INNOVATE Corp.

Reference is made to the factors set forth under the caption “Special Note Regarding Forward-Looking Statements” in Part I, Item 2 of this quarterly report on Form 10-Q and other risk factors described in our Annual Report, which are incorporated herein by reference. There have not been any material changes to the risk factors previously disclosed in our Annual Report and our Quarterly Report, except as set forth below.

The agreements governing our indebtedness, including the indentures governing INNOVATE’s 2027 Senior Secured Notes, 2027 Convertible Notes, 2026 Senior Secured Notes, 2026 Convertible Notes, CGIC Subordinated Secured Promissory Note and Revolving Line of Credit, and the Certificates of Designation with respect to our Series A-3 and Series A-4 Preferred Stock, contain various covenants that limit our discretion in the operation of our business and/or require us to meet financial maintenance tests and other covenants. The failure to comply with such tests and covenants could have a material adverse effect on us.

The agreements governing our indebtedness, including the indentures governing INNOVATE’s 2027 Senior Secured Notes, 2027 Convertible Notes, 2026 Senior Secured Notes, 2026 Convertible Notes, CGIC Subordinated Secured Promissory Note and Revolving Line of Credit, and the Certificates of Designation with respect to our Series A-3 and Series A-4 Preferred Stock, contain, and any of our other future financing agreements may contain, covenants imposing operating and financial restrictions on our businesses.

Theindentures governing INNOVATE’s 2027 Senior Secured Notes, 2027 Convertible Notes, 2026 Senior Secured Notes, 2026 Convertible Notes, CGIC Subordinated Secured Promissory Note and Revolving Line of Credit, and the Certificates of Designation with respect to our Series A-3 and Series A-4 Preferred Stock contain, and any future debt agreements may contain, various covenants, including those that restrict our ability to, among other things:

•incur liens on our property, assets and revenue;

•borrow money, and guarantee or provide other support for the indebtedness of third parties;

•redeem or repurchase our capital stock;

•make scheduled interest and principal or other payments or prepay, redeem or repurchase, certain of our indebtedness, including Existing Notes that did not participate in the Exchange Offer and the Solicitation or our Series A-3 and Series A-4 preferred stock;

•enter into certain change of control transactions;

•make investments in entities that we do not control, including joint ventures;

•enter into certain asset sale transactions, including divestiture of certain company assets and divestiture of capital stock of wholly-owned subsidiaries;

•enter into certain transactions with affiliates; and

•enter into secured financing arrangements.

The debt facilities at our subsidiaries contain similar covenants applicable to each respective subsidiary. These covenants may limit our ability to effectively operate our businesses. For example, DBMG has an indemnity agreement with its surety bond provider that also contains covenants on retention of capital and working capital requirements for DBMG, which may limit the amount of dividends DBMG may pay to its stockholders.

Theindentures governing INNOVATE’s 2027 Senior Secured Notes and 2027 Convertible Notes also require 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.

Any failure to comply with the restrictions in theindentures governing INNOVATE’s 2027 Senior Secured Notes and 2027 Convertible Notes, or any other agreement governing our existing indebtedness or indebtedness we may incur in the future, may result in an event of default under those agreements. Such default may allow the creditors to accelerate the related debt, which acceleration may trigger cross-acceleration or cross-default provisions in other debt. If any of these risks were to occur, our business and operations could be materially and adversely affected.

The Certificates of Designation provide the holders of our Series A-3 and Series A-4 Preferred Stock with consent and voting rights with respect to certain of the matters referred to above, in addition to certain corporate governance rights. These restrictions may interfere with our ability to obtain financings or to engage in other business activities, which could have a material adverse effect on our business and operations.