 ) ( 2.0 )

Proceeds from sale of investments

Cash paid for asset acquisitions

( 0.5 ) ( 1.2 )

Other investing activities — 0.5

Cash (used in) provided by investing activities

Cash used in investing activities

( 22.6 ) ( 13.9 )

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Proceeds from rights offering and private placement, net of issuance costs

Proceeds from lines of credit

Proceeds from lines of credit, net of deferred financing costs

Payments on lines of credit ( 116.8 ) ( 125.0 )

( 125.0 ) ( 94.7 )

Proceeds from other debt obligations, net of deferred financing costs

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( 48.7 ) ( 28.0 )

Purchase of preferred stock — ( 7.0 )

Payments to non-controlling interests and redeemable non-controlling interests related to sale of equity method investment ( 0.3 ) ( 15.9 )

Deferred financing costs paid to third parties

( 0.5 ) ( 0.2 )

Payments to non-controlling interests related to former sale of equity method investment

Dividend payments ( 2.2 ) ( 1.2 )

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Effects of exchange rate changes on cash, cash equivalents and restricted cash 0.6 ( 1.7 )

Net (decrease) increase in cash and cash equivalents, including restricted cash

Net increase (decrease) in cash and cash equivalents, including restricted cash

63.4 ( 33.0 )

Cash, cash equivalents and restricted cash, beginning of year

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The Company’s shares of common stock trade on the New York Stock Exchange ("NYSE") under the symbol "VATE".

The Company currently has three reportable segments, plus our Other segment, based on management’s organization of the enterprise:

The Company has three reportable segments, plus the Company's Other segment, based on management’s organization of the enterprise:

Infrastructure, Life Sciences, Spectrum, and Other which includes businesses that do not meet the separately reportable segment thresholds.

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Pansend maintains a controlling interest of 80.0 % in Genovel Orthopedics, Inc.

("Genovel"), which seeks to develop products to treat early osteoarthritis of the knee, and also has a controlling interest of 81.4 % ( 56.6 % as of December 31, 2023) in R2 Technologies, Inc.

("Genovel"), which seeks to develop products to treat early osteoarthritis of the knee, and also has a controlling interest as of December 31, 2025 of 81.0 % ( 81.4 % as of December 31, 2024) in R2 Technologies, Inc.

("R2 Technologies"), which develops aesthetic and medical technologies for the skin.

Pansend also invests in other early stage or developmental stage healthcare companies and, as of December 31, 2025, had a 44.6 % interest ( 45.9 % as of December 31, 2024) in MediBeacon Inc.

("MediBeacon"), a medical technology company specializing in the advances of fluorescent tracer agents and transdermal measurement, potentially enabling real-time, direct monitoring of kidney function, and maintained a 1.6 % fully diluted interest in Triple Ring Technologies, Inc.

("Triple Ring"), a science and technology co-development company, and a 20.1 % interest in Scaled Cell Solutions, Inc.

("MediBeacon"), a medical technology company specializing in the advances of fluorescent tracer agents and transdermal measurement, potentially enabling real-time, direct monitoring of kidney function, maintained a 1.6 % fully diluted interest in Triple Ring Technologies, Inc.

("Triple Ring"), a science and technology co-development company, and maintained a 20.1 % interest in Scaled Cell Solutions, Inc.

("Scaled Cell"), an immunotherapy company developing a novel autologous cell therapy system to potentially improve current CAR-T treatments.

The Company's Spectrum segment is comprised of HC2 Broadcasting Holdings Inc.

("Broadcasting") and its subsidiaries.

("Broadcasting" or "HC2B) and its subsidiaries.

Broadcasting strategically acquires and operates over-the-air broadcasting stations across the United States.

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The Company's Other segment represents all other businesses or investments that do not meet the definition of a segment individually or in the aggregate.

Included in the Other segment is TIC Holdco, Inc.

("TIC"), which was dissolved May 23, 2024, and the former Marine Services segment, which included its holding company, Global Marine Holdings, LLC ("GMH") in which the Company maintained a 72.8 % controlling interest until its dissolution on December 13, 2024.

GMH's prior period results included its subsidiary's prior 19.0 % equity method investment in HMN International Co., Ltd., formerly known as Huawei Marine Networks Co.

(“HMN”), until it was sold on March 6, 2023.

Refer to Note 6.

Investments for additional information.

The Other segment primarily includes legacy businesses or holding companies such as the holding company of the Company's former Marine Services segment, Global Marine Holdings, LLC ("GMH") in which the Company had a 72.8 % controlling interest until its dissolution on December 13, 2024, and TIC Holdco, Inc.

("TIC"), which was dissolved on May 23, 2024.

Summary of Significant Accounting Policies

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All such adjustments are of a normal recurring nature.

Certain prior amounts have been reclassified or combined to conform to the current year presentation.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Certain prior amounts have been reclassified or combined to conform to the current year presentation.

In addition, unless noted, all share 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 these Consolidated Financial Statements have been retroactively adjusted to reflect the one-for-ten reverse stock split of the Company's issued and outstanding common stock that was effected by the Company on August 8, 2024 (the "Reverse Stock Split"), as if it had occurred at the beginning of the earliest period presented.

Refer to Note 16.

Equity and Temporary Equity for information relating to the 2024 Reverse Stock Split and adjustments resulting from the Reverse Stock Split.

Going Concern

Liquidity and Going Concern

The accompanying Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern.

However, as of the date of these financial statements, there is substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued.

The principal conditions leading to this conclusion are the upcoming maturities and covenants of the Company's Corporate Senior Secured Notes, other current debt at Corporate and certain of the Company's subsidiaries, as well as from certain cross-default provisions in the Company's Senior Secured Notes.

Based on these conditions, the Company may not be able to meet its obligations at maturity and comply with certain cross-default provisions under the Senior Secured Notes over the next twelve months.

The principal conditions leading to this conclusion are the upcoming maturities of the Company's debt obligations.

Based on these conditions, the Company may not be able to meet its obligations at maturity nor comply with certain cross-default provisions under the 2027 Senior Secured Notes over the next twelve months, or any potential breach of the milestone covenant of the 10.50 % 2027 Senior Secured Notes Indenture which has required the Company to commence a sales process for all or substantially all of DBM Global’s assets or equity interests in accordance with certain dates and deadlines.

Refer to Note 11.

Debt Obligations for additional information.

Management has evaluated the significance of these conditions in relation to the Company's ability to meet its obligations.

The potential inability to refinance or extend the maturity of the aforementioned current debt, or to obtain additional financing, raises substantial doubt about the Company's ability to continue as a going concern.

The Company plans to alleviate these conditions through various initiatives it is currently exploring, including refinancing the debt at Corporate and its subsidiaries, pursuing asset sales, and raising additional capital.

However, there can be no assurance that the Company will have the ability to raise additional capital when needed, be successful in any asset sales, or refinance its existing debt, on attractive terms, or at all nor any assurances that lenders will provide additional extensions, waivers or amendments in the event of future non-compliance with the Company’s debt covenants or other possible events of default.

Further, there can be no assurance that the Company will be able to execute a reduction, extension, or refinancing of the debt, or that the terms of any replacement financing would be as favorable as the terms of the debt prior to the maturity date.

The Company plans to alleviate these conditions through various initiatives it is currently exploring, including pursuing asset sales, and potentially refinancing debt and raising additional capital.

However, there can be no assurance that the Company will have the ability to be successful in any asset sales, additional capital raises or the refinancing of its existing debt, on attractive terms or at all, nor any assurances that lenders will provide additional extensions, waivers or amendments in the event of future non-compliance with the Company’s debt covenants or other possible events of default.

There can be no assurance that these plans will be successfully implemented or that they will mitigate the conditions that raise substantial doubt about the Company's ability to continue as a going concern.

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The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions.

These estimates and assumptions affect the reported amounts of assets and liabilities and various disclosures within these consolidated financial statements as of the date of the consolidated financial statements and the reported amounts of net revenue and expenses during the reporting period These estimates are based on historical experience and various other assumptions that management believes to be reasonable under the circumstances.

These estimates are based on historical experience and various other assumptions that management believes to be reasonable under the circumstances.

Actual results may differ from these estimates.

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Cash and cash equivalents are maintained at financial institutions that management considers to be of high credit quality.

The Company's restricted cash balances consist of funds that are contractually or legally restricted as to usage or withdrawal and have been presented separately from cash and cash equivalents in the Consolidated Balance Sheets in the Other current assets and Other assets (noncurrent), as applicable, and are primarily comprised of security deposits for long-term leases, which are held in separate bank accounts.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The Company's restricted cash balances consist of funds that are contractually or legally restricted as to usage or withdrawal and have been presented separately from cash and cash equivalents in the Consolidated Balance Sheets in the Other current assets and Other assets (noncurrent) as applicable, and are primarily comprised of security deposits for long-term leases, which are held in separate bank accounts.

Fair Value Measurements

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The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.

The Company’s assets and liabilities that are measured at fair value on a recurring basis include investment(s) in marketable equity securities.

The Company’s assets and liabilities that are measured at fair value on a recurring basis included investment(s) in marketable equity securities.

Our financial assets measured at fair value on a non-recurring basis include equity securities without readily determinable fair values.

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Once collection efforts by the Company are exhausted, the determination for charging off uncollectible receivables is made and the receivable is written off against the allowance, and reversals of previously reserved amounts are recognized if a specifically reserved item is settled for an amount exceeding the previous estimate.

Subsequent to year end, on January 1, 2026, the Company adopted ASU 2025-05 and is utilizing the practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606 ( Revenue from Contracts with Customers) .

See the Accounting Pronouncements Issued But Pending Adoption section below for additional information.

Inventory, which is primarily composed of steel components for construction projects at DBM, is valued at the lower of cost or net realizable value under the first-in, first-out method.

6 unchanged sentences

The Company utilizes the equity method to account for investments when it possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee.

The ability to exercise significant influence is presumed when an investor possesses more than 20% of the voting interests of the investee, such as with our investments in MediBeacon and Scaled Cell, of which we own a 45.9 % interest in MediBeacon and a 20.1 % interest in Scaled Cell as of December 31, 2024.

The ability to exercise significant influence is presumed when an investor possesses more than 20% of the voting interests of the investee, such as with our investments in MediBeacon and Scaled Cell, of which the Company owns a 44.6 % interest in MediBeacon and a 20.1 % interest in Scaled Cell as of December 31, 2025.

This presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is restricted.

3 unchanged sentences

Such additional equity method losses, if any, are based upon the change in the Company's claim on the investee’s book value.

We carry investments in marketable equity securities at fair value and record the changes in fair values in the Consolidated Statement of Operations as a component of Other income, net.

Investments in marketable equity securities are carried at fair value and the Company records the changes in fair values in the Consolidated Statement of Operations as a component of Other income, net.

The Company utilizes the measurement alternative method to account for investments when it does not possess the ability to exercise significant influence or control and the investment does not have a readily determinable fair value.

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Accounting for Income Taxes

We recognize deferred tax assets and liabilities for the expected future tax consequences of transactions and events.

Deferred tax assets and liabilities are recognized for the expected future tax consequences of transactions and events.

Under this method, deferred tax assets and liabilities are determined based on the difference between the book basis and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

If necessary, deferred tax assets are reduced by a valuation allowance to an amount that is determined to be more likely than not recoverable.

We must make significant estimates and assumptions about future taxable income and future tax consequences when determining the amount of the valuation allowance.

The determination of the valuation allowance requires management to make significant estimates and assumptions about future taxable income and future tax consequences when determining the amount of the valuation allowance.

The additional guidance provided by ASC No.

1 unchanged sentence

Expected outcomes of current or anticipated tax examinations, refund claims and tax-related litigation and estimates regarding additional tax liability (including interest and penalties thereon) or refunds resulting therefrom will be recorded based on the guidance provided by ASC 740 to the extent applicable.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefit from an uncertain tax position is recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.

These assessments of uncertain tax positions contain judgments related to the interpretation of tax regulations in the jurisdictions in which we transact business.

These assessments of uncertain tax positions contain judgments related to the interpretation of tax regulations in the jurisdictions in which the Company transacts business.

The judgments and estimates made at a point in time may change based on the outcome of tax audits, expiration of statutes of limitations, as well as changes to, or further interpretations of, tax laws and regulations.

At December 31, 2024, our U.S.

and foreign companies have significant deferred tax assets resulting from tax loss carryforwards.

Additionally, the deferred tax assets generated by certain businesses that do not qualify to be included in the INNOVATE Corp.

At December 31, 2025, the Company's U.S.

and foreign companies had significant deferred tax assets primarily attributable to tax loss carryforwards.

Deferred tax assets generated by certain businesses that are not included in the INNOVATE Corp.

consolidated income tax return have been reduced by a full valuation allowance.

Based on consideration of both positive and negative evidence, we determined that it was more likely than not that the net deferred tax assets of the INNOVATE Corp.

Based on evaluation of available positive and negative evidence, management had determined that it was more likely than not that the net deferred tax assets of the INNOVATE Corp.

consolidated filing group will not be realized.

Therefore, a full valuation allowance was maintained against the INNOVATE Corp.

Accordingly, a full valuation allowance was maintained against the INNOVATE Corp.

consolidated filing group’s net deferred tax assets as of December 31, 2025.

The appropriateness and amount of the valuation allowance are based on cumulative history of losses and our assumptions about the future taxable income of each affiliate and the timing of the reversal of deferred tax assets and liabilities.

This assessment was based on cumulative historical losses and management's assumptions regarding future taxable income of each affiliate and the timing of the reversal of deferred tax assets and liabilities.

In relation to tax effects for accumulated other comprehensive income ("OCI"), our policy is to release the tax effects of amounts reclassified from accumulated OCI to pre-tax income (loss) from continuing operations.

3 unchanged sentences

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation, which is provided on the straight-line method over the estimated useful lives of the assets, which we regularly evaluate.

The estimated useful lives of the assets range from 5 to 40 years for buildings and leasehold improvements, 3 to 15 years for equipment, furniture and fixtures, and 3 to 20 years for transportation equipment.

47 unchanged sentences

They are renewable after application and reviewed by the Federal Communications Commission ("FCC") and historically are renewed except in rare cases in which a petition to deny, a complaint or an adverse finding as to the licensee's qualifications results in loss of the license.

As of December 31, 2025, the Company has initiated processes to explore strategic alternatives for potential asset sales.

Management considered whether these actions represented an indicator of impairment.

Based on the information available as of December 31, 2025, management concluded it was not more likely than not that the estimated fair value of the applicable reporting unit(s) was less than its carrying value.

Management will continue to monitor events and circumstances related to the sales processes and will perform interim impairment testing if facts and circumstances change that would indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Valuation of Long-Lived Assets

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The estimate of the appropriate discount rate to be used to apply the present value model in determining fair value was the Company’s weighted-average cost of capital which is based on the effective rate of its debt obligations at the current market values (for periods during which the Company had debt obligations) as well as the current volatility and trading value of the Company’s common stock.

The Company accounts for leases on the balance sheet as lease assets and lease liabilities for leases classified as operating and finance leases.

The Company accounts for leases on the balance sheet as lease assets and lease liabilities for leases classified as operating leases and finance leases.

The Company determines if an arrangement is a lease at inception.

6 unchanged sentences

For lease agreements that contain non-lease components, the Company elected to combine lease and non-lease components as a single lease component.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Leases with an initial term of twelve months or less are not recorded on the balance sheet unless they are expected to be renewed.

2 unchanged sentences

As of December 31, 2025, the operating lease liability does not include any options to extend or terminate leases.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Foreign Currency Transactions

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ASC 815 requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria.

The criteria included circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodied both the embedded derivative instrument and the host contract is not remeasured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodied both the embedded derivative instrument and the host contract is not remeasured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments, when it has been determined that the embedded conversion options should not be bifurcated from their host instruments, as follows:

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The Company capitalizes certain expenses incurred in connection with its debt and line of credit obligations as reductions of the outstanding loan balances as a component of the carrying amount of Debt obligations in the Consolidated Balance Sheet and amortizes them using the effective interest method over the term of the respective debt agreement as a component of Interest expense in the Consolidated Statements of Operations.

If the Company extinguishes portions of its debt prior to the maturity date, deferred financing costs are charged to expense on a pro-rata basis and are included in loss on early extinguishment or restructuring of debt within Other income, net in the Consolidated Statements of Operations.

If the Company extinguishes portions of its debt prior to the maturity date, deferred financing costs are charged to expense on a pro-rata basis and are included in gain or loss on early extinguishment or restructuring of debt within Other income, net in the Consolidated Statements of Operations.

Share-Based Compensation

Share-based compensation includes restricted shares, restricted stock units and stock options, which are measured based on the grant date fair values and are recognized on a straight-line basis over the requisite service or vesting period.

Any forfeitures are recorded as they occur.

Non-cash stock-based compensation expense is included within general and administrative expense in the consolidated statements of operations.

16 unchanged sentences

Basic and Diluted Loss Per Common Share for additional information.

Discontinued Operations

In accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations , the Company reports the results of operations of a business as discontinued operations if a disposal represents a strategic shift that has or will have a major effect on the Company's operations and financial results when the business is disposed of or classified as held-for-sale.

The held-for-sale criteria are assessed as of the balance sheet date.

The Company assessed these criteria as of December 31, 2025, and determined that no businesses met the criteria for held-for-sale or discontinued operations classification.

Under ASC 360, Property, Plant and Equipment, assets may be classified as held-for-sale even though the discontinued operations criterion is not met.

Recent Accounting Pronouncements

Accounting Pronouncements Adopted in the Current Year

On November 27, 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ("ASU 2023-07") .

ASU 2023-07 improves reportable segment disclosures by requiring enhanced disclosures about significant segment expenses.

The guidance was effective for the Company for annual periods beginning on January 1, 2024, and did not have a significant impact on the related disclosures within these Consolidated Financial Statements.

On December 14, 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires, among other things, greater disaggregation of information in the rate reconciliation and for paid income taxes to be disaggregated by jurisdiction.

The guidance was effective for the Company's 2025 annual Form 10-K and did not have a material impact on the related disclosures within these Consolidated Financial Statements.

Refer to Note 12.

Operating Segments and Related Information.

Income Taxes for additional information.

Accounting Pronouncements Issued But Pending Adoption

On September 18, 2025, the FASB issued ASU 2025-06 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software ("ASU 2025-06").

The amendments in ASU 2025-06 modernize the accounting for software costs that are accounted for under Subtopic 350-40 by removing all references to prescriptive and sequential software development stages throughout Subtopic 350-40.

Under ASU 2025-06, an entity is required to start capitalizing software costs when management has authorized and committed to funding the software project and it is probable the project will be completed and the software will be used to perform the function intended (referred to as the "probable-to-complete recognition threshold").

ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods.

Entities may apply the amendments retrospectively for all prior periods presented in the financial statements, prospectively or under a modified retrospective approach based on the status of the project and whether software costs were capitalized before the date of adoption.

The Company expects that it will apply the new guidance prospectively and is currently evaluating the potential effect of this ASU on future transactions;

however, the Company does not expect this ASU to have a significant effect on the Company’s Consolidated Financial Statements.

On July 30, 2025, the FASB issued ASU 2025-05 Financial Instruments - Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05").

The amendments in ASU 2025-05 provide entities with a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606 ( Revenue from Contracts with Customers) .

The practical expedient allows entities to assume that current conditions as of the balance sheet date will not change for the remaining life of an asset when developing reasonable and supportable forecasts as part of the estimation of expected credit losses.

ASU 2025-05 is effective prospectively for fiscal years beginning after December 15, 2025, and interim periods within those annual reporting periods.

The Company adopted ASU 2025-05 on January 1, 2026, and is utilizing the practical expedient.

The Company does not expect the adoption of this ASU to have a significant effect on the Company’s Consolidated Financial Statements.

On May 12, 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810):

Determining the Accounting Acquirer in the Acquisition of a VIE ("ASU 2025-03").

The amendments in ASU 2025-03 require an entity, involved in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business, to consider certain factors to determine which entity is the accounting acquirer.

ASU 2025-03 is effective prospectively for fiscal years beginning after December 15, 2026, and interim periods within those annual reporting periods.

The Company is currently evaluating the potential effect of this ASU on future transactions;

however, the Company does not expect this ASU to have a material effect on the Company’s Consolidated Financial Statements.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

On November 26, 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20):

3 unchanged sentences

ASU 2024-04 is effective for fiscal years beginning after December 15, 2025, and interim periods within those annual reporting periods.

The Company is currently evaluating the potential effect of this ASU on the Company’s Consolidated Financial Statements.

