INV

Business Context and Reporting Period

Company: Innventure, Inc. (Successor to Innventure LLC following a Business Combination on October 2, 2024).

Reporting Period: Quarterly Report on Form 10-Q for the period ended June 30, 2025.

Business Model: Innventure founds, funds, and operates companies focused on transformative, sustainable technology solutions (e.g., Accelsius, AeroFlexx, Refinity). The company operates as a single reportable segment ("Technology") alongside "Other" activities.

Accounting Basis: Financial statements reflect a "Successor" basis of accounting post-Business Combination, making them non-comparable to "Predecessor" periods prior to October 2, 2024.

Key Financial Metrics (Six Months Ended June 30, 2025)

Material Changes vs. Prior Comparable Period

• Revenue Growth: Revenue increased 56.6% to $700 (from $447 in the six months ended June 30, 2024), driven by $255 in product sales from the Technology segment.
• Significant Loss Expansion: Net loss widened significantly to $(394.9M) from $(18.8M) in the prior period. This is primarily due to a non-cash goodwill impairment charge of $346.6M.
• Expense Increases:
  • General & Administrative: Increased 134.9% to $38.2M, driven by stock-based compensation and professional fees.
  • R&D: Increased 258.9% to $12.3M, largely due to amortization of intangible assets.
  • Cost of Sales: Increased from $0 to $3.0M as the Technology segment began generating revenue.
• Non-Operating Items:
  • Recognized a $23.6M gain from the change in fair value of financial liabilities (warrants and earnouts).
  • Recorded $3.5M loss on extinguishment of related party debt and $3.5M loss on extinguishment of debt (WTI Facility modification).

Guidance, Outlook, Risks, and Unusual Items

Going Concern Warning

Management has concluded there is substantial doubt about the Company's ability to continue as a going concern within one year. The company has a working capital deficit of $51.2M and recurring operating losses. It estimates a need for at least $50M to meet liquidity requirements for the next 12 months, plus an additional $25M for growth.

Liquidity Sources

• SEPA: Standby Equity Purchase Agreement with Yorkville has approximately $70M remaining availability.
• Debt: Recent issuance of $30M in Convertible Debentures and utilization of the WTI Facility ($20M drawn).

Unusual Items

• Goodwill Impairment: Triggered by sustained decreases in the Company's stock price and market capitalization during late February through April 2025.
• Debt Extinguishment: Modification of the WTI Facility was accounted for as an extinguishment, resulting in a $3.5M loss.

Internal Control Weaknesses

Management concluded disclosure controls were not effective due to material weaknesses, including insufficient staffing for complex transactions, lack of IT general controls, and errors in inventory costing and purchase accounting assessments.

Investor Verification Checklist

• Liquidity Runway: Verify the Company's ability to access the remaining $70M under the SEPA and secure additional financing to cover the estimated $75M liquidity gap.
• Goodwill Valuation: Assess the sensitivity of the remaining $323.5M goodwill balance to further declines in stock price, which could trigger additional impairment charges.
• Debt Covenants: Review the terms of the WTI Facility and Convertible Debentures, specifically the requirement to maintain $5M in restricted cash and potential dilution from conversion features.
• Internal Controls: Monitor the remediation plan for material weaknesses in financial reporting and IT controls to ensure future financial accuracy.
• Revenue Sustainability: Evaluate the scalability of the Technology segment's product sales ($255k in 6 months) against the high cost structure ($404M operating expenses).