INNOVATE Corp. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated annual financial statements and the notes thereto, each of which are contained in Item 8. entitled "Financial Statements and Supplementary Data ," and other financial information included herein. Some of the information contained in this discussion and analysis includes forward-looking statements that involve risks and uncertainties. You should review the " Risk Factors " section as well as the section below entitled "Special Note Regarding Forward-Looking Statements" for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Unless the context otherwise requires, in this Annual Report on Form 10-K, "INNOVATE" means INNOVATE Corp. and the "Company," "we" and "our" mean INNOVATE together with its consolidated subsidiaries. "U.S. GAAP" means accounting principles accepted in the United States of America. Our Business and Our Operations We are a diversified holding company with principal operations conducted through three operating platforms or reportable segments as of December 31, 2025: Infrastructure ("DBMG"), Life Sciences ("Pansend"), and Spectrum, plus our Other segment, which includes businesses that do not meet the separately reportable segment thresholds. For additional information on our business, refer to Note 1. Organization and Business to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference. Cyclical Patterns Our segments' operations can be highly cyclical. Our volume of business in our Infrastructure segment may be adversely affected by declines or delays in projects, which may vary by geographic region. Project schedules, particularly in connection with large, complex, and longer-term projects can also create fluctuations in the services provided, which may adversely affect us in any given period. For example, in connection with larger, more complicated projects, the timing of obtaining permits and other approvals may be delayed, and we may need to maintain a portion of our workforce and equipment in an underutilized capacity to ensure we are strategically positioned to deliver on such projects when they move forward. Examples of other items that may cause our results or demand for our services to fluctuate materially from quarter to quarter include: weather or project site conditions; customer spending patterns, including seasonal trends, and the financial condition of our customers and their access to capital; our profit margins on projects performed during any particular period; rising interest rates and inflation; and regulatory, economic, political and market conditions on a regional, national or global scale. Accordingly, our operating results in any particular period may not be indicative of the results that can be expected for any other period. Recent Developments We continually evaluate strategic and business alternatives within our operating segments, which may include the following: operating, growing or acquiring additional assets or businesses related to current or historical operations; or winding down or selling our existing operations. In the longer term, we may evaluate opportunities to acquire assets or businesses unrelated to our current or historical operations. In the event we were to enter into a strategic transaction to sell any of our existing operations, our intention is to use available proceeds from such transaction to address our capital structure. During 2025, as part of our strategic process, we have engaged in several transactions that had or will have an effect on the results of operations and financial condition of our business and individual segments. Debt Obligations and Financing During 2025, we refinanced our debt, including at the Corporate and subsidiary level. This financing helped us provide needed capital for our operations and the operations of our subsidiaries, and the refinancing of the debt, which, among other things, extended the maturities of the debt, allows us to continue to pursue our strategic plans. 50 Infrastructure 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. ("UMB"). The DBMG Credit Agreement provides DBMG with senior secured debt financing in an amount up to $220.0 million in the aggregate, consisting of (i) a senior secured revolving credit facility (the “DBMG Revolving Facility”) in an aggregate amount of $135.0 million and (ii) a senior secured term loan facility in the amount of $85.0 million. The DBMG Credit Agreement also contains an accordion feature to increase the allowable size of the DBMG Revolving Facility by an additional $50.0 million. The DBMG Revolving Facility and term loan facility will mature on May 20, 2030. DBMG entered into the DBMG Credit Agreement to fully repay DBMG’s existing debt obligations and provide additional working capital capacity. Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference for additional information. As of December 31, 2025, DBMG had a total outstanding balance of $15.0 million under its new revolving facility and the effective interest rate on DBMG's revolving loans was 6.80%. Interest on the new revolving facility is paid monthly, and the new revolving facility has an unused commitment fee of 0.50% per annum times the average daily unused availability under the line. As of December 31, 2025, the total outstanding balance of DBMG's term loan was $72.6 million. Principal payments and interest on DBMG's term loan are paid monthly, and the effective interest rate was 7.4% as of December 31, 2025. The indenture governing INNOVATE’s 2027 Senior Secured Notes required us to meet certain milestones with respect to strategic alternatives for our operating subsidiaries, including asset sales generating at least $150 million in net proceeds, such that by September 1, 2025 we needed to have a bona fide bid or term sheet related to a potential sale, a fully executed purchase or equity agreement by November 1, 2025, and an executed transaction with applied proceeds to the 2027 Senior Secured Notes Indenture no later than February 1, 2026, and in the event of the failure to achieve these milestones, the mandatory commencement of a sales process for DBMG. We did not achieve these milestones and accordingly we have commenced a sales process for DBMG. The covenants contained in the DBMG Credit Agreement contain a Change in Control clause, which would constitute an Event of Default, both as defined in the DBMG Credit Agreement, which could accelerate the maturity of our Infrastructure segment's debt in the future upon certain events, including a sale of DBMG. Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference. Life Sciences On August 4, 2025, Lancer Capital, a related party, and R2 Technologies entered into an Amended and Restated Senior Secured Promissory Note, which was previously amended multiple times, and which, among other things, extended the maturity of the note to the earlier of August 1, 2026, or the occurrence of (i) a Change of Control (as defined in the amended note) or (ii) the sale of all or substantially all of the assets of R2 Technologies. The amended note has an interest rate of 12% and removed certain exit and default fees. Accrued and unpaid interest is capitalized monthly into the principal balance. The total new initial principal amount of the amended note on August 4, 2025 was $43.5 million, which incorporated the $20.0 million principal amount of the note as previously amended effective January 31, 2024 (which was comprised of a principal amount of $17.4 million and unpaid accrued interest of $2.6 million), accrued interest of $7.0 million and $16.5 million in accrued exit fees which had been incurred from January 31, 2024 through August 4, 2025. In addition, a new 5% extension fee of $2.2 million was capitalized into the principal amount on August 4, 2025. The amended note had a principal balance of $47.9 million as of December 31, 2025. Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on the note and its various amendments. During the year ended December 31, 2025, Pansend closed on several intercompany convertible 13.0% note instruments with R2 Technologies, and funded a total of $7.5 million to R2 Technologies. The outstanding principal amounts of the notes, together with any interest then accrued and unpaid, is convertible at the option of Pansend into shares of a new Series E Convertible Preferred Stock ("Series E") or new Series F Convertible Preferred Stock ("Series F") in R2 Technologies, as applicable to each note, upon written notice to R2 Technologies and the notes have a maturity date, of the earlier of July 31, 2026, or a change in control of R2 Technologies, as defined in the notes. These notes and related intercompany interest are eliminated on consolidation. Subsequent to year end, in February and March 2026, an additional $0.3 million in intercompany convertible 13.0% notes with R2 Technologies was funded. Refer to Note 16. Equity and Temporary Equity to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on R2 Technologies' convertible preferred stock and convertible notes. 51 Spectrum On August 4, 2025, Spectrum entered into a Tenth Omnibus Amendment to Secured Notes and Limited Consent to MSD Secured Note and Intercreditor Agreement with the note holders of Spectrum’s $69.7 million 8.50% and 11.45% Notes (the “Spectrum Notes”) to, among other things, extend the maturity of such notes from August 15, 2025 to September 30, 2026 (the “Spectrum Notes Extension”). Interest is payable upon maturity of the notes. As a result of Spectrum Notes Extension, additional exit fees of $9.9 million were incurred. The total exit fees associated with the notes of $25.8 million is payable on the earlier of maturity or repayment of the principal, and is reflected within Accrued liabilities in the Consolidated Balance Sheet as of December 31, 2025. Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on our Spectrum debt. Non-Operating Corporate In August 2025, the Company closed on a series of indebtedness refinancing transactions that extended certain of INNOVATE's debt maturities. These refinancing transactions included: (i) the closings of an exchange offer and consent solicitation with respect to the Company’s senior secured notes; (ii) privately negotiated exchanges of certain of the Company’s convertible senior notes; (iii) amendment and extension of the Company’s 2020 Revolving Credit Agreement to September 15, 2026; and (iv) amendment and extension of the Company’s CGIC note to April 30, 2027, as well as the exchange of a portion of the Company’s preferred stock held by CGIC and accrued preferred stock dividends in exchange for increasing the principal amount of that note (the "Preferred Stock Exchange") The Company issued $360.4 million aggregate principal amount of 10.50% 2027 Senior Secured Notes as consideration for the exchange of $328.1 million aggregate principal amount of the 8.50% 2026 Senior Secured Notes. The new principal amounts also include fees payable to the lenders and amounts in lieu of interest payments in respect of the 8.50% 2026 Senior Secured Notes that were due August 1, 2025. The 10.50% 2027 Senior Secured Notes mature on February 1, 2027 and accrue interest at a rate of 10.50% per year, payable semi-annually on February 1 st and August 1 st of each year, commencing on February 1, 2026. For the first interest period only, interest has been paid in kind. All subsequent interest payments are payable in cash. The Company exchanged $48.7 million of aggregate principal amount of the 2026 Convertible Notes for $53.5 million aggregate principal amount of newly issued 9.5% Convertible Senior Secured Notes due 2027 (the “2027 Convertible Notes”). The new principal amounts also include fees payable to the lenders and amounts in lieu of interest payments in respect of the 2026 Convertible Notes that were due on August 1, 2025. The 2027 Convertible Notes mature on March 1, 2027 and interest on the 2027 Convertible Notes is paid semi-annually on February 1 st and August 1 st of each year, commencing on February 1, 2026. For the first interest period only, interest has been paid in kind. All subsequent interest payments are payable in cash. The amended CGIC Note has a fixed interest rate of 16.0%. Interest on the amended CGIC Note will be paid on a monthly basis and in kind through August 31, 2026. All interest payments thereafter will be payable in cash, in arrears. The additional principal amount incurred under the Preferred Stock Exchange was $9.6 million (reflective of the $9.1 million accrued value of the Series A-4 Preferred Stock and $0.5 million in accrued dividends on the Series A-3 and A-4 Preferred Stock). In addition, an extension fee and accrued interest of $2.4 million on the CGIC Note through July 31, 2025, were capitalized to the new principal amount of the CGIC Note, for a total new aggregate outstanding principal amount of $43.0 million. As of December 31, 2025, the total carrying amount related to the CGIC Note was $46.8 million, inclusive of $45.9 million of principal (including capitalized interest), and a net unamortized premium of $0.9 million. Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on our Non-Operating Corporate segment debt. Equity Method Investments MediBeacon 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. Refer to Note 6. Investments, which is incorporated herein by reference, for additional information. In February 2025, China's National Medical Products Administration (“NMPA”) approved MediBeacon's TGFR Monitor and TGFR Sensor. Full regulatory approval from China's NMPA occurred in October 2025, following its approval for the categorization of the Lumitrace (relmapirazin) injection as a drug in China. 