INNOVATE Corp.

Previous wording

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

Current wording

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

Previous wording

During 2025 thus far, and subsequent to quarter end we have refinanced some of our debt, including at the subsidiary level. This financing helped us provide needed capital for our operations and the operations of our subsidiaries.

Current wording

During 2025, we have refinanced our debt, including at the subsidiary level. This financing helped us provide needed capital for our operations and the operations of our subsidiaries, and the refinancing of the debt, which, among other things, extended the maturities of the debt, allows us to continue to pursue our strategic plans.

Previous wording

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 Credit Facility will mature on May 20, 2030. DBMG entered into the DBMG Revolving Facility to fully repay DBMG’s existing debt obligations and provide additional working capital capacity.

Current wording

On May 20, 2025, DBMG entered into an Amended and Restated Credit agreement (the "DBMG Credit Agreement"), with the lenders which are party thereto from time to time (each a “Lender” and collectively the “Lenders”) and UMB BANK, N.A. ("UMB"). The DBMG Credit Agreement provides DBMG with senior secured debt financing in an amount up to $220.0 million in the aggregate, consisting of (i) a senior secured revolving credit facility (the “DBMG Revolving Facility”) in an aggregate amount of $135.0 million and (ii) a senior secured term loan facility in the amount of $85.0 million. The DBMG Credit Agreement also contains an accordion feature to increase the allowable size of the DBMG Revolving Facility by an additional $50.0 million. The DBMG Revolving Facility and term loan facility will mature on May 20, 2030. DBMG entered into the DBMG Credit Agreement to fully repay DBMG’s existing debt obligations and provide additional working capital capacity.

Previous wording

As of June 30, 2025, DBMG had a total outstanding balance of $30.0 million under its new revolving facility and the effective interest rate on DBMG's revolving loans was 7.60%. Interest on the new revolving facility is paid monthly and the new revolving facility has an unused commitment fee of 0.50% per annum times the average daily unused availability under the line,

Current wording

As of September 30, 2025, DBMG had a total outstanding balance of $20.0 million under its new revolving facility and the effective interest rate on DBMG's revolving loans was 7.28%. Interest on the new revolving facility is paid monthly, and the new revolving facility has an unused commitment fee of 0.50% per annum times the average daily unused availability under the line. As of September 30, 2025, the total outstanding balance of DBMG's term loans was $83.9 million. Principal payments and interest on DBMG's term loans are paid monthly, and the effective interest rate was 7.87% as of September 30, 2025. Refer to Note 11. Debt Obligations to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q, which is incorporated herein by reference for additional information, regarding the recent refinancing and indebtedness of our Infrastructure segment.

Previous wording

On February 20, 2025, Pansend closed on a new $3.5 million convertible 13.0% note instrument with R2 Technologies. The principal amount of the note, together with any interest then accrued and unpaid, is convertible at the option of Pansend, into shares of a new Series E Preferred Stock ("Series E") in R2 Technologies upon written notice to R2 Technologies and has a maturity date of the earlier of July 31, 2025, or a change in control of R2 Technologies, as defined in the note. The transaction is eliminated on consolidation. On June 9, 2025, Pansend closed on a new $3.0 million convertible 13.0% note instrument with R2 Technologies, of which $0.6 million had been funded as of June 30, 2025. The principal amount of the note, together with any interest then accrued and unpaid, is convertible at the option of Pansend into shares of a new Series F Convertible Preferred Stock ("Series F") in R2 Technologies upon written notice to R2 Technologies and has a maturity date of the earlier of July 31, 2025, or a change in control of R2 Technologies, as defined in the note. The transaction is eliminated on consolidation. Subsequent to quarter end, in July 2025, an additional $0.8 million was funded. Subsequent to quarter end, the maturities of these intercompany notes were extended to the earlier of July 31, 2026, or a change in control of R2 Technologies, as defined in the notes.

Current wording

On February 20, 2025, Pansend closed on a $3.5 million convertible 13.0% note instrument with R2 Technologies. The principal amount of the note, 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") in R2 Technologies upon written notice to R2 Technologies and has a maturity date, as amended on July 23, 2025, of the earlier of July 31, 2026, or a change in control of R2 Technologies, as defined in the note. On June 9, 2025, Pansend closed on a $3.0 million convertible 13.0% note instrument with R2 Technologies, of which $2.5 million had been funded as of September 30, 2025. The principal amount of the note, together with any interest then accrued and unpaid, is convertible at the option of Pansend into shares of a new Series F Convertible Preferred Stock ("Series F") in R2 Technologies upon written notice to R2 Technologies and has a maturity date, as amended on July 23, 2025, of the earlier of July 31, 2026, or a change in control of R2 Technologies, as defined in the note. These notes and related intercompany interest are eliminated on consolidation. Subsequent to quarter end, in October and November 2025, an additional $0.5 million was funded. Refer to Note 15. Equity and Temporary Equity to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for additional information on R2 Technologies' convertible preferred stock and convertible notes.

Previous wording

Subsequent to quarter end, on August 4, 2025, the Company closed a series of indebtedness refinancing transactions that will extend certain of the Company’s debt maturities. The refinancing transactions include (i) the initial closing of an exchange offer and consent solicitation with respect to the Company’s senior secured notes, (ii) privately negotiated exchanges of certain of the Company’s convertible senior notes, (iii) amendment and extension of the Company’s 2020 revolving credit agreement, (iv) amendment and extension of the Company’s CGIC note, as well as the exchange of a portion of the Company’s preferred stock held by CGIC in exchange for increasing the principal amount of that note, (v) amendment and extension of the Spectrum debt and (vi) amendment and extension of the R2 Technologies debt. Refer to Note 21. Subsequent Events, which is incorporated herein by reference, for additional information.

