INV

Business Context and Reporting Period

Company: Innventure, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 30, 2026
Business Overview: Innventure is an industrial growth conglomerate that founds, funds, and operates companies focused on transformative, sustainable technology solutions. Key subsidiaries include AeroFlexx (aircraft fuel), Accelsius (data center cooling), and Refinity (plastic waste gasification). The company operates as a single reportable segment ("Technology") alongside "Other" activities.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Revenue increased 100.2% year-over-year for the quarter and 242% for the six-month period, driven by product sales and service revenue in the Technology segment (Accelsius).
• Operating Expenses: Total operating expenses decreased significantly year-over-year ($32.4M vs. $143.1M for the quarter) primarily due to the absence of a $113.3 million goodwill impairment charge recorded in the prior year. However, R&D expenses increased 61.2% due to development costs for Refinity.
• Non-Operating Items: The company recorded a $1.0 million loss on extinguishment of debt in the current six-month period related to the repayment of Convertible Debentures. In the prior year, this line item included a $3.5 million loss on extinguishment and a $3.5 million loss on extinguishment of related party debt.
• Debt Reduction: The company repaid the Convertible Debentures in full in January 2026 and repaid Series 1 Promissory Notes in January 2026.

Guidance, Outlook, Risks, and Contingencies

• Going Concern Warning: Management has determined that conditions raise substantial doubt about the company's ability to continue as a going concern within one year. The company requires at least $50.0 million to meet operating needs over the next 12 months, with up to an additional $25.0 million needed for subsidiaries.
• Liquidity Sources: The company plans to fund operations through cash on hand, the Standby Equity Purchase Agreement (SEPA) with Yorkville (approx. $53.9 million remaining availability), and additional equity/debt financings.
• Legal Proceedings: Accelsius is defending against a lawsuit filed by Advanced Cooling Technologies, Inc. (ACT) alleging trade secret misappropriation and unfair competition. The company disputes the allegations and cannot estimate potential losses.
• Project Update: Accelsius removed the "DarkNX" project (six 10MW deployments) from internal bookings after the deployment site became unavailable.
• Contractual Obligations: Significant future commitments include fixed patent installment payments totaling $12.4 million through 2040 and minimum fees under a Framework Agreement for Refinity's gasification technology.

Investor Verification Checklist

• Cash Burn Rate: Verify the sustainability of the $59.5 million cash used in operating activities over the last six months against the $46.5 million total cash balance.
• Financing Execution: Confirm the ability to access the remaining $53.9 million under the SEPA and secure the additional $50M+ capital required to avoid liquidity crisis.
• Revenue Quality: Assess the scalability of the Technology segment revenue ($2.4M for six months) relative to the high cost structure ($61.2M operating expenses).
• Legal Exposure: Monitor the outcome of the ACT lawsuit, which could result in significant monetary damages or injunctive relief.
• Debt Covenants: Review compliance with the WTI Facility covenants, specifically the requirement to maintain $5.0 million in restricted cash.