52 On December 16, 2025, MediBeacon received approval from the FDA for its next generation MediBeacon TGFR System including the latest TGFR Reusable Sensor. The latest TGFR Reusable Sensor has been designed for patient comfort, ease of application, and reusability. It also lowers the cost compared to the single use TGFR Sensor previously approved by the FDA. Financial Presentation Background In the below section within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, we compare, pursuant to U.S. GAAP and SEC disclosure rules, the Company’s results of operations for the year ended December 31, 2025, as compared to the year ended December 31, 2024. Results of Operations The following table summarizes our results of operations (in millions): Year Ended December 31, 2025 2024 Increase / (Decrease) Revenue Infrastructure $ 1,210.3 $ 1,071.6 $ 138.7 Life Sciences 12.5 9.8 2.7 Spectrum 23.2 25.7 (2.5) Total revenue $ 1,246.0 $ 1,107.1 $ 138.9 Income (loss) from operations Infrastructure $ 55.4 $ 65.7 $ (10.3) Life Sciences (10.9) (14.1) 3.2 Spectrum (0.1) 1.4 (1.5) Other (0.1) — (0.1) Non-Operating Corporate (15.6) (13.0) (2.6) Total income from operations $ 28.7 $ 40.0 $ (11.3) Interest expense (89.0) (74.5) (14.5) Loss from equity investees (5.9) (2.3) (3.6) Other income, net 4.7 3.4 1.3 Loss from operations before income taxes $ (61.5) $ (33.4) $ (28.1) Income tax expense (2.5) (6.3) 3.8 Net loss $ (64.0) $ (39.7) $ (24.3) Net loss attributable to non-controlling interests and redeemable non-controlling interests 3.4 5.1 (1.7) Net loss attributable to INNOVATE Corp. $ (60.6) $ (34.6) $ (26.0) Less: Preferred stock dividends 3.4 1.2 2.2 Net loss attributable to common stockholders and participating preferred stockholders $ (64.0) $ (35.8) $ (28.2) Revenue : Revenue for the year ended December 31, 2025, increased $138.9 million to $1,246.0 million from $1,107.1 million for the year ended December 31, 2024. The increase was primarily driven by our Infrastructure segment, and to a lesser extent our Life Sciences segment, which was partially offset by a decrease at our Spectrum segment. The increase at our Infrastructure segment was primarily driven by the timing and size of projects at DBMG's commercial structural steel fabrication and erection business, which had increased activity subsequent to the comparable year on certain large commercial construction projects, which was partially offset by timing and size of projects at the industrial maintenance and repair business, Banker Steel and the construction modeling and detailing business, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business in the comparable year, which also had increased activity in the prior year on certain large commercial construction projects that have since been completed. The increase at our Life Sciences segment was attributable to R2 Technologies, primarily driven by increases in Glacial Spa and Glacial fx unit sales outside North America, as well as an increase in consumable sales in North America, which was partially offset by a decrease in Glacial fx unit sales in North America. The decrease at our Spectrum segment was primarily driven by the termination of certain customers in the current year and a downturn in the direct response advertising market, which was partially offset by the launch of new networks subsequent to the comparable year. 53 Income from operations : Income from operations for the year ended December 31, 2025, decreased $11.3 million to $28.7 million from $40.0 million for the year ended December 31, 2024. The decrease was primarily due to a net decrease in gross profit of $9.1 million, and a net decrease in other operating income of $9.4 million, partially offset by a net decrease in SG&A expenses of $7.1 million. The net decrease in gross profit, despite an increase in revenue, was primarily driven by our Infrastructure segment due to timing and size of projects in the comparable year that have since been completed, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business in the comparable year and our Spectrum segment primarily due to the termination of certain customers in the current year and a downturn in the direct response advertising market. The decrease in other operating income was primarily driven by our Infrastructure segment as a result of an unrepeated gain on lease modification and unrepeated gains on the sale of various properties in the comparable year, as well as various losses on the sale of properties and a loss on lease modification in the current year, which was partially offset by our Spectrum segment primarily due to a favorable legal settlement in the current year, and unrepeated lease termination settlement costs incurred in the comparable year. The decrease in SG&A was primarily driven by our Infrastructure segment primarily due to a decrease in compensation-related expenses, and, to a lesser extent, decreases in consulting fees and travel expenses, and a decrease at our Life Sciences segment due to a reduction in compensation-related expenses at Pansend and R2 Technologies. These decreases in SG&A were partially offset by an increase in SG&A at our Non-Operating Corporate segment primarily due to the debt refinancing costs and expenses in the current year related to potential dispositions, which were partially offset by decreases in other legal fees and insurance expense as well as a net decrease in employee-related expenses. Interest expense : Interest expense for the year ended December 31, 2025, increased $14.5 million to $89.0 million from $74.5 million for the year ended December 31, 2024. The increase in interest expense was primarily driven by our Non-Operating Corporate and Life Sciences segments, and to a lesser extent by our Spectrum segment. The increase at our Non-Operating Corporate segment was due to the indebtedness refinancing transactions completed during the current year, which resulted in increased principal balances due to the capitalization of fees and interest, and certain increases in interest rates, leading to increased interest expense including amortization of fees. Interest at our Life Sciences segment increased due to a higher outstanding principal amount resulting from the capitalization of unpaid interest and exit fees into the principal amount subsequent to the comparable year. The increase at our Spectrum segment was due to the refinancing transactions and increased fees subsequent to the comparable year. These increases in interest expense were slightly offset by a decrease at our Infrastructure segment due to a net decrease in outstanding principal balances. Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on the indebtedness refinancing transactions. Loss from equity investees: Loss from equity investees for the year ended December 31, 2025, increased $3.6 million to $5.9 million from $2.3 million for the year ended December 31, 2024. The increase in loss was due to an increase in losses recognized from MediBeacon. During the year ended December 31, 2025, as a result of the first quarter equity transactions that occurred upon FDA approval of MediBeacon's TGFR, Pansend's basis in MediBeacon increased by $5.9 million, consisting of a $4.4 million step-up gain and $1.5 million from the conversion of accrued interest on Pansend's convertible notes with MediBeacon, resulting in Pansend recognizing $5.9 million of equity method losses that were previously unrecognized. During the year ended December 31, 2024, Pansend's basis in MediBeacon had increased by $2.3 million due to the issuance of additional convertible note investments in the comparable year, resulting in Pansend recognizing $2.3 million of equity method losses that were previously unrecognized. As of both December 31, 2025 and 2024, Pansend's net carrying amount of its investment in MediBeacon was zero, and Pansend had unrecognized losses from this investment. Refer to Note 6. Investments to the Consolidated Financial Statements of this Annual Report on Form 10-K. which is incorporated herein by reference, for additional information on our equity investments. Other income, net: Other income, net for the year ended December 31, 2025, increased $1.3 million to $4.7 million from $3.4 million for the year ended December 31, 2024. The increase was primarily driven by the $4.4 million step-up gain following MediBeacon's FDA approval in January 2025, and an increase in fair value gains on marketable securities at our Non-Operating Corporate segment. These increases were partially offset by an increase in foreign currency translation losses from our Infrastructure segment, a decrease in interest income at our Life Sciences and Non-Operating Corporate segments, and a legal settlement expense at our Non-Operating Corporate segment in the current year. Net loss on repurchase or extinguishment of debt remained consistent as compared to the prior year; however, the net loss was comprised of a loss on extinguishment of debt of $0.3 million related to a refinancing at our Infrastructure segment during the year ended December 31, 2025, as compared to a $2.2 million loss on debt extinguishment at R2 Technologies in the comparable year, which was largely offset by a $1.9 million gain on debt repurchase at our Non-Operating Corporate segment related to the partial repurchase of the 2026 Convertible Notes in the comparable year. Refer to Note 21. Supplementary Financial Information to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on other income, net. Income tax expense : Income tax expense for the year ended December 31, 2025, decreased $3.8 million to $2.5 million from $6.3 million for the year ended December 31, 2024. The decrease was primarily driven by the decrease in pre-tax results, as well as the limitations on the utilization of net operating losses ("NOL") by INNOVATE's U.S. consolidated group in the comparable year. These limitations arose from Internal Revenue Code Section 382 and the Tax Cuts and Jobs Act's 80 percent limitation on NOLs incurred after 2017. The Organization for Economic Cooperation and Development ("OECD") has announced an Inclusive Framework on Base Erosion and Profit Shifting including a Pillar Two Model to provide for a 15% global minimum tax on the earnings of multinational corporations with consolidated revenue over €750 million. Many jurisdictions have enacted Pillar Two legislation that started to become effective in 2024. The OECD, and its member countries, continue to release new guidance and legislation on Pillar Two. Based on current enacted laws, Pillar Two is not expected to materially impact our effective tax rate or cash flows in the next year. We will continue to evaluate the impact on our financial position as new legislation or guidance is introduced which could change our current assessment. 54 On July 4, 2025, the One Big Beautiful Bill Act "OBBBA") was enacted into law, introducing various changes to U.S. federal income tax provisions, including modifications to bonus depreciation, interest expense limitations, and the treatment of research and development expenditures. Under ASC 740, the effects of newly enacted tax legislation must be recognized in the period that includes the enactment date. Management has evaluated the provisions of the OBBBA and their current and potential impact on the financial statements. Based on this evaluation, the Company does not expect the OBBBA to have a material effect on the current or deferred income tax balances, effective tax rate, or overall financial position. The effects of the legislation have been reflected in the Company's income tax provision for the year ended December 31, 2025. The Company will continue to monitor developments and assess the impact of the OBBBA as additional guidance becomes available and as facts and circumstances evolve. Segment Results of Operations In the Company's Consolidated Financial Statements, other operating (income) loss includes: (i) (gain) loss on sale or disposal of assets; (ii) lease termination costs and (gains) losses on lease modifications; (iii) asset impairment expense; and (iv) accretion of asset retirement obligations; as applicable. Each table summarizes the results of operations of our operating segments (in millions). Infrastructure Segment Year Ended December 31, 2025 2024 Increase / (Decrease) Revenue $ 1,210.3 $ 1,071.6 $ 138.7 Cost of revenue 1,026.2 880.4 145.8 Selling, general and administrative 115.2 123.1 (7.9) Depreciation and amortization 12.1 12.0 0.1 Other operating loss (income) 1.4 (9.6) 11.0 Income from operations $ 55.4 $ 65.7 $ (10.3) Revenue: Revenue for the year ended December 31, 2025, increased $138.7 million to $1,210.3 million from $1,071.6 million for the year ended December 31, 2024. The increase was primarily driven by the timing and size of projects at DBMG's commercial structural steel fabrication and erection business, which had increased activity subsequent to the comparable year on certain large commercial construction projects. The increase was partially offset by the timing and size of projects at the industrial maintenance and repair business, Banker Steel, and, the construction modeling and detailing business, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business in the comparable year, which also had increased activity in the prior year on certain large commercial construction projects that have since been completed. Cost of revenue : Cost of revenue for the year ended December 31, 2025, increased $145.8 million to $1,026.2 million from $880.4 million for the year ended December 31, 2024. The increase was primarily driven by the increase in revenues at DBMG's commercial structural steel fabrication and erection business due to the increased activity subsequent to the comparable year on certain large commercial construction projects, which was partially offset by decreases as a result of the decrease in revenues at the industrial maintenance and repair business and Banker Steel from the timing of project activity on certain large commercial construction projects and decreases in costs as they were completed in the current year. Selling, general and administrative: S elling, general and administrative expense for the year ended December 31, 2025, decreased $7.9 million to $115.2 million from $123.1 million for the year ended December 31, 2024. The decrease was primarily driven by a decrease in compensation-related expenses, and, to a lesser extent, decreases in consulting fees and travel expenses. Other operating loss (income) : Other operating loss (income) for the year ended