Current wording

In August 2025, the Company closed on a series of indebtedness refinancing transactions that extended certain of INNOVATE's debt maturities. These refinancing transactions included: (i) the closings of an exchange offer and consent solicitation with respect to the Company’s senior secured notes; (ii) privately negotiated exchanges of certain of the Company’s convertible senior notes; (iii) amendment and extension of the Company’s 2020 Revolving Credit Agreement to September 15, 2026; and (iv) amendment and extension of the Company’s CGIC note to April 30, 2027, as well as the exchange of a portion of the Company’s preferred stock held by CGIC and accrued preferred stock dividends in exchange for increasing the principal amount of that note (the "Preferred Stock Exchange")

Previous wording

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% to 39.7%. As a result of these transactions, Pansend recognized a step-up gain of $4.4 million in Other (expense) income, net in the Condensed Consolidated Statements of Operations for the six months ended June 30, 2025, which increased Pansend's carrying amount of its investment in MediBeacon. Concurrently, Pansend recognized equity method losses of $5.9 million, consisting of 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.

Current wording

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% to 39.7%. Refer to Note 6. Investments, which is incorporated herein by reference, for additional information.

Previous wording

In the below section within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, we compare, pursuant to U.S. GAAP and SEC disclosure rules, the Company’s results of operations for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024.

Current wording

In the below section within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, we compare, pursuant to U.S. GAAP and SEC disclosure rules, the Company’s results of operations for the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024.

Previous wording

Revenue: Revenue for the three months ended June 30, 2025 decreased $71.1 million to $242.0 million from $313.1 million for the three months ended June 30, 2024. The decrease was driven primarily by our Infrastructure segment and to a lesser extent by our Spectrum segment, which was partially offset by an increase at our Life Sciences segment. The decrease at our Infrastructure segment was primarily driven by the timing and size of projects at Banker Steel, DBMG's commercial structural steel fabrication and erection business, the industrial maintenance and repair business and the construction modeling and detailing business, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business in the comparable period, which also had increased activity in the comparable period on certain large commercial construction projects that have since been completed or are nearing completion in the current period. The decrease at our Spectrum segment was primarily driven by the loss of certain customers and a decrease in direct response advertising, which was partially offset by the launch of new networks subsequent to the comparable period. The increase at our Life Sciences segment was attributable to R2 Technologies, primarily driven by increases in Glacial Spa unit sales, consumable sales and Glacial fx unit sales outside North America, as well as an increase in Glacial fx unit sales and consumable sales in North America. The increase was partially offset by a decrease in Glacial Rx unit sales in North America.

Current wording

Revenue for the nine months ended September 30, 2025, decreased $7.2 million to $863.3 million from $870.5 million for the nine months ended September 30, 2024. The decrease was primarily driven by our Infrastructure segment, and to a lesser extent our Spectrum segment, which was partially offset by an increase at our Life Sciences segment. The decrease at our Infrastructure segment was primarily driven by the timing and size of projects at Banker Steel, the industrial maintenance and repair business, and the construction modeling and detailing business, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business in the comparable period, which also had increased activity in the prior year on certain large commercial construction projects that have since been completed or are nearing completion in the current period. These decreases were partially offset by the timing and size of projects at DBMG's commercial structural steel fabrication and erection business, which had increased activity subsequent to the comparable period on certain large commercial construction projects. The decrease at our Spectrum segment was primarily driven by the termination of certain customers in the current period and a downturn in the direct response advertising market, which was partially offset by the launch of new networks subsequent to the comparable period. The increase at our Life Sciences segment was attributable to R2 Technologies, primarily driven by an increase in Glacial Spa and Glacial fx unit sales outside North America, as well as an increases in consumable sales and Glacial fx and Glacial Rx unit sales in North America.

Previous wording

Income from operations: Income from operations for the three months ended June 30, 2025, decreased $23.9 million to $4.9 million from $28.8 million for the three months ended June 30, 2024. The decrease was due to a net decrease in gross profit of $20.0 million, a decrease in other operating income of $11.7 million, which was partially offset by a decrease in selling, general and administrative ("SG&A") expenses of $7.8 million. The net decrease in gross profit was primarily driven by our Infrastructure segment due to timing and size of projects that have since been completed or are nearing completion in the current period, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business in the comparable period. The decrease in other operating income was primarily driven by our Infrastructure segment as a result of unrepeated gains on lease modifications and unrepeated gains on the sale of various properties in the comparable period, as well as various losses on the sale of properties and a loss on lease modification in the current period. Partially offsetting the above decreases was a decrease in SG&A, which was primarily driven by our Infrastructure segment primarily due to a decrease in compensation-related expenses due to timing, and to a lesser extent, decreases in travel expenses and professional and consulting fees.

Current wording

Income from operations: Income from operations for the three months ended September 30, 2025, increased $0.2 million to $6.1 million from $5.9 million for the three months ended September 30, 2024. The increase was primarily due to a net increase in gross profit of $1.5 million and an increase in other operating income of $0.8 million, which were mostly offset by a net increase in selling, general and administrative ("SG&A") expenses of $2.2 million. The net increase in gross profit was primarily driven by our Infrastructure segment due to timing and size of projects, which had increased activity subsequent to the comparable period on certain large commercial construction projects, which was partially offset by our Spectrum segment due to the termination of certain customers in the current period and a downturn in the direct response advertising market. The increase in other operating income was primarily driven by our Spectrum segment due to a favorable legal settlement in the current period and unrepeated lease termination settlement costs incurred in the comparable period. The increase in SG&A was primarily driven by our Non-Operating Corporate segment primarily due to the debt refinancing costs expensed in the current period and an increase in share-based compensation expense related to the vesting and issuance of equity awards to our Interim-CEO, which awards had not yet been vested or granted in the comparable period, which was partially offset by a decrease in other legal fees and a decrease in SG&A at our Infrastructure segment due to a decrease in compensation-related expenses and consulting fees, and to a lesser extent our Life Sciences segment due to a reduction in compensation-related expenses at Pansend.

Previous wording

Income from operations for the six months ended June 30, 2025, decreased $23.3 million to $8.3 million from $31.6 million for the six months ended June 30, 2024. The decrease was due to a net decrease in gross profit of $23.1 million, a decrease in other operating income of $9.7 million, partially offset by, a decrease SG&A expenses of $9.5 million The net decrease in gross profit was primarily driven by our Infrastructure segment due to timing and size of projects that have since been completed or are nearing completion in the current period, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business in the comparable period. The decrease in other operating income was primarily driven by our Infrastructure segment as a result of unrepeated gains on lease modifications and unrepeated gains on the sale of various properties in the comparable period, as well as various losses on the sale of properties and a loss on lease modification in the current period. Partially offsetting the above decreases was a decrease in SG&A, which was primarily driven by our Infrastructure segment primarily due to a decrease in compensation-related expenses primarily due to timing, and, to a lesser extent, decreases in consulting fees and travel expenses, which were partially offset by an increase in computer and software-related costs in the current period.

