INNOVATE Corp. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our management evaluated, with the participation of our interim Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 as amended (the "Exchange Act") as of the end of the period covered by this report. Based on this evaluation, our interim Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2025, our disclosure controls and procedures were effective. Disclosure controls and procedures mean our controls and other procedures that are designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management’s Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's internal control over financial reporting is designed to provide reasonable assurance as to the reliability of its financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Because of the inherent limitations in any internal control, no matter how well designed, misstatements may occur and not be prevented or detected. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Further, the evaluation of the effectiveness of internal control over financial reporting described below was made as of a specific date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies and procedures may decline. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. This assessment was based on updated criteria for effective internal control over financial reporting set forth by the Committee of Sponsoring Organizations of the Treadway Commission Internal Control-Integrated Framework (2013). Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2025. Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION There were no "non-Rule 10b5-1 trading arrangements" (as defined in Item 408 of Regulation S-K of the Exchange Act) adopted , modified, or terminated during the quarter ended December 31, 2025, by our directors and Section 16 officers. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. 73 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information regarding this item will be set forth in our definitive proxy statement for our 2026 meeting of stockholders ("2026 Proxy Statement") and is incorporated herein by reference. Code of Conduct We have adopted a Code of Conduct applicable to all directors, officers and employees, including the Chief Executive Officer, senior financial officers and other persons performing similar functions. The Code of Conduct is a statement of business practices and principles of behavior that support our commitment to conducting business in accordance with the highest standards of business conduct and ethics. Our Code of Conduct covers, among other things, compliance resources, conflicts of interest, compliance with laws, rules and regulations, internal reporting of violations and accountability for adherence to the Code of Conduct. A copy of the Code of Conduct is available under the "Investor Relations-Corporate Governance" section of our website at www.innovatecorp.com . Any amendment of the Code of Conduct or any waiver of its provisions for a director or executive officer must be approved by the Board or a duly authorized committee thereof. We intend to post on our website all disclosures that are required by law or the rules of the NYSE concerning any amendments to, or waivers from, any provision of the Code of Conduct. ITEM 11. EXECUTIVE COMPENSATION Information regarding this item will be set forth in our 2026 Proxy Statement and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information regarding this item will be set forth in our 2026 Proxy Statement and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Information regarding this item will be set forth in our 2026 Proxy Statement and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Information regarding principal accountant fees and services will be set forth in our 2026 Proxy Statement and is incorporated herein by reference. PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) List of Documents Filed as Part of This Report: 1) Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm Consolidated Statements of Operations Consolidated Statements of Comprehensive Loss Consolidated Balance Sheets Consolidated Statements of Stockholders’ Deficit Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements 2) Financial Statement Schedules Financial statement schedules have been omitted since they either are not required, not applicable, or the information is otherwise included. 74 3) Exhibit Index The following is a list of exhibits filed (including those incorporated by reference) or furnished as part of this Annual Report on Form 10-K. Exhibit Number Description 2.1 Stock Purchase Agreement, dated March 26, 2021, by and among INNOVATE 2 Corp (f/k/a HC2 Holdings 2, Inc.), Continental Insurance Group, Ltd. and Continental General Holdings LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by INNOVATE on March 29, 2021) (File No. 001-35210) 3.1 Fourth Amended and Restated By-Laws of INNOVATE Corp (f/k/a HC2 Holdings, Inc.) dated February 21, 2019 (incorporated by reference to Exhibit 3.1 to INNOVATE's Current Report on Form 8-K, filed on February 25, 2019) (File No. 001-35210) 3.2 Amendment #1 to Fourth Amended and Restated By-Laws of INNOVATE Corp., (f/k/a HC2 Holdings Inc.) effective September 20, 2021 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on August 19, 2021) (File No. 001-35210) 3.3 Third Amended and Restated Certificate of Incorporation of INNOVATE Corp., dated September 30, 2024 (incorporated by reference to Exhibit 4.1 to INNOVATE's Form S-8 Registration Statement, filed with the SEC on October 30, 2024 (File No. 001-35210) 4.1 Amended and Restated Certificate of Designation of Series A Fixed-to-Floating Rate Perpetual Preferred Stock of DBM Global Intermediate Holdco Inc. dated July 1, 2021 (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed by INNOVATE on July 7, 2021) (File No. 001-35210) 4.2 Secured Note dated October 24, 2019, by and among HC2 Station, HC2 LPTV, HC2 Broadcasting Inc. ("HC2 Broadcasting"), HC2 Network Inc. ("HC2 Network") (collectively the "Subsidiary Borrowers"), HC2 Broadcasting Intermediate Holdings Inc. ("HC2 Intermediate") (the "Intermediate Parent"), HC2 Broadcasting Holdings (the "Parent Borrower" and, together with the Intermediate Parent and the Subsidiary Borrowers, the "Borrowers"), and MSD PCOF Partners XVIII, LLC ("MSD") (incorporated by reference to Exhibit 4.12 to INNOVATE's Annual Report on Form 10-K, filed on March 16, 2020) (File No. 001-35210) 4.3 Amended and Restated Secured Note dated October 24, 2019, by and among HC2 Station, HC2 LPTV, HC2 Broadcasting, HC2 Network (collectively, the "Subsidiary Borrowers"), HC2 Intermediate (the "Intermediate Parent), HC2 Broadcasting Holdings (the "Parent Borrower" and, together with the Intermediate Parent and the Subsidiary Borrowers, the "Borrowers" , and Great American Life Insurance Company ("GALIC") a n d Great American Insurance Company ("GAIC") (incorporated by reference to Exhibit 4.13 to INNOVATE's Annual Report on Form 10-K, filed on March 16, 2020) (File No. 001-35210) 4.4 First Omnibus Amendment to Secured Notes and Intercreditor Agreement dated as of February 21, 2020, by and among Station Group, LPTV, Broadcasting, Network, and HC2 Broadcasting Inc., Intermediate Parent, Parent Borrower, and MSD PCOF Partners, XVIII, LLC ("MSD"), GALIC and GAIC (incorporated by reference to Exhibit 4.1 to INNOVATE’s Quarterly Report on Form 10-Q, filed on May 11, 2020) (File No. 001-35210) 4.5 Second Omnibus Amendment to Secured Notes dated as of August 31, 2020, by and among Station Group, LPTV, Broadcasting, Network, and HC2 Broadcasting Inc., Intermediate Parent, Parent Borrower, and MSD PCOF Partners, XVIII, LLC ("MSD"), GALIC and GAIC (incorporated by reference to Exhibit 10.33 to the Annual Report on Form 10-K filed on March 9, 2022) (File No. 001-35210) 4.6 Third Omnibus Amendment to Secured Notes and Second Amendment to Intercreditor Agreement dated as of September 25, 2020, by and among Station Group, LPTV, Broadcasting, Network, and HC2 Broadcasting Inc., Intermediate Parent, Parent Borrower, and MSD PCOF Partners, XVIII, LLC ("MSD"), GALIC and GAIC (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed on November 9, 2020) (File No. 001-35210) 4.7 Fourth Omnibus Amendment to Secured Notes and Third Amendment to Intercreditor Agreement, dated as of November 25, 2020, by and among Station Group, LPTV, Broadcasting, Network, and HC2 Broadcasting Inc., Intermediate Parent, Parent Borrower, and MSD PCOF Partners, XVIII, LLC ("MSD"), GALIC and GAIC (incorporated by reference to Exhibit 10.34 to the Annual Report on Form 10-K filed on March 9, 2022) (File No. 001-35210), 4.8 Fifth Omnibus Amendment to Secured Notes, Consent and Second Amendment to Asset Sale Under Secured Notes and Intercreditor Agreement, dated as of October 21, 2021 by and among HC2 Station Group, Inc., HC2 LPTV Holdings, Inc., HC2 Broadcasting Inc., HC2 Network Inc., HC2 Broadcasting License Inc., HC2 Broadcasting Intermediate Holdings Inc., HC2 Broadcasting Holdings Inc., MSD PCOF Partners XVIII, LLC, Great American Life Insurance Company and Great American Insurance Company (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by INNOVATE on October 27, 2021) (File No. 001-35210) 4.9 Sixth Omnibus Amendment to Secured Notes, dated as of November 28, 2022, by and among HC2 Station Group, Inc., HC2 LPTV Holdings, Inc., HC2 Broadcasting Inc., HC2 Network Inc., HC2 Broadcasting License Inc., DTV America Corporation, HC2 Broadcasting Intermediate Holdings Inc., HC2 Broadcasting Holdings Inc., MSD PCOF Partners, XVIII, LLC, MassMutual Ascent Life Insurance Company and Great American Insurance Company (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by INNOVATE on November 29, 2022) (File No. 001-35210) 75 4.10 Seventh Omnibus Amendment to Secured Notes, dated as of December 30, 2022, by and among HC2 Station Group, Inc., HC2 Broadcasting Inc., HC2 Network Inc., HC2 Broadcasting License Inc., DTV America Corporation, HC2 Broadcasting Intermediate Holdings Inc., HC2 Broadcasting Holdings Inc., MSD PCOF Partners, XVIII, LLC, MassMutual Ascent Life Insurance Company and Great American Insurance Company (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by INNOVATE on January 5, 2023) (File No. 001-35210) 4.11 Eighth Omnibus Amendment to Secured Notes, dated as of August 8, 2023, by and among, HC2 Station Group, Inc., HC2 Broadcasting Inc., HC2 Network Inc., DTV America Corporation, HC2 Broadcasting Intermediate Holdings Inc., HC2 Broadcasting Holdings Inc., MSD PCOF Partners XVIII, LLC, MassMutual Ascend Life Insurance Company and Great American Insurance Company (incorporated by reference to Exhibit 10.11 to the Quarterly Report on Form 10-Q filed by INNOVATE on August 9, 2023) (File No. 001-35210) 4.12 Ninth Omnibus Amendment to Secured Notes, dated as of November 9, 2023, by and among, HC2 Station Group, Inc., HC2 Broadcasting Inc., HC2 Network Inc., DTV America Corporation, HC2 Broadcasting Intermediate Holdings Inc., HC2 Broadcasting Holdings Inc., MSD PCOF Partners XVIII, LLC, MassMutual Ascend Life Insurance Company and Great American Insurance Company (incorporated by reference to Exhibit 10.11 to the Quarterly Report on Form 10-Q filed by INNOVATE on November 9, 2023) (File No. 001-35210) 4.13 Ninth Amended and Restated Agreement Re: Secured Notes dated October 24, 2019, among HC2 Station, HC2 LPTV, HC2 Network, HC2 Broadcasting, GALIC, GAIC and MSD (incorporated by reference to Exhibit 10.38 to INNOVATE's Annual Report on Form 10-K, filed on March 16, 2020) (File No. 001-35210) 4.14 Indenture governing the 8.500% senior secured notes due 2026, dated as of February 1, 2021, by and among INNOVATE Corp. (f/k/a HC2 Holdings, Inc.), the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed by INNOVATE on February 1, 2021) (File No. 001-35210) 4.15 Form of 8.500% senior secured notes due 2026 (incorporated by reference to Exhibit 4.2 (included in Exhibit 4.1) to the Current Report on Form 8-K filed by INNOVATE on February 1, 2021) (File No. 001-35210) 4.16 Indenture governing the 7.5% convertible senior notes due 2026, dated as of February 1, 2021, by and between INNOVATE Corp. (f/k/a HC2 Holdings, Inc.) and U.S. Bank National Association (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed by INNOVATE on February 1, 2021) (File No. 001-35210) 4.17 Form of 7.5% convertible senior notes due 2026 (incorporated by reference to Exhibit 4.4 (included at p.15 of Exhibit 4.3) to the Current Report on Form 8-K filed by INNOVATE on February 1, 2021) (File No. 001-35210) 4.18 Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (fi led herewith) 4.19 Agreement Re: Secured Notes, dated January 22, 2019, by and among HC2 Station, HC2 LPTV, GALIC and GAIC (incorporated by reference to Exhibit 10.1 to INNOVATE's Current Report on Form 8-K, filed on January 23, 2019) (File No. 001-35210) 4.20 Registration Rights Agreement dated as of September 9, 2020, by and between INNOVATE Corp and Lancer Capital LLC (incorporated by reference to Exhibit 4 .21 to INNOVATE's Annual Report on Form 10-K, filed on March 31, 2025) (File No. 001-35210) 4.21 Second Amended and Restated Registration Rights Agreement, dated as of January 5, 2015, by and among INNOVATE Corp (f/k/a HC2 Holdings, Inc.), the initial purchasers of the Series A Preferred Stock, the initial purchasers of the Series A -1 Preferred Stock and the purchasers of the Series A-2 Preferred Stock (incorporated by reference to Exhibit 10.2 on INNOVATE's Current Report on Form 8-K, filed on January 9, 2015) (File No. 001-35210). 4.22 Registration Rights Agreement dated as of March 5, 2024 by and between INNOVATE Corp. and Lancer Capital LLC (incorporated by reference to Exhibit 10.71 to the Annual Report on Form 10-K filed on March 6, 2024 (File No. 001-35210) 4.23 Indenture governing the 10.500% senior secured notes due 2027, dated as of August 4, 2025, by and among INNOVATE Corp., the guarantors party thereto and U.S. Bank Trust Company, National Association (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on August 5, 2025) (File No. 001-35210) 4.24 Form of 10.500% senior secured notes due 2027 (incorporated by reference to Exhibit A of Exhibit 4.1 to the Current Report on Form 8-K filed on August 5, 2025) (File No. 001-35210) 4.25 First supplemental indenture dated as of August 4 , 2025, to the indenture governing the 8.500% senior secured notes due 2026, dated as of Februar y 1, 2021 , by and among HC2 Holdings, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed on August 5, 2025) (File No. 001-35210) 4.26 Indenture governing the 9.500% convertible senior secured notes due 2027, dated as of August 4, 2025, by and among INNOVATE Corp., the guarantors party thereto and U.S. Bank Trust Company, National Association (incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K filed on August 5, 2025) (File No. 001-35210) 4.27 Form of 9.500% convertible senior secured notes due 2027 (incorporated by reference at page 35 to Exhibit 4.4 to the Current Report on Form 8-K filed on August 5, 2025) (File No. 001-35210) 76 4.28 First supplemental indenture dated as of August 4 , 2 025, to the indenture governing the 7.5% convertible senior notes due 2026, dated as of February 1, 2021, by and between HC2 Holdings, Inc. and U.S. Bank National Association (incorporated by reference to Exhibit 4.6 to the Current Report on Form 8-K filed on August 5, 2025) (File No. 001-35210) 4.29 Seventh Amendment to Credit Agreement, dated as of July 31, 2025, among INNOVATE Corp., the guarantors party thereto and MSD PCOF Partners IX, LLC (incorporated by reference to Exhibit 4.7 to the Current Report on Form 8-K filed on August 5, 2025) (File No. 001-3520) 4.30 Eighth Amendment to Credit Agreement, dated as of August 4, 2025, among INNOVATE Corp. , the guarantors party thereto and MSD PCOF Partners IX, LLC (incorporated by reference to Exhibit 4.8 to the Current Report on Form 8-K filed on August 5 , 2025) (File No. 001-3520) 4.31 Tenth Omnibus Amendment to Secured Notes, dated as of August 4, 2025, by and among HC2 Station Group, Inc., HC2 Broadcasting Inc., HC2 Network Inc., DTV America Corporation, HC2 Broadcasting Intermediate Holdings Inc., HC2 Broadcasting Holdings Inc., MSD PCOF Partners XVIII, LLC, Mass Mutual Ascend Life Insurance Company and Great American Insurance Company (incorporated by reference to Exhibit 4.9 to the Current Report on Form 8-K filed on August 5, 2025) (File No. 001-35210) 4.32 Side Letter to Tenth Omnibus Amendment to Secured Notes, dated as of August 4, 2025, by and among Innovate Corp., MassMutual Ascend Life Insurance Company, Great American Insurance Company and MSD PCOF Partners XVIII, LLC (incorporated by reference to Exhibit 4.10 to the Current Report on Form 8-K filed on August 5, 2025) (File No. 001-35210) 10.1^ INNOVATE Corp. (f/k/a HC2 Holdings Inc.) 2014 Omnibus Equity Award Plan (incorporated by reference to Exhibit A to INNOVATE’s Definitive Proxy Statement, filed on April 30 , 2014) (File No. 001-35210) 10.2^ Employment Agreement, dated May 20, 2015, by and between INNOVATE Corp. (f/k/a HC2 Holdings, Inc.) and Michael Sena (incorporated by reference to Exhibit 10.2 on INNOVATE’s Quarterly Report on Form 10-Q, filed on August 10, 2015) (File No. 001-35210) 10.3^ Revised Form of Indemnification Agreement of INNOVATE Corp. (f/k/a HC2 Holdings, Inc.) (incorporated by reference to Exhibit 10.1 on INNOVATE’s Quarterly Report on Form 10-Q, filed on November 9, 2016) (File No. 001-35210) 10.4^ INNOVATE Corp. (f/k/a HC2 Holdings, Inc.) Amended and Restated 2014 Omnibus Equity Award Plan (incorporated by reference to Exhibit B to the INNOVATE Definitive Proxy Statement filed on April 26, 2017) (File No. 001-35210) 10.5^ Form of Employee Nonqualified Option Award Agreement (incorporated by reference to Exhibit 10.4 on INNOVATE's Quarterly Report on Form 10-Q, filed on August 9, 2016 (File No. 001-35210 ) 10.6 Securities Purchase Agreement dated as of June 27, 2017 among DTV Holding Inc., John N. Kyle II, Kristina C. Bruni, King Forward, Inc., Equity Trust Co FBO John N. Kyle, Tiger Eye Licensing L.L.C., Bella Spectra Corporation, Kim Ann Dagen and Michael S. Dagen, Trustees of the Kim Ann Dagen Revocable Living Trust Agreement dated March 2, 1999, Madison Avenue Ventures, LLC, Paul Donner, Reeves Callaway, Don Shalhub, Shalhub Medical Investments PA, Tipi Sha, LLC, Luis O. Suau, Irwin Podhajser , Humberto Garriga and DT V Holding Inc. (incorporated by reference to Exhibit 10.1 to INNOVATE's Current Report on Form 8-K, filed on June 28, 2017) (File No. 001-35210) 10.7^ INNOVATE Corp (f/k/a HC2 Holdings, Inc.) Second Amended and Restated 2014 Omnibus Equity Award Plan (incorporated by reference to Exhibit A to INNOVATE's Definitive Proxy Statement, filed on April 30, 2018) (File No. 001-35210) 10.8^ Executive Severance Guidelines effective October 21, 2021 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by INNOVATE on October 27, 2021) (File No. 001-35210) 10.9^ 2019 INNOVATE Corp. Executive Bonus Plan effective April 25, 2019 (incorporated by reference to Exhibit 10.35 to the Annual Report on Form 10-k filed on March 9, 2022) (File No. 001-35210)) 10.10^ Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.36 to the Annual Report on Form 10-K filed on March 9, 2022) (File No. 001-35210) 10.11^ Form of Stock Option Agreement (incorporated by reference to Exhibit 10.37 to the Annual Report on Form 10-K filed on March 9, 2022) (File No. 001-35210) 10.12^ Form of Director Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.38 to the Annual Report on Form 10-K filed on March 9, 2022) (File No. 001-35210) 10.13 Letter Agreement with Continental General Insurance Company dated December 30, 2022 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by INNOVATE on January 5, 2023) (File No. 001-35210) 10.14 Stock Purchase Agreement dated as of May 9, 2023 by and between INNOVATE Corp. and Continental General Insurance Company (incorporated by reference to Exhibit 10.5 to Quarterly Report on Form 10-Q filed by INNOVATE on May 10, 2023) (File No. 001-35210) 10.15 Subordinated Unsecured Promissory Note dated as of May 9, 2023 by and between INNOVATE Corp. and Continental General Insurance Company (incorporated by reference to Exhibit 10.6 to Quarterly Report on Form 10-Q filed by INNOVATE on May 10, 2023) (File No. 001-35210) 77 10.16^ Employment Agreement dated as of October 6, 2023 by and between Paul K. Voigt and INNOVATE Corp. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by INNOVATE on October 11, 2023) (File No. 001-35210) 10.17 INNOVATE Corp. Clawback Policy effective November 2, 2023 (incorporated by reference to Exhibit 10.66 to the Annual Report on Form 10-K filed by INNOVATE on March 6, 2024) (File No. 001-35210) 10.18 INNOVATE Corp Second Amended and Restated 2014 Omnibus Equity Award Plan, as amended (incorporated by reference to Exhibit A to INNOVATE’s Information Statement on Schedule 14C, filed with the SEC on October 7, 2024) (File No. 001-35210) 10.19 Third Amended & Restated Limited Liability Company Agreement of Pansend Life Sciences, LLC, dated as of November 21, 2019, by and among INNOVATE 2 Corp. (f/k/a HC2 Holdings 2, Inc.), David Present and Cherine Plumaker (incorporated by reference to Exhibit 10.32 to the Annual Report on Form 10-K filed on March 31, 2025) (File No. 001-35210) 10.20^ Form of Restricted Stock Unit Award Agreement ( i n corporated by reference to Exhibit 10.33 to the Annual report on Form 10-K filed on March 31 , 2025 ) (File No. 001-35210) 10.21 Subordinated Secured Promissory Note dated August 4, 2025 by and between INNOVATE Corp. and Continental General Insurance Company (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on August 5, 2025 (File No. 001-35210) 10.22 Amended and Restated Senior Secured Promissory Note dated as of August 4, 2025 by and between R2 Technologies, Inc. and Lancer Capital LLC (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on August 5, 2025 (File No. 001-35210) 10.23 C ollateral Trust Agreement dated August 4, 2025 among INNOVATE Corp . , the other Grantors from time to time party thereto, U.S. Bank Trust Company, National Association, as Trustee under the Indenture, MSC PCOF Partners IX, LLC, as First-Out Lender under the First-Out Credit Agreement and a Fixed Out Authorized Representative, and U.S. Bank Trust Company, National Association, as Collateral Trustee (filed herewith) 10.24 Amended and Restated Credit Agreement, dated as of May 20, 2025, by and among DBM Global Inc., the other Borrowers listed on Schedule 1.1 thereto, the Lenders, which are party thereto from time to time and UMB Bank, n.a., a national banking association, as Letter of Credit Issuer and as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on May 21, 2025) (File No. 001-35210) 19 INNOVATE Corp. Insider Trading Policy effective November 2, 2023 (incorporated by reference to Exhibit 10.67 to the Annual Report on Form 10-K filed by INNOVATE on March 6, 2024) (File No. 001-35210) 21.1 Subsidiaries of INNOVATE (filed herewith) 23.1 Consent of BDO USA, P.C., an independent registered public accounting firm (filed herewith) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith) 32.1* Section 1350 Certification of Chief Executive Officer and Chief Financial Officer (furnished herewith) 101 The following materials from the registrant’s Annual Report on Form 10-K for the fiscal years ended December 31, 2025 and 2024, formatted in extensible business reporting language (XBRL); (i) Consolidated Statements of Operations (ii) Consolidated Statements of Comprehensive ( Loss ) , (iii) Consolidated Balance Sheets , (iv) Consolidated Statements of Stockholders’ Deficit , (v) Consolidated Statements of Cash Flows , and (vi) Notes to Consolidated Financial Statements (filed herewith). 104 The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, formatted in Inline XBRL (included as Exhibit 101). * These certifications are being "furnished" and will not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference. ^ Indicates management contract or compensatory plan or arrangement. ITEM 16. FORM 10-K SUMMARY Not applicable. 78 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INNOVATE Corp. By: /S/ PAUL K. VOIGT Paul K. Voigt President and Interim Chief Executive Officer (Principal Executive Officer) Date: March 26, 2026 POWER OF ATTORNEY Each of the officers and directors of INNOVATE Corp., whose signature appears below, in so signing, also makes, constitutes and appoints each of Paul K. Voigt and Michael J. Sena, and each of them, his true and lawful attorneys-in-fact, with full power and substitution, for him in any and all capacities, to execute and cause to be filed with the SEC any and all amendments to this Annual Report on Form 10-K, with exhibits thereto and other documents connected therewith and to perform any acts necessary to be done in order to file such documents, and hereby ratifies and confirms all that said attorneys-in-fact or their substitute or substitutes may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated as of March 26, 2026. Signature Title /S/ PAUL K. VOIGT Interim Chief Executive Officer Paul K. Voigt /S/ MICHAEL J. SENA Chief Financial Officer (Principal Financial and Accounting Officer) Michael J. Sena /S/ AVRAM A. GLAZER Director Avram A. Glazer /S/ WARREN H. GFELLER Director Warren H. Gfeller /S/ BRIAN S. GOLDSTEIN Director Brian S. Goldstein /S/ AMY WILKINSON Director Amy Wilkinson 79 INNOVATE CORP. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS R eport of Inde pendent Registered Pu blic Accoun ting Firm ( BDO USA, P.C. , New York, NY ; PCAOB ID# 243 ) F- 2 Consolidated Statements of Operations F- 4 Consolidated Statements of Comprehensive Loss F- 5 Consolidated Balance Sheets F- 6 Consolidated Statements of Stockholders’ Deficit F- 7 Consolidated Statements of Cash Flows F- 8 Notes to Consolidated Financial Statements F- 9 (1) Organization and Business F- 9 (2) Summary of Significant Accounting Policies F- 9 (3) Revenue and Contracts in Process F- 17 (4) Accounts Receivable, Net F- 23 (5) Inventory F- 24 (6) Investments F- 24 (7) Property, Plant and Equipment, Net F- 25 (8) Goodwill and Intangibles, Net F- 25 (9) Leases F- 27 (10) Other Assets, Accrued Liabilities and Other Liabilities F- 28 (11) Debt Obligations F- 30 (12) Income Taxes F- 40 (13) Commitments and Contingencies F- 44 (14) Employee Retirement Plans F- 45 (15) Share-Based Compensation F- 46 (1 6 ) Equity and Temporary Equity F- 48 (1 7 ) Related Parties F- 52 (1 8 ) Operating Segments and Related Information F- 53 (1 9 ) Basic and Diluted Loss Per Common Share F- 54 ( 20 ) Fair Value of Financial Instruments F- 56 (2 1 ) Supplementary Financial Information F- 57 (22) Subsequent Events F- 57 F-1 Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors INNOVATE Corp. New York, New York Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of INNOVATE Corp. (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern Uncertainty The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has significant upcoming maturities of its debt obligations and is subject to certain cross-default provisions. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. F-2 Revenue Recognition - Estimated Costs to Complete for the Infrastructure Segment As described in Note 3 to the consolidated financial statements, revenue for the Company’s Infrastructure Segment (“DBMG”) was approximately $1.21 billion for the year ended December 31, 2025. DBMG performs its services primarily under fixed-price contracts and recognizes revenue over time using the input method to measure progress for its projects. The most reliable measure of progress is the cost incurred towards delivery of the completed project. 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. 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 a loss on a contract becomes determinable. We identified the estimate of certain costs to be incurred towards delivery of projects for specific revenue contracts at DBMG as a critical audit matter. Estimating future direct materials, direct labor, and subcontractor costs included in the measurement of progress of projects for specific revenue contracts at DBMG required significant management judgment. Auditing these elements involved especially challenging auditor judgment in evaluating the reasonableness of the estimated direct materials, labor, and subcontractor costs over the duration of these contracts. The primary procedures we performed to address this critical audit matter included assessing the reasonableness of the estimated direct materials, direct labor, and subcontractor costs included in the measurement of the progress of projects for specific revenue contracts at DBMG through: • Evaluating the reasonableness of project budgets for specific revenue contracts through (i) performing gross margin analysis using subsequently available information, and (ii) for a sample of cost of sales transactions, verifying the related cost types are included in the project’s budget. • Assessing the reasonableness of revisions in the estimated direct materials, direct labor, and subcontractor costs and investigating reasons for changes in expected costs and project margins. • Evaluating the reasonableness of project cost estimates to complete by performing inquiries of project management personnel and assessing the nature of activities required to complete open projects. /s/ BDO USA, P.C. We have served as the Company's auditor since 2011. New York, New York March 26, 2026 F-3 INNOVATE CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except shares and per share amounts) Year Ended December 31, 2025 2024 Revenue $ 1,246.0 $ 1,107.1 Cost of revenue 1,046.3 898.3 Gross profit 199.7 208.8 Operating expenses: Selling, general and administrative 153.1 160.2 Depreciation and amortization 17.5 17.6 Other operating loss (income) 0.4 ( 9.0 ) Income from operations 28.7 40.0 Other (expense) income: Interest expense ( 89.0 ) ( 74.5 ) Loss from equity investees ( 5.9 ) ( 2.3 ) Other income, net 4.7 3.4 Loss from operations before income taxes ( 61.5 ) ( 33.4 ) Income tax expense ( 2.5 ) ( 6.3 ) Net loss ( 64.0 ) ( 39.7 ) Net loss attributable to non-controlling interests and redeemable non-controlling interests 3.4 5.1 Net loss attributable to INNOVATE Corp. ( 60.6 ) ( 34.6 ) Less: Preferred stock dividends 3.4 1.2 Net loss attributable to common stockholders and participating preferred stockholders $ ( 64.0 ) $ ( 35.8 ) Loss per common share - basic and diluted $ ( 4.84 ) $ ( 3.08 ) Weighted-average common shares outstanding - basic and diluted 13,217,593 10,696,274 The accompanying notes are an integral part of these consolidated financial statements. F-4 INNOVATE CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in millions) Year Ended December 31, 2025 2024 Net loss $ ( 64.0 ) $ ( 39.7 ) Other comprehensive income (loss) Foreign currency translation adjustment, net of tax 1.2 ( 2.3 ) Other comprehensive income (loss) $ 1.2 $ ( 2.3 ) Comprehensive loss ( 62.8 ) ( 42.0 ) Comprehensive loss attributable to non-controlling interests and redeemable non-controlling interests 3.3 5.3 Comprehensive loss attributable to INNOVATE Corp. $ ( 59.5 ) $ ( 36.7 ) The accompanying notes are an integral part of these consolidated financial statements. F-5 INNOVATE CORP. CONSOLIDATED BALANCE SHEETS (in millions, except share amounts) December 31, 2025 2024 Assets Current assets Cash and cash equivalents $ 112.1 $ 48.8 Accounts receivable, net 241.1 194.0 Contract assets 64.1 106.3 Inventory 16.0 20.8 Other current assets 18.2 21.0 Total current assets 451.5 390.9 Investments 1.8 3.6 Deferred tax asset 2.0 1.6 Property, plant and equipment, net 141.8 133.6 Goodwill 127.0 126.7 Intangibles, net 165.2 172.4 Other assets 60.8 62.3 Total assets $ 950.1 $ 891.1 Liabilities, temporary equity and stockholders’ deficit Current liabilities Accounts payable $ 141.4 $ 84.8 Accrued liabilities 122.5 109.7 Current portion of debt obligations 581.4 162.2 Contract liabilities 171.9 109.1 Other current liabilities 16.9 17.2 Total current liabilities 1,034.1 483.0 Deferred tax liability 4.7 4.4 Debt obligations 80.3 500.6 Other liabilities 46.3 46.8 Total liabilities 1,165.4 1,034.8 Commitments and contingencies (Note 13) Temporary equity Preferred Stock Series A-3 and Preferred Stock Series A-4, $ 0.001 par value 9.3 16.1 Shares authorized: 20,000,000 ; Shares issued and outstanding: 6,125 and 6,125 of Series A-3; 1,937 and 10,000 of Series A-4, respectively. Redeemable non-controlling interests 1.6 ( 0.5 ) Total temporary equity 10.9 15.6 Stockholders’ deficit Common stock, $ 0.001 par value — — Shares authorized: 250,000,000 Shares issued: 13,818,904 and 13,410,179 , respectively Shares outstanding: 13,655,062 and 13,261,379 , respectively Additional paid-in capital 350.1 350.1 Treasury stock, at cost: 163,842 and 148,800 shares, respectively ( 5.6 ) ( 5.4 ) Accumulated deficit ( 582.5 ) ( 521.9 ) Accumulated other comprehensive loss ( 2.1 ) ( 3.2 ) Total INNOVATE Corp. stockholders’ deficit ( 240.1 ) ( 180.4 ) Non-controlling interests 13.9 21.1 Total stockholders’ deficit ( 226.2 ) ( 159.3 ) Total liabilities, temporary equity and stockholders’ deficit $ 950.1 $ 891.1 The accompanying notes are an integral part of these consolidated financial statements. F-6 INNOVATE CORP. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (in millions, except share amounts) Temporary Equity Stockholders' (Deficit) Equity Preferred Stock and Redeemable Non-Controlling Interests Common Stock Additional Paid-In Capital Treasury Stock Accumulated Deficit Accumulated Comprehensive Income (Loss) (a) Total INNOVATE Stockholders' (Deficit) Equity Non-Controlling Interests Total Stockholders' (Deficit) Equity Shares (thousands) Amount Balance as of December 31, 2023 $ 15.4 7,923.5 $ — $ 328.3 $ ( 5.4 ) $ ( 487.3 ) $ ( 1.1 ) $ ( 165.5 ) $ 13.8 $ ( 151.7 ) Share-based compensation — — — 3.4 — — — 3.4 — 3.4 Preferred stock dividends ( 0.3 ) — — ( 1.2 ) — — — ( 1.2 ) — ( 1.2 ) Issuance of common stock — 224.8 — — — — — — — — Issuance of preferred stock in private placement 31.3 — — — — — — — — — Rights offering, net of transaction costs — 530.6 — 1.9 — — — 1.9 — 1.9 Series C Preferred Share Conversion ( 31.3 ) 4,469.4 — 31.3 — — — 31.3 — 31.3 Reverse stock split — 113.1 — — — — — — — — Effect of Series D investment in R2 Technologies 1.1 — — ( 13.2 ) — — — ( 13.2 ) 12.1 ( 1.1 ) Distributions to non-controlling interests — — — — — — — — ( 0.3 ) ( 0.3 ) Transactions with non-controlling interests — — — ( 0.4 ) — — — ( 0.4 ) 0.2 ( 0.2 ) Net loss ( 0.6 ) — — — — ( 34.6 ) — ( 34.6 ) ( 4.5 ) ( 39.1 ) Other comprehensive loss — — — — — — ( 2.1 ) ( 2.1 ) ( 0.2 ) ( 2.3 ) Balance as of December 31, 2024 $ 15.6 13,261.4 $ — $ 350.1 $ ( 5.4 ) $ ( 521.9 ) $ ( 3.2 ) $ ( 180.4 ) $ 21.1 $ ( 159.3 ) Share-based compensation — — — 2.7 — — — 2.7 — 2.7 Shares withheld to satisfy tax withholdings — ( 15.1 ) — — ( 0.2 ) — — ( 0.2 ) — ( 0.2 ) Dividends 2.2 — — ( 3.4 ) — — — ( 3.4 ) ( 1.6 ) ( 5.0 ) Issuance of common stock, net of forfeitures — 408.8 — — — — — — — — Exchange of preferred stock for debt ( 9.1 ) — — — — — — — — — Transactions with non-controlling interests and redeemable non-controlling interests 2.9 — — 0.2 — — — 0.2 ( 3.0 ) ( 2.8 ) Other — — — 0.5 — — — 0.5 — 0.5 Net loss ( 0.7 ) — — — — ( 60.6 ) — ( 60.6 ) ( 2.7 ) ( 63.3 ) Other comprehensive income — — — — — — 1.1 1.1 0.1 1.2 Balance as of December 31, 2025 $ 10.9 13,655.1 $ — $ 350.1 $ ( 5.6 ) $ ( 582.5 ) $ ( 2.1 ) $ ( 240.1 ) $ 13.9 $ ( 226.2 ) (a) Inclusive of other comprehensive income (loss), foreign currency cumulative translation adjustments totaled a loss of $ 3.3 million and $ 4.5 million as of December 31, 2025 and 2024, respectively. The accompanying notes are an integral part of these consolidated financial statements. F-7 INNOVATE CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Year Ended December 31, 2025 2024 Cash flows from operating activities Net loss $ ( 64.0 ) $ ( 39.7 ) Adjustments to reconcile net loss to cash provided by operating activities Share-based compensation expense 2.7 3.4 Depreciation and amortization (including amounts in cost of revenue) 30.4 32.9 Amortization of deferred financing costs and debt discount 23.7 7.7 Net loss on extinguishment or repurchase of debt 0.3 0.3 Loss from equity investees 5.9 2.3 Gains on lease modifications ( 0.1 ) ( 8.7 ) (Gains) losses on investments ( 5.2 ) 0.2 Asset impairment expense — 0.1 Deferred income tax (benefit) expense ( 0.1 ) 0.5 Other operating activities, net 1.8 ( 2.0 ) Changes in assets and liabilities: Accounts receivable ( 48.7 ) 91.8 Contract assets 42.2 12.3 Other current assets ( 2.9 ) ( 0.1 ) Inventory 4.8 1.9 Other assets 12.3 8.4 Accounts payable 57.1 ( 57.2 ) Accrued liabilities 37.6 12.2 Contract liabilities 62.8 ( 44.4 ) Other current liabilities ( 0.3 ) 2.1 Other liabilities ( 13.7 ) ( 14.9 ) Cash provided by operating activities 146.6 9.1 Cash flows from investing activities Purchase of property, plant and equipment ( 26.1 ) ( 19.0 ) Proceeds from disposal of property, plant and equipment 1.4 10.1 Loans to equity method investee — ( 2.3 ) Purchase of investments ( 0.3 ) ( 2.0 ) Proceeds from sale of investments 2.9 — Cash paid for asset acquisitions ( 0.5 ) ( 1.2 ) Other investing activities — 0.5 Cash used in investing activities ( 22.6 ) ( 13.9 ) Cash flows from financing activities Proceeds from rights offering and private placement, net of issuance costs — 33.2 Proceeds from lines of credit, net of deferred financing costs 85.9 70.0 Payments on lines of credit ( 116.8 ) ( 125.0 ) Proceeds from other debt obligations, net of deferred financing costs 21.3 25.0 Principal payments for and repurchases of other debt obligations ( 48.7 ) ( 28.0 ) Deferred financing costs paid to third parties ( 0.5 ) ( 0.2 ) Payments to non-controlling interests related to former sale of equity method investment — ( 0.3 ) Dividend payments ( 2.2 ) ( 1.2 ) Other financing activities ( 0.2 ) — Cash used in financing activities ( 61.2 ) ( 26.5 ) Effects of exchange rate changes on cash, cash equivalents and restricted cash 0.6 ( 1.7 ) Net increase (decrease) in cash and cash equivalents, including restricted cash 63.4 ( 33.0 ) Cash, cash equivalents and restricted cash, beginning of year 49.3 82.3 Cash, cash equivalents and restricted cash, end of year $ 112.7 $ 49.3 The accompanying notes are an integral part of these consolidated financial statements. F-8 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Business INNOVATE Corp. ("INNOVATE" and, together with its consolidated subsidiaries, the "Company", "we" and "our") is a diversified holding company that has a portfolio of subsidiaries in a variety of operating segments. The Company seeks to grow these businesses so that they can generate long-term sustainable free cash flow and attractive returns in order to maximize value for all stakeholders. While the Company generally intends to acquire controlling equity interests in its operating subsidiaries, the Company may invest to a limited extent in a variety of non-controlling equity interest positions or debt instruments. The Company’s shares of common stock trade on the New York Stock Exchange ("NYSE") under the symbol "VATE". The Company has three reportable segments, plus the Company's Other segment, based on management’s organization of the enterprise: Infrastructure, Life Sciences, Spectrum, and Other which includes businesses that do not meet the separately reportable segment thresholds. 1. The Company's Infrastructure segment is comprised of DBM Global Inc. ("DBMG") and its wholly-owned subsidiaries. DBMG is a fully integrated industrial construction, structural steel and facility maintenance provider that provides fabrication and erection of structural steel and heavy steel plate services and also fabricates trusses and girders and specializes in the fabrication and erection of large-diameter water pipe and water storage tanks, as well as 3-D Building Information Modeling (“BIM”) and detailing. DBMG provides these services on commercial, industrial, and infrastructure construction projects such as high- and low-rise buildings and office complexes, hotels and casinos, convention centers, sports arenas and stadiums, shopping malls, hospitals, dams, bridges, mines, metal processing, refineries, pulp and paper mills and power plants. Through GrayWolf Industrial Inc. ("GrayWolf"), DBMG provides integrated solutions for digital engineering, modeling and detailing, construction, heavy equipment installation and facility services including maintenance, repair, and installation to a diverse range of end markets. Through Aitken Manufacturing, Inc., DBMG manufactures pollution control scrubbers, tunnel liners, pressure vessels, strainers, filters, separators and a variety of customized products. Through Banker Steel, a division of Schuff Steel Company, DBMG provides full-service fabricated structural steel and erection services primarily for the U.S. East Coast and Southeast commercial and industrial construction markets, in addition to full design-assist services. The Company maintains a 91.2 % controlling interest in DBMG. 2. The Company's Life Sciences segment is comprised of Pansend Life Sciences, LLC ("Pansend"), its subsidiaries and its equity investments. Pansend maintains a controlling interest of 80.0 % in Genovel Orthopedics, Inc. ("Genovel"), which seeks to develop products to treat early osteoarthritis of the knee, and also has a controlling interest as of December 31, 2025 of 81.0 % ( 81.4 % as of December 31, 2024) in R2 Technologies, Inc. ("R2 Technologies"), which develops aesthetic and medical technologies for the skin. Pansend also invests in other early stage or developmental stage healthcare companies and, as of December 31, 2025, had a 44.6 % interest ( 45.9 % as of December 31, 2024) in MediBeacon Inc. ("MediBeacon"), a medical technology company specializing in the advances of fluorescent tracer agents and transdermal measurement, potentially enabling real-time, direct monitoring of kidney function, maintained a 1.6 % fully diluted interest in Triple Ring Technologies, Inc. ("Triple Ring"), a science and technology co-development company, and maintained a 20.1 % interest in Scaled Cell Solutions, Inc. ("Scaled Cell"), an immunotherapy company developing a novel autologous cell therapy system to potentially improve current CAR-T treatments. 3. The Company's Spectrum segment is comprised of HC2 Broadcasting Holdings Inc. ("Broadcasting" or "HC2B) and its subsidiaries. Broadcasting strategically acquires and operates over-the-air broadcasting stations across the United States. The Company maintains a 98.0 % controlling interest in Broadcasting and maintains a controlling interest of approximately 69.2 %, inclusive of 2.8 % proxy rights from minority holders of DTV America Corporation ("DTV"). On a fully diluted basis, the Company would have an 85.8 % controlling interest in Broadcasting. 4. The Company's Other segment represents all other businesses or investments that do not meet the definition of a segment individually or in the aggregate. The Other segment primarily includes legacy businesses or holding companies such as the holding company of the Company's former Marine Services segment, Global Marine Holdings, LLC ("GMH") in which the Company had a 72.8 % controlling interest until its dissolution on December 13, 2024, and TIC Holdco, Inc. ("TIC"), which was dissolved on May 23, 2024. 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries and all other subsidiaries over which the Company exerts control. All intercompany profits, transactions and balances have been eliminated in consolidation. The remaining interests not owned by the Company are presented as a non-controlling interest component of total equity. Basis of Presentation The accompanying Consolidated Financial Statements of the Company included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of such information. All such adjustments are of a normal recurring nature. Certain prior amounts have been reclassified or combined to conform to the current year presentation. F-9 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Liquidity and Going Concern The accompanying Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern. However, as of the date of these financial statements, there is substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. The principal conditions leading to this conclusion are the upcoming maturities of the Company's debt obligations. Based on these conditions, the Company may not be able to meet its obligations at maturity nor comply with certain cross-default provisions under the 2027 Senior Secured Notes over the next twelve months, or any potential breach of the milestone covenant of the 10.50 % 2027 Senior Secured Notes Indenture which has required the Company to commence a sales process for all or substantially all of DBM Global’s assets or equity interests in accordance with certain dates and deadlines. Refer to Note 11. Debt Obligations for additional information. Management has evaluated the significance of these conditions in relation to the Company's ability to meet its obligations. The potential inability to refinance or extend the maturity of the aforementioned current debt, or to obtain additional financing, raises substantial doubt about the Company's ability to continue as a going concern. The Company plans to alleviate these conditions through various initiatives it is currently exploring, including pursuing asset sales, and potentially refinancing debt and raising additional capital. However, there can be no assurance that the Company will have the ability to be successful in any asset sales, additional capital raises or the refinancing of its existing debt, on attractive terms or at all, nor any assurances that lenders will provide additional extensions, waivers or amendments in the event of future non-compliance with the Company’s debt covenants or other possible events of default. Further, there can be no assurance that the Company will be able to execute a reduction, extension, or refinancing of the debt, or that the terms of any replacement financing would be as favorable as the terms of the debt prior to the maturity 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. These Consolidated Financial Statements 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. Use of Estimates and Assumptions The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and various disclosures within these consolidated financial statements as of the date of the consolidated financial statements and the reported amounts of net revenue and expenses during the reporting period. These estimates are based on historical experience and various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates. Significant estimates include the recognition of revenue and project profit or loss, which require estimates regarding the extent of progress towards completion on contracts and contract revenue and costs on long-term contracts; allowances for credit losses; fair value estimates, including the valuation of certain investments, market assumptions used in estimating the fair values of certain assets (including goodwill and intangibles) and liabilities, the calculation used in determining the fair value of equity awards required by ASC 718, Compensation - Stock Compensation ("ASC 718"); income taxes and various other contingencies. Estimates of fair value represent the Company’s best estimates developed with the assistance of independent appraisals or various valuation techniques and, where the foregoing have not yet been completed or are not available, industry data and trends and by reference to relevant market rates and transactions. The estimates and assumptions are inherently subject to significant uncertainties and contingencies beyond the control of the Company. Accordingly, the Company cannot provide assurance that the estimates, assumptions, and values reflected in the valuations will be realized, and actual results could vary materially. Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents are comprised principally of amounts in interest bearing checking accounts and money market accounts with original maturities of three months or less. The Company considers all highly liquid investments purchased with original maturities of three months or less from the date of purchase to be cash equivalents. The Company maintains its current cash with financial institutions with balances that may exceed federally insured limits. Cash and cash equivalents are maintained at financial institutions that management considers to be of high credit quality. The Company's restricted cash balances consist of funds that are contractually or legally restricted as to usage or withdrawal and have been presented separately from cash and cash equivalents in the Consolidated Balance Sheets in the Other current assets and Other assets (noncurrent), as applicable, and are primarily comprised of security deposits for long-term leases, which are held in separate bank accounts. F-10 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Fair Value Measurements Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value: • Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 - Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings. • Level 3 - Unobservable inputs that are supported by little or no market activities. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. The Company’s assets and liabilities that are measured at fair value on a recurring basis included investment(s) in marketable equity securities. Our financial assets measured at fair value on a non-recurring basis include equity securities without readily determinable fair values. Other financial assets and liabilities are carried at cost (initial fair value) or amortized cost where applicable, with the current fair value disclosed, if required. Allowance for Credit Losses The Company maintains allowances for credit losses, for its financial assets, primarily for accounts receivable and contract assets, in accordance with Accounting Standards Codification ("ASC") Financial Instruments - Credit Losses (Topic 326). Accounts receivable are stated at amounts due from customers net of allowance for expected credit losses. The measurement and recognition of the allowance for credit losses involves the use of judgment and represents management’s estimate of expected lifetime credit losses based on historical experience and trends, current conditions and reasonable and supportable forecasts. Any changes in these assumptions can lead to a change in the estimate. Management’s assessment of expected credit losses includes consideration of current and expected economic, market and industry factors affecting the Company’s customers, including their financial condition and other factors affecting their ability to pay; the aging of account balances; historical credit loss experience; customer concentrations; and customer credit-worthiness; among other factors. Management has elected to use a risk-based, pool-level segmentation framework to calculate the expected loss rate. Management evaluates its experience with historical losses and then applies this historical loss ratio to financial assets with similar characteristics. The Company’s historical loss ratio or its determination of risk pools may be adjusted for changes in customer, economic, market or other circumstances. The Company may also establish an allowance for credit losses for specific receivables when it is probable that the receivable will not be collected and the loss can be reasonably estimated. At each balance sheet date, all past due or potentially uncollectible accounts are assessed individually for the purpose of determining the appropriate allowance for credit losses. Once collection efforts by the Company are exhausted, the determination for charging off uncollectible receivables is made and the receivable is written off against the allowance, and reversals of previously reserved amounts are recognized if a specifically reserved item is settled for an amount exceeding the previous estimate. Subsequent to year end, on January 1, 2026, the Company adopted ASU 2025-05 and is utilizing the practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606 ( Revenue from Contracts with Customers) . See the Accounting Pronouncements Issued But Pending Adoption section below for additional information. Inventory Inventory, which is primarily composed of steel components for construction projects at DBM, is valued at the lower of cost or net realizable value under the first-in, first-out method. Provision for obsolescence is made where appropriate and is charged to cost of revenue in the Consolidated Statements of Operations. These costs include only direct labor and expenses incurred to date and exclude any allocation of overhead. The policy for long-term work in progress contracts is disclosed within the Revenue and Cost Recognition accounting policy in Note 3. Revenue and Contracts in Process. F-11 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Investments The Company utilizes the equity method to account for investments when it possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when an investor possesses more than 20% of the voting interests of the investee, such as with our investments in MediBeacon and Scaled Cell, of which the Company owns a 44.6 % interest in MediBeacon and a 20.1 % interest in Scaled Cell as of December 31, 2025. This presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is restricted. The Company applies the equity method to investments in common stock and to other investments when such other investments possess substantially identical subordinated interests to common stock. In applying the equity method, the Company records the investment at cost and subsequently increases or decreases the carrying amount of the investment by its proportionate share of the net earnings or losses and other comprehensive income (loss) of the investee, as well as any changes as a result of changes in ownership. In the event that net losses of the investee reduce the carrying amount to zero, additional net losses may be recorded if other investments in the investee are at-risk, even if the Company has not committed to provide financial support to the investee. Such additional equity method losses, if any, are based upon the change in the Company's claim on the investee’s book value. Investments in marketable equity securities are carried at fair value and the Company records the changes in fair values in the Consolidated Statement of Operations as a component of Other income, net. The Company utilizes the measurement alternative method to account for investments when it does not possess the ability to exercise significant influence or control and the investment does not have a readily determinable fair value. Under this method, investments are initially recognized at cost and subsequently measured at cost, adjusted for any observable changes in the fair value of the investment. In addition, the Company reviews the carrying value of investments measured under the measurement alternative for impairment on a regular basis. If there is an indication of impairment, the Company assesses whether the carrying value of the investment exceeds its recoverable amount. Any impairment losses are recognized in the financial statements. The Company's investments are recorded as a separate line in the Company’s Consolidated Balance Sheets. Income or loss from equity method investments is recorded as a separate line item in the Consolidated Statements of Operations. Changes in the fair value of equity securities and impairments recognized for measurement alternative method investments, if any, are recorded within Other income, net in the Consolidated Statements of Operations. Accounting for Income Taxes Deferred tax assets and liabilities are recognized for the expected future tax consequences of transactions and events. Under this method, deferred tax assets and liabilities are determined based on the difference between the book basis and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. If necessary, deferred tax assets are reduced by a valuation allowance to an amount that is determined to be more likely than not recoverable. The determination of the valuation allowance requires management to make significant estimates and assumptions about future taxable income and future tax consequences when determining the amount of the valuation allowance. The additional guidance provided by ASC No. 740, “Income Taxes” (“ASC 740”), clarifies the accounting for uncertainty in income taxes recognized in the financial statements. Expected outcomes of current or anticipated tax examinations, refund claims and tax-related litigation and estimates regarding additional tax liability (including interest and penalties thereon) or refunds resulting therefrom will be recorded based on the guidance provided by ASC 740 to the extent applicable. The tax benefit from an uncertain tax position is recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. These assessments of uncertain tax positions contain judgments related to the interpretation of tax regulations in the jurisdictions in which the Company transacts business. The judgments and estimates made at a point in time may change based on the outcome of tax audits, expiration of statutes of limitations, as well as changes to, or further interpretations of, tax laws and regulations. At December 31, 2025, the Company's U.S. and foreign companies had significant deferred tax assets primarily attributable to tax loss carryforwards. Deferred tax assets generated by certain businesses that are not included in the INNOVATE Corp. U.S. consolidated income tax return have been reduced by a full valuation allowance. Based on evaluation of available positive and negative evidence, management had determined that it was more likely than not that the net deferred tax assets of the INNOVATE Corp. U.S. consolidated filing group will not be realized. Accordingly, a full valuation allowance was maintained against the INNOVATE Corp. U.S. consolidated filing group’s net deferred tax assets as of December 31, 2025. This assessment was based on cumulative historical losses and management's assumptions regarding future taxable income of each affiliate and the timing of the reversal of deferred tax assets and liabilities. In relation to tax effects for accumulated other comprehensive income ("OCI"), our policy is to release the tax effects of amounts reclassified from accumulated OCI to pre-tax income (loss) from continuing operations. Any remaining tax effect in accumulated OCI is released following a portfolio approach. F-12 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation, which is provided on the straight-line method over the estimated useful lives of the assets, which are regularly evaluated. The estimated useful lives of the assets range from 5 to 40 years for buildings and leasehold improvements, 3 to 15 years for equipment, furniture and fixtures, and 3 to 20 years for transportation equipment. Leasehold improvements are amortized over the lives of the leases or estimated useful lives of the assets, whichever is shorter. Assets under construction are not depreciated until they are complete and available for use. Land is not depreciated. Purchased property and equipment is recorded at cost, or, if acquired in a business combination, at the acquisition date fair value. Cost includes the original purchase price of the asset, the costs attributable to bringing the asset to its working condition for its intended use and finance costs incurred prior to the asset being available for use, as well as any subsequent major expenditures for improvements and replacements which extend useful lives or increase capacity of the assets. Expenditures for maintenance and repairs are expensed as incurred. Finance lease assets are recognized based on the present value of minimum future lease payments. Costs for internal-use software that are incurred in the preliminary project stage and in the post-implementation stage are expensed as incurred. Costs incurred during the application development stage are capitalized and amortized over the estimated useful life of the software, beginning when the software project is ready for its intended use, over the estimated useful life of the software, typically 3 years. When assets are sold or otherwise retired, the costs and accumulated amortization and depreciation are removed from the books and the resulting gain or loss is included in operating results. Property, plant and equipment that have been included as part of the assets held-for-sale are no longer amortized or depreciated from the time that they are classified as such. The Company periodically utilizes a qualitative assessment to evaluate whether it is more likely than not that the fair value of its property, plant and equipment is less than its carrying value, and, if so, quantitatively evaluates the carrying value of its property, plant and equipment based upon the estimated cash flows to be generated by the related assets. If an impairment is indicated, a loss is recognized. Acquisitions The Company accounts for acquisitions using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date. Estimates of fair value included in the Consolidated Financial Statements represent the Company’s best estimates and valuations developed, when needed, with the assistance of independent appraisers or, where such valuations have not yet been completed or are not available, industry data and trends and by reference to relevant market rates and transactions. Such estimates and assumptions are inherently subject to significant uncertainties and contingencies beyond the control of the Company. Accordingly, the Company cannot provide assurance that the estimates, assumptions, and values reflected in the valuations will be realized, and actual results could vary materially. Goodwill and Other Intangible Assets Goodwill and intangible assets deemed to have indefinite lives are not amortized, but, rather, tested for impairment. The Company tests goodwill 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 there is a potential impairment. The factors that management considers 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 the Company's 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. The Company elected 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. Under the quantitative test, management estimates 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, management assesses 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. F-13 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Intangible assets not subject to amortization (i.e. indefinite-lived intangibles) consist of certain television broadcast licenses. Intangible assets subject to amortization consists of certain trade names, customer contracts and developed technology. These finite-lived intangible assets are amortized based on their estimated useful lives. Impairment on such assets is recognized and measured only if there are events and circumstances that indicate that the carrying amount may not be recoverable. The amount of impairment of other long-lived assets (excluding goodwill) is calculated as the amount by which the carrying value of the asset exceeds the fair market value of the asset, which is generally determined based on projected discounted future cash flows. 