December 31, 2025, decreased by $11.0 million to a loss of $1.4 million from income of $9.6 million for the year ended December 31, 2024. The decrease was primarily driven by an unrepeated gain on lease modification and unrepeated gains on the sale of various properties in the comparable year, as well as various losses on the sale of properties and a loss on lease modification in the current year. 55 Life Sciences Segment Year Ended December 31, 2025 2024 Increase / (Decrease) Revenue $ 12.5 $ 9.8 $ 2.7 Cost of revenue 8.4 6.4 2.0 Selling, general and administrative 14.6 17.1 (2.5) Depreciation and amortization 0.4 0.4 — Loss from operations $ (10.9) $ (14.1) $ 3.2 Revenue : Revenue for the year ended December 31, 2025, increased $2.7 million to $12.5 million from $9.8 million for the year ended December 31, 2024. The increase in revenue was attributable to R2 Technologies, primarily driven by increases in Glacial Spa and Glacial fx unit sales outside North America, as well as an increase in consumable sales in North America. The increases were partially offset by a decrease in Glacial fx unit sales in North America. Cost of revenue : Cost of revenue for the year ended December 31, 2025, increased $2.0 million to $8.4 million from $6.4 million for the year ended December 31, 2024. The increase in cost of revenue was attributable to R2 Technologies, primarily driven by the increase in revenue from the additional unit system and consumables sales noted above and, to a lesser extent, the related increases in warranty expenses, freight costs, and royalty expenses. Selling, general and administrative : Selling, general and administrative expense for the year ended December 31, 2025, decreased $2.5 million to $14.6 million from $17.1 million for the year ended December 31, 2024. The decrease was primarily driven by a reduction in compensation-related expenses at Pansend and R2 Technologies. Spectrum Segment Year Ended December 31, 2025 2024 Increase / (Decrease) Revenue $ 23.2 $ 25.7 $ (2.5) Cost of revenue 11.7 11.5 0.2 Selling, general and administrative 7.6 7.3 0.3 Depreciation and amortization 5.0 5.1 (0.1) Other operating (income) loss (1.0) 0.4 (1.4) (Loss) income from operations $ (0.1) $ 1.4 $ (1.5) Revenue: Revenue for the year ended December 31, 2025, decreased $2.5 million to $23.2 million from $25.7 million for the year ended December 31, 2024. The decrease was primarily driven by the termination of certain customers in the current year and a downturn in the direct response advertising market, which was partially offset by the launch of new networks subsequent to the comparable year. Cost of revenue: Cost of revenue for the year ended December 31, 2025, increased $0.2 million to $11.7 million from $11.5 million for the year ended December 31, 2024. The majority of our Spectrum segment's costs are relatively fixed in nature and do not fluctuate significantly with changes in revenue. Other operating (income) loss : Other operating (income) loss for the year ended December 31, 2025, increased $1.4 million to income of $1.0 million from a loss of 0.4 million for year ended December 31, 2024. The increase in income was primarily driven by a favorable legal settlement in the current year and unrepeated lease termination settlement costs incurred in the comparable year. 56 Non-Operating Corporate Year Ended December 31, 2025 2024 Increase / (Decrease) Selling, general and administrative $ 15.6 $ 12.7 $ 2.9 Depreciation and amortization — 0.1 (0.1) Other operating loss — 0.2 (0.2) Loss from operations $ (15.6) $ (13.0) $ (2.6) Selling, general and administrative : Selling, general and administrative expenses for the year ended December 31, 2025 increased 2.9 million to $15.6 million from $12.7 million for the year ended December 31, 2024. The increase was primarily driven by $4.3 million of debt refinancing costs and $0.4 million of expenses in the current year related to potential dispositions, which were partially offset by a decrease in other legal fees due to legal matters settled in or subsequent to the comparable year, as well as a decrease in insurance expense and a net decrease in employee-related expenses. Loss from Equity Investees Year Ended December 31, 2025 2024 (Increase) / Decrease Life Sciences $ (5.9) $ (2.3) $ (3.6) Loss from equity investees $ (5.9) $ (2.3) $ (3.6) Life Sciences: Loss from equity investees within our Life Sciences segment for the year ended December 31, 2025, increased $3.6 million to $5.9 million from $2.3 million for the year ended December 31, 2024. The increase in loss was due to an increase in losses recognized from MediBeacon. During the year ended December 31, 2025, as a result of the first quarter equity transactions that occurred upon FDA approval of MediBeacon's TGFR, Pansend's basis in MediBeacon increased by $5.9 million, consisting of a $4.4 million step-up gain and $1.5 million from the conversion of accrued interest on Pansend's convertible notes with MediBeacon, resulting in Pansend recognizing $5.9 million of equity method losses that were previously unrecognized. During the year ended December 31, 2024, Pansend's basis in MediBeacon had increased by $2.3 million due to the issuance of additional convertible note investments in the comparable year, resulting in Pansend recognizing $2.3 million of equity method losses that were previously unrecognized. As of both December 31, 2025 and 2024, Pansend's net carrying amount of its investment in MediBeacon was zero, and Pansend had unrecognized losses from this investment. Refer to Note 6. Investments to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on our equity investments. Non-GAAP Financial Measures and Other Information Adjusted EBITDA Adjusted EBITDA is not a measurement recognized under U.S. GAAP. In addition, other companies may define Adjusted EBITDA differently than we do, which could limit its usefulness. Management believes that Adjusted EBITDA provides investors with meaningful information for gaining an understanding of our results as it is frequently used by the financial community to provide insight into an organization’s operating trends and facilitates comparisons between peer companies, since interest, taxes, depreciation, amortization and the other items listed in the definition of Adjusted EBITDA below can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA can also be a useful measure of a company’s ability to service debt. While management believes that non-U.S. GAAP measurements are useful supplemental information, such adjusted results are not intended to replace our U.S. GAAP financial results. Using Adjusted EBITDA as a performance measure has inherent limitations as an analytical tool as compared to net income (loss) or other U.S. GAAP financial measures, as this non-U.S. GAAP measure excludes certain items, including items that are recurring in nature, which may be meaningful to investors. As a result of the exclusions, Adjusted EBITDA should not be considered in isolation and does not purport to be an alternative to net income (loss) or other U.S. GAAP financial measures as a measure of our operating performance. The calculation of Adjusted EBITDA, as defined by us, consists of Net income (loss) attributable to INNOVATE Corp., excluding: discontinued operations, if applicable; depreciation and amortization; other operating (income) loss, which is inclusive of (gain) loss on sale or disposal of assets, lease termination costs, (gains) losses on lease modifications, asset impairment expense; interest expense; other (income) expense, net; income tax expense (benefit); non-controlling interest; share-based compensation expense; realignment and exit costs; debt refinancing costs; and acquisition and disposition costs. 57 Adjusted EBITDA by segment is summarized as follows: (in millions): Year Ended December 31, 2025 2024 Increase / (Decrease) Infrastructure $ 87.5 $ 89.1 $ (1.6) Life Sciences (16.1) (14.5) (1.6) Spectrum 4.4 7.1 (2.7) Non-Operating Corporate (8.5) (10.4) 1.9 Other and Eliminations (0.1) — (0.1) Adjusted EBITDA $ 67.2 $ 71.3 $ (4.1) The tables below provide reconciliations of net income (loss) attributable to INNOVATE Corp. to Adjusted EBITDA for the years ended December 31, 2025 and 2024: (in millions) Year Ended December 31, 2025 Infrastructure Life Sciences Spectrum Non-Operating Corporate Other and Eliminations INNOVATE Net income (loss) attributable to INNOVATE Corp. $ 29.5 $ (22.2) $ (23.5) $ (44.3) $ (0.1) $ (60.6) Adjustments to reconcile net income (loss) to Adjusted EBITDA: Depreciation and amortization 12.1 0.4 5.0 — — 17.5 Depreciation and amortization (included in cost of revenue) 12.9 — — — — 12.9 Other operating loss (income) 1.4 — (1.0) — — 0.4 Interest expense 8.7 14.8 15.4 50.1 — 89.0 Other (income) expense, net (1.9) (4.6) 9.3 (7.5) — (4.7) Income tax expense (benefit) 16.2 — 0.2 (13.9) — 2.5 Non-controlling interest 2.8 (4.8) (1.4) — — (3.4) Share-based compensation expense — 0.3 — 2.4 — 2.7 Realignment and exit costs 4.9 — 0.2 — — 5.1 Debt refinancing costs 0.1 — 0.2 4.3 — 4.6 Acquisition and disposition costs 0.8 — — 0.4 — 1.2 Adjusted EBITDA $ 87.5 $ (16.1) $ 4.4 $ (8.5) $ (0.1) $ 67.2 (in millions) Year Ended December 31, 2024 Infrastructure Life Sciences Spectrum Non-Operating Corporate Other and Eliminations INNOVATE Net income (loss) attributable to INNOVATE Corp. $ 40.3 $ (19.7) $ (20.0) $ (35.3) $ 0.1 $ (34.6) Adjustments to reconcile net income (loss) to Adjusted EBITDA: Depreciation and amortization 12.0 0.4 5.1 0.1 — 17.6 Depreciation and amortization (included in cost of revenue) 15.2 0.1 — — — 15.3 Other operating (income) loss (9.6) — 0.4 0.2 — (9.0) Interest expense 10.3 9.8 14.3 40.1 — 74.5 Other (income) expense, net (3.9) 0.8 8.5 (8.7) (0.1) (3.4) Income tax expense (benefit) 15.2 — 0.2 (9.1) — 6.3 Non-controlling interest 3.8 (7.3) (1.6) — — (5.1) Share-based compensation expense — 1.2 — 2.2 — 3.4 Realignment and exit costs 5.2 — — — — 5.2 Acquisition and disposition costs 0.6 0.2 0.2 0.1 — 1.1 Adjusted EBITDA $ 89.1 $ (14.5) $ 7.1 $ (10.4) $ — $ 71.3 58 Infrastructure: Net income from our Infrastructure segment for the year ended December 31, 2025, decreased $10.8 million to $29.5 million from $40.3 million for the year ended December 31, 2024. Adjusted EBITDA from our Infrastructure segment for the year ended December 31, 2025, decreased $1.6 million to $87.5 million from $89.1 million for the year ended December 31, 2024. The decrease in Adjusted EBITDA was primarily driven by a decrease in gross profit, despite the increase in revenue, at DBMG's commercial structural steel fabrication and erection business resulting from favorable close-outs of projects in the comparable year. The decrease was also driven by a decrease in revenue and gross profit at Banker Steel, as well as the industrial maintenance and repair business due to timing of certain large construction projects in the comparable year that have since been completed. These decreases were partially offset by a decrease in recurring SG&A expenses, primarily driven by a decrease in compensation-related expenses, and to a lesser extent, decreases in consulting fees and travel expenses. Life Sciences: Net loss from our Life Sciences segment for the year ended December 31, 2025, increased $2.5 million to $22.2 million from $19.7 million for the year ended December 31, 2024. Adjusted EBITDA loss from our Life Sciences segment for the year ended December 31, 2025, increased $1.6 million to $16.1 million from $14.5 million for the year ended December 31, 2024. The increase in Adjusted EBITDA loss was primarily due to an increase in equity method losses recognized from MediBeacon, as discussed in the Loss from Equity Investees section above. The increase in Adjusted EBITDA loss was partially offset by a decrease in SG&A expenses primarily driven by a reduction in compensation-related expenses at Pansend and R2 Technologies and an increase in gross profit at R2 Technologies, driven by increased revenue (as discussed in the Revenue section above). Spectrum: Net loss from our Spectrum segment for the year ended December 31, 2025, increased $3.5 million to $23.5 million from $20.0 million for the year ended December 31, 2024. Adjusted EBITDA from our Spectrum segment for the year ended December 31, 2025, decreased $2.7 million to $4.4 million from $7.1 million for the year ended December 31, 2024. The decrease in Adjusted EBITDA was primarily driven by the net decrease in revenue as a result of the termination of certain customers in the current year and a downturn in the direct response advertising market, which was partially offset by the launch of new networks subsequent to the comparable year. Non-Operating Corporate: Net loss from our Non-Operating Corporate segment for the year ended December 31, 2025, increased $9.0 million to $44.3 million from $35.3 million for the year ended December 31, 2024. Adjusted EBITDA loss from our Non-Operating Corporate segment for the year ended December 31, 2025, decreased $1.9 million to $8.5 million from $10.4 million for the year ended December 31, 2024. The decrease in Adjusted EBITDA loss was primarily driven by a decrease in non-refinancing related legal fees due to legal matters settled in or subsequent to the comparable year, as well as decreases in employee-related expenses and insurance expense. Backlog Backlog is our estimate of the U.S. dollar amount of future revenues we expect to realize as a result of performing work on projects in backlog. Projects in backlog consist of awarded contracts, letters of intent, notices to proceed, change orders, and purchase orders obtained. Backlog increases as contract commitments are obtained, decreases as revenues are recognized and increases or decreases to reflect modifications in the work to be performed under the contracts. Backlog is converted to sales in future periods as work is performed or projects are completed. Backlog can be significantly affected by the receipt or loss of individual contracts. Infrastructure Segment As of December 31, 2025, DBMG's backlog was $1,723.9 million, consisting of $1,713.1 