Current wording

Income from operations for the nine months ended September 30, 2025, decreased $23.1 million to $14.4 million from $37.5 million for the nine months ended September 30, 2024. The decrease was primarily due to a net decrease in gross profit of $21.6 million, and a net decrease in other operating income of $8.9 million, partially offset by a net decrease in SG&A expenses of $7.3 million. The net decrease in gross profit was primarily driven by our Infrastructure segment due to timing and size of projects that have since been completed or are nearing completion in the current period, including the effect of changes in estimated costs to complete those projects recognized in the ordinary course of business in the comparable period and, to a lesser extent, our Spectrum segment primarily due to the termination of certain customers in the current period and a downturn in the direct response advertising market. The decrease in other operating income was primarily driven by our Infrastructure segment as a result of unrepeated gains on lease modifications and unrepeated gains on the sale of various properties in the comparable period, as well as various losses on the sale of properties and a loss on lease modification in the current period, which was partially offset by our Spectrum segment due to a favorable legal settlement in the current period and unrepeated lease termination settlement costs incurred in the comparable period. The decrease in SG&A, which was primarily driven by our Infrastructure segment primarily due to a decrease in compensation-related expenses primarily due to timing, and, to a lesser extent, decreases in consulting fees and travel expenses, and a decrease at our Life Sciences segment due to a reduction in compensation-related expenses at Pansend. The decreases in SG&A were partially offset by our Non-Operating Corporate segment primarily due to the debt refinancing costs expensed in the current period and an increase in share-based compensation expense related to the vesting and issuance of equity awards to our Interim-CEO, which awards had not yet been vested or granted in the comparable period, which were partially offset by a decrease in other legal fees.

Previous wording

Loss from equity investees for the six months ended June 30, 2025, increased $3.6 million to $5.9 million from $2.3 million for the six months ended June 30, 2024. The increase in loss was due to an increase in losses recognized from MediBeacon. During the six months ended June 30, 2025as a result of the first quarter equity transactions that occurred upon FDA approval of MediBeacon's TGFR, Pansend's basis in MediBeacon increased by $5.9 million, consisting of a $4.4 million step-up gain and $1.5 million from the conversion of accrued interest on Pansend's convertible notes with MediBeacon, resulting in Pansend recognizing $5.9 million of equity method losses that were previously unrecognized. During the six months ended June 30, 2024, Pansend's basis in MediBeacon had increased by $2.3 million due to the issuance of additional convertible note investments in the comparable period, resulting in Pansend recognizing $2.3 million of equity method losses that were previously unrecognized. As of both June 30, 2025 and 2024, Pansend's net carrying amount of its investment in MediBeacon was zero, and Pansend had unrecognized losses from this investment. Refer to Note 6. Investments to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for additional information on our equity investments.

Current wording

Loss from equity investees: Loss from equity investees for the nine months ended September 30, 2025, increased $3.6 million to $5.9 million from $2.3 million for the nine months ended September 30, 2024. The increase in loss was due to an increase in losses recognized from MediBeacon. During the nine months ended September 30, 2025, as a result of the first quarter equity transactions that occurred upon FDA approval of MediBeacon's TGFR, Pansend's basis in MediBeacon increased by $5.9 million, consisting of a $4.4 million step-up gain and $1.5 million from the conversion of accrued interest on Pansend's convertible notes with MediBeacon, resulting in Pansend recognizing $5.9 million of equity method losses that were previously unrecognized. During the nine months ended September 30, 2024, Pansend's basis in MediBeacon had increased by $2.3 million due to the issuance of additional convertible note investments in the comparable period, resulting in Pansend recognizing $2.3 million of equity method losses that were previously unrecognized. As of both September 30, 2025 and 2024, Pansend's net carrying amount of its investment in MediBeacon was zero, and Pansend had unrecognized losses from this investment. Refer to Note 6. Investments to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for additional information on our equity investments.

Previous wording

Other (expense) income, net: Other (expense) income, net for the three months ended June 30, 2025, decreased $0.5 million to an expense of $0.3 million from income of $0.2 million for the three months ended June 30, 2024. The decrease was primarily driven by a decrease in interest income at our Life Sciences segment, a net loss on debt extinguishment of $0.3 million at our Infrastructure segment in the current period and an increase in foreign currency translation losses from our Infrastructure segment. These decreases were partially offset by an increase in unrealized fair value gains on marketable securities at our Non-Operating Corporate segment.

Current wording

Other income, net: Other income, net for the three months ended September 30, 2025, decreased $1.6 million to $0.6 million from $2.2 million for the three months ended September 30, 2024. The decrease was primarily driven by an unrepeated $1.9 million gain on debt repurchase at our Non-Operating Corporate segment related to the partial repurchase of the 2026 Convertible Notes in the comparable period and a decrease in interest income at our Life Sciences and Non-Operating Corporate segments. These decreases were partially offset by a decrease in foreign currency translation losses from our Infrastructure segment and an increase in fair value gains on marketable securities at our Non-Operating Corporate segment.

Previous wording

Other income (expense), net for the six months ended June 30, 2025, increased $4.7 million to income of $3.7 million from an expense of $1.0 million for the six months ended June 30, 2024. The increase was primarily driven by the $4.4 million step-up gain following MediBeacon's FDA approval in January 2025, a decrease in loss on extinguishment of debt due to $0.3 million related to a refinancing at our Infrastructure segment during the six months ended June 30, 2025 as compared to a $2.2 million loss on debt extinguishment at R2 Technologies in the comparable period, and an increase in unrealized fair value gains on marketable securities at our Non-Operating Corporate segment. These increases were partially offset by an increase in foreign currency translation losses from our Infrastructure segment, a decrease in interest income at our Life Sciences segment and a legal settlement expense at our Non-Operating Corporate segment in the current period.