Entities may apply the amendments retrospectively for all prior periods presented in the financial statements or prospectively.

The Company adopted ASU 2024-04 on January 1, 2026 and is applying the guidance on a prospective basis.

The adoption of this ASU did not have an effect on the Company's Consolidated Financial Statements.

On November 4, 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

Disaggregation of Income Statement Expenses ("ASU 2024-03" ).

The amendments in this ASU require disclosure, in the notes to financial statements, of specified information about certain costs and expenses, including the total amount of selling expenses incurred in the period and an entity's definition of selling expenses.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted, as further amended in ASU 2025-01.

ASU 2024-03, with effective dates as clarified by ASU 2025-01 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date, is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating this ASU, which will only have an effect on the disclosures within the Company’s Consolidated Financial Statements.

On December 14, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures ("ASU 2023-09").

ASU 2023-09 improves income tax disclosures by adding requirements related to the tax rate reconciliation, disaggregation of income taxes paid and other miscellaneous tax disclosures.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and the Company will reflect updates to its tax disclosures pursuant to the requirements of ASU 2023-09 in its future filings, as applicable.

Subsequent Events

11 unchanged sentences

In determining if the collectability of consideration is probable, the Company considers the customer’s ability and intention to pay such consideration through an evaluation of several factors, including an assessment of the creditworthiness of the customer and our prior collection history with such customer.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Identify the performance obligations in the contract

6 unchanged sentences

In determining whether a warranty provides an additional service, the Company considers each warranty provision in comparison to warranty terms which are standard in the industry.

The Company accounts for product warranties in accordance with ASC 460, “Guarantees.” At the time of sale, the Company recognizes a liability for the estimated future costs associated with warranty claims.

The warranty liability is determined based on historical claim experience, product failure rates, and management’s assessment of future warranty costs.

Estimates are reviewed periodically and adjusted as necessary to reflect actual experience.

Warranty costs are recorded as a component of cost of goods sold and the warranty liability is included in accrued expenses and other current liabilities on the consolidated balance sheet.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Determine the transaction price

20 unchanged sentences

In certain circumstances, the stand-alone selling price is determined using an expected profit margin on anticipated costs related to the performance obligation.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Recognize revenue as performance obligations are satisfied

3 unchanged sentences

The Company transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognizes revenue over time if one of the following three criteria are met:

(a) the customer simultaneously receives and consumes the benefits provided by the Company’s performance as we perform, (b) the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (c) the Company’s performance does not create an asset with an alternative use to us, and we have an enforceable right to payment for performance completed to date.

(a) the customer simultaneously receives and consumes the benefits provided by the Company’s performance as it performs, (b) the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (c) the Company’s performance does not create an asset with an alternative use to us, and the Company has an enforceable right to payment for performance completed to date.

The Company has determined that one or more of these three criteria are met for such contracts.

1 unchanged sentence

The selection of the method to measure progress towards completion can be either an input method or an output method and requires judgment based on the nature of the goods or services to be provided.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Presentation of Taxes Collected

7 unchanged sentences

Total revenue $ 1,246.0 $ 1,107.1

Accounts receivables, net, from contracts with customers consisted of the following (in millions):

Accounts receivable, net, from contracts with customers consisted of the following (in millions):

Infrastructure

2 unchanged sentences

Spectrum 1.7 1.9

Total accounts receivables with customers $ 188.2 $ 273.2

Total accounts receivable with customers

$ 240.5 $ 188.2

As of January 1, 2024, accounts receivable, net, from contracts with customers totaled $ 273.2 million.

5 unchanged sentences

Costs include all direct material and labor costs related to contract performance, subcontractor costs, indirect labor, and fabrication plant overhead costs, which are charged to contract costs as incurred.

Revenues relating to changes in the scope of a contract are recognized when DBMG and customer or general contractor have agreed on both the scope and price of changes, the work has commenced, and that realization of revenue exceeding the costs is assured beyond a reasonable doubt.

Revenues relating to changes in the scope of a contract are recognized when DBMG and the customer or general contractor have agreed on both the scope and price of changes, the work has commenced, and that realization of revenue exceeding the costs is assured beyond a reasonable doubt.

Revisions in estimates during the course of contract work are reflected in the accounting period in which the facts requiring the revision become known.

7 unchanged sentences

Amounts expected to be collected beyond one year are classified as other long-term assets.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Service Contracts

For service contracts (including maintenance contracts) where we have the right to consideration from the customer in an amount that corresponds directly with the value received by the customer based on our performance to date, revenue is recognized as services are performed.

For service contracts (including maintenance contracts) where the Company has the right to consideration from the customer in an amount that corresponds directly with the value received by the customer based on our performance to date, revenue is recognized as services are performed.

For all other types of service contracts, revenue is recognized over time using the input method to measure progress because it best depicts the transfer of value to the customer.

3 unchanged sentences

Retention on contract receivables are amounts due on progress billings, which are withheld until a future period.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Disaggregation of Revenues

5 unchanged sentences

Year Ended December 31,

Industrial $ 307.9 $ 403.0

Commercial $ 371.9 $ 292.6

Industrial 306.6 307.9

Transportation 192.9 275.3

Healthcare 173.1 151.6

Convention 14.0 124.2

Government 128.8 11.7

Leisure 13.0 9.6

Energy 7.2 9.2

Convention 8.8 14.0

Total revenue from contracts with customers $ 1,208.6 $ 1,069.9

9 unchanged sentences

Contract liabilities additionally include advanced payments from our customers on certain contracts.

Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation.

Contract liabilities decrease as the Company recognizes revenue from the satisfaction of the related performance obligation.

The Company classifies contract assets and liabilities that may be settled beyond one year from the balance sheet date as current, consistent with the length of time of the Company’s project operating cycle.

2 unchanged sentences

As of December 31, 2025 and 2024, the total retainage receivable was $ 81.6 million and $ 94.1 million, respectively, and the amount of retainage receivable estimated by management to be collected beyond one year is approximately 27.8 % and 18.8 % of the balance, respectively.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

When payment of the retainage is contingent upon the Company fulfilling its obligations under the contract it does not meet the criteria to be included in accounts receivable and remains in the contract’s respective contract assets or contract liability, determined on a contract-by-contract basis.

The Company has reflected such amounts within the Consolidated Balance Sheets.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Contract assets and contract liabilities consisted of the following (in millions):

18 unchanged sentences

and recognized unapproved change orders, contract claims and changes in estimated costs to complete in the normal course of business.

The change in contract assets during the years ended December 31, 2024 and 2023, is a result of the recording of $ 68.0 million and $ 86.6 million, respectively, of contract assets driven by new commercial projects, offset by $ 80.3 million and $ 133.1 million, respectively, of contract assets transferred to receivables from contract assets recognized at the beginning of the year, including from certain large projects completed or nearing completion and the corresponding billing of amounts previously recorded as contract assets.

The change in contract liabilities during the years ended December 31, 2024 and 2023, is a result of the recording of periodic contract liabilities of $ 102.3 million and $ 146.2 million, respectively, driven largely by new commercial projects, offset by revenue recognized that was included in the contract liability balance at the beginning of the year in the amount of $ 146.7 million and $ 91.3 million, respectively, including from certain large projects completed or nearing completion.

The change in contract assets during the years ended December 31, 2025 and 2024, is a result of the recording of $ 45.9 million and $ 68.0 million, respectively, of contract assets driven by new commercial projects, partially offset by $ 88.1 million and $ 80.3 million, respectively, of contract assets transferred to receivables from contract assets recognized at the beginning of the year, including from certain large projects completed or nearing completion and the corresponding billing of amounts previously recorded as contract assets.

The change in contract liabilities during the year ended December 31, 2025 is a result of the recording of periodic contract liabilities of $ 166.5 million, driven primarily by large initial billings on new commercial projects, partially offset by revenue recognized that was included in the contract liability balance at the beginning of the year in the amount of $ 103.7 million.

The change in contract liabilities during the year ended December 31, 2024, is as a result of revenue recognized that was included in the contract liability balance at the beginning of the year in the amount of $ 146.7 million, including from certain large projects completed or nearing completion, partially offset by the recording of periodic contract liabilities of $ 102.3 million.

INNOVATE CORP.

3 unchanged sentences

Within One Year Within Five Years Total

Healthcare $ 172.6 $ 128.7 $ 301.3

Industrial $ 406.6 $ 113.2 $ 519.8

Transportation 255.6 247.0 502.6

Commercial 285.9 51.4 337.3

Industrial 144.0 0.3 144.3

Healthcare 182.4 33.2 215.6

Government 95.7 12.9 108.6

Leisure 11.1 11.4 22.5

Convention 7.5 — 7.5

Energy 27.1 — 27.1

Leisure 0.1 — 0.1

Remaining unsatisfied performance obligations $ 1,253.7 $ 457.7 $ 1,711.4

39 unchanged sentences

Broadcast station revenue is recognized over the life of the contract, when the program is broadcast.

The fees that we charge can be fixed or variable and the contracts that the Company enters into are generally short-term in nature.

The fees that Spectrum charges can be fixed or variable and the contracts that the Company enters into are generally short-term in nature.

Variable fees are usage/sales-based and recognized as revenue when the subsequent usage occurs.

1 unchanged sentence

Payment Terms

We have an unconditional right to receive payment of the amount billed generally within 30 days of the invoice date.

Spectrum has an unconditional right to receive payment of the amount billed generally within 30 days of the invoice date.

Payment terms are expressly stated in our standard terms and conditions.

16 unchanged sentences

As of January 1, 2024, accounts receivable, net totaled $ 278.4 million.

For the years ended December 31, 2024 and 2023, the Company recognized a reversal of expected credit losses of $ 0.1 million and expected credit losses of $ 2.3 million, respectively, which primarily related to a receivable at the Company's Infrastructure segment expensed as a result of a legacy customer bankruptcy in 2023.

Direct write-downs of accounts receivable charged against the allowance totaled $ 0.2 million and $ 2.4 million for the years ended December 31, 2024 and 2023, respectively.

For the years ended December 31, 2025 and 2024, the Company recognized expected credit losses of $ 0.5 million and a reversal of expected credit losses of $ 0.1 million, respectively.

INNOVATE CORP.

5 unchanged sentences

Total inventory $ 16.0 $ 20.8

The carrying values of the Company's investments, by category, were as follows (in millions):

The carrying values of the Company's investments, by accounting category, were as follows (in millions):

Fair Value (2)

2 unchanged sentences

December 31, 2024 $ 0.9 $ 1.8 $ 0.9 $ 3.6

(1) The Company's equity method investments as of both December 31, 2024 and 2023, were comprised of MediBeacon and Scaled Cell.

(2) The Company's fair value investment in common stock of a publicly traded company was purchased during the year ended December 31, 2024.

(3) The Company's measurement alternative method investment as of both December 31, 2024 and 2023, was comprised of Triple Ring.

The Company's share of net losses from its equity method investments was $ 2.3 million and $ 9.4 million for the years ended December 31, 2024 and 2023, respectively.

(1) The Company's equity method investments were comprised of MediBeacon and Scaled Cell as of both December 31, 2025 and 2024.

(2) The Company's fair value investments in common stock were comprised of marketable equity securities in two publicly traded companies that were purchased in October 2024 and March 2025, all of which were sold in July 2025.

(3) The Company's measurement alternative method investment was comprised of Triple Ring as of both December 31, 2025 and 2024.

The Company's recognized share of net losses from its equity method investments was $ 5.9 million and $ 2.3 million for the years ended December 31, 2025 and 2024, respectively.

Pansend accounts for its preferred stock investment in MediBeacon under the equity method of accounting, inclusive of any fixed maturity securities (notes) issued by MediBeacon to Pansend.

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 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.

As a result of these transactions, Pansend recognized a step-up gain of $ 4.4 million which is reflected in Other income, net in the Consolidated Statements of Operations for the year ended December 31, 2025, which increased Pansend's carrying amount of its investment in MediBeacon.

Concurrently, Pansend recognized equity method losses of $ 5.9 million, driven by the $ 4.4 million step-up gain and $ 1.5 million of interest from the conversion of the convertible notes, which were previously unrecognized because Pansend's carrying amount of its investment in MediBeacon had been previously reduced to zero .

During the year ended December 31, 2024, MediBeacon issued an aggregate $ 2.3 million of 12 % convertible notes to Pansend with each note due to Pansend in three years from date of issuance.

As a result of these note issuances with 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, including the notes, had been previously reduced to zero .

During the year ended December 31, 2023, as a result of note modifications and additional note issuances with MediBeacon, Pansend recognized $ 4.7 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 .

In addition, as a result of an equity transaction in the first quarter of 2023 at MediBeacon with Huadong, Pansend's ownership in MediBeacon decreased from approximately 47.2 % as of December 31, 2022, to approximately 46.2 % subsequent to the transaction, and as a result, Pansend recognized a gain of $ 3.8 million, which was included in Other income, net, in the Consolidated Statement of Operations for the year ended December 31, 2023, and which increased Pansend's carrying amount of its investment in MediBeacon.

Concurrently, Pansend recognized equity method losses of $ 3.8 million 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 and 2023, MediBeacon's total outstanding principal amount of notes due to Pansend was $ 12.0 million and $ 9.7 million, respectively.

Interest income earned by Pansend from the MediBeacon notes totaled $ 1.4 million and $ 0.5 million for the years ended December 31, 2024 and 2023, respectively, and the related accrued interest receivable was $ 1.7 million and $ 0.3 million as of December 31, 2024 and 2023, respectively.

As of December 31, 2024 and 2023, Pansend's carrying amount of its investment in MediBeacon remained at zero , inclusive for December 31, 2024 and 2023, of the $ 12.0 million and $ 9.7 million in convertible and secured promissory notes which were offset against recognized equity method losses, and Pansend 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.

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 and concurrently, pursuant to its amended commercial partnership with Huadong and, as a result of FDA approval, a $ 7.5 million milestone payment from Huadong for MediBeacon preferred stock was in process.

Once completed, these transactions will decrease Pansend's ownership in MediBeacon from approximately 45.9 % prior to the transactions 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 %.

MediBeacon's total outstanding principal amount of notes due to Pansend was $ 0.5 million and $ 12.0 million, as of December 31, 2025 and 2024, respectively.

Interest income earned by Pansend from the MediBeacon notes totaled $ 0.1 million and $ 1.4 million for the years ended December 31, 2025 and 2024, respectively.

The related accrued interest receivable was $ 0.4 million and $ 1.7 million, as of December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, Pansend's carrying amount of its investment in MediBeacon remained at zero , inclusive for December 31, 2025 and 2024, of the $ 0.5 million and $ 12.0 million, respectively, in convertible and secured promissory notes which has been offset against recognized equity method losses, and Pansend has cumulative unrecognized equity method losses relating to MediBeacon of $ 19.8 million as of December 31, 2025.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Marketable Securities

In October 2024, the Company purchased common shares in the open market of a publicly traded company for approximately $ 2.0 million, which represents less than 1 % of the total outstanding common stock of the issuer.

These securities are remeasured at fair value each reporting period using the externally quoted market price, a Level 1 input.

For the year ended December 31, 2024, unrealized fair value losses of $ 0.2 million related to these securities were included in Other income, net in the Consolidated Financial Statements.

Triple Ring and Scaled Cell

On November 30, 2023, the Company sold the majority of its equity method investment in Triple Ring, in which it had held 25.8 % interest and, in exchange, received 240,613 shares of Scaled Cell (valued at $ 0.9 million) and $ 5.0 million in cash proceeds.

The Company recognized a loss of $ 0.2 million on the sale of the investment, which is reflected in Other income (expense), net, in the Consolidated Statement of Operations for the year ended December 31, 2023.

Subsequent to the transaction, and as of December 31, 2023, the Company held a 7.2 % common interest ( 1.9 % on a fully diluted basis) in Triple Ring, which is accounted for using the measurement alternative method.

As of December 31, 2024, the Company holds a 7.2 % common interest ( 1.6 % on a fully diluted basis).

As of both December 31, 2024 and 2023, the Company still held 240,613 shares of Scaled Cell, representing a 20.1 % interest.

As of both December 31, 2025 and 2024, the Company held 240,613 shares of Scaled Cell, representing a 20.1 % interest.

Scaled Cell is an immunotherapy company developing a novel autologous cell therapy system to potentially improve current chimeric antigen receptor T-cell ("CAR-T") treatments.

As of both December 31, 2025 and 2024, the Company held a 7.2 % common interest ( 1.6 % on a fully diluted basis) in Triple Ring, which is accounted for using the measurement alternative method.

The Company accounts for its equity securities without readily determinable fair values under the measurement alternative election of ASC 321, Investments—Equity Securities , whereby the Company can elect to measure an equity security without a readily determinable fair value that does not qualify for the practical expedient to estimate fair value (net asset value) at its cost minus impairment, if any.

On March 6, 2023, the Company, through New Saxon 2019 Limited (“New Saxon”), an indirect subsidiary of GMH, closed on the sale of its remaining 19.0 % interest in HMN to subsidiaries and an affiliate of Hengtong Optic-Electric Co Ltd.

The sale was consummated pursuant to the terms of a supplemental agreement entered into by the parties in June 2022.

During the year ended December 31, 2023, New Saxon received gross proceeds of $ 54.2 million and interest income of $ 0.5 million, of which $ 4.4 million was withheld for a foreign tax payment, and $ 15.9 million was distributed to GMH's non-controlling interest holders and redeemable non-controlling interest holders pursuant to the partnership agreement.

New Saxon recognized a gain on sale of $ 12.2 million, which was included in Other income, net, in the Consolidated Statement of Operations for the year ended December 31, 2023.

During the year ended December 31, 2024, a final distribution of $ 0.3 million was released to GMH's non-controlling interest holders pursuant to the partnership agreement, relating to amounts that were previously withheld for reserves and contingencies.

Subsequently, both New Saxon and GMH were dissolved before the end of 2024, and the Company recognized no gain or loss on dissolution.

Marketable Securities

In October 2024, the Company purchased common shares in the open market of a publicly traded company for approximately $ 2.0 million, and in March 2025, the Company purchased common shares in the open market of another publicly traded company for $ 0.3 million.

Both purchases represented less than 1 % of the total outstanding equity of the respective issuers.

In July 2025, all of these shares were sold for aggregate proceeds of $ 2.9 million.

Prior to their disposal, these securities were remeasured at fair value each reporting period using the externally quoted market prices, Fair Value Level 1 inputs.

For the years ended December 31, 2025 and 2024, fair value gains of $ 0.8 million and unrealized fair value losses of $ 0.2 million, respectively, related to these securities were included in Other income, net in the Consolidated Financial Statements.

Property, Plant and Equipment, Net

10 unchanged sentences

These amounts included $ 12.9 million and $ 15.3 million of depreciation expense recognized within cost of revenue for the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2024, and December 31, 2023, the net book value of equipment held under finance leases included in PP&E was $ 0.5 million and $ 2.3 million, respectively.

As of December 31, 2024, and December 31, 2023, the gross value of capitalized internal-use software included in PP&E was $ 20.7 million and $ 15.0 million, respectively, and the net book value was $ 9.8 million and $ 5.9 million, respectively.

As of December 31, 2025 and 2024, the gross value of capitalized internal-use software included in PP&E was $ 21.0 million and $ 20.7 million, respectively, and the net book value as of December 31, 2025 and 2024, was $ 6.6 million and $ 9.8 million, respectively.

Assets held-for-sale are included within Other current assets in the Consolidated Balance Sheets.

As of December 31, 2024, there were $ 7.0 million in assets held-for-sale, which primarily consisted of one building, equipment and land and the associated improvements at the Company's Infrastructure segment.

As of December 31, 2023, there were $ 3.1 million in assets held-for-sale, which primarily consisted of two buildings and the associated building improvements at the Company's Infrastructure segment, which were subsequently sold.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

As of December 31, 2025, there were no assets held-for-sale.

As of December 31, 2024, there were $ 7.0 million in assets held-for-sale, which primarily consisted of one building and associated building improvements, land, and equipment at the Company's Infrastructure segment.

Goodwill and Intangibles, Net

5 unchanged sentences

Translation adjustments

( 0.4 ) — ( 0.4 )

Balance as of December 31, 2024

1 unchanged sentence

Translation adjustments

( 0.4 ) — ( 0.4 )

Balance as of December 31, 2025

$ 105.6 $ 21.4 $ 127.0

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Indefinite-Lived Intangible Assets

The carrying amounts of indefinite-lived intangible assets were as follows (in millions):

FCC licenses $ 107.7 $ 106.3

Federal Communications Commission ("FCC") licenses

$ 107.9 $ 107.7

Total $ 107.9 $ 107.7

During the year ended December 31, 2024, the Spectrum segment completed the purchases of five Low Power Television licenses and stations for an aggregate consideration of $ 1.5 million, with $ 0.3 million payable on or before April 12, 2025.