million under contracts or purchase orders and $10.8 million under letters of intent or notices to proceed. Approximately $1,137.0 million, representing 66.0% of DBMG’s backlog as of December 31, 2025, was attributable to five contracts, letters of intent, notices to proceed or purchase orders. If one or more of these projects terminate or reduce their scope, DBMG’s backlog could decrease substantially. DBMG has included an additional $12.5 million in its backlog that is not included in the remaining unsatisfied performance obligations disclosed in Note 3. Revenue and Contracts in Process. This additional backlog includes commitments under master service agreements that are estimated amounts of work to be performed based on customer communications, historic performance and knowledge of our customers' intentions. Liquidity and Capital Resources 2025 Debt Refinancing In August 2025, the Company closed on a series of indebtedness refinancing transactions that extended certain of the Company’s debt maturities. The refinancing transactions included: (i) the closings of an exchange offer and consent solicitation with respect to the Company’s senior secured notes; (ii) privately negotiated exchanges of certain of the Company’s convertible senior notes; (iii) amendment and extension of the Company’s 2020 Revolving Credit Agreement; (iv) amendment and extension of the Company’s CGIC note, as well as the exchange of a portion of the Company’s preferred stock held by CGIC and accrued preferred stock dividends in exchange for increasing the principal amount of that note; (v) amendment and extension of the Spectrum debt; and (vi) amendment and extension of the R2 Technologies debt. In addition, on May 20, 2025, DBMG entered into an Amended and Restated Credit Agreement. Total third-party fees expensed related to the refinancing transactions were $4.6 million for the year ended December 31, 2025, respectively, and total third-party fees capitalized were $0.5 million for the year ended December 31, 2025, respectively. Refer to “ Indebtedness ” below and to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information. 59 Indebtedness Non-Operating Corporate 10.50% Senior Secured Notes due 2027 In August 2025, we closed on an exchange offer and consent solicitation to eligible holders of our 8.50% senior secured notes due 2026 ("8.50% 2026 Senior Secured Notes") to exchange such notes for newly issued 10.50% senior secured notes due 2027 (the “10.50% 2027 Senior Secured Notes”). The Company, the guarantors party thereto from time to time and U.S. Bank Trust Company, National Association, as trustee (in such capacity, the “10.50% 2027 Senior Secured Notes Trustee”) and collateral trustee, entered into an indenture (the “10.50% 2027 Senior Secured Notes Indenture”) governing the 10.50% 2027 Senior Secured Notes and we issued $360.4 million aggregate principal amount of 10.50% senior secured notes due 2027 (the "10.50% 2027 Senior Secured Notes") as consideration for the exchange of $328.1 million aggregate principal amount of the 8.50% 2026 Senior Secured Notes. The new principal amount includes fees payable to the lenders and $52.50 principal amount of 10.50% 2027 Senior Secured Notes per $1,000 principal amount of 8.50% 2026 Senior Secured Notes exchanged, paid to exchanging holders in lieu of the interest payment in respect of the 8.50% 2026 Senior Secured Notes that was due on August 1, 2025. The 10.50% 2027 Senior Secured Notes mature on February 1, 2027 and accrue interest at a rate of 10.50% per year, payable semi-annually on February 1 st and August 1 st of each year, commencing on February 1, 2026. For the first interest period only, interest has been paid in kind. All subsequent interest payments are payable in cash. As of December 31, 2025, the total carrying amount related to the note was $345.5 million, inclusive of $360.4 million aggregate principal outstanding, partially offset by a $13.9 million total unamortized discount and $1.0 million of total unamortized deferred financing fees. The effective interest rate on the 10.50% 2027 Senior Secured Notes was 14.4% as of December 31, 2025. Aggregate interest expense for the new 10.50% 2027 Senior Secured Notes, including the contractual interest coupon and amortization of fees was $20.6 million for the year ended December 31, 2025. Our obligations under the 10.50% 2027 Senior Secured Notes Indenture are irrevocably and unconditionally guaranteed, jointly and severally, by the same guarantors that guarantee the 8.50% 2026 Senior Secured Notes (the “Subsidiary Guarantors”). The 10.50% 2027 Senior Secured Notes and the related guarantees are senior secured obligations of the Company and the Subsidiary Guarantors. Asset Sale Offer. If we complete certain assets sales, we may be required in certain circumstances to make an offer to purchase the 10.50% 2027 Senior Secured Notes with the net cash proceeds from such an asset sale at a price in cash equal to 101% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date of purchase. Certain Covenants. The 10.50% 2027 Senior Secured Notes Indenture contains covenants limiting, among other things, our ability, and, in certain cases, our subsidiaries' ability, to incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; make certain restricted payments; sell assets; engage in certain transactions with affiliates; or consolidate or merge with, or sell substantially all of its assets to, another person. Additionally, the 10.50% 2027 Senior Secured Notes Indenture required us to meet certain milestones with respect to strategic alternatives for our operating subsidiaries, including asset sales generating at least $150 million in net proceeds, to be applied to the 10.50% 2027 Senior Secured Notes, such that by September 1, 2025, we needed to have a bona fide bid or term sheet related to a potential sale. The September 1, 2025 milestone was not reached, and in accordance with the indenture, we have thus been required to commence a sales process for DBMG. The sales process for DBMG has separate milestone requirements, which we have either met or extended as of December 31, 2025. In addition, subsequent to year end, the February 1, 2026 milestone for a final bid or term sheet was extended to March 1, 2026 and was met on this revised date. The March 1, 2026 milestone for a fully executed purchase agreement, has been extended to April 1, 2026. As of the date of this Annual Report on Form 10-K, the Company is in compliance with the milestone covenants. Any failure to comply with the restrictions or covenants in the indentures governing INNOVATE’s 2027 Senior Secured Notes and 2027 Convertible Notes , or any other agreement governing our existing indebtedness or indebtedness we may incur in the future, may result in an event of default under those agreements. Such default may allow the creditors to accelerate the related debt, which acceleration may trigger cross-acceleration or cross-default provisions in other debt. Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information. 8.50% Senior Secured Notes due 2026 The original $330.0 million aggregate principal amount of 8.50% senior secured notes due February 1, 2026 (the "8.50% 2026 Senior Secured Notes") were issued in 2021 at 100% of par. In August 2025, we exchanged $328.1 million aggregate principal amount of the 8.50% 2026 Senior Secured Notes for new 10.50% 2027 Senior Secured Notes, as discussed above. As of December 31, 2025, we had $1.9 million aggregate principal amount of the 8.50% 2026 Senior Secured Notes remaining with an effective interest rate of 9.3%. Subsequent to year end, on February 2, 2026, the Company repaid the remaining principal balance and all accrued interest. Interest was payable semi-annually in arrears on February 1 st and August 1 st of each year. Aggregate interest expense, including the contractual interest coupon and amortization of the deferred financing fees was $17.9 million for the year ended December 31, 2025. 60 Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference for additional information. 2027 Convertible Notes On August 4, 2025, we settled the exchanges (collectively, the “Convertible Notes Exchanges”) under our privately negotiated exchange agreements (collectively, the “Exchange Agreements”) with certain holders of our 7.5% Convertible Senior Notes due 2026 ("the 2026 Convertible Notes"). Pursuant to the Exchange Agreements, we exchanged $48.7 million of the then outstanding aggregate principal amount of the 2026 Convertible Notes for $53.5 million aggregate principal amount of newly issued 9.5% Convertible Senior Secured Notes due 2027 (the “2027 Convertible Notes”), which is the total outstanding as of December 31, 2025. The 2027 Convertible Notes mature on March 1, 2027 unless earlier converted, redeemed or purchased. The new principal amount includes fees payable to the lenders and $47.50 principal amount of 2027 Convertible Notes per $1,000 principal amount of 2026 Convertible Notes exchanged, paid to exchanging holders in lieu of the interest payment in respect of the 2026 Convertible Notes that was due on August 1, 2025. As of December 31, 2025, the total carrying amount related to the notes was $52.5 million, inclusive of $53.5 million aggregate principal outstanding, partially offset by a remaining unamortized net discount of $0.8 million and unamortized deferred financing fees of $0.2 million. The 2027 Convertible Notes accrue interest at a rate of 9.5% per year. The effective interest rate on the 2027 Convertible Notes is 11.1%. Interest on the 2027 Convertible Notes is paid semi-annually on February 1 st and August 1 st of each year, commencing on February 1, 2026. For the first interest period only, interest has been paid in kind. All subsequent interest payments are payable in cash. Aggregate interest expense, including the contractual interest coupon and amortization of the deferred financing fees and net discount was $2.4 million for the year ended December 31, 2025. The Company, the guarantors party thereto from time to time and U.S. Bank Trust Company, National Association, as trustee (in such capacity, the “2027 Convertible Notes Trustee”) and collateral trustee, entered into an indenture (the “2027 Convertible Notes Indenture”), dated as of August 4, 2025, governing the 2027 Convertible Notes. Certain Covenants. The 2027 Convertible Notes Indenture contains covenants limiting, among other things, our ability, and, in certain cases, our subsidiaries' ability, to incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; make certain restricted payments; sell assets; 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. Any failure to comply with the restrictions or covenants in the indentures governing INNOVATE’s 2027 Senior Secured Notes and 2027 Convertible Notes , or any other agreement governing our existing indebtedness or indebtedness we may incur in the future, may result in an event of default under those agreements. Such default may allow the creditors to accelerate the related debt, which acceleration may trigger cross-acceleration or cross-default provisions in other debt. Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information. 2026 Convertible Notes The original $51.8 million aggregate principal amount of 7.50% convertible notes (the "2026 Convertible Notes") were issued under an indenture dated February 1, 2021, between the Company and U.S. Bank, as trustee. During July 2024, INNOVATE repurchased $2.9 million principal amount of its 2026 Convertible Notes at a market discount for $1.1 million, which was inclusive of accrued interest of $0.1 million. As discussed above, on August 4, 2025, pursuant to the Exchange Agreements, we exchanged $48.7 million aggregate principal amount of the 2026 Convertible Notes for new 2027 Convertible Notes. Subsequent to the exchanges and, as of December 31, 2025, we had $0.2 million aggregate principal remaining of the 2026 Convertible Notes. The 2026 Convertible Notes mature on August 1, 2026, unless earlier converted, redeemed or purchased. The 2026 Convertible Notes accrue interest at a rate of 7.5% per year, which interest is paid semi-annually in arrears on February 1 st and August 1 st of each year. As of December 31, 2025, the effective interest rate on the 2026 Convertible Notes was 3.0%. Aggregate interest expense recognized relating to both the contractual interest coupon and amortization of discount net of premium and deferred financing costs was $0.9 million for the year ended December 31, 2025. On August 4, 2025, the Company and U.S. Bank Trust Company, National Association, as trustee (the “2026 Convertible Notes Trustee”) entered into a first supplemental indenture (the “2026 Convertible Notes Supplemental Indenture”) to the indenture, dated as of February 1, 2021, by and among the Company, the guarantors party thereto from time to time and the 2026 Convertible Notes Trustee, governing the 2026 Convertible Notes (the “2026 Convertible Notes Indenture”). The 2026 Convertible Notes Supplemental Indenture amended the 2026 Convertible Notes Indenture and the 2026 Convertible Notes to effectuate certain proposed amendments with respect to the 2026 Convertible Notes pursuant to the solicitation of consents, which amendments included eliminating substantially all of the restrictive covenants, eliminating certain events of default, modifying covenants regarding mergers and consolidations and modifying or eliminating certain other provisions, contained in the 2026 Convertible Notes Indenture and the 2026 Convertible Notes. 