Current wording

Other income, net for the nine months ended September 30, 2025, increased $3.1 million to $4.3 million from $1.2 million for the nine months ended September 30, 2024. The increase was primarily driven by the $4.4 million step-up gain following MediBeacon's FDA approval in January 2025, and an increase in fair value gains on marketable securities at our Non-Operating Corporate segment. These increases were partially offset by a decrease in interest income at our Life Sciences and Non-Operating Corporate segments, an increase in foreign currency translation losses from our Infrastructure segment and a legal settlement expense at our Non-Operating Corporate segment in the current period. Net loss on repurchase or extinguishment of debt remained consistent as compared to the prior period; however, the net loss was comprised of a loss on extinguishment of debt of $0.3 million related to a refinancing at our Infrastructure segment during the nine months ended September 30, 2025, as compared to a $2.2 million loss on debt extinguishment at R2 Technologies in the comparable period, which was largely offset by a $1.9 million gain on debt repurchase at our Non-Operating Corporate segment related to the partial repurchase of the 2026 Convertible Notes in the comparable period.

Previous wording

Income tax (expense) benefit: Income tax expense for the three months ended June 30, 2025, increased $6.7 million to an expense of $4.2 million from a benefit of $2.5 million for the three months ended June 30, 2024. Income tax expense for the six months ended June 30, 2025, increased $10.5 million to $11.3 million from $0.8 million for the six months ended June 30, 2024. The increases in tax expense were primarily driven by the impact of projected pre-tax results on the annual effective tax rate and the limitations on the utilization of net operating losses ("NOL") by INNOVATE's U.S. consolidated group as a result of the Internal Revenue Code Section 382 and the Tax Cuts and Jobs Act's 80 percent limitation on NOLs incurred after 2017.

Current wording

Income tax benefit (expense): Income tax benefit for the three months ended September 30, 2025, increased $10.2 million to a benefit of $7.1 million from an expense of $3.1 million for the three months ended September 30, 2024. Income tax expense for the nine months ended September 30, 2025, increased $0.3 million to $4.2 million from $3.9 million for the nine months ended September 30, 2024. The movement in tax benefit and expense were primarily driven by the impact of projected pre-tax results on the annual effective tax rate including the limitations on the utilization of net operating losses ("NOL") by INNOVATE's U.S. consolidated group as a result of the Internal Revenue Code Section 382 and the Tax Cuts and Jobs Act's 80 percent limitation on NOLs incurred after 2017.

Previous wording

Cost of revenue: Cost of revenue for the three months ended June 30, 2025 decreased $52.1 million to 191.4 million from $243.5 million for the three months ended June 30, 2024. The decrease was primarily driven by the decrease in revenues at Banker Steel, the industrial maintenance and repair business, DBMG's commercial structural steel fabrication and erection business and the construction modeling and detailing business, from the timing of project activity on certain large commercial construction projects and decreases in project costs as they were completed or are nearing completion in the current period.

Current wording

Cost of revenue: Cost of revenue for the three months ended September 30, 2025 increased $103.2 million to $292.3 million from $189.1 million for the three months ended September 30, 2024. The increase was primarily driven by the increase in revenues at DBMG's commercial structural steel fabrication and erection business due to the increased activity subsequent to the comparable period on certain large commercial construction projects, which was partially offset by the industrial maintenance and repair business due to the decrease in revenue and decrease in project costs as they had increased activity in the prior year on certain large commercial construction and industrial maintenance projects that have since been completed.

Previous wording

Cost of revenue for the six months ended June 30, 2025, decreased $91.7 million to $414.9 million from $506.6 million for the six months ended June 30, 2024. The decrease was primarily driven by the decrease in revenues at Banker Steel, the industrial maintenance and repair business and the construction modeling and detailing business from the timing of project activity on certain large commercial construction projects and decreases in costs as they are completed or are were nearing completion in the current period, which was partially offset by an increase in costs associated with DBMG's commercial structural steel fabrication and erection business.

Current wording

Cost of revenue for the nine months ended September 30, 2025, increased $11.5 million to $707.2 million from $695.7 million for the nine months ended September 30, 2024. The increase was primarily driven by the increase in revenues at DBMG's commercial structural steel fabrication and erection business due to the increased activity subsequent to the comparable period on certain large commercial construction projects, which was partially offset by decreases in revenues at Banker Steel, the industrial maintenance and repair business and the construction modeling and detailing business from the timing of project activity on certain large commercial construction projects and decreases in costs as they were completed or are nearing completion in the current period.

Previous wording

Other operating loss (income): Other operating (income) loss for the three months ended June 30, 2025 decreased $11.7 million to a loss of $1.2 million from income of $10.5 million for the three months ended June 30, 2024. Other operating (income) loss for the six months ended June 30, 2025, decreased by $10.0 million to a loss of $1.1 million from income of $8.9 million for the six months ended June 30, 2024. The decreases were primarily driven by unrepeated gains on lease modifications and unrepeated gains on the sale of various properties in the comparable period, as well as various losses on the sale of properties and a loss on lease modification in the current period.

Current wording

Other operating loss (income): Other operating loss (income) for the nine months ended September 30, 2025, decreased by $10.0 million to a loss of $1.2 million from income of $8.8 million for the nine months ended September 30, 2024. The decrease was primarily driven by unrepeated gains on lease modifications and unrepeated gains on the sale of various properties in the comparable period, as well as various losses on the sale of properties and a loss on lease modification in the current period.

Previous wording

Revenue: Revenue for the three months ended June 30, 2025, increased $1.5 million to $3.2 million from $1.7 million for the three months ended June 30, 2024. The increase was attributable to R2 Technologies, primarily driven by increases in Glacial Spa unit sales, consumable sales and Glacial fx unit sales outside North America, as well as an increase in Glacial fx unit sales and consumable sales in North America. The increase was partially offset by a decrease in Glacial Rx unit sales in North America.

Current wording

Revenue: Revenue for the three months ended September 30, 2025, increased $0.1 million to $3.1 million from $3.0 million for the three months ended September 30, 2024. The increase was attributable to R2 Technologies, primarily driven by increases in Glacial Spa unit sales and Glacial fx unit sales outside North America, as well as an increase in consumable sales in North America. The increase was mostly offset by a decrease in Glacial fx unit sales in North America and a decrease in consumable sales outside North America.