The acquisitions were accounted for as asset acquisitions.

The weighted-average period prior to the next renewal for FCC licenses was 5.4 years and 6.2 years as of December 31, 2024 and 2023, respectively, after taking into consideration licenses that were successfully renewed shortly after year-end.

The weighted-average period prior to the next renewal for FCC licenses was 4.4 years and 5.4 years as of December 31, 2025 and 2024, respectively.

While broadcast television licenses are issued for a fixed period of time (generally eight years ), renewals of these licenses have occurred routinely and at nominal cost.

18 unchanged sentences

Amortization expense is included in Depreciation and amortization in the Consolidated Statements of Operations.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Future estimated annual amortization expense for intangible assets as of December 31, 2025, is as follows (in millions):

1 unchanged sentence

Thereafter 31.6

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The Company has entered into operating leases for land, office space, and certain Company vehicles and equipment and has entered into finance leases for certain Company vehicles and equipment.

16 unchanged sentences

Total lease liabilities $ 55.9 $ 57.0

For the year ended December 31, 2023, the Company recorded an impairment charge to right-of-use-assets of $ 0.6 million, that primarily related to FCC licenses impaired.

Impairment charges are included in Other operating (income) loss in the Consolidated Statements of Operations.

The tables below present financial information associated the Company's leases.

The following table summarizes the components of lease expense (in millions):

12 unchanged sentences

Based on the short-term leases executed as of December 31, 2025, the Company expects that it will incur approximately $ 12.1 million in estimated short-term lease costs for the year ended December 31, 2026.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Cash flow information related to leases is as follows (in millions):

8 unchanged sentences

Finance leases $ 0.1 $ —

(1) For the year ended December 31, 2024, excludes $ 4.0 million received for a lease modification incentive.

(1) The above amounts exclude $ 4.0 million received during the year ended December 31, 2025, and $ 4.0 million received during the year ended December 31, 2024 for a lease modification incentive.

See below for additional information.

The weighted-average remaining lease term and the weighted-average discount rate for the Company's leases were as follows:

Year ended December 31,

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

On May 1, 2024, a subsidiary of DBMG amended the termination date of three property leases that had an original expiry date of March 31, 2031.

In exchange, and as an inducement for DBMG to early terminate, the landlord agreed to pay DBMG $ 12.0 million in surrender fees in three equal installments, contingent on timely vacate and inspection milestones, of which DBMG received $ 4.0 million in surrender fees in 2024 and $ 4.0 million in surrender fees in 2025, with the remaining $ 4.0 million payment due to DBMG due within five business days of the vacate date in 2027 for the remaining property lease.

After final surrender of the properties, DBMG will have no further obligations under these leases.

The Company accounted for this transaction as a lease modification and recognized a $ 8.7 million gain on lease modification, which is included in Other operating income in the Consolidated Statement of Operations for the year ended December 31, 2024.

The weighted-average remaining lease terms and the weighted-average discount rates for the Company's leases were as follows:

Weighted-average remaining lease term (years) - operating leases 6.6 7.4

5 unchanged sentences

2026 $ 15.5 $ 0.1

2026 12.0 0.2

Thereafter 17.2 —

2 unchanged sentences

Total lease liability

On May 1, 2024, a subsidiary of DBMG amended the termination date of three property leases that had an original expiry date of March 31, 2031.

In exchange, and as an inducement for DBMG to early terminate, the landlord agreed to pay DBMG $ 12.0 million in surrender fees in three equal installments, contingent on timely vacate and inspection milestones, of which DBMG has received $ 4.0 million in surrender fees as of December 31, 2024, with the remaining two $ 4.0 million payments due to DBMG due within five business days of the vacate dates in 2025 and 2027.

After final surrender of the properties, DBMG will have no further obligations under these leases.

The Company accounted for this transaction as a lease modification, and recognized a $ 8.7 million gain on lease modification, which is included in Other operating (income) loss in the Consolidated Statement of Operations for the year ending December 31, 2024.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

In November 2021, INNOVATE entered into a ten-year lease arrangement for a special purpose space in Palm Beach, Florida, which was amended in February 2023 to extend the term of the lease to 15 years, with future monthly lease payments of approximately $ 0.2 million over the entire lease term and annual common area maintenance charges of $ 0.6 million, both of which are subject to a 3 % annual upward adjustment, with total square footage of 25,184 , as amended.

The lease had not yet commenced for accounting purposes as the space was still under construction, and, therefore, future lease payments were not recorded on the Company's Consolidated Balance Sheets.

In December 2023, the Company entered into a sublease agreement with Palm Beach Cultural Innovation Center, Inc.

(“PBCIC”), a Florida not-for-profit corporation and related party to Avram A.

Glazer, the Chairman of INNOVATE's Board of Directors, who is also on the board of directors of PBCIC.

Pursuant to the sublease, PBCIC would have use of the underlying space and, as consideration, PBCIC agreed to undertake all of the tenant’s build-out costs and related obligations under the lease agreement between the Company, as tenant, and RPP Palm Beach Property LP, as landlord.

Effective March 29, 2024, the Company assigned the lease, as amended, and the sublease to an affiliate of Mr.

Glazer, releasing the Company of all obligations under the lease, as amended, and the sublease.

The Company previously recorded $ 1.1 million in prepaid rent related to this lease, which was written-off in December 2023 upon the execution of the sublease to PBCIC.

While there were no new expenses incurred during 2024, the Company also previously incurred other expenses of $ 1.1 million since inception related to the special purpose space and PBCIC, of which $ 0.7 million is included in Selling, general and administrative in the Consolidated Statement of Operations for the year ended December 31, 2023.

In December 2021, the Company entered into a five-year lease agreement for corporate office space in West Palm Beach, Florida, that would, on commencement of the lease, require future monthly lease payments of approximately $ 0.1 million over the entire lease term, subject to 3 % annual upward adjustment.

This lease had not yet commenced as the building was still under construction, and therefore, other than a $ 0.2 million deposit included in Other assets as of December 31, 2023, future lease payments were not recorded on the Company's Consolidated Balance Sheets.

On March 29, 2024, the Company assigned the lease to Lancer Capital, an entity controlled by Mr.

Glazer, releasing the Company of all obligations under the lease.

The $ 0.2 million security deposit on the lease was also assigned to Lancer Capital and written-off in March 2024.

Other Assets, Accrued Liabilities and Other Liabilities

5 unchanged sentences

Income tax receivable

Restricted cash - current

Total other current assets

25 unchanged sentences

$ 42.9 $ 43.5

Accrued interest and exit fees (non-current portion)

Accrued interest (non-current portion)

Total other liabilities $ 46.3 $ 46.8

7 unchanged sentences

The Company’s obligations represent the present value of future costs associated with the removal of certain assets imposed by the existing tower lease agreements.

As of December 31, 2024, there was $ 0.7 million of non-current accrued interest included in Other liabilities.

As of December 31, 2023, there was $ 14.9 million of non-current accrued interest and $ 15.9 million of exit fees payable included in Other liabilities.

Refer to Note 11.

Debt Obligations for additional information on the exit fees.

INNOVATE CORP.

2 unchanged sentences

Debt obligations, including finance lease obligations, consisted of the following (in millions):

Maturity Date

Infrastructure

PRIME minus 0.75 % Line of Credit due 2025

$ 45.0 $ 100.0

3.25 % Term Loan due 2026

PRIME minus 0.75 % Term Loan due 2026

4.00 % Note due 2024

Obligations under finance leases 0.6 2.4

SOFR plus 2.75 % Revolving Credit Facility

May 20, 2030 $ 15.0 $ —

SOFR plus 2.75 % Term Loan

May 20, 2030 72.6 —

PRIME minus 0.75 % Revolving Credit Facility

3.25 % Term Loan

PRIME minus 0.75 % Term Loan

Obligations under finance leases Various 0.1 0.6

Total Infrastructure $ 87.7 $ 144.7

8.50 % Note due 2025

$ 19.3 $ 19.3

11.45 % Notes due 2025

September 30, 2026 $ 19.3 $ 19.3

11.45 % Notes

September 30, 2026 50.4 50.4

Total Spectrum $ 69.7 $ 69.7

Life Sciences

20.00 % Notes due 2025

Lancer Promissory Note

August 1, 2026 $ 47.9 $ 24.0

Total Life Sciences $ 47.9 $ 24.0

Non-Operating Corporate

8.50 % Senior Secured Notes due 2026

$ 330.0 $ 330.0

7.50 % Convertible Senior Notes due 2026

SOFR plus 5.75 % Line of Credit due 2025

CGIC Unsecured Note due 2026 31.0 35.1

10.50 % Senior Secured Notes (1)

February 1, 2027 $ 360.4 $ —

9.50 % Convertible Senior Notes (1)

March 1, 2027 53.5 —

CGIC Promissory Note (1)

April 30, 2027 45.9 31.0

SOFR plus 5.75 % Revolving Line of Credit

September 15, 2026 20.0 20.0

8.50 % Senior Secured Notes

February 1, 2026 1.9 330.0

7.50 % Convertible Senior Notes

August 1, 2026 0.2 48.9

Total Non-Operating Corporate $ 481.9 $ 429.9

2 unchanged sentences

current portion of debt obligations (1)

( 581.4 ) ( 162.2 )

Debt obligations, net of current portion

As of December 31, 2024, estimated future aggregate finance lease and debt payments, including interest, were as follows (in millions):

$ 80.3 $ 500.6

(1) Certain debt instruments with long-term maturity dates have been classified as current obligations as of December 31, 2025, due to contingent mandatory prepayment provisions contained in the agreements that could require repayment within one year of the balance sheet date if certain asset sales occur, resulting in uncertainty regarding the timing of repayment.

In August 2025, INNOVATE closed on a series of indebtedness refinancing transactions that extended certain of the Company's debt maturities within its Life Sciences, Spectrum and Non-Operating Corporate segments.

Total third-party fees related to the refinancing transactions, that were expensed as a result of these refinancing transactions being classified as modifications or troubled debt restructurings under ASC 470 as described below, totaled $ 4.5 million for the year ended December 31, 2025.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

As of December 31, 2025, estimated future aggregate finance lease and principal debt payments based on contractual maturities, excluding interest, were as follows (in millions):

Finance Leases Debt Total

2 unchanged sentences

2028 — 5.8 5.8

Total minimum principal and interest payments

2029 — 6.4 6.4

Amount representing interest (1)(2)

2030 — 63.6 63.6

Total aggregate finance lease and debt payments $ 0.6 $ 667.7 $ 668.3

(1) Excludes exit fees for Spectrum and R2 Technologies.

(2) Excludes additional estimated interest payments of $ 0.4 million resulting from the extension subsequent to year end of the Non-Operating Corporate SOFR plus 5.75 % Line of Credit from May 16, 2025, to August 1, 2025, and excludes additional estimated interest due of $ 2.9 million resulting from the extension subsequent to year end of the R2 Technologies 20.0 % Note with Lancer Capital from December 31, 2024, to August 1, 2025.

Total aggregate finance lease and debt principal payments

$ 0.1 $ 687.1 $ 687.2

The interest rates on finance leases ranged from approximately 3.0 % to 5.6 %.

Infrastructure

DBMG has a $ 135.0 million Revolving Line with UMB that bears interest at a prime rate minus a spread with an interest rate floor of 4.25 %.

The Revolving Line with UMB matures on August 15, 2025.

The outstanding balance was $ 45.0 million and $ 100.0 million, as of December 31, 2024 and 2023, respectively, and availability for revolving loans was $ 89.9 million and $ 34.9 million as of December 31, 2024 and 2023, respectively.

Interest is paid monthly and the effective interest rate on the Revolving Line with UMB was 6.98 % and 8.33 % as of December 31, 2024 and 2023, respectively.

The Revolving Line with UMB also includes a commitment fee equal to 0.25 % per annum times the average daily unused availability under the line.

DBMG also has a $ 74.6 million 3.25 % term loan due 2026 (the " 3.25 % UMB Term Loan"), which expires May 31, 2026, and bears interest, which is paid monthly, at an annual rate of 3.25 % with an effective interest rate of 3.3 %.

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 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.

On May 20, 2025, concurrently with DBMG’s entry into the new DBMG Credit Agreement, DBMG terminated its prior credit agreement, dated as of May 27, 2021 and as amended by the First Amendment to Credit Agreement, dated August 2, 2022, the Second Amendment to Credit Agreement, dated December 12, 2023, and the Third Amendment to Credit Agreement, dated June 28, 2024 (as amended, the “Prior DBMG Credit Agreement”).

DBMG used a portion of the proceeds of the new DBMG Credit Agreement to refinance the indebtedness under the Prior DBMG Credit Agreement, and thereafter terminated the Prior DBMG Credit Agreement.

The maturity dates of the revolving line and term loans under the Prior DBMG Credit Agreement were August 15, 2025, and May 31, 2026, respectively.

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.

The obligations of the Borrowers under the new DBMG Credit Agreement are guaranteed by certain domestic subsidiaries of DBMG.

As security for the Borrowers’ obligations under the DBMG Credit Agreement, (i) DBMG and its domestic subsidiaries have granted a first priority lien on substantially all their tangible and intangible personal property, including, without limitation, accounts receivable, equipment and the equity interests of certain of DBMG’s direct and indirect subsidiaries, and (ii) certain of the domestic subsidiaries of DBMG have granted a first priority lien on ten parcels of real estate owned by such subsidiaries.

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 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 the DBMG debt in the future upon certain events, including a sale of DBMG.

As the Change in Control clause has not yet been triggered, the DBMG debt instruments remain classified as non-current as of December 31, 2025, except amounts due within the 2026 fiscal year, as originally defined in the DBMG Credit Agreement.

Due to multiple lenders being party to the new DBMG Credit Agreement, the May 20, 2025 transactions were determined to be either an extinguishment or modification under ASC 470-50, Debt - Modifications and Extinguishments ("ASC 470-50") or the incurrence of new debt, depending on the specific lender.

For the portions of the debt classified as extinguishments, losses on extinguishment totaling $ 0.3 million, were included within Other income, net on the Consolidated Statement of Operations for the year ended December 31, 2025.

For the debt portions classified as modifications or new debt, new incremental deferred financing fees totaling $ 1.8 million were capitalized as original issue discounts and included in the carrying amount of the debt in the Consolidated Balance Sheet and $ 0.1 million in fees paid to third parties were expensed.

Capitalized fees are amortized over the remaining life of the debt under the effective interest rate method and are included in interest expense.

DBMG had availability for revolving loans of $ 119.9 million and $ 89.9 million, as of December 31, 2025 and 2024, respectively.

Interest is paid monthly on DBMG's revolving loans, and the effective interest rate on DBMG's revolving loans was 6.8 % and 7.0 %, as of December 31, 2025 and 2024, respectively.

The new DBMG Revolving Facility has an unused commitment fee of 0.50 % per annum times the average daily unused availability under the line, whereas under the Prior DBMG Credit Agreement, the commitment fee was equal to 0.25 % per annum times the average daily unused availability under the line.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

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 ("PRIME minus 0.75% Term Loan due 2026"), with the same interest rate as the Revolving Line with UMB and the same maturity date as the initial 3.25 % UMB Term Loan.

Principal payments and interest are paid monthly.

The UMB term loans and Revolving Line with UMB associated with the Infrastructure segment contain customary restrictive and financial covenants related to debt levels and performance, including a Fixed Charge Coverage Ratio covenant, as defined in their agreements.

The 4.00 % note matured on March 31, 2024, and was fully redeemed on April 2, 2024.

Refer to Note 17.

Related Parties for additional information.

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.

Prior to the new DBMG Credit Agreement, DBMG had two term loans under the Prior DBMG Credit Agreement.

As of December 31, 2024, the $ 74.6 million term loan bore interest at an annual rate of 3.25 %, with an effective interest rate of 3.3 %.

As of December 31, 2024, the $ 24.5 million term loan bore interest at PRIME minus 0.75 %, at the same rate as the prior revolving loans.

DBMG is in compliance with its debt covenants as of December 31, 2025.

The maturity date of Spectrum's 8.50 % and 11.45 % Notes is August 15, 2025, as amended in November 2023.

As a result of amendments to extend the maturity date during the year ended December 31, 2023, additional exit fees of $ 8.3 million were incurred.

The exit fees associated with the notes, which 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.

A corresponding liability for the total exit fees of $ 15.9 million is reflected within Accrued Liabilities in the Consolidated Balance Sheet as of December 31, 2024, and within Other Liabilities (non-current) in the Consolidated Balance Sheet as of December 31, 2023.

Interest is capitalized and payable upon maturity of the notes, of which there was $ 20.5 million and $ 12.9 million of accrued but unpaid interest as of December 31, 2024 and 2023, respectively.

As of December 31, 2024 and 2023, the weighted-average effective interest rate on the notes, as amended, was 22.8 % per annum.

During November 2023, concurrently with Broadcasting's execution of the Ninth Amendment to Secured Notes, which among other things extended the maturity of the notes, INNOVATE entered into a related side letter with the lenders, whereby INNOVATE agreed 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 Broadcasting's Senior Secured Notes.

Assuming there are sufficient proceeds remaining after such repayment, an additional $ 2.0 million is payable for payments made after November 9, 2024, and in exchange for the additional $ 2.0 million fee, the institutional investors will return their equity interests in HC2 Broadcasting Holdings, Inc.

and their equity interests in DTV America.

The lenders hold warrants to purchase 145,825 shares of common stock of HC2 Broadcasting Holdings, Inc which can be exercised at any time until August 2027 at an exercise price of $ 0.01 per share.

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”).

The Spectrum Notes Extension was determined to be a modification of debt under ASC 470-50, as the terms of the debt were not determined to be substantially different, as the present value of cash flows under the amended terms of the Spectrum Notes were not greater than 10 % different from the present value of the remaining cash flows under the prior terms.

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

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

A liability for the total exit fees of $ 25.8 million and $ 15.9 million was reflected within Accrued liabilities in the Consolidated Balance Sheets as of December 31, 2025 and 2024, respectively.

Accrued interest of $ 27.9 million and $ 20.5 million, as of December 31, 2025 and 2024, respectively, is reflected within Accrued liabilities in the Consolidated Balance Sheets and is payable upon maturity of the notes.

As of December 31, 2025 and 2024, the weighted-average effective interest rate on the notes, as amended, was 25.0 % and 22.8 % per annum, 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 Company is 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.

The Company has 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, the Company is in compliance with the milestone covenants.

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

Assuming there are sufficient proceeds remaining after such repayment, INNOVATE is 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.

Life Sciences

During the year ended December 31, 2023, R2 Technologies closed on $ 6.6 million of additional notes from Lancer Capital, including $ 1.3 million of unpaid accrued interest which was capitalized into the principal balance, increasing the aggregate outstanding principal to $ 17.4 million as of December 31, 2023.

The interest rate on the outstanding principal balance also increased to 20 % per annum during 2023.

The notes 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.

The 20 % $ 20.0 million note also included an exit fee, which would be 10.5 % of the principal amount being repaid as of April 30, 2024.

As a result of the addition of the exit fee effective January 31, 2024, the transaction was determined to be an extinguishment of debt under ASC 470-50, Debt - Modifications and Extinguishments, and the exit fee payable to the existing lender of $ 2.2 million was included as a loss on debt extinguishment within Other income, net in the Consolidated Statement of Operations.

The original maturity date of the 20 % $ 20.0 million note was April 30, 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.

Effective May 17, 2024, the maturity date of the note was extended to December 31, 2024, and the exit fees were amended.

The May 17, 2024, amendment was determined to be a modification of debt under ASC 470-50, Debt - Modifications and Extinguishments, as the terms of the debt were not determined to be substantially different, including taking into consideration the ability to prepay the debt at anytime, and, therefore, the increases in exit fees are being amortized using the effective interest method.

The exit fee, as amended, and as of December 31, 2024, was equal to 11.90 % of the principal amount being repaid.

Effective July 31, 2024, an additional exit fee of $ 1.0 million was incurred under the amendment, which increased by $ 1.0 million each month until the end of November 2024.

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

The exit fees were amortized over the term of the note using the effective interest rate method and are included in interest expense.

On August 4, 2025, Lancer Capital LLC ("Lancer"), a related party, 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 Lancer 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 Lancer 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 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.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

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.

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.

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.