61 Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference. Our debt contains customary events of default which could, subject to certain conditions, cause the 2026 Senior Secured Notes and the 2026 Convertible Notes to become immediately due and payable. Revolving Line of Credit We have a revolving credit agreement with MSD PCOF Partners IX, LLC ("MSD") which has a maximum commitment of $20.0 million ("Revolving Line of Credit"), of which $20.0 million had been drawn as of December 31, 2025. Interest on loans under the Revolving Line of Credit accrues at SOFR plus 5.75% and is payable quarterly. On August 4, 2025, the Company and MSD entered into an Eighth Amendment to Credit Agreement, which among other things, extended the maturity of the 2020 Revolving Credit Agreement to September 15, 2026 and added a new $0.4 million extension fee that is payable on the earlier of the maturity date or the date of prepayment of the debt. The Revolving Line of Credit has an interest rate margin applicable to loans borrowed under the Revolving Line of Credit of 5.75%, and the benchmark rates for the interest are SOFR-based rates. As of December 31, 2025, the effective interest rate on the Revolving Line of Credit, as amended, was 10.0%. Interest is paid quarterly in arrears. The Revolving Line of Credit also includes a commitment fee at a per annum rate of 1.0% calculated based off the actual daily amount of unused availability under the Revolving Line of Credit with MSD, and also includes a requirement for prepayment using the net cash proceeds received from certain asset sales. The affirmative and negative covenants governing the Revolving Line of Credit are substantially consistent with the affirmative and negative covenants contained in the indenture that governs the Company's 10.5% Senior Secured Notes. Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference for additional information. CGIC Promissory Note On August 4, 2025, we entered into a Subordinated Secured Promissory Note with CGIC to, among other things, extend the maturity of its existing subordinated unsecured promissory note with CGIC (the “CGIC Note”) from February 28, 2026 to April 30, 2027, and secure the amended CGIC Note by a third priority lien on the same collateral securing the 10.50% 2027 Senior Secured Notes and the 2027 Convertible Notes. The amended CGIC Note has an interest rate of 16.0%, and an effective interest rate of 14.6% as of December 31, 2025. Interest on the amended CGIC Note will be paid on a monthly basis and in kind through August 31, 2026. All interest payments thereafter will be payable in cash, in arrears. As part of the agreement with CGIC, the accrued value of 8,063 shares of Series A-4 Preferred Stock of the Company held by CGIC, and unpaid accrued cash dividends for the A-3 and A-4 Preferred Stock were exchanged for an additional principal amount of the CGIC Note, on a dollar-for-dollar basis (the “Preferred Stock Exchange”). The additional principal amount incurred under the Preferred Stock Exchange was $9.6 million (reflective of the $9.1 million accrued value of the Series A-4 Preferred Stock and $0.5 million in accrued dividends on the Series A-3 and A-4 Preferred Stock). In addition, an extension fee and accrued interest of $2.4 million on the CGIC Note through July 31, 2025, were capitalized to the new principal amount of the CGIC Note, for a total new aggregate outstanding principal amount of $43.0 million. As of December 31, 2025 the total carrying amount related to the note was $46.8 million, inclusive of $45.9 million of principal (including capitalized interest), and a net unamortized premium of $0.9 million. For the year ended December 31, 2025, interest expense recognized relating to the CGIC Note, including the contractual interest coupon and amortization of the deferred financing fees and discounts, was $5.9 million. Mandatory Prepayment s. After the indefeasible repayment and satisfaction in full in cash of all obligations under the 10.50% 2027 Senior Secured Notes, the 10.50% 2027 Senior Secured Notes Indenture, the 2027 Convertible Notes, the 2027 Convertible Notes Indenture and all other Senior Debt (or, in each case, under any refinancing indebtedness in respect thereof), the Company must prepay the CGIC Note (together with all accrued and unpaid interest and all other amounts payable under the CGIC Note) upon the occurrence of an Asset Sale (as defined in the agreement), in an amount equal to the Net Cash Proceeds (as defined in the agreement) from such Asset Sale, with such prepayment due no later than two (2) Business Days after the receipt of such Net Cash Proceeds by the Company (or its subsidiary, if applicable) from such Asset Sale. Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference for additional information. Infrastructure As of December 31, 2025, our Infrastructure segment has an aggregate amount of principal outstanding debt, including obligations under finance leases, of $87.7 million. 62 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. ("UMB"). 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. The term loan and borrowings under the new DBMG Credit Agreement bear interest at a rate per annum equal to a SOFR Rate plus a variable spread based on a Senior Funded Indebtedness to EBITDA Ratio as defined in the agreement with an interest rate floor of 4.25% per annum. As of December 31, 2025, DBMG had a total outstanding balance of $15.0 million under its Revolving Facility and the effective interest rate on DBMG's revolving loans was 6.80%. Interest on the new revolving facility is paid monthly and the new revolving facility has an unused commitment fee of 0.50% per annum times the average daily unused availability under the line. DBMG had availability for revolving loans of $119.9 million as of December 31, 2025. As of December 31, 2025, the total outstanding balance of DBMG's term loan was $72.6 million, and the effective interest rate was 7.4%. Principal payments and interest on DBMG's term loan is paid monthly. The DBMG Credit Agreement contains usual and customary restrictive and financial covenants related to debt levels and performance, including a Fixed Charge Coverage Ratio; and a Senior Funded Indebtedness to EBITDA Ratio, both as defined in the DBMG Credit Agreement. The DBMG Credit Agreement also contains a Change in Control clause, which would constitute an Event of Default, both as defined in the DBMG Credit Agreement, which could accelerate the maturity of our Infrastructure segment's debt in the future upon certain events, including a sale of DBMG. Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference. Life Sciences As of December 31, 2025, our Life Sciences segment has aggregate principal outstanding debt of $47.9 million with Lancer, a related party. On August 4, 2025, Lancer and R2 Technologies entered into an Amended and Restated Senior Secured Promissory Note (the "Lancer Note"), which was previously amended multiple times as further described below, and which, among other things, extended the maturity of the note to the earlier of August 1, 2026, or the occurrence of (i) a Change of Control (as defined in the amended note) or (ii) the sale of all or substantially all of the assets of R2 Technologies. The note can be repaid at any time with an optional prepayment of the entire then-outstanding and unpaid principal and accrued interest upon five-days written notice to Lancer Capital. The amended note has an interest rate of 12% and removed certain exit and default fees. Accrued and unpaid interest is capitalized monthly into the principal balance. As of December 31, 2025, the effective interest rate on the note, as amended, was 17.0%. The total new initial principal amount of the amended Lancer Note on August 4, 2025 was $43.5 million, which incorporated the $20.0 million principal amount of the note as previously amended effective January 31, 2024 (which was comprised of a principal amount of $17.4 million and unpaid accrued interest of $2.6 million), accrued interest of $7.0 million and $16.5 million in accrued exit fees which had been incurred from January 31, 2024 through August 4, 2025. In addition, a new 5% extension fee of $2.2 million was capitalized into the principal amount on August 4, 2025. As of December 31, 2025, the total carrying amount relating to the note, which is included within the Current portion of debt obligations in the Consolidated Balance Sheet, was $46.6 million, inclusive of $47.9 million of principal (which includes capitalized interest and fees), partially offset by $1.3 million of the unamortized OID for the extension fee. Interest expense, including amortization of fees, related to the Lancer Note was $14.7 million for the year ended December 31, 2025. Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference for additional information. During the year ended December 31, 2025, Pansend closed on several intercompany convertible 13.0% note instruments with R2 Technologies, and funded a total of $7.5 million to R2 Technologies. The outstanding principal amounts of the notes, together with any interest then accrued and unpaid, is convertible at the option of Pansend into shares of a new Series E Convertible Preferred Stock ("Series E") or new Series F Convertible Preferred Stock ("Series F") in R2 Technologies, as applicable to each note, upon written notice to R2 Technologies and the notes have a maturity date, of the earlier of July 31, 2026, or a change in control of R2 Technologies, as defined in the notes. These notes and related intercompany interest are eliminated on consolidation. Subsequent to year end, in February and March 2026, an additional $0.3 million in intercompany convertible 13.0% notes with R2 Technologies was funded. 63 Refer to Note 16. Equity and Temporary Equity to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information on R2 Technologies' convertible preferred stock and convertible notes. Spectrum 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”). As a result of the Spectrum Notes Extension, additional exit fees of $9.9 million were incurred, and the total exit fees of $25.8 million are reflected within Accrued liabilities in the Consolidated Balance Sheet as of December 31, 2025. The exit fees are payable on the earlier of maturity or repayment of the principal, were recorded as original issue discount and are being amortized over the remaining life of the notes, which is assumed to be the maturity date. Interest is payable upon maturity of the notes. As of December 31, 2025 and 2024, the weighted-average effective interest rates on the notes, as amended, were 25.0% and 22.8%, respectively. In connection with the Spectrum Notes Extension, INNOVATE entered into a related side letter (the "Spectrum Letter") with the lenders, which required us to meet certain milestones with respect to strategic alternatives for the Spectrum segment, such that, if the Spectrum Notes are not repaid in full in cash on or before November 1, 2025, the side letter provides that we are required to commence an alternative strategic process for HC2B which includes a sale of HC2B with the net proceeds to be applied to the Spectrum Notes. The November 1, 2025 milestone was not reached and in accordance with the Spectrum letter, management initiated a strategic process for HC2B. We have met or extended all milestones associated with the sale as of December 31, 2025. Subsequent to year-end, the December 31, 2025 milestone for a confidential information memorandum and bid process letter was met on the revised date of January 8, 2026. The February 1, 2026 milestone for the submission of at least one bona fide indication of interest in an HC2B sale was waived. The March 1, 2026 milestone for an executed letter of intent regarding an HC2B sale was extended to March 27, 2026. As of the date of this Annual Report on Form 10-K, we are in compliance with the milestone covenants. The Spectrum Letter also requires us to utilize proceeds from a sale of certain of its existing operations, as allowable under the Company's current agreements and indentures and after all other required payments have been made, for repayment of a portion of the Spectrum Notes. Assuming there are sufficient proceeds remaining after such repayment, the side letter provides that we are required to purchase the institutional investors' equity interests in HC2B and DTV for an aggregate purchase price of $2.0 million. The lenders hold 20,408 shares of common stock in HC2B 2,222,222 shares of common stock in DTV, and warrants to purchase 145,825 shares of common stock of HC2B which can be exercised at any time until August 31, 2028, at an exercise price of $0.01 per share. These redeemable non-controlling interests totaling $2.6 million are reflected at carrying value as redeemable non-controlling interests in the Consolidated Balance Sheet as of December 31, 2025. As of December 31, 2025, Management has evaluated this redeemable non-controlling interest and determined that redemption is not probable at this time due to the uncertainty of redemption. Therefore, the carrying amount has not been adjusted to redemption value. The Company will continue to monitor for any changes in circumstances. Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference for additional information. Restrictive Covenants Pursuant to the 8.50% 2026 Senior Secured Notes Supplemental Indenture, substantially all of the restrictive covenants for the 8.50% 2026 Senior Secured Notes were eliminated. The indenture governing the 2027 Senior Secured Notes dated August 4, 2025, by and among INNOVATE, the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee (in such capacity, the “10.50% 2027 Senior Secured Notes Trustee”) and collateral trustee (the "10.50% 2027 Senior Secured Notes Indenture"), contains certain affirmative and negative covenants limiting, among other things, the ability of the Company, and, in certain cases, the Company’s subsidiaries, to incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; make certain restricted payments; sell assets; engage in certain transactions with affiliates; or consolidate or merge with, or sell substantially all of its assets to, another person. Additionally, the 10.50% 2027 Senior Secured Notes Indenture required us to meet certain milestones with respect to strategic alternatives for our operating subsidiaries, including asset sales generating at least $150 million in net proceeds, to be applied to the 10.50% 2027 Senior Secured Notes, such that by September 1, 2025, we needed to have a bona fide bid or term sheet related to a potential sale. The September 1, 2025 milestone was not reached, and in accordance with the indenture, we have thus been required to commence a sales process for DBMG. The sales process for DBMG has separate milestone requirements, which we have either met or extended as of December 31, 2025. In addition, subsequent to year end, the February 1, 2026 milestone for a final bid or term sheet was extended to March 1, 2026 and was met on this revised date. The March 1, 2026 milestone for a fully executed purchase agreement, has been extended to April 1, 2026. As of the date of this Annual Report on Form 10-K, the Company is in compliance with the milestone covenants. 