Previous wording

Revenue for the six months ended June 30, 2025, increased $3.6 million to $6.3 million from $2.7 million for the six months ended June 30, 2024. The increase in revenue was attributable to R2 Technologies, primarily driven by an increase in Glacial fx unit sales and consumable sales in North America, as well as an increase in Glacial Spa unit sales, consumable sales and Glacial fx unit sales outside North America.

Current wording

Revenue for the nine months ended September 30, 2025, increased $3.7 million to $9.4 million from $5.7 million for the nine months ended September 30, 2024. The increase in revenue was attributable to R2 Technologies, primarily driven by an increase in Glacial Spa and Glacial fx unit sales outside North America, as well as an increases in consumable sales and Glacial fx and Glacial Rx unit sales in North America.

Previous wording

Cost of revenue: Cost of revenue for the three months ended June 30, 2025, increased $1.0 to $2.1 million from $1.1 million for the three months ended June 30, 2024. Cost of revenue for the six months ended June 30, 2025, increased $2.7 million to $4.4 million from $1.7 million for the six months ended June 30, 2024. The increases in cost of revenue were attributable to R2 Technologies, primarily driven by the increase in revenue from the additional unit system and consumables sales noted above, and, to a lesser extent, the related increases in warranty expenses, royalty expenses, and freight costs. The increase in cost of revenue was partially offset by changes in product mix sold as the Glacial fx and Glacial Spa systems have a lower production cost per system compared to the Glacial Rx.

Current wording

Cost of revenue: Cost of revenue for the three months ended September 30, 2025, increased $0.2 million to $2.2 million from $2.0 million for the three months ended September 30, 2024. Cost of revenue for the nine months ended September 30, 2025, increased $2.9 million to $6.6 million from $3.7 million for the nine months ended September 30, 2024. The increases in cost of revenue were attributable to R2 Technologies, primarily driven by the increase in revenue from the additional unit system and consumables sales noted above and, to a lesser extent, the related increases in warranty expenses, royalty expenses, and freight costs. The increase in cost of revenue was partially offset by changes in product mix sold as the Glacial fx and Glacial Spa systems have a lower production cost per system compared to the Glacial Rx.

Previous wording

Selling, general and administrative: Selling, general and administrative for the three months ended June 30, 2025 increased slightly by $0.1 million to $1.9 million from 1.8 million for the three months ended June 30, 2024. Selling, general and administrative for the six months ended June 30, 2025 increased slightly by $0.1 million to 3.8 million from 3.7 million for the six months ended June 30, 2024.

Current wording

Selling, general and administrative: Selling, general and administrative for the three months ended September 30, 2025 increased slightly by $0.1 million to $2.0 million from 1.9 million for the three months ended September 30, 2024. Selling, general and administrative for the nine months ended September 30, 2025 increased slightly by $0.2 million to $5.8 million from $5.6 million for the nine months ended September 30, 2024.

Previous wording

Depreciation and amortization: Depreciation and amortization for the three months ended June 30, 2025, decreased slightly by $0.1 million to $1.2 million from $1.3 million for the three months ended June 30, 2024. Depreciation and amortization for the six months ended June 30, 2025, decreased slightly by $0.2 million to $2.4 million from $2.6 million for the six months ended June 30, 2024.

Current wording

Depreciation and amortization: Depreciation and amortization for the three months ended September 30, 2025, decreased slightly by $0.1 million to $1.2 million from $1.3 million for the three months ended September 30, 2024. Depreciation and amortization for the nine months ended September 30, 2025, decreased by $0.3 million to $3.6 million from $3.9 million for the nine months ended September 30, 2024.

Previous wording

Selling, general and administrative: Selling, general and administrative expenses for the three months ended June 30, 2025, decreased $0.2 million to $2.6 million from $2.8 million for the three months ended June 30, 2024. Selling, general and administrative expenses for the six months ended June 30, 2025 decreased 0.5 million to $5.5 million from $6.0 million for the six months ended June 30, 2024. The decreases were primarily driven by a decrease in legal fees due to legal matters settled subsequent to the comparable period, as well as slight decreases in other employee-related expenses, accounting and other professional expenses and insurance expense, which were partially offset by an increase in share-based compensation expense related to the issuance of equity awards to our Interim-CEO, which awards had not yet been granted in the comparable period.

Current wording

Selling, general and administrative: Selling, general and administrative expenses for the three months ended September 30, 2025, increased $4.0 million to $7.0 million from $3.0 million for the three months ended September 30, 2024. The increase was primarily driven by $4.3 million in debt refinancing costs expensed in the current period and an increase in share-based compensation expense related to the vesting and issuance of equity awards to our Interim-CEO, which awards had not yet been vested or granted in the comparable period, which were partially offset by a decrease in other legal fees due to legal matters settled subsequent to the comparable period, as well as slight decreases in other professional expenses, insurance expense and other employee-related expenses.

Previous wording

Depreciation and amortization: Depreciation and amortization for the three months ended June 30, 2025, decreased to zero from $0.1 million for the three months ended June 30, 2024. Depreciation and amortization for the six months ended June 30, 2025, decreased to zero from $0.1 million for the six months ended June 30, 2024. The decreases were driven by assets that were fully depreciated subsequent to the comparable periods.

Current wording

Depreciation and amortization: Depreciation and amortization for the nine months ended September 30, 2025, decreased to zero from $0.1 million for the nine months ended September 30, 2024. The decrease was driven by assets that were fully depreciated subsequent to the comparable period.

Previous wording

Other operating loss (income): Other operating income for the three months ended June 30, 2025, decreased to zero from income of $0.1 million for the three months ended June 30, 2024. Other operating loss for the six months ended June 30, 2025, decreased to zero from a loss of $0.2 million for the six months ended June 30, 2024. Other operating loss for the six months ended June 30, 2024 related to lease termination costs for two leases exited by the Company.

Current wording

Other operating loss: Other operating loss for the nine months ended September 30, 2025, decreased to zero from $0.2 million for the nine months ended September 30, 2024. Other operating loss for the nine months ended September 30, 2024 related to lease termination costs for two leases exited by the Company.