Interest on the note, as amended, is payable monthly in arrears, in cash or, if not paid in cash, accrued and unpaid interest is capitalized monthly into the principal balance.

Interest expense, including amortization of all exit fees, related to the note(s) with Lancer Capital was $ 9.8 million and $ 2.9 million for the years ended December 31, 2024 and 2023, respectively.

For the year ended December 31, 2024, in accordance with the 20 % note agreement, additional unpaid cash interest due of $ 4.0 million was capitalized into the principal balance.

As of December 31, 2024, the total outstanding amount relating to the note was $ 31.9 million, inclusive of $ 24.0 million of principal and capitalized interest, which total is included within Current portion of debt obligations in the Consolidated Balance Sheet, and $ 7.9 million in total accrued exit fees which are included within Accrued liabilities in the Consolidated Balance Sheet.

As of December 31, 2023, accrued interest, which had not yet been capitalized into the principal balance, was $ 2.4 million, and was included within Accrued liabilities in the Consolidated Balance Sheet.

As of December 31, 2024 and 2023, the effective interest rate on the notes, as amended, was 57.8 % and 20.0 %, respectively.

The August 4, 2025 amendment was determined to be a troubled debt restructuring under ASC 470-60, Debt - Troubled debt restructuring by debtors ("ASC 470-60") because R2 Technologies was deemed to be experiencing financial difficulty, and according to the substantial changes under the amendment, the lender was deemed to have granted a concession.

no gain or loss on the amendment was recorded, as the future undiscounted cash flows under the amended terms were greater than the net carrying value of the note prior to the amendment.

A new effective interest rate was established based on the carrying value of the original debt and the revised future cash flows, which is inclusive of the extension fee.

The new extension fee was recorded as OID and is being amortized over the term of the note using the effective interest rate method and is included in interest expense.

As of December 31, 2025 and 2024, the effective interest rate on the note, as amended, was 17.0 % and 57.8 %, respectively.

Interest expense, including amortization of fees, related to the Lancer Note was $ 14.7 million and $ 9.8 million for the years ended December 31, 2025 and 2024.

For the years ended December 31, 2025 and 2024, $ 5.3 million and $ 6.6 million of accrued interest, excluding exit fees and extension fees, was capitalized into the principal balance.

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.

As of December 31, 2024, the carrying amounts relating to the note totaled $ 31.9 million, inclusive of $ 24.0 million of principal and capitalized interest, which total was included within Current portion of debt obligations in the Consolidated Balance Sheet, and $ 7.9 million in total accrued exit fees which were included within Accrued liabilities in the Consolidated Balance Sheet.

Effective January 31, 2024, when the 20 % $ 20.0 million note was entered into with Lancer Capital, which replaced the prior 20 % note, the note included an exit fee of 10.5 % of the principal amount to be repaid.

As a result of the addition of the exit fee, the transaction was determined to be an extinguishment of debt under ASC 470-50 , and the $ 2.2 million exit fee was included as a loss on debt extinguishment within Other income, net on the Consolidated Statement of Operations for the year ended December 31, 2024.

The original maturity date of the 20 % $ 20.0 million note was April 30, 2024, which was then extended on May 17, 2024, to December 31, 2024.

The May 17, 2024 amendment included an amendment to the exit fees and was determined to be a modification of debt under ASC 470-50, as the terms of the debt were not determined to be substantially different, including taking into consideration the ability to prepay the debt at any time, and, therefore, the additional exit fees were amortized using the effective interest method and were included in interest expense.

During the first quarter of 2025, with an effective date of December 31, 2024, the maturity date of the note was extended to August 1, 2025, and an additional exit fee of $ 1.0 million was incurred under the amendment, which increased by $ 1.0 million each month.

The base exit fee, as amended, would increase each month and would equal 13.09 % of the principal amount being repaid at maturity.

The amendment was determined to be a modification of debt under ASC 470-50, as the terms of the debt were not determined to be substantially different, including taking into consideration the ability to prepay the debt at any time, and, therefore, the additional exit fees were amortized over the term of the note using the effective interest rate method and were included in interest expense.

The total new exit fees associated with the notes were recorded as an OID of $ 8.7 million and were amortized over the remaining term of the note.

A corresponding liability for the new exit fees of $ 8.7 million was recorded for total accrued exit fees of $ 16.5 million which were included within Accrued liabilities in the Consolidated Balance Sheet prior to the August 4, 2025 amendment.

Non-Operating Corporate

2026 Senior Secured Notes

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

The 2026 Senior Secured Notes have a stated annual interest rate of 8.50 % and have an effective interest rate of 9.3 %, which reflects $ 10.8 million of deferred financing fees, including underwriting fees.

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

Aggregate interest expense, including the contractual interest coupon and amortization of the deferred financing fees was $ 30.4 million and $ 30.1 million, respectively, for the years ended December 31, 2024 and 2023, respectively.

2026 Convertible Notes

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

Bank, as trustee (the "Convertible Indenture").

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

The 2026 Convertible Notes were issued at 100 % of par with a stated annual interest rate of 7.50 %.

The fair value of the embedded conversion feature contained in the 2026 Convertible Notes had a fair value of $ 12.3 million, which was recorded as a premium on the 2026 Convertible Notes.

The 2026 Convertible Notes have an effective interest rate of 3.21 %, which reflects the initial $ 12.3 million premium and $ 1.1 million of deferred financing fees.

During the year ended December 31, 2024, INNOVATE repurchased $ 2.9 million principal amount of its 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.

As of December 31, 2024, the 2026 Convertible Notes held by third parties had a net carrying value of $ 52.3 million inclusive of an unamortized premium of $ 3.8 million and unamortized deferred financing costs of $ 0.4 million.

As of December 31, 2023, the 2026 Convertible Notes had a net carrying value of $ 57.3 million inclusive of an unamortized premium of $ 6.0 million and unamortized deferred financing costs of $ 0.5 million.

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

Aggregate interest expense recognized relating to both the contractual interest coupon and amortization of discount net of premium and deferred financing costs was $ 1.7 million and $ 1.9 million, for the years ended December 31, 2024 and 2023, respectively.

Each $1,000 of principal of the 2026 Convertible Notes is convertible into 23.6327 shares of our common stock, which is equivalent to a conversion price of approximately $ 42.31 per share, both as adjusted for the 2024 Reverse Stock Split and subject to further adjustment upon the occurrence of specified events.

Based on the closing price of our common stock of $ 4.94 on December 31, 2024, the if-converted value of the 2026 Convertible Notes did not exceed its principal value.

In August 2025, INNOVATE 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 (as defined below);

and (iv) amendment and extension of the Company’s promissory note with Continental General Insurance Company ("CGIC"), 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.

10.50 % Senior Secured Notes due 2027

In August 2025, the Company closed on an exchange offer and consent solicitation to eligible holders of its 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 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 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.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Revolving Line of Credit

The Company has a revolving credit agreement with MSD PCOF Partners IX, LLC ("MSD"), which has a maximum commitment of $ 20.0 million ("Revolving Line of Credit").

As of both December 31, 2024 and 2023, the outstanding balance was $ 20.0 million.

The maturity date of the Revolving Line of Credit, as amended on May 6, 2024, was 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.

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, 2024 and 2023, the effective interest rate on the Revolving Line of Credit, as amended, was 10.6 % and 11.3 %, respectively.

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 a prepayment if net cash proceeds from certain asset sales in excess of $ 10.0 million are received.

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 2026 Senior Secured Notes.

CGIC Unsecured Note Due 2026

On May 9, 2023, in connection with the redemption of DBM Global Intermediate Holdco Inc.'s Series A Fixed-to-Floating Rate Perpetual Preferred Stock (the “DBMGi Series A Preferred Stock”), the Company issued a subordinated unsecured promissory note to Continental General Insurance Company ("CGIC") in the principal amount of $ 35.1 million (the "CGIC Unsecured Note").

Refer to Note 16.

Equity and Temporary Equity for additional information.

The CGIC Note, which is due February 28, 2026, bore interest at 9.0 % per annum through May 8, 2024, bears interest at 16.0 % per annum from May 9, 2024, to May 8, 2025, and 32.0 % per annum thereafter.

As of December 31, 2024 and 2023, the effective interest rate on the note, as adjusted, was 17.5 %, and 18.1 %, respectively.

The CGIC Unsecured Note also requires a mandatory prepayment from the proceeds from certain asset sales and the greater of $ 3.0 million or 12.5 % of the net proceeds from certain equity sales.

As a result of the closing of the Rights Offering on April 24, 2024, INNOVATE redeemed $ 4.1 million of the CGIC Unsecured Note on April 26, 2024.

Other covenants in the CGIC Unsecured Note are generally consistent with the Company's Indenture governing the 8.50 % Senior Secured Notes due 2026, dated as of February 1, 2021, by and among the Company, the guarantors party thereto and U.S.

Bank National Association.

For the years ended December 31, 2024 and 2023, interest expense recognized relating to the CGIC Unsecured Note was $ 5.7 million and $ 4.1 million, respectively, and cash paid for interest to CGIC was $ 4.6 million and $ 1.8 million, respectively.

Accrued interest related to the CGIC notes was $ 3.4 million and $ 2.0 million as of December 31, 2024 and 2023, respectively.

The Company’s 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.

The 10.50 % 2027 Senior Secured Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) or any state securities laws and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from the registration requirements of the Securities Act.

The exchange of the 8.50 % 2026 Senior Secured Notes for the 10.50 % 2027 Senior Secured Notes was determined to be a modification of debt under ASC 470-50, as the terms of the debt were not determined to be substantially different, as the present value of cash flows under the terms of the 10.50 % 2027 Senior Secured notes were not greater than 10 % different from the present value of the remaining cash flows under the 2026 8.50 % Senior Secured Notes.

Therefore, total fees and additional interest of $ 18.3 million payable to the lenders and capitalized into the new principal amount under the exchange offer was recorded as an OID and remaining unamortized deferred financing fees of $ 1.3 million allocated from the 8.50 % 2026 Senior Secured Notes exchanged will be amortized into interest expense over the term of the notes using the effective interest rate method.

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.

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 $ 13.9 million of the unamortized OID and $ 1.0 million of unamortized deferred financing fees.

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

10.50 % 2027 Senior Secured Notes Terms and Conditions

The 10.50 % 2027 Senior Secured Notes mature on February 1, 2027.

The 2026 Senior Secured Notes accrue interest at a rate of 8.50 % per year.

Interest on the 2026 Senior Secured Notes is paid semi-annually on February 1 and August 1 of each year.

Issue Price .

The issue price of the 2026 Senior Secured Notes was 100 % of par.

The notes and the note guarantees are the Company’s and certain of its direct and indirect domestic subsidiaries’ (the "Subsidiary Guarantors") general senior secured obligations.

The notes and the note guarantees will rank:

(i) senior in right of payment to all of the Company’s and the Subsidiary Guarantors’ future subordinated debt;

(ii) equal in right of payment, subject to the priority of any First-Out Obligations (as defined in the Secured Indenture), with all of the Company’s and the Subsidiary Guarantors’ existing and future senior debt and effectively senior to all of its and the Subsidiary Guarantor’s unsecured debt to the extent of the value of the collateral;

and (iii) effectively subordinated to all liabilities of its non-guarantor subsidiaries.

The notes and the note guarantees are secured on a first-priority basis by substantially all of the Company’s assets and the assets of the Subsidiary Guarantors, subject to certain exceptions and permitted liens.

The 2026 Senior Secured Notes are secured by a first priority lien on substantially all of the Company’s assets (except for certain "Excluded Assets," and subject to certain "Permitted Liens," each as defined in the Secured Indenture), including, without limitation:

• all equity interests owned by the Company or a Subsidiary Guarantor (which, in the case of any equity interest in a foreign subsidiary, will be limited to 100 % of the non-voting stock (if any) and 65 % of the voting stock of such foreign subsidiary) and the related rights and privileges associated therewith (but excluding Equity Interests of Insurance Subsidiaries (as defined in the Secured Indenture), to the extent the pledge thereof is deemed a "change of control" under applicable insurance regulations);

• all equipment, goods and inventory owned by the Company or a Subsidiary Guarantor;

• all cash and investment securities owned by the Company or a Subsidiary Guarantor;

The 10.50 % 2027 Senior Secured Notes 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 will be paid in kind.

All subsequent interest payments are payable in cash.

The 10.50 % 2027 Senior Secured Notes and the note guarantees are the Company’s and the Subsidiary Guarantors’ senior secured obligations.

The 10.50 % 2027 Senior Secured Notes and the note guarantees will rank:

(i) equal in right of payment (subject to the priority of any First-Out Obligations (as defined in the 10.50 % 2027 Senior Secured Notes Indenture) (including any debt under the Company’s existing $ 20.0 million secured revolving credit facility)) with all existing and future senior debt of the Company and the Subsidiary Guarantors and effectively senior to all unsecured debt of the Company to the extent of the value of the collateral;

(ii) senior in right of payment to all of the Company’s future debt that expressly provides for its subordination to the 10.50 % 2027 Senior Secured Notes;

(iii) effectively subordinated to any existing and future debt of the Company that is secured by liens on property and assets that do not constitute collateral, to the extent of the value of such property and assets;

and (iv) structurally subordinated to any existing and future debt and other liabilities of the Company’s non-guarantor subsidiaries.

The 10.50 % 2027 Senior Secured Notes are secured by a first priority lien on substantially all of the Company’s assets and the assets of the Subsidiary Guarantors (except for certain “Excluded Assets,” and subject to certain “Permitted Liens,” each as defined in the 10.50 % 2027 Senior Secured Notes Indenture), including, without limitation:

• all equity interests owned by the Company or a Subsidiary Guarantor (which, in the case of any equity interest in a foreign subsidiary, will be limited to 65 % of the voting stock of such foreign subsidiary if the pledge thereof would result in adverse tax consequences that are material to the value of the collateral);

• all equipment, goods, inventory and fixtures owned by the Company or a Subsidiary Guarantor;

• all accounts, cash, deposit accounts and investment securities owned by the Company or a Subsidiary Guarantor;

• all documents, books and records, instruments and chattel paper owned by the Company or a Subsidiary Guarantor;

• all general intangibles owned by the Company or a Subsidiary Guarantor;

• all intellectual property and other general intangibles owned by the Company or a Subsidiary Guarantor;

• any proceeds and supporting obligations thereof.

No Sinking Fund.

The Company is not required to make any sinking fund payments with respect to the 10.50 % 2027 Senior Secured Notes.

Optional Redemption.

The Company has the option to redeem some or all of the 10.50 % 2027 Senior Secured Notes at a redemption price equal to 100 % of the principal amount plus accrued and unpaid interest, if any, to, but not including, the redemption date.

Asset Sale Offer.

If the Company completes certain assets sales, the Company 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.

Change of Control.

If a Change of Control (as defined in the 10.50 % 2027 Senior Secured Notes Indenture) occurs, the Company will be required to make an offer to purchase the 10.50 % 2027 Senior Secured Notes for cash at a price equal to 101 % of the aggregate principal amount of such 10.50 % 2027 Senior Secured Notes on the date of purchase, plus any accrued and unpaid interest to the date of repurchase.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The Secured Indenture permits the Company, under specified circumstances, to incur additional debt in the future that could equally and ratably share in the collateral.

The amount of such debt is limited by the covenants contained in the Secured Indenture.

Restricted Payments.

The Secured Indenture contains specific covenants which restrict the Company's ability and the ability of its restricted subsidiaries (as defined in the Secured Indenture) to incur certain additional indebtedness;

make certain dividends, distributions, investments and other restricted payments;

repay certain debt;

sell certain assets;

or enter into certain transactions with affiliates.

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

At December 31, 2024, the Company was in compliance with all covenants contained in the 2026 Senior Secured Notes.

Certain Covenants.

The 10.50 % 2027 Senior Secured Notes Indenture contains covenants limiting, among other things, the ability of the Company, and, in certain cases, the Company’s subsidiaries, 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 the Company had 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, the Company has thus been required to commence a sales process for DBMG.

The sales process for DBMG has separate milestone requirements, which the Company has 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.

Events of Default.

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

The 10.50 % 2027 Senior Secured Notes Indenture contains customary events of default which could, subject to certain conditions, cause the 10.50 % 2027 Senior Secured Notes to become immediately due and payable, including, but not limited to defaults by the Company in the payment of the principal of any the 10.50 % 2027 Senior Secured Notes when the same becomes due and payable at maturity, upon acceleration or redemption, or otherwise (other than pursuant to an offer to purchase by the Company) or in the payment of interest on any note when the same becomes due and payable, and the default continues for a period of 30 days;

failure to comply with certain other covenants in the 10.50 % 2027 Senior Secured Notes Indenture for a period of 60 days following notice by the 10.50 % 2027 Senior Secured Notes Trustee or the holders of at least 30 % in aggregate principal amount of the 10.50 % 2027 Senior Secured Notes then outstanding;

failure to pay or otherwise default on material debt;

or failure to pay final judgments entered by a court or courts of competent jurisdiction aggregating $ 20 million or more (excluding amounts covered by insurance), which judgments are not paid, discharged or stayed, for a period of 60 days;

certain events of bankruptcy or insolvency;

and failure to comply with the milestone covenant described above.

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, the Company 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, the Company had $ 1.9 million aggregate principal amount of the 8.50 % 2026 Senior Secured Notes remaining.

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

The 2026 Senior Secured Notes had a stated annual interest rate of 8.50 % and had an effective interest rate of 9.3 %, which reflected the initial $ 10.8 million of deferred financing fees in 2021, including underwriting fees.

There was a negligible amount and $ 2.8 million of remaining unamortized deferred financing fees as of December 31, 2025 and 2024, respectively.

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 and $ 30.4 million for the years ended December 31, 2025 and 2024, respectively.

8.50 % 2026 Senior Secured Notes Terms and Conditions

The 8.50 % 2026 Senior Secured Notes matured on February 1, 2026.

The 2026 Senior Secured Notes accrued interest at a rate of 8.50 % per year.

Interest on the 2026 Senior Secured Notes was paid semi-annually on February 1 and August 1 of each year.

2027 Convertible Notes

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

Pursuant to the Exchange Agreements, the Company 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 principal amount as of December 31, 2025.

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.

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.

The Convertible Notes Exchanges were made, and the 2027 Convertible Notes were issued, in reliance on a private placement exemption from registration under the Securities Act.

The 2027 Convertible Notes and the shares of common stock issuable upon their conversion have not been and will not be registered under the Securities Act, and the 2027 Convertible Notes and such shares may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from the registration requirements of the Securities Act.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The initial maximum number of securities underlying the 2027 Convertible Notes, assuming the largest “make-whole” addition to the conversion rate under the 2027 Convertible Notes Indenture, and assuming that the Company has obtained the requisite stockholder approval referred to above, is 1,543,174 shares of the Company’s common stock.

As of December 31, 2025, each $1,000 of principal of the 2027 Convertible Notes is convertible into 23.6327 shares of our common stock, for a total of 1,263,308 shares of common stock, which is equivalent to a conversion price of approximately $ 42.31 per share, as adjusted for the reverse stock split in 2024 and subject to further adjustment upon the occurrence of specified events.

Based on the closing price of our common stock on December 31, 2025, the if-converted value of the 2027 Convertible Notes did not exceed its principal value.

The convertible notes exchange was determined to be a modification of debt under ASC 470-50, as the terms of the debt were not determined to be substantially different, including taking into consideration the ability to prepay the 2027 Convertible Notes at any time.

Pursuant to ASC 470-50, because the exchange was deemed to be a modification and the fair value of the embedded conversion feature (evaluated under ASC 815-40 and determined not to be bifurcated as a derivative) increased, the carrying amount of the debt was adjusted accordingly, with a corresponding $ 0.5 million credit recorded to additional paid-in capital ("APIC").

Therefore, the following amounts were recorded as an OID or deferred financing cost and are being amortized into interest expense over the term of the new 2027 Convertible Notes using the effective interest rate method:

total new fees and additional interest of $ 2.9 million payable to the lenders and capitalized into the principal amount for the convertible notes exchanged, remaining unamortized deferred financing fees of $ 0.2 million allocated from the 2026 Convertible Notes exchanged, and a discount of $ 0.5 million, attributable to the increase in fair value of the embedded conversion option, offset partially by $ 2.4 million in remaining unamortized premiums allocated from the 2026 Convertible Notes exchanged.

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

Aggregate interest expense, including the contractual interest coupon and amortization was $ 2.4 million for the year ended December 31, 2025.

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

2027 Convertible Notes Terms and Conditions

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

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

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

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

Issue Price .

The issue price of the 2026 Convertible Notes was 100 % of par.