64 In connection with the Spectrum Notes Extension, INNOVATE entered into a related side letter (the "Spectrum Letter") with the lenders, which required us to meet certain milestones with respect to strategic alternatives for the Spectrum segment, such that, if the Spectrum Notes are not repaid in full in cash on or before November 1, 2025, the side letter provides that we are required to commence an alternative strategic process for HC2B which includes a sale of HC2B with the net proceeds to be applied to the Spectrum Notes. The November 1, 2025 milestone was not reached and in accordance with the Spectrum letter, management initiated a strategic process for HC2B. We have met or extended all milestones associated with the sale as of December 31, 2025. Subsequent to year-end, the December 31, 2025 milestone for a confidential information memorandum and bid process letter was met on the revised date of January 8, 2026. The February 1, 2026 milestone for the submission of at least one bona fide indication of interest in an HC2B sale was waived. The March 1, 2026 milestone for an executed letter of intent regarding an HC2B sale was extended to March 27, 2026. As of the date of this Annual Report on Form 10-K, we are in compliance with the milestone covenants. The instruments governing the Company’s Series A-3 Preferred Stock and Series A-4 Preferred Stock also limit our and our subsidiaries ability to take certain actions, including, among other things, to incur additional indebtedness; issue additional Series A-3 Preferred Stock and Series A-4 Preferred Stock; engage in transactions with affiliates; and make certain restricted payments. These limitations are subject to a number of important exceptions and qualifications. We have conducted our operations in a manner that has resulted in compliance with the indentures, and as of the date of this Annual Report on Form 10-K we are in compliance with the covenants of our debt agreements. The September 1, 2025 milestone was not reached on our 2027 Senior Secured Notes, the Company has thus initiated a sales process for DBMG, and is in compliance with the milestone covenants requirement. Due to other pending milestones which will require the sale of assets and use of proceeds to pay off our debt, we have classified certain debt instruments with long-term contractual maturities as current. If we fail to meet these pending milestones, and therefore are unable to remain in compliance and do not make alternate arrangements or obtain a waiver, an event of default would occur under our indentures which, among other remedies, could result in the outstanding obligations under the indenture becoming immediately due and payable and permitting the exercise of remedies with respect to the collateral. There is no assurance that we will be able to complete any non-operational transaction we may undertake to maintain compliance with covenants or, even if we complete any such transaction, that we will be able to maintain compliance for any subsequent period. The debt instruments associated with our Infrastructure segment contain customary restrictive and financial covenants related to debt levels and performance, including a Fixed Charge Coverage Ratio covenant, and a Senior Funded Indebtedness to EBITDA Ratio, both as defined in the agreement. The debt instruments associated with our Infrastructure segment also contain a Change in Control clause, which would constitute an Event of Default, both as defined in the DBMG Credit Agreement, which could accelerate the maturity of the segment's debt in the future upon certain events, including a sale of DBMG. As of December 31, 2025, our Infrastructure segment was in compliance with the covenants of its debt agreement. Refer to Note 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information. Short- and Long-Term Liquidity Considerations and Risks Our Non-Operating Corporate segment's liquidity needs have primarily been for interest payments on our senior secured notes, convertible notes, Revolving Line of Credit, CGIC Note, and dividend payments, out of legally available funds, on our Series A-3 and Series A-4 Preferred Stock and recurring operational expenses. As a result of our recent refinancing as discussed in " Indebtedness " above, certain interest payments for our Corporate debt will be or has been paid in kind and therefore will be incorporated into the respective principal balances to be paid on maturity of the respective debt. On a consolidated basis, as of December 31, 2025, we had $112.1 million of cash and cash equivalents, excluding restricted cash, compared to $48.8 million as of December 31, 2024. On a stand-alone basis, as of December 31, 2025, our Non-Operating Corporate segment had cash and cash equivalents, excluding restricted cash, of $4.2 million and no marketable securities, as compared to cash and cash equivalents, excluding restricted cash, of $13.8 million and $1.8 million of marketable securities as of December 31, 2024. Our subsidiaries' principal liquidity requirements arise from cash used in operating activities, debt service, and capital expenditures, including purchases of steel construction equipment, OTA broadcast station equipment, development of back-office systems, operating costs and expenses, and income taxes. As of December 31, 2025, we had $687.2 million of principal indebtedness on a consolidated basis compared to $668.3 million as of December 31, 2024, a net increase of $18.9 million, due to an increase in debt at our Non-Operating Corporate and Life Sciences segments, partially offset by a decrease in debt at our Infrastructure segment. The increase at our Non-Operating Corporate segment was due to the August 2025 refinancing and exchanges of our senior secured notes and convertible notes and the capitalization of fees and unpaid accrued interest into the principal amounts of the new notes, the capitalization of extension fees and unpaid accrued interest into the principal amount of our CGIC note, the exchange of 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 for an additional principal amount of the CGIC Note. The increase at our Life Sciences segment was due to the capitalization of fees and unpaid accrued interest of $23.9 million at R2 Technologies into the outstanding principal balance of their note with Lancer. The increases in debt were partially offset by a $57.0 million decrease in debt at our Infrastructure segment due to their second quarter 2025 refinancing transaction and repayments on their debt. 65 On a stand-alone basis, our Non-Operating Corporate segment principal indebtedness was $481.9 million and $429.9 million as of December 31, 2025 and 2024, respectively. The December 31, 2025 indebtedness balance consists of the $360.4 million aggregate principal amount of new 10.50% 2027 Senior Secured Notes, $53.5 million aggregate principal amount of new 9.50% 2027 Convertible Notes, $1.9 million aggregate principal amount remaining of 8.50% 2026 Senior Secured Notes, $0.2 million aggregate principal amount remaining of 7.50% 2026 Convertible Notes, $45.9 million principal amount of the CGIC Note and $20.0 million aggregate principal amount drawn on our Revolving Line of Credit. Our Non-Operating Corporate segment is required to make semi-annual interest payments on the 10.50% 2027 Senior Secured Notes and on the 2027 Convertible Notes, on February 1 st and August 1 st of each year. For the first interest period only, which is the interest period ending on January 31, 2026, interest will be paid in kind. Interest payments on the CGIC Note are required on a monthly basis; however, interest will be paid in kind through August 31, 2026. All remaining interest payments will be paid in cash in arrears. We are also required to make quarterly interest payments on our Revolving Line of Credit and semi-annual interest payments on the 8.50% 2026 Senior Secured Notes and 2026 Convertible Notes on February 1 st and August 1 st of each year. We are required to make dividend payments, out of legally available funds, on our outstanding Series A-3 Preferred Stock and Series A-4 Preferred Stock on January 15 th , April 15 th , July 15 th , and October 15 th of each year. The Series A-3 Preferred Stock and Series A-4 Preferred Stock have a maturity date of July 1, 2026. On the maturity date, the holders will be entitled to redeem the Series A-3 Preferred Stock and Series A-4 Preferred Stock 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); however, it is uncertain at this time whether the Company will have legally available funds to complete the redemption. 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, and (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. During the first quarter of 2025, the Company accrued the 7.5% quarterly dividend of $0.3 million and subsequently paid the dividend in April 2025. During the second, third and fourth quarters of 2025, INNOVATE's Board of Directors (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 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. 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 and Note 16. Equity and Temporary Equity for additional information. Our Non-Operating Corporate segment received $16.6 million in net tax sharing payments from our Infrastructure segment for the year ended December 31, 2025. Additionally, our Non-Operating Corporate segment received $17.0 million in dividends from our Infrastructure segment during the year ended December 31, 2025. Subsequent to year end, on February 2, 2026, DBMG declared a $5.0 million cash dividend which was paid on February 24, 2026, of which our Non-Operating Corporate segment received approximately $4.6 million. We have financed our growth and operations to date, and expect to finance our future growth and operations, through public offerings and private placements of debt and equity securities, credit facilities, vendor financing, finance lease financing and other financing arrangements, as well as cash generated from the operations of our subsidiaries. In the future, we may also choose to sell additional assets or certain investments to generate cash. We are currently exploring other strategic alternatives and it is reasonably possible that within the next twelve months we will generate cash proceeds from an asset sale that will be used to repay certain debt obligations as required. 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 of the Company's outstanding debt obligations. Based on these conditions, we may not be able to meet our 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 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 11. Debt Obligations to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference. 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. 66 Management 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 we will have the ability to be successful in any asset sales, additional capital raise, or the refinancing of our 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 our debt covenants or other possible events of default. Further, there can be no assurance that we 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 dates. 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. The Consolidated Financial Statements included in this Annual Report on Form 10-K do not include any adjustments to the carrying amounts and classification of assets, liabilities, or expenses that may result if the Company is unable to continue as a going concern. While we have noted the conditions above regarding our ability to continue as a going concern, it is important to note that our largest subsidiary, DBMG, is operationally profitable, continues to maintain a strong financial position and remains in good standing with its lenders. Under INNOVATE’s Senior Secured Notes Indenture, DBMG is a restricted subsidiary, not a guarantor, and INNOVATE’s equity interests in DBMG are pledged as collateral. Capital Expenditures Capital expenditures are set forth in the table below (in millions): Year Ended December 31, 2025 2024 Infrastructure $ 23.4 $ 17.6 Life Sciences — — Spectrum 2.7 1.4 Total $ 26.1 $ 19.0 Purchase Commitments Unrecorded future minimum purchase commitments as of December 31, 2025, were $362.3 million. Refer to Note 13. Commitments and Contingencies to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information. Summary of Consolidated Cash Flows The below table summarizes the cash provided by or used in our activities (in millions): Year Ended December 31, Change 2025 2024 Cash provided by operating activities $ 146.6 $ 9.1 $ 137.5 Cash used in investing activities (22.6) (13.9) (8.7) Cash used in financing activities (61.2) (26.5) (34.7) Effects of exchange rate changes on cash, cash equivalents and restricted cash 0.6 (1.7) 2.3 Net increase (decrease) in cash and cash equivalents, including restricted cash $ 63.4 $ (33.0) $ 96.4 Operating Activities Cash provided by operating activities was $146.6 million for the year ended December 31, 2025, as compared to $9.1 million for the year ended December 31, 2024, an improvement of $137.5 million. Cash flows from operations are primarily influenced by changes in the timing of demand for services and by operating margins, but can also be affect ed by working capital needs associated with our operations. For the year ended December 31, 2025, the improvement in cash flows from operating activities was primarily driven by an increase in cash provided by operating activities at our Infrastructure segment and, to a much lesser extent, a decrease in cash used in operating activities at our Non-Operating Corporate segment. The improvement at our Infrastructure segment was due to an increase in working capital inflows primarily due to normal business fluctuations in contract-related assets and liabilities, accounts payable and other accrued liabilities, partially offset by a decrease in working capital inflows primarily from the fluctuations in accounts receivable, due to the timing of regular billing and collection activities and ordinary project activity. Our Non-Operating Corporate segment's decrease in cash used in operating activities was primarily due to a decrease in cash paid for interest, partially offset by an increase in cash paid for taxes, and an increase in operating expenses primarily due to refinancing costs. 