Previous wording

Loss from equity investees within our Life Sciences segment for the six months ended June 30, 2025, increased $3.6 million to $5.9 million from $2.3 million for the six months ended June 30, 2024. The increase in loss was due to an increase in losses recognized from MediBeacon. During the six months ended June 30, 2025, as a result of the first quarter equity transactions that occurred upon FDA approval of MediBeacon's TGFR, Pansend's basis in MediBeacon increased by $5.9 million, consisting of a $4.4 million step-up gain and $1.5 million from the conversion of accrued interest on Pansend's convertible notes with MediBeacon, resulting in Pansend recognizing $5.9 million of equity method losses that were previously unrecognized. During the six months ended June 30, 2024, Pansend's basis in MediBeacon had increased by $2.3 million due to the issuance of additional convertible note investments in the comparable period, resulting in Pansend recognizing $2.3 million of equity method losses that were previously unrecognized. As of both June 30, 2025 and 2024, Pansend's net carrying amount of its investment in MediBeacon was zero, and Pansend had unrecognized losses from this investment.

Current wording

Life Sciences: Loss from equity investees within our Life Sciences segment for the nine months ended September 30, 2025, increased $3.6 million to $5.9 million from $2.3 million for the nine months ended September 30, 2024. The increase in loss was due to an increase in losses recognized from MediBeacon. During the nine months ended September 30, 2025, as a result of the first quarter equity transactions that occurred upon FDA approval of MediBeacon's TGFR, Pansend's basis in MediBeacon increased by $5.9 million, consisting of a $4.4 million step-up gain and $1.5 million from the conversion of accrued interest on Pansend's convertible notes with MediBeacon, resulting in Pansend recognizing $5.9 million of equity method losses that were previously unrecognized. During the nine months ended September 30, 2024, Pansend's basis in MediBeacon had increased by $2.3 million due to the issuance of additional convertible note investments in the comparable period, resulting in Pansend recognizing $2.3 million of equity method losses that were previously unrecognized. As of both September 30, 2025 and 2024, Pansend's net carrying amount of its investment in MediBeacon was zero, and Pansend had unrecognized losses from this investment.

Previous wording

The calculation of Adjusted EBITDA, as defined by us, consists of Net income (loss) attributable to INNOVATE Corp., excluding: discontinued operations, if applicable; depreciation and amortization; other operating (income) loss, which is inclusive of (gain) loss on sale or disposal of assets, lease termination costs, (gains) losses on lease modifications, and asset impairment expense; interest expense; other (income) expense, net; income tax expense (benefit); non-controlling interest; share-based compensation expense; realignment and exit costs; and acquisition and disposition costs.

Current wording

The calculation of Adjusted EBITDA, as defined by us, consists of Net income (loss) attributable to INNOVATE Corp., excluding: discontinued operations, if applicable; depreciation and amortization; other operating (income) loss, which is inclusive of (gain) loss on sale or disposal of assets, lease termination costs, (gains) losses on lease modifications, and asset impairment expense; interest expense; other (income) expense, net; income tax expense (benefit); non-controlling interest; share-based compensation expense; realignment and exit costs; debt refinancing costs; and acquisition and disposition costs.

Previous wording

Infrastructure: Net income from our Infrastructure segment for the six months ended June 30, 2025, decreased $15.3 million to $10.1 million from $25.4 million for the six months ended June 30, 2024. Adjusted EBITDA from our Infrastructure segment for the six months ended June 30, 2025, decreased $14.8 million to $36.0 million from $50.8 million for the six months ended June 30, 2024. The decrease in Adjusted EBITDA was primarily driven by a decrease in gross margins at DBMG's commercial structural steel fabrication and erection business, a decrease revenue at Banker Steel, and a decrease in gross margins and revenue at the construction modeling and detailing business, due to timing of certain large commercial construction projects that have since been completed or are nearing completion in the current period. This decrease was partially offset by an improvement in gross margin at the industrial maintenance and repair business, and a decrease in recurring SG&A expenses, primarily driven by a decrease in compensation-related expenses due to timing, and to a lesser extent, decreases in consulting fees and travel expenses, which were partially offset by an increase in computer and software-related costs in the current period.

Current wording

Infrastructure: Net income from our Infrastructure segment for the three months ended September 30, 2025, increased $2.6 million to $8.8 million from $6.2 million for the three months ended September 30, 2024. Adjusted EBITDA from our Infrastructure segment for the three months ended September 30, 2025, increased $2.6 million to $23.5 million from $20.9 million for the three months ended September 30, 2024. The increase in Adjusted EBITDA was primarily driven by the increase in revenue and gross profit at DBMG's commercial structural steel fabrication and erection business, which had increased activity subsequent to the comparable period on certain large commercial construction projects, an improvement in gross profit at Banker Steel, and a decrease in recurring SG&A expenses primarily due to a decrease in compensation-related expenses and consulting fees. These increases were partially offset by the decrease in revenue and gross profit at the industrial maintenance and repair business due to increased activity in the comparable period on certain large commercial construction and industrial maintenance projects that have since been completed.

Previous wording

Life Sciences: Net loss from our Life Sciences segment for the three months ended June 30, 2025, increased $2.7 million to $6.5 million from $3.8 million for the three months ended June 30, 2024. Adjusted EBITDA loss from our Life Sciences segment for the three months ended June 30, 2025, decreased $2.2 million to $2.6 million from $4.8 million for the three months ended June 30, 2024. The decrease in Adjusted EBITDA loss was primarily due to the decrease in equity method losses recognized from MediBeacon, as discussed in the Loss from Equity Investees section above, and an increase in gross profit at R2 Technologies, driven by increased revenue (as discussed in the Revenue section above), and a decrease in SG&A expenses at R2 Technologies primarily driven by a decrease in employee commissions.

Current wording

Life Sciences: Net loss from our Life Sciences segment for the three months ended September 30, 2025, decreased $1.4 million to $4.6 million from $6.0 million for the three months ended September 30, 2024. Adjusted EBITDA loss from our Life Sciences segment for the three months ended September 30, 2025, decreased $0.4 million to $2.6 million from $3.0 million for the three months ended September 30, 2024. The decrease in Adjusted EBITDA loss was primarily driven by a reduction in compensation-related expenses at Pansend.