The notes are the Company’s general unsecured and unsubordinated obligations and will rank equally in right of payment with all of the Company’s existing and future unsecured and unsubordinated indebtedness, and senior in right of payment to any of the Company’s future indebtedness that is expressly subordinated to the notes.

The notes will be effectively subordinated to all of the Company’s existing and future secured indebtedness, including the Company’s 2026 Senior Secured Notes, to the extent of the value of the collateral securing that indebtedness, and structurally subordinated to all indebtedness and other liabilities of the Company’s subsidiaries, including trade credit.

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 will be paid in kind.

All subsequent interest payments are payable in cash.

The 2027 Convertible Notes constitute a secured and second-priority lien obligation of the Company.

The 2027 Convertible Notes and the note guarantees will rank:

(i) junior in right of payment with all existing and future first-lien debt of the Company and the Subsidiary Guarantors (including the 10.50 % 2027 Senior Secured Notes, the 2020 Revolving Credit Agreement and the guarantees thereof) and effectively senior to all unsecured or third-lien debt of the Company to the extent of the value of the collateral;

(ii) senior in right of payment to all of the Company’s future debt that expressly provides for its subordination to the 2027 Convertible Notes;

and (iv) structurally subordinated to any existing and future debt and other liabilities of the Company’s non-guarantor subsidiaries.

The 2027 Convertible Notes are secured by a second priority lien on substantially all of the Company’s assets and the assets of the Subsidiary Guarantors (except for certain “Excluded Assets,” and subject to certain “Permitted Liens,” each as defined in the 2027 Convertible Notes Indenture), including, without limitation:

• all equipment, goods, inventory and fixtures owned by the Company or a Subsidiary Guarantor;

• all accounts, cash, deposit accounts and investment securities owned by the Company or a Subsidiary Guarantor;

• all documents, books and records, instruments and chattel paper owned by the Company or a Subsidiary Guarantor;

• all intellectual property and other general intangibles owned by the Company or a Subsidiary Guarantor;

• any proceeds and supporting obligations thereof.

No Sinking Fund.

The Company is not required to make any sinking fund payments with respect to the 2027 Convertible Notes.

Optional Redemption.

As of August 1, 2023 and thereafter, the Company may redeem for cash all of the notes if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (which need not be consecutive trading days) during any 30 consecutive trading-day period ending within five trading days prior to the date on which the Company provides notice of redemption.

The redemption price will equal 100 % of the principal amount of the notes being redeemed, plus accrued and unpaid interest, including additional interest, if any, to, but excluding, the redemption date.

The Company may redeem the 2027 Convertible Notes in whole or in part, for cash.

The redemption price will equal 100 % of the principal amount of the 2027 Convertible Notes being redeemed, plus accrued and unpaid interest, including additional interest, if any, to, but excluding, the redemption date.

Asset Sale Offer.

If the Company completes certain assets sales, the Company may be required in certain circumstances to make an offer to purchase the 2027 Convertible Notes with the net cash proceeds from such an asset sale (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, and all other Senior Debt) 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.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Fundamental Change.

If the Company undergoes a Fundamental Change (as defined in the 2027 Convertible Notes Indenture), subject to certain conditions, the Company may be required to purchase all or any portion of the 2027 Convertible Notes for cash.

The Fundamental Change purchase price will be 100 % of the principal amount of the 2027 Convertible Notes to be purchased, plus any accrued and unpaid interest, including additional interest, if any, to, but excluding, the Fundamental Change Purchase Date (as defined in the 2027 Convertible Notes Indenture).

The Fundamental Change definition excludes ownership of the Company’s equity by Lancer Capital LLC and its affiliates.

Certain Covenants.

The 2027 Convertible Notes Indenture contains covenants limiting, among other things, the ability of the Company, and, in certain cases, the Company’s subsidiaries, 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.

Conversion Rights.

The 2026 Convertible Notes are convertible into shares of the Company’s common stock based on a conversion rate of 23.6327 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to a conversion price of approximately $ 42.31 per share of the Company’s common stock), at any time prior to the close of business on the business day immediately preceding the maturity date, in principal amounts of $1,000 or an integral multiple of $1,000 in excess thereof.

In addition, following a Make-Whole Fundamental Change (as defined in the Convertible Indenture) or the Company’s delivery of a notice of redemption for the 2026 Convertible Notes, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2026 Convertible Notes in connection with (i) such Make-Whole Fundamental Change or (ii) such notice of redemption.

However, to comply with certain listing standards of the NYSE, the Company will settle in cash its obligation to increase the conversion rate in connection with a Make-Whole Fundamental Change or redemption until it has obtained the requisite stockholder approval.

The 2027 Convertible Notes will be convertible into cash, shares of the Company’s common stock, or a combination thereof, at the Company’s election, based on an initial conversion rate of 23.6327 shares of common stock per $1,000 principal amount of 2027 Convertible Notes (equivalent to an initial conversion price of approximately $ 42.31 per share of the Company’s common stock), at any time prior to the close of business on the business day immediately preceding the maturity date, in principal amounts of $1,000 or an integral multiple of $ 1.00 in excess thereof.

In addition, following a Make-Whole Fundamental Change (as defined in the 2027 Convertible Notes Indenture) or the Company’s delivery of a notice of redemption for the 2027 Convertible Notes, the Company will, in certain circumstances, be required to increase the conversion rate for a holder who elects to convert its 2027 Convertible Notes in connection with (i) such Make-Whole Fundamental Change or (ii) such notice of redemption.

Events of Default.

The Convertible Indenture contains customary events of default which could, subject to certain conditions, cause the 2026 Convertible Notes to become immediately due and payable.

As of December 31, 2024, the Company was in compliance with all covenants contained in the 2026 Convertible Notes.

Revolving Credit Agreement

MSD PCOF Partners IX, LLC

The maturity date of the Revolving Line of Credit, as amended on May 6, 2024, was 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.

Obligations under the Revolving Credit Agreement constitute a First-Out Debt, as defined in the Secured Indenture, and are secured on a pari passu basis with the 2026 Senior Secured Notes.

The 2027 Convertible Notes Indenture contains customary events of default, including cross-default provisions with other INNOVATE debt instruments, which could, subject to certain conditions, cause the 2027 Convertible Notes to become immediately due and payable, including, but not limited to defaults by the Company in the payment of the principal of any the 2027 Convertible Notes when the same becomes due and payable at maturity, upon acceleration or redemption, or otherwise or in the payment of interest on any note when the same becomes due and payable, and the default continues for a period of 30 days;

failure to comply with certain other covenants in the 2027 Convertible Notes Indenture for a period of 60 days following notice by 2027 Convertible Notes Trustee or the holders of at least 25 % in aggregate principal amount of the 2027 Convertible Notes then outstanding;

failure to pay or otherwise default on material debt;

and certain events of bankruptcy or insolvency.

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, the Company 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, the Company has $ 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 were issued in 2021 at 100 % of par with a stated annual interest rate of 7.50 %.

The fair value of the embedded conversion feature contained in the 2026 Convertible Notes had an initial fair value of $ 12.3 million, which was recorded as a premium on the 2026 Convertible Notes.

The 2026 Convertible Notes had an initial effective interest rate of 3.21 %, which reflected the initial $ 12.3 million premium and $ 1.1 million of deferred financing fees.

As of December 31, 2025, the remaining 2026 Convertible Notes had a net carrying value of $ 0.2 million.

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

As of December 31, 2024, the 2026 Convertible Notes had a net carrying value of $ 52.3 million, inclusive of an unamortized premium of $ 3.8 million and unamortized deferred financing costs of $ 0.4 million.

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

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 and $ 1.7 million for the years ended December 31, 2025 and 2024, respectively.

Each $1,000 of principal of the 2026 Convertible Notes is convertible into 23.6327 shares of INNOVATE's common stock, which is equivalent to a conversion price of approximately $ 42.31 per share, for a total of 3,781 shares of common stock, as adjusted for the reverse stock split in 2024, and subject to further adjustment upon the occurrence of specified events.

Based on the closing price of our common stock on December 31, 2025, the if-converted value of the 2026 Convertible Notes did not exceed its principal value.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

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.

Revolving Line of Credit

The Company has a revolving credit agreement with MSD PCOF Partners IX, LLC ("MSD"), which has a maximum commitment of $ 20.0 million ("Revolving Line of Credit").

As of both December 31, 2025 and 2024, the outstanding balance was $ 20.0 million.

The maturity date of the Revolving Line of Credit, as amended on August 4, 2025, is September 15, 2026.

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 and 2024, the effective interest rate on the Revolving Line of Credit, as amended, was 10.0 % and 10.6 %, respectively.

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 on 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.

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 maturity date or date of prepayment of the debt.

The August 4, 2025 amendment was determined to be a modification of debt under ASC 470-50, as the product of the borrowing capacity and remaining term of the amended Revolving Line of Credit was greater than the product of the borrowing capacity and remaining term of the Revolving Line of Credit under the terms immediately prior to the amendment.

As such, the $ 0.4 million extension fee and third-party legal costs of $ 0.3 million incurred under the amendment will be amortized into interest expense over the term of the Revolving Line of Credit.

Revolving Credit Agreement Terms and Conditions

Obligations under the Revolving Credit Agreement constitute First-Out Debt, as defined in the Secured Indenture, and are secured on a pari passu basis with the 2027 Senior Secured Notes.

As provided under a Collateral Trust Joinder, the lender was added as a secured party to the Collateral Trust Agreement, and accordingly the pari passu obligations and commitments under the Revolving Credit Agreement are secured equally and ratably by the collateral of the Secured Notes.

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

CGIC Promissory Note

On August 4, 2025, the Company and CGIC entered into a Subordinated Secured Promissory Note 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 monthly 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 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”).

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.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

2026 Unsecured CGIC Note:

The 2026 Unsecured CGIC Note matures on February 28, 2026.

The 2026 Unsecured CGIC Notes accrued interest at a rate 9 % per year through May 8, 2024, and accrues at 16 % per year from May 9, 2024 to May 8, 2025, and 32 % per year thereafter.

Interest on the 2026 Convertible Notes is paid monthly, on the last day of each month or next succeeding business day.

The original CGIC subordinated unsecured promissory note, which was entered into in 2023 in connection with the redemption of DBM Global Intermediate Holdco Inc.'s Series A Fixed-to-Floating Rate Perpetual Preferred Stock (the “DBMGi Series A Preferred Stock”), had a principal amount of $ 35.1 million, an original maturity date of February 28, 2026, and bore interest at 9.0 % per annum through May 8, 2024, 16.0 % per annum from May 9, 2024 to May 8, 2025, and 32.0 % per annum thereafter.

As of December 31, 2024, the effective interest rate on the note, as adjusted, was 17.5 %.

The CGIC note required a mandatory prepayment from the proceeds from certain asset sales and the greater of $ 3.0 million or 12.5 % of the net proceeds from certain equity sales.

As a result of the closing of the rights offering and concurrent private placement in 2024 (refer to Note 16.

Equity and Temporary Equity), INNOVATE redeemed $ 4.1 million of the CGIC Note on April 26, 2024.

The mandatory prepayment requirement for certain equity sales was removed under the August 4, 2025 amendment.

The August 4, 2025 amendment, including the Preferred Stock Exchange, was determined to be a troubled debt restructuring under ASC 470-60, because INNOVATE was deemed to be experiencing financial difficulty, and according to the substantial changes under the amendment, the lender was deemed to have granted a concession.

However, no gain or loss on the amendment was recorded, as the future undiscounted cash flows under the amended terms were greater than the net carrying value of the note, preferred stock and accrued dividends prior to the amendment.

A new effective interest rate was established based on the carrying values of the original debt, preferred stock, accrued dividends, and the revised future cash flows, which is inclusive of the extension fee.

The new extension fee was recorded as an OID to the carrying amount of the note and is being amortized into interest expense over the term of the CGIC Note using the effective interest rate method.

For the years ended December 31, 2025 and 2024, interest expense recognized relating to the CGIC Note, including the contractual interest coupon and amortization of the discount, was $ 5.9 million and $ 5.7 million, respectively, and cash paid for interest to CGIC was $ 3.2 million and $ 4.6 million, respectively.

Subsequent to August 4, 2025, in accordance with the terms of the amended CGIC Note, $ 2.9 million of interest was capitalized into the principal balance.

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.

As of December 31, 2024, the total carrying amount of the note was $ 31.0 million and accrued interest payable was $ 3.4 million.

CGIC Note Terms and Conditions

Issue Price .

The issue price of the 2026 Unsecured CGIC Notes was 100 % of par.

The issue price of the CGIC Note was 100 % of par.

The note is a part of the Company’s general unsecured and unsubordinated obligations and will rank equally in right of payment with all of the Company’s existing and future unsecured and unsubordinated indebtedness, and senior in right of payment to any of the Company’s future indebtedness that is expressly subordinated to the notes.

The notes will be effectively subordinated to all of the Company’s existing and future secured indebtedness, including the Company’s 2026 Senior Secured Notes, 2026 Convertible Notes and structurally subordinated to all indebtedness and other liabilities of the Company’s subsidiaries, including trade credit.

Optional and Mandatory Prepayments.

The Company may prepay the entire note or a portion thereof at any time, without incurring penalties or premiums.

Such prepayments must cover the principal amount along with accrued interest up to the prepayment date, as well as any other outstanding amounts under the note.

Any prepaid amount cannot be re-borrowed.

The CGIC Unsecured Note also requires a mandatory prepayment from the proceeds from certain asset sales and the greater of $ 3.0 million or 12.5 % of the proceeds from certain equity sales.

The notes will be effectively subordinated to all of the Company’s existing and future secured indebtedness, including the Company’s 2027 10.50 % Senior Secured Notes, 2026 8.50 % Senior Secured Notes, 2027 Convertible Notes, 2026 Convertible Notes and structurally subordinated to all indebtedness and other liabilities of the Company’s subsidiaries, including trade credit.

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.

Optional Prepayments.

Subject to subordination to the Company's Senior Debt, and as long as the Borrower is not in default on any of the Senior Debt and such payment does not result in default on any of the Senior Debt, the Company may prepay the CGIC Note in whole or in part at any time or from time to time without penalty or premium by paying the principal amount to be prepaid together with accrued and unpaid interest thereon to the date of prepayment and all other amounts payable under this CGIC Note.

Events of Default .

The note contains customary events of default and contains cross-default provisions with the Company's Unsecured Indenture and Senior Debt which could, subject to certain conditions, cause the note to become immediately due and payable.

The note contains customary events of default and contains cross-default provisions with other INNOVATE debt instruments which could, subject to certain conditions, cause the note to become immediately due and payable.

INNOVATE is in compliance with its debt covenants as of December 31, 2025.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The income tax expense (benefit) for income taxes for the years indicated were as follows (in millions):

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Foreign ( 0.4 ) 0.3

Net deferred tax expense (benefit)

Net deferred tax (benefit) expense

$ ( 0.1 ) $ 0.5

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$ ( 61.5 ) $ ( 33.4 )

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

For the years indicated, the income tax expense differed from the amount computed by applying the federal statutory income tax rate to income (loss) before income taxes due to the following items (in millions):

The following table is a reconciliation of the U.S.

federal statutory rate of 21% to the Company’s effective rate for the year ended December 31, 2025 in accordance with the guidance in ASU No.

2023-09 (in millions):

Year Ended December 31, 2025

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State tax, net of federal benefit (1)

1.9 ( 3.1 ) %

Foreign Tax Effects 0.3 ( 0.5 ) %

Increase (decrease) in valuation allowance 12.7 ( 20.7 ) %

Non-taxable or non-deductible items:

Non-deductible meals and entertainment 0.7 ( 1.1 ) %

Other Adjustment:

Other ( 0.2 ) 0.3 %

Income tax expense $ 2.5 ( 4.1 ) %

(1) State taxes in New York, California, and Louisiana made up the majority (greater than 50%) of the tax effect in this category.

The following table is a reconciliation of the U.S.

federal statutory rate of 21% to the Company’s effective rate for the years ended December 31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09 (in millions):

Year Ended December 31, 2024

Tax (benefit) at federal statutory rate $ ( 7.0 )

State tax, net of federal benefit ( 1.3 )

Non-deductible meals and entertainment 0.5

Executive and stock compensation 2.1

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Return to provision ( 3.8 )

Foreign withholding tax expense — 4.4

Gain on sale of investment — 0.5

Outside basis differences — ( 6.9 )

Other 0.9 0.7

Income tax expense $ 6.3

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Income tax expense of $ 2.5 million for the year ended December 31, 2025, primarily relates to the tax expense for taxpaying entities for which there was a decrease in tax expense due to the decrease in pre-tax results.

Additionally, the tax benefits associated with losses generated by certain other businesses have been reduced by a full valuation allowance as management does not believe it is more-likely-than-not that the losses will be utilized.

Income tax expense of $ 6.3 million for the year ended December 31, 2024, primarily relates to the tax expense for taxpaying entities, for which there was an increase in current federal tax expense due to INNOVATE's U.S.

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tax consolidated group and certain other businesses have been reduced by a full valuation allowance as the Company does not believe it is more-likely-than not that the losses will be utilized prior to expiration.

Income tax expense of $ 4.5 million for the year ended December 31, 2023, primarily relates to the tax expense for taxpaying entities and includes a $ 1.1 million net tax benefit, consisting of a current tax expense of $ 4.4 million related to a foreign withholding 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 HMN put option agreement and the expected foreign withholding taxes on the book over tax outside basis difference in the investment, both of which were related to the sale of New Saxon's 19 % investment in HMN on March 6, 2023.

Additionally, the tax benefits associated with losses generated by the INNOVATE Corp.

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.

The following table presents income taxes paid, net of refunds, for the year ended December 31, 2025, based on the adoption of ASU 2023-09 (in millions):

Year Ended December 31, 2025

Amount Percent

Federal $ 0.9 14.0 %

California 1.5 23.4 %

New York 1.2 18.8 %

Louisiana 0.8 12.5 %

Other state jurisdictions 1.2 18.8 %

Canada 0.5 7.8 %

Other foreign jurisdictions 0.3 4.7 %

Total income taxes paid, net of refunds

$ 6.4 100.0 %

INNOVATE CORP.

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163(j) carryforward 74.4 68.3

Deferred Interest

Lease liability 15.5 15.7

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If it is determined that the deferred tax assets cannot be realized, a valuation allowance must be established, with a corresponding charge to net income (loss).

The Company establishes valuation allowances for deferred tax assets that, in its judgment are not more likely-than-not realizable.

These judgments are based on projections of future income or loss and other positive and negative evidence by individual tax jurisdiction.

The Company records valuation allowances for deferred tax assets when, based on management's judgment, it is more likely than not that such assets will not be realized.

This assessment is based on projections of future income or loss and other positive and negative evidence by individual tax jurisdiction.

Changes in industry and economic conditions and the competitive environment may impact these projections.

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Thus, it is more likely than not that the group’s US deferred tax assets will not be realized.

Valuation allowances have been maintained against deferred tax assets based on losses generated by certain businesses that do not qualify to be included in the INNOVATE Corp.

However, as the Company executes potential sales of subsidiaries, management expects that such event would likely provide sufficient positive evidence to support the realization of certain deferred tax assets, which could result in a material release of the Company’s valuation allowance.

Valuation allowances have been maintained against deferred tax assets based on losses generated by certain businesses that are not included in the INNOVATE Corp.

consolidated income tax return.

Generally, consolidation rules under the Internal Revenue Code require consolidation of like-kind entities with an 80% or greater equity ownership, and each individual state or foreign jurisdiction has their own distinct consolidation rules which vary.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

As of December 31, 2025, the Company has not recognized any deferred tax liabilities associated with undistributed earnings of its foreign subsidiaries, as these earnings are considered permanently reinvested.

Determination of the amount of unrecognized deferred income tax liability is not practicable because of the complexities associated with its hypothetical calculation.

Determination of the amount of unrecognized deferred income tax liability is not practicable due to the complexities associated with its hypothetical calculation.

Upon distribution of those earnings in the form of dividends or otherwise, the Company may be subject to U.S.

income taxes and withholding taxes payable in various foreign jurisdictions, which could potentially be offset by foreign tax credits.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Net Operating Losses

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NOL carryforwards from its subsidiaries that do not qualify to be included in the INNOVATE U.S.

consolidated income tax return, including $ 102.8 million from R2, $ 44.1 million from DTV America, and other entities of $ 2.5 million.

consolidated income tax return, including $ 115.7 million from R2 Technologies, $ 45.9 million from DTV, and other entities of $ 2.7 million.

Of the $ 164.3 million of gross U.S.

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382 of approximately $ 2.3 million.