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. Licensing: Television broadcast licenses generally are granted for eight-year periods. They are renewable after application and reviewed by the Federal Communications Commission ("FCC") and historically are renewed except in rare cases in which a petition to deny, a complaint or an adverse finding as to the licensee's qualifications results in loss of the license. As of December 31, 2025, the Company has initiated processes to explore strategic alternatives for potential asset sales. Management considered whether these actions represented an indicator of impairment. Based on the information available as of December 31, 2025, management concluded it was not more likely than not that the estimated fair value of the applicable reporting unit(s) was less than its carrying value. Management will continue to monitor events and circumstances related to the sales processes and will perform interim impairment testing if facts and circumstances change that would indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Valuation of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes indicate that the carrying amount of an asset may not be recoverable. In the event of such conditions, the Company compares the expected undiscounted future cash flows to the carrying amount of the assets. If the total of the expected undiscounted future cash flows is less than the carrying amount of the assets, the Company is required to make estimates of the fair value of the long-lived assets in order to calculate the impairment loss equal to the difference between the fair value and carrying value of the assets. The Company makes significant assumptions and estimates in this process regarding matters that are inherently uncertain, such as determining asset groups and estimating future cash flows, remaining useful lives, discount rates and growth rates. The resulting undiscounted cash flows are projected over an extended period of time, which subjects those assumptions and estimates to an even larger degree of uncertainty. While the Company believes that its estimates are reasonable, different assumptions could materially affect the valuation of the long-lived assets. The Company derives future cash flow estimates from its historical experience and its internal business plans, which include consideration of industry trends, competitive actions, technology changes, regulatory actions, available financial resources for marketing and capital expenditures and changes in its underlying cost structure. The Company makes assumptions about the remaining useful life of its long-lived assets. The assumptions are based on the average life of its historical capital asset additions and its historical asset purchase trend. In some cases, due to the nature of a particular industry in which the company operates, such as the broadcast or infrastructure industry, the Company may assume that technology changes in such industry render all associated assets, including equipment, obsolete with no salvage value after their useful lives. In certain circumstances in which the underlying assets could be leased for an additional period of time or salvaged, the Company includes such estimated cash flows in its estimate. The estimate of the appropriate discount rate to be used to apply the present value model in determining fair value was the Company’s weighted-average cost of capital which is based on the effective rate of its debt obligations at the current market values (for periods during which the Company had debt obligations) as well as the current volatility and trading value of the Company’s common stock. Leases The Company accounts for leases on the balance sheet as lease assets and lease liabilities for leases classified as operating leases and finance leases. The Company determines if an arrangement is a lease at inception. Operating lease right-of-use assets are included in Other Assets, and operating lease liabilities are included in Other current liabilities and Other liabilities (non-current) as applicable in the Consolidated Balance Sheets for their respective short-term and long-term portions and are recognized based on the present value of lease payments over the lease term at the commencement date. Finance leases are included in property, plant and equipment and debt obligations in the Consolidated Balance Sheets and are recognized based on the present value of lease payments over the lease term at commencement date. The majority of the Company’s leases do not provide an implicit rate of return; therefore, the Company uses its incremental borrowing rate at commencement date in determining the present value of lease payments. The incremental borrowing rate represents the rate of interest that would be paid to borrow on a collateralized basis over a similar term. The Company determines its incremental borrowing rate using a portfolio approach based on information available as of the lease commencement date, including applicable lease terms and the current economic environment. For lease agreements that contain non-lease components, the Company elected to combine lease and non-lease components as a single lease component. F-14 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Leases with an initial term of twelve months or less are not recorded on the balance sheet unless they are expected to be renewed. Lease expense is recognized on a straight-line basis over the lease term. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. As of December 31, 2025, the operating lease liability does not include any options to extend or terminate leases. Foreign Currency Transactions Foreign currency transactions are transactions denominated in a currency other than a subsidiary’s functional currency. A change in the exchange rates between a subsidiary’s functional currency and the currency in which a transaction is denominated increases or decreases the expected amount of functional currency cash flows upon settlement of the transaction. That increase or decrease in functional currency cash flows, which occurs upon an actual transfer of one currency to another, is reported by the Company as a foreign currency transaction gain (loss). The primary component of the Company’s foreign currency transaction gain (loss) is due to agreements in place with certain subsidiaries in foreign countries regarding intercompany transactions. The Company anticipates repayment of these transactions in the foreseeable future and recognizes the realized and unrealized gains or losses on these transactions that result from foreign currency changes in the period in which they occur as foreign currency transaction gain (loss). Foreign Currency Translation The assets and liabilities of the Company’s foreign subsidiaries are translated at the exchange rates in effect on the reporting date. Income and expenses are translated at the average exchange rate during the period. The net effect of such translation gains and losses are reflected within AOCI in the stockholders’ equity (deficit) section of the Consolidated Balance Sheets. If there is a planned or completed sale or liquidation of the Company's ownership in a foreign operation, the relevant foreign currency translation adjustment is recognized in the Consolidated Statement of Operations. In these consolidated financial statements, “$” means U.S. dollars, unless otherwise noted. Convertible Instruments Convertible instruments are generally accounted for as a single unit of account. ASC 815 requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodied both the embedded derivative instrument and the host contract is not remeasured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments, when it has been determined that the embedded conversion options should not be bifurcated from their host instruments, as follows: the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized using the effective interest method over the term of the related debt to their stated date of redemption as a component of Interest expense in the Consolidated Statement of Operations. Deferred Financing Costs The Company capitalizes certain expenses incurred in connection with its debt and line of credit obligations as reductions of the outstanding loan balances as a component of the carrying amount of Debt obligations in the Consolidated Balance Sheet and amortizes them using the effective interest method over the term of the respective debt agreement as a component of Interest expense in the Consolidated Statements of Operations. If the Company extinguishes portions of its debt prior to the maturity date, deferred financing costs are charged to expense on a pro-rata basis and are included in gain or loss on early extinguishment or restructuring of debt within Other income, net in the Consolidated Statements of Operations. Share-Based Compensation Share-based compensation includes restricted shares, restricted stock units and stock options, which are measured based on the grant date fair values and are recognized on a straight-line basis over the requisite service or vesting period. Non-cash stock-based compensation expense is included within general and administrative expense in the consolidated statements of operations. Grants of restricted shares and restricted stock units are valued based on the closing market share price of INNOVATE's common stock as reported on the New York Stock Exchange (the “market price”) on the date of grant. The Company uses a Black-Scholes option valuation model to determine the grant date fair value of stock options. The Black-Scholes model incorporates various assumptions including the expected term of awards, volatility of stock price, risk-free rates of return and dividend yield. The expected term of an award is no less than the option vesting period and is based on the Company’s historical experience. Expected volatility is based upon the historical volatility of the Company’s stock price. The risk-free interest rate is approximated using rates available on U.S. Treasury securities with a remaining term similar to the option’s expected life. The Company uses a dividend yield of zero in the Black-Scholes option valuation model as it does not anticipate paying cash dividends in the foreseeable future. Share-based compensation is recorded net of actual forfeitures as they occur. F-15 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Income (Loss) Per Common Share Basic income (loss) per common share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted income (loss) per common share is computed using the weighted-average number of shares of common stock, adjusted for the dilutive effect of potential common stock equivalents and related income from continuing operations, net of tax. Potential common stock equivalents, computed using the treasury stock method or the if-converted method, include stock options, restricted stock units, convertible preferred stock and convertible debt. Refer to Note 19. Basic and Diluted Loss Per Common Share for additional information. Discontinued Operations In accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations , the Company reports the results of operations of a business as discontinued operations if a disposal represents a strategic shift that has or will have a major effect on the Company's operations and financial results when the business is disposed of or classified as held-for-sale. The held-for-sale criteria are assessed as of the balance sheet date. The Company assessed these criteria as of December 31, 2025, and determined that no businesses met the criteria for held-for-sale or discontinued operations classification. Under ASC 360, Property, Plant and Equipment, assets may be classified as held-for-sale even though the discontinued operations criterion is not met. Recent Accounting Pronouncements Accounting Pronouncements Adopted in the Current Year On December 14, 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires, among other things, greater disaggregation of information in the rate reconciliation and for paid income taxes to be disaggregated by jurisdiction. The guidance was effective for the Company's 2025 annual Form 10-K and did not have a material impact on the related disclosures within these Consolidated Financial Statements. Refer to Note 12. Income Taxes for additional information. Accounting Pronouncements Issued But Pending Adoption On September 18, 2025, the FASB issued ASU 2025-06 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software ("ASU 2025-06"). The amendments in ASU 2025-06 modernize the accounting for software costs that are accounted for under Subtopic 350-40 by removing all references to prescriptive and sequential software development stages throughout Subtopic 350-40. Under ASU 2025-06, an entity is required to start capitalizing software costs when management has authorized and committed to funding the software project and it is probable the project will be completed and the software will be used to perform the function intended (referred to as the "probable-to-complete recognition threshold"). ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods. Entities may apply the amendments retrospectively for all prior periods presented in the financial statements, prospectively or under a modified retrospective approach based on the status of the project and whether software costs were capitalized before the date of adoption. The Company expects that it will apply the new guidance prospectively and is currently evaluating the potential effect of this ASU on future transactions; however, the Company does not expect this ASU to have a significant effect on the Company’s Consolidated Financial Statements. On July 30, 2025, the FASB issued ASU 2025-05 Financial Instruments - Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05"). The amendments in ASU 2025-05 provide entities with a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606 ( Revenue from Contracts with Customers) . The practical expedient allows entities to assume that current conditions as of the balance sheet date will not change for the remaining life of an asset when developing reasonable and supportable forecasts as part of the estimation of expected credit losses. ASU 2025-05 is effective prospectively for fiscal years beginning after December 15, 2025, and interim periods within those annual reporting periods. The Company adopted ASU 2025-05 on January 1, 2026, and is utilizing the practical expedient. The Company does not expect the adoption of this ASU to have a significant effect on the Company’s Consolidated Financial Statements. On May 12, 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a VIE ("ASU 2025-03"). The amendments in ASU 2025-03 require an entity, involved in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business, to consider certain factors to determine which entity is the accounting acquirer. ASU 2025-03 is effective prospectively for fiscal years beginning after December 15, 2026, and interim periods within those annual reporting periods. The Company is currently evaluating the potential effect of this ASU on future transactions; however, the Company does not expect this ASU to have a material effect on the Company’s Consolidated Financial Statements. F-16 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED On November 26, 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments ("ASU 2024-04"). The amendments in this update affect entities that settle convertible debt instruments for which the conversion privileges were changed to induce conversion. The amendments clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for fiscal years beginning after December 15, 2025, and interim periods within those annual reporting periods. Entities may apply the amendments retrospectively for all prior periods presented in the financial statements or prospectively. The Company adopted ASU 2024-04 on January 1, 2026 and is applying the guidance on a prospective basis. The adoption of this ASU did not have an effect on the Company's Consolidated Financial Statements. On November 4, 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03" ). The amendments in this ASU require disclosure, in the notes to financial statements, of specified information about certain costs and expenses, including the total amount of selling expenses incurred in the period and an entity's definition of selling expenses. ASU 2024-03, with effective dates as clarified by ASU 2025-01 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating this ASU, which will only have an effect on the disclosures within the Company’s Consolidated Financial Statements. Subsequent Events ASC 855, Subsequent Events requires the Company to evaluate events that occur after the balance sheet date as of which the financial statements are issued, and to determine whether adjustments to or additional disclosures in the financial statements are necessary. Refer to Note 22. Subsequent Events. 3. Revenue and Contracts in Process ASC 606 aligns revenue recognition with the timing of when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To achieve this core principle, the Company applies the following five steps in accordance with ASC 606: Identify the contract with a customer A contract with a customer exists when: (a) the parties have approved the contract and are committed to perform their respective obligations, (b) the rights of the parties can be identified, (c) payment terms can be identified, (d) the arrangement has commercial substance, and (e) collectability of consideration is probable. Judgment is required when determining if the contractual criteria are met, specifically in the earlier stages of a project when a formally executed contract may not yet exist. In these situations, the Company evaluates all relevant facts and circumstances, including the existence of other forms of documentation or historical experience with our customers that may indicate a contractual agreement is in place and revenue should be recognized. In determining if the collectability of consideration is probable, the Company considers the customer’s ability and intention to pay such consideration through an evaluation of several factors, including an assessment of the creditworthiness of the customer and our prior collection history with such customer. Identify the performance obligations in the contract At contract inception, the Company assesses the goods or services promised in a contract and identifies, as a separate performance obligation, each distinct promise to transfer goods or services to the customer. The identified performance obligations represent the "unit of account" for purposes of determining revenue recognition. In order to properly identify separate performance obligations, the Company applies judgment in determining whether each good or service provided is: (a) capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and (b) distinct within the context of the contract, whereby the transfer of the good or service to the customer is separately identifiable from other promises in the contract. In addition, when assessing performance obligations within a contract, the Company considers the warranty provisions included within such contract. To the extent the warranty terms provide the customer with an additional service, other than assurance that the promised good or service complies with agreed upon specifications, such warranty is accounted for as a separate performance obligation. In determining whether a warranty provides an additional service, the Company considers each warranty provision in comparison to warranty terms which are standard in the industry. The Company accounts for product warranties in accordance with ASC 460, “Guarantees.” At the time of sale, the Company recognizes a liability for the estimated future costs associated with warranty claims. The warranty liability is determined based on historical claim experience, product failure rates, and management’s assessment of future warranty costs. Estimates are reviewed periodically and adjusted as necessary to reflect actual experience. Warranty costs are recorded as a component of cost of goods sold and the warranty liability is included in accrued expenses and other current liabilities on the consolidated balance sheet. F-17 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Determine the transaction price The transaction price represents the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to our customers. The consideration promised within a contract may include fixed amounts, variable amounts, or both. To the extent the performance obligation includes variable consideration, including contract bonuses and penalties that can either increase or decrease the transaction price, the Company estimates the amount of variable consideration to be included in the transaction price utilizing one of two prescribed methods, depending on which method better predicts the amount of consideration to which the entity will be entitled. Such methods include: (a) the expected value method, whereby the amount of variable consideration to be recognized represents the sum of probability weighted amounts in a range of possible consideration amounts, and (b) the most likely amount method, whereby the amount of variable consideration to be recognized represents the single most likely amount in a range of possible consideration amounts. When applying these methods, the Company considers all information that is reasonably available, including historical, current and estimates of future performance. Variable consideration is included in the transaction price only to the extent it is probable, in the Company’s judgment, that a significant future reversal in the amount of cumulative revenue recognized under the contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved. This threshold is referred to as the variable consideration constraint. In assessing whether to apply the variable consideration constraint, the Company considers if factors exist that could increase the likelihood or the magnitude of a potential reversal of revenue, including, but not limited to, whether: (a) the amount of consideration is highly susceptible to factors outside of the Company’s influence, such as the actions of third parties, (b) the uncertainty surrounding the amount of consideration is not expected to be resolved for a long period of time, (c) the Company’s experience with similar types of contracts is limited or that experience has limited predictive value, (d) the Company has a practice of either offering a broad range of price concessions or changing the payment terms and conditions of similar contracts in similar circumstances, and (e) the contract has a large number and broad range of possible consideration amounts. Pending change orders represent one of the most common forms of variable consideration included within contract value and typically represent contract modifications for which a change in scope has been authorized or acknowledged by our customer, but the final adjustment to contract price is yet to be negotiated. In estimating the transaction price for pending change orders, the Company considers all relevant facts, including documented correspondence with the customer regarding acknowledgment and/or agreement with the modification, as well as historical experience with the customer or similar contractual circumstances. Based upon this assessment, the Company estimates the transaction price, including whether the variable consideration constraint should be applied. Changes in the estimates of transaction prices are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. Such changes in estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in prior periods. Such changes in estimates may also result in the reversal of previously recognized revenue if the ultimate outcome differs from the Company’s previous estimate. Allocate the transaction price to performance obligations in the contract For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation based on a relative stand-alone selling price. The Company determines the stand-alone selling price based on the price at which the performance obligation would have been sold separately in similar circumstances to similar customers. If the stand-alone selling price is not observable, the Company estimates the stand-alone selling price taking into account all available information such as market conditions and internal pricing guidelines. In certain circumstances, the stand-alone selling price is determined using an expected profit margin on anticipated costs related to the performance obligation. Recognize revenue as performance obligations are satisfied The Company recognizes revenue at the time the related performance obligation is satisfied by transferring a promised good or service to its customers. A good or service is considered to be transferred when the customer obtains control. The Company can transfer control of a good or service and satisfy its performance obligations either over time or at a point in time. The Company transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognizes revenue over time if one of the following three criteria are met: (a) the customer simultaneously receives and consumes the benefits provided by the Company’s performance as it performs, (b) the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (c) the Company’s performance does not create an asset with an alternative use to us, and the Company has an enforceable right to payment for performance completed to date. The Company has determined that one or more of these three criteria are met for such contracts. For performance obligations satisfied over time, the Company recognizes revenue by measuring the progress toward complete satisfaction of that performance obligation. The selection of the method to measure progress towards completion can be either an input method or an output method and requires judgment based on the nature of the goods or services to be provided. F-18 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Presentation of Taxes Collected The Company reports a value-added tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between the Company and a customer on a net basis (excluded from revenues). Revenue from contracts with customers consisted of the following (in millions): Year Ended December 31, 2025 2024 Infrastructure $ 1,210.3 $ 1,071.6 Life Sciences 12.5 9.8 Spectrum 23.2 25.7 Total revenue $ 1,246.0 $ 1,107.1 Accounts receivable, net, from contracts with customers consisted of the following (in millions): December 31, 2025 2024 Infrastructure $ 237.0 $ 184.8 Life Sciences 1.8 1.5 Spectrum 1.7 1.9 Total accounts receivable with customers $ 240.5 $ 188.2 As of January 1, 2024, accounts receivable, net, from contracts with customers totaled $ 273.2 million. Infrastructure Segment DBMG performs its services primarily under fixed-price contracts and recognizes revenue over time using the input method to measure progress for its projects. 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 DBMG and the customer or general contractor have agreed on both the scope and price of changes, the work has commenced, and that realization of revenue exceeding the costs is assured beyond a reasonable doubt. Revisions in estimates during the course of contract work are reflected in the accounting period in which the facts requiring the revision become known. Provisions for estimated losses on uncompleted contracts are made in the period a loss on a contract becomes determinable. Payment Terms The timing of customer billings is generally dependent upon advance billing terms, milestone billings based on completion of certain phases of work, or when services are provided. Under the typical payment terms of master and other service agreements and fixed price contracts, the customer makes progress payments based on quantifiable measures of performance by the Company as defined by each specific agreement. Progress payments, generally net of amounts retained, are paid by the customer over the duration of the contract. Amounts billed and due from customers, as well as the amount of contract assets, are generally classified within current assets in the consolidated balance sheets. Refer to Contract Assets and Contract Liabilities below for related discussion. Amounts expected to be collected beyond one year are classified as other long-term assets. Service Contracts For service contracts (including maintenance contracts) where the Company has the right to consideration from the customer in an amount that corresponds directly with the value received by the customer based on our performance to date, revenue is recognized as services are performed. For all other types of service contracts, revenue is recognized over time using the input method to measure progress because it best depicts the transfer of value to the customer. Costs include all direct material and labor costs, subcontractor costs, and allocated overhead costs related to contract performance. Construction contracts with customers generally provide that billings are to be made monthly in amounts which are commensurate with the extent of performance under the contracts. Contract receivables arise principally from the balance of amounts due on progress billings on jobs under construction. Retention on contract receivables are amounts due on progress billings, which are withheld until a future period. F-19 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Disaggregation of Revenues DBMG's revenues are principally derived from contracts to provide fabrication and erection services to its customers. Contracts represent the majority of the revenue of the Infrastructure segment and are generally recognized over time. A majority of contracts are domestic, fixed priced, and are completed within one year . Disaggregation of the Infrastructure segment, by market or type of customer, is used to evaluate its financial performance. The following table disaggregates DBMG's revenue by market (in millions): Year Ended December 31, 2025 2024 Commercial $ 371.9 $ 292.6 Industrial 306.6 307.9 Transportation 192.9 275.3 Healthcare 173.1 151.6 Government 128.8 11.7 Energy 13.5 7.2 Leisure 13.0 9.6 Convention 8.8 14.0 Total revenue from contracts with customers $ 1,208.6 $ 1,069.9 Other revenue 1.7 1.7 Total Infrastructure segment revenue $ 1,210.3 $ 1,071.6 Contract Assets and Contract Liabilities The timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets include unbilled amounts from our long-term construction projects when revenue recognized under the cost-to-cost measure of progress exceed the amounts invoiced to our customers, as the amounts cannot be billed under the terms of our contracts. Such amounts are recoverable from our customers based upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of a contract. In addition, many of our time and materials arrangements, as well as our contracts to perform turnaround services within the United States industrial services segment, are billed in arrears pursuant to contract terms that are standard within the industry, resulting in contract assets and/or unbilled receivables being recorded, as revenue is recognized in advance of billings. Our contract assets do not include capitalized costs to obtain and fulfill a contract. Contract liabilities from our long-term construction contracts occur when amounts invoiced to our customers exceed revenues recognized. Contract liabilities additionally include advanced payments from our customers on certain contracts. Contract liabilities decrease as the Company recognizes revenue from the satisfaction of the related performance obligation. The Company classifies contract assets and liabilities that may be settled beyond one year from the balance sheet date as current, consistent with the length of time of the Company’s project operating cycle. Retainage receivable represents amounts invoiced to customers where payments have been partially withheld (usually 10 % or less) pending the completion of certain milestones, satisfaction of other contractual conditions or the completion of the project. Retainage agreements vary from project to project and balances could be outstanding for several months or years depending on a number of circumstances, such as contract-specific terms, project performance and other variables that may arise as the Company makes progress toward completion. As of December 31, 2025 and 2024, the total retainage receivable was $ 81.6 million and $ 94.1 million, respectively, and the amount of retainage receivable estimated by management to be collected beyond one year is approximately 27.8 % and 18.8 % of the balance, respectively. When payment of the retainage is contingent upon the Company fulfilling its obligations under the contract it does not meet the criteria to be included in accounts receivable and remains in the contract’s respective contract assets or contract liability, determined on a contract-by-contract basis. The Company has reflected such amounts within the Consolidated Balance Sheets. F-20 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Contract assets and contract liabilities consisted of the following (in millions): December 31, 2025 2024 Costs incurred on contracts in progress $ 1,365.3 $ 1,435.2 Estimated earnings 194.4 75.8 Contract revenue earned on uncompleted contracts 1,559.7 1,511.0 Less: progress billings 1,667.5 1,513.8 $ ( 107.8 ) $ ( 2.8 ) The above is included in the accompanying Consolidated Balance Sheets under the following line items: Contract assets $ 64.1 $ 106.3 Contract liabilities ( 171.9 ) ( 109.1 ) $ ( 107.8 ) $ ( 2.8 ) December 31, 2025 2024 Cost in excess of billings and estimated earnings $ 28.7 $ 50.8 Conditional retainage 35.4 55.5 Contract assets $ 64.1 $ 106.3 Billings in excess of costs and estimated earnings $ ( 218.1 ) $ ( 147.7 ) Conditional retainage 46.2 38.6 Contract liabilities $ ( 171.9 ) $ ( 109.1 ) As of January 1, 2024, contract assets were $ 118.6 million and contract liabilities were $ 153.5 million. Contract assets and liabilities fluctuate period to period based on various factors, including, among others, changes in the number and size of projects in progress at period end; variability in billing and payment terms, such as up-front or advance billings, interim or milestone billings, or deferred billings; and recognized unapproved change orders, contract claims and changes in estimated costs to complete in the normal course of business. The change in contract assets during the years ended December 31, 2025 and 2024, is a result of the recording of $ 45.9 million and $ 68.0 million, respectively, of contract assets driven by new commercial projects, partially offset by $ 88.1 million and $ 80.3 million, respectively, of contract assets transferred to receivables from contract assets recognized at the beginning of the year, including from certain large projects completed or nearing completion and the corresponding billing of amounts previously recorded as contract assets. The change in contract liabilities during the year ended December 31, 2025 is a result of the recording of periodic contract liabilities of $ 166.5 million, driven primarily by large initial billings on new commercial projects, partially offset by revenue recognized that was included in the contract liability balance at the beginning of the year in the amount of $ 103.7 million. The change in contract liabilities during the year ended December 31, 2024, is as a result of revenue recognized that was included in the contract liability balance at the beginning of the year in the amount of $ 146.7 million, including from certain large projects completed or nearing completion, partially offset by the recording of periodic contract liabilities of $ 102.3 million. F-21 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Transaction Price Allocated to Remaining Unsatisfied Performance Obligations As of December 31, 2025, the transaction price allocated to remaining unsatisfied performance obligations consisted of the following (in millions): Within One Year Within Five Years Total Industrial $ 406.6 $ 113.2 $ 519.8 Transportation 255.6 247.0 502.6 Commercial 285.9 51.4 337.3 Healthcare 182.4 33.2 215.6 Government 95.7 12.9 108.6 Energy 27.1 — 27.1 Convention 0.3 — 0.3 Leisure 0.1 — 0.1 Remaining unsatisfied performance obligations $ 1,253.7 $ 457.7 $ 1,711.4 DBMG's remaining unsatisfied performance obligations increase with awards of new contracts and decrease as it performs work and recognizes revenue on existing contracts. DBMG includes a project within its remaining unsatisfied performance obligations at such time the project is awarded and agreement on contract terms has been reached. DBMG's remaining unsatisfied performance obligations include amounts related to contracts for which a fixed price contract value is not assigned when a reasonable estimate of total transaction price can be made. DBMG expects to recognize this revenue approximately within the next 2.3 years. Remaining unsatisfied performance obligations include unrecognized revenues to be realized from uncompleted construction contracts. Although many of DBMG's contracts are subject to cancellation at the election of its customers, in accordance with industry practice, DBMG does not limit the amount of unrecognized revenue included within its remaining unsatisfied performance obligations due to the inherent substantial economic penalty that would be incurred by its customers upon cancellation. Life Sciences Segment Beginning in 2021, R2 Technologies commercially launched its first product, Glacial Rx. Combined with other topical consumables, the Glacial Rx system is sold to medical practices and is intended to be operated by a trained health care professional. Beginning in 2022, R2 Technologies commercially launched its second product in China, Glacial Spa. This product launched into the United States and Canada in 2023, marketed as Glacial fx. This device is sold into nonmedical markets as a cooling experience used to even skin tone and brighten and lighten skin and is intended to be operated by a trained esthetician. Glacial Rx and Glacial fx are sold in North America using a direct sales force. In certain cases, these systems are leased for a small, initial upfront fee and recurring lease payments over a specified timeframe. In international markets, R2 Technologies sells Glacial Rx, Glacial fx and Glacial Spa through distributors. Currently, R2 Technologies has contracts with distributors to sell these products into the following countries: Mexico, United Arab Emirates, Saudi Arabia, Bahrain, Qatar, Australia, Hong Kong, Singapore, Vietnam, China, United Kingdom, France, Kuwait, and India. The Glacial Spa system is currently sold in China and distributed by Huadong’s existing sales force to spas. To operate the systems, kits containing a cycle card with a set number of cycles must be purchased. Once the cycles are exhausted, practices can purchase additional cards with additional cycles resulting in recurring revenues to R2 Technologies. Further, certain topical consumables are required to be utilized in conjunction with the systems also resulting in recurring revenues to R2 Technologies. Within North America, revenue is recognized on shipment. For international sales, shipping terms are Ex Works, wherein R2 Technologies makes its products available at a specific location, but the buyer is required to pay the transportation costs. Revenue is recognized once an agreed upon freight carrier is selected and goods are picked up by the freight carrier. Payment Terms In both North America and internationally, R2 Technologies generally requires customers to remit payment upfront prior to shipment. These payment terms are expressly stated in the standard terms and conditions. In certain circumstances within North America, R2 Technologies accepts longer payment terms not to exceed one year . Any payment plan variation is expressly disclosed in the master services agreement which is required to be signed in conjunction with each sale by every customer. The invoiced amount to be received is recorded in Accounts receivable, net, in the Consolidated Balance Sheet. F-22 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED The following table disaggregates the Life Sciences segment's revenue by type (in millions): Year Ended December 31, 2025 2024 Systems and consumables revenue $ 12.5 $ 9.8 Total Life Sciences segment revenue $ 12.5 $ 9.8 Spectrum Segment Broadcast station revenue is generated primarily from the sale of television airtime in return for a fixed fee or a portion of the related ad sales recognized by the third party. In a typical broadcast station revenue agreement, the licensee of a station makes available, for a fee, airtime on its station to a party which supplies content to be broadcast during that airtime and collects revenue from advertising aired during such content. Broadcast station revenue is recognized over the life of the contract, when the program is broadcast. The fees that Spectrum charges can be fixed or variable and the contracts that the Company enters into are generally short-term in nature. Variable fees are usage/sales-based and recognized as revenue when the subsequent usage occurs. Transaction prices are based on the contract terms, with no material judgments or estimates. Payment Terms Spectrum has an unconditional right to receive payment of the amount billed generally within 30 days of the invoice date. Payment terms are expressly stated in our standard terms and conditions. The invoiced amount to be received is recorded in Accounts Receivable on our Consolidated Balance Sheet. The following table disaggregates the Spectrum segment's revenue by type (in millions): Year Ended December 31, 2025 2024 Broadcast station $ 23.2 $ 25.7 Total Spectrum segment revenue $ 23.2 $ 25.7 Transaction Price Allocated to Remaining Unsatisfied Performance Obligations As of December 31, 2025, the transaction price allocated to remaining unsatisfied performance obligations consisted of $ 10.5 million of broadcast station revenues of which $ 8.4 million is expected to be recognized within one year and $ 2.1 million is expected to be recognized within the next 2 years. 4. Accounts Receivable, Net Accounts receivable, net, consisted of the following (in millions): December 31, 2025 2024 Contracts in progress $ 237.0 $ 184.9 Unbilled retentions 0.1 0.1 Trade receivables 3.6 3.3 Other receivables 0.6 5.8 Allowance for expected credit losses ( 0.2 ) ( 0.1 ) Total $ 241.1 $ 194.0 As of January 1, 2024, accounts receivable, net totaled $ 278.4 million. For the years ended December 31, 2025 and 2024, the Company recognized expected credit losses of $ 0.5 million and a reversal of expected credit losses of $ 0.1 million, respectively. F-23 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED 5. Inventory Inventory consisted of the following (in millions): December 31, 2025 2024 Raw materials and consumables $ 14.9 $ 19.6 Work in process 0.3 0.4 Finished goods 0.8 0.8 Total inventory $ 16.0 $ 20.8 6. Investments The carrying values of the Company's investments, by accounting category, were as follows (in millions): Date Equity Method (1) Fair Value (2) Measurement Alternative (3) Total December 31, 2025 $ 0.9 $ — $ 0.9 $ 1.8 December 31, 2024 $ 0.9 $ 1.8 $ 0.9 $ 3.6 (1) The Company's equity method investments were comprised of MediBeacon and Scaled Cell as of both December 31, 2025 and 2024. (2) The Company's fair value investments in common stock were comprised of marketable equity securities in two publicly traded companies that were purchased in October 2024 and March 2025, all of which were sold in July 2025. (3) The Company's measurement alternative method investment was comprised of Triple Ring as of both December 31, 2025 and 2024. The Company's recognized share of net losses from its equity method investments was $ 5.9 million and $ 2.3 million for the years ended December 31, 2025 and 2024, respectively. MediBeacon Pansend accounts for its preferred stock investment in MediBeacon under the equity method of accounting, inclusive of any fixed maturity securities (notes) issued by MediBeacon to Pansend. On January 17, 2025, MediBeacon received approval from the U.S. Food and Drug Administration ("FDA") for its Transdermal GFR Measurement System ("TGFR"). Pursuant to the terms of MediBeacon's convertible notes, upon the FDA approval, Pansend's convertible notes of $ 11.4 million and the related accrued interest of $ 1.5 million, together totaling $ 12.9 million, were converted into Series 3 Preferred Stock. In addition, pursuant to its amended commercial partnership with Huadong and, as a result of FDA approval, a $ 7.5 million milestone payment from Huadong Medicine Co. Ltd ("Huadong"), a publicly traded company on the Shenzhen Stock Exchange, to MediBeacon for MediBeacon preferred stock was received in the first quarter of 2025. As a result of these transactions, Pansend's ownership in MediBeacon decreased from 45.9 % prior to the transactions to 44.7 % subsequent to the transactions. On a fully diluted basis, Pansend's ownership in MediBeacon decreased from 40.1 % prior to the transactions to 39.7 % subsequent to the transactions. As a result of these transactions, Pansend recognized a step-up gain of $ 4.4 million which is reflected in Other income, net in the Consolidated Statements of Operations for the year ended December 31, 2025, which increased Pansend's carrying amount of its investment in MediBeacon. Concurrently, Pansend recognized equity method losses of $ 5.9 million, driven by the $ 4.4 million step-up gain and $ 1.5 million of interest from the conversion of the convertible notes, which were previously unrecognized because Pansend's carrying amount of its investment in MediBeacon had been previously reduced to zero . During the year ended December 31, 2024, MediBeacon issued an aggregate $ 2.3 million of 12 % convertible notes to Pansend with each note due to Pansend in three years from date of issuance. As a result of these note issuances with MediBeacon, during the year ended December 31, 2024, Pansend recognized $ 2.3 million of equity method losses which were previously unrecognized because Pansend's carrying amount of its investment in MediBeacon, including the notes, had been previously reduced to zero . MediBeacon's total outstanding principal amount of notes due to Pansend was $ 0.5 million and $ 12.0 million, as of December 31, 2025 and 2024, respectively. Interest income earned by Pansend from the MediBeacon notes totaled $ 0.1 million and $ 1.4 million for the years ended December 31, 2025 and 2024, respectively. The related accrued interest receivable was $ 0.4 million and $ 1.7 million, as of December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, Pansend's carrying amount of its investment in MediBeacon remained at zero , inclusive for December 31, 2025 and 2024, of the $ 0.5 million and $ 12.0 million, respectively, in convertible and secured promissory notes which has been offset against recognized equity method losses, and Pansend has cumulative unrecognized equity method losses relating to MediBeacon of $ 19.8 million as of December 31, 2025. F-24 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Scaled Cell As of both December 31, 2025 and 2024, the Company held 240,613 shares of Scaled Cell, representing a 20.1 % interest. Scaled Cell is an immunotherapy company developing a novel autologous cell therapy system to potentially improve current chimeric antigen receptor T-cell ("CAR-T") treatments. Triple Ring As of both December 31, 2025 and 2024, the Company held a 7.2 % common interest ( 1.6 % on a fully diluted basis) in Triple Ring, which is accounted for using the measurement alternative method. The Company accounts for its equity securities without readily determinable fair values under the measurement alternative election of ASC 321, Investments—Equity Securities , whereby the Company can elect to measure an equity security without a readily determinable fair value that does not qualify for the practical expedient to estimate fair value (net asset value) at its cost minus impairment, if any. Marketable Securities In October 2024, the Company purchased common shares in the open market of a publicly traded company for approximately $ 2.0 million, and in March 2025, the Company purchased common shares in the open market of another publicly traded company for $ 0.3 million. Both purchases represented less than 1 % of the total outstanding equity of the respective issuers. In July 2025, all of these shares were sold for aggregate proceeds of $ 2.9 million. Prior to their disposal, these securities were remeasured at fair value each reporting period using the externally quoted market prices, Fair Value Level 1 inputs. For the years ended December 31, 2025 and 2024, fair value gains of $ 0.8 million and unrealized fair value losses of $ 0.2 million, respectively, related to these securities were included in Other income, net in the Consolidated Financial Statements. 7. Property, Plant and Equipment, Net Property, plant and equipment, net, ("PP&E") consisted of the following (in millions): December 31, 2025 2024 Equipment, furniture and fixtures, and software $ 223.3 $ 211.0 Building and leasehold improvements 42.4 36.8 Land 25.3 18.6 Construction in progress 16.3 8.0 Plant and transportation equipment 6.7 7.4 $ 314.0 $ 281.8 Less: Accumulated depreciation 172.2 148.2 Total $ 141.8 $ 133.6 Depreciation expense was $ 22.9 million and $ 25.0 million for the years ended December 31, 2025 and 2024, respectively. These amounts included $ 12.9 million and $ 15.3 million of depreciation expense recognized within cost of revenue for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, the gross value of capitalized internal-use software included in PP&E was $ 21.0 million and $ 20.7 million, respectively, and the net book value as of December 31, 2025 and 2024, was $ 6.6 million and $ 9.8 million, respectively. Assets held-for-sale are included within Other current assets in the Consolidated Balance Sheets. As of December 31, 2025, there were no assets held-for-sale. As of December 31, 2024, there were $ 7.0 million in assets held-for-sale, which primarily consisted of one building and associated building improvements, land, and equipment at the Company's Infrastructure segment. 8. Goodwill and Intangibles, Net Goodwill The carrying amounts of goodwill by segment were as follows (in millions): Infrastructure Spectrum Total Balance at December 31, 2023 $ 105.7 $ 21.4 $ 127.1 Translation adjustments ( 0.4 ) — ( 0.4 ) Balance as of December 31, 2024 $ 105.3 $ 21.4 $ 126.7 Translation adjustments 0.3 — 0.3 Balance as of December 31, 2025 $ 105.6 $ 21.4 $ 127.0 F-25 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Indefinite-Lived Intangible Assets The carrying amounts of indefinite-lived intangible assets were as follows (in millions): December 31, 2025 2024 Federal Communications Commission ("FCC") licenses $ 107.9 $ 107.7 Total $ 107.9 $ 107.7 The weighted-average period prior to the next renewal for FCC licenses was 4.4 years and 5.4 years as of December 31, 2025 and 2024, respectively. While broadcast television licenses are issued for a fixed period of time (generally eight years ), renewals of these licenses have occurred routinely and at nominal cost. In addition, the Company does not believe that the expiration or non-renewal of any of its FCC licenses would have a material adverse effect on the expected future cash flows and profitability. Definite-Lived Intangible Assets The gross carrying amounts and accumulated amortization of definite-lived intangible assets by major intangible asset class were as follows (in millions): Weighted-Average Original Useful Life December 31, 2025 Gross Carrying Amount Accumulated Amortization Net Trade names 15 years $ 25.2 $ ( 12.6 ) $ 12.6 Customer relationships and contracts 11 years 87.6 ( 54.3 ) 33.3 Channel sharing arrangements 35 years 12.6 ( 2.5 ) 10.1 Other 10 years 3.6 ( 2.3 ) 1.3 Total $ 129.0 $ ( 71.7 ) $ 57.3 Weighted-Average Original Useful Life December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Trade names 15 years $ 25.1 $ ( 11.0 ) $ 14.1 Customer relationships and contracts 11 years 87.4 ( 49.1 ) 38.3 Channel sharing arrangements 35 years 12.6 ( 2.2 ) 10.4 Other 10 years 3.9 ( 2.0 ) 1.9 Total $ 129.0 $ ( 64.3 ) $ 64.7 Amortization expense for definite-lived intangible assets was $ 7.5 million and $ 7.9 million for the years ended December 31, 2025 and 2024, respectively. Amortization expense is included in Depreciation and amortization in the Consolidated Statements of Operations. Amortization Future estimated annual amortization expense for intangible assets as of December 31, 2025, is as follows (in millions): Estimated Amortization 2026 $ 6.7 2027 4.9 2028 4.9 2029 4.7 2030 4.5 Thereafter 31.6 Total $ 57.3 F-26 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED 9. Leases The Company has entered into operating leases for land, office space, and certain Company vehicles and equipment and has entered into finance leases for certain Company vehicles and equipment. The leases will expire between 2026 and 2045. Right-of-use lease assets and lease liabilities consisted of the following (in millions): Balance Sheet Location December 31, 2025 2024 Right-of-use assets: Operating lease Other assets (non-current) $ 52.9 $ 53.7 Finance lease Property, plant and equipment, net 0.1 0.5 Total right-of-use assets $ 53.0 $ 54.2 Lease liabilities: Current portion of operating lease Other current liabilities $ 12.9 $ 12.9 Non-current portion of operating lease Other liabilities 42.9 43.5 Finance lease Debt obligations 0.1 0.6 Total lease liabilities $ 55.9 $ 57.0 The following table summarizes the components of lease expense (in millions): Year Ended December 31, 2025 2024 Finance lease cost: Amortization of right-of-use assets $ 0.2 $ 0.4 Interest on lease liabilities — 0.1 Net finance lease cost 0.2 0.5 Operating lease cost 18.2 17.5 Variable lease cost 0.6 0.6 Sublease income — ( 0.7 ) Total non-current lease cost 19.0 17.9 Short-term lease costs 27.1 30.0 Total lease cost $ 46.1 $ 47.9 Based on the short-term leases executed as of December 31, 2025, the Company expects that it will incur approximately $ 12.1 million in estimated short-term lease costs for the year ended December 31, 2026. Cash flow information related to leases is as follows (in millions): Year Ended December 31, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases (1) $ 19.4 $ 19.3 Operating cash flows for finance leases $ — $ 0.1 Financing cash flows for finance leases $ 0.3 $ 0.4 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases $ 15.6 $ 18.5 Finance leases $ 0.1 $ — (1) The above amounts exclude $ 4.0 million received during the year ended December 31, 2025, and $ 4.0 million received during the year ended December 31, 2024 for a lease modification incentive. See below for additional information. F-27 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED On May 1, 2024, a subsidiary of DBMG amended the termination date of three property leases that had an original expiry date of March 31, 2031. In exchange, and as an inducement for DBMG to early terminate, the landlord agreed to pay DBMG $ 12.0 million in surrender fees in three equal installments, contingent on timely vacate and inspection milestones, of which DBMG received $ 4.0 million in surrender fees in 2024 and $ 4.0 million in surrender fees in 2025, with the remaining $ 4.0 million payment due to DBMG due within five business days of the vacate date in 2027 for the remaining property lease. After final surrender of the properties, DBMG will have no further obligations under these leases. The Company accounted for this transaction as a lease modification and recognized a $ 8.7 million gain on lease modification, which is included in Other operating income in the Consolidated Statement of Operations for the year ended December 31, 2024. The weighted-average remaining lease terms and the weighted-average discount rates for the Company's leases were as follows: December 31, 2025 2024 Weighted-average remaining lease term (years) - operating leases 6.6 7.4 Weighted-average remaining lease term (years) - finance leases 2.1 2.7 Weighted-average discount rate - operating leases 6.4 % 6.1 % Weighted-average discount rate - finance leases 5.0 % 5.3 % Future minimum lease commitments (undiscounted) as of December 31, 2025, were as follows (in millions): Operating Leases Finance Leases 2026 $ 15.5 $ 0.1 2027 13.6 — 2028 10.1 — 2029 6.5 — 2030 4.9 — Thereafter 17.2 — Total future minimum lease payments 67.8 0.1 Less: amounts representing interest ( 12.0 ) — Total lease liability $ 55.8 $ 0.1 10. Other Assets, Accrued Liabilities and Other Liabilities Other Current Assets Other current assets consisted of the following (in millions): December 31, 2025 2024 Prepaid assets $ 10.6 $ 10.9 Assets held-for-sale — 7.0 Income tax receivable 4.4 0.6 Other 3.2 2.5 Total other current assets $ 18.2 $ 21.0 Other Assets Other assets, which are reflected within non-current assets in the Consolidated Balance Sheets, consisted of the following (in millions): December 31, 2025 2024 Right-of-use assets $ 52.9 $ 53.7 Restricted cash - non-current 0.6 0.5 Other 7.3 8.1 Total other assets $ 60.8 $ 62.3 F-28 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Accrued Liabilities Accrued liabilities consisted of the following (in millions): December 31, 2025 2024 Accrued expenses $ 12.8 $ 13.4 Accrued payroll and employee benefits 36.7 34.1 Accrued interest and exit fees (current portion) 72.1 61.0 Accrued sales and use taxes 0.3 0.4 Accrued income taxes 0.6 0.8 Total accrued liabilities $ 122.5 $ 109.7 Other Current Liabilities Other current liabilities consisted of the following (in millions): December 31, 2025 2024 Operating lease liability, current portion $ 12.9 $ 12.9 Other 4.0 4.3 Total other current liabilities $ 16.9 $ 17.2 Other Liabilities Other liabilities, which are reflected within non-current liabilities in the Consolidated Balance Sheets, consisted of the following (in millions): December 31, 2025 2024 Operating lease liability, net of current portion $ 42.9 $ 43.5 Accrued interest (non-current portion) — 0.7 Other 3.4 2.6 Total other liabilities $ 46.3 $ 46.8 Asset Retirement Obligations The changes in the carrying amounts of the Company's Asset Retirement Obligations ("ARO") included in Other liabilities above are as follows (in millions): December 31, 2025 2024 Carrying value, beginning of year $ 1.9 $ 1.9 Accretion expense 0.2 0.2 Revisions in estimated cash flows 0.1 ( 0.2 ) Carrying value, end of year $ 2.2 $ 1.9 The AROs relate to Spectrum’s tower leases and related tower assets, which are removable and can be retired or redeployed elsewhere. The Company’s obligations represent the present value of future costs associated with the removal of certain assets imposed by the existing tower lease agreements. F-29 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED 11. Debt Obligations Debt obligations, including finance lease obligations, consisted of the following (in millions): Maturity Date December 31, Infrastructure 2025 2024 SOFR plus 2.75 % Revolving Credit Facility May 20, 2030 $ 15.0 $ — SOFR plus 2.75 % Term Loan May 20, 2030 72.6 — PRIME minus 0.75 % Revolving Credit Facility — 45.0 3.25 % Term Loan — 74.6 PRIME minus 0.75 % Term Loan — 24.5 Obligations under finance leases Various 0.1 0.6 Total Infrastructure $ 87.7 $ 144.7 Spectrum 8.50 % Note September 30, 2026 $ 19.3 $ 19.3 11.45 % Notes September 30, 2026 50.4 50.4 Total Spectrum $ 69.7 $ 69.7 Life Sciences Lancer Promissory Note August 1, 2026 $ 47.9 $ 24.0 Total Life Sciences $ 47.9 $ 24.0 Non-Operating Corporate 10.50 % Senior Secured Notes (1) February 1, 2027 $ 360.4 $ — 9.50 % Convertible Senior Notes (1) March 1, 2027 53.5 — CGIC Promissory Note (1) April 30, 2027 45.9 31.0 SOFR plus 5.75 % Revolving Line of Credit September 15, 2026 20.0 20.0 8.50 % Senior Secured Notes February 1, 2026 1.9 330.0 7.50 % Convertible Senior Notes August 1, 2026 0.2 48.9 Total Non-Operating Corporate $ 481.9 $ 429.9 Total outstanding principal $ 687.2 $ 668.3 Unamortized issuance discount, issuance premium, and deferred financing costs ( 25.5 ) ( 5.5 ) Less: current portion of debt obligations (1) ( 581.4 ) ( 162.2 ) Debt obligations, net of current portion $ 80.3 $ 500.6 (1) Certain debt instruments with long-term maturity dates have been classified as current obligations as of December 31, 2025, due to contingent mandatory prepayment provisions contained in the agreements that could require repayment within one year of the balance sheet date if certain asset sales occur, resulting in uncertainty regarding the timing of repayment. In August 2025, INNOVATE closed on a series of indebtedness refinancing transactions that extended certain of the Company's debt maturities within its Life Sciences, Spectrum and Non-Operating Corporate segments. Total third-party fees related to the refinancing transactions, that were expensed as a result of these refinancing transactions being classified as modifications or troubled debt restructurings under ASC 470 as described below, totaled $ 4.5 million for the year ended December 31, 2025. F-30 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED As of December 31, 2025, estimated future aggregate finance lease and principal debt payments based on contractual maturities, excluding interest, were as follows (in millions): Finance Leases Debt Total 2026 $ 0.1 $ 145.2 $ 145.3 2027 — 466.1 466.1 2028 — 5.8 5.8 2029 — 6.4 6.4 2030 — 63.6 63.6 Total aggregate finance lease and debt principal payments $ 0.1 $ 687.1 $ 687.2 The interest rates on finance leases ranged from approximately 3.0 % to 5.6 %. Infrastructure 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. On May 20, 2025, concurrently with DBMG’s entry into the new DBMG Credit Agreement, DBMG terminated its prior credit agreement, dated as of May 27, 2021 and as amended by the First Amendment to Credit Agreement, dated August 2, 2022, the Second Amendment to Credit Agreement, dated December 12, 2023, and the Third Amendment to Credit Agreement, dated June 28, 2024 (as amended, the “Prior DBMG Credit Agreement”). DBMG used a portion of the proceeds of the new DBMG Credit Agreement to refinance the indebtedness under the Prior DBMG Credit Agreement, and thereafter terminated the Prior DBMG Credit Agreement. The maturity dates of the revolving line and term loans under the Prior DBMG Credit Agreement were August 15, 2025, and May 31, 2026, respectively. The term loan and borrowings under the new DBMG Credit Agreement bear interest at a rate per annum equal to a SOFR Rate plus a variable spread based on a Senior Funded Indebtedness to EBITDA Ratio as defined in the agreement with an interest rate floor of 4.25 % per annum. The obligations of the Borrowers under the new DBMG Credit Agreement are guaranteed by certain domestic subsidiaries of DBMG. As security for the Borrowers’ obligations under the DBMG Credit Agreement, (i) DBMG and its domestic subsidiaries have granted a first priority lien on substantially all their tangible and intangible personal property, including, without limitation, accounts receivable, equipment and the equity interests of certain of DBMG’s direct and indirect subsidiaries, and (ii) certain of the domestic subsidiaries of DBMG have granted a first priority lien on ten parcels of real estate owned by such subsidiaries. The DBMG Credit Agreement contains usual and customary restrictive and financial covenants related to debt levels and performance, including a Fixed Charge Coverage Ratio; and a Senior Funded Indebtedness to EBITDA Ratio, both as defined in the DBMG Credit Agreement. The DBMG Credit Agreement contains a Change in Control clause, which would constitute an Event of Default, both as defined in the DBMG Credit Agreement, which could accelerate the maturity of the DBMG debt in the future upon certain events, including a sale of DBMG. As the Change in Control clause has not yet been triggered, the DBMG debt instruments remain classified as non-current as of December 31, 2025, except amounts due within the 2026 fiscal year, as originally defined in the DBMG Credit Agreement. Due to multiple lenders being party to the new DBMG Credit Agreement, the May 20, 2025 transactions were determined to be either an extinguishment or modification under ASC 470-50, Debt - Modifications and Extinguishments ("ASC 470-50") or the incurrence of new debt, depending on the specific lender. For the portions of the debt classified as extinguishments, losses on extinguishment totaling $ 0.3 million, were included within Other income, net on the Consolidated Statement of Operations for the year ended December 31, 2025. For the debt portions classified as modifications or new debt, new incremental deferred financing fees totaling $ 1.8 million were capitalized as original issue discounts and included in the carrying amount of the debt in the Consolidated Balance Sheet and $ 0.1 million in fees paid to third parties were expensed. Capitalized fees are amortized over the remaining life of the debt under the effective interest rate method and are included in interest expense. DBMG had availability for revolving loans of $ 119.9 million and $ 89.9 million, as of December 31, 2025 and 2024, respectively. Interest is paid monthly on DBMG's revolving loans, and the effective interest rate on DBMG's revolving loans was 6.8 % and 7.0 %, as of December 31, 2025 and 2024, respectively. The new DBMG Revolving Facility has an unused commitment fee of 0.50 % per annum times the average daily unused availability under the line, whereas under the Prior DBMG Credit Agreement, the commitment fee was equal to 0.25 % per annum times the average daily unused availability under the line. F-31 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Principal payments and interest on DBMG's term loan are paid monthly, and the effective interest rate was 7.4 % as of December 31, 2025. Prior to the new DBMG Credit Agreement, DBMG had two term loans under the Prior DBMG Credit Agreement. As of December 31, 2024, the $ 74.6 million term loan bore interest at an annual rate of 3.25 %, with an effective interest rate of 3.3 %. As of December 31, 2024, the $ 24.5 million term loan bore interest at PRIME minus 0.75 %, at the same rate as the prior revolving loans. DBMG is in compliance with its debt covenants as of December 31, 2025. 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”). The Spectrum Notes Extension was determined to be a modification of debt under ASC 470-50, as the terms of the debt were not determined to be substantially different, as the present value of cash flows under the amended terms of the Spectrum Notes were not greater than 10 % different from the present value of the remaining cash flows under the prior terms. As a result of the Spectrum Notes Extension, additional exit fees of $ 9.9 million were incurred. The exit fees associated with the notes, which are payable on the earlier of maturity or repayment of the principal, were recorded as an original issue discount ("OID") and are being amortized over the remaining life of the notes, which is assumed to be the maturity date. A liability for the total exit fees of $ 25.8 million and $ 15.9 million was reflected within Accrued liabilities in the Consolidated Balance Sheets as of December 31, 2025 and 2024, respectively. Accrued interest of $ 27.9 million and $ 20.5 million, as of December 31, 2025 and 2024, respectively, is reflected within Accrued liabilities in the Consolidated Balance Sheets and is payable upon maturity of the notes. As of December 31, 2025 and 2024, the weighted-average effective interest rate on the notes, as amended, was 25.0 % and 22.8 % per annum, respectively. In connection with the Spectrum Notes Extension, INNOVATE entered into a related side letter (the "Spectrum Letter") with the lenders, which required us to meet certain milestones with respect to strategic alternatives for the Spectrum segment, such that, if the Spectrum Notes are not repaid in full in cash on or before November 1, 2025, the side letter provides that Company is required to commence an alternative strategic process for HC2B which includes a sale of HC2B with the net proceeds to be applied to the Spectrum Notes. The November 1, 2025 milestone was not reached and in accordance with the Spectrum letter, management initiated a strategic process for HC2B. The Company has met or extended all milestones associated with the sale as of December 31, 2025. Subsequent to year-end, the December 31, 2025 milestone for a confidential information memorandum and bid process letter, was met on the revised date of January 8, 2026. The February 1, 2026 milestone for the submission of at least one bona fide indication of interest in an HC2B sale was waived. The March 1, 2026 milestone for an executed letter of intent regarding an HC2B sale, was extended to March 27, 2026. As of the date of this Annual Report on Form 10-K, the Company is in compliance with the milestone covenants. The Spectrum Letter also requires INNOVATE to utilize proceeds from a sale of certain assets, as allowable under the Company's current agreements and indentures and after all other required payments have been made, for repayment of the Spectrum Notes. Assuming there are sufficient proceeds remaining after such repayment, INNOVATE is required to purchase the institutional investors' equity interests in HC2B and DTV for an aggregate purchase price of $ 2.0 million. The lenders hold 20,408 shares of common stock in HC2B, 2,222,222 shares of common stock in DTV, and warrants to purchase 145,825 shares of common stock of HC2B which can be exercised at any time until August 31, 2028, at an exercise price of $ 0.01 per share. These redeemable non-controlling interests totaling $ 2.6 million are reflected at carrying value as redeemable non-controlling interests in the Consolidated Balance Sheet as of December 31, 2025. As of December 31, 2025, Management has evaluated this redeemable non-controlling interest and determined that redemption is not probable at this time due to the uncertainty of redemption. Therefore, the carrying amount has not been adjusted to redemption value. The Company will continue to monitor for any changes in circumstances. Life Sciences On August 4, 2025, Lancer Capital LLC ("Lancer"), a related party, and R2 Technologies entered into an Amended and Restated Senior Secured Promissory Note (the "Lancer Note"), which was previously amended multiple times as further described below, and which, among other things, extended the maturity of the note to the earlier of August 1, 2026, or the occurrence of (i) a Change of Control (as defined in the amended note) or (ii) the sale of all or substantially all of the assets of R2 Technologies. The Lancer Note can be repaid at any time with an optional prepayment of the entire then-outstanding and unpaid principal and accrued interest upon five-days written notice to Lancer Capital. The amended Lancer Note has an interest rate of 12 % and removed certain exit and default fees. Accrued and unpaid interest is capitalized monthly into the principal balance. The total new initial principal amount of the amended Lancer Note on August 4, 2025 was $ 43.5 million, which incorporated the $ 20.0 million principal amount of the note as previously amended effective January 31, 2024 (which was comprised of a principal amount of $ 17.4 million and unpaid accrued interest of $ 2.6 million), accrued interest of $ 7.0 million and $ 16.5 million in accrued exit fees which had been incurred from January 31, 2024 through August 4, 2025. In addition, a new 5 % extension fee of $ 2.2 million was capitalized into the principal amount on August 4, 2025. F-32 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED The August 4, 2025 amendment was determined to be a troubled debt restructuring under ASC 470-60, Debt - Troubled debt restructuring by debtors ("ASC 470-60") because R2 Technologies was deemed to be experiencing financial difficulty, and according to the substantial changes under the amendment, the lender was deemed to have granted a concession. However; no gain or loss on the amendment was recorded, as the future undiscounted cash flows under the amended terms were greater than the net carrying value of the note prior to the amendment. A new effective interest rate was established based on the carrying value of the original debt and the revised future cash flows, which is inclusive of the extension fee. The new extension fee was recorded as OID and is being amortized over the term of the note using the effective interest rate method and is included in interest expense. As of December 31, 2025 and 2024, the effective interest rate on the note, as amended, was 17.0 % and 57.8 %, respectively. Interest expense, including amortization of fees, related to the Lancer Note was $ 14.7 million and $ 9.8 million for the years ended December 31, 2025 and 2024. For the years ended December 31, 2025 and 2024, $ 5.3 million and $ 6.6 million of accrued interest, excluding exit fees and extension fees, was capitalized into the principal balance. As of December 31, 2025, the total carrying amount relating to the note, which is included within the Current portion of debt obligations in the Consolidated Balance Sheet, was $ 46.6 million, inclusive of $ 47.9 million of principal (which includes capitalized interest and fees), partially offset by $ 1.3 million of the unamortized OID for the extension fee. As of December 31, 2024, the carrying amounts relating to the note totaled $ 31.9 million, inclusive of $ 24.0 million of principal and capitalized interest, which total was included within Current portion of debt obligations in the Consolidated Balance Sheet, and $ 7.9 million in total accrued exit fees which were included within Accrued liabilities in the Consolidated Balance Sheet. Effective January 31, 2024, when the 20 % $ 20.0 million note was entered into with Lancer Capital, which replaced the prior 20 % note, the note included an exit fee of 10.5 % of the principal amount to be repaid. As a result of the addition of the exit fee, the transaction was determined to be an extinguishment of debt under ASC 470-50 , and the $ 2.2 million exit fee was included as a loss on debt extinguishment within Other income, net on the Consolidated Statement of Operations for the year ended December 31, 2024. The original maturity date of the 20 % $ 20.0 million note was April 30, 2024, which was then extended on May 17, 2024, to December 31, 2024. The May 17, 2024 amendment included an amendment to the exit fees and was determined to be a modification of debt under ASC 470-50, as the terms of the debt were not determined to be substantially different, including taking into consideration the ability to prepay the debt at any time, and, therefore, the additional exit fees were amortized using the effective interest method and were included in interest expense. During the first quarter of 2025, with an effective date of December 31, 2024, the maturity date of the note was extended to August 1, 2025, and an additional exit fee of $ 1.0 million was incurred under the amendment, which increased by $ 1.0 million each month. The base exit fee, as amended, would increase each month and would equal 13.09 % of the principal amount being repaid at maturity. The amendment was determined to be a modification of debt under ASC 470-50, as the terms of the debt were not determined to be substantially different, including taking into consideration the ability to prepay the debt at any time, and, therefore, the additional exit fees were amortized over the term of the note using the effective interest rate method and were included in interest expense. The total new exit fees associated with the notes were recorded as an OID of $ 8.7 million and were amortized over the remaining term of the note. A corresponding liability for the new exit fees of $ 8.7 million was recorded for total accrued exit fees of $ 16.5 million which were included within Accrued liabilities in the Consolidated Balance Sheet prior to the August 4, 2025 amendment. Non-Operating Corporate In August 2025, INNOVATE closed on a series of indebtedness refinancing transactions that extended certain of INNOVATE's debt maturities. These refinancing transactions included: (i) the closings of an exchange offer and consent solicitation with respect to the Company’s senior secured notes; (ii) privately negotiated exchanges of certain of the Company’s convertible senior notes; (iii) amendment and extension of the Company’s 2020 Revolving Credit Agreement (as defined below); and (iv) amendment and extension of the Company’s promissory note with Continental General Insurance Company ("CGIC"), as well as the exchange of a portion of the Company’s preferred stock held by CGIC and accrued preferred stock dividends in exchange for increasing the principal amount of that note. 10.50 % Senior Secured Notes due 2027 In August 2025, the Company closed on an exchange offer and consent solicitation to eligible holders of its 8.50 % senior secured notes due 2026 (" 8.50 % 2026 Senior Secured Notes") to exchange such notes for newly issued 10.50 % senior secured notes due 2027 (the “ 10.50 % 2027 Senior Secured Notes”). The Company, the guarantors party thereto from time to time and U.S. Bank Trust Company, National Association, as trustee (in such capacity, the “ 10.50 % 2027 Senior Secured Notes Trustee”) and collateral trustee, entered into an indenture (the “ 10.50 % 2027 Senior Secured Notes Indenture”) governing the 10.50 % 2027 Senior Secured Notes and the Company issued $ 360.4 million aggregate principal amount of 10.50 % 2027 Senior Secured Notes as consideration for the exchange of $ 328.1 million aggregate principal amount of the 8.50 % 2026 Senior Secured Notes. The new principal amount includes fees payable to the lenders and $52.50 principal amount of 10.50 % 2027 Senior Secured Notes per $1,000 principal amount of 8.50 % 2026 Senior Secured Notes exchanged, paid to exchanging holders in lieu of the interest payment in respect of the 8.50 % 2026 Senior Secured Notes that was due on August 1, 2025. F-33 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED The Company’s obligations under the 10.50 % 2027 Senior Secured Notes Indenture are irrevocably and unconditionally guaranteed, jointly and severally, by the same guarantors that guarantee the 8.50 % 2026 Senior Secured Notes (the “Subsidiary Guarantors”). The 10.50 % 2027 Senior Secured Notes and the related guarantees are senior secured obligations of the Company and the Subsidiary Guarantors. The 10.50 % 2027 Senior Secured Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) or any state securities laws and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from the registration requirements of the Securities Act. The exchange of the 8.50 % 2026 Senior Secured Notes for the 10.50 % 2027 Senior Secured Notes was determined to be a modification of debt under ASC 470-50, as the terms of the debt were not determined to be substantially different, as the present value of cash flows under the terms of the 10.50 % 2027 Senior Secured notes were not greater than 10 % different from the present value of the remaining cash flows under the 2026 8.50 % Senior Secured Notes. Therefore, total fees and additional interest of $ 18.3 million payable to the lenders and capitalized into the new principal amount under the exchange offer was recorded as an OID and remaining unamortized deferred financing fees of $ 1.3 million allocated from the 8.50 % 2026 Senior Secured Notes exchanged will be amortized into interest expense over the term of the notes using the effective interest rate method. Aggregate interest expense for the new 10.50 % 2027 Senior Secured Notes, including the contractual interest coupon and amortization of fees was $ 20.6 million for the year ended December 31, 2025. As of December 31, 2025, the total carrying amount related to the note was $ 345.5 million, inclusive of $ 360.4 million aggregate principal outstanding, partially offset by $ 13.9 million of the unamortized OID and $ 1.0 million of unamortized deferred financing fees. The effective interest rate on the 10.50 % 2027 Senior Secured Notes was 14.4 % as of December 31, 2025. 10.50 % 2027 Senior Secured Notes Terms and Conditions Maturity. The 10.50 % 2027 Senior Secured Notes mature on February 1, 2027. Interest. The 10.50 % 2027 Senior Secured Notes accrue interest at a rate of 10.50 % per year, payable semi-annually on February 1 st and August 1 st of each year, commencing on February 1, 2026. For the first interest period only, interest will be paid in kind. All subsequent interest payments are payable in cash. Ranking. The 10.50 % 2027 Senior Secured Notes and the note guarantees are the Company’s and the Subsidiary Guarantors’ senior secured obligations. The 10.50 % 2027 Senior Secured Notes and the note guarantees will rank: (i) equal in right of payment (subject to the priority of any First-Out Obligations (as defined in the 10.50 % 2027 Senior Secured Notes Indenture) (including any debt under the Company’s existing $ 20.0 million secured revolving credit facility)) with all existing and future senior debt of the Company and the Subsidiary Guarantors and effectively senior to all unsecured debt of the Company to the extent of the value of the collateral; (ii) senior in right of payment to all of the Company’s future debt that expressly provides for its subordination to the 10.50 % 2027 Senior Secured Notes; (iii) effectively subordinated to any existing and future debt of the Company that is secured by liens on property and assets that do not constitute collateral, to the extent of the value of such property and assets; and (iv) structurally subordinated to any existing and future debt and other liabilities of the Company’s non-guarantor subsidiaries. Collateral. The 10.50 % 2027 Senior Secured Notes are secured by a first priority lien on substantially all of the Company’s assets and the assets of the Subsidiary Guarantors (except for certain “Excluded Assets,” and subject to certain “Permitted Liens,” each as defined in the 10.50 % 2027 Senior Secured Notes Indenture), including, without limitation: • all equity interests owned by the Company or a Subsidiary Guarantor (which, in the case of any equity interest in a foreign subsidiary, will be limited to 65 % of the voting stock of such foreign subsidiary if the pledge thereof would result in adverse tax consequences that are material to the value of the collateral); • all equipment, goods, inventory and fixtures owned by the Company or a Subsidiary Guarantor; • all accounts, cash, deposit accounts and investment securities owned by the Company or a Subsidiary Guarantor; • all documents, books and records, instruments and chattel paper owned by the Company or a Subsidiary Guarantor; • all intellectual property and other general intangibles owned by the Company or a Subsidiary Guarantor; and • any proceeds and supporting obligations thereof. No Sinking Fund. The Company is not required to make any sinking fund payments with respect to the 10.50 % 2027 Senior Secured Notes. Optional Redemption. The Company has the option to redeem some or all of the 10.50 % 2027 Senior Secured Notes at a redemption price equal to 100 % of the principal amount plus accrued and unpaid interest, if any, to, but not including, the redemption date. Asset Sale Offer. If the Company completes certain assets sales, the Company may be required in certain circumstances to make an offer to purchase the 10.50 % 2027 Senior Secured Notes with the net cash proceeds from such an asset sale at a price in cash equal to 101 % of the principal amount thereof, together with accrued and unpaid interest, if any, to the date of purchase. Change of Control. If a Change of Control (as defined in the 10.50 % 2027 Senior Secured Notes Indenture) occurs, the Company will be required to make an offer to purchase the 10.50 % 2027 Senior Secured Notes for cash at a price equal to 101 % of the aggregate principal amount of such 10.50 % 2027 Senior Secured Notes on the date of purchase, plus any accrued and unpaid interest to the date of repurchase. F-34 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Certain Covenants. The 10.50 % 2027 Senior Secured Notes Indenture contains covenants limiting, among other things, the ability of the Company, and, in certain cases, the Company’s subsidiaries, to incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; make certain restricted payments; 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 the Company had a bona fide bid or term sheet related to a potential sale. The September 1, 2025 milestone was not reached, and in accordance with the indenture, the Company has thus been required to commence a sales process for DBMG. The sales process for DBMG has separate milestone requirements, which the Company has either met or extended as of December 31, 2025. In addition, subsequent to year end, the February 1, 2026 milestone for a final bid or term sheet was extended to March 1, 2026 and was met on this revised date. The March 1, 2026 milestone for a fully executed purchase agreement, has been extended to April 1, 2026. As of the date of this Annual Report on Form 10-K, the Company is in compliance with the milestone covenants. Events of Default. The 10.50 % 2027 Senior Secured Notes Indenture contains customary events of default which could, subject to certain conditions, cause the 10.50 % 2027 Senior Secured Notes to become immediately due and payable, including, but not limited to defaults by the Company in the payment of the principal of any the 10.50 % 2027 Senior Secured Notes when the same becomes due and payable at maturity, upon acceleration or redemption, or otherwise (other than pursuant to an offer to purchase by the Company) or in the payment of interest on any note when the same becomes due and payable, and the default continues for a period of 30 days; failure to comply with certain other covenants in the 10.50 % 2027 Senior Secured Notes Indenture for a period of 60 days following notice by the 10.50 % 2027 Senior Secured Notes Trustee or the holders of at least 30 % in aggregate principal amount of the 10.50 % 2027 Senior Secured Notes then outstanding; failure to pay or otherwise default on material debt; or failure to pay final judgments entered by a court or courts of competent jurisdiction aggregating $ 20 million or more (excluding amounts covered by insurance), which judgments are not paid, discharged or stayed, for a period of 60 days; certain events of bankruptcy or insolvency; and failure to comply with the milestone covenant described above. 8.50 % Senior Secured Notes due 2026 The original $ 330.0 million aggregate principal amount of 8.50 % senior secured notes due February 1, 2026 (the " 8.50 % 2026 Senior Secured Notes") were issued in 2021 at 100 % of par. In August 2025, the Company exchanged $ 328.1 million aggregate principal amount of the 8.50 % 2026 Senior Secured Notes for new 10.50 % 2027 Senior Secured Notes, as discussed above. As of December 31, 2025, the Company had $ 1.9 million aggregate principal amount of the 8.50 % 2026 Senior Secured Notes remaining. Subsequent to year end, on February 2, 2026, the Company repaid the remaining principal balance and all accrued interest. The 2026 Senior Secured Notes had a stated annual interest rate of 8.50 % and had an effective interest rate of 9.3 %, which reflected the initial $ 10.8 million of deferred financing fees in 2021, including underwriting fees. There was a negligible amount and $ 2.8 million of remaining unamortized deferred financing fees as of December 31, 2025 and 2024, respectively. Interest was payable semi-annually in arrears on February 1 st and August 1 st of each year. Aggregate interest expense, including the contractual interest coupon and amortization of the deferred financing fees was $ 17.9 million and $ 30.4 million for the years ended December 31, 2025 and 2024, respectively. 8.50 % 2026 Senior Secured Notes Terms and Conditions Maturity . The 8.50 % 2026 Senior Secured Notes matured on February 1, 2026. Interest . The 2026 Senior Secured Notes accrued interest at a rate of 8.50 % per year. Interest on the 2026 Senior Secured Notes was paid semi-annually on February 1 and August 1 of each year. 2027 Convertible Notes On August 4, 2025, the Company settled the exchanges (collectively, the “Convertible Notes Exchanges”) under its privately negotiated exchange agreements (collectively, the “Exchange Agreements”) with certain holders of its 7.5 % Convertible Senior Notes due 2026 ("the 2026 Convertible Notes"). Pursuant to the Exchange Agreements, the Company exchanged $ 48.7 million of the then outstanding aggregate principal amount of the 2026 Convertible Notes for $ 53.5 million aggregate principal amount of newly issued 9.5 % Convertible Senior Secured Notes due 2027 (the “2027 Convertible Notes”), which is the total outstanding principal amount as of December 31, 2025. The new principal amount includes fees payable to the lenders and $47.50 principal amount of 2027 Convertible Notes per $1,000 principal amount of 2026 Convertible Notes exchanged, paid to exchanging holders in lieu of the interest payment in respect of the 2026 Convertible Notes that was due on August 1, 2025. The Company, the guarantors party thereto from time to time and U.S. Bank Trust Company, National Association, as trustee (in such capacity, the “2027 Convertible Notes Trustee”) and collateral trustee, entered into an indenture (the “2027 Convertible Notes Indenture”), dated as of August 4, 2025, governing the 2027 Convertible Notes. The Convertible Notes Exchanges were made, and the 2027 Convertible Notes were issued, in reliance on a private placement exemption from registration under the Securities Act. The 2027 Convertible Notes and the shares of common stock issuable upon their conversion have not been and will not be registered under the Securities Act, and the 2027 Convertible Notes and such shares may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from the registration requirements of the Securities Act. F-35 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED The initial maximum number of securities underlying the 2027 Convertible Notes, assuming the largest “make-whole” addition to the conversion rate under the 2027 Convertible Notes Indenture, and assuming that the Company has obtained the requisite stockholder approval referred to above, is 1,543,174 shares of the Company’s common stock. As of December 31, 2025, each $1,000 of principal of the 2027 Convertible Notes is convertible into 23.6327 shares of our common stock, for a total of 1,263,308 shares of common stock, which is equivalent to a conversion price of approximately $ 42.31 per share, as adjusted for the reverse stock split in 2024 and subject to further adjustment upon the occurrence of specified events. Based on the closing price of our common stock on December 31, 2025, the if-converted value of the 2027 Convertible Notes did not exceed its principal value. The convertible notes exchange was determined to be a modification of debt under ASC 470-50, as the terms of the debt were not determined to be substantially different, including taking into consideration the ability to prepay the 2027 Convertible Notes at any time. Pursuant to ASC 470-50, because the exchange was deemed to be a modification and the fair value of the embedded conversion feature (evaluated under ASC 815-40 and determined not to be bifurcated as a derivative) increased, the carrying amount of the debt was adjusted accordingly, with a corresponding $ 0.5 million credit recorded to additional paid-in capital ("APIC"). Therefore, the following amounts were recorded as an OID or deferred financing cost and are being amortized into interest expense over the term of the new 2027 Convertible Notes using the effective interest rate method: total new fees and additional interest of $ 2.9 million payable to the lenders and capitalized into the principal amount for the convertible notes exchanged, remaining unamortized deferred financing fees of $ 0.2 million allocated from the 2026 Convertible Notes exchanged, and a discount of $ 0.5 million, attributable to the increase in fair value of the embedded conversion option, offset partially by $ 2.4 million in remaining unamortized premiums allocated from the 2026 Convertible Notes exchanged. The effective interest rate on the 2027 Convertible Notes is 11.1 %. Aggregate interest expense, including the contractual interest coupon and amortization was $ 2.4 million for the year ended December 31, 2025. As of December 31, 2025, the total carrying amount related to the note was $ 52.5 million, inclusive of $ 53.5 million aggregate principal outstanding, partially offset by a remaining unamortized net OID of $ 0.8 million and unamortized deferred financing fees of $ 0.2 million. 2027 Convertible Notes Terms and Conditions Maturity. The 2027 Convertible Notes mature on March 1, 2027 unless earlier converted, redeemed or purchased. Interest. The 2027 Convertible Notes accrue interest at a rate of 9.5 % per year. Interest on the 2027 Convertible Notes is paid semi-annually on February 1 st and August 1 st of each year, commencing on February 1, 2026. For the first interest period only, interest will be paid in kind. All subsequent interest payments are payable in cash. Ranking. The 2027 Convertible Notes constitute a secured and second-priority lien obligation of the Company. The 2027 Convertible Notes and the note guarantees will rank: (i) junior in right of payment with all existing and future first-lien debt of the Company and the Subsidiary Guarantors (including the 10.50 % 2027 Senior Secured Notes, the 2020 Revolving Credit Agreement and the guarantees thereof) and effectively senior to all unsecured or third-lien debt of the Company to the extent of the value of the collateral; (ii) senior in right of payment to all of the Company’s future debt that expressly provides for its subordination to the 2027 Convertible Notes; (iii) effectively subordinated to any existing and future debt of the Company that is secured by liens on property and assets that do not constitute collateral, to the extent of the value of such property and assets; and (iv) structurally subordinated to any existing and future debt and other liabilities of the Company’s non-guarantor subsidiaries. Collateral. The 2027 Convertible Notes are secured by a second priority lien on substantially all of the Company’s assets and the assets of the Subsidiary Guarantors (except for certain “Excluded Assets,” and subject to certain “Permitted Liens,” each as defined in the 2027 Convertible Notes Indenture), including, without limitation: • all equity interests owned by the Company or a Subsidiary Guarantor (which, in the case of any equity interest in a foreign subsidiary, will be limited to 65 % of the voting stock of such foreign subsidiary if the pledge thereof would result in adverse tax consequences that are material to the value of the collateral); • all equipment, goods, inventory and fixtures owned by the Company or a Subsidiary Guarantor; • all accounts, cash, deposit accounts and investment securities owned by the Company or a Subsidiary Guarantor; • all documents, books and records, instruments and chattel paper owned by the Company or a Subsidiary Guarantor; • all intellectual property and other general intangibles owned by the Company or a Subsidiary Guarantor; and • any proceeds and supporting obligations thereof. No Sinking Fund. The Company is not required to make any sinking fund payments with respect to the 2027 Convertible Notes. Optional Redemption. The Company may redeem the 2027 Convertible Notes in whole or in part, for cash. The redemption price will equal 100 % of the principal amount of the 2027 Convertible Notes being redeemed, plus accrued and unpaid interest, including additional interest, if any, to, but excluding, the redemption date. Asset Sale Offer. If the Company completes certain assets sales, the Company may be required in certain circumstances to make an offer to purchase the 2027 Convertible Notes with the net cash proceeds from such an asset sale (After the indefeasible repayment and satisfaction in full in cash of all obligations under the 10.50 % 2027 Senior Secured Notes, the 10.50 % 2027 Senior Secured Notes Indenture, and all other Senior Debt) at a price in cash equal to 101 % of the principal amount thereof, together with accrued and unpaid interest, if any, to the date of purchase. F-36 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Fundamental Change. If the Company undergoes a Fundamental Change (as defined in the 2027 Convertible Notes Indenture), subject to certain conditions, the Company may be required to purchase all or any portion of the 2027 Convertible Notes for cash. The Fundamental Change purchase price will be 100 % of the principal amount of the 2027 Convertible Notes to be purchased, plus any accrued and unpaid interest, including additional interest, if any, to, but excluding, the Fundamental Change Purchase Date (as defined in the 2027 Convertible Notes Indenture). The Fundamental Change definition excludes ownership of the Company’s equity by Lancer Capital LLC and its affiliates. Certain Covenants. The 2027 Convertible Notes Indenture contains covenants limiting, among other things, the ability of the Company, and, in certain cases, the Company’s subsidiaries, to incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; make certain restricted payments; 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. Conversion Rights. The 2027 Convertible Notes will be convertible into cash, shares of the Company’s common stock, or a combination thereof, at the Company’s election, based on an initial conversion rate of 23.6327 shares of common stock per $1,000 principal amount of 2027 Convertible Notes (equivalent to an initial conversion price of approximately $ 42.31 per share of the Company’s common stock), at any time prior to the close of business on the business day immediately preceding the maturity date, in principal amounts of $1,000 or an integral multiple of $ 1.00 in excess thereof. In addition, following a Make-Whole Fundamental Change (as defined in the 2027 Convertible Notes Indenture) or the Company’s delivery of a notice of redemption for the 2027 Convertible Notes, the Company will, in certain circumstances, be required to increase the conversion rate for a holder who elects to convert its 2027 Convertible Notes in connection with (i) such Make-Whole Fundamental Change or (ii) such notice of redemption. Events of Default. The 2027 Convertible Notes Indenture contains customary events of default, including cross-default provisions with other INNOVATE debt instruments, which could, subject to certain conditions, cause the 2027 Convertible Notes to become immediately due and payable, including, but not limited to defaults by the Company in the payment of the principal of any the 2027 Convertible Notes when the same becomes due and payable at maturity, upon acceleration or redemption, or otherwise or in the payment of interest on any note when the same becomes due and payable, and the default continues for a period of 30 days; failure to comply with certain other covenants in the 2027 Convertible Notes Indenture for a period of 60 days following notice by 2027 Convertible Notes Trustee or the holders of at least 25 % in aggregate principal amount of the 2027 Convertible Notes then outstanding; failure to pay or otherwise default on material debt; or failure to pay final judgments entered by a court or courts of competent jurisdiction aggregating $ 20 million or more (excluding amounts covered by insurance), which judgments are not paid, discharged or stayed, for a period of 60 days; and certain events of bankruptcy or insolvency. 2026 Convertible Notes The original $ 51.8 million aggregate principal amount of 7.50 % convertible notes (the "2026 Convertible Notes") were issued under an indenture dated February 1, 2021, between the Company and U.S. Bank, as trustee. During July 2024, INNOVATE repurchased $ 2.9 million principal amount of its 2026 Convertible Notes at a market discount for $ 1.1 million, which was inclusive of accrued interest of $ 0.1 million. As discussed above, on August 4, 2025, pursuant to the Exchange Agreements, the Company exchanged $ 48.7 million aggregate principal amount of the 2026 Convertible Notes for new 2027 Convertible Notes. Subsequent to the exchanges and, as of December 31, 2025, the Company has $ 0.2 million aggregate principal remaining of the 2026 Convertible Notes. The 2026 Convertible Notes mature on August 1, 2026, unless earlier converted, redeemed or purchased. The 2026 Convertible Notes were issued in 2021 at 100 % of par with a stated annual interest rate of 7.50 %. The fair value of the embedded conversion feature contained in the 2026 Convertible Notes had an initial fair value of $ 12.3 million, which was recorded as a premium on the 2026 Convertible Notes. The 2026 Convertible Notes had an initial effective interest rate of 3.21 %, which reflected the initial $ 12.3 million premium and $ 1.1 million of deferred financing fees. As of December 31, 2025, the remaining 2026 Convertible Notes had a net carrying value of $ 0.2 million. The effective interest rate on the remaining 2026 Convertible Notes as of December 31, 2025 was 3.0 %. As of December 31, 2024, the 2026 Convertible Notes had a net carrying value of $ 52.3 million, inclusive of an unamortized premium of $ 3.8 million and unamortized deferred financing costs of $ 0.4 million. Interest is payable semi-annually in arrears on February 1 st and August 1 st of each year. Aggregate interest expense recognized relating to both the contractual interest coupon and amortization of discount, net of premium and deferred financing costs was $ 0.9 million and $ 1.7 million for the years ended December 31, 2025 and 2024, respectively. Each $1,000 of principal of the 2026 Convertible Notes is convertible into 23.6327 shares of INNOVATE's common stock, which is equivalent to a conversion price of approximately $ 42.31 per share, for a total of 3,781 shares of common stock, as adjusted for the reverse stock split in 2024, and subject to further adjustment upon the occurrence of specified events. Based on the closing price of our common stock on December 31, 2025, the if-converted value of the 2026 Convertible Notes did not exceed its principal value. F-37 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED On August 4, 2025, the Company and U.S. Bank Trust Company, National Association, as trustee (the “2026 Convertible Notes Trustee”) entered into a first supplemental indenture (the “2026 Convertible Notes Supplemental Indenture”) to the indenture, dated as of February 1, 2021, by and among the Company, the guarantors party thereto from time to time and the 2026 Convertible Notes Trustee, governing the 2026 Convertible Notes (the “2026 Convertible Notes Indenture”). The 2026 Convertible Notes Supplemental Indenture amended the 2026 Convertible Notes Indenture and the 2026 Convertible Notes to effectuate certain proposed amendments with respect to the 2026 Convertible Notes pursuant to the solicitation of consents, which amendments included eliminating substantially all of the restrictive covenants, eliminating certain events of default, modifying covenants regarding mergers and consolidations and modifying or eliminating certain other provisions, contained in the 2026 Convertible Notes Indenture and the 2026 Convertible Notes. Revolving Line of Credit The Company has a revolving credit agreement with MSD PCOF Partners IX, LLC ("MSD"), which has a maximum commitment of $ 20.0 million ("Revolving Line of Credit"). As of both December 31, 2025 and 2024, the outstanding balance was $ 20.0 million. The maturity date of the Revolving Line of Credit, as amended on August 4, 2025, is September 15, 2026. The Revolving Line of Credit has an interest rate margin applicable to loans borrowed under the Revolving Line of Credit of 5.75 %, and the benchmark rates for the interest are SOFR-based rates. As of December 31, 2025 and 2024, the effective interest rate on the Revolving Line of Credit, as amended, was 10.0 % and 10.6 %, respectively. Interest is paid quarterly in arrears. The Revolving Line of Credit also includes a commitment fee at a per annum rate of 1.0 % calculated based on the actual daily amount of unused availability under the Revolving Line of Credit with MSD, and also includes a requirement for prepayment using the net cash proceeds received from certain asset sales. The affirmative and negative covenants governing the Revolving Line of Credit are substantially consistent with the affirmative and negative covenants contained in the indentures that govern the Company's senior secured notes. On August 4, 2025, the Company and MSD entered into an Eighth Amendment to Credit Agreement, which among other things, extended the maturity of the 2020 Revolving Credit Agreement to September 15, 2026, and added a new $ 0.4 million extension fee that is payable on the earlier of maturity date or date of prepayment of the debt. The August 4, 2025 amendment was determined to be a modification of debt under ASC 470-50, as the product of the borrowing capacity and remaining term of the amended Revolving Line of Credit was greater than the product of the borrowing capacity and remaining term of the Revolving Line of Credit under the terms immediately prior to the amendment. As such, the $ 0.4 million extension fee and third-party legal costs of $ 0.3 million incurred under the amendment will be amortized into interest expense over the term of the Revolving Line of Credit. Revolving Credit Agreement Terms and Conditions Ranking. Obligations under the Revolving Credit Agreement constitute First-Out Debt, as defined in the Secured Indenture, and are secured on a pari passu basis with the 2027 Senior Secured Notes. Collateral: As provided under a Collateral Trust Joinder, the lender was added as a secured party to the Collateral Trust Agreement, and accordingly the pari passu obligations and commitments under the Revolving Credit Agreement are secured equally and ratably by the collateral of the Secured Notes. Any failure to comply with the restrictions in the agreements governing the Company's indentures, or any agreement governing other indebtedness the Company could incur, 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. CGIC Promissory Note On August 4, 2025, the Company and CGIC entered into a Subordinated Secured Promissory Note to, among other things, extend the maturity of its existing subordinated unsecured promissory note with CGIC (the “CGIC Note”) from February 28, 2026 to April 30, 2027, and secure the amended CGIC Note by a third priority lien on the same collateral securing the 10.50 % 2027 Senior Secured Notes and the 2027 Convertible Notes. The amended CGIC Note has an interest rate of 16.0 %, and an effective interest rate of 14.6 % as of December 31, 2025. Interest on the amended CGIC Note will be paid monthly and in kind through August 31, 2026. All interest payments thereafter will be payable in cash, in arrears. As part of the agreement with CGIC, the accrued value of 8,063 shares of Series A-4 Preferred Stock of the Company held by CGIC, and unpaid accrued dividends for the A-3 and A-4 Preferred Stock were exchanged for an additional principal amount of the CGIC Note, on a dollar-for-dollar basis (the “Preferred Stock Exchange”). The additional principal amount incurred under the Preferred Stock Exchange was $ 9.6 million (reflective of the $ 9.1 million accrued value of the Series A-4 Preferred Stock and $ 0.5 million in accrued dividends on the Series A-3 and A-4 Preferred Stock). In addition, an extension fee and accrued interest of $ 2.4 million on the CGIC Note through July 31, 2025, were capitalized to the new principal amount of the CGIC Note, for a total new aggregate outstanding principal amount of $ 43.0 million. F-38 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED The original CGIC subordinated unsecured promissory note, which was entered into in 2023 in connection with the redemption of DBM Global Intermediate Holdco Inc.'s Series A Fixed-to-Floating Rate Perpetual Preferred Stock (the “DBMGi Series A Preferred Stock”), had a principal amount of $ 35.1 million, an original maturity date of February 28, 2026, and bore interest at 9.0 % per annum through May 8, 2024, 16.0 % per annum from May 9, 2024 to May 8, 2025, and 32.0 % per annum thereafter. As of December 31, 2024, the effective interest rate on the note, as adjusted, was 17.5 %. The CGIC note required a mandatory prepayment from the proceeds from certain asset sales and the greater of $ 3.0 million or 12.5 % of the net proceeds from certain equity sales. As a result of the closing of the rights offering and concurrent private placement in 2024 (refer to Note 16. Equity and Temporary Equity), INNOVATE redeemed $ 4.1 million of the CGIC Note on April 26, 2024. The mandatory prepayment requirement for certain equity sales was removed under the August 4, 2025 amendment. The August 4, 2025 amendment, including the Preferred Stock Exchange, was determined to be a troubled debt restructuring under ASC 470-60, because INNOVATE was deemed to be experiencing financial difficulty, and according to the substantial changes under the amendment, the lender was deemed to have granted a concession. However, no gain or loss on the amendment was recorded, as the future undiscounted cash flows under the amended terms were greater than the net carrying value of the note, preferred stock and accrued dividends prior to the amendment. A new effective interest rate was established based on the carrying values of the original debt, preferred stock, accrued dividends, and the revised future cash flows, which is inclusive of the extension fee. The new extension fee was recorded as an OID to the carrying amount of the note and is being amortized into interest expense over the term of the CGIC Note using the effective interest rate method. For the years ended December 31, 2025 and 2024, interest expense recognized relating to the CGIC Note, including the contractual interest coupon and amortization of the discount, was $ 5.9 million and $ 5.7 million, respectively, and cash paid for interest to CGIC was $ 3.2 million and $ 4.6 million, respectively. Subsequent to August 4, 2025, in accordance with the terms of the amended CGIC Note, $ 2.9 million of interest was capitalized into the principal balance. As of December 31, 2025, the total carrying amount related to the note was $ 46.8 million, inclusive of $ 45.9 million of principal (including capitalized interest) and a net unamortized premium of $ 0.9 million. As of December 31, 2024, the total carrying amount of the note was $ 31.0 million and accrued interest payable was $ 3.4 million. CGIC Note Terms and Conditions Issue Price . The issue price of the CGIC Note was 100 % of par. Ranking . The note is a part of the Company’s general unsecured and unsubordinated obligations and will rank equally in right of payment with all of the Company’s existing and future unsecured and unsubordinated indebtedness, and senior in right of payment to any of the Company’s future indebtedness that is expressly subordinated to the notes. The notes will be effectively subordinated to all of the Company’s existing and future secured indebtedness, including the Company’s 2027 10.50 % Senior Secured Notes, 2026 8.50 % Senior Secured Notes, 2027 Convertible Notes, 2026 Convertible Notes and structurally subordinated to all indebtedness and other liabilities of the Company’s subsidiaries, including trade credit. Mandatory Prepayment s. After the indefeasible repayment and satisfaction in full in cash of all obligations under the 10.50 % 2027 Senior Secured Notes, the 10.50 % 2027 Senior Secured Notes Indenture, the 2027 Convertible Notes, the 2027 Convertible Notes Indenture and all other Senior Debt (or, in each case, under any refinancing indebtedness in respect thereof), the Company must prepay the CGIC Note (together with all accrued and unpaid interest and all other amounts payable under the CGIC Note) upon the occurrence of an Asset Sale (as defined in the agreement), in an amount equal to the Net Cash Proceeds (as defined in the agreement) from such Asset Sale, with such prepayment due no later than two (2) Business Days after the receipt of such Net Cash Proceeds by the Company (or its subsidiary, if applicable) from such Asset Sale. Optional Prepayments. Subject to subordination to the Company's Senior Debt, and as long as the Borrower is not in default on any of the Senior Debt and such payment does not result in default on any of the Senior Debt, the Company may prepay the CGIC Note in whole or in part at any time or from time to time without penalty or premium by paying the principal amount to be prepaid together with accrued and unpaid interest thereon to the date of prepayment and all other amounts payable under this CGIC Note. Events of Default . The note contains customary events of default and contains cross-default provisions with other INNOVATE debt instruments which could, subject to certain conditions, cause the note to become immediately due and payable. INNOVATE is in compliance with its debt covenants as of December 31, 2025. F-39 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED 12. Income Taxes The income tax expense (benefit) for income taxes for the years indicated were as follows (in millions): Year Ended December 31, 2025 2024 Current tax expense Federal $ ( 1.0 ) $ 0.6 State 2.6 4.5 Foreign 1.0 0.7 Net current tax expense $ 2.6 $ 5.8 Deferred tax expense (benefit) Federal $ 0.3 $ 0.2 Foreign ( 0.4 ) 0.3 Net deferred tax (benefit) expense $ ( 0.1 ) $ 0.5 Income tax expense $ 2.5 $ 6.3 The US and foreign components of income (loss) from continuing operations before income taxes for the years indicated were as follows (in millions): Year Ended December 31, 2025 2024 US $ ( 63.3 ) $ ( 36.1 ) Foreign 1.8 2.7 Loss from continuing operations before income taxes $ ( 61.5 ) $ ( 33.4 ) The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company’s effective rate for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09 (in millions): Year Ended December 31, 2025 Amount Percent Tax (benefit) at federal statutory rate $ ( 12.9 ) 21.0 % State tax, net of federal benefit (1) 1.9 ( 3.1 ) % Foreign Tax Effects 0.3 ( 0.5 ) % Increase (decrease) in valuation allowance 12.7 ( 20.7 ) % Non-taxable or non-deductible items: Non-deductible meals and entertainment 0.7 ( 1.1 ) % Other Adjustment: Other ( 0.2 ) 0.3 % Income tax expense $ 2.5 ( 4.1 ) % (1) State taxes in New York, California, and Louisiana made up the majority (greater than 50%) of the tax effect in this category. The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company’s effective rate for the years ended December 31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09 (in millions): Year Ended December 31, 2024 Amount Tax (benefit) at federal statutory rate $ ( 7.0 ) State tax, net of federal benefit ( 1.3 ) Non-deductible meals and entertainment 0.5 Executive and stock compensation 2.1 Increase (decrease) in valuation allowance 19.8 Tax rate changes ( 4.9 ) Return to provision ( 3.8 ) Other 0.9 Income tax expense $ 6.3 F-40 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Income tax expense of $ 2.5 million for the year ended December 31, 2025, primarily relates to the tax expense for taxpaying entities for which there was a decrease in tax expense due to the decrease in pre-tax results. Additionally, the tax benefits associated with losses generated by certain other businesses have been reduced by a full valuation allowance as management does not believe it is more-likely-than-not that the losses will be utilized. Income tax expense of $ 6.3 million for the year ended December 31, 2024, primarily relates to the tax expense for taxpaying entities, for which there was an increase in current federal tax expense due to INNOVATE's U.S. consolidated group utilizing its remaining unlimited NOLs in 2024 and due to the Tax Cuts and Jobs Act's 80% limitation on net operating losses incurred after 2017. Additionally, the tax benefits associated with losses generated by the INNOVATE Corp. U.S. tax consolidated group and certain other businesses have been reduced by a full valuation allowance as the Company does not believe it is more-likely-than not that the losses will be utilized prior to expiration. On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law, introducing various changes to U.S. federal income tax provisions, including modifications to bonus depreciation, interest expense limitations, and the treatment of research and development expenditures. Under ASC 740, the effects of newly enacted tax legislation must be recognized in the period that includes the enactment date. Management has evaluated the provisions of the OBBBA and their current and potential impact on the financial statements. Based on this evaluation, the Company does not expect the OBBBA to have a material effect on the current or deferred income tax balances, effective tax rate, or overall financial position. The effects of the legislation have been reflected in the Company’s income tax provision for the year ended December 31, 2025. The Company will continue to monitor developments and assess the impact of the OBBBA as additional guidance becomes available and as facts and circumstances evolve. The following table presents income taxes paid, net of refunds, for the year ended December 31, 2025, based on the adoption of ASU 2023-09 (in millions): Year Ended December 31, 2025 Amount Percent Federal $ 0.9 14.0 % State: California 1.5 23.4 % New York 1.2 18.8 % Louisiana 0.8 12.5 % Other state jurisdictions 1.2 18.8 % Foreign: Canada 0.5 7.8 % Other foreign jurisdictions 0.3 4.7 % Total income taxes paid, net of refunds $ 6.4 100.0 % F-41 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Deferred income taxes reflect the net income tax effect of temporary differences between the basis of assets and liabilities for financial reporting purposes and for income tax purposes. Net deferred tax balances as of the years indicated were comprised of the following (in millions): December 31, 2025 2024 Net operating loss carryforwards $ 81.6 $ 79.2 Basis difference in fixed assets 0.4 0.4 Deferred compensation 7.6 8.1 Sec. 163(j) carryforward 74.4 68.3 Deferred Interest 4.3 — Lease liability 15.5 15.7 Investment in partnership 10.5 10.8 Other deferred tax assets 8.1 8.1 Total deferred tax assets 202.4 190.6 Valuation allowance ( 138.6 ) ( 128.9 ) Total net deferred tax assets $ 63.8 $ 61.7 Basis difference in fixed assets ( 17.0 ) ( 16.4 ) Right-of-use assets ( 14.7 ) ( 15.0 ) Basis difference in intangibles ( 32.7 ) ( 30.4 ) Lease termination ( 0.7 ) ( 1.5 ) Other deferred tax liabilities ( 1.4 ) ( 1.2 ) Total deferred tax liabilities $ ( 66.5 ) $ ( 64.5 ) Net deferred tax liabilities $ ( 2.7 ) $ ( 2.8 ) Net deferred tax asset per Consolidated Balance Sheet $ 2.0 $ 1.6 Deferred tax liabilities per Consolidated Balance Sheet 4.7 4.4 Total net deferred tax liabilities $ ( 2.7 ) $ ( 2.8 ) Deferred tax assets refer to assets that are attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets in essence represent future savings of taxes that would otherwise be paid in cash. The realization of the deferred tax assets is dependent upon the generation of sufficient future taxable income, including capital gains. If it is determined that the deferred tax assets cannot be realized, a valuation allowance must be established, with a corresponding charge to net income (loss). The Company records valuation allowances for deferred tax assets when, based on management's judgment, it is more likely than not that such assets will not be realized. This assessment is based on projections of future income or loss and other positive and negative evidence by individual tax jurisdiction. Changes in industry and economic conditions and the competitive environment may impact these projections. During each reporting period, the Company assesses the likelihood that its deferred tax assets will be realized and determines if adjustments to its valuation allowances are appropriate. Management evaluated the need to maintain the valuation allowance against the deferred taxes of the INNOVATE Corp. U.S. consolidated tax group ("the group") for each of the reporting periods based on the positive and negative evidence available. The objective negative evidence evaluated was the group’s historical operating results over the prior three-year period. The group is in a cumulative three-year loss as of December 31, 2025, which provides negative evidence that is difficult to overcome and would require a substantial amount of objectively verifiable positive evidence of future income to support the realizability of the group’s deferred tax assets. While positive evidence exists by way of unrealized gains in the Company’s investments, management concluded that the negative evidence outweighs the positive evidence. Thus, it is more likely than not that the group’s US deferred tax assets will not be realized. However, as the Company executes potential sales of subsidiaries, management expects that such event would likely provide sufficient positive evidence to support the realization of certain deferred tax assets, which could result in a material release of the Company’s valuation allowance. Valuation allowances have been maintained against deferred tax assets based on losses generated by certain businesses that are not included in the INNOVATE Corp. U.S. consolidated income tax return. Generally, consolidation rules under the Internal Revenue Code require consolidation of like-kind entities with an 80% or greater equity ownership, and each individual state or foreign jurisdiction has their own distinct consolidation rules which vary. F-42 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED As of December 31, 2025, the Company has not recognized any deferred tax liabilities associated with undistributed earnings of its foreign subsidiaries, as these earnings are considered permanently reinvested. Determination of the amount of unrecognized deferred income tax liability is not practicable due to the complexities associated with its hypothetical calculation. Upon distribution of those earnings in the form of dividends or otherwise, the Company may be subject to U.S. income taxes and withholding taxes payable in various foreign jurisdictions, which could potentially be offset by foreign tax credits. Net Operating Losses At December 31, 2025, the Company had gross U.S. net operating loss ("NOL") carryforwards available to reduce future taxable income of the U.S. consolidated group in the amount of $ 176.3 million. The Company expects that approximately $ 123.0 million of the gross U.S. NOL carryforwards would be available to offset taxable income in 2026 and later periods. This estimate may change based on changes to actual results reported on the 2025 U.S. tax return. The amount of U.S. NOL carryforwards reflected in the financial statements differ from the amounts reported on the U.S. tax return due to uncertain tax positions related to tax laws and regulations that are subject to varied interpretation by the Internal Revenue Service ("IRS"). Due to U.S. enacted Public Law 115-97, known informally as the Tax Cuts and Jobs Act (the "TCJA") in 2017, U.S. NOL carryforwards in the amount of $ 141.8 million, generated after 2017 have an indefinite carryforward period. U.S. NOL carryforwards, in the amount of $ 34.5 million, generated prior to 2018 will expire, if unused, by 2037. Additionally, as of December 31, 2025, the Company had $ 164.3 million of gross U.S. NOL carryforwards from its subsidiaries that do not qualify to be included in the INNOVATE U.S. consolidated income tax return, including $ 115.7 million from R2 Technologies, $ 45.9 million from DTV, and other entities of $ 2.7 million. Of the $ 164.3 million of gross U.S. NOL carryforwards, $ 128.2 million was generated after 2017 and will have an indefinite carryforward period; the remaining $ 36.1 million was generated prior to 2018 and will expire, if unused, by 2037. Pursuant to the rules under Section 382, the Company concluded that it underwent an ownership change on May 29, 2014 and $ 46.1 million gross U.S. NOLs recorded in the consolidated financial statements are subject to an annual limitation under IRC Sec. 382 of approximately $ 2.3 million. The purchase of GrayWolf on November 30, 2018 triggered a Section 382 ownership change. $ 57.1 million of gross U.S. NOLs acquired are subject to an annual limitation between $ 3.0 million and $ 4.0 million for the first five years beginning in 2019 and $ 1.1 million afterwards. $ 25.4 million of the GrayWolf U.S. NOLs subject to Section 382 were generated in 2018, and, therefore, they do not expire. Additionally, the Company has $ 11.4 million of acquired U.S. NOLs from DTV America, which is subject to an annual limitation under Section 382 of the Internal Revenue Code. As of December 31, 2025, the Company had foreign operating loss carryforwards of approximately $ 0.6 million. Unrecognized Tax Benefits The Company follows the provision of ASC 740 which prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. The Company is subject to challenge from various taxing authorities relative to certain tax planning strategies, including certain intercompany transactions as well as regulatory taxes . The Company did not have any unrecognized tax benefits as of December 31, 2025 and 2024, related to uncertain tax positions that would impact the effective income tax rate if recognized. The Company has reduced the NOL carryforward by $ 58.7 million for uncertain tax positions based on our interpretation of tax laws and regulations that are subject to varied interpretations by the IRS. Below is a tabular reconciliation of the total amount of unrecognized tax benefits as of the years indicated (in millions): Year Ended December 31, 2025 2024 Uncertain tax benefits - January 1 $ 17.6 $ 17.6 Gross decreases - Tax positions in prior year — — Uncertain tax benefits - December 31 $ 17.6 $ 17.6 Examinations The Company conducts business globally, and as a result, INNOVATE or one or more of its subsidiaries files income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. Tax years 2002-2024 remain open for examination. F-43 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED The Company is currently under examination in various state and foreign tax jurisdictions. The open tax years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, character, timing or inclusion of revenue and expenses or the applicability of income tax credits for the relevant tax period. Given the nature of tax audits, there is a risk that disputes may arise. 13. Commitments and Contingencies Unrecorded future minimum purchase commitments as of December 31, 2025, were as follows (in millions) : 2026 $ 362.0 2027 0.1 2028 0.1 2029 0.1 Total commitments $ 362.3 The Company’s future minimum purchase commitments are primarily for materials and subcontractor costs to be used in its construction projects. The amounts are fixed and determinable and do not include variable components. Litigation The Company is subject to claims and legal proceedings that arise in the ordinary course of business. Such matters are inherently uncertain, and there can be no guarantee that the outcome of any such matter will be decided favorably to the Company or that the resolution of any such matter will not have a material adverse effect upon the Company’s Consolidated Financial Statements. Such legal matters may include, but is not limited to, actions or claims relating to sensitive data, including proprietary business information and intellectual property, personally identifiable information of employees and contractors, cyber-attacks, data breaches and non-compliance with contractual or other legal obligations. Litigation and other legal matters are inherently unpredictable and subject to substantial uncertainties and adverse resolutions could occur. In addition, litigation and other legal matters, including class-action lawsuits, government investigations and regulatory proceedings can be costly to defend and, depending on the class size and claims, could be costly to settle. The Company does not believe that any of such pending claims and legal proceedings will have a material adverse effect on its Consolidated Financial Statements. The Company records a liability in its Consolidated Financial Statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated as well as any legal costs incurred related to the litigation. The Company reviews these estimates each accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in a liability and the amount of loss can be reasonably estimated, the Company estimates and discloses the possible loss or range of loss to the extent necessary for its Consolidated Financial Statements not to be misleading. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in the Company's Consolidated Financial Statements. Any legal or other expenses associated with the litigation are accrued for as the expenses are incurred. The Company maintains liability insurance that insures it against workers’ compensation, personal and bodily injury, property damage, directors’ and officers’ liability, errors and omissions, cyber liability, and employment practices liability. There can be no assurance that the liability insurance will cover all events or that the limits of coverage will be sufficient to fully cover all liabilities. Based on a review of the current facts and circumstances with counsel in each of the matters disclosed, management has provided for what is believed to be a reasonable estimate of loss exposure. While acknowledging the uncertainties of litigation, management believes that the ultimate outcome of litigation will not have a material effect on its financial position and will defend itself vigorously. GrayWolf Collective Action Claim On March 24, 2026, a subsidiary of DBM Global, GrayWolf Integrated Construction Company, received a draft of a purported Collective Action Complaint entitled Hilario Riviera, Individually and for Others Similarly Situated v. GrayWolf Integrated Construction Company (the "Draft Complaint") alleging that GrayWolf failed to properly pay Riviera for all hours worked because GrayWolf automatically rounded the punch in and punch out times for work to the nearest half hour for GrayWolf’s own primary benefit and to the detriment of Riviera and other hourly employees. The Draft Complaint also states that GrayWolf paid Riviera and other hourly employees “per diems,” not reasonably calculated to reimburse expenses and based on time worked, but GrayWolf excluded “per diems” from their regular rate of pay for overtime purposes. The action is purported to be brought under the Fair Labor Standards Act (the "FLSA") on behalf of hourly employees for the last three years who had wages rounded or received "per diems". GrayWolf intends to enter into a “Tolling Agreement” with the Plaintiff to stay any statute of limitations while GrayWolf investigates this matter and expects that it will vigorously contest the allegations. Accordingly, the Company cannot reasonably estimate any range of potential loss at this time. F-44 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Other Commitments and Contingencies Letters of Credit and Performance Bonds As of December 31, 2025, DBMG had outstanding letters of credit of $ 0.1 million under credit and security agreements and performance bonds of $ 680.2 million. As of December 31, 2024, DBMG had outstanding letters of credit of $ 0.1 million under credit and security agreements and performance bonds of $ 183.9 million. DBMG’s contract arrangements with customers sometimes require DBMG to provide performance bonds to partially secure its obligations under its contracts. Bonding requirements typically arise in connection with private contracts and sometimes with respect to certain public work projects. DBMG’s performance bonds are obtained through surety companies and typically cover the entire project price. The ratings of the bonding companies utilized by DBMG are highly rated, ranging from A-, A, A+, AA- and AA. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable. The Company maintains all cash and cash equivalents at accredited financial institutions, in amounts that exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company held $ 7.6 million and $ 5.5 million of cash and restricted cash in foreign accounts as of December 31, 2025 and 2024, respectively, none of which is covered by the Federal Deposit Insurance Corporation ("FDIC"). The Company attempts to minimize the risks related to cash and cash equivalents by investing in a range of financial instruments as defined by the Company. Concentrations of credit risk with respect to accounts receivable are limited by the large number of customers comprising the Company's customer base and their geographic and business dispersion. In addition, concentrations of credit risk at DBM with respect to receivables are limited as the Company’s customers tend to be larger general contractors and subcontractors on adequately funded projects and the Company has certain lien rights. The Company performs ongoing credit evaluations of the customers' financial condition and generally does not require collateral to support customer receivables. The Company's revenue, accounts receivable and accounts payable concentrations of 10% and greater were as follows: Year Ended December 31, 2025 2024 Segment Revenue Accounts Receivable Accounts Payable Revenue Accounts Receivable Accounts Payable Customer A Infrastructure 13.1 % 29.6 % * * Customer B Infrastructure * 10.2 % * * Customer C Infrastructure * * 14.4 % * Customer D Infrastructure * * 10.3 % * Customer E Infrastructure * * * 10.3 % Supplier A Infrastructure 23.3 % * Supplier B Infrastructure * 15.2 % Supplier C Infrastructure * 15.5 % *Less than 10% concentration 14. Employee Retirement Plans 401(k) Plans The Company and various subsidiaries maintain 401(k) retirement savings plans which cover eligible employees, including for certain union steelworkers, and permit participants to contribute to the plans, subject to Internal Revenue Code restrictions and which feature matching contributions of various percentages of the first 3 % to 5 % of employee annual salary contributions, depending on the subsidiary. The Company made aggregate matching contributions of $ 2.9 million for the year ended December 31, 2025, of which $ 1.3 million was reflected as a component of Cost of revenue in the Consolidated Statements of Operations, and $ 1.6 million was reflected as a component of Selling, general and administrative in the Consolidated Statements of Operations. The Company made aggregate matching contributions of $ 2.8 million for the year ended December 31, 2024, of which $ 1.1 million was reflected as a component of Cost of revenue in the Consolidated Statements of Operations, and $ 1.7 million was reflected as a component of Selling, general and administrative in the Consolidated Statements of Operations. F-45 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Multi-Employer Plans Certain of the Company's Infrastructure segment workforce are subject to collective bargaining agreements. The Company contributes to union-sponsored, multi-employer pension plans. Contributions are made in accordance with negotiated labor contracts. The passage of the Multi-Employer Pension Plan Amendments Act of 1980 ("the Act") may, under certain circumstances, cause the Company to become subject to liabilities in excess of contributions made under collective bargaining agreements. Generally, liabilities are contingent upon termination, withdrawal, or partial withdrawal from the plans. Under the Act, liabilities would be based upon the Company's proportionate share of each plan's unfunded vested benefits. The Company made contributions to various multi-employer pension plans totaling $ 6.5 million and $ 9.8 million during the years ended December 31, 2025 and 2024, respectively, which was reflected as a component of Cost of revenue in the Consolidated Statements of Operations. Amounts contributed to the multi-employer pension plans can vary depending on a combination of when and in which state the erection phase of the Company's projects occur. The decrease in contributions for the year ended December 31, 2025 was due to the timing of work being done on the erection phase of our projects in states with higher contribution rates such as California and New York. As of December 31, 2025, approximately 23.9 % of DBMG’s employees are covered under various collective bargaining agreements. As of December 31, 2025, most of the Infrastructure segment's collective bargaining agreements are subject to automatic annual or other renewal unless either party elects to terminate the agreement on the scheduled expiration date. 15. Share-based Compensation On April 11, 2014, INNOVATE’s Board of Directors adopted the INNOVATE Corp. Omnibus Equity Award Plan (the "2014 Plan"), which was originally approved at the annual meeting of stockholders held on June 12, 2014. On April 21, 2017, the Board of Directors, subject to stockholder approval, adopted the Amended and Restated 2014 Omnibus Equity Award Plan (the "Restated 2014 Plan"). The Restated 2014 Plan was approved by INNOVATE's stockholders at the annual meeting of stockholders held on June 14, 2017. Subject to adjustment as provided in the Restated 2014 Plan, the Restated 2014 Plan authorized the issuance of 3,500,000 shares of common stock of INNOVATE, plus any shares that again become available for awards under the 2014 Plan, plus any shares that again become available for awards under the Restated 2014 Plan. On April 20, 2018, the Board of Directors, subject to stockholder approval, adopted the Second Amended and Restated 2014 Omnibus Equity Award Plan (the "Second A&R 2014 Plan"). The Second A&R 2014 Plan was approved by INNOVATE's stockholders at the annual meeting of stockholders held on June 13, 2018. Subject to adjustment as provided in the Second A&R 2014 Plan, the Second A&R 2014 Plan authorized the issuance of up to 3,500,000 shares of common stock of INNOVATE, plus any shares that again become available for awards under the 2014 Plan or the Restated 2014 Plan. The Second A&R 2014 Plan provides that no further awards will be granted pursuant to the 2014 Plan or the Restated 2014 Plan. However, awards previously granted under either the 2014 Plan or the Amended 2014 Plan will continue to be subject to and governed by the terms of the 2014 Plan and Amended 2014 Plan, respectively. The Compensation Committee of INNOVATE's Board of Directors administers the 2014 Plan, the Amended 2014 Plan and the Second A&R 2014 Plan and has broad authority to administer, construe and interpret the plans. The Second A&R 2014 Plan provides for the grant of awards of non-qualified stock options, incentive (qualified) stock options, stock appreciation rights, restricted stock awards, restricted stock units, other stock based awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing. The Company typically issues new shares of common stock upon the exercise of stock options, as opposed to using treasury shares. On September 30, 2024, the Board of Directors adopted, subject to stockholder approval, an amendment to the Second A&R 2014 Plan to increase the number of shares of the Company's common stock, par value $ 0.001 per share, available for issuance thereunder to 1,300,000 (the “Plan Amendment”). Prior to the adoption by the Board of Directors, there were a total of 101,943 shares of common stock available for future award under the "Second A&R 2014 Plan. The Plan Amendment was approved by holders of a majority in voting power on October 4, 2024, by written consent in lieu of a special meeting, and was effective as of October 29, 2024. As of December 31, 2025, 97,895 shares for awards remain available for issuance under the Second A&R 2014 Plan, as amended. Total share-based compensation expense recognized by the Company and its subsidiaries under all equity compensation arrangements was $ 2.7 million and $ 3.4 million for the years ended December 31, 2025 and 2024, respectively, which is included within Selling, general and administrative expenses in the Consolidated Statements of Operations. All grants are time based and vest either immediately or over a period established at grant, typically with a requisite service period of one to three years for a member of the Board of Directors or an employee to vest in the share-based award, subject to discretion by Compensation Committee. There are no other substantive conditions for vesting. The Company recognizes compensation expense for equity awards, reduced by actual forfeitures as they are incurred, using the straight-line basis. F-46 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Restricted Stock and Restricted Stock Units A summary of INNOVATE’s restricted stock and restricted stock unit activity is as follows: Number of Shares Weighted-Average Grant Date Fair Value Unvested - December 31, 2024 294,663 $ 8.12 Granted 278,389 $ 5.90 Vested ( 246,355 ) $ 8.05 Forfeited ( 12,521 ) $ 7.99 Unvested - December 31, 2025 314,176 $ 6.22 The aggregate vesting date fair value of the restricted stock and restricted stock units which vested during the years ended December 31, 2025 and 2024, was $ 1.3 million and $ 0.9 million, respectively. As of December 31, 2025, the total unrecognized share-based compensation expense related to unvested restricted stock and restricted stock units was $ 1.1 million and is expected to be recognized over the remaining weighted-average period of 0.9 years. Stock Options A summary of INNOVATE’s stock option activity is as follows: Number of Stock Options Weighted-Average Exercise Price Outstanding - December 31, 2024 217,733 $ 16.94 Granted 100,000 $ 5.67 Outstanding - December 31, 2025 317,733 $ 13.39 Exercisable - December 31, 2024 117,733 $ 27.74 Exercisable - December 31, 2025 217,733 $ 16.94 As of December 31, 2025, the intrinsic value and weighted-average remaining life of the Company's outstanding and exercisable stock options were $ 30 thousand and approximately 8.4 years, respectively. The maximum contractual term of the Company's exercisable stock options is approximately ten years . As of December 31, 2025, there were 100,000 unvested stock options and $ 0.2 million of unrecognized share-based compensation expense related to unvested stock options and is expected to be recognized over the remaining period of 0.8 years. Interim CEO Equity Awards On October 29, 2024, when the Plan Amendment became effective, the following awards, which were previously awarded to the Company's Interim Chief Executive Officer ("Interim CEO") and subject to stockholder approval of the Plan Amendment, became effective: (i) 95,322 of restricted stock unit awards ("RSUs"), which were awarded on October 11, 2023; (ii) 100,000 stock option awards with a strike price of $ 25.00 (as retroactively adjusted for the Reverse Stock Split in 2024) and an expiration date of September 15, 2033, which were awarded on September 15, 2023; (iii) 142,857 of RSUs, which were awarded on August 19, 2024; and (iv) 100,000 stock option awards with a strike price of $ 4.22 and an expiration date of September 15, 2034, which were awarded on September 15, 2024. On August 6, 2025, the Interim CEO was awarded 176,056 restricted stock awards ("RSAs") that vest on August 6, 2026. On September 15, 2025, the Interim CEO was awarded 100,000 stock option awards with a strike price of $ 5.67 and expiration date of September 15, 2035. F-47 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED The fair value of each stock option award was determined on the date of grant using the Black-Scholes option-pricing model using the following assumptions: Year Ended December 31, 2025 2024 Stock price at date of grant $ 4.75 $ 6.27 Expected term 5.5 years 5.1 years - 5.6 years Risk-free interest rate 3.7 % 4.1 % Expected volatility 88.4 % 80.9 % - 82.7 % Expected dividend yield — % — % Grant date fair value per option $ 3.34 $ 2.67 -$ 4.75 The expected option term of the Company's "plain vanilla" stock options granted reflect the application of the simplified method, as prescribed by Staff Accounting Bulletin Topic 14 . The simplified method was used as the Company does not believe it has sufficient historical exercise data to provide a reasonable basis for the expected term of its stock option grants. The simplified method will be used until such time as the Company has stock option exercise experience in which to reasonably determine the expected life. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Volatility and expected dividend yield are calculated using INNOVATE's historical volatility and dividend history. 16. Equity and Temporary Equity 2024 Rights Offering and Concurrent Private Placement On March 8, 2024, the Company commenced a rights offering ("Rights Offering"), in which each holder of the Company’s common stock, Series A-3 Convertible Participating Preferred Stock, Series A-4 Convertible Participating Preferred Stock and the 2026 Convertible Notes as of March 6, 2024 (the “rights offering record date”), were granted rights to purchase common stock. In connection with the Rights Offering, the Company entered into an Investment Agreement with Lancer Capital (the "Investment Agreement"), pursuant to which Lancer Capital agreed to purchase up to $ 19.0 million of Series C Preferred Stock as a backstop to the Rights Offering (the "Backstop Commitment") and to purchase $ 16.0 million of Series C Preferred Stock in a private placement transaction ("Concurrent Private Placement"). Lancer Capital is an investment fund led by Avram A. Glazer, the Chairman of the Board and the Company’s largest stockholder. As the Rights Offering had not yet settled by March 28, 2024, in accordance with the Investment Agreement, Lancer Capital purchased $ 25.0 million of Series C Preferred Stock, referred to as the "equity advance." On April 24, 2024, the Company completed and closed on the Rights Offering and issued a total of 530,611 shares of common stock for $ 3.7 million. In addition, Lancer Capital purchased an additional approximately 6,286 Series C Preferred Stock for $ 6.3 million under the Backstop Commitment. In total, the Company received $ 35.0 million in aggregate gross proceeds related to the Rights Offering and Concurrent Private Placement and incurred $ 1.8 million in dealer manager fees and other related costs which were capitalized into Additional paid in capital ("APIC"). On June 18, 2024, the Company's shareholders approved the conversion of the Series C Preferred Stock into common stock, and approximately 31,286 shares of Series C Preferred Stock, which were held by Lancer Capital, were converted into 4,469,390 shares of common stock, and there were no shares of the Series C Preferred Stock outstanding subsequent to their conversion into the Company's common stock. The Series C Preferred Stock was intended to be the economic equivalent of common stock, participating on an as-converted basis in all dividends, distributions, merger consideration and all other consideration receivable by holders of common stock, and a means through which the Backstop Arrangement and Concurrent Private Placement could be effected prior to the completion of the stockholder vote and the satisfaction of any other regulatory requirements. Prior to the conversion, the holder of the Series C Preferred Stock was entitled to receive dividends anytime the Company declared a dividend on its common stock (excluding dividends consisting in whole or in part of common stock). The dividend amount would be based on the number of shares (including fractions) of common stock into which the shares of Series C Preferred Stock were convertible on the applicable record date multiplied by the dividend per share declared on the Company's common stock. On September 30, 2024, the Company filed a Certificate of Elimination to its Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, eliminating from the Second Amended and Restated Certificate of Incorporation all matters set forth in the Certificate of Designation with respect to its Series C Preferred Stock, no shares of which were then issued and outstanding. F-48 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Reverse Stock Split On August 8, 2024, the Company effected a 1-for-10 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”) following stockholder approval. The Reverse Stock Split was implemented for the primary purpose of regaining compliance with the minimum bid price requirement for continued listing of the Company’s common stock on the NYSE. The Reverse Stock Split did not change the $ 0.001 par value per share of the common stock. As a result of the Reverse Stock Split, the number of outstanding common shares was reduced from 130,529,931 to 13,166,057 , inclusive of an additional 113,064 incremental whole shares issued for fractional shares. Unless noted, all share and per share amounts of common stock, options and restricted stock and any associated debt or preferred stock conversion rates contained in the historical periods, prior to the date of the Reverse Stock Split, presented within these Consolidated Financial Statements have been retroactively adjusted to reflect the 1-for-10 Reverse Stock Split as if it had occurred at the beginning of the earliest period presented. Preferred Shares The Company’s preferred shares authorized, issued and outstanding consisted of the following: December 31, 2025 2024 Preferred shares authorized, $ 0.001 par value 20,000,000 20,000,000 Series A-3 shares issued and outstanding 6,125 6,125 Series A-4 shares issued and outstanding 1,937 10,000 Series A-3 and Series A-4 Shares Issuance and Conversion. On July 1, 2021, (the "Exchange Date") as a part of the sale of Continental Insurance Group ("CIG"), INNOVATE entered into an exchange agreement (the "Exchange Agreement") with CGIC, also a former subsidiary, which held the remaining shares of the Company's previous Series A and Series A-2 Preferred Stock and was eliminated in consolidation prior to the sale of the Company's former Insurance segment on July 1, 2021. Per the Exchange Agreement, INNOVATE exchanged 6,125 shares of the Series A and 10,000 shares of the Series A-2 shares that CGIC held for an equivalent number of Series A-3 Convertible Participating Preferred Stock ("Series A-3") and Series A-4 Convertible Participating Preferred Stock ("Series A-4"), respectively. The terms remained substantially the same, except that the Series A-3 and Series A-4 mature on July 1, 2026. On August 4, 2025, INNOVATE closed on a Preferred Stock Exchange with CGIC that resulted in the redemption of 8,063 shares of Series A-4 Preferred Stock of the Company and unpaid accrued dividends for the A-3 and A-4 Preferred Stock for an additional principal amount of the CGIC Note. Refer to Note 11. Debt Obligations for additional information. Since the time of issuance of the Series A-3 and Series A-4 Preferred Stock on July 1, 2021, the Series A-3 and Series A-4 Preferred Stock have been classified as temporary equity in the Company's Consolidated Balance Sheet. After giving effect to the Preferred Stock Exchange in August 2025, the Series A-3 and A-4 Preferred Stock have a combined redemption value of $ 9.3 million and a current fair value of $ 9.6 million as of December 31, 2025, which is inclusive of accreted dividends and $ 0.3 million in accrued cash dividends. Dividends. The Series A-3 and Series A-4 Preferred Stock accrue a cumulative quarterly cash dividend at an annualized rate of 7.50 %. The accrued values of the Series A-3 and Series A-4 Preferred Stock accrete quarterly at an annualized rate of 4.00 % that is reduced to 2.00 % or 0.0 % if the Company achieves specified rates of growth measured by increases in its net asset value; provided, that the accreting dividend rate will be 7.25 % in the event that (A) the daily volume weighted-average price ("VWAP") of the Company's common stock is less than a certain threshold amount, (B) the Company's common stock is not registered under Section 12(b) of the Securities Exchange Act of 1934, as amended, or (C) the Company's common stock is not listed on certain national securities exchanges or the Company is delinquent in the payment of any cash dividends. The Series A-3 and Series A-4 Preferred Stock is also entitled to participate in cash and in-kind distributions to holders of shares of Company's common stock on an as-converted basis. During the three months ended March 31, 2025, INNOVATE's Board of Directors ("the Board") declared cash dividends with respect to INNOVATE’s issued and outstanding Series A-3 Preferred Stock and Series A-4 Preferred Stock as presented in the following table (in millions): 2025 Declaration Date and Holders of Record Date March 31, 2025 Payment Date April 15, 2025 Total Dividend $ 0.3 F-49 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED During the second, third, and fourth quarters of 2025, the Board did not declare any cash dividends with respect to INNOVATE’s issued and outstanding Series A-3 Preferred Stock and Series A-4 Preferred Stock. Aggregate quarterly dividends of $ 0.7 million, $ 0.5 million, and $ 0.4 million for the second, third, and fourth quarters of 2025, respectively, included the annual cash dividend of 7.5 % per annum which was accrued and also the accreting dividend of 7.25 % per annum. In addition, during the second quarter of 2025, the Company recorded the accretion and accrual of additional dividends of $ 1.3 million related to prior years, and $ 0.2 million related to the first quarter of 2025. This included cumulative accreting dividends, which were recorded following the determination that such dividends had accreted due to the daily VWAP of the Company's common stock trading at less than $1 at various dates since 2022, as adjusted for the 2024 Reverse Stock Split. These adjustments during the second quarter of 2025 that related to prior years resulted in: (i) an increase in the accrued value of the preferred stock of $ 1.3 million; (ii) a decrease in Additional Paid-In Capital (APIC) of $ 1.3 million; (iii) an increase in accrued liabilities of $ 0.1 million; and (iv) an increase in net loss attributable to common shareholders of $ 1.3 million. The Company evaluated the effects of the adjustment, both qualitatively and quantitatively, and does not believe the adjustment was material to any current or prior interim or annual periods that were affected. On August 4, 2025, $ 0.5 million in accrued quarterly dividends was exchanged for an additional principal amount of the CGIC note as part of the Preferred Stock Exchange. Refer to Note 11. Debt Obligations for additional information. During the year ended December 31, 2024, the Board declared cash dividends with respect to INNOVATE’s issued and outstanding Series A-3 Preferred Stock and Series A-4 Preferred Stock as presented in the following table (in millions): 2024 Declaration Date and Holders of Record Date March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 Payment Date April 15, 2024 July 15, 2024 October 15, 2024 January 15, 2025 Total Dividend $ 0.3 $ 0.3 $ 0.3 $ 0.3 Subsequent Measurement. The Company elected to account for the Series A-3 and Series A-4 Preferred Stock by immediately recognizing changes in the redemption value as they occur. The carrying values of the Series A-3 and Series A-4 Preferred Stock are adjusted to equal what the redemption amount would be as if the redemption were to occur at the end of the reporting period as if it were also the redemption date for the Series A-3 and Series A-4 Preferred Stock. Any cash dividends paid directly reduce the carrying value of the Series A-3 and Series A-4 Preferred Stock until the carrying value equals the redemption value. Once the carrying value is equal to the redemption value, the dividends declared are accrued by debiting retained earnings, or if retained earnings is a deficit, then by debiting additional-paid-in-capital. The Company has historically paid cash dividends on its Series A-3 and Series A-4 Preferred Stock and expects to continue to either accrete and accrue or pay such dividends each quarter. Optional Conversion. Each share of Series A-3 and Series A-4 may be converted by the holder into shares of the Company's common stock at any time based on the then-applicable conversion price. As of December 31, 2025, each share of the Series A-3 Preferred Stock was convertible at an accrued value of $ 1,000 per share, divided by the conversion price of $ 23.63 (as it may be adjusted from time to time, the "Series A-3 Conversion Price"), and each share of Series A-4 Preferred Stock was convertible at an accrued value of $ 1,000 per share divided by the conversion price of $ 34.40 (as it may be adjusted from time to time, the "Series A-4 Conversion Price") (collectively the “Conversion Prices”). The Conversion Prices have historically been adjusted from time to time and continue to be subject to potential adjustment for dividends, certain distributions, reverse stock splits or stock splits, combinations, reclassifications, reorganizations, mergers, recapitalizations and similar events, as well as in connection with issuances of equity or equity-linked or other comparable securities by the Company at a price per share (or with a conversion or exercise price or effective issue price) that is below the Conversion Prices (which adjustment shall be made on a weighted-average basis). As of December 31, 2025, the Series A-3 Preferred Stock and Series A-4 Preferred Stock, including the accrued value of accreting dividends, were convertible into 299,518 and 65,075 shares, respectively, of INNOVATE's common stock. As of December 31, 2024, the Series A-3 Preferred Stock and Series A-4 Preferred Stock were convertible into 259,212 and 290,672 shares, respectively, of INNOVATE's common stock. Redemption by the Holders / Automatic Conversion. On July 1, 2026, holders of the Series A-3 and Series A-4 shall be entitled to cause the Company to redeem, out of legally available funds, the Series A-3 and Series A-4 at the accrued value per share plus accrued but unpaid dividends (to the extent not included in the accrued value of Series A-3 and Series A-4). Each share of Series A-3 and Series A-4 that is not so redeemed will be automatically converted into shares of the Company's common stock at the Conversion Price then in effect. Upon a change of control (as defined in the Company's Third Amended and Restated Certificate of Incorporation) holders of the Series A-3 and Series A-4 shall be entitled to cause the Company to redeem their shares of Series A-3 and Series A-4 at a price per share of Series A-3 and Series A-4 equal to the greater of (i) the accrued value of the Series A-3 and Series A-4, plus any accrued and unpaid dividends (to the extent not included in the accrued value of Series A-3 and Series A-4 Preferred Stock), and (ii) the value that would be received if the share of Series A-3 and Series A-4 were converted into shares of the Company's common stock immediately prior to the change of control. F-50 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Redemption by the Company / "Company Call Option". At any time, the Company may redeem the Series A-3 and Series A-4, in whole but not in part, at a price per share generally equal to 150 % of the accrued value per share, plus accrued but unpaid dividends (to the extent not included in the accrued value of the Series A-3 and Series A-4), subject to the holder's right to convert prior to such redemption. Forced Conversion . The Company may force conversion of the Series A-3 and Series A-4 into shares of the Company's common stock if the common stock's thirty-day VWAP exceeds 150 % of the then-applicable Conversion Price and the common stock’s daily VWAP exceeds 150 % of the then-applicable Conversion Price for at least 20 trading days out of the thirty trading day period used to calculate the 30 -day VWAP. In the event of a forced conversion, the holders of Series A-3 and Series A-4 will have the ability to elect cash settlement in lieu of conversion if certain market liquidity thresholds for the Company's common stock are not achieved. Liquidation Preference . In the event of any liquidation, dissolution or winding up of the Company (any such event, a “Liquidation Event”), the holders of Series A-3 and Series A-4 will be entitled to receive per share the greater of (i) the accrued value of the Series A-3 and Series A-4, plus any accrued and unpaid dividends (to the extent not included in the accrued value of Series A-3 and Series A-4), and (ii) the value that would be received if the share of Series A-4 and Series A-4 were converted into shares of the Company's common stock immediately prior to such occurrence. The Series A-3 and Series A-4 will rank junior to any existing or future indebtedness but senior to the Company's common stock and any future equity securities other than any future senior or pari passu preferred stock issued in compliance with the Company's Third Amended and Restated Certificate of Incorporation. The Series A-3 Preferred Stock and the Series A-4 Preferred Stock rank at parity. Voting Rights. Except as required by applicable law, the holders of the shares of the Series A-3 and Series A-4 will be entitled to vote on an as-converted basis with the holders of the Company’s common stock on all matters submitted to a vote of the holders of the Company's common stock with the holders of Series A-3 Preferred Stock and Series A-4 Preferred Stock on certain matters, and separately as a class on certain limited matters. Consent Rights. For so long as any of the Series A-3 and Series A-4 is outstanding, consent of the holders of shares representing at least 75 % of certain of the Series A-3 and Series A-4 then outstanding is required for certain material actions. Participation Rights. Pursuant to the securities purchase agreements entered into with the initial purchasers of the Series A-3 Preferred Stock and the Series A-4 Preferred Stock, subject to meeting certain ownership thresholds, certain purchasers of the Series A-3 Preferred Stock and the Series A-4 Preferred Stock are entitled to participate, on a pro-rata basis in accordance with their ownership percentage, determined on an as-converted basis, in issuances of equity and equity linked securities by the Company. In addition, subject to meeting certain ownership thresholds, certain initial purchasers of the Series A-3 Preferred Stock and the Series A-4 Preferred Stock will be entitled to participate in issuances of preferred securities and in debt transactions of the Company. Spectrum Redeemable Non-Controlling Interests Refer to Note 11. Debt Obligations for information regarding the Company's Spectrum Segment's redeemable non-controlling interests. R2 Technologies Non-Controlling Interests The Company has non-redeemable and redeemable non-controlling interests related to R2 Technologies in the form of common stock as well as convertible preferred stock that is redeemable upon the occurrence of a change in control, as defined in the respective agreements. If an event is not solely within the control of the Company, it is classified outside of permanent equity in the mezzanine section of the Company's Consolidated Balance Sheets. The Company adjusts the carrying value of the non-controlling interests based on an allocation of subsidiary earnings (losses) based on ownership interests. As of December 31, 2025 and 2024, it was not deemed probable that the amounts relating to convertible preferred stock in non-controlling interests will become redeemable as no change in control has occurred or is expected to occur; therefore, no additional adjustments or remeasurements were required under ASC 480-10, Distinguishing Liabilities from Equity. During the year ended December 31, 2025, Pansend closed on several intercompany convertible 13.0 % note instruments with R2 Technologies, and funded a total of $ 7.5 million to R2 Technologies. The outstanding principal amounts of the notes, together with any interest then accrued and unpaid, is convertible at the option of Pansend into shares of a new Series E Convertible Preferred Stock ("Series E") or new Series F Convertible Preferred Stock ("Series F") in R2 Technologies, as applicable to each note, upon written notice to R2 Technologies and the notes have a maturity date, of the earlier of July 31, 2026, or a change in control of R2 Technologies, as defined in the notes. These notes and related intercompany interest are eliminated on consolidation. Subsequent to year end, in February 2026 and March 2026, an additional $ 0.3 million in intercompany convertible 13.0 % notes with R2 Technologies was funded. As a result of the allocation of losses, the redeemable non-controlling interest related to R2 Technologies was negative $ 1.0 million and negative $ 0.5 million as of December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, the Company had negative $ 9.2 million and negative $ 4.9 million, respectively of R2 Technologies non-controlling interests reflected within Non-controlling interests within the Consolidated Balance Sheets. F-51 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Liquidation Preference R2 Technologies has issued multiple A, B, C and D-series, and, in the future potentially E-series and F-series, participating convertible preferred stock (the "R2 Technologies Preferred Shares"), all of which contain a liquidation preference. In the event of a liquidation event, each Preferred Share has a liquidation preference to be paid out of the assets legally available for distribution, which entitles the holder of each series A, series C, series D, series E (upon conversion of the aforementioned $ 3.5 million note that is convertible into Series E) and series F (upon conversion of the aforementioned notes that are convertible into Series F) R2 Technologies Preferred Shares to receive, before any payments to holders of junior securities, the sum of the following: (i) the accrued value in cash; (ii) all accrued and unpaid dividends, including basic dividends and accreting dividends, if any, and (iii) an amount, in cash or otherwise, equivalent to what the holder would receive if they had converted the R2 Technologies Preferred Shares into R2 Technologies common stock or reference property just before the liquidation event. Series B R2 Technologies Preferred Shareholders would be entitled to receive, before any payments to holders of junior securities, the greater of (i) the sum of (A) the accrued value in cash, plus (B) all accrued and unpaid dividends, including basic dividends and accreting dividends, if any, or (ii) an amount, in cash or otherwise, equivalent to what the holder would receive if they had converted the R2 Technologies Preferred Shares into R2 Technologies common stock or reference property just before the liquidation event. If the assets of R2 Technologies legally available for distribution are insufficient to pay these obligations in full, R2 Technologies Preferred Shareholders and holders of any parity securities share the remaining assets in proportion to the full respective amounts to which they are entitled. After receiving the full liquidation preference, R2 Technologies Preferred Shareholders have no further claim to R2 Technologies' assets, except for any new securities or instruments received as part of the liquidation preference. The value of non-cash assets distributed equals their fair market value on the distribution date. No holder of junior securities receives any payment unless the entire liquidation preference of R2 Technologies Preferred Shares is paid. If there is insufficient cash to pay the entire liquidation preference and any liquidation preference in respect of any parity securities in full in cash upon a liquidation event, R2 Technologies Preferred Shareholders and parity securities holders will share available cash proportionally. As of both December 31, 2025 and 2024, R2 Technologies had negative net assets after consideration of intercompany and third-party debt, as applicable, and, therefore, there would be no legally available funds to satisfy any liquidation preferences upon a liquidation event. 17. Related Parties Non-Operating Corporate During the first quarter of 2024, in connection with the Rights Offering, the Company entered into an Investment Agreement with Lancer Capital, an entity controlled by Avram A. Glazer, pursuant to which Lancer Capital agreed to the Backstop Commitment to purchase up to $ 19.0 million of Series C Preferred Stock in connection with the Rights Offering and to purchase $ 16.0 million of Series C Preferred Stock in a private placement transaction ("Concurrent Private Placement"), of which $ 25.0 million would be purchased before the closing of the Rights Offering if the Rights Offering did not close by March 28, 2024. As a result of the extension of the Rights Offering, on March 28, 2024, Lancer Capital funded the equity advance of $ 25.0 million to the Company and received 25,000 shares of Series C Preferred Stock. On April 24, 2024, as a result of the closing of the Rights Offering and Concurrent Private Placement, Lancer Capital purchased an additional approximately 6,286 shares of Series C Preferred Stock for $ 6.3 million. On June 18, 2024, the Company held its annual shareholder meeting where the Company's shareholders approved the conversion of the Series C Preferred Stock into common stock. As a result, approximately 31,286 Series C Preferred Stock held by Lancer Capital were converted into 4,469,390 shares of INNOVATE's common stock, and there were no shares of the Series C Preferred Stock outstanding subsequent to their conversion into the Company's common stock. Refer to Note 16. Equity and Temporary Equity for additional information. As of December 31, 2025, Lancer Capital held $ 2.2 million of the Company's 2027 Convertible Notes, which were issued on August 4, 2025, in exchange for the $ 2.0 million of principal amount of the Company's 2026 Convertible Notes held by Lancer prior to the exchange and as of December 31, 2024. The principal amount of the 2027 Convertible Notes includes capitalized interest and extension fees. As of December 31, 2025, the $ 2.2 million in 2027 Convertible Notes are convertible into 51,874 shares of common stock of INNOVATE. As of December 31, 2024, the $ 2.0 million in 2026 Convertible Notes were convertible into 47,265 shares of common stock of INNOVATE. During both the years ended December 31, 2025 and 2024, Lancer Capital earned $ 0.2 million in interest relating to these notes. Refer to Note 11. Debt Obligations for additional information on the Convertible Notes. CGIC is a former significant shareholder and is the shareholder of the Company's Series A-3 Preferred Stock and Series A-4 Preferred Stock. Refer to Note 16. Equity and Temporary Equity for additional information. In addition, as of December 31, 2025 and 2024, the Company owed $ 45.9 million and $ 31.0 million, respectively, in principal amount of a promissory note owed to CGIC. Refer to Note 11. Debt Obligations for additional information. In December 2023, the Company entered into a sublease agreement for a special purpose space with PBCIC, a Florida not-for-profit corporation and related party to Avram A. Glazer, the Chairman of INNOVATE's Board of Directors and a significant shareholder, who is also on the board of directors of PBCIC. In March 2024, the Company assigned this lease to an entity controlled by Mr. Glazer. In addition, in March 2024, the Company assigned a lease for office space to an entity controlled by Mr. Glazer. The $ 0.2 million security deposit on the lease was also assigned to Lancer Capital and written-off in March 2024. F-52 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Infrastructure DBMG and Banker Steel, jointly and severally, had a subordinated 4.0 % note payable to Banker Steel's former owner, in which Donald Banker's family trust has a 25 % interest. The 4.0 % note and associated accrued interest matured on March 31, 2024, and was fully redeemed on April 2, 2024. During the year ended December 31, 2024, DBMG made $ 5.0 million in scheduled principal payments on the 4.0 % note. Life Sciences As of December 31, 2025, R2 Technologies had $ 47.9 million in principal amount of a 12.0 % senior secured promissory note due to Lancer Capital. As of December 31, 2024, R2 Technologies had $ 24.0 million in principal amount of a 20.0 % senior secured promissory note due to Lancer Capital. Refer to Note 11. Debt Obligations for additional information. For the years ended December 31, 2025 and 2024, R2 Technologies recognized revenue of $ 3.6 million and $ 1.4 million, respectively from sales and profit sharing agreements with a subsidiary of Huadong, a related party of R2 Technologies. There were $ 0.6 million and $ 0.1 million of related receivables from this subsidiary of Huadong as of December 31, 2025 and 2024, respectively. Share-based compensation and royalty expenses related to Blossom Innovations, LLC ("Blossom"), an investor of R2 Technologies since 2014, totaled $ 0.3 million and $ 1.1 million, for the years ended December 31, 2025 and 2024, respectively. The related payables due to Blossom totaled $ 0.2 million as of December 31, 2025, and there were no related payables due to Blossom as of December 31, 2024. Refer to Note 6. Investments for transactions with equity method investees of the Company. 18. Segments and Related Information The Company currently operates in one primary geography - United States, and substantially all revenue is derived in the United States, and substantially all PP&E and intangible assets reside in the United States. The Company's reportable segments are identified based on the nature of the services and products provided, the organizational structure, and the internal reporting system used by the Chief Operating Decision Maker ("CODM") to assess performance and allocate resources. As of December 31, 2025, the Company had three reportable operating segments, plus the Other segment, based on management’s organization of the enterprise - Infrastructure, Life Sciences, Spectrum, and Other. The Company also has a Non-Operating Corporate segment. All inter-segment transactions are eliminated on consolidation. There are no inter-segment revenues. Refer to Note 1. Organization and Business for additional information on the organizational structure of the business and Note 3. Revenue and Contracts in Process for additional information on revenue by segment. The CODM for the Company is the Interim CEO, Paul Voigt. The CODM is primarily responsible for allocating resources at all levels that do not require board approval. The CODM monitors the performance of each segment and is responsible for making strategic decisions regarding capital and resource allocation. The CODM uses a combination of monthly reports, which detail revenue and income (loss) from operations, and quarterly summaries, which include detailed breakdowns of each segment's income (loss) from operations, to evaluate segment performance, allocate resources and make strategic decisions. These financial metrics are used to view operating trends, perform analytical comparisons and benchmark performance between periods and to monitor budget-to-actual variances on a monthly basis. The primary U.S. GAAP metric used by the CODM in assessing segment performance is income (loss) from operations. Financial information, including revenue and expenses, with respect to the Company’s operating segments, is as follows (in millions): Year Ended December 31, 2025 Infrastructure Life Sciences Spectrum Non-Operating Corporate Other and Eliminations INNOVATE Revenue $ 1,210.3 $ 12.5 $ 23.2 $ — $ — $ 1,246.0 Cost of revenue 1,026.2 8.4 11.7 — — 1,046.3 Selling, general and administrative expenses 115.2 14.6 7.6 15.6 0.1 153.1 Depreciation and amortization 12.1 0.4 5.0 — — 17.5 Other operating loss (income) (1) 1.4 — ( 1.0 ) — — 0.4 Income (loss) from operations $ 55.4 $ ( 10.9 ) $ ( 0.1 ) $ ( 15.6 ) $ ( 0.1 ) $ 28.7 Other data: Capital cash expenditures $ 23.4 $ — $ 2.7 $ — $ — $ 26.1 (1) Other operating loss for the year ended December 31, 2025, primarily consisted of a loss on lease modification and losses on the sales of various properties at the Company's Infrastructure segment, partially offset primarily by a gain on legal settlement at the Company's Spectrum Segment. F-53 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Year Ended December 31, 2024 Infrastructure Life Sciences Spectrum Non-Operating Corporate Other and Eliminations INNOVATE Revenue $ 1,071.6 $ 9.8 $ 25.7 $ — $ — $ 1,107.1 Cost of revenue 880.4 6.4 11.5 — — 898.3 Selling, general and administrative expenses 123.1 17.1 7.3 12.7 — 160.2 Depreciation and amortization 12.0 0.4 5.1 0.1 — 17.6 Other operating (income) loss (1) ( 9.6 ) — 0.4 0.2 — ( 9.0 ) Income (loss) from operations $ 65.7 $ ( 14.1 ) $ 1.4 $ ( 13.0 ) $ — $ 40.0 Other data: Capital cash expenditures $ 17.6 $ — $ 1.4 $ — $ — $ 19.0 (1) Other operating income at the Company's Infrastructure segment for the year ended December 31, 2024, related mainly to a gain on a lease modification and a net gain on the sale and disposal of various properties. Certain balance sheet data: December 31, 2025 Infrastructure Life Sciences Spectrum Non-Operating Corporate Other and Eliminations INNOVATE Investments (1) $ — $ 1.8 $ — $ — $ — $ 1.8 Total assets $ 758.9 $ 9.6 $ 174.5 $ 7.1 $ — $ 950.1 December 31, 2024 Infrastructure Life Sciences Spectrum Non-Operating Corporate Other and Eliminations INNOVATE Investments (1) $ — $ 1.8 $ — $ 1.8 $ — $ 3.6 Total assets $ 683.6 $ 11.9 $ 178.9 $ 16.7 $ — $ 891.1 (1) The Company's equity method investments in its Life Sciences segment totaled $ 0.9 million as of both December 31, 2025 and 2024. Year Ended December 31, 2025 2024 Reconciliation of the consolidated segment income from operations to consolidated loss from operations before income taxes: Income from operations $ 28.7 $ 40.0 Interest expense ( 89.0 ) ( 74.5 ) Loss from equity investees ( 5.9 ) ( 2.3 ) Other income, net 4.7 3.4 Loss from operations before income taxes $ ( 61.5 ) $ ( 33.4 ) 19. Basic and Diluted Loss Per Common Share Loss per share ("EPS") is calculated using the two-class method, which allocates earnings among common stock and participating securities to calculate EPS when an entity's capital structure includes either two or more classes of common stock or common stock and participating securities. Unvested share-based payment awards, and, previously, the Series C Preferred Stock, that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities. As such, shares of any unvested restricted stock, and, previously, the Series C Preferred Stock, of the Company are considered participating securities; however, unvested shares of restricted stock do not participate in losses and, as such, are excluded from the computation of basic loss per share during periods of net losses. The dilutive effect, if applicable, of stock options and their equivalents (including non-vested stock issued under share-based compensation plans), is computed using the "if-converted method" if this measurement is determined to be more dilutive than the treasury stock method in a period. The Company had no dilutive common stock equivalents during the years ended December 31, 2025, and 2024, due to the results from continuing operations being a loss, net of tax. For the years ended December 31, 2025 and 2024, 304,684 and 171,565 , respectively, of common stock equivalents from unvested restricted stock awards and unvested restricted stock units were excluded from the weighted-average number of shares used to calculate diluted loss per share as their inclusion would have been anti-dilutive. Other instruments that may, in the future, if the average market price of the Company's stock exceeds the conversion prices, have a dilutive effect on EPS, but were excluded from the computations of diluted net loss per share for the years ended December 31, 2025 and 2024, and may be excluded from computations of diluted EPS in the future, are: convertible preferred stock, convertible debt, and stock options. Refer to Note 15. Share-based Compensation and Note 16. Equity and Temporary Equity for additional information on INNOVATE's equity instruments. F-54 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED The following table presents a reconciliation of net loss to net loss used in the basic and diluted EPS calculations (in millions, except shares and per share amounts): Year Ended December 31, 2025 2024 Net loss $ ( 64.0 ) $ ( 39.7 ) Net loss attributable to non-controlling interests and redeemable non-controlling interests 3.4 5.1 Net loss attributable to INNOVATE Corp. ( 60.6 ) ( 34.6 ) Less: Preferred stock dividends 3.4 1.2 Net loss attributable to common stockholders and participating preferred stockholders $ ( 64.0 ) $ ( 35.8 ) Participating shares Weighted-average common shares outstanding 13,217,593 10,696,274 Series C Preferred stock — 947,307 Total 13,217,593 11,643,581 Percentage of loss allocated to: Common stock 100.0 % 91.9 % Series C Preferred stock — % 8.1 % Numerator for loss per share: Net loss attributable to common stockholders, basic and diluted $ ( 64.0 ) $ ( 32.9 ) Net loss attributable to Series C holders, basic and diluted — ( 2.9 ) Denominator for loss per share: Weighted-average common shares outstanding - basic and diluted 13,217,593 10,696,274 Weighted-average Series C shares outstanding - basic and diluted — 947,307 Loss per share Loss per common share - basic and diluted $ ( 4.84 ) $ ( 3.08 ) Loss per Series C share - basic and diluted $ — $ ( 3.08 ) F-55 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED 20. Fair Value of Financial Instruments Fair Value of Financial Instruments Not Measured at Fair Value Our financial instruments primarily include cash and cash equivalents, restricted cash, accounts receivable and contract assets, marketable and non-marketable securities, including equity investments and certain other investments, notes receivable, accounts payable and other current and non-current liabilities, redeemable non-controlling interests and debt obligations. The following tables present the carrying amounts and estimated fair values of the Company’s financial instruments, which were not measured at fair value on a recurring basis and not measured using the equity method of accounting, with fair values shown according to the fair value hierarchy. The tables exclude carrying amounts for cash and cash equivalents and restricted cash (Level 1 measurements), accounts receivable and contract assets, accounts payable, contract liabilities and other current liabilities, and other assets and liabilities (Level 2 measurements) that approximate fair value due to the relatively short periods to maturity (in millions): December 31, 2025 Fair Value Measurement Using: Carrying Value Estimated Fair Value Quoted Prices (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Measurement alternative investment (1) $ 0.9 $ 0.9 $ — $ — $ 0.9 Total assets not accounted for at fair value $ 0.9 $ 0.9 $ — $ — $ 0.9 Liabilities Debt obligations (2) $ 661.6 $ 642.1 $ — $ 447.2 $ 194.9 Total liabilities not accounted for at fair value $ 661.6 $ 642.1 $ — $ 447.2 $ 194.9 (1) Refer to Note 6. Investments for additional information. (2) Excludes lease obligations accounted for under ASC 842, Leases. The fair value of the Company's Level 3 debt obligations incorporates applicable exit fees, while the carrying value of the debt obligations excludes $ 25.8 million in exit fees which is reflected in Accrued liabilities in the Company's Consolidated Balance Sheet. December 31, 2024 Fair Value Measurement Using: Carrying Value Estimated Fair Value Quoted Prices (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Measurement alternative investment (1) $ 0.9 $ 0.9 $ — $ — $ 0.9 Total assets not accounted for at fair value $ 0.9 $ 0.9 $ — $ — $ 0.9 Liabilities Debt obligations (2) $ 662.2 $ 577.1 $ — $ 577.1 $ — Total liabilities not accounted for at fair value $ 662.2 $ 577.1 $ — $ 577.1 $ — (1) Refer to Note 6. Investments for additional information. (2) Excludes lease obligations accounted for under ASC 842 , Leases . Debt Obligations. The fair value of the Company’s long-term obligations was determined using reporting from externally quoted market prices for INNOVATE's 10.50 % 2027 Senior Secured Notes, 8.50 % 2026 Senior Secured Notes, 9.5 % Convertible Senior Secured Notes due 2027, and 7.50 % Convertible Senior Notes due 2026, which are reflected as Level 2 fair value measurements due to limited recently available observable trading activity for these instruments. The methodology for the Level 2 fair value measurements combines direct recent transaction activity or, if available, market observations from contributed sources with quantitative pricing models or fair value reports from valuation providers to generate evaluated prices and are classified as Level 2 fair value measurements. The Level 3 fair value measurements, including those for the Company's other debt instruments, were estimated using an income approach based on the expected future cash flows, discounted at an estimated market yield. The discount rate, or yield to maturity, was derived from a synthetic credit rating and corresponding market spread analysis as of the valuation date to estimate an option-adjusted spread which was then applied to the applicable risk-free curve, consistent with market observable inputs for similarly rated debt. Certain long-term obligations have a fair value estimate equal to their carrying value due to recent transaction activity. The fair value of the debt instruments is disclosed for informational purposes and does not necessarily represent the amount that would be realized upon settlement or transfer. F-56 INNOVATE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Fair Value of Financial Instruments Measured at Fair Value The Company's investments in marketable securities were measured at fair value, using publicly available quoted market prices, a Level 1 input. Refer to Note 6. Investments for additional information. 21. Supplementary Financial Information Other income, net The following table provides information relating to Other income, net (in millions): Year Ended December 31, 2025 2024 Gain on step-up of equity method investment $ 4.4 $ — Net loss on repurchase or extinguishment of debt ( 0.3 ) ( 0.3 ) Interest income 0.7 2.6 Foreign currency translation (losses) gains ( 1.1 ) 1.3 Fair value gains (losses) on securities 0.8 ( 0.2 ) Other 0.2 — Total other income, net $ 4.7 $ 3.4 Supplemental Cash Flow Information The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Consolidated Balance Sheets and Consolidated Statements of Cash Flows (in millions): Year Ended December 31, 2025 2024 Cash and cash equivalents, beginning of the year $ 48.8 $ 80.8 Restricted cash included in other current assets — 0.9 Restricted cash included in other assets (non-current) 0.5 0.6 Total cash, cash equivalents and restricted cash, beginning of the year $ 49.3 $ 82.3 Cash and cash equivalents, end of the year $ 112.1 $ 48.8 Restricted cash included in other current assets — — Restricted cash included in other assets (non-current) 0.6 0.5 Total cash and cash equivalents and restricted cash, end of the year $ 112.7 $ 49.3 Supplemental cash flow information: Cash paid for interest $ 30.0 $ 48.6 Cash paid for income taxes, net $ 6.4 $ 3.5 Non-cash investing and financing activities: Accrued interest and fees capitalized into principal debt $ 66.3 $ 6.6 Accrued dividends capitalized into principal debt $ 0.5 $ — Exchange of preferred stock for debt $ 9.1 $ — Property, plant and equipment included in accounts payable or accrued expenses $ 0.8 $ 0.5 22. Subsequent Events Refer to Note 11. Debt Obligations for updates regarding the milestone covenants related to the Company's 10.50 % 2027 Senior Secured Notes and Spectrum Notes. F-57