INNOVATE Corp.

Current report

The Risk Factors set forth below supplement and, as applicable, update, and should be read together with, the risk factors set forth in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025. The Company is currently pursuing highly substantial asset dispositions. It has also made changes to its debt arrangements and other liabilities, including following June 30, 2026, and expects to make further changes. These ongoing actions will substantially alter the Company’s business, prospects, cash flow and financial position going forward and all information herein, including information incorporated by reference herein, should be evaluated in light of these changes and potential changes. Refer to Note 22. Subsequent Events for further information.

Current report

If we fail to consummate the Spectrum Merger, the Bridge Loan Facility may become due on terms we do not expect to have the resources to satisfy, which could trigger defaults under our debt instruments and materially adversely affect our financial condition, liquidity and ability to continue as a going concern.

Current report

The Spectrum Merger involves the transfer of FCC broadcasting licenses held by our Spectrum segment. FCC approval is required for such transfers, and there can be no assurance that such approval will be obtained in a timely manner or at all. Any delay or denial of FCC approval could delay or prevent the consummation of the Spectrum Merger and expose Broadcasting and its guarantors to repayment or acceleration of the Bridge Loan Facility. The FCC regulatory approval process may also impose conditions on the transfer that could reduce the benefits of the transaction.

Current report

If we fail to consummate the Spectrum Merger, the Bridge Loan Facility under the New Loan Agreement would remain outstanding and, absent consummation of the Merger by the first anniversary of the Loan Closing Date, Broadcasting would be required to repay in cash an amount sufficient to result in a minimum cash return of 1.5:1.0 on the original principal amount of the Loans, including all accrued and capitalized interest, which the Company does not expect Broadcasting or the guarantors to have the resources to satisfy. In addition, termination of the Merger Agreement would constitute an event of default under the New Loan Agreement, potentially accelerating the Bridge Loan Facility obligations. The closing is subject to conditions that may not be satisfied, including receipt of FCC approval and expiration or termination of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, waiting period, and the Merger Agreement is terminable by either party if the Merger has not occurred by November 29, 2026, subject to extensions to March 1, 2027 and May 29, 2027 if only specified regulatory conditions remain unsatisfied. Any failure or material delay in consummating the Spectrum Merger could therefore trigger defaults or cross-defaults under our debt instruments and have a material adverse effect on our financial condition, results of operations, liquidity and ability to continue as a going concern.

Current report

Even if the Merger is consummated, the Company does not expect to receive any cash proceeds from the Spectrum Merger; the Company's retained 25% equity interest in the Surviving Entity would be illiquid absent exercise of the CONX Affiliate's option under the CONX Affiliate Letter Agreement, the timing, price and occurrence of which are uncertain. In addition, the Option Agreement may require the Company to apply net cash proceeds from future asset sales to exercise the option to acquire additional Surviving Entity equity, subject to applicable exceptions and the requirements of our debt instruments, which could limit the proceeds otherwise available for other corporate purposes.

Current report

The Spectrum Merger may subject us to risks associated with transition services, dis-synergies, stranded assets, and employee retention.

Current report

In connection with the Spectrum Merger, we may be required to provide certain transition services to the purchaser, and any issues, delays or complications in completing such services, including the incurrence of unanticipated costs, could adversely affect our business and financial condition. In addition, as a result of the probable sale, we may incur or experience various adverse effects, including but not limited to (i) greater costs or fewer benefits than anticipated under the sale agreement, (ii) operational or commercial difficulties segregating the divested assets from our retained assets, (iii) disputes with the purchasers regarding the nature and sufficiency of the transition services we provide, (iv) higher vendor costs due to reduced economies of scale or other similar dis-synergies, (v) modified, terminated or scaled back relationships with existing customers or difficulty attracting prospective customers, (vi) diversion of management's attention away from the operations of our retained business, (vii) loss or difficulty in retaining employees due to concerns over future job security or responsibilities, or (viii) losses or increased inefficiencies from stranded or underutilized assets. Any of these risks could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Current report

Retained liabilities and indemnification obligations in connection with the Spectrum Merger could result in unanticipated costs.

Current report

In connection with the Spectrum Merger, we may retain certain pre-closing liabilities and may be subject to indemnification obligations under the applicable sale agreements and related ancillary agreements. These retained liabilities and indemnification obligations could result in unanticipated costs and could have a material adverse effect on our financial condition, results of operations, and cash flows. In addition, we remain liable for claims and expenses that may arise related to our business operations prior to the completion of the sales, and we may be subject to contingent liabilities related to the sales that could have a material adverse effect on our financial condition.

Previous report

There have been no material changes in our risk factors from those disclosed in Part 1, Item 1A of our Fiscal Year 2025 Form 10-K, which was filed with the SEC on March 26, 2026. See "Risk Factors" in Item 1A of Part I of such Fiscal Year 2025 Form 10-K for a complete description of the material risks we face.