On November 4, 2015, INNOVATE issued 8.5 million shares of its stock in a primary offering.

The Company believes the issuance resulted in a Section 382 ownership change and $ 31.7 million gross U.S.

NOLs recorded in the consolidated financial statements are subject to IRC Sec.

The purchase of GrayWolf on November 30, 2018 triggered a Section 382 ownership change.

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The Company did not have any unrecognized tax benefits as of December 31, 2025 and 2024, related to uncertain tax positions that would impact the effective income tax rate if recognized.

The Company has reduced the NOL carryforward by $ 58.7 million for uncertain tax positions based on our interpretation of tax laws and regulations that are subject to varied interpretation by the IRS.

Below is a tabular reconciliation of the total amount of unrecognized tax benefits as of the years indicated (in millions):

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Tax years 2002-2024 remain open for examination.

The Company is currently under examination in various domestic and foreign tax jurisdictions.

The open tax years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, character, timing or inclusion of revenue and expenses or the applicability of income tax credits for the relevant tax period.

Given the nature of tax audits, there is a risk that disputes may arise.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The Company is currently under examination in various state and foreign tax jurisdictions.

Given the nature of tax audits, there is a risk that disputes may arise.

Commitments and Contingencies

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Any legal or other expenses associated with the litigation are accrued for as the expenses are incurred.

The Company maintains liability insurance that insures it against workers’ compensation, personal and bodily injury, property damage, directors’ and officers’ liability, errors and omissions, cyber liability, employment practices liability.

There can be no assurance that the liability insurance will cover all events or that the limits of coverage will be sufficient to fully cover all liabilities.

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While acknowledging the uncertainties of litigation, management believes that the ultimate outcome of litigation will not have a material effect on its financial position and will defend itself vigorously.

DTV Derivative Litigation

On March 15, 2021, holders of DTV stock and options filed a stockholder class action and derivative complaint in the Delaware Court of Chancery in an action styled Bocock, et al., v.

HC2 Holdings, Inc.

2021-0224 (Del.

Plaintiffs asserted claims for breach of fiduciary duty, aiding and abetting breaches of fiduciary duty, and waste against, among others, INNOVATE (f/k/a HC2 Holdings, Inc.), certain of INNOVATE’s subsidiaries, and certain current and former DTV officers and directors in connection with certain sales and purchases of broadcast stations and licenses.

Defendants moved to dismiss the complaint in its entirety.

On October 28, 2022, the Court issued a Memorandum Opinion granting in part and denying in part Defendants’ motions to dismiss.

On February 14, 2024, the plaintiffs amended their complaint to further narrow their claims.

On July 22, 2024, the parties reached an agreement in principle to settle the litigation for $ 125,000 .

The parties have submitted the settlement for Court approval, which is pending.

GrayWolf Collective Action Claim

On March 24, 2026, a subsidiary of DBM Global, GrayWolf Integrated Construction Company, received a draft of a purported Collective Action Complaint entitled Hilario Riviera, Individually and for Others Similarly Situated v.

GrayWolf Integrated Construction Company (the "Draft Complaint") alleging that GrayWolf failed to properly pay Riviera for all hours worked because GrayWolf automatically rounded the punch in and punch out times for work to the nearest half hour for GrayWolf’s own primary benefit and to the detriment of Riviera and other hourly employees.

The Draft Complaint also states that GrayWolf paid Riviera and other hourly employees “per diems,” not reasonably calculated to reimburse expenses and based on time worked, but GrayWolf excluded “per diems” from their regular rate of pay for overtime purposes.

The action is purported to be brought under the Fair Labor Standards Act (the "FLSA") on behalf of hourly employees for the last three years who had wages rounded or received "per diems".

GrayWolf intends to enter into a “Tolling Agreement” with the Plaintiff to stay any statute of limitations while GrayWolf investigates this matter and expects that it will vigorously contest the allegations.

Accordingly, the Company cannot reasonably estimate any range of potential loss at this time.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Marin General Hospital Replacement Litigation

On October 20, 2022, McCarthy Building Companies, Inc.

(“McCarthy”) filed suit against Schuff Steel Company (“Schuff”), a subsidiary of DBMG, and Quality Assurance Engineering, Inc.

dba Consolidated Engineering Laboratories (“CEL”) in the Superior Court of the State of California for the County of Marin, styled McCarthy Building Companies, Inc.

Schuff Steel Company;

Quality Engineering, Inc.

dba Consolidated Engineering Laboratories, et al., Case No.

CIV2203963 (the “Action”).

In the Action, McCarthy alleges damages and delays caused by alleged failures in fabrication, erection, welding, and quality control by Schuff and improper quality assurance responsibilities by CEL on the Marin General Hospital Replacement Building (the “Project”).

McCarthy asserts claims against Schuff for breach of contract, express indemnity, breach of express warranties, negligence, equitable implied indemnity, breach of implied warranties, and declaratory relief.

On February 13, 2023, Schuff filed its response denying liability to McCarthy and asserting a Cross-Complaint against McCarthy, and other companies involved in the design, construction, and quality assurance, who potentially are liable for damages and delays alleged by McCarthy on the Project.

In the Cross-Complaint, Schuff asserts claims for breach of contract, violation of statute, equitable indemnity apportionment, and contribution and express indemnity (the “Cross-Complaint”).

Schuff intends to vigorously defend this Action and aggressively pursue the Cross-Complaint and cannot reasonably estimate any range of potential loss at this time.

Meruelo Television Litigation

On August 8, 2023, Meruelo Television, LLC (“Plaintiff”) commenced a lawsuit in the Superior Court of the State of California, Los Angeles County, subsequently removed to federal court in the U.S.

District Court for the Central District of California, titled Meruelo Television, LLC v.

HC2 Network, Inc.

(C.D.Cal.) Case No.

2:23-cv-08184-AB-BFM (the “Lawsuit”), asserting claims against defendants HC2 Network, Inc.

(“HC2”) and INNOVATE Corp.

(“INNOVATE” or the “Company” and, together with HC2, the “Defendants”).

On April 9, 2024, Plaintiff and Defendants filed in the Lawsuit a Stipulation of Dismissal, as so-ordered by the Court on April 16, 2024, whereby Plaintiff dismissed without prejudice its claims as against INNOVATE, while retaining its claim against HC2.

On October 28, 2024, the parties stipulated to dismiss the remaining claims in the Lawsuit.

On November 1, 2024, the Court entered an Order dismissing of the Lawsuit with prejudice.

Other Commitments and Contingencies

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DBMG’s performance bonds are obtained through surety companies and typically cover the entire project price.

The ratings of the bonding companies utilized by DBMG are highly rated, ranging from A-, A, A+ and AA.

The ratings of the bonding companies utilized by DBMG are highly rated, ranging from A-, A, A+, AA- and AA.

Concentrations of Credit Risk

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The Company performs ongoing credit evaluations of the customers' financial condition and generally does not require collateral to support customer receivables.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The Company's revenue and accounts receivable concentrations of 10% and greater were as follows:

The Company's revenue, accounts receivable and accounts payable concentrations of 10% and greater were as follows:

Year Ended December 31,

Segment Revenue Accounts Receivable Revenue Accounts Receivable

Segment Revenue Accounts Receivable Accounts Payable Revenue Accounts Receivable Accounts Payable

Customer A Infrastructure 13.1 % 29.6 % * *

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Infrastructure * * * 10.3 %

Infrastructure 23.3 % *

Infrastructure * 15.2 %

Infrastructure * 15.5 %

*Less than 10% concentration

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The Company made aggregate matching contributions of $ 2.8 million for the year ended December 31, 2024, of which $ 1.1 million was reflected as a component of Cost of revenue in the Consolidated Statements of Operations, and $ 1.7 million was reflected as a component of Selling, general and administrative in the Consolidated Statements of Operations.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Multi-Employer Plans

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The Company made contributions to various multi-employer pension plans totaling $ 6.5 million and $ 9.8 million during the years ended December 31, 2025 and 2024, respectively, which was reflected as a component of Cost of revenue in the Consolidated Statements of Operations.

Amounts contributed to the multi-employer pension plans can vary depending on a combination of when and in which state the erection phase of the Company's projects occur.

The decrease in contributions for the year ended December 31, 2025 was due to the timing of work being done on the erection phase of our projects in states with higher contribution rates such as California and New York.

As of December 31, 2025, approximately 23.9 % of DBMG’s employees are covered under various collective bargaining agreements.

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Subject to adjustment as provided in the Second A&R 2014 Plan, the Second A&R 2014 Plan authorized the issuance of up to 3,500,000 shares of common stock of INNOVATE, plus any shares that again become available for awards under the 2014 Plan or the Restated 2014 Plan.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The Second A&R 2014 Plan provides that no further awards will be granted pursuant to the 2014 Plan or the Restated 2014 Plan.

7 unchanged sentences

As of December 31, 2025, 97,895 shares for awards remain available for issuance under the Second A&R 2014 Plan, as amended.

Total share-based compensation expense recognized by the Company and its subsidiaries under all equity compensation arrangements was $ 3.4 million and $ 2.2 million for the years ended December 31, 2024 and 2023, respectively, which is reflected as a component of Selling, general and administrative expenses in the Consolidated Statements of Operations.

All grants are time based and vest either immediately or over a period established at grant, typically with a requisite service period of one to three years for a member of the Board of Directors or an employee to vest in the stock-based award, subject to discretion by Compensation Committee.

Total share-based compensation expense recognized by the Company and its subsidiaries under all equity compensation arrangements was $ 2.7 million and $ 3.4 million for the years ended December 31, 2025 and 2024, respectively, which is included within Selling, general and administrative expenses in the Consolidated Statements of Operations.

All grants are time based and vest either immediately or over a period established at grant, typically with a requisite service period of one to three years for a member of the Board of Directors or an employee to vest in the share-based award, subject to discretion by Compensation Committee.

There are no other substantive conditions for vesting.

The Company recognizes compensation expense for equity awards, reduced by actual forfeitures as they are incurred, using the straight-line basis.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Restricted Stock and Restricted Stock Units

A summary of INNOVATE’s restricted stock and restricted stock unit activity (as adjusted for the Reverse Stock Split) is as follows:

A summary of INNOVATE’s restricted stock and restricted stock unit activity is as follows:

Number of Shares

3 unchanged sentences

Vested ( 246,355 ) $ 8.05

Unvested - December 31, 2023 62,572 $ 29.48

Granted 367,681 $ 6.15

Vested ( 135,590 ) $ 12.64

Forfeited ( 12,521 ) $ 7.99

Unvested - December 31, 2025 314,176 $ 6.22

The aggregate vesting date fair value of the restricted stock and restricted stock units which vested during the years ended December 31, 2025 and 2024, was $ 1.3 million and $ 0.9 million, respectively.

As of December 31, 2024, the total unrecognized stock-based compensation expense related to unvested restricted stock and restricted stock units was $ 1.4 million and is expected to be recognized over the remaining weighted-average period of 1.0 year.

As of December 31, 2025, the total unrecognized share-based compensation expense related to unvested restricted stock and restricted stock units was $ 1.1 million and is expected to be recognized over the remaining weighted-average period of 0.9 years.

Stock Options

A summary of INNOVATE’s stock option activity (as adjusted for the Reverse Stock Split) is as follows:

A summary of INNOVATE’s stock option activity is as follows:

Number of Stock Options

1 unchanged sentence

Outstanding - December 31, 2024 217,733 $ 16.94

Expired ( 35,233 ) $ 31.20

Outstanding and exercisable- December 31, 2023 464,282 $ 51.68

Granted 200,000 $ 14.61

Expired ( 446,549 ) $ 52.02

100,000 $ 5.67

Outstanding - December 31, 2025

2 unchanged sentences

117,733 $ 27.74

As of December 31, 2024, the intrinsic value and weighted-average remaining life of the Company's outstanding and exercisable stock options were zero and approximately 7.9 years, respectively.

Exercisable - December 31, 2025

217,733 $ 16.94

As of December 31, 2025, the intrinsic value and weighted-average remaining life of the Company's outstanding and exercisable stock options were $ 30 thousand and approximately 8.4 years, respectively.

The maximum contractual term of the Company's exercisable stock options is approximately ten years .

As of December 31, 2024, there were 100,000 unvested stock options and $ 0.4 million of unrecognized stock-based compensation expense related to unvested stock options and is expected to be recognized over the remaining period of 0.7 years.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

As of December 31, 2025, there were 100,000 unvested stock options and $ 0.2 million of unrecognized share-based compensation expense related to unvested stock options and is expected to be recognized over the remaining period of 0.8 years.

Interim CEO Equity Awards

On October 29, 2024, when the Plan Amendment became effective, the following awards which were previously awarded to the Company's Interim Chief Executive Officer ("Interim CEO"), that were 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:

On October 29, 2024, when the Plan Amendment became effective, the following awards, which were previously awarded to the Company's Interim Chief Executive Officer ("Interim CEO") and subject to stockholder approval of the Plan Amendment, became effective:

(i) 95,322 of restricted stock unit awards ("RSUs"), 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;

(ii) 100,000 stock 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.

The fair value of each option award was determined on the date of grant using the Black-Scholes option-pricing model using the following assumptions:

December 31, 2024

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

On August 6, 2025, the Interim CEO was awarded 176,056 restricted stock awards ("RSAs") that vest on August 6, 2026.

On September 15, 2025, the Interim CEO was awarded 100,000 stock option awards with a strike price of $ 5.67 and expiration date of September 15, 2035.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The fair value of each stock option award was determined on the date of grant using the Black-Scholes option-pricing model using the following assumptions:

Year Ended December 31,

Stock price at date of grant

$ 4.75 $ 6.27

Expected term

5.1 years - 5.6 years

5.5 years 5.1 years - 5.6 years

Risk-free interest rate

11 unchanged sentences

Equity and Temporary Equity

Authorized Share Capital

The Company held its annual meeting of stockholders on June 18, 2024, where the Company’s stockholders approved an increase in the authorized number of common shares from 160,000,000 to 250,000,000 .

2024 Rights Offering and Concurrent Private Placement

On March 8, 2024, the Company commenced a rights offering ("Rights Offering"), in which 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”), were granted rights to purchase common stock.

In connection with the Rights Offering, the Company entered into an Investment Agreement with Lancer Capital (the "Investment Agreement"), pursuant to which Lancer Capital agreed to purchase up to $ 19.0 million of Series C Preferred Stock as a backstop to the Rights Offering (the "Backstop Commitment") and to purchase $ 16.0 million of Series C Preferred Stock in a private placement transaction ("Concurrent Private Placement").

Lancer Capital is an investment fund led by Avram A.

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

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 for $ 3.7 million.

In addition, 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 were capitalized into Additional paid in capital ("APIC").

On June 18, 2024, the Company's shareholders approved the conversion of the Series C Preferred Stock into common stock, and 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, and there were no shares of the Series C Preferred Stock outstanding subsequent to their conversion into the Company's common stock.

The Series C Preferred Stock was intended to be the economic equivalent of common stock, participating on an as-converted basis in all dividends, distributions, merger consideration and all other consideration receivable by holders of common stock, and a means through which the Backstop Arrangement and Concurrent Private Placement could be effected prior to the completion of the stockholder vote and the satisfaction of any other regulatory requirements.

Prior to the conversion, the holder of the Series C Preferred Stock was entitled to receive dividends anytime the Company declared a dividend on its common stock (excluding dividends consisting in whole or in part of common stock).

The dividend amount would be based on the number of shares (including fractions) of common stock into which the shares of Series C Preferred Stock were convertible on the applicable record date multiplied by the dividend per share declared on the Company's common stock.

On September 30, 2024, the Company filed a Certificate of Elimination to its Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, eliminating from the Second Amended and Restated Certificate of Incorporation all matters set forth in the Certificate of Designation with respect to its Series C Preferred Stock, no shares of which were then issued and outstanding.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

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.

The Reverse Stock Split did not change the $ 0.001 par value per share of the common 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 share 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 these Consolidated Financial Statements have been retroactively adjusted to reflect the one-for-ten Reverse Stock Split as if it had occurred at the beginning of the earliest period presented.

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).

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

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 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.

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 shareholders 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).

See " Series C Preferred Stock " below for additional information.

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).

Unless noted, all share 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, prior to the date of the Reverse Stock Split, presented within these Consolidated Financial Statements have been retroactively adjusted to reflect the 1-for-10 Reverse Stock Split as if it had occurred at the beginning of the earliest period presented.

Preferred Shares

4 unchanged sentences

Series A-4 shares issued and outstanding 1,937 10,000

Series C Preferred Stock

On March 5, 2024, the Company's Board of Directors approved a Certificate of Designation for 35,000 Series C Preferred Stock.

The certificate of designation authorized the existing 20,000,000 shares of preferred stock, par value $ 0.001 to apply to this series.

On March 28, 2024, the Company amended its amended and restated certificate of incorporation by filing the Certificate of Designations of the Series C Preferred Stock with the Secretary of State of the State of Delaware.

The issued Series C Preferred Stock was classified as temporary equity as it was not mandatorily redeemable due to the presence of substantive conversion features and would only have become mandatorily redeemable on the sixth anniversary of initial issuance if not previously converted.

The Series C Preferred Stock was recognized at fair value upon issuance, net of total allocated issuance costs.

As the Series C Preferred Stock was contingently redeemable, subsequent accretion to redemption value including accreted dividends would only have occurred if the contingency was resolved and the redemption had become probable (i.e., if stockholder approval was no longer reasonably possible).

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

On March 28, 2024, INNOVATE issued and sold 25,000 shares of its Series C Preferred Stock, par value $ 0.001 per share for the aggregate purchase price of $ 25.0 million to Lancer Capital.

On April 24, 2024, INNOVATE issued and sold an additional approximately 6,286 shares of its Series C Preferred Stock for the aggregate purchase price of $ 6.3 million to Lancer Capital.

The Series C Preferred Stock became convertible upon the approval of shareholders during the annual shareholder meeting held on June 18, 2024, and consequently the approximately 31,286 Series C Preferred Stock held by Lancer Capital were converted at their conversion price of $ 7.00 ($ 0.70 on a pre Reverse Stock Split basis) into 4,469,390 shares of INNOVATE's common stock ( 44,693,895 on a pre Reverse Stock Split basis).

Prior to the conversion, holders of the Series C Preferred Stock were entitled to receive dividends anytime the Company declared a dividend on its common stock (excluding dividends consisting in whole or in part of common stock).

As of December 31, 2024, there were no Series C Preferred Stock outstanding.

Series A-3 and Series A-4 Shares

3 unchanged sentences

The terms remained substantially the same, except that the Series A-3 and Series A-4 mature on July 1, 2026.

Since the time of issuance of the Series A-3 and Series A-4 Preferred Stock on July 1, 2021, the Series A-3 and Series A-4 have been classified as temporary equity in the Company's Consolidated Balance Sheet, with a combined redemption value of $ 16.1 million and with a current fair value of $ 16.4 million as of December 31, 2024, which is inclusive of the $ 0.3 million accrued dividend payable on January 15, 2025.

On September 30, 2024, the Company filed a Certificate of Elimination to its Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, eliminating from the Second Amended and Restated Certificate of Incorporation all matters set forth in the Certificate of Designation with respect to its Series A Preferred Stock and Series A-2 Preferred Stock, no shares of which were then issued and outstanding.

On August 4, 2025, INNOVATE closed on a Preferred Stock Exchange with CGIC that resulted in the redemption of 8,063 shares of Series A-4 Preferred Stock of the Company and unpaid accrued dividends for the A-3 and A-4 Preferred Stock for an additional principal amount of the CGIC Note.

Refer to Note 11.

Debt Obligations for additional information.

Since the time of issuance of the Series A-3 and Series A-4 Preferred Stock on July 1, 2021, the Series A-3 and Series A-4 Preferred Stock have been classified as temporary equity in the Company's Consolidated Balance Sheet.

After giving effect to the Preferred Stock Exchange in August 2025, the Series A-3 and A-4 Preferred Stock have a combined redemption value of $ 9.3 million and a current fair value of $ 9.6 million as of December 31, 2025, which is inclusive of accreted dividends and $ 0.3 million in accrued cash dividends.

The Series A-3 and Series A-4 Preferred Stock accrue a cumulative quarterly cash dividend at an annualized rate of 7.50 %.

