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YoY shift: Lean -
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.47pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.47pp
Lean -
Net-tone change vs last year's 10-K.
MD&A
-0.47pp
Lean -
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+17
unable+9
delays+9
claims+5
limitations+4
Positive rising
successfully+6
effective+6
achieve+2
advances+2
successful+1
Risk Factors (Item 1A)
14,090 words
Item 1A. Risk Factors.
You should carefully consider the following risk factors, together with all of the other information included in this Form 10-K. The market price of the Company’s common stock, par value $0.0001 per share (“Common Stock”) could decline due to any of these risks, in which case you could lose all or part of your investment. In assessing these risks, you should also refer to the other information included in this Form 10-K, including the consolidated financial statements and notes thereto and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Company’s business, financial condition or results of operations could be affected materially and adversely by any of the risks discussed below. We cannot assure you that any of the events discussed below will not occur.
Summary of Risk Factors
Our business is subject to a number of risks and uncertainties . Some of these principal risks include the following:
• Innventure may not be able to obtain additional financing to fund the operations and growth of the business.
• There is uncertainty regarding Innventure’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial about its ability to continue as a going .
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
impairment+15
concern+2
losses+2
downward+2
volatility+2
Positive rising
satisfaction+2
benefit+1
innovators+1
stabilized+1
best+1
MD&A (Item 7)
6,024 words
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context otherwise requires, references in this section to “we”, “us” and “our” refer to the business and operations of Innventure LLC and its consolidated subsidiaries prior to the Business Combination, which became the business of the Company and its subsidiaries following the consummation of the Business Combination. Unless otherwise indicated, all dollar amounts (“$”) are expressed in thousands.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our and our predecessor’s, as applicable, consolidated financial statements and related notes and other information included elsewhere in this Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below in this section and those discussed in the sections titled “Risk Factors” and “Cautionary Statement Regarding Forward–Looking Statements” included elsewhere in this Form 10-K. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Overview
Innventure is an industrial growth conglomerate that founds, funds, and operates companies with a focus on commercializing transformative, sustainable technology solutions acquired or licensed from MNCs or other technology with the intent to maximize values for investors and other stakeholders through cash flow generated through holding long term positions in our Innventure Companies. Refer to Item 1. “Business” of this Form 10-K for a detailed discussion of our business activities.
• Innventure depends on its Innventure Companies for revenue and cash, and the Innventure Companies are not guaranteed to succeed.
• Innventure may not be successful in finding future opportunities to license or acquire breakthrough technology solutions from Technology Solutions Providers, and any failure to satisfy the requirement of or maintain relationships with its technology providers could materially aversely affect its business.
• Innventure’s growth strategy depends on its ability to scale the Innventure Companies effectively, and it may be unable to do so successfully.
• The WTI Facility may impair Innventure LLC’s, Innventure’s and the Innventure Companies’ financial and operating flexibility.
• It is not possible to predict the extent to which Innventure will, intends to, or may rely on Yorkville and the SEPA as a source of funding, including the actual number of shares Innventure will sell under the SEPA to Yorkville or the actual gross proceeds resulting from those sales.
• Innventure’s pursuit of new Innventure Companies and acquisitions of new technologies could disrupt its ongoing business, present risks not originally contemplated and materially adversely affect its business, reputation, results of operations and financial condition.
• The Innventure Companies are early-stage companies, and their limited operating history makes it difficult to evaluate their future prospects and the risks and challenges they may encounter.
• Accelsius’ cooling products may be subject to increased regulatory scrutiny due to their use of working fluid refrigerants that contain fluorine.
• Accelsius’ results of operations may be adversely affected by long and unpredictable deployment cycles in the data center market, which could delay or reduce the conversion of bookings into revenue.
• If Accelsius is unable to develop and commercialize next-generation cooling solutions capable of addressing increasing chip power densities and thermal loads, our business and competitive position could be materially adversely affected.
• The failure of Accelsius and AFX to access necessary raw materials or other components in a timely manner and to specification or their inability to maintain relationships with suppliers and manufacturing
partners could prevent them from delivering products within required time frames and could cause production delays, cancellations, penalty payments and damage to their brands and reputations.
• Refinity faces risks in designing, constructing and operating its first commercial-scale manufacturing facility, and it may be unable to successfully or timely complete and bring the facility online.
• The market price of our Common Stock is likely to be highly volatile, and you may lose some or all of your investment.
• Future offerings of debt or offerings or issuances of equity securities by Innventure may adversely affect the market price of the Common Stock or otherwise dilute all other stockholders and may result in the issuance of securities with rights that are senior to those of the holders of Common Stock.
• Additional financing transactions by the Innventure Companies could impact your rights as a stockholder of Innventure.
• Stockholder activism or unsolicited acquisition proposals could disrupt our business, divert management’s attention and impede our ability to execute our business model and achieve our long-term strategic objectives.
• Provisions in our Amended and Restated Certificate of Incorporation (the “A&R Certificate of Incorporation”) and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management.
• If Innventure’s estimates or judgments relating to its critical accounting estimates prove to be incorrect or financial reporting standards or interpretations change, Innventure’s results of operations could be adversely affected.
• If Innventure is deemed to be an investment company under the Investment Company Act, it may be required to institute burdensome compliance requirements and its activities may be restricted, which may make it difficult to operate or to execute its growth plans.
• Innventure may be unable to sufficiently protect the IP rights of itself and the Innventure Companies and may encounter disputes from time to time relating to its use of the IP of third parties.
• Innventure, the Innventure Companies, and Innventure’s MNC partners may be negatively impacted by volatility in the political and economic environment, geopolitical unrest, economic downturns and increases in interest rates, and a period of sustained inflation, which could have an adverse impact on Innventure’s and the Innventure Companies’ business, financial condition, results of operations and prospects.
• Changes in U.S. or foreign trade policies, including additional tariffs or global trade conflicts, may adversely impact our business and operating results.
Cyber-attacks or a failure in Innventure’s information technology and data security infrastructure could adversely affect Innventure’s business and operations.
Risks Related to Innventure’s Business
Innventure may not be able to obtain additional financing to fund the operations and growth of the business.
Innventure and the Innventure Companies expect to require additional financing to fund their operations or growth. The failure to secure additional financing could have a material adverse effect on the continued development or growth of Innventure and the Innventure Companies. Such financings may result in dilution to stockholders, issuance of securities with priority as to liquidation and dividend and other rights more favorable than Common Stock, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect their business. In addition, Innventure may seek additional capital due to favorable market conditions or strategic considerations even if it believes that it has sufficient funds for current or future operating plans. There can be no
assurance that financing will be available to Innventure on favorable terms, or at all. The inability to obtain financing when needed may make it more difficult for Innventure and the Innventure Companies to operate their businesses or implement their growth plans.
There is uncertainty regarding Innventure’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt about its ability to continue as a going concern.
The independent registered public accounting firm for Innventure issued a report on the audited financial statements for the years ended December 31, 2025 and December 31, 2024 for Innventure that includes an explanatory paragraph expressing substantial doubt in Innventure’s ability to continue as a going concern for one year from the date of such report. The ability of Innventure to continue as a going concern is dependent on the Company’s ability to obtain additional equity or debt financing or to generate cash flow from operations. The substantial doubt regarding the potential ability of Innventure to continue as a going concern may adversely affect its ability to obtain such debt or equity financing on reasonable terms or at all, or to secure new customers or relationships, including relationships with Technology Solutions Providers. Additionally, if Innventure is unable to continue as a going concern, investors, including holders of Common Stock, may lose some or all of their investment.
Innventure depends on its Innventure Companies for revenue and cash, and the Innventure Companies are not guaranteed to succeed.
Innventure’s principal operation is to partner with Technology Solutions Providers to acquire new IP through newly-created entities where Innventure supports the initial funding and management of the company. Innventure also conducts operations through its subsidiaries, including the investment management services provided to the ESG Fund. There can be no assurance that the Innventure Companies that Innventure has launched or may launch in the future will succeed, and their future financial performance is uncertain. Launching and supporting the Innventure Companies could be very costly and could distract Innventure’s management from its other operations or other Innventure Companies.
Innventure’s ability to generate cash to meet its obligations or to pay dividends will be highly dependent on the earnings of, and receipt of funds from, its investment management services and its equity ownership interests in the Innventure Companies. The ability of the Innventure Companies to generate sufficient revenue to allow Innventure and them to make scheduled payments on their obligations will depend on their future financial performance, which will be affected by a range of economic, competitive and business factors, many of which will be outside of Innventure’s control. Innventure cannot assure you that the cash flow and future earnings of the Innventure Companies will be adequate for the Innventure Companies to service any corporate obligations or operating needs.
If the Innventure Companies do not generate sufficient cash flow from future operations to satisfy corporate obligations and operating needs or if Innventure is unable to access the cash of its Innventure Companies through distributions, dividend payments or loans, Innventure may have to: undertake alternative financing plans (such as refinancing), restructure debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. Innventure cannot assure you that any such alternative refinancing would be possible, that any assets could be sold, or, if sold, of the timing of the sales and the amount of proceeds realized from those sales, that additional financing could be obtained on acceptable terms, if at all, or that additional financing would be permitted under the terms of Innventure’s various debt instruments then in effect. Innventure’s inability to generate and access sufficient cash flow from the Innventure Companies to satisfy its obligations, or to refinance its obligations on commercially reasonable terms, would have an adverse effect on its business, financial condition and results of operations. Furthermore, Innventure and the Innventure Companies may incur substantial additional indebtedness in the future that may severely restrict or prohibit the Innventure Companies from making distributions, paying dividends or making loans to Innventure.
Innventure may not be successful in finding future opportunities to license or acquire breakthrough technology solutions, and any failure to satisfy the requirements of or maintain relationships with its technology providers could materially adversely affect its business.
Innventure relies on its ability to identify and acquire breakthrough technology solutions from Technology Solutions Providers to create and operate new entities that generate future revenues. If Innventure is unable to reach
agreements with Technology Solutions Providers on acceptable terms for license or acquisition of IP related to certain technology solutions, Innventure may have to curtail the founding and operating of Innventure Companies. If Innventure fails to identify and acquire further technology solutions to form the basis of new Innventure Companies or does not have sufficient funds or expertise to undertake the necessary development and commercialization activities required to make those companies and the acquired technology solutions commercially viable, Innventure’s business, financial condition, results of operations and prospects may be materially and adversely affected.
Under the terms of Innventure and the Innventure Companies’ agreements with P&G, Nokia, and VTT, and any agreements they may enter with future technology providers, they may be required to obtain or provide certain permits, licenses or other authorizations, provide certain fiscal indemnification to their technology providers and meet various other terms and conditions. If Innventure and the Innventure Companies fail to comply with the terms and conditions of the applicable MNC agreement, they may loseexclusivity or other rights or incur liabilities to their technology providers under the applicable MNC agreement. In that situation, the damages Innventure and the Innventure Companies would be subject to would be quantified either by the applicable courts or by third-party valuation firms. If one or more of these MNC agreements is terminated, Innventure’s ability to license other technologies from existing or future technology providers could be impeded and the underlying value of Innventure’s business could decline significantly.
Our growth strategy depends on our ability to scale our Innventure Companies effectively, and we may be unable to do so successfully.
Our long-term growth strategy contemplates expanding the operations and market share of our Innventure Companies. Successfully scaling multiple operating businesses simultaneously presents operational, managerial and financial challenges. We may not have sufficient resources, expertise or management bandwidth to support these expansion efforts effectively.
As our Innventure Companies grow, they may encounter issues such as long sales cycles, product development delays, capacity constraints, supply chain limitations, increased competition, pricing pressures, customer concentration risks and operational inefficiencies. They may also face difficulties recruiting, training and retaining qualified personnel necessary to support expansion, particularly in competitive labor markets.