67 Investing Activities Cash used in investing activities was $22.6 million for the year ended December 31, 2025, as compared to $13.9 million for the year ended December 31, 2024, an increase in cash used in investing activities of $8.7 million. Capital expenditures totaled $26.1 million, or $24.7 million net of proceeds from disposals, for the year ended December 31, 2025, as compared to $19.0 million, or $8.9 million net proceeds after disposals, for the year ended December 31, 2024, for a net increase in cash used in investing activities of $15.8 million. The increase was primarily driven by our Infrastructure segment, which had more PP&E sales in the comparable year due to a plant closure in 2024, and increased PP&E additions in the current year at our Infrastructure and Spectrum segments. In addition the comparable year included unrepeated proceeds of $0.5 million in other investing activities related to a note receivable at our Life Sciences segment. These increases in cash used in investing activities were partially offset by net proceeds related to purchase and sale of marketable securities investments at our Non-Operating Corporate segment of $2.6 million in the current year, as compared to $2.0 million in net payments for these investments in the prior year. In addition, the prior year cash outflows at our Life Sciences segment included loans to MediBeacon of $2.3 million, and there was a $0.7 million decrease in asset acquisition payments at our Spectrum segment as compared to the prior year. Financing Activities Cash used in financing activities was $61.2 million for the year ended December 31, 2025, as compared to $26.5 million for the year ended December 31, 2024, an increase in cash used in financing activities of $34.7 million. The increase in financing cash outflows was primarily driven by our Non-Operating Corporate segment, which received $33.2 million in net proceeds from the Rights Offering and Concurrent Private Placement in 2024. In addition, for the year ended December 31, 2025, net repayments on other debt obligations totaled $27.4 million, as compared to net repayments of $3.0 million in the comparable year, an increase in cash outflows of $24.4 million, driven primarily by term loan activity at our Infrastructure segment, who refinanced their debt in the current year, and had a $29.5 million net increase in other debt obligation outflows, partially offset by our Non-Operating Corporate segment, due to an unrepeated $4.1 million repayment on the CGIC Note in the comparable year and unrepeated $1.0 million payment for partial redemption of our 2026 Convertible Notes in the comparable year. These increases in cash outflows were partially offset by a decrease in net cash outflows from revolving credit facility activity, which totaled $30.9 million for year ended December 31, 2025, as compared to $55.0 million in the prior year, for a decrease in net cash outflows of $24.1 million, which was attributable to our Infrastructure segment. The increase in cash used in financing activities was also driven by a $1.0 million increase in dividends paid primarily due to $1.6 million in dividends declared and paid by DBMG during the year ended December 31, 2025, partially offset by a $0.6 million decrease in cash paid for preferred share dividends at our Non-Operating Corporate Segment, a $0.3 million increase in debt issuance costs paid to third parties and a $0.2 million increase in cash paid for other financing activities. The increase in cash outflows was also partially offset by a $0.3 million decrease in payments to non-controlling interests due to a final distribution made by our Other segment to New Saxons' non-controlling interests in the prior year. Infrastructure Cash Flows Cash flows from operating activities are the principal source of cash used to fund DBMG’s operating expenses, interest payments on debt, and capital expenditures. DBMG's short-term cash needs are primarily for working capital to support operations including receivables, inventories, and other costs incurred in performing on its contracts. DBMG attempts to structure the payment arrangements under its contracts to match costs incurred under the project. To the extent it is able to bill in advance of costs incurred, DBMG generates working capital through billings in excess of costs and recognized earnings on uncompleted contracts. DBMG relies on its credit facilities to meet its working capital needs. DBMG believes that its available funds, cash generated by operating activities and funds available under its bank credit facilities will be adequate to meet all funding requirements for its operating expenses, working capital needs, interest payments on debt and capital expenditures for the foreseeable future. However, DBMG may expand its operations through future acquisitions and may require additional equity or debt financing. DBMG is required to make monthly interest payments on all of its debt. Based upon the December 31, 2025, debt balance, DBMG anticipates that its interest payments will be approximately $1.4 million for each quarter of 2026. New Accounting Pronouncements For information on new accounting pronouncements, refer to Note 2. Summary of Significant Accounting Policies to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference, for additional information. Critical Accounting Estimates The preparation of financial statements in accordance with generally accepted accounting principles under U.S. Generally Accepted Accounting Principles ("GAAP") requires the use of estimates and assumptions that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental disclosures, including information about contingencies, risk and financial condition. 68 Critical accounting estimates are defined as those that are reflective of significant judgments and uncertainties and potentially yield materially different results under different assumptions or conditions. Given current facts and circumstances, we believe that our estimates and assumptions are reasonable, adhere to GAAP and are consistently applied. Our selection and disclosure of our critical accounting policies and estimates has been reviewed with our Audit Committee. The following is a review of the more significant assumptions and estimates used in the preparation of our consolidated financial statements. For all of these estimates, we caution that future events rarely develop exactly as forecasted, and the best estimates routinely require adjustment. Refer to Note 2. Summary of Significant Accounting Policies and Note 3. Revenue and Contracts in Process to the Consolidated Financial Statements of this Annual Report on Form 10-K, which discuss our significant accounting and revenue recognition policies and are incorporated herein by reference. Revenue Recognition - Estimated Costs to Complete With respect to our Infrastructure segment (DBMG), we recognize a significant portion of our revenue over time using the input method to measure the progress of costs incurred for our service and construction contracts. DBMG performs its services primarily under fixed-price contracts and recognizes revenue over time using the input method to measure progress for its projects. DBMG 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 DBMG’s performance as we perform, (b) DBMG’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (c) the DBMG'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. The Company has determined that one or more of these three criteria are met for such contracts. The most reliable measure of progress is the cost incurred towards delivery of the completed project. Therefore, the input method provides the most reliable method to measure progress. Revenue recognition begins when work has commenced. 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 we and a customer or general contractor have agreed on both the initial scope and price of any subsequently mutually agreed upon change orders due to a change in scope or other cost factors, the work has commenced, and that realization of revenue is reasonably assured. Revisions in estimates during the course of contract work are reflected in the accounting period in which the facts requiring the revision become known. Provisions for estimated losses on uncompleted contracts are made in the period in which a loss on a contract becomes determinable. Income Taxes Our annual tax rate is based on our income, statutory tax rates, exchange rates and tax planning opportunities available to us in the various jurisdictions in which we operate. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining our tax expense and in evaluating our tax positions, including evaluating uncertainties. We review our tax positions on a quarterly basis and adjust the related balances as new information becomes available. Deferred tax assets represent amounts available to reduce income taxes payable in future periods and arise primarily from temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards. The realizability of deferred tax assets is evaluated by assessing the sufficiency of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income inherently rely heavily on estimates. To provide insight, we use our historical experience and our short and long-range business forecasts. We must make significant estimates and assumptions about future taxable income and future tax consequences when determining the amount of the valuation allowance. Based on an evaluation of available positive and negative evidence, we concluded that it was more likely than not that the net deferred tax assets of the INNOVATE Corp. U.S. consolidated income tax group and certain separate entity filers will not be realized. Therefore, a full valuation allowance was maintained against the net deferred tax assets as of December 31, 2025. Although realization is not assured for the remaining deferred income tax assets, we believe it is more likely than not that the deferred tax assets will be realized within the applicable statutory expiration periods. However, deferred tax assets could be reduced in future periods if estimates of taxable income are significantly reduced. 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 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. 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 are estimates recorded to the extent applicable based on management judgment. 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. Refer to Note 12. Income Taxes to the Consolidated Financial Statements of this Annual Report on Form 10-K for further information, which is incorporated herein by reference. 69 Goodwill and Intangible Assets Goodwill and intangible assets deemed to have indefinite lives are not amortized, but, rather, are tested for impairment. We test goodwill and indefinite-lived intangibles for impairment at least annually in the fourth quarter (October 1st) or when factors indicate that the carrying amounts of assets may not be recoverable and that there is a potential impairment in accordance with the provisions of ASC 350, Intangibles - Goodwill and Other ("ASC 350"). The factors that we consider important, and which could trigger an impairment review, include, but are not limited to: a more likely than not expectation of selling or disposing all, or a portion, of a reporting unit; a significant decline in the market value of our common stock or debt securities for a sustained period; a material adverse change in economic, financial market, industry or sector trends; a material failure to achieve operating results relative to historical levels or projected future levels; and significant changes in operations or business strategy. Intangible assets that have finite lives are amortized over their estimated useful lives and are subject to the impairment provisions of ASC 360, Property, plant, and equipment ("ASC 360"). We elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying value, and if so, a quantitative test is performed. The quantitative evaluation for impairment of indefinite-lived intangibles consists of a comparison of the fair value of an intangible asset with its carrying amount. If the carrying amount of the intangible asset exceeds its fair value, an impairment loss shall be recognized in an amount equal to the excess, limited to the amount of recognized goodwill. Under the quantitative test, we estimate the fair value of a reporting unit, which requires various assumptions including projections of future cash flows, perpetual growth rates and discount rates. The assumptions about future cash flows and growth rates are based on our assessment of a number of factors, including the reporting unit’s recent performance against budget, performance in the market that the reporting unit serves, and industry and general economic data from third-party sources. Discount rate assumptions are based on an assessment of the risk inherent in those future cash flows. Changes to the underlying businesses could affect the future cash flows, which in turn could affect the fair value of the reporting unit. Further, we assess the current market capitalization, forecasts and the amount by which the fair values exceeded the carrying values. If the carrying amount of the reporting unit exceeds the fair value, an impairment loss