The accrued values of the Series A-3 and Series A-4 Preferred Stock accrete quarterly at an annualized rate of 4.00 % that is reduced to 2.00 % or 0.0 % if the Company achieves specified rates of growth measured by increases in its net asset value;

provided, that the accreting dividend rate will be 7.25 % in the event that (A) the daily volume weighted-average price ("VWAP") of the Company's common stock is less than a certain threshold amount, (B) the Company's common stock is not registered under Section 12(b) of the Securities Exchange Act of 1934, as amended, (C) the Company's common stock is not listed on certain national securities exchanges or the Company is delinquent in the payment of any cash dividends.

provided, that the accreting dividend rate will be 7.25 % in the event that (A) the daily volume weighted-average price ("VWAP") of the Company's common stock is less than a certain threshold amount, (B) the Company's common stock is not registered under Section 12(b) of the Securities Exchange Act of 1934, as amended, or (C) the Company's common stock is not listed on certain national securities exchanges or the Company is delinquent in the payment of any cash dividends.

The Series A-3 and Series A-4 Preferred Stock is also entitled to participate in cash and in-kind distributions to holders of shares of Company's common stock on an as-converted basis.

During the three months ended March 31, 2025, INNOVATE's Board of Directors ("the Board") declared cash dividends with respect to INNOVATE’s issued and outstanding Series A-3 Preferred Stock and Series A-4 Preferred Stock as presented in the following table (in millions):

Declaration Date and Holders of Record Date March 31, 2025

Payment Date April 15, 2025

Total Dividend $ 0.3

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

During the second, third, and fourth quarters of 2025, the Board did not declare any cash dividends with respect to INNOVATE’s issued and outstanding Series A-3 Preferred Stock and Series A-4 Preferred Stock.

Aggregate quarterly dividends of $ 0.7 million, $ 0.5 million, and $ 0.4 million for the second, third, and fourth quarters of 2025, respectively, included the annual cash dividend of 7.5 % per annum which was accrued and also the accreting dividend of 7.25 % per annum.

In addition, during the second quarter of 2025, the Company recorded the accretion and accrual of additional dividends of $ 1.3 million related to prior years, and $ 0.2 million related to the first quarter of 2025.

This included cumulative accreting dividends, which were recorded following the determination that such dividends had accreted due to the daily VWAP of the Company's common stock trading at less than $1 at various dates since 2022, as adjusted for the 2024 Reverse Stock Split.

These adjustments during the second quarter of 2025 that related to prior years resulted in:

(i) an increase in the accrued value of the preferred stock of $ 1.3 million;

(ii) a decrease in Additional Paid-In Capital (APIC) of $ 1.3 million;

(iii) an increase in accrued liabilities of $ 0.1 million;

and (iv) an increase in net loss attributable to common shareholders of $ 1.3 million.

The Company evaluated the effects of the adjustment, both qualitatively and quantitatively, and does not believe the adjustment was material to any current or prior interim or annual periods that were affected.

On August 4, 2025, $ 0.5 million in accrued quarterly dividends was exchanged for an additional principal amount of the CGIC note as part of the Preferred Stock Exchange.

Refer to Note 11.

Debt Obligations for additional information.

During the year ended December 31, 2024, the Board declared cash dividends with respect to INNOVATE’s issued and outstanding Series A-3 Preferred Stock and Series A-4 Preferred Stock as presented in the following table (in millions):

Declaration Date and Holders of Record Date March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024

Payment Date April 15, 2024 July 15, 2024 October 15, 2024 January 15, 2025

Total Dividend $ 0.3 $ 0.3 $ 0.3 $ 0.3

Subsequent Measurement.

3 unchanged sentences

Once the carrying value is equal to the redemption value, the dividends declared are accrued by debiting retained earnings, or if retained earnings is a deficit, then by debiting additional-paid-in-capital.

The Company has a history of paying dividends on its Series A-3 and Series A-4 Preferred Stock and expects to continue to pay such dividends each quarter.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The Company has historically paid cash dividends on its Series A-3 and Series A-4 Preferred Stock and expects to continue to either accrete and accrue or pay such dividends each quarter.

Optional Conversion.

Each share of Series A-3 and Series A-4 may be converted by the holder into shares of the Company's common stock at any time based on the then-applicable conversion price.

Each share of Series A-3 was initially convertible at an accrued value of $ 1,000 per share divided by a conversion price of $ 4.25 (as it may be adjusted from time to time, the "Series A-3 Conversion Price"), and each share of Series A-4 was initially convertible at an accrued value of $ 1,000 per share divided by a conversion price of $ 8.25 (as it may be adjusted from time to time, the "Series A-4 Conversion Price") (collectively the “Conversion Prices” and unadjusted for the Reverse Stock Split).

The Conversion Prices are subject to adjustment for dividends, certain distributions, stock splits, combinations, reclassifications, reorganizations, mergers, recapitalizations and similar events, as well as in connection with issuances of equity or equity-linked or other comparable securities by the Company at a price per share (or with a conversion or exercise price or effective issue price) that is below the Conversion Prices’ (which adjustment shall be made on a weighted-average basis).

Actual conversion prices at the time of the exchange in 2021 were $ 3.52 for the Series A and $ 5.33 for the Series A-2 (on a pre Reverse Stock Split basis).

As a result of the Rights Offering and Concurrent Private Placement, and due to the anti-dilution provisions contained in the terms of the Series A-3 Preferred Stock and Series A-4 Preferred Stock, as of April 24, 2024, the conversion price of the Series A-3 Preferred Stock was adjusted to $ 2.38 (on a pre Reverse Stock Split basis) and the conversion price of the Series A-4 Preferred Stock was adjusted to $ 3.47 (on a pre Reverse Stock Split basis).

As a result of the Reverse Stock Split, the conversion prices were further adjusted, and as of August 8, 2024, the conversion price of the Series A-3 Preferred Stock was adjusted to $ 23.63 , and the conversion price of the Series A-4 Preferred Stock was adjusted to $ 34.40 .

As of December 31, 2025, each share of the Series A-3 Preferred Stock was convertible at an accrued value of $ 1,000 per share, divided by the conversion price of $ 23.63 (as it may be adjusted from time to time, the "Series A-3 Conversion Price"), and each share of Series A-4 Preferred Stock was convertible at an accrued value of $ 1,000 per share divided by the conversion price of $ 34.40 (as it may be adjusted from time to time, the "Series A-4 Conversion Price") (collectively the “Conversion Prices”).

The Conversion Prices have historically been adjusted from time to time and continue to be subject to potential adjustment for dividends, certain distributions, reverse stock splits or stock splits, combinations, reclassifications, reorganizations, mergers, recapitalizations and similar events, as well as in connection with issuances of equity or equity-linked or other comparable securities by the Company at a price per share (or with a conversion or exercise price or effective issue price) that is below the Conversion Prices (which adjustment shall be made on a weighted-average basis).

As of December 31, 2025, the Series A-3 Preferred Stock and Series A-4 Preferred Stock, including the accrued value of accreting dividends, were convertible into 299,518 and 65,075 shares, respectively, of INNOVATE's common stock.

As of December 31, 2024, the Series A-3 Preferred Stock and Series A-4 Preferred Stock were convertible into 259,212 and 290,672 shares, respectively, of INNOVATE's common stock.

Redemption by the Holders / Automatic Conversion.

On July 1, 2026, holders of the Series A-3 and Series A-4 shall be entitled to cause the Company to redeem the Series A-3 and Series A-4 at the accrued value per share plus accrued but unpaid dividends (to the extent not included in the accrued value of Series A-3 and Series A-4).

On July 1, 2026, holders of the Series A-3 and Series A-4 shall be entitled to cause the Company to redeem, out of legally available funds, the Series A-3 and Series A-4 at the accrued value per share plus accrued but unpaid dividends (to the extent not included in the accrued value of Series A-3 and Series A-4).

Each share of Series A-3 and Series A-4 that is not so redeemed will be automatically converted into shares of the Company's common stock at the Conversion Price then in effect.

Upon a change of control (as defined in each Certificate of Designation) holders of the Series A-3 and Series A-4 shall be entitled to cause the Company to redeem their shares of Series A-3 and Series A-4 at a price per share of Series A-3 and Series A-4 equal to the greater of (i) the accrued value of the Series A-3 and Series A-4, plus any accrued and unpaid dividends (to the extent not included in the accrued value of Series A-3 and Series A-4 Preferred Stock), and (ii) the value that would be received if the share of Series A-3 and Series A-4 were converted into shares of the Company's common stock immediately prior to the change of control.

Upon a change of control (as defined in the Company's Third Amended and Restated Certificate of Incorporation) holders of the Series A-3 and Series A-4 shall be entitled to cause the Company to redeem their shares of Series A-3 and Series A-4 at a price per share of Series A-3 and Series A-4 equal to the greater of (i) the accrued value of the Series A-3 and Series A-4, plus any accrued and unpaid dividends (to the extent not included in the accrued value of Series A-3 and Series A-4 Preferred Stock), and (ii) the value that would be received if the share of Series A-3 and Series A-4 were converted into shares of the Company's common stock immediately prior to the change of control.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Redemption by the Company / "Company Call Option".

At any time, the Company may redeem the Series A-3/Series A-4, in whole but not in part, at a price per share generally equal to 150 % of the accrued value per share, plus accrued but unpaid dividends (to the extent not included in the accrued value of the Series A-3/Series A-4), subject to the holder's right to convert prior to such redemption.

At any time, the Company may redeem the Series A-3 and Series A-4, in whole but not in part, at a price per share generally equal to 150 % of the accrued value per share, plus accrued but unpaid dividends (to the extent not included in the accrued value of the Series A-3 and Series A-4), subject to the holder's right to convert prior to such redemption.

Forced Conversion .

3 unchanged sentences

In the event of any liquidation, dissolution or winding up of the Company (any such event, a “Liquidation Event”), the holders of Series A-3 and Series A-4 will be entitled to receive per share the greater of (i) the accrued value of the Series A-3 and Series A-4, plus any accrued and unpaid dividends (to the extent not included in the accrued value of Series A-3 and Series A-4), and (ii) the value that would be received if the share of Series A-4 and Series A-4 were converted into shares of the Company's common stock immediately prior to such occurrence.

The Series A-3 and Series A-4 will rank junior to any existing or future indebtedness but senior to the Company's common stock and any future equity securities other than any future senior or pari passu preferred stock issued in compliance with each Certificate of Designation.

The Series A-3 Preferred Stock and the Series A-4 Preferred Stock rank at parity.

6 unchanged sentences

In addition, subject to meeting certain ownership thresholds, certain initial purchasers of the Series A-3 Preferred Stock and the Series A-4 Preferred Stock will be entitled to participate in issuances of preferred securities and in debt transactions of the Company.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

As of December 31, 2023, the Series A-3 Preferred Stock and Series A-4 Preferred Stock were convertible into 174,070 ( 1,740,700 on a pre Reverse Stock Split basis) and 187,554 ( 1,875,533 on a pre Reverse Stock Split basis) shares, respectively of INNOVATE's common stock.

As a result of the Rights Offering and Concurrent Private Placement in 2024, and due to the anti-dilution provisions contained in the terms of the Series A-3 Preferred Stock and Series A-4 Preferred Stock, the conversion prices were adjusted, and as of April 24, 2024, the Series A-3 Preferred Stock and Series A-4 Preferred Stock were convertible into 256,986 ( 2,569,858 on a pre Reverse Stock Split basis) and 288,177 ( 2,881,761 on a pre Reverse Stock Split basis) shares, respectively, of INNOVATE's common stock.

As of December 31, 2024, subsequent to the Reverse Stock Split, the Series A-3 Preferred Stock and Series A-4 Preferred Stock were convertible into 259,212 and 290,672 shares, respectively, of INNOVATE's common stock.

Series A-3 and Series A-4 Preferred Share Dividends

During the years ended December 31, 2024 and 2023, INNOVATE's Board of Directors (the "Board") declared cash dividends with respect to INNOVATE’s issued and outstanding Series A-3 Preferred Stock and Series A-4 Preferred Stock, as presented in the following tables (in millions):

Declaration Date and Holders of Record Date March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024

Payment Date April 15, 2024 July 15, 2024 October 15, 2024 January 15, 2025

Total Dividend $ 0.3 $ 0.3 $ 0.3 $ 0.3

Declaration Date and Holders of Record Date March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023

Payment Date April 17, 2023 July 14, 2023 October 13, 2023 January 15, 2024

Total Dividend $ 0.3 $ 0.3 $ 0.3 $ 0.3

DBMGi Series A Preferred Stock

On November 30, 2018, CGIC purchased 40,000 shares of DBMGi Series A Preferred Stock, which was then eliminated in consolidation.

DBM Global Intermediate Holdco Inc.

("DBMGi") is 100 % owned by INNOVATE and owns 91.2 % of DBMG.

On July 1, 2021, as a part of the sale of CGIC, which resulted in the deconsolidation of the entity, the Company was deemed to have issued $ 40.9 million of DBMGi Series A Preferred Stock to the then deconsolidated CGIC.

Upon the deemed issuance of the DBMGi Series A Preferred Stock on July 1, 2021, the DBMGi Series A Preferred Stock was classified as temporary equity in the Company's Consolidated Balance Sheet.

There are 500,000 shares with a par value of $ 0.001 each authorized for issuance.

Subsequent to the issuance of the DBMGi Series A Preferred Stock, 1,820.25 shares were issued as payment in kind for dividends, resulting in a total of 41,820.25 shares of DBMGi's Series A Preferred Stock outstanding.

The DBMGi Series A Preferred Stock was redeemable at any time, in whole or in part, at the option of the Company, or at any time or by the holder prior to July 2026.

On March 15, 2023, DBMGi received a redemption notice from CGIC requesting that DBMGi redeem 41,820.25 shares of DBMGi Series A Preferred Stock, representing all of the issued and outstanding shares of DBMGi Series A Preferred Stock, within 60 days of the notice, or by May 15, 2023.

On May 9, 2023, the Company entered into a Stock Purchase Agreement and Subordinated Unsecured Promissory Note with CGIC whereby INNOVATE purchased the 41,820.25 shares of DBMGi Series A Preferred Stock for full satisfaction of the redemption notice.

In full consideration of the DBMGi Series A Preferred Stock as well as the accrued dividend of $ 0.4 million, the Company paid CGIC $ 7.1 million on May 9, 2023, and issued a subordinated unsecured promissory note to CGIC in the principal amount of $ 35.1 million.

The promissory note is due February 28, 2026, and bore interest at 9.0 % per annum through May 8, 2024, bears interest at 16.0 % per annum from May 9, 2024, to May 8, 2025, and 32.0 % per annum thereafter.

Spectrum Redeemable Non-Controlling Interests

Refer to Note 11.

Debt Obligations for additional information on the promissory note.

The DBMGi Series A Preferred Stock was measured each reporting period at its maximum redemption value, which was equal to the stated value plus all accrued, accumulated and unpaid dividends as of the end of each reporting period, as they were currently redeemable.

The carrying amount as of May 9, 2023, was $ 41.8 million as well as the accrued dividend of $ 0.4 million and, subsequently, there was no gain or loss on the purchase of the DBMGi Series A Preferred Stock from CGIC.

The DBMGi Series A Preferred Stock accrued a cumulative quarterly cash or payment in kind dividend at a rate of (a) for the first five years following the date of issuance, (i) 9.00 % per annum if dividends are paid in kind or (ii) 8.25 % per annum if dividends are paid in cash and (b) starting on the fifth anniversary of the date of issuance, a rate per annum equal to (i) LIBOR (as defined in the Certificate of Designation) plus a spread of 5.85 % (together, the “LIBOR Rate”) per annum, plus 0.75 % if dividends are paid in kind or (ii) the LIBOR Rate per annum in the case of dividends paid in cash.

Subsequent to the transition away from LIBOR beginning in 2023, the Certificate of Designation allows for a LIBOR Successor Rate, which allows the Company to reasonably determine an alternate benchmark rate (including any mathematical or other adjustments to the benchmarks (if any) incorporated therein) giving due consideration to any evolving or then existing convention for similar U.S.

dollar denominated syndicated credit facilities for such alternative benchmarks.

Subsequent to May 9, 2023, the date that INNOVATE purchased the DBMGi Series A Preferred Stock, the dividends were eliminated on consolidation.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

During the year ended December 31, 2023, DBMGi's Board of Directors declared dividends with respect to DBMGi’s issued and outstanding DBMGi Series A Preferred Stock.

The dividend paid on April 17, 2023, was paid in cash and no dividends were subsequently declared;

however, in connection with the Stock Purchase Agreement entered into with CGIC on May 9, 2023, an equivalent amount of the dividends that had accrued through May 8, 2023, was paid to CGIC on May 9, 2023, as part of the purchase price:

$ 0.1 million was paid in cash and $ 0.3 million was included in the principal amount of the new unsecured note that was issued on May 9, 2023.

The dividend that accrued for the remaining portion of that period was eliminated on consolidation subsequent to the purchase.

The declared dividends and equivalent amounts paid during the year ended December 31, 2023, are presented in the following table (in millions):

Declaration Date and Holders of Record Date March 31, 2023 May 9, 2023

Payment Date April 17, 2023 May 9, 2023

Total Dividend

Debt Obligations for information regarding the Company's Spectrum Segment's redeemable non-controlling interests.

R2 Technologies Non-Controlling Interests

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therefore, no additional adjustments or remeasurements were required under ASC 480-10, Distinguishing Liabilities from Equity.

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

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 new Series E Convertible 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.

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

As a result of the allocation of losses, the redeemable non-controlling interest related to R2 Technologies was negative $ 1.0 million and negative $ 0.5 million as of December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, the Company had negative $ 9.2 million and negative $ 4.9 million, respectively of R2 Technologies non-controlling interests reflected within Non-controlling interests within the Consolidated Balance Sheets.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Liquidation Preference

R2 Technologies has issued multiple A, B, C and D-series, and, in the future potentially E-series, participating convertible preferred stock (the "R2 Technologies Preferred Shares"), all of which contain a liquidation preference.

In the event of a liquidation event, each Preferred Share has a liquidation preference to be paid out of the assets legally available for distribution, which entitles the holder of each series A, series C, series D and series E (upon conversion of the aforementioned $ 3.5 million note that is convertible into Series E) R2 Technologies Preferred Shares to receive, before any payments to holders of junior securities, the sum of the following:

R2 Technologies has issued multiple A, B, C and D-series, and, in the future potentially E-series and F-series, participating convertible preferred stock (the "R2 Technologies Preferred Shares"), all of which contain a liquidation preference.

In the event of a liquidation event, each Preferred Share has a liquidation preference to be paid out of the assets legally available for distribution, which entitles the holder of each series A, series C, series D, series E (upon conversion of the aforementioned $ 3.5 million note that is convertible into Series E) and series F (upon conversion of the aforementioned notes that are convertible into Series F) R2 Technologies Preferred Shares to receive, before any payments to holders of junior securities, the sum of the following:

(i) the accrued value in cash;

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If there is insufficient cash to pay the entire liquidation preference and any liquidation preference in respect of any parity securities in full in cash upon a liquidation event, R2 Technologies Preferred Shareholders and parity securities holders will share available cash proportionally.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

R2 Technologies' total liquidation preference upon a hypothetical liquidation event, including the liquidation preference for Pansend Life Sciences, LLC, was $ 143.5 million and $ 112.3 million as of December 31, 2024 and 2023, respectively, of which $ 51.8 million and $ 48.0 million as of December 31, 2024 and 2023, respectively, was attributable to redeemable and non-redeemable non-controlling interests, inclusive of initial preferred stock and unpaid accreted dividends.

However, as of both December 31, 2024 and 2023, R2 Technologies had negative net assets after consideration of intercompany and third party debt, as applicable, and, therefore, there would be no legally available funds to satisfy such liquidation preferences upon a hypothetical liquidation event.

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 NOLs 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.

As of both December 31, 2025 and 2024, R2 Technologies had negative net assets after consideration of intercompany and third-party debt, as applicable, and, therefore, there would be no legally available funds to satisfy any liquidation preferences upon a liquidation event.

Related Parties

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During the first quarter of 2024, in connection with the Rights Offering, the Company entered into an Investment Agreement with Lancer Capital, an entity controlled by Avram A.

Glazer, pursuant to which Lancer Capital agreed to the Backstop Commitment to purchase up to $ 19.0 million of Series C Preferred Stock in connection with the Rights Offering and to purchase $ 16.0 million of Series C Preferred Stock in a Concurrent Private Placement, of which $ 25.0 million would be purchased before the closing of the Rights Offering if the Rights Offering did not close by March 28, 2024.

Glazer, pursuant to which Lancer Capital agreed to the Backstop Commitment to purchase up to $ 19.0 million of Series C Preferred Stock in connection with the Rights Offering and to purchase $ 16.0 million of Series C Preferred Stock in a private placement transaction ("Concurrent Private Placement"), of which $ 25.0 million would be purchased before the closing of the Rights Offering if the Rights Offering did not close by March 28, 2024.