In addition, scaling our businesses may require significant capital expenditures or working capital investments, and we or our Innventure Companies may not be able to obtain financing on acceptable terms or at all. Our Innventure Companies are not currently profitable, and even if they succeed in increasing adoption of their products and services, market conditions—particularly related to supply and customer acquisition costs, including costs associated with tariffs—may prevent them from achieving or sustaining profitability. If demand does not increase as quickly as planned or costs increase more rapidly than expected, our cash flows could be adversely affected, and we may be required to make additional investments in the Innventure Companies that could adversely impact our own operations and growth plans. Integration of new facilities, systems or processes may also result in temporary disruptions to operations, reduced productivity or service delays.
If we are unable to scale our Innventure Companies in a disciplined and cost-effective manner, our growth prospects, competitive position, results of operations and financial condition could be materially adversely affected.
The WTI Facility may impair Innventure LLC’s, the Company’s and the Innventure Companies’ financial and operating flexibility.
The WTI Facility imposes various representations, warranties, covenants and events of default on Innventure LLC, the Company and the Innventure Companies, including, without limitation, on their ability to incur indebtedness, grant liens, transfer assets, make investments, make dividends and other distributions and make certain payments of other indebtedness. Obligations under the WTI Facility are secured by a lien on substantially all of the assets of Innventure LLC and the Company. These restrictions could limit Innventure LLC’s, the Company’s and the Innventure Companies’ financial and operational flexibility and may require Innventure LLC, the Company and the Innventure Companies to seek consents from the WTI Lenders prior to taking certain actions. Such consents may not be provided by the WTI Lenders on a timely basis, or at all.
The restrictions imposed by the WTI Facility on Innventure LLC, the Company and the Innventure Companies may make it more difficult for them to operate their businesses or implement their growth plans going forward. Even if deemed necessary, we may not be able to raise additional indebtedness in the future on terms acceptable to us or at all because of the restrictions imposed by the WTI Facility. As a result, we would be more vulnerable to general adverse economic, industry and capital markets conditions in addition to the risks associated with indebtedness described above.
It is not possible to predict the extent to which Innventure will, intends to, or may rely on Yorkville and the SEPA as a source of funding or the actual number of shares Innventure will sell or gross proceeds resulting from those sales.
Subject to the terms and conditions of the SEPA, Innventure may, at its discretion, issue and sell to Yorkville up to $75.0 million of shares of Common Stock from time to time. As of March 23, 2026, Innventure has drawn $2.67 million under the SEPA. The purchase price per share will fluctuate based on the market prices of Common Stock during the sales period, and Innventure has the discretion to deliver notices to Yorkville at any time throughout the term of the SEPA, subject to certain conditions and limitations in the SEPA and compliance with applicable law. Accordingly, it is not currently possible to predict the number of shares that will be issued and sold to Yorkville, the actual purchase price per share to be paid by Yorkville for those shares or the actual gross proceeds to be raised in connection with those sales. Actual gross proceeds may be less than $75.0 million, which may impact Innventure’s future liquidity.
Moreover, although the SEPA provides that Innventure may sell up to an aggregate of $75.0 million of its Common Stock to Yorkville, Innventure registered the resale by Yorkville of up to 16,244,741 shares of Common Stock that may be issued subject to certain ownership limitations set forth in the SEPA. If Innventure elects to issue and sell to Yorkville all of the shares registered for resale, depending on the market prices of its Common Stock for each purchase made pursuant to the SEPA, the actual gross proceeds from the sale of those shares may be substantially less than the remaining approximately $66.6 million total commitment available under the SEPA. If (i) it becomes necessary for Innventure to issue and sell to Yorkville more shares than the shares registered for resale in order to receive aggregate gross proceeds equal to the remaining approximately $66.6 million under the SEPA and (ii) if Innventure is able to sell more shares than the shares registered for resale by Yorkville while still complying with the ownership limitations set forth in the SEPA, then Innventure will need to file with the SEC one or more additional registration statements to register under the Securities Act of 1933, as amended (the “Securities Act”) the resale by Yorkville of any such additional shares of Common Stock, and such registration statements would need to be declared effective by the SEC, in each case before Innventure may elect to sell any additional shares to Yorkville under the SEPA, a process which will take time and incur additional expense. Any issuance and sale by Innventure under the SEPA of a substantial amount of shares of Common Stock in addition to the shares already registered for resale by Yorkville could cause additional substantial dilution to Innventure’s stockholders. The number of shares of Common Stock ultimately offered for resale by Yorkville is dependent upon the number of shares, if any, Innventure ultimately sells to Yorkville under the SEPA.
The extent to which Innventure will rely on Yorkville as a source of funding will depend on a number of factors, including the prevailing market price of Common Stock and the extent to which Innventure is able to secure working and other capital from other sources. If obtaining sufficient funding from Yorkville were to prove unavailable or prohibitively dilutive, Innventure may need to secure additional sources of funding beyond its current expectations in order to satisfy its working and other capital needs. Even if Innventure were to sell to Yorkville all of the shares of Common Stock available for sale under the SEPA, Innventure may still need additional capital to fully implement its business, operating and development plans. Should the financing Innventure requires to sustain its working capital needs be unavailable or prohibitively expensive when Innventure requires it, the consequences may be a material adverse effect on Innventure’s business, operating results, financial condition and prospects.
It is not possible to predict the actual number of shares Innventure will sell under the SEPA to Yorkville, or the actual gross proceeds resulting from those sales.
Subject to certain conditions and limitations in the SEPA and compliance with applicable law, Innventure has the discretion to deliver notices to Yorkville at any time throughout the term of the SEPA. The actual number of shares of Common Stock that are issued and sold to Yorkville depends on a number of factors, including the market price of Common Stock during the sales period. Actual gross proceeds may be less than $75.0 million, which may impact Innventure’s future liquidity. Because the price per share of each share sold to Yorkville will fluctuate during
the sales period, it is not currently possible to predict the number of shares that will be sold or the actual gross proceeds to be raised in connection with those sales.
As of March 23, 2026, Innventure has drawn $8.4 million under the SEPA. Moreover, although the SEPA provides that Innventure may sell up to an aggregate of $75.0 million of its Common Stock to Yorkville, Innventure registered the resale by Yorkville of up to 17,242,314 shares of Common Stock that may be issued without exceeding the 9.99% prong of the exchange cap set forth in the SEPA. If Innventure elects to issue and sell to Yorkville all of the shares registered for resale to Yorkville, depending on the market prices of its Common Stock for each purchase made pursuant to the SEPA, the actual gross proceeds from the sale of the shares may be substantially less than the $75.0 million total commitment available to Innventure under the SEPA. If it becomes (i) necessary for Innventure to issue and sell to Yorkville under the SEPA more shares than the shares registered for resale by Yorkville in order to receive the aggregate gross proceeds equal to $75.0 million under the SEPA and (ii) if Innventure is able to sell more shares than the shares registered for resale by Yorkville while still complying with the exchange cap, then Innventure will need to file with the SEC one or more additional registration statements to register under the Securities Act of 1933, as amended (the “Securities Act”) the resale by Yorkville of any such additional shares of Common Stock over the shares registered for resale by Yorkville and such registration statements would need to be declared effective by the SEC, in each case before Innventure may elect to sell any additional shares of Common Stock to Yorkville under the SEPA, a process which will take time and incur additional expense.
Any issuance and sale by Innventure under the SEPA of a substantial amount of shares of Common Stock in addition to the shares already registered for resale by Yorkville could cause additional substantial dilution to Innventure’s stockholders. The number of shares of Common Stock ultimately offered for resale by Yorkville is dependent upon the number of shares of Common Stock, if any, Innventure ultimately sells to Yorkville under the SEPA.
Innventure’s success will depend on its ability to attract and retain personnel and manage human capital both for itself and the Innventure Companies, while controlling labor costs.
Innventure’s future success depends on its ability to attract, recruit, train, retain, motivate and integrate key personnel for itself and the Innventure Companies, including its management team, key executives, and other key talent, and the management team and key R&D, manufacturing, engineering and sales and marketing personnel for the Innventure Companies. Competition for qualified personnel is intense. The loss or incapacity of existing members of Innventure’s executive management team could adversely affect its operations if it experiences difficulties in hiring qualified successors.
Innventure believes that its future viability and the future viability of the Innventure Companies will depend largely on their ability to attract and retain highly skilled managerial, sales, scientific and technical personnel. In order to do so, in the future it may need to pay higher compensation or fees to its employees or consultants than currently expected, and such higher compensation payments may have a negative effect on its operating results.
Innventure’s pursuit of new Innventure Companies and acquisitions of new technologies could disrupt its ongoing business, present risks not originally contemplated and materially adversely affect its business, reputation, results of operations and financial condition.
Innventure’s growth strategy involves creating new Innventure Companies and acquiring new technologies. These new companies or future technology acquisitions could disrupt Innventure’s ongoing businesses, which may frustrate Innventure’s MNC partners, the existing Innventure Companies, and their customers, harming Innventure’s business relationships and causing a loss of revenue and business opportunities. Innventure’s ability to effectively manage the creation of new Innventure Companies and the resulting technology acquisitions and expansions of operations will also require it to enhance its operational, financial and management controls and infrastructure, human resources policies and reporting systems. These enhancements and improvements will require significant capital expenditures, investments in additional headcount and other operating expenditures and allocation of valuable management and employee resources, which may divert Innventure’s resources from its ongoing businesses. Innventure’s future financial performance and ability to execute on its business plan will depend, in part, on its ability to effectively manage any future Innventure Companies and technology acquisitions. There are no guarantees Innventure will be able to do so in an efficient or timely manner, or at all.
Risks Related to the Innventure Companies’ Operations
The Innventure Companies are early-stage companies, and their limited operating history makes it difficult to evaluate their future prospects and the risks and challenges they may encounter.
The Innventure Companies are in the process of commercializing the technology solutions around which they are built, and their product offerings and partnering revenues are limited and remain in very early stages. Their limited operating history makes it difficult to evaluate the Innventure Companies’ future prospects and the risks and challenges they may encounter. Risks and challenges the Innventure Companies have faced or expect to face include, but are not limited to, their ability to:
• develop and commercialize their products and processes;
• design and deliver products and processes of acceptable performance that function as anticipated;
• generate material revenue sufficient to achieve and sustain profitability, accurately forecast revenue and effectively manage expenses;
• attract new customers and commercial relationships;
• compete successfully in the industry in which they operate;
• plan for and manage capital expenditures for their current and future products and manage their supply chain and supplier relationships related to their current and future products;
• scale quickly enough due to capital and other resource constraints;
• find, contract with, and retain reliable and commercially reasonable materials, components, manufacturers and inventory vendors;
• comply with existing and new or modified laws and regulations applicable to their business in and outside the United States, including compliance requirements of U.S. customs and export regulations;
• anticipate and respond to macroeconomic changes and changes in the markets in which they operate;
• anticipate and respond to regulatory and/or environmental policies that impact the Innventure Companies’ plant operations;
• maintain and enhance the value of their reputation and brand;
• develop and protect IP;
• hire, integrate and retain talented people at all levels of their organizations;
• successfullydefend themselves in any legal proceeding that may arise and enforce their rights in any legal proceedings they may initiate; and
• manage and mitigate the adverse effects on their business of any public health emergencies, natural disasters, widespread travel disruptions, security risks including IT security, data privacy, cyber risks, international conflicts, geopolitical tension and other events beyond their control.