Previous wording

Spectrum: Net loss from our Spectrum segment for the six months ended June 30, 2025, increased $1.7 million to $11.5 million from $9.8 million for the six months ended June 30, 2024. Adjusted EBITDA from our Spectrum segment for the six months ended June 30, 2025, decreased $0.7 million to $2.4 million from $3.1 million for the six months ended June 30, 2024. The decrease in Adjusted EBITDA was primarily driven by the loss of certain customers and a decrease in direct response advertising, which was partially offset by the launch of new networks subsequent to the comparable period.

Current wording

Spectrum: Net loss from our Spectrum segment for the three months ended September 30, 2025, increased $0.3 million to $5.9 million from $5.6 million for the three months ended September 30, 2024. Adjusted EBITDA from our Spectrum segment for the three months ended September 30, 2025, decreased $0.7 million to $1.0 million from $1.7 million for the three months ended September 30, 2024. The decrease in Adjusted EBITDA was primarily driven by the termination of certain customers in the current period and a downturn in the direct response advertising market.

Previous wording

The tables below provide reconciliations of net income (loss) attributable to INNOVATE Corp. to Adjusted EBITDA for the six months ended June 30, 2025 and 2024:

Current wording

The tables below provide reconciliations of net income (loss) attributable to INNOVATE Corp. to Adjusted EBITDA for the nine months ended September 30, 2025 and 2024:

Previous wording

Infrastructure: Net income from our Infrastructure segment for the three months ended June 30, 2025, decreased $15.5 million to $5.5 million from $21.0 million for the three months ended June 30, 2024. Adjusted EBITDA from our Infrastructure segment for the three months ended June 30, 2025, decreased $13.2 million to $19.3 million from $32.5 million for the three months ended June 30, 2024. The decrease in Adjusted EBITDA was primarily driven by a decrease in revenue and gross margins at DBMG's commercial structural steel fabrication and erection business, a decrease in revenue at Banker Steel and a decrease in revenue and gross margins at the construction modeling and detailing business, due to timing of certain large commercial construction projects that have since been completed or are nearing completion in the current period. This decrease was partially offset by a an improvement in gross margins at the industrial maintenance and repair business, and a decrease in recurring SG&A expenses, primarily driven by a decrease in compensation-related expenses due to timing, and to a lesser extent, decreases in travel expenses and professional and consulting fees.

Current wording

Infrastructure: Net income from our Infrastructure segment for the nine months ended September 30, 2025, decreased $12.7 million to $18.9 million from $31.6 million for the nine months ended September 30, 2024. Adjusted EBITDA from our Infrastructure segment for the nine months ended September 30, 2025, decreased $12.2 million to $59.5 million from $71.7 million for the nine months ended September 30, 2024. The decrease in Adjusted EBITDA was primarily driven by a decrease in gross profit, despite the increase in revenue, at DBMG's commercial structural steel fabrication and erection business, and the decrease in revenue and gross profit at Banker Steel due to timing of certain large commercial construction projects that have since been completed or are nearing completion in the current period. These decreases were partially offset by an improvement in gross profit at the industrial maintenance and repair business, and a decrease in recurring SG&A expenses, primarily driven by a decrease in compensation-related expenses primarily due to timing, and to a lesser extent, decreases in consulting fees and travel expenses.

Previous wording

Life Sciences: Net loss from our Life Sciences segment for the six months ended June 30, 2025, increased $5.8 million to $14.1 million from $8.3 million for the six months ended June 30, 2024. Adjusted EBITDA loss from our Life Sciences segment for the six months ended June 30, 2025, increased $2.3 million to $11.3 million from $9.0 million for the six months ended June 30, 2024. The increase in Adjusted EBITDA loss was primarily due to an increase in equity method losses recognized from MediBeacon, as discussed in the Loss from Equity Investees section above. The increase in Adjusted EBITDA loss was partially offset by an increase in gross profit at R2 Technologies, driven by increased revenue (as discussed in the Revenue section above), and a decrease in SG&A expenses primarily driven by a reduction in compensation-related expenses at Pansend.

Current wording

Life Sciences: Net loss from our Life Sciences segment for the nine months ended September 30, 2025, increased $4.4 million to $18.7 million from $14.3 million for the nine months ended September 30, 2024. Adjusted EBITDA loss from our Life Sciences segment for the nine months ended September 30, 2025, increased $1.9 million to $13.9 million from $12.0 million for the nine months ended September 30, 2024. The increase in Adjusted EBITDA loss was primarily due to an increase in equity method losses recognized from MediBeacon, as discussed in the Loss from Equity Investees section above. The increase in Adjusted EBITDA loss was partially offset by a decrease in SG&A expenses primarily driven by a reduction in compensation-related expenses at Pansend and an increase in gross profit at R2 Technologies, driven by increased revenue (as discussed in the Revenue section above).

Previous wording

Spectrum: Net loss from our Spectrum segment for the three months ended June 30, 2025, increased $1.1 million to $6.1 million from $5.0 million for the three months ended June 30, 2024. Adjusted EBITDA from our Spectrum segment for the three months ended June 30, 2025, decreased $0.5 million to $1.0 million from $1.5 million for the three months ended June 30, 2024. The decrease in Adjusted EBITDA was primarily driven by the loss of certain customers and a decrease in direct response advertising, which was partially offset by the launch of new networks subsequent to the comparable period.

Current wording

Spectrum: Net loss from our Spectrum segment for the nine months ended September 30, 2025, increased $2.0 million to $17.4 million from $15.4 million for the nine months ended September 30, 2024. Adjusted EBITDA from our Spectrum segment for the nine months ended September 30, 2025, decreased $1.4 million to $3.4 million from $4.8 million for the nine months ended September 30, 2024. The decrease in Adjusted EBITDA was primarily driven by the termination of certain customers in the current period and a downturn in the direct response advertising market, which was partially offset by the launch of new networks subsequent to the comparable period.

Previous wording

As of June 30, 2025, DBMG's backlog was $1,254.4 million, consisting of $1,140.8 million under contracts or purchase orders and $113.6 million under letters of intent or notices to proceed. Approximately $737.1 million, representing 58.8% of DBMG’s backlog as of June 30, 2025, was attributable to five contracts, letters of intent, notices to proceed or purchase orders. If one or more of these projects terminate or reduce their scope, DBMG’s backlog could decrease substantially. DBMG has included an additional $12.2 million in its backlog that is not included in the remaining unsatisfied performance obligations disclosed in Note 3. Revenue and Contracts in Process. This additional backlog includes commitments under master service agreements that are estimated amounts of work to be performed based on customer communications, historic performance and knowledge of our customers' intentions.

Current wording

As of September 30, 2025, DBMG's backlog was $1,548.4 million, consisting of $1,483.7 million under contracts or purchase orders and $64.7 million under letters of intent or notices to proceed. Approximately $1,022.6 million, representing 66.0% of DBMG’s backlog as of September 30, 2025, was attributable to five contracts, letters of intent, notices to proceed or purchase orders. If one or more of these projects terminate or reduce their scope, DBMG’s backlog could decrease substantially. DBMG has included an additional $10.7 million in its backlog that is not included in the remaining unsatisfied performance obligations disclosed in Note 3. Revenue and Contracts in Process. This additional backlog includes commitments under master service agreements that are estimated amounts of work to be performed based on customer communications, historic performance and knowledge of our customers' intentions.

Previous wording

Subsequent to quarter end, on August 4, 2025, the Company closed a series of indebtedness refinancing transactions that will extend certain of the Company’s debt maturities. The refinancing transactions include (i) the initial closing of an exchange offer and consent solicitation with respect to the Company’s senior secured notes, (ii) privately negotiated exchanges of certain of the Company’s convertible senior notes, (iii) amendment and extension of the Company’s 2020 revolving credit agreement, (iv) amendment and extension of the Company’s CGIC note, as well as the exchange of a portion of the Company’s preferred stock held by CGIC in exchange for increasing the principal amount of that note, (v) amendment and extension of the Spectrum debt and (vi) amendment and extension of the R2 Technologies debt. Refer to Note 21. Subsequent Events, which is incorporated herein by reference, for additional information.

Current wording

In August 2025, the Company closed on a series of indebtedness refinancing transactions that extended certain of the Company’s debt maturities. The refinancing transactions included: (i) the closings of an exchange offer and consent solicitation with respect to the Company’s senior secured notes; (ii) privately negotiated exchanges of certain of the Company’s convertible senior notes; (iii) amendment and extension of the Company’s 2020 Revolving Credit Agreement; (iv) amendment and extension of the Company’s CGIC note, as well as the exchange of a portion of the Company’s preferred stock held by CGIC and accrued preferred stock dividends in exchange for increasing the principal amount of that note; (v) amendment and extension of the Spectrum debt; and (vi) amendment and extension of the R2 Technologies debt. In addition, on May 20, 2025, DBMG entered into an Amended and Restated Credit Agreement. Total third-party fees expensed related to the refinancing transactions were $4.5 million and $4.6 million for the three and nine months ended September 30, 2025, respectively, and total third party fees capitalized were $0.4 million and $2.1 million for the three and nine months ended September 30, 2025, respectively. Refer to “Indebtedness” below and to Note 11. Debt Obligations to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for additional information.

Previous wording

On February 1, 2021, our Non-Operating Corporate segment repaid the senior secured notes that were due in 2021 and issued $330.0 million aggregate principal amount of 8.50% senior secured notes due February 1, 2026 (the "8.50% 2026 Senior Secured Notes"). The 2026 Senior Secured Notes mature on February 1, 2026, and accrue interest at a rate of 8.50% per year, which interest is paid semi-annually on February 1 st and August 1 st of each year. If the Company sells certain assets and the net cash proceeds from all applicable asset sales exceed $50.0 million since the issue date of the 2026 Senior Secured Notes, the Company may be required in certain circumstances to make an offer to purchase the notes with the net cash proceeds from such an asset sale in excess of such $50.0 million threshold 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.

Current wording

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

Previous wording

The indenture governing the 2026 Senior Secured Notes dated February 1, 2021, by and among INNOVATE, the guarantors party thereto and U.S. Bank National Association, a national banking association, as trustee (the "Secured Indenture"), contains certain affirmative and negative covenants limiting, among other things, the ability of the Company, and, in certain cases, the Company’s subsidiaries, to incur additional indebtedness; create liens; engage in sale-leaseback transactions; pay dividends or make distributions in respect of capital stock; make certain restricted payments; sell assets; engage in 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.

Current wording

Certain Covenants. The 2027 Convertible Notes Indenture contains covenants limiting, among other things, our ability, and, in certain cases, our subsidiaries' ability, to incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; make certain restricted payments; sell assets; engage in certain transactions with affiliates; or consolidate or merge with, or sell substantially all of its assets to, another person. These covenants are subject to a number of important exceptions and qualifications.

Previous wording

The original $51.8 million aggregate principal amount of 7.50% convertible notes (the "2026 Convertible Notes") were issued under a separate indenture dated February 1, 2021, between the Company and U.S. Bank, as trustee (the "Convertible Indenture"). In July 2024, we repurchased $2.9 million principal amount of our 2026 Convertible Notes at a market discount for $1.1 million, which was inclusive of accrued interest of $0.1 million. As of June 30, 2025, we had $48.9 million principal amount of 2026 Convertible Notes outstanding. The 2026 Convertible Notes mature on August 1, 2026, unless earlier converted, redeemed or purchased. The 2026 Convertible Notes accrue interest at a rate of 7.5% per year, which interest is paid semi-annually on February 1 st and August 1 st of each year.

Current wording

The original $51.8 million aggregate principal amount of 7.50% convertible notes (the "2026 Convertible Notes") were issued under an indenture dated February 1, 2021, between the Company and U.S. Bank, as trustee. During July 2024, INNOVATE repurchased $2.9 million principal amount of its 2026 Convertible Notes at a market discount for $1.1 million, which was inclusive of accrued interest of $0.1 million. As discussed above, on August 4, 2025, pursuant to the Exchange Agreements, we exchanged $48.7 million aggregate principal amount of the 2026 Convertible Notes for new 2027 Convertible Notes. Subsequent to the exchanges and, as of September 30, 2025, we had $0.2 million aggregate principal remaining of the 2026 Convertible Notes.