As a result of the extension of the Rights Offering, on March 28, 2024, Lancer Capital funded the equity advance of $ 25.0 million to the Company and received 25,000 shares of Series C Preferred Stock.

As a result, Mr.

Glazer's beneficial ownership increased from 29.1 % as of March 5, 2024, immediately prior to the start of the Rights Offering, to 48.8 % as of March 31, 2024.

On April 24, 2024, as a result of the closing of the Rights Offering and Concurrent Private Placement, Lancer Capital purchased an additional approximately 6,286 shares of Series C Preferred Stock for $ 6.3 million, increasing Mr.

Glazer's beneficial ownership to 52.1 %.

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

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

As a result, approximately 31,286 Series C Preferred Stock held by Lancer Capital were converted into 4,469,390 shares of INNOVATE's common stock, and there were no shares of the Series C Preferred Stock outstanding subsequent to their conversion into the Company's common stock.

Refer to Note 16.

Equity and Temporary Equity for additional information.

As of December 31, 2024, Mr.

Glazer's beneficial ownership was 51.2 %.

Lancer Capital held $ 2.0 million of principal amount of the Company's 7.50 % 2026 Convertible Notes, as of both December 31, 2024 and 2023.

As of December 31, 2025, Lancer Capital held $ 2.2 million of the Company's 2027 Convertible Notes, which were issued on August 4, 2025, in exchange for the $ 2.0 million of principal amount of the Company's 2026 Convertible Notes held by Lancer prior to the exchange and as of December 31, 2024.

The principal amount of the 2027 Convertible Notes includes capitalized interest and extension fees.

As of December 31, 2025, the $ 2.2 million in 2027 Convertible Notes are convertible into 51,874 shares of common stock of INNOVATE.

As of December 31, 2024, the $ 2.0 million in 2026 Convertible Notes were convertible into 47,265 shares of common stock of INNOVATE.

During both the years ended December 31, 2025 and 2024, Lancer Capital earned $ 0.2 million in interest relating to these notes.

Refer to Note 11.

Debt Obligations for additional information on the Convertible Notes.

During both the years ended December 31, 2024 and 2023, Lancer Capital earned $ 150 thousand in interest relating to these notes.

CGIC is a former significant shareholder and is the shareholder of the Company's Series A-3 Preferred Stock and Series A-4 Preferred Stock.

Refer to Note 16.

Equity and Temporary Equity for additional information.

In addition, as of December 31, 2025 and 2024, the Company owed $ 45.9 million and $ 31.0 million, respectively, in principal amount of a promissory note owed to CGIC.

Refer to Note 11.

Debt Obligations for additional information.

In December 2023, the Company entered into a sublease agreement for a special purpose space with PBCIC, a Florida not-for-profit corporation and related party to Avram A.

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In addition, in March 2024, the Company assigned a lease for office space to an entity controlled by Mr.

Refer to Note 9.

Leases for additional information.

In September 2018, the Company entered into a 75 -month lease for office space which expired in December 2024.

As part of the agreement, INNOVATE was able to pay a lower security deposit and lease payments and received favorable lease terms as consideration for landlord required cross default language in the event of default of the shared space leased by Harbinger Capital Partners, a company controlled by a former CEO of INNOVATE and formerly a related party, in the same building.

With the adoption of ASC 842, Leases , as of January 1, 2019, this lease was recognized as a right-of-use asset and lease liability in the Consolidated Balance Sheets.

As of December 31, 2024, there was no remaining lease liability or corresponding right-of-use asset.

On May 9, 2023, the Company entered into a Stock Purchase Agreement and Subordinated Unsecured Promissory Note with CGIC in the principal amount of $ 35.1 million.

CGIC is a former significant shareholder and is the shareholder of the Series A-3 Preferred Stock and Series A-4 Preferred Stock.

As a result of the closing of the Rights Offering on April 24, 2024, INNOVATE redeemed $ 4.1 million of the CGIC Unsecured Note on April 26, 2024.

Refer to Note 11.

Debt Obligations and Note 16.

Equity and Temporary Equity for additional information.

Infrastructure

Banker Steel previously leased two planes from Banker Aviation, LLC, a former related party and entity that is owned by Donald Banker, who was the CEO of Banker Steel until December 2023.

Both leases had been terminated by the fourth quarter of 2023.

For the year ended December 31, 2023, DBMG incurred related lease expenses of $ 1.2 million.

The $ 0.2 million security deposit on the lease was also assigned to Lancer Capital and written-off in March 2024.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

DBMG and Banker Steel, jointly and severally, had a subordinated 4.0 % note payable to Banker Steel's former owner, in which Donald Banker's family trust has a 25 % interest, and jointly and severally also had a subordinated 8.0 % note payable to Donald Banker's family trust, the latter of which was fully paid off in December 2023.

Infrastructure

DBMG and Banker Steel, jointly and severally, had a subordinated 4.0 % note payable to Banker Steel's former owner, in which Donald Banker's family trust has a 25 % interest.

The 4.0 % note and associated accrued interest matured on March 31, 2024, and was fully redeemed on April 2, 2024.

During the year ended December 31, 2024, DBMG made $ 5.0 million in scheduled principal payments on the 4.0 % note.

DBMG incurred aggregate interest expense related to these notes of $ 25 thousand and $ 1.5 million for the years ended December 31, 2024 and 2023, respectively.

Accrued interest was $ 0.1 million as of December 31, 2023.

Life Sciences

As of December 31, 2024 and 2023, R2 Technologies had $ 24.0 million and $ 17.4 million, respectively, in principal amount of 20.0 % senior secured promissory notes due to Lancer Capital.

As of December 31, 2025, R2 Technologies had $ 47.9 million in principal amount of a 12.0 % senior secured promissory note due to Lancer Capital.

As of December 31, 2024, R2 Technologies had $ 24.0 million in principal amount of a 20.0 % senior secured promissory note due to Lancer Capital.

Refer to Note 11.

Debt Obligations for additional information and for a subsequent event related to the extension of the maturity date of the 20.0 % senior secured promissory notes due to Lancer Capital.

For the years ended December 31, 2024 and 2023, R2 Technologies recognized $ 1.4 million and $ 0.7 million, respectively, of revenue from sales and profit sharing agreements with a subsidiary of Huadong, a related party of R2.

There were $ 0.1 million of related receivables from this subsidiary of Huadong as of December 31, 2024, and there were no related receivables from this subsidiary of Huadong as of December 31, 2023.

Share-based compensation and royalty expenses related to Blossom Innovations, LLC, an investor of R2 Technologies since 2014, totaled $ 1.1 million and $ 0.3 million, for the years ended December 31, 2024 and 2023, respectively.

Debt Obligations for additional information.

For the years ended December 31, 2025 and 2024, R2 Technologies recognized revenue of $ 3.6 million and $ 1.4 million, respectively from sales and profit sharing agreements with a subsidiary of Huadong, a related party of R2 Technologies.

There were $ 0.6 million and $ 0.1 million of related receivables from this subsidiary of Huadong as of December 31, 2025 and 2024, respectively.

Share-based compensation and royalty expenses related to Blossom Innovations, LLC ("Blossom"), an investor of R2 Technologies since 2014, totaled $ 0.3 million and $ 1.1 million, for the years ended December 31, 2025 and 2024, respectively.

The related payables due to Blossom totaled $ 0.2 million as of December 31, 2025, and there were no related payables due to Blossom as of December 31, 2024.

Refer to Note 6.

Investments for transactions with equity method investees of the Company.

Operating Segments and Related Information

The Company currently has one primary reportable geographic segment - United States, and primarily all revenue is derived in the United States, and primarily all PP&E and intangible assets reside in the United States.

The reportable segments are identified based on the nature of the services and products provided, the organizational structure, and the internal reporting system used by the Chief Operating Decision Maker ("CODM") to assess performance and allocate resources.

The Company has three reportable operating segments, plus the Other segment, based on management’s organization of the enterprise - Infrastructure, Life Sciences, Spectrum, and Other.

Segments and Related Information

The Company currently operates in one primary geography - United States, and substantially all revenue is derived in the United States, and substantially all PP&E and intangible assets reside in the United States.

The Company's reportable segments are identified based on the nature of the services and products provided, the organizational structure, and the internal reporting system used by the Chief Operating Decision Maker ("CODM") to assess performance and allocate resources.

As of December 31, 2025, the Company had three reportable operating segments, plus the Other segment, based on management’s organization of the enterprise - Infrastructure, Life Sciences, Spectrum, and Other.

The Company also has a Non-Operating Corporate segment.

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Organization and Business for additional information on the organizational structure of the business and Note 3.

Revenue and Contracts in Process for additional information on the products and services offered by each segment.

The Chief Operating Decision Maker ("CODM") for the Company is the Interim CEO, Paul Voigt.

Revenue and Contracts in Process for additional information on revenue by segment.

The CODM for the Company is the Interim CEO, Paul Voigt.

The CODM is primarily responsible for allocating resources at all levels that do not require board approval.

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These financial metrics are used to view operating trends, perform analytical comparisons and benchmark performance between periods and to monitor budget-to-actual variances on a monthly basis.

The primary GAAP metric used by the CODM in assessing segment performance is income (loss) from operations.

The primary U.S.

GAAP metric used by the CODM in assessing segment performance is income (loss) from operations.

Financial information, including revenue and expenses, with respect to the Company’s operating segments, is as follows (in millions):

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Depreciation and amortization 12.1 0.4 5.0 — — 17.5

Other operating (income) loss (1)

Other operating loss (income) (1)

1.4 — ( 1.0 ) — — 0.4

Income (loss) from operations $ 55.4 $ ( 10.9 ) $ ( 0.1 ) $ ( 15.6 ) $ ( 0.1 ) $ 28.7

Capital expenditures (2)

$ 17.6 $ — $ 1.4 $ — $ — $ 19.0

Investments (3)

$ — $ 1.8 $ — $ 1.8 $ — $ 3.6

Capital cash expenditures

$ 23.4 $ — $ 2.7 $ — $ — $ 26.1

(1) Other operating income at our Infrastructure segment for the year ended December 31, 2024, related mainly to a gain on a lease modification and a net gain on the sale and disposal of various properties.

(2) Capital expenditures reflect cash expenditures.

(3) The Company's equity method investments in the Life Sciences segment totaled $ 0.9 million as of December 31, 2024.

(1) Other operating loss for the year ended December 31, 2025, primarily consisted of a loss on lease modification and losses on the sales of various properties at the Company's Infrastructure segment, partially offset primarily by a gain on legal settlement at the Company's Spectrum Segment.

INNOVATE CORP.

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$ 65.7 $ ( 14.1 ) $ 1.4 $ ( 13.0 ) $ — $ 40.0

Capital expenditures (2)

Capital cash expenditures

$ 17.6 $ — $ 1.4 $ — $ — $ 19.0

(1) Other operating income at the Company's Infrastructure segment for the year ended December 31, 2024, related mainly to a gain on a lease modification and a net gain on the sale and disposal of various properties.

Certain balance sheet data:

December 31, 2025

Infrastructure Life Sciences Spectrum Non-Operating Corporate Other and Eliminations INNOVATE

Investments (1)

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$ 758.9 $ 9.6 $ 174.5 $ 7.1 $ — $ 950.1

(1) Other operating loss for the year ended December 31, 2023, primarily consisted of a write-off of prepaid rent at the Other segment and an impairment of leasehold improvements at the Non-Operating Corporate segment for unutilized office space.

(2) Capital expenditures reflect cash expenditures.

(3) The Company's equity method investments in the Life Sciences segment totaled $ 0.9 million as of December 31, 2023.

December 31, 2024

Infrastructure Life Sciences Spectrum Non-Operating Corporate Other and Eliminations INNOVATE

Investments (1)

$ — $ 1.8 $ — $ 1.8 $ — $ 3.6

$ 683.6 $ 11.9 $ 178.9 $ 16.7 $ — $ 891.1

(1) The Company's equity method investments in its Life Sciences segment totaled $ 0.9 million as of both December 31, 2025 and 2024.

Year Ended December 31,

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Basic and Diluted Loss Per Common Share

Earnings (loss) per share ("EPS") is calculated using the two-class method, which allocates earnings among common stock and participating securities to calculate EPS when an entity's capital structure includes either two or more classes of common stock or common stock and participating securities.

Unvested share-based payment awards and Series C Preferred Stock that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities.

As such, shares of any unvested restricted stock and Series C Preferred Stock of the Company are considered participating securities;

however, unvested shares of restricted stock do not participate in losses and, as such, are excluded from the computation of basic earnings (loss) per share during periods of net losses.

The dilutive effect, if applicable, of stock options and their equivalents (including non-vested stock issued under stock-based compensation plans), is computed using the "if-converted method" if this measurement is determined to be more dilutive than the treasury stock method in a period.

Loss per share ("EPS") is calculated using the two-class method, which allocates earnings among common stock and participating securities to calculate EPS when an entity's capital structure includes either two or more classes of common stock or common stock and participating securities.

Unvested share-based payment awards, and, previously, the Series C Preferred Stock, that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities.

As such, shares of any unvested restricted stock, and, previously, the Series C Preferred Stock, of the Company are considered participating securities;

however, unvested shares of restricted stock do not participate in losses and, as such, are excluded from the computation of basic loss per share during periods of net losses.

The dilutive effect, if applicable, of stock options and their equivalents (including non-vested stock issued under share-based compensation plans), is computed using the "if-converted method" if this measurement is determined to be more dilutive than the treasury stock method in a period.

The Company had no dilutive common stock equivalents during the years ended December 31, 2025, and 2024, due to the results from continuing operations being a loss, net of tax.

For the years ended December 31, 2025 and 2024, 304,684 and 171,565 , respectively, of common stock equivalents from unvested restricted stock awards and unvested restricted stock units were excluded from the weighted-average number of shares used to calculate diluted loss per share as their inclusion would have been anti-dilutive.

Other instruments that may, in the future, if the average market price of the Company's stock exceeds the conversion prices, have a dilutive effect on EPS, but were excluded from the computations of diluted net loss per share, and may be excluded from computations of diluted EPS in the future, are:

Other instruments that may, in the future, if the average market price of the Company's stock exceeds the conversion prices, have a dilutive effect on EPS, but were excluded from the computations of diluted net loss per share for the years ended December 31, 2025 and 2024, and may be excluded from computations of diluted EPS in the future, are:

convertible preferred stock, convertible debt, and stock options.

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Net loss $ ( 64.0 ) $ ( 39.7 )

Net loss attributable to non-controlling interest and redeemable non-controlling interest 5.1 3.7

Net loss attributable to non-controlling interests and redeemable non-controlling interests 3.4 5.1

Net loss attributable to INNOVATE Corp.

( 60.6 ) ( 34.6 )

Preferred dividends 1.2 2.4

Preferred stock dividends 3.4 1.2

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

Loss allocable to common shares:

Participating shares

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Numerator for loss per share:

Net loss attributable to common stock holders, basic and diluted $ ( 32.9 ) $ ( 37.6 )

Net loss attributable to Series C holder, basic and diluted

Net loss attributable to common stockholders, basic and diluted

$ ( 64.0 ) $ ( 32.9 )

Net loss attributable to Series C holders, basic and diluted

Denominator for loss per share:

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Weighted-average Series C shares outstanding - basic and diluted

Loss per share

Loss per common share - basic and diluted

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$ — $ ( 3.08 )

(1) Basic and diluted loss per common share and weighted-average common shares outstanding for the year ended December 31, 2023, in the table above have been retroactively adjusted to reflect the 1-for-10 reverse stock split effected on August 8, 2024.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Fair Value of Financial Instruments

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Our financial instruments primarily include cash and cash equivalents, restricted cash, accounts receivable and contract assets, marketable and non-marketable securities, including equity investments and certain other investments, notes receivable, accounts payable and other current and non-current liabilities, redeemable non-controlling interests and debt obligations.

The following tables presents the carrying amounts and estimated fair values of the Company’s financial instruments, which were not measured at fair value on a recurring basis and not measured using the equity method of accounting, with fair values shown according to the fair value hierarchy.

The following tables present the carrying amounts and estimated fair values of the Company’s financial instruments, which were not measured at fair value on a recurring basis and not measured using the equity method of accounting, with fair values shown according to the fair value hierarchy.

The tables exclude carrying amounts for cash and cash equivalents and restricted cash (Level 1 measurements), accounts receivable and contract assets, accounts payable, contract liabilities and other current liabilities, and other assets and liabilities (Level 2 measurements) that approximate fair value due to the relatively short periods to maturity (in millions):

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

December 31, 2025 Fair Value Measurement Using:

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(2) Excludes lease obligations accounted for under ASC 842, Leases.

The fair value of the Company's Level 3 debt obligations incorporates applicable exit fees, while the carrying value of the debt obligations excludes $ 25.8 million in exit fees which is reflected in Accrued liabilities in the Company's Consolidated Balance Sheet.

December 31, 2024 Fair Value Measurement Using:

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Debt Obligations.

The fair value of the Company’s long-term obligations was determined using reporting from externally quoted market prices for INNOVATE's 8.50 % 2026 Senior Secured Notes and for INNOVATE's 7.50 % Convertible Senior Notes due 2026, which are reflected as Level 2 fair value measurements due to limited recently available observable trading activity for these instruments.

All other long-term obligations of the Company are also reflected as Level 2 fair value measurements, as this methodology combines direct recent transaction activity or, if available, market observations from contributed sources with quantitative pricing models or fair value reports from valuation providers to generate evaluated prices and are classified as Level 2 fair value measurements.

The fair value of the Company’s long-term obligations was determined using reporting from externally quoted market prices for INNOVATE's 10.50 % 2027 Senior Secured Notes, 8.50 % 2026 Senior Secured Notes, 9.5 % Convertible Senior Secured Notes due 2027, and 7.50 % Convertible Senior Notes due 2026, which are reflected as Level 2 fair value measurements due to limited recently available observable trading activity for these instruments.

The methodology for the Level 2 fair value measurements combines direct recent transaction activity or, if available, market observations from contributed sources with quantitative pricing models or fair value reports from valuation providers to generate evaluated prices and are classified as Level 2 fair value measurements.

The Level 3 fair value measurements, including those for the Company's other debt instruments, were estimated using an income approach based on the expected future cash flows, discounted at an estimated market yield.

The discount rate, or yield to maturity, was derived from a synthetic credit rating and corresponding market spread analysis as of the valuation date to estimate an option-adjusted spread which was then applied to the applicable risk-free curve, consistent with market observable inputs for similarly rated debt.

Certain long-term obligations have a fair value estimate equal to their carrying value due to recent transaction activity.

The fair value of the debt instruments is disclosed for informational purposes and does not necessarily represent the amount that would be realized upon settlement or transfer.

Fair Value of Financial Instruments Measured at Fair Value

The Company's investment in marketable securities is measured at fair value, using publicly available quoted market prices, a Level 1 input.

Refer to Note 6.

INNOVATE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Fair Value of Financial Instruments Measured at Fair Value

The Company's investments in marketable securities were measured at fair value, using publicly available quoted market prices, a Level 1 input.

Refer to Note 6.

Investments for additional information.

Supplementary Financial Information

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Year Ended December 31,

Gain on sale of investments $ — $ 12.0

Gain on step-up of equity method investment $ 4.4 $ —

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Interest income 0.7 2.6

Foreign currency translation gain (loss) 1.3 ( 0.4 )

Foreign currency translation (losses) gains ( 1.1 ) 1.3

Fair value gains (losses) on securities 0.8 ( 0.2 )

Total other income, net

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Cash paid for interest

Cash paid for income taxes, net of refunds

$ 30.0 $ 48.6

Cash paid for income taxes, net

Non-cash investing and financing activities:

Unsecured note issued in connection with purchase of preferred stock and payment of dividends $ — $ 35.1

Accrued interest capitalized into principal debt

Accrued interest and fees capitalized into principal debt

Accrued dividends capitalized into principal debt

Exchange of preferred stock for debt

Property, plant and equipment included in accounts payable or accrued expenses

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Refer to Note 11.

Investments for details related to the FDA approval received for MediBeacon's TGFR subsequent to year end.

Refer to Note 11.

Debt Obligations for details related to amendments to the Company's debt instruments subsequent to year end.

Refer to Note 16.

Equity and Temporary Equity for details related to R2 Technologies' issuance of a convertible note subsequent to year end.

Debt Obligations for updates regarding the milestone covenants related to the Company's 10.50 % 2027 Senior Secured Notes and Spectrum Notes.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures