INNOVATE Corp

Current report

Substantial doubt about our ability to continue as a going concern

Current report

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 current debt at certain of the Company's subsidiaries as well as from certain cross-default provisions in the Company's Senior Secured Notes. Based on these conditions, the Company may not be able to meet its obligations at maturity and comply with certain cross-default provisions under the Senior Secured Notes over the next 12 months. The Company plans to alleviate these conditions through various initiatives it is currently exploring, including refinancing the debt at Broadcasting and DBMG, pursuing asset sales, and raising additional capital. However, there can be no assurance that the Company will have the ability to raise additional capital when needed, be successful in any asset sales, or refinance its existing debt, on attractive terms, or at all, nor any assurances that lenders will provide additional extensions, waivers or amendments in the event of future non-compliance with the Company’s debt covenants or other possible events of default. Further, there can be no assurance that the Company will be able to execute a reduction, extension, or refinancing of the debt, or that the terms of any replacement financing would be as favorable as the terms of the debt prior to the maturity date. There can be no assurance that these plans will be successfully implemented or that they will mitigate the conditions that raise substantial doubt about the Company's ability to continue as a going concern. The inability to refinance or extend the maturity of the current debt at the Company's subsidiaries, or to raise sufficient cash to pay the debt at maturity would have a material adverse effect on our financial condition and likely cause the price of the Company’s common stock to decline.

Previous report

Risks Relating to our Common Stock

Previous report

We may not meet the continued listing requirements of the NYSE, which could result in a delisting of our common stock.

Previous report

As previously reported, on February 26, 2024, we received a notification letter from the NYSE notifying us that the closing price for our common stock had been below $1.00 for the previous 30 consecutive trading days and that we therefore are “below criteria” for continued listing on the NYSE and subject to the procedures outlined in Sections 801 and 802 of the NYSE Listed Company Manual. The notification provided us with a cure period of six months, or until August 26, 2024, in which to regain compliance. To regain compliance, the closing price of our common stock must be at least $1.00 and the average closing price of our common stock over the preceding 30 trading days must be at least $1.00, and in such case, the NYSE will provide us with written confirmation of compliance.

Previous report

The Company held its annual meeting of stockholders on June 18, 2024, where the Company’s stockholders approved a reverse stock split of the Company's common stock, par value $0.001 per share, at a ratio within a range of 1-for-2 and 1-for-10 and granted the Company’s Board of Directors the discretion to determine the timing and ratio of the split within such range. On July 4, 2024, the Company’s Board of Directors determined to effect the reverse stock split of the common stock at a 1-for-10 ratio (the “Reverse Stock Split”) and approved the filing of a certificate of amendment (the “Certificate of Amendment”) to the Second Amended and Restated Certificate of Incorporation of the Company to effect the Reverse Stock Split. The Company intends to file the Certificate of Amendment with the Delaware Secretary of State on August 8, 2024 to effect the Reverse Stock Split. The Reverse Stock Split should have the immediate effect of increasing the price of our common stock on the NYSE, therefore reducing the risk that our common stock could be delisted from the NYSE.

Previous report

Although the Company expects the Reverse Stock Split to restore our compliance with the NYSE listing requirements, we can provide no assurance that it will have the expected result. If the NYSE delists our common stock from trading on its exchange for failure to meet NYSE listing standards for continued listing, an investor would likely find it significantly more difficult to dispose of or obtain our shares, and our ability to raise future capital through the sale of our shares or issue our shares as consideration in acquisitions could be severely limited. Additionally, we may not be able to list our common stock on another national securities exchange, which could result in our securities being quoted on an over-the-counter market. If this were to occur, our stockholders could face significant material adverse consequences, including limited availability of market quotations for our common stock and reduced liquidity for the trading of our securities. Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business development opportunities.