If the Innventure Companies fail to address the risks and difficulties that they face, including those associated with the challenges listed above, their business, financial condition, results of operations, prospects and that of Innventure, could be adversely affected. Further, because the Innventure Companies have limited historical financial data and operate in a rapidly evolving and highly competitive market, any predictions about their future revenue and expenses may not be as accurate as they would be if the Innventure Companies had a longer operating history or operated in a more predictable market. The Innventure Companies have encountered in the past, and will encounter in the future, risks and uncertainties frequently experienced by growing companies with limited operating histories
in rapidly changing industries. If the Innventure Companies’ assumptions regarding these risks and uncertainties, which they use to plan and operate their business, are incorrect or change, or if they do not address these risks successfully, their results of operations could differ materially from their expectations and their business, financial condition, results of operations and prospects could be adversely affected.
Failure of our Innventure Companies to achieve and maintain a high level of product and service quality and on-time delivery could damage their reputations with customers and negatively impact our results.
Product and service quality issues could harm customer confidence in our Innventure Companies and their brands. If certain of our Innventure Company’s product and service offerings do not meet applicable safety standards or their customers’ expectations regarding quality, safety or performance, they could experience lost sales and increased costs, and we could be exposed to legal, financial and reputational risks.
Our Innventure Companies cannot be certain that their quality controls and procedures will reveal defects in their products, which may not become apparent until after the products have been placed in use in the market. Accordingly, there is a risk that products will have defects, which could result in loss of sales or delays in market acceptance and require a product recall or field corrective action. Such remedial actions could be expensive to implement and may damage our Innventure Companies’ reputations, customer relationships and market shares.
If our Innventure Companies’ products fail to perform as expected, they could be exposed to liabilities such as warranty, product liability, personal injury and other claims. There can be no assurance that our Innventure Companies will not experience any material warranty or product liability claims in the future, that they will not incur significant costs to defend such claims or that they will have adequate resources to cover any recall, repair and replacement costs.
Accelsius’ cooling products may be subject to increased regulatory scrutiny due to their use of working fluid refrigerants that contain fluorine.
The market and/or regulatory agencies inside and outside the United States may elect to curtail the use of polyfluoroalkyl substances, including hydrofluoroolefins and hydrochlorofluoroolefins, due to their persistence in the environment, their global warming potential, or their ozone depletion potential. While Accelsius believes it follows industry best practices in respect of its use of these commonly available refrigerants as working fluids in Accelsius’ cooling products, unforeseen regulatory changes that limit availability or manufacturing capacity or increase material prices would adversely affect Accelsius business.
Accelsius may need to rely on third-party manufacturers to fulfill significant customer orders that it may book in the future, which could adversely affect its margins, quality control, and ability to meet delivery timelines.
Because Accelsius’ existing manufacturing capacity is limited, it plans to rely on relationships with one or more third party manufacturers as it scales its operations. Reliance on third-party manufacturers could subject Accelsius to a number of risks, including reduced control over production processes, quality assurance, regulatory compliance, intellectual property protection, and delivery schedules. Third-party manufacturers may experience capacity constraints, labor shortages, supply chain disruptions, financial instability, or operational failures that could delay production or increase costs. Any inability to timely fulfill customer orders, maintain product quality standards, or manage costs effectively could result in customer dissatisfaction, order cancellations, reputational harm, loss of future business, or potential claimsagainst us. If Accelsius is unable to successfully scale its manufacturing capabilities through third parties when needed, our growth prospects, operating results, and financial condition could be materially adversely affected.
Accelsius’ results of operations may be adversely affected by long and unpredictable deployment cycles in the data center market, which could delay or reduce the conversion of bookings into revenue.
Accelsius provides products that are incorporated into the design, construction and expansion of data centers. The development of new data centers and the retrofitting or expansion of existing facilities are highly complex, capital-intensive and multi-phase projects that typically involve extensive planning, engineering, permitting, procurement and construction processes. As a result, there could be significant delays between the time Accelsius
receives bookings or enters into customer agreements and the time its products are delivered, installed, accepted and recognized as revenue.
Accelsius’ customers’ data center projects are subject to numerous risks and uncertainties beyond its control and large data center customers frequently adjust project timelines, reduce or reallocate capital expenditures, or pause or cancel projects altogether in response to changes in business priorities, market conditions or technological developments. Any such delays, modifications or cancellations may postpone, reduce or eliminate anticipated revenue associated with existing bookings.
Because Accelsius may incur significant manufacturing, procurement or operating expenses in advance of revenue recognition, extended deployment cycles can adversely affect its working capital requirements, cash flows and operating margins. Moreover, its backlog or bookings may not be indicative of future revenue or financial performance if projects are delayed or cancelled. If Accelsius is unable to accurately forecast the timing of customer deployments or effectively manage its cost structure in light of these long and uncertain cycles, our results of operations and financial condition could be materially adversely affected.
Accelsius may not realize all of the sales expected from its backlog of orders and contracts.
Accelsius may enter into purchase orders or contracts for orders that provide customers the right, in some circumstances, to terminate, reduce or defer orders. If customers terminate, reduce or defer orders, the revenue Accelsius expects to generate from its backlog may not be fully realized.
Accelsius’ purchase orders to date have been received from a limited number of customers, and this customer concentration could materially adversely affect our business.
Accelsius is an early-stage company and has not yet generated significant revenue. To date, substantially all of its purchase orders have been received from a limited number of customers. Until Accelsius is able to broaden its customer base and generate meaningful recurring revenue, its business will remain particularly vulnerable to risks associated with customer concentration, and our results of operations and financial condition could be materially adversely affected.
If Accelsius is unable to develop and commercialize next-generation cooling solutions capable of addressing increasing chip power densities and thermal loads, our business and competitive position could be materially adversely affected.
The processors deployed in modern data centers are becoming increasingly powerful and thermally dense, driven in part by advances in artificial intelligence, high-performance computing and other compute-intensive applications. As chip architectures evolve, power consumption per rack and per chip continues to increase, and thermal design requirements are becoming more complex. Accelsius’ future growth depends on our ability to anticipate these technology trends and to design, test and commercialize cooling solutions that can effectively manage higher heat flux, tighter temperature tolerances and changing form factors.
Developing advanced cooling technologies requires significant research and development investment, specialized engineering expertise and close coordination with semiconductor manufacturers, original equipment manufacturers and data center operators. There can be no assurance that Accelsius’ current or future products will be capable of meeting emerging performance requirements, reliability standards, energy efficiency targets or total cost of ownership expectations.
If Accelsius is unable to innovate at a pace consistent with advances in chip performance, or if its solutions fail to achieve market acceptance due to performance limitations, cost considerations or operational complexity, customers may adopt alternative cooling technologies offered by competitors or developed in-house. Any failure to develop and commercialize effective next-generation cooling products on a timely basis could result in loss of market share, reduced revenue growth and a material adverse effect on our business, results of operations and financial condition.
The market, including customers and potential investors, may be skeptical of the viability and benefits of Accelsius’ and Refinity’s products and processes because they are based on relatively novel and complex technology.
The market, including customers and potential investors, may be skeptical of the viability and benefits of Accelsius’ and Refinity’s products and processes because they are based on relatively novel and complex technology. There can be no assurance that Accelsius’ and Refinity’s products and processes will be understood, approved, or accepted by customers and potential investors or that Accelsius or Refinity will be able to sell its products profitably at competitive prices and with features sufficient to establish demand or to design and build a plastic waste to drop-in chemicals plant on budget or profitably operate such a plant, respectively. If Accelsius and Refinity are unable to convince these potential customers of the utility and value of their products and processes or that their solutions are superior to those they currently use, they will not be successful in entering those markets and their business and results of operations will be adversely affected. If potential investors are skeptical of the success of Accelsius’ and Refinity’s products and processes, their ability to raise capital and the value of Innventure stock may be adversely affected.
The failure of Accelsius and AFX to access necessary raw materials or other components in a timely manner and to specification or their inability to maintain relationships with suppliers and manufacturing partners could prevent them from delivering products within required time frames and could cause production delays, cancellations, penalty payments and damage to their brands and reputations.
If Accelsius’ suppliers provide insufficient inventory to meet customer demand or such inventory is not at the level of quality required to meet its standards, Accelsius’ results of operations could be materially and negatively impacted. If Accelsius fails to develop or maintain its relationships with suppliers, or if there is otherwise a shortage or lack of availability of any required raw materials or components, Accelsius may be unable to manufacture its products or those products may be available only at a higher cost or after a long delay. Accelsius’ inability to maintain relationships with manufacturing partners could further compound these risks. Significant delays and shortages could prevent Accelsius from delivering its products to its customers within required time frames and cause order cancellations, which would adversely impact its cash flows and results of operations.
AFX faces similar supply chain risks and is early in the development of its commercial production capacity and has not yet fully diversified suppliers for critical raw materials, specifically its film. Thus far, AFX has qualified one incumbent raw material film supplier—a large, foreign third-party supplier with over 22,000 employees and operations in approximately 100 countries—and is working to finalize a raw materials agreement with the same. Currently, AFX relies on individual purchase orders to purchase the film produced by the supplier. AFX is in the process of qualifying two additional raw material film suppliers, both similarly large foreign third-party suppliers with large global footprints. AFX intends to continue to work towards further diversifying its supplier base as product demand grows and multiple suppliers are needed to support business continuity, though there is no guaranty that such diversification will be successful. Because AFX currently has no alternative sources of supply, any failure by its suppliers to provide sufficient inventory at required quality standards could materially and negatively impact AFX’s results of operations.
Due to increased demand across a range of industries, the global supply chain for certain raw materials and components has experienced significant strain. The global macroeconomic environment and geopolitical instability, such as the instability and hostilities in the Middle East, including the conflict with Iran, as well as the impact of tariffs, have also contributed to and exacerbated this strain. There can be no assurance that the impact of these issues on the supply chain will not continue, or worsen, in the future. Significant delays and shortages could prevent AFX from delivering its products to its customers within required time frames and cause order cancellations, which would adversely impact its cash flows and results of operations.
AFX may not be able to meet applicable regulatory requirements for the use of AFX’s products in food grade applications, and, even if the requirements are met, complying on an ongoing basis with the numerous regulatory requirements applicable to AFX’s products and AFX’s facilities will be time-consuming and costly.
The use of AFX’s products in food grade applications is subject to regulation by the U.S. Food and Drug Administration (“FDA”). The FDA has established certain guidelines for the use of recycled plastics in food packaging, as set forth in the “ Guidance for Industry - Use of Recycled Plastics in Food Packaging: Chemistry
Considerations (August 2006) .” In order for AFX’s products to be used in food grade applications, AFX will be required to partner with customers or third-party co-manufacturers that possess the required food certifications to do the filling of AFX’s package.
The process of obtaining FDA regulatory approval requires the expenditure of substantial time, of up to one year, and significant financial resources. If AFX decides to partner with qualified customers or third-party co-manufacturers to fill AFX’s package, the search for and negotiations required for such relationships would require significant time, effort, and financial resources to complete, and may not result in a successful production relationship. All of the above would have an adverse effect on AFX’s business, financial condition, results of operations and prospects.
Furthermore, changes in regulatory requirements, laws and policies, or evolving interpretations of existing regulatory requirements, laws and policies, may result in increased compliance costs, delays, capital expenditures and other financial obligations that could adversely affect AFX’s business, financial condition, results of operations and prospects.
AFX expects to encounter regulations in most if not all of the countries in which AFX may seek to expand, and AFX cannot be sure that it will be able to obtain necessary approvals in a timely manner or at all. If AFX’s products do not meet applicable regulatory requirements in a particular country or at all, then AFX may face reduced market demand in those countries and AFX’s business, financial condition, results of operations and prospects will be adversely affected.
The various regulatory schemes applicable to AFX’s products will continue to apply following initial approval. Monitoring regulatory changes and our ongoing compliance with applicable requirements is time-consuming and may affect AFX’s business, financial condition, results of operation and prospects. If AFX fails to comply with such requirements on an ongoing basis, AFX may be subject to fines or other penalties, or may be prevented from selling its products, and AFX’s business, financial condition, results of operation and prospects may be harmed.
Refinity faces risks in designing, constructing and operating its first commercial-scale manufacturing facility, and it may be unable to successfully or timely complete and bring the facility online.
Refinity intends to design, construct and operate its first commercial-scale manufacturing facility to produce products based on its novel technology. The development of a unique manufacturing facility involves substantial technical, operational, financial and regulatory risks. Refinity has limited experience constructing and operating a facility of this scale and complexity, and its product has not previously been manufactured at commercial volumes. As a result, Refinity may encounter unanticipated design, engineering, construction, commissioning and scale-up challenges.
The construction and launch of the facility will require significant capital expenditures and management attention. Refinity may experience delays due to permitting requirements, zoning approvals, environmental and safety reviews, supply chain disruptions, contractor performance issues, labor shortages, equipment procurement delays, adverse weather conditions, or other factors beyond Refinity’s control. Any delays in completing construction or commencing commercial production could postpone anticipated revenues, increase costs, and adversely affect our liquidity and financial condition.
In addition, scaling Refinity’s technology from pilot production to full commercial manufacturing may reveal inefficiencies, yield losses, quality control issues, equipment failures, or other operational challenges that were not apparent at smaller scales. Refinity may be required to modify its processes, incur additional capital expenditures, or suspend operations to address such issues. There can be no assurance that Refinity will achieve expected production volumes, cost efficiencies, product performance standards or gross margins.
If Refinity is unable to successfully finance, construct, scale and operate this manufacturing facility on a timely and cost-effective basis, its growth strategy, competitive position, results of operations and financial condition could be materially adversely affected.
Risks Related to Our Common Stock
The market price of our Common Stock is likely to be highly volatile, and you may lose some or all of your investment.
The market price of our Common Stock may fluctuate significantly due to a number of factors, some of which may be beyond our control, including those factors discussed in this “ Risk Factors ” section and many others, such as:
• dilution resulting from the sales of the Common Stock or preferred stock by Innventure;
• actual or anticipated fluctuations in Innventure’s financial condition and operating results, including fluctuations in its quarterly and annual results;
• changes in laws and regulations affecting Innventure’s business;
• the public’s reaction to Innventure’s press releases, its other public announcements and its filings with the SEC;
• Innventure’s failure to meet the estimates and projections of the investment community or that it may otherwise provide to the public;
• overall performance of the equity markets;
• trading volume of the Common Stock;
• significant lawsuits, including shareholder litigation;
• failure to comply with the requirements of the Nasdaq Global Market (“Nasdaq”);
• general economic, industry and market conditions other events or factors, many of which are beyond Innventure’s control; and
• changes in accounting standards, policies, guidelines, interpretations or principles.
Volatility in Innventure’s share price could subject Innventure to securities class action litigation.
In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. If Innventure faces such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm its business.
Future offerings of debt or offerings or issuances of equity securities by Innventure may adversely affect the market price of the Common Stock or otherwise dilute all other stockholders and may result in the issuance of securities with rights that are senior to those of the holders of Common Stock.
Innventure expects to raise additional capital in the future. Innventure may attempt to obtain financing or to further increase Innventure’s capital resources by issuing additional shares of Common Stock or offering debt or other equity securities, including commercial paper, medium-term notes, senior or subordinated notes, debt securities convertible into equity or shares of preferred stock. Innventure also expects to grant new equity awards to employees, directors, and consultants under Innventure’s stock incentive plans. Future acquisitions could require substantial additional capital in excess of cash from operations. Innventure would expect to obtain the capital required for acquisitions through a combination of additional issuances of equity, corporate indebtedness and/or cash from operations.
Issuing additional shares of Common Stock or other equity securities or securities convertible into equity may dilute the economic and voting rights of Innventure’s existing stockholders or reduce the market price of the Common Stock or both. Upon liquidation, holders of such debt securities, preferred shares, and lenders with respect to other borrowings would receive a distribution of Innventure’s available assets prior to the holders of Common
Stock. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred shares, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit Innventure’s ability to pay dividends to the holders of Common Stock. Innventure’s decision to issue securities in any future offering will depend on market conditions and other factors beyond Innventure’s control, which may adversely affect the amount, timing and nature of Innventure’s future offerings.
Additional financing transactions by the Innventure Companies could impact your rights as a stockholder of Innventure.
Innventure and the Innventure Companies expect to require additional financing to fund their operations or growth. These additional financing transactions could include transactions at the Innventure Company level, such as Innventure’s sale of Innventure Company equity, or the Innventure Companies’ issuance of new equity. The issuance of new equity securities to third-party investors at the Innventure Company level or the sale of a portion of Innventure Company equity held by Innventure would reduce Innventure’s ownership interest in that Innventure Company. Furthermore, the holders of those equity securities could have structural priority as compared to Common Stock with respect to that Innventure Companies’ assets and could also have priority as to liquidation and dividend and other rights more favorable than Common Stock with respect to that Innventure Company. This priority, or any reduction in Innventure’s ownership interest in any Innventure Companies, may reduce the value of Common Stock and could impact the Company’s ability to refrain from being deemed an investment company under the Investment Company Act .
Stockholder activism or unsolicited acquisition proposals could disrupt our business, divert management’s attention and impede our ability to execute our business model and achieve our long-term strategic objectives.
We have, and may from time to time become, subject to stockholder activism, unsolicited acquisition proposals or other attempts to effect changes in our strategic direction, capital allocation priorities, governance structure, management or board composition. Responding to such actions can be costly and time-consuming and may significantly divert the attention and resources of our Board and management from the execution of our business model and long-term strategic initiatives.
Stockholder activism campaigns or unsolicited bids may create uncertainty among our employees, customers, suppliers and other business partners. This uncertainty could adversely affect our ability to retain and recruit key personnel, maintain commercial relationships (including with MNCs and Technology Solutions Providers), negotiate contracts, pursue strategic transactions or execute operational initiatives. Public disputes with activist investors or bidders may also result in reputational harm and increased market volatility in our stock price.
In addition, addressing activist demands or evaluating unsolicited acquisition proposals may require us to incur substantial advisory, legal and other expenses, including proxy solicitation and public relations costs. If a proxy contest or other contested matter arises, we may experience further distraction and expense. Even if unsuccessful, such actions may lead to changes in strategy or governance that are not aligned with our long-term business plan.
If an unsolicited acquisition proposal were to result in a transaction, we may not realize the long-term value of our strategic plan as a standalone company. Alternatively, the perception that we are “in play” may cause stock price volatility and could impair our ability to access capital markets or enter into long-term commercial arrangements. Any of these factors could materially adversely affect our ability to execute our business model, achieve our long-term goals and deliver value to our stockholders.
The market may not fully understand or accept our conglomerate structure and the value of our Innventure Companies, which could cause our common stock to trade at a discount to our net asset value.
We operate as a diversified conglomerate that operates a group of operating businesses across multiple industries. Investors may have difficulty independently assessing the underlying value of our Innventure Companies and our enterprise as a whole. Investors may apply a “conglomerate discount” to our stock price due to perceived complexity of our model, valuation uncertainty, limited liquidity at the subsidiary level, or concerns regarding realization of value.
If the market does not fully understand or accept our business model or capital allocation strategy, our common stock may trade at a sustained or significant discount. A sustained discount could impair our ability to raise equity capital on attractive terms, limit our strategic flexibility, reduce the effectiveness of our equity as acquisition currency and increase pressure from stockholders to pursue strategic alternatives transactions such as spin-offs, asset sales, restructurings, or a sale of the company. Such actions, if undertaken, may divert management’s attention, increase costs and may not be aligned with our long-term strategic objectives.
There can be no assurance that our efforts to demonstrate the intrinsic value of our Innventure Companies will be successful. If our common stock continues to trade at a material discount, our ability to execute our long-term strategy and maximize stockholder value could be materially adversely affected.
Provisions in the A&R Certificate of Incorporation and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management.
The A&R Certificate of Incorporation and our By-laws (as amended and restated, the “Bylaws”) contain provisions that could significantly reduce the value of the Common Stock to a potential acquirer or delay or prevent changes in control or changes in our management without the consent of the Board. The provisions in Innventure’s charter documents include the following:
• a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of the Board;
• no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
• the exclusive right of the Board, unless the Board grants such a right to the holders of any series of preferred stock, to elect a director to fill a vacancy created by the expansion of the Board or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board;
• the prohibition on removal of directors without cause;
• the ability of the Board to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
• the ability of the Board to alter the Bylaws without obtaining stockholder approval;
• the required approval of at least 2/3 of the shares entitled to vote to amend or repeal the Bylaws or amend, alter or repeal certain provisions of the A&R Certificate of Incorporation;
• a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of Innventure’s stockholders;
• an exclusive forum provision providing that the Court of Chancery of the State of Delaware (the “Delaware Court”) will be the exclusive forum for certain actions and proceedings;
• the requirement that a special meeting of stockholders may be called only by the Board, Innventure’s chief executive officer, or the chairman of the Board, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
• advance notice procedures that stockholders must comply with in order to nominate candidates to the Board or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of Innventure; and
• Innventure is subject to the anti-takeover provisions contained in Section 203 of the Delaware General Corporation Law, which will prevent Innventure from engaging in a business combination with any holder
of 15% or more of its capital stock unless the holder has held the stock for three years or, among other exceptions, the Board has approved the transaction.
If Innventure’s estimates or judgments relating to its critical accounting estimates prove to be incorrect or financial reporting standards or interpretations change, Innventure’s results of operations could be adversely affected.
The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Innventure will base its estimates on historical experience, known trends and events, and various other factors that it believes to be reasonable under the circumstances, as provided in the section entitled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates .” The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Significant assumptions and estimates may be used in preparing Innventure’s financial statements. Innventure’s results of operations may be adversely affected if its assumptions change or if actual circumstances differ from those in its assumptions, which could cause its results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of its Common Stock.
Additionally, Innventure will regularly monitor its compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to it. As a result of new standards, changes to existing standards and changes in their interpretation, Innventure might be required to change its accounting policies, alter its operational policies, and implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or Innventure may be required to restate its published financial statements. Such changes to existing standards or changes in their interpretation may have an adverse effect on its reputation, business, financial position, and profit.
The exclusive forum provision in the A&R Certificate of Incorporation could limit Innventure’s stockholders’ ability to choose their preferred judicial forum for disputes with Innventure or its directors, officers, or employees.
The A&R Certificate of Incorporation provides that, unless Innventure consents in writing to the selection of an alternative forum, the sole and exclusive forum for specified legal actions is the Delaware Court. Current and former stockholders are deemed to have consented to the personal jurisdiction of the Delaware Court in connection with any action to enforce that exclusive forum provision and to service of process in any such action. The exclusive forum provision of the A&R Certificate of Incorporation does not apply to actions arising under federal securities laws including suits brought to enforce any liability or duty created by the Securities Act, the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. To the extent that this provision of the A&R Certificate of Incorporation limits a current or former stockholder’s ability to select a judicial forum other than the Delaware Court, it might discourage the specified legal actions, might cause current or former stockholders to incur additional litigation-related expenses, and might result in outcomes unfavorable to current or former stockholders. A court might determine that this provision of the A&R Certificate of Incorporation is inapplicable or unenforceable in any particular action, in which case we may incur additional litigation related expenses in such action, and the action may result in outcomes unfavorable to us, which could have a materially adverse impact on Innventure’s reputation, its business operations, and its financial position or results of operations.
If Innventure is deemed to be an investment company under the Investment Company Act, it may be required to institute burdensome compliance requirements and its activities may be restricted, which may make it difficult to operate or to execute its growth plans.
If Innventure is deemed to be an investment company under the Investment Company Act, it will be subject to additional regulatory requirements and its activities may be restricted, including:
• restrictions on the nature of its investments;
• limitations on its ability to borrow;
• prohibitions on transactions with affiliates; and
• restrictions on the issuance of securities.
Each of these may make it difficult for Innventure to run its business. In addition, the law may impose upon Innventure burdensome requirements, including:
• registration as an investment company and subsequent regulation as an investment company;
• adoption of a specific form of corporate structure; and
• reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
Innventure intends to conduct its operations so that it is not required to register as an investment company under the Investment Company Act. Section 3(a)(1)(A) of the Investment Company Act defines an “investment company” as any issuer that is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities. Section 3(a)(1)(C) of the Investment Company Act defines an investment company as any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. Government securities and cash items) on an unconsolidated basis. Excluded from the term “investment securities,” among other things, are U.S. Government securities and securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on the exemption from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act. For purposes of the Investment Act, Innventure’s majority-owned subsidiaries include those in which Innventure directly or indirectly owns 50% or more of the outstanding voting securities.
Furthermore, if Innventure were to operate its Innventure Companies primarily for the purpose of making a profit in the sale of its Innventure Companies’ securities rather than retaining control of such companies, it may increase the likelihood that Innventure could be deemed an investment company.
Though Innventure does not expect exit transactions to be a factor in the business plans for its Innventure Companies and does not believe that its principal activities will subject it to the Investment Company Act, if Innventure were deemed to be subject to the Investment Company Act, compliance with the additional regulatory burdens discussed above would require additional expense and attention from management for which Innventure has not accounted.
The determination as to whether certain Innventure assets are viewed as securities (i.e., by falling within the definition of an “investment contract”) is made by Innventure and if the SEC were to disagree with Innventure’s determination, Innventure could be deemed to be an investment company under the Investment Company Act.
Section 3(a)(1)(A) of the Investment Company Act defines an “investment company” to include a company that “is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities.” Whether a company is engaged primarily in the business of investing in securities is a question of fact that is determined through the analysis of five factors. No single factor by itself is dispositive. The relevant factors are: (1) the nature of a company’s assets; (2) the source of a company’s income; (3) the company’s historic development; (4) the company’s public representations; and (5) the activities of the company’s officers and directors.
In the context of its Section 3(a)(1)(A) analysis, and specifically Section 3(a)(1)(A)’s asset test, Innventure has determined that neither Innventure’s equity interest in AeroFlexx nor the loans from Innventure to AeroFlexx are a “security.” This determination is based upon Innventure’s conclusion that neither should be viewed as an “investment contract.” Applicable case law has found that an “investment contract” exists when there is the investment of money in a common enterprise with a reasonable expectation of profits to be derived primarily from the efforts of others.
The above determinations were made by Innventure based in large part on case law precedent and no-action letters issued by the SEC staff and other SEC interpretive guidance, and the significant relationship that exists between Innventure and AeroFlexx (e.g., Innventure founded AeroFlexx and the only AeroFlexx director that is not
also an Innventure director is the Chief Executive Officer of AeroFlexx who is, himself, an employee of Innventure). Additionally, based in large part on case law precedent and SEC staff no-action letters, Innventure determined that the loans from Innventure to AeroFlexx should not constitute securities that are “evidences of indebtedness” under the Investment Company Act.
Innventure has not requested the SEC to approve this analysis and the SEC has not done so. If the SEC were to disagree with Innventure’s analysis or relevant factual circumstances were to change, Innventure may be required to adjust its analysis and, potentially, its asset composition, in order to support its conclusion that it should not be deemed to be an investment company under the Investment Company Act. If Innventure were required to register as an investment company under the Investment Company Act, compliance with the additional associated regulatory burdens would require additional expense and attention from management for which Innventure has not accounted and, furthermore, could require Innventure to restructure its operations, sell certain of its assets or abstain from the purchase of certain assets, which could have a material adverse effect on Innventure’s business, financial condition, results of operations and prospects.
Risks Related to Intellectual Property
Innventure may be unable to sufficiently protect the IP rights of itself and the Innventure Companies and may encounter disputes from time to time relating to its use of the IP of third parties.
Innventure and the Innventure Companies’ core business relies on IP acquired or licensed from Technology Solutions Providers. Innventure monitors and protects against activities that might infringe, dilute, misappropriate or otherwise violate that IP and relies on the relevant patent, trademark and other laws of the U.S. and other countries. However, Innventure, the Innventure Companies, and their MNC or other third party partners may be unable to prevent their employees, consultants or other third parties from infringing, diluting or misappropriating their IP or from otherwise violating obligations with respect to their IP and confidential information, which could have a material adverse effect on Innventure and the Innventure Companies’ business, financial condition, results of operations and prospects.
Even upon the registration of their IP rights, there is no certainty that Innventure’s, the Innventure Companies’ or their MNC or other third party partners’ IP rights will provide them with substantial protection or commercial benefit. Despite Innventure, the Innventure Companies’ and their MNC or other third party partners’ efforts to protect their IP, some of their innovations may not be protectable, and their IP rights may offer insufficient protection from competition or unauthorized use, lapse or expire, be challenged, narrowed, invalidated, misappropriated by third parties, or be deemed unenforceable or abandoned. In addition, the laws of some non-U.S. jurisdictions, particularly those of certain emerging markets, provide less protection for Innventure and the Innventure Companies’ IP rights than the laws of the U.S. and present greater risks of infringement, misappropriation, dilution or other misuse. To the extent Innventure, the Innventure Companies, and their MNC or other third party partners cannot protect their IP and confidential information, unauthorized use and misuse of that IP could harm their competitive position and have a material adverse effect on Innventure’s business, financial condition, results of operations and prospects.
Furthermore, regulations governing domain names may not protect Innventure’s and the Innventure Companies’ trademarks and other proprietary rights that may be displayed on or in conjunction with their website and other marketing media. Innventure may be unable to prevent third parties from acquiring or retaining domain names that are similar to, infringe upon, or diminish the value of their respective trademarks and other proprietary rights.
Despite Innventure’s and the Innventure Companies’ efforts to protect their rights, unauthorized third parties may attempt to duplicate or copy the proprietary aspects of its technology and processes. Innventure’s and the Innventure Companies’ competitors and other third parties independently may design around or develop similar technology or otherwise duplicate Innventure’s or the Innventure Companies’ services or products such that Innventure or the Innventure Companies could not assert their IP rights against them. In addition, Innventure’s and the Innventure Companies’ contractual arrangements may not effectively prevent disclosure of their IP and confidential and proprietary information or provide an adequate remedy in the event of an unauthorized disclosure. Measures in place may not prevent misappropriation or infringement of Innventure’s or the Innventure Companies’ IP or proprietary information and the resulting loss of competitive advantage, and Innventure or the Innventure Companies may be required to litigate to protect their IP and proprietary information from misappropriation or infringement by others, which is expensive, could cause a diversion of resources and may not be successful.
Innventure or the Innventure Companies also may encounter disputes from time to time concerning IP rights of others, and it may not prevail in these disputes. Third parties may raise claimsagainst Innventure or the Innventure Companies alleging that Innventure, the Innventure Companies, their employees, consultants or other third parties retained or indemnified by Innventure or the Innventure Companies, infringe, dilute, misappropriate or otherwise violate their IP rights. Some third-party IP rights may be extremely broad, and it may not be possible for Innventure or the Innventure Companies to conduct their operations in such a way as to avoid all allegedviolations of such IP rights and thus, Innventure and the Innventure Companies cannot be certain that their technologies or products and services do not infringe valid patents, trademarks, copyrights or other proprietary rights held by third parties. Given the complex, rapidly changing and competitive technological and business environment in which Innventure and the Innventure Companies operate, and the potential risks and uncertainties of IP-related litigation, an assertion of an infringement claim against Innventure or the Innventure Companies may cause Innventure or the Innventure Companies to spend significant amounts to defend the claim, even if Innventure and the Innventure Companies ultimately prevail, pay significant money damages, lose significant revenues, be prohibited from using the relevant systems, processes, technologies or other IP (temporarily or permanently), cease offering certain products or services, or incur significant license, royalty or technology development expenses.
Moreover, it has become common in recent years for individuals and groups to purchase IP assets for the sole purpose of making claims of infringement and attempting to extract settlements from companies such as Innventure and the Innventure Companies. Even in instances where Innventure and the Innventure Companies believe that claims and allegations of IP infringementagainst them are without merit, defendingagainst such claims is time consuming and expensive and could result in the diversion of time and attention of Innventure’s and the Innventure Companies’ management and employees. In addition, although in some cases a third-party may have agreed to indemnify Innventure or the Innventure Companies for such costs, such indemnifying party may refuse or be unable to uphold its contractual obligations. In other cases, insurance may not cover potential claims of this type adequately or at all, and Innventure or the Innventure Companies may be required to pay monetary damages, which may be significant.
Competitors may develop or acquire competing solutions, and our intellectual property may not prevent others from designing around our technology.
Our Innventure Companies operate in highly competitive and rapidly evolving markets. As early-stage companies, they face competition from established companies with substantially greater financial, technical, manufacturing, marketing and distribution resources, as well as from other emerging companies seeking to address similar customer needs. Current or potential competitors may independently develop technologies or products that are superior to, more cost-effective than, or more widely adopted than our solutions. In addition, competitors may acquire or partner with other companies to obtain technologies, intellectual property or capabilities that directly compete with or render our solutions less attractive.
Although our solutions are based on proprietary technologies with existing or pending patent protections, such protections may be limited in scope, subject to challenge, or insufficient to prevent competitors from developing alternative approaches. Our intellectual property protections may not provide meaningful barriers to entry, and competitors may design around our claims by developing non-infringing technologies that achieve similar results. In some cases, design-arounds may be commercially viable and may avoid our intellectual property rights entirely. Moreover, patent litigation is costly, time-consuming and uncertain, and we may lack the financial resources to enforce our intellectual property rights effectively.
If competitors are able to develop or acquire competing solutions, whether by innovation, acquisition, partnership or design-around of our intellectual property, our market opportunity could be reduced, pricing pressure could increase, and our ability to achieve revenue growth, profitability or market acceptance could be materially adversely affected.
General Risk Factors
Innventure, the Innventure Companies, and Innventure’s MNC partners may be negatively impacted by volatility in the political and economic environment, geopolitical unrest, such as the instability and hostilities in the Middle East, including the conflict with Iran, economic downturns and high interest rates, and a period of
sustained inflation, which could have an adverse impact on Innventure’s and the Innventure Companies’ business, financial condition, results of operations and prospects.
Trade, monetary and fiscal policies, including tariffs, and political and economic conditions may substantially change, and credit markets may experience periods of constriction and variability. These conditions may impact Innventure’s business. Further rising inflation may negatively impact Innventure and the Innventure Companies’ business and raise its costs. While Innventure and the Innventure Companies will take actions, wherever possible, to reduce the impact of the effects of inflation, in the case of sustained inflation, it could become increasingly difficult to effectively mitigate the increases to Innventure and the Innventure Companies’ costs. If Innventure and the Innventure Companies are unable to take actions to effectively mitigate the effect of the resulting higher costs, Innventure’s business, financial condition, results of operations and prospects could be adversely impacted.
Higher interest rates, coupled with reduced government spending and volatility in financial markets may increase economic uncertainty and affect Innventure and the Innventure Companies’ suppliers and potential customers. Likewise, geopolitical and economic instability may disrupt our business, our supply chain and adversely affect Innventure and the Innventure Companies’ suppliers and potential customers. If the equity and credit markets deteriorate, including as a result of political or economic unrest or war, it may make necessary debt or equity financing more difficult to obtain. Increased inflation rates can adversely affect Innventure and the Innventure Companies by increasing its costs, including labor and employee benefit costs. In addition, higher inflation, macro turmoil, uncertainty and market-wide liquidity concerns could also adversely affect Innventure and the Innventure Companies’ suppliers and potential customers, which could have an adverse impact on Innventure’s business, financial condition, results of operations and prospects.
Changes in U.S. or foreign trade policies, including additional tariffs or global trade conflicts, may adversely impact our business and operating results.
Innventure operates in a global marketplace, exposing the Company to various risks associated with foreign trade policies, tariffs, and global trade conflicts. Our business model, which focuses on the commercialization of breakthrough technologies and the development of innovative products, relies heavily on the import and export of goods and services across international borders. Changes in foreign trade policies, such as the imposition of new tariffs, duties, or other trade barriers, can increase the cost of our products and materials, disrupt our supply chain, and reduce our competitiveness in the global market. Additionally, ongoing or escalating trade conflicts between major economies can create uncertainty and volatility, which may result in retaliatory tariffs, trade restrictions, and other measures that can adversely affect our ability to conduct business internationally. Such conflicts can also lead to disruptions in the availability of critical components, delays in shipments, and increased costs, all of which can negatively impact our operations and financial performance. Compliance with complex and evolving international trade regulations, including export controls and economic sanctions, is essential for our global operations, and failure to comply can result in significant fines and reputational damage. Additionally, changes in these regulations can restrict our ability to sell products to certain countries or customers, limiting our market opportunities and revenue potential. Failure to effectively manage these risks could have a material adverse effect on our operations, financial condition, and results of operations.
Innventure, the Innventure Companies, and their MNC partners face risks and uncertainties related to litigation, regulatory actions and investigations.
Innventure, the Innventure Companies, and their MNC partners are subject to, and may become a party to, a variety of litigation, other claims, suits, regulatory actions and government investigations and inquiries. In addition, from time to time, we may also be involved in legal proceedings and investigations arising in the ordinary course of business, including those relating to employment matters, relationships with collaboration partners, IP disputes, and other business matters. Any such claims or investigations may be time-consuming, costly, divert management resources, or otherwise have a material adverse effect on its business or results of operations.
The results of litigation and other legal proceedings are inherently uncertain and adverse judgments or settlements in some or all of these legal disputes may result in materially adverse monetary damages or injunctive relief against Innventure and the Innventure Companies. Any claims or litigation, even if fully indemnified or insured, could damage its reputation and make it more difficult to compete effectively or obtain adequate insurance in the future.
Cyber-attacks or a failure in Innventure’s information technology and data security infrastructure could adversely affect Innventure’s business and operations.
Innventure relies on information technology systems in connection with various aspects of the operation of its business. Innventure’s business and that of the Innventure Companies depend on the integrity of such information technology systems, which are inherently susceptible to a number of threats, including, but not limited to, viruses, ransomware, malware, malicious codes, hacking, phishing, denial of service actions, human error, network failures, electronic loss of data and other electronic security breaches. A successful material cyber-attack may result in the loss or compromise of customer, financial or operational data, theft of IP, disruption of billing, collections or normal manufacturing activities, disruption of data analytics and electronic monitoring and control of operational systems, loss of revenue, ransomware payments, remediation costs related to lost, stolen or compromised data, repairs to infrastructure, physical systems or data processing systems, increased cybersecurity protection costs or violation of United States and international privacy laws, which may result in litigation. Any of these occurrences could harm Innventure’s reputation or have a material adverse effect on its business, financial condition, results of operation and prospects. Innventure has implemented measures to mitigate potential risks associated with information technology disruptions and cybersecurity threats; however, there is no assurance that these measures will prevent cyber-attacks or security breaches. Although Innventure periodically assesses these risks, implements controls and performs business continuity and disaster recovery planning, it cannot be sure that interruptions with material adverse effects will not occur.
Innventure may face particular data protection and privacy risks in connection with the European Union’s Global Data Protection Regulation, the California Consumer Privacy Act and other privacy laws and regulations.
Data privacy laws continue to evolve in various jurisdictions, including the scope of consumer and commercial privacy protections. It is possible that data privacy laws, including those that may develop regarding new technologies such as AI, may be interpreted in various jurisdictions to apply to our business in the future. As our business grows, it is therefore possible that we will have a higher regulatory risk profile and increased costs as we seek to comply with new regulatory requirements related to the processing of personal and commercial data.
Innventure is subject to laws of various jurisdictions where it operates or does business related to solicitation, collection, processing, transferring, storing or use of consumer, customer, vendor, investor, employee or other stakeholder information and personal data, including but, not limited to, the General Data Protection Regulation of the European Union, the California Consumer Privacy Act, and various other privacy laws and regulations. Innventure may be subject to additional regulations, such as the European Union AI Act, that specifically affect the use of personal information in the context of AI systems. The changes introduced by these laws and regulations increase the complexity of regulations enacted to protect business and personal data, subject Innventure to additional costs. These laws and regulations may grant, among other things, individual rights to access and delete personal information, and the right to opt out of the sale of personal information. These laws and regulations can also impose significant forfeitures and penalties for noncompliance and afford private rights of action to individuals under certain circumstances. Any failure to manage data privacy in compliance with applicable laws and regulations could result in significant regulatory investigations, fines, and sanctions, consumer and class action litigation, commercial litigation, prolongednegative publicity, data breaches, declining customer confidence, loss of key customers, employee liability, and other unfavorable consequences.
AI technologies could present business, compliance and reputational risks.
Recent technological advances in AI and machine-learning technology both present opportunities and pose risks to Innventure. If Innventure fails to keep pace with rapidly evolving technological developments in AI, its competitive position and business results may suffer. Innventure faces risk of competitive disadvantage if its competitors more effectively use AI to better serve customers, drive internal efficiencies, and/or create new or enhanced products or services. The introduction of these technologies, particularly generative AI, into internal processes, customer engagements, and/or new and existing product offerings may result in new or expanded risks and liabilities, including due to enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality or security risks, as well as other factors that could adversely affect Innventure’s business, reputation, and financial results. In addition, Innventure personnel could, unbeknownst to us, improperly utilize AI and machine learning-technology while carrying out their responsibilities. The use of AI in the development of Innventure’s products and services could also cause loss of IP, as well as subject us to risks related to IP
infringement or misappropriation, data privacy and cybersecurity. The use of AI can lead to unintended consequences, including generating content that appears correct but is factually inaccurate, misleading or otherwise flawed, or that results in unintended biases and discriminatory outcomes, which could harm Innventure’s reputation and business and expose Innventure to risks related to inaccuracies or errors in the output of such technologies.
Climate change, or legal, regulatory or market measures to address climate change may materially adversely affect Innventure’s financial condition and business operations.
Climate change resulting from increased concentrations of carbon dioxide and other GHGs in the atmosphere could present risks to Innventure and the Innventure Companies’ future operations from natural disasters and extreme weather conditions, such as hurricanes, tornadoes, earthquakes, wildfires or flooding. Such extreme weather conditions could pose physical risks to Innventure’s and the Innventure Companies’ facilities and disrupt operation of Innventure and the Innventure Companies’ supply chain and may impact operational costs. The impacts of climate change on global resources may result in scarcity, which could in the future impact Innventure and the Innventure Companies’ ability to access sufficient equipment and materials in certain locations and result in increased costs. Concern over climate change could result in new legal or regulatory requirements designed to mitigate the effects of climate change on the environment. If such laws or regulations are more stringent than current legal or regulatory requirements, Innventure and the Innventure Companies may experience increased compliance burdens and costs to meet the regulatory obligations and may adversely affect raw material sourcing, manufacturing operations and the distribution of Innventure and the Innventure Companies’ products.
Changes in tax laws could adversely affect Innventure and the Innventure Companies.
Innventure and the Innventure Companies operate in various jurisdictions and are subject to changes in applicable tax laws, treaties, or regulations in those jurisdictions. A material change in the tax laws, treaties, or regulations, or their interpretation, of any jurisdiction with which Innventure and the Innventure Companies do business, or in which Innventure and the Innventure Companies have significant operations, could adversely affect Innventure. For example, the Organisation for Economic Cooperation and Development (the “OECD”) has introduced a global minimum tax framework (“Pillar Two”) that establishes a global minimum tax rate of 15%, such that multinational enterprises with an effective tax rate in a jurisdiction below this minimum rate will need to pay additional tax. Several countries have enacted legislation to implement the OECD’s Pillar Two global minimum tax framework, and additional countries are expected to do so in the near future. On June 28, 2025, the G7 released a joint statement announcing an understanding regarding a proposed “side-by-side” solution that would exempt U.S.-parented multinational businesses from certain provisions of Pillar Two; however, no agreement regarding implementation of the proposal has yet been reached. The implementation of these rules could increase our effective tax rate and result in additional tax compliance obligations.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact.
innovators
positive
Segments
Based on the allocation of resources and assessment of financial performance by our Chief Executive Officer (who has been determined to be our Chief Operating Decision Maker), we have identified one reportable segment: Technology. The Company’s remaining operations are not reportable segments and are classified as “Other”. “Other” primarily includes the Company’s remaining operations consisting of Innventure’s original platform business, service activities, Refinity and equity method investment activities.
The Business Combination
On October 24, 2023, Learn CW and Innventure LLC entered into a Business Combination Agreement with Holdco, LCW Merger Sub and Innventure Merger Sub. On September 30, 2024, the stockholders of Learn CW approved the Business Combination, and the Business Combination closed on the Closing Date. The Business Combination has been accounted for using the acquisition method of accounting. The Company determined the accounting acquirer to be Holdco. Accordingly, the Company recorded assets acquired, liabilities assumed and non-controlling interest at their acquisition date fair values and recognized goodwill.
As a consequence of the Business Combination, Innventure, Inc. is the successor to an SEC-registered and Nasdaq listed company which will require Innventure to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. Innventure expects to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting and legal and administrative resources, including increased audit and legal fees.
Innventure’s future results of consolidated operations and financial position may not be comparable to historical results as a result of the Business Combination.
Financial Summary
Highlights
The year ended December 31, 2025 includes the following highlights:
• Innventure’s Technology segment began generating revenue related to its cooling systems for data centers.
• Total operational expenses of approximately $466.8 million, primarily made up of a goodwill impairment charge and increased costs associated with generating revenue for the Technology Segment, professional and legal fees, and sales and advertising costs for the year ended December 31, 2025.
• Cash inflows from equity and net debt raises were approximately $139.3 million for the year ended December 31, 2025. These cash inflows from equity and net debt raises are compared to net cash outflows related to operating and investing activities of $84.8 million for the year ended December 31, 2025.
Results of Operations for the Years Ended December 31, 2025 and 2024
To reflect the application of different bases of accounting as a result of the Business Combination, the tables provided below separate the Company’s results via a black line into two distinct periods as follows: (1) up to and including the Closing Date (labeled “Predecessor”) and (2) the period after that date (labeled “Successor”). The periods after October 1, 2024 are the “Successor” period while the periods before October 2, 2024 are the “Predecessor” periods.
Management believes reviewing our operating results for the twelve-months ended December 31, 2024 by combining the results of the Predecessor and Successor periods (“S/P Combined”) is more useful in discussing our overall operating performance when compared to the same period in the prior year. The combined results of operations included in our discussion below are not considered to be prepared in accordance with U.S. GAAP and have not been prepared as pro forma results under applicable regulations, may not reflect the actual results we would have achieved had the Business Combination occurred at the beginning of fiscal 2024 and should not be viewed as a substitute for the results of operations of the Predecessor and Successor periods presented in accordance with GAAP. Accordingly, in addition to presenting our results of operations as reported in our consolidated financial statements in accordance with GAAP, the tables below present the non-GAAP combined results for the year.
Successor
Predecessor
S/P Combined (Non-GAAP)
Non-GAAP
Year Ended December 31, 2025
Period from October 2, 2024 through December 31, 2024
Period from January 1, 2024 through October 1, 2024
Year ended December 31, 2024
2025 vs 2024 Changes
(in thousands)
Revenue
Operating Expenses
Cost of sales
General and administrative
Sales and marketing
Research and development
Goodwill impairment
Total Operating Expenses
Loss from Operations
Non-operating (Expense) and Income
Interest expense, net
Net gain (loss) from investments
Net (loss) gain on investments - due to related parties
Change in fair value of financial liabilities
Equity method investment (loss) income
Realized gain on conversion of available for sale investment
Loss on extinguishment of debt
Loss on extinguishment of related party debt
Loss on conversion of promissory notes
Write-off of loan commitment fee asset
Miscellaneous other expense
Total Non-operating (Expense) Income
Income tax expense (benefit)
Net Loss
Less: net loss attributable to
Non-redeemable non-controlling interest
Net Loss Attributable to Innventure, Inc. Stockholders / Innventure LLC Unitholders
*not meaningful
Revenue
Revenue was $2.1 million and $1.2 million for the years ended December 31, 2025 and 2024 an increase of $0.8 million, or 68.5%. The increase was driven by an increase in product sales in the Technology segment, offset by a decrease in management fee income.
Cost of sales
Cost of sales was $18.8 million and $4.5 million for the year ended December 31, 2025 and 2024, respectively, an increase of $14.3 million. The increase relates to the generation of revenue at the Technology segment resulting in an increase in costs related to supplies and materials, an increase in amortization of intangible assets and, an increase in employee costs.
General and administrative
General and administrative expense was $66.7 million and $56.3 million for the year ended December 31, 2025 and 2024, respectively, an increase of 10.4 million, or 18.6%. The increase in expenditure was attributed to increased stock-based compensation costs, increased intangible asset amortization, and increased professional and legal fees.
Goodwill impairment
Goodwill impairment expense was $346.6 million for the December 31, 2025 The impairment was due to sustained decreases in the Company’s publicly quoted share price and market capitalization, which were sensitive to the general downwardvolatility experienced in the stock market during late February 2025 through April 2025.
Sales and marketing
Sales and marketing expense was $9.6 million and $6.2 million for the year ended December 31, 2025 and 2024, respectively, an increase of $3.4 million, or 55.7%. The increase was due to increased employee costs and an increase in advertising and marketing-related events and expenses primarily associated with the commercialization phase of the Technology segment.
Research and development
Research and development expense was $25.0 million and $11.3 million for the year ended December 31, 2025 and 2024, respectively, an increase of $13.7 million or 121.1%. The increase was due to an increase in amortization of intangible assets, an increase in employee costs, and an increase in development fees at Refinity.
Interest expense, net
Interest expense, net was $9.7 million and $2.4 million for the year ended December 31, 2025 and 2024, respectively, an increase of $7.3 million. The increase was due to interest expense on the convertible debentures (collectively, the “Convertible Debentures”) issued to Yorkville pursuant to each of the securities purchase agreement, dated September 15, 2025 (“Securities Purchase Agreement”), and the securities purchase agreement, dated March 25, 2025, contractual interest expense for the term loan agreement entered into on October 22, 2024 by and among the Company and WTI Fund X, Inc. and WTI Fund XI, Inc. (collectively, “WTI Lenders”), which provides for a term loan facility in the aggregate principal amount of up to $50,000 (the “WTI Facility”), amortization of issuance costs on the WTI Facility, partially offset by a net decrease in interest expense related to other debt instruments that have been paid down, and by an increase in interest income.
Net gain (loss) from investments
Net gain on investments was $0.1 million and $11.5 million for the year ended December 31, 2025 and 2024, respectively, a decrease of $11.4 million or 98.9%. The decrease was due to the gain on investment in PureCycle Technologies, Inc. (“PCT”) owned stock via Class PCTA units prior year, which is no longer consolidated in the Company’s consolidated financial statements as a result of Business Combination.
Net (loss) gain on investments - due to related parties
There was no net loss on investments – due to related parties for the year ended December 31, 2025 and $0.5 million for the year ended December 31, 2024. The change was due to an increase in the fair value of the liability of PCT stock owed to other parties for the prior year. The Class PCTA associated liabilities are no longer consolidated in the Company’s consolidated financial statements as a result of the Business Combination.
Change in fair value of financial liabilities
The fair value of financial liabilities increased by $16.1 million and decreased by $21.4 million for the year ended December 31, 2025 and 2024, respectively, an increase to income of $37.6 million, or 175.4%. The increase to income was primarily due to decreases in fair value for warrants and earnout liabilities, and was offset by a net increase in the fair value of the embedded derivative liabilities.
Equity method investment (loss) income
Equity method investment loss was $12.6 million and immaterial for the year ended December 31, 2025 and 2024, respectively. The change is related to losses from the Company’s equity method investment in AeroFlexx, partially offset by a gain from the ESG Fund in 2024.
Realized gain on conversion of available for sale investment
Realized gain on conversion of available for sale investment was $1.5 million for the year ended December 31, 2025, was due to the partial conversion of the AeroFlexx investment in debt securities resulting in a realized gain. There was no realized gain on conversion of available for sale investment for the year ended December 31, 2024.
Loss on extinguishment of debt
Loss on extinguishment of debt was a noncash expense totaling $16.1 million for the year ended December 31, 2025 due to the modification of the WTI Facility and a modification of the first and second tranches of the New Convertible Debentures to Yorkville. There was no gain or loss on extinguishment of debt for the year ended December 31, 2024.
Loss on extinguishment of related party debt
Loss on extinguishment of related party debt was $3.5 million for the year ended December 31, 2025 due to the extinguishment of the related party loans by additional issuances of the Company’s series C preferred stock, $0.0001 par value per share (“Series C Preferred Stock”). There was no gain or loss on extinguishment of related party debt for the year ended December 31, 2024.
Loss on conversion of promissory notes
Loss on conversion of promissory notes was $1.1 million during the year ended December 31, 2024 due to the automatic conversion of promissory notes into equity instruments which was treated as an extinguishment thereby generating a loss. There was no equivalent transaction for the year ended December 31, 2025.
Loss attributable to Non-controlling interest
Loss attributable to non-controlling interests was $182.0 million and $20.1 million for the years ended December 31, 2025 and 2024, respectively. This was due to the increase in the Technology segment net loss as a result of goodwill impairment.
Non-GAAP Financial Measures
We use certain financial measures that are not calculated in accordance with generally accepted accounting principles in the U.S. (GAAP) to supplement our consolidated financial statements. These non-GAAP financial measures provide additional information to investors to facilitate comparisons of past and present operating results, identify trends in our underlying operating performance, and offer greatertransparency on how we evaluate our business activities. These measures are integral to our processes for budgeting, managing operations, making strategic decisions, and evaluating our performance.
Our primary non-GAAP financial measures are EBITDA and Adjusted EBITDA. We define EBITDA as net income before interest, income taxes, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain non-cash items, non-recurring expenses, and other items that are not indicative of our core operating activities. These may include stock-based compensation, acquisition costs, and other financial items. We believe Adjusted EBITDA is valuable for investors and analysts as it provides additional insight into our operational performance, excluding the impacts of certain financing, investing, and other non-operational activities. This measure helps in comparing our current operating results with prior periods and with those of other companies in our industry. It is also used internally for allocating resources efficiently, assessing the economic outcomes of acquisitions and strategic decisions, and evaluating the performance of our management team.
There are limitations to Adjusted EBITDA, including its exclusion of cash expenditures, future requirements for capital expenditures and contractual commitments, and changes in our cash requirements for working capital needs. Adjusted EBITDA also omits significant interest expenses and related cash requirements for interest and payments. While depreciation and amortization are non-cash charges, the associated assets will often need to be replaced in the future, and Adjusted EBITDA does not reflect the cash required for such replacements. Additionally, Adjusted EBITDA does not account for income or other taxes or necessary cash tax payments.
Investors should use caution when comparing our non-GAAP measure to similar metrics used by other companies, as definitions can vary. Adjusted EBITDA should not be considered in isolation or as a substitute for GAAP financial measures.
In presenting Adjusted EBITDA, we aim to provide investors with an additional tool for assessing the operational performance of our business. It serves as a useful complement to our GAAP results, offering a more comprehensive understanding of our financial health and operational efficiencies.
The following table provides a reconciliation from Net Loss to EBITDA and Adjusted EBITDA for the specified periods:
Successor
Predecessor
S/P Combined (Non-GAAP)
Year Ended December 31, 2025
Period from October 2, 2024 through December 31, 2024
Period from January 1, 2024 through October 1, 2024
Year ended December 31, 2024
(in thousands)
Net loss
Interest expense, net (1)
Depreciation and amortization expense
Income tax expense (benefit)
EBITDA
Transaction and other related costs (2)
Change in fair value of financial liabilities (3)
Stock-based compensation (4)
Goodwill impairment (5)
Loss on extinguishment of debt (6)
Loss on extinguishment of related party debt (7)
Loss on conversion of promissory notes
Adjusted EBITDA
(1) Interest expense, net – For the year ended December 31, 2025 and for the combined twelve months ended December 31, 2024, interest expense, net includes interest incurred on our various borrowing facilities and the amortization of debt issuance costs. Additional debt issuance cost associated with a loan commitment fee asset in the amount of $10,041 was written off in combined twelve months ended December 31, 2024 and has also been included in this adjustment. This amount is representative of the asset associated with the additional funds under the second and third tranches of the WTI Facility. When it became known that we would not be able to draw on these subsequent tranches based on certain metrics contained within the WTI Facility, we immediately wrote this asset off.
(2) Transaction and other related costs – For the combined twelve months ended December 31, 2024
this is comprised entirely of consulting, legal, and other professional fees related to the Business Combination.
(3) Change in fair value of financial liabilities – For the December 31, 2025, the change in fair value of financial liabilities primarily consists of the change in fair value of the warrant liability, the earnout liability and the embedded derivatives in various instruments. For the year ended December 31, 2024, this is comprised entirely of the change in fair value of the embedded derivative associated with the convertible notes.
(4) Stock based compensation – For the December 31, 2025, stock based compensation primarily consisted of awards in the 2024 Equity and Incentive Plan entered into on October 2, 2024 subsequent to the Business Combination. These awards consisted of Stock Options, Restricted Stock Units, and Stock Appreciation Rights. Further, a portion of this expense was related to share-based payment employee incentive plans in existence at subsidiaries. Additional Stock Options were granted in February 2025 and additional Restricted Stock Units were granted in June 2025 and August 2025 which are included in the stock-based compensation caption for their respective periods. For the year ended December 31 2024, stock-based compensation was comprised wholly of share-based payment employee incentive plans in existence at Innventure LLC and other subsidiaries.
(5) Goodwill impairment - For the year ended December 31, 2025, the Company recognized goodwill impairment due to sustained decreases in the Company’s publicly quoted share price and market capitalization, which were, at least in part, sensitive to the general downwardvolatility experienced in the stock market from late February 2025 through April 2025. The publicly quoted share price stabilized some in May 2025 and June 2025.
(6) Loss on extinguishment of debt - For the December 31, 2025, the Company modified the WTI Facility, and such modification was accounted for as a debt extinguishment while no debt was repaid.
(7) Loss on extinguishment of related party debt - For the December 31, 2025, the Company extinguished certain related party debts by issuing Series C Preferred Stock.
Liquidity and Capital Resources
As discussed in more detail below, management has concluded that there is substantial doubt about our ability to continue as a going concern within one year after the date that these consolidated financial statements included in Item 1. of this Form 10-K were issued. The condensed consolidated financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty.
Sources of Liquidity
In assessing liquidity, we monitor and analyze cash on hand and operating expenditure commitments. Our material liquidity requirements are from working capital requirements and operating expense obligations. To date we have financed our operations primarily through cash flows from investing and financing activities.
The following is a summary of the components of our current liquidity (in thousands):
December 31, 2025
December 31, 2024
Cash and cash equivalents
Restricted cash
Working capital
Our long-term future liquidity requirements will depend on many factors, including funding required by us and our Innventure Companies to (i) support the growth of the business and the current business strategy; (ii) fund working capital, capital expenditures and general corporate expenditures; and (iii) support other business opportunities and expenditures. As of December 31, 2025 and over the next 12 months, we anticipate that Innventure, Inc. will require at least $50.0 million to meet its operating and strategic needs, with an additional $25.0 million required to support growth across our Innventure Companies in accordance with our current business plan. We expect to meet these needs through a combination of cash on hand, operating cash flows, strategic investments, the SEPA with Yorkville (maximum remaining availability of approximately $66.6 million as of December 31, 2025, subject to the satisfaction of certain conditions in the SEPA and additional financings completed by us and our Innventure Companies. Summarized below are equity and debt financing activities made during the year ended December 31, 2025, and thereafter:
Equity Financing Activities:
• The Company entered into the SEPA with Yorkville in October 2023, which provides the Company the right, but not the obligation, to sell to Yorkville up to $75.0 million in the Company’s common stock, par value $0.0001 per share (“Common Stock”) from time to time through November 2027 (of which approximately $66.6 million in Common Stock remains available for issuance under the SEPA), subject to the satisfaction of certain conditions in the SEPA. During the year ended December 31, 2025, the Company issued 997,573 shares of Common Stock pursuant to the SEPA in payment of $4.9 million of principal and $0.2 million of payment premiums for the Convertible Debentures. In addition to the Common Stock issuances pursuant to the SEPA made in repayment towards the Convertible Debentures, the Company sold 1,071,566 shares of Common Stock under the SEPA, raising $6.1 million in cash proceeds.
• Accelsius raised a total of $7.1 million through the issuance of Accelsius Series A Preferred units during the year ended December 31, 2025.
• The Company issued 2,885,848 shares of Series C Preferred Stock on March 24, 2025 for a total amount of $28.8 million, with the consideration received in the form of cash, services, and related party debt cancellation.
• Accelsius raised $25.0 million on October 2, 2025 through the issuance of 685,163 Accelsius Series B-1 units (“Series B-1 Units”) to Johnson Controls, Inc. (“JCI”). $7.3 million of debt converted to equity in the form of 251,452 Series B-2 units and 125,725 B-2 Warrants in conjunction with the issuance of Series B-1 units by Accelsius.
• The Company raised $9.8 million on October 3, 2025 through a private placement by issuing 1,625,235 shares of Common Stock at $6.00 per share and Series A warrants to purchase 1,625,235 shares of Common Stock.
• On December 29, 2025, Accelsius issued and sold 822,195 Series B-1 Units to Legrand DPC, LLC, (“ Legrand ”), for approximately $30.0 million, before deducting financial advisor fees and other estimated offering expenses. Additionally, Accelsius issued and sold to JCI an additional 274,065 units of the Series B-1 Units for gross proceeds of approximately $10.0 million.
• On January 12, 2026, the Company entered into securities purchase agreements with four institutional investors for the purchase and sale of 11,428,572 shares of Common Stock for gross proceeds of approximately $40.0 million, before deducting placement agent fees and offering expenses.
Debt Financing Activities:
• The Company issued $30.0 million in Convertible Debentures in April and May 2025, split between two tranches. The Company received $18.0 million and $9.0 million in cash proceeds for the first and second tranche, respectively. In connection with the issuance of the Convertible Debentures, the Company issued two warrants (the “2025 WTI Warrants”) to purchase, at a price of $0.01 per share (subject to certain limitations and adjustment), up to an aggregate total of 495,074 shares of Common Stock (subject to future adjustments to the number and type of shares pursuant to the 2025 WTI Warrants), to WTI Fund X, LLC and WTI Fund XI, LLC, exercisable through March 31, 2035.
• Accelsius entered into unsecured convertible notes (“Related Party Term Convertible Notes”) with certain investors deemed to be Related Parties (as defined in the Company’s Related Party Transactions Policy) for a total principal amount of $4.2 million in June 2025. The Related Party Term Convertible Notes are convertible into Series A Units of Accelsius and have a maturity date of December 31, 2026.
• Accelsius entered into an unsecured Convertible Promissory Note (“CPN”) with a related party lender in June 2025 that is drawable in three tranches with 15% interest and an immaterial loan fee. On October 8, 2025, the Company repaid the CPN in full due to its related party, amounting to $2.0 million in principal and $0.1 million in interest and loan fees, for a total of $2.1 million.
• Accelsius issued unsecured convertible notes with various other parties for a total principal amount of $7.8 million in June and July of 2025 that are convertible into Series A Units of Accelsius starting January 2026.
• Accelsius entered into unsecured convertible promissory notes totaling $9.2 million in principal between August 12, 2025 and September 19, 2025, with $7.3 million in cash proceeds received by December 31, 2025.
• The Company entered into the Securities Purchase Agreement with Yorkville on September 15, 2025 to issue convertible debentures (the “New Convertible Debentures”). Of the $15.0 million authorized, one tranche totaling $10.0 million was issued before September 30, 2025 totaling $9.0 million in cash proceeds. On November 12, 2025, the Company issued an additional tranche of the New Convertible Debentures for $5.0 million, totaling $4.5 million in cash proceeds.
• Pursuant to the Fifth Amendment to Loan and Security Agreement between Innventure LLC and Accelsius, on September 18, 2025 the Company elected to convert $0.5 million of accrued interest outstanding into 45,159 Series A Units of Accelsius.
All convertible notes are subordinated to the WTI Facility and other debt of the Company owed to the WTI Lenders, and the holders of the convertible notes have agreed not to demand repayment while senior obligations remain outstanding.
Cash Flows
Cash flows associated with operating, investing and financing activities are summarized as follows (in thousands):
Successor
Predecessor
S/P Combined 2024
Change
Year Ended December 31, 2025
October 2, 2024 through December 31, 2024
January 1, 2024 through October 1, 2024
Year ended December 31, 2024
Amount
% Change
Net Cash Used in Operating Activities
Net Cash Provided by (Used in) Investing Activities
Net Cash Provided by Financing Activities
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
Net Cash Used in Operating Activities
Cash flows used in operating activities were $80.7 million for the year ended December 31, 2025, as compared to $48.1 million for the year ended December 31, 2024, an increase of $32.6 million, or 67.9%. The increase is primarily related to working capital impacts and increases in operating losses.
Net Cash Provided (Used in) by Investing Activities
Cash flows used in investing activities were $4.1 million for the combined year ended December 31, 2025, as compared to cash flows provided by investing activities of $0.9 million for the year ended December 31, 2024, a change of $5.0 million. The increase is primarily related to lower investments in debt securities and advances to our related parties, partially offset by reduced proceeds from sales of investments.
Net Cash Provided by Financing Activities
Cash flows provided by financing activities were $139.1 million for the year ended December 31, 2025, as compared to $71.9 million for the year ended December 31, 2024, an increase of $67.2 million or 93.5%. The increase is primarily related to proceeds from issuance of equity and debt financing.
Indebtedness
Refer to Note 5. Borrowings to our consolidated financial statements for the years ended December 31, 2025 and 2024 included in Item 8 of this Form 10-K for a discussion of our indebtedness.
Contractual Obligations
The following table presents a summary of our contractual obligations, including payments due by period, as of December 31, 2025:
Thereafter
Total
Operating lease
Debt obligations
Fixed future installments payable
Total
Going Concern
We have experienced recurring losses from operations and negative cash flows from operating activities. In addition, we and our Innventure Companies continue to have an ongoing need to raise additional cash from outside sources to sustain our and our Innventure Companies’ operations and fund our and their growth plans. In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update 2014-15, “ Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern ,” management has determined that these conditions raise substantial doubt about our ability to continue as a going concern within one year after the date of the consolidated financial statements included in Item 8 of this Form 10-K. If we are unable to obtain adequate capital from public or private equity or debt financing or otherwise generate sufficient revenues from our Innventure Companies to support our cost structure within the normal operating cycle of a twelve (12) month period, we may have to implement additional cost reduction measures or adjust the timing or scope of certain operations at Innventure or certain Innventure Companies, in part or in full, to help manage liquidity. If we raise additional funds through the issuance of additional debt or equity securities (at either the Innventure or Innventure Company level), it could result in substantial dilution to our existing stockholders and increase fixed payment obligations, and these securities may have rights senior to those of our Common Stock. See “Item 1A. Risk Factors – Risk Related to Innventure’s Business – There is uncertainty regarding Innventure’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt about its ability to continue as a going concern.”
We can make no assurances that required financings will be available for the amounts needed, or on terms commercially acceptable to us, if at all. If subsequent capital raises or revenues from operations at the Innventure Companies are insufficient to bridge financial and liquidity shortfalls (or both), there would likely be a material adverse effect on our business and financial condition that would materially adversely affect our ability to continue as a going concern.
The consolidated financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty.
Critical Accounting Policies and Use of Estimates
Our consolidated financial statements have been prepared in conformity with GAAP. In preparation of these consolidated financial statements, our management is required to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Management considers an accounting judgment, estimate, or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates, and assumptions could have a material impact on the consolidated financial statements. Our significant accounting policies are described in Note 2. Accounting Policies to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further information.
In preparation of these consolidated financial statements, management applied critical estimates and assumptions while determining the carrying value of our equity method investments and fair value measurements, and while performing impairment assessments on long-lived assets and goodwill. Accordingly, actual results could differ from those estimates.
Fair Value Measurement
We measure certain financial instruments at fair value on a recurring and nonrecurring basis, consisting primarily of our investment in debt securities and warrants. The investments in debt securities are accounted for on an as-converted basis using a Black-Scholes model and the warrants are accounted for using a Monte Carlo valuation. Adjustments to fair value require quantitative assessments according to a hierarchy that prioritizes the inputs to valuation techniques measure fair value and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company categorizes each of its fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 – Unobservable inputs that are supported by little or no market activity and reflect management’s best estimate of what market participants would use in pricing the asset or liability. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
Equity Method Investments
The carrying value of our equity method investments is determined based on amounts invested by the Company, adjusted for the Company’s share in the earnings or losses of each investee, after consideration of contractual arrangements that govern allocations of income or loss, less distributions received. For investments where the specified allocations of income or loss are different from the allocation of cash from operations and on liquidation, the Company utilizes the hypothetical liquidation book value method to allocate income or loss from the equity method investment. The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable.
Goodwill Impairment
Goodwill is allocated at the date the goodwill is initially recorded. We have one operating segment and reporting unit, and evaluate goodwill for impairment as one singular reporting unit. We evaluate our goodwill for impairment annually at the beginning of the fourth quarter or earlier upon the occurrence of a triggering event, such as substantive unfavorable changes in economic conditions, industry trends, costs, cash flows, or ongoing declines in market capitalization. Goodwill impairment testing was performed using the income approach via a discounted cash flow model. The income approach estimates fair value by converting future cash flows to a current amount on the measurement date after taking into consideration marketplace conditions. Assumptions including discount rate and estimated future cash flows had a significant impact to the estimated fair value of the reporting unit.