shall be recognized in an amount equal to the excess. Based on qualitative assessments performed as of October 1, 2025, management determined it was more likely than not that the fair value of its reporting units and the fair value of the indefinite-lived intangible assets exceeded their carrying values, and, as such, no impairment was required. Intangible assets not subject to amortization (i.e. indefinite-lived intangibles) consist of certain television broadcast licenses. Intangible assets subject to amortization consist of certain trade names, customer contracts and developed technology. These finite-lived intangible assets are amortized based on their estimated useful lives. Such assets are subject to the impairment provisions of ASC 360, wherein impairment is recognized and measured only if there are events and circumstances that indicate that the carrying amount may not be recoverable. The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset group. An impairment loss is recorded to the extent the carrying amount of the asset or asset group exceeds the fair value and is not recoverable. Refer to Note 8. Goodwill and Intangibles, Net, to the Consolidated Financial Statements of this Annual Report on Form 10-K for additional information on goodwill and intangible assets, including, if applicable, any intangible impairments recorded during the years presented, which is incorporated herein by reference. As of December 31, 2025, we had 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. Related Party Transactions For a discussion of our Related Party Transactions, refer to Note 17. Related Parties to the Consolidated Financial Statements of this Annual Report on Form 10-K, which is incorporated herein by reference. Special Note Regarding Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements. We have made statements in this Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “2025 Annual Report”) that may constitute “forward-looking statements.” Such statements are based on current expectations, and are not strictly historical statements. In some cases, you can identify forward-looking statements by terminology such as "if," "may," "should," "believe," "anticipate," "future," "forward," "potential," "estimate," "opportunity," "goal," "objective," "growth," "outcome," "could," "expect," "intend," "plan," "strategy," "provide," "commitment," "result," "seek," "pursue," "ongoing," "include" or in the negative of such terms or comparable terminology. These forward-looking statements inherently involve certain risks and uncertainties and are not guarantees of performance, results, or the creation of stockholder value, although they are based on our current plans or assessments which we believe to be reasonable as of the date hereof. 70 Factors that could cause actual results, events and developments to differ include, without limitation: the ability of our subsidiaries (including, target businesses following their acquisition) to generate sufficient net income and cash flows to make upstream cash distributions, capital market conditions, our and our subsidiaries’ ability to identify any suitable future acquisition opportunities, efficiencies/cost avoidance, cost savings, income and margins, growth, economies of scale, combined operations, future economic performance, conditions to, and the timetable for, completing future acquisitions and dispositions and the successful integration of acquisitions with INNOVATE or the applicable subsidiary, litigation, potential and contingent liabilities, management’s plans, changes in regulations and taxes. Forward-looking statements are not guarantees of performance. You should understand that the following important factors, in addition to those discussed under the section entitled " Risk Factors " in Item 1A of this Annual Report on Form 10-K and the documents incorporated herein by reference, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. You should also understand that many factors described under one heading below may apply to more than one section in which we have grouped them for the purpose of this presentation. As a result, you should consider all of the following factors, together with all of the other information presented herein, in evaluating our business and that of our subsidiaries. INNOVATE Corp. and Subsidiaries Our actual results or other outcomes may differ from those expressed or implied by forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following: • our dependence on distributions from our subsidiaries to fund our operations and payments on our obligations; • substantial doubt about our ability to continue operating as a going concern; • the impact on our business and financial condition of our substantial indebtedness and the significant additional indebtedness and other financing obligations we may incur; • the impact of covenants in the Indentures governing INNOVATE’s 2027 Senior Secured Notes, 2027 Convertible Notes, 2026 Senior Secured Notes, 2026 Convertible Notes, CGIC Subordinated Secured Promissory Note and Revolving Line of Credit, our Third Amended and Restated Certificate of Incorporation and all other subsidiary debt obligations as summarized in Note 11. Debt Obligations to our Consolidated Financial Statements included in this Annual Report on Form 10-K and any future amendments or other new financing agreements on our ability to operate our business and finance our pursuit of acquisition opportunities; • our possible inability to generate sufficient liquidity, margins, earnings per share, cash flow and working capital from our operating segments; • our dependence on certain key personnel including the passing in 2023 of Mr. Barr, our former CEO, President and Director and the successful transition of his management responsibilities; • bank failures or other similar events that could adversely affect our and our customers' and vendors' liquidity and financial performance; • our possible inability to hire and retain qualified executive management, sales, technical and other personnel; • the potential for, and our ability to, remediate future material weaknesses in our internal controls over financial reporting; • changes in market conditions, including from political regulatory or market uncertainty, changes in foreign exchange rates, interest rates or inflation, supply chain disruptions, labor shortages and increases in overall price levels, including in transportation costs; • the uncertain effects of U.S. and foreign government actions affecting international trade and economic policy, including changes in volatility in tariffs and trade policies and retaliatory actions, on credit markets, customers, and customer retention, and demand for our products and services; • increased competition in the markets in which our operating segments conduct their businesses; • limitations on our ability to successfully identify any strategic acquisitions or business opportunities and to compete for these opportunities with others who have greater resources; • our ability to effectively increase the size of our organization, if needed, and manage our growth; • the impact of expending significant resources in considering acquisition targets or business opportunities that are not consummated; • our expectations and timing with respect to our ordinary course acquisition activity and whether such acquisitions are accretive or dilutive to stockholders; • the effect any interests our officers, directors, stockholders and their respective affiliates may have in certain transactions in which we are involved; • uncertain global economic conditions in the markets in which our operating segments conduct their businesses; • the effects related to or resulting from ongoing and recent geopolitical events, such as the conflicts in Ukraine, the Middle East, and Venezuela, including the imposition of additional sanctions and export controls, as well as the broader impact to financial markets and the global macroeconomic and geopolitical environment; • the impact of catastrophic events, including natural disasters, pandemic illness and the outbreak of war, or acts of terrorism; • potential impacts on our business resulting from climate change, greenhouse gas regulations, and the impact of climate change-related changes on the frequency and severity of weather patterns; • the impact of additional material charges associated with our oversight of acquired or target businesses and the integration of our financial reporting; • tax consequences associated with our acquisition, holding and disposition of target companies and assets; • our ability to remain in compliance with the listing standards of the NYSE; • the ability of our operating segments to attract and retain customers; 71 • our expectations regarding the timing, extent and effectiveness of our cost reduction initiatives and management’s ability to moderate or control discretionary spending; • management’s plans, goals, forecasts, expectations, guidance, objectives, strategies and timing for future operations, acquisitions, synergies, asset dispositions, fixed asset and goodwill impairment charges, tax and withholding expense, selling, general and administrative expenses, product plans, performance and results; • management’s assessment of market factors and competitive developments, including pricing actions and regulatory rulings; • our expectations and timing with respect to any strategic dispositions and sales of our operating subsidiaries, or businesses, that we may make in the future and the effect of any such dispositions or sales on our results of operations; • the possibility of indemnification claims arising out of divestitures of businesses; and • our possible inability to raise additional capital when needed or refinance our existing debt, on attractive terms, or at all. Infrastructure / DBM Global Inc. Our actual results or other outcomes of DBMG, and, thus, our Infrastructure segment, may differ from those expressed or implied by forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following: • adverse impacts from weather affecting DBMG’s performance and timeliness of completion of projects, which could lead to increased costs and affect the quality, costs or availability of, or delivery schedule for, equipment, components, materials, labor or subcontractors; • cost overruns on fixed-price or similar contracts or failure to receive timely or proper payments on cost-reimbursable contracts, whether as a result of improper estimates, performance, disputes, or otherwise; • uncertain timing and funding of new contract awards, as well as project cancellations; • potential impediments and limitations on our ability to complete ordinary course acquisitions in anticipated time frames or at all; • changes in the costs or availability of, or delivery schedule for, equipment, components, materials, labor or subcontractors; • changes in economic conditions, including from the impact of inflationary pressures and changes in interest rates; • adverse outcomes of pending claims or litigation or the possibility of new claims or litigation, and the potential effect of such claims or litigation on DBMG’s business, financial condition, results of operations or cash flow; • risks associated with labor productivity, including performance of subcontractors that DBMG hires to complete projects; • its ability to realize cost savings from expected performance of contracts, whether as a result of improper estimates, performance, or otherwise; • its ability to settle or negotiate unapproved change orders and claims; • fluctuating revenue resulting from a number of factors, including the cyclical nature of the individual markets in which our customers operate; • our possible inability to raise additional capital when needed or refinance our existing debt, on attractive terms, or at all; and • lack of necessary liquidity to provide bid, performance, advance payment and retention bonds, guarantees, or letters of credit securing DBMG’s obligations under bids and contracts, or to finance expenditures prior to the receipt of payment for the performance of contracts. Life Sciences / Pansend Life Sciences, LLC Our actual results or other outcomes of Pansend Life Sciences, LLC, and, thus, our Life Sciences segment, may differ from those expressed or implied by forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following: • our Life Sciences segment’s ability to invest in development stage companies; • Indebtedness of R2 Technologies that will mature on August 1, 2026; • our Life Sciences segment’s ability to develop products and treatments related to its portfolio companies; • medical advances in healthcare and biotechnology; • governmental regulation in the healthcare industry; and • our Life Sciences segment possible inability to raise additional capital when needed or refinance its existing debt, on attractive terms, or at all. Spectrum / HC2 Broadcasting Holdings Inc. Our actual results or other outcomes of Broadcasting, and, thus, our Spectrum segment, may differ from those expressed or implied by forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following: • our Spectrum segment’s ability to operate in highly competitive markets and maintain market share; • our Spectrum segment’s ability to effectively implement its business strategy or be successful in the operation of its business; • our Spectrum segment's possible inability to raise additional capital when needed or refinance its existing debt, on attractive terms, or at all; • new and growing sources of competition in the broadcasting industry; and • FCC regulation of the television broadcasting industry. 72 We caution the reader that undue reliance should not be placed on any forward-looking statements, which speak only as of the date of this document. Neither we nor any of our subsidiaries undertake any duty or responsibility to update any of these forward-looking statements to reflect events or circumstances after the date of this document or to reflect actual outcomes, except as required by applicable law. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable.