v3.25.3
Fair Value (Q2)
 6 Months Ended 12 Months Ended
Jun. 30, 2025
Dec. 31, 2024
Fair Value Disclosures [Abstract]    
Fair Value
Note 4. Fair Value
The following tables present the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024:

 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2025
 
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
 
Significant
Other
Observable
Inputs
(Level 2)
 
 
Significant
Unobservable
Inputs
(Level 3)
 
 
Total
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Investment in debt security - AFS
 
 
$—
 
 
$—
 
 
$9,017
 
 
$9,017
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Earnout liability
 
 
$—
 
 
$—
 
 
$4,370
 
 
$4,370
2024 WTI Warrant liability
 
 
—
 
 
—
 
 
12,450
 
 
12,450
2025 WTI Warrant liability
 
 
—
 
 
—
 
 
3,400
 
 
3,400
Private placement warrant liability
 
 
—
 
 
7,146
 
 
—
 
 
7,146
Embedded derivative liability - Convertible Debentures
 
 
—
 
 
—
 
 
1,796
 
 
1,796
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2024
 
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
 
Significant
Other
Observable
Inputs
(Level 2)
 
 
Significant
Unobservable
Inputs
(Level 3)
 
 
Total
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Investment in debt security - AFS
 
 
$—
 
 
$—
 
 
$11,187
 
 
$11,187
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Earnout liability
 
 
$—
 
 
$—
 
 
$14,752
 
 
$14,752
2024 WTI Warrant liability
 
 
—
 
 
—
 
 
17,230
 
 
17,230
Private placement warrant liability
 
 
—
 
 
16,793
 
 
—
 
 
16,793
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains and losses for such assets and liabilities categorized within the Level 3 table set forth may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
Changes in the estimated fair value of Level 3 financial assets and liabilities that are measured on a recurring basis for the six months ended June 30, 2025 (Successor) and the six months ended June 30, 2024 (Predecessor), respectively, are as follows:

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Embedded
derivative liability -
convertible
promissory notes
 
 
Investment in debt
securities - AFS
 
 
Earnout
liability
 
 
2024 WTI
Warrant
liability
 
 
2025 WTI
Warrant
liability
 
 
Embedded
derivative liability -
Convertible
Debentures
Balance as of January 1, 2024 (Predecessor)
 
 
$1,994
 
 
$—
 
 
$—
 
 
$—
 
 
$—
 
 
$—
Settlement
 
 
(2,472)
 
 
—
 
 
—
 
 
—
 
 
—
 
 
—
Change in fair value
 
 
478
 
 
—
 
 
—
 
 
—
 
 
—
 
 
—
Balance as of June 30, 2024 (Predecessor)
 
 
$—
 
 
$—
 
 
$—
 
 
$—
 
 
$—
 
 
$—
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of January 1, 2025 (Successor)
 
 
$—
 
 
$11,187
 
 
$14,752
 
 
$17,230
 
 
$—
 
 
$—
Additions
 
 
—
 
 
7,278
 
 
—
 
 
—
 
 
3,090
 
 
1,774
Settlement
 
 
—
 
 
(8,757)
 
 
(873)
 
 
—
 
 
—
 
 
—
Change in fair value
 
 
—
 
 
(691)
 
 
(9,509)
 
 
(4,780)
 
 
310
 
 
22
Balance as of June 30, 2025 (Successor)
 
 
$—
 
 
$9,017
 
 
$4,370
 
 
$12,450
 
 
$3,400
 
 
$1,796
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
There were no transfers in or out of levels during the three and six months ended June 30, 2025 (Successor) nor for the three and six months ended June 30, 2024 (Predecessor).
The following table summarizes the significant unobservable inputs (Level 3):

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal Valuation
Techniques
 
 
Unobservable
Inputs
 
 
June 30,
2025
 
 
December 31, 2024
Investment in debt securities - AFS:
 
 
 
Black-Scholes model
 
 
Volatility
 
 
 
 
 
120%
 
 
 
 
 
 
Time to liquidity
 
 
 
 
 
2 years
 
 
 
 
 
 
Discount for lack of marketability
 
 
 
 
 
31.00%
 
 
 
 
 
 
Weighted average cost of capital
 
 
 
 
 
45.00%
 
 
 
 
 
 
Risk-free rate
 
 
 
 
 
4.23%
 
 
 
Discounted Cash Flows
 
 
AeroFlexx yield
 
 
13.31%
 
 
 
Earnout Shares:
 
 
 
Geometric Brownian Motion
 
 
Term
 
 
6.3 years
 
 
6.8 years
 
 
 
 
 
 
Stock price
 
 
$4.80
 
 
$13.85
 
 
 
 
 
 
Volatility
 
 
56.00%
 
 
56.00%
 
 
 
 
 
 
Risk-free rate
 
 
3.87%
 
 
4.42%
 
 
 
 
 
 
Revenue risk premium
 
 
28.20%
 
 
36.10%
 
 
 
 
 
 
Revenue volatility
 
 
152.00%
 
 
176.00%
2024 WTI Warrants:
 
 
 
Geometric Brownian Motion
 
 
Stock price
 
 
$4.80
 
 
$13.85
 
 
 
 
 
 
Stock price volatility
 
 
56.00%
 
 
56.00%
 
 
 
 
 
 
Credit spread
 
 
25.60%
 
 
18.80%
2025 WTI Warrants:
 
 
 
Geometric Brownian Motion
 
 
Stock price
 
 
$4.80
 
 
 
 
 
 
 
 
 
Stock price volatility
 
 
56.00%
 
 
 
 
 
 
 
 
 
Credit spread
 
 
25.60%
 
 
 
Embedded derivative liability - Convertible Debentures:
 
 
 
Discounted Cash Flows
 
 
Debt Yield
 
 
40.60%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As further discussed and defined in Note 5. Borrowings, the Company issued Convertible Debentures (as defined below) which contain certain features which qualify as embedded derivates requiring bifurcation. The fair value of the embedded derivative liability is determined utilizing a “with and without” method, in which the fair value is calculated as the difference in the fair value of the entire hybrid instrument and the fair value of the instrument excluding the bifurcated derivative features. The initial fair value of the embedded derivative was determined using a discounted cash flow model as of April 14, 2025 and May 15, 2025 which is reflective of the dates of the Convertible Debenture issuances. The model uses a significant assumption of a debt yield of 44.5% for the April 14, 2025 issuance and 42.6% for the May 15, 2025 issuance.
As further discussed in Note 3. Investments, outstanding principal and accrued interest of $7,250 for the investment in debt securities - AFS was automatically converted into Class D preferred units in accordance with the loan agreement. Prior to the conversion, the fair value was estimated using a Black Scholes model. Post conversion, the fair value is estimated using a discounted cash flow model by discounting the contractual debt cash flows at a rate incorporating the credit risk of AeroFlexx.
The initial fair value of the 2025 WTI Warrants (as defined and further described below) was determined using a Monte Carlo valuation model in which the future stock price is simulated assuming a Geometric Brownian Motion in a risk-neutral framework. The model utilizes significant assumptions including stock price, stock price volatility and credit spread. Specifically, the initial valuation as of the April 14, 2025 issuance date considered a stock price of $3.65, stock price volatility of 57.00%, and credit spread of 27.70%. The credit spread relates to estimated counterparty credit risk of Innventure being able to make payments related to the WTI Lenders’ put right, in which the WTI Lenders may exchange the 2025 WTI Warrants for a total cash payment of $3,000 after the 10-year anniversary of issuance. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve.
For further information on the Earnout Shares (as defined below), 2024 WTI Warrants (as defined below), and 2025 WTI Warrants, refer to Note 9. Earnout Shares and Note 10. Warrants.
Note 4. Fair Value
Fair Value Hierarchy
The following tables present the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 (Successor) and December 31, 2023 (Predecessor):

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2024 (Successor)
 
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
 
Significant Other
Observable Inputs
(Level 2)
 
 
Significant
Unobservable
Inputs
(Level 3)
 
 
Total
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Investment in debt security - AFS
 
 
$—
 
 
$—
 
 
$11,187
 
 
$11,187
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Earnout liability
 
 
$—
 
 
$—
 
 
$14,752
 
 
$14,752
WTI warrant liability
 
 
 
 
 
 
 
 
17,230
 
 
17,230
Private placement warrant liability
 
 
—
 
 
16,793
 
 
—
 
 
16,793
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023 (Predecessor)
 
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
 
Significant Other
Observable Inputs
(Level 2)
 
 
Significant
Unobservable
Inputs
(Level 3)
 
 
Total
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Exchange-traded investments at FVTNI
 
 
$9,685
 
 
$—
 
 
$—
 
 
$9,685
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Embedded derivative liability
 
 
$—
 
 
$—
 
 
$1,994
 
 
$1,994
Related party payables
 
 
347
 
 
—
 
 
—
 
 
347
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains and losses for such assets and liabilities categorized within the Level 3 table set forth may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
Changes in the estimated fair value of Level 3 financial assets and liabilities that are measured on a recurring basis for the Successor period from October 2, 2024 through December 31, 2024, the Predecessor period from January 1, 2024 through October 1, 2024 and the Predecessor year ended December 31, 2023, respectively, are as follows:

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Forward
Contract
 
 
Embedded
Derivative
Liability
 
 
Investment
in debt
securities - AFS
 
 
Earnout
Liability
 
 
WTI Warrant
Liability
Balance as of January 1, 2023 (Predecessor)
 
 
$—
 
 
$1,641
 
 
$—
 
 
$—
 
 
$—
Additions
 
 
—
 
 
1,119
 
 
—
 
 
—
 
 
—
Change in fair value
 
 
—
 
 
(766)
 
 
—
 
 
—
 
 
—
Balance as of December 31, 2023 (Predecessor)
 
 
$—
 
 
$1,994
 
 
$—
 
 
$—
 
 
$—
Additions
 
 
—
 
 
—
 
 
10,110
 
 
—
 
 
—
Settlement
 
 
—
 
 
(2,472)
 
 
—
 
 
—
 
 
—
Change in fair value
 
 
—
 
 
478
 
 
62
 
 
—
 
 
—
Balance as of October 1, 2024 (Predecessor)
 
 
—
 
 
—
 
 
10,172
 
 
—
 
 
—
Balance as of October 2, 2024 (Successor)
 
 
—
 
 
—
 
 
10,172
 
 
11,352
 
 
—
Additions
 
 
54
 
 
—
 
 
106
 
 
 
 
 
15,690
Settlement
 
 
(99)
 
 
—
 
 
—
 
 
—
 
 
—
Change in fair value
 
 
45
 
 
—
 
 
909
 
 
3,400
 
 
1,540
Balance as of December 31, 2024 (Successor)
 
 
$—
 
 
$—
 
 
$11,187
 
 
$14,752
 
 
$17,230
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
There were no transfers in or out of levels during the Successor period from October 2, 2024 through December 31, 2024, the Predecessor period from January 1, 2024 through October 1, 2024, or for the Predecessor year ended December 31, 2023.
Standby Equity Purchase Agreement
On October 24, 2023, the Company entered into the Standby Equity Purchase Agreement (“SEPA”) with Yorkville, as further described in Note 13. Stockholders’ Equity with applicable terms defined. The SEPA became effective concurrently with the Business Combination. The SEPA includes two components subject to fair value measurement: the Purchased Put Option and Forward Contract. These are considered freestanding financial instruments not indexed to the Company’s stock.
The Purchased Put Option is accounted for as a derivative asset, initially measured at fair value upon Closing and subsequently measured at fair value each reporting period with changes in fair value recorded in the consolidated statements of operations and comprehensive income (loss). The Purchased Put Option fair value is considered de minimis upon Closing due to the exercise price being at a discount to market prices and remains de minimis as of December 31, 2024.
The Forward Contract is initially measured at fair value upon any Advance Notice and subsequently remeasured with changes in fair value recorded in the consolidated statements of operations and comprehensive income (loss). A derivative liability or asset will be recorded when there is an Advance Notice outstanding as of a reporting period. There were no outstanding Advance Notices as of December 31, 2024.
Derivative Liabilities
Embedded derivative liabilities contained within the 2025 Notes (as defined and further described in Note 5. Borrowings) are stated at fair value. Fair value is determined utilizing discounted cash flows, using unobservable market data inputs, and an option pricing model based on a probability-weighted expected outcome with respect to a financing or a change of control. The derivatives associated with the 2025 Notes were settled in March 2024 due to conversion of the 2025 Notes in a qualified financing. A summary of the significant unobservable inputs utilized to estimate the fair value is as follows:

 
 
 
 
 
 
 
Embedded derivative within 2025 Note issued August 18, 2022
with a principal balance of $4,000
 
 
Settlement
 
 
December 31, 2023
Discount Rate
 
 
35%
 
 
35% - 36%
Probability of Expected Outcomes
 
 
 
 
 
 
Financing
 
 
100%
 
 
95%
Change in control
 
 
—%
 
 
3%
Other
 
 
—%
 
 
2%
 
 
 
 
 
 
 

 
 
 
 
 
 
 
Embedded derivative within 2025 Notes issued June 7 & July 3, 2023
with an aggregate principal balance of $2,000
 
 
 
 
 
 
Discount Rate
 
 
71% - 87%
 
 
71% - 88%
Probability of Expected Outcomes
 
 
 
 
 
 
Financing
 
 
100%
 
 
95%
Change in control
 
 
—%
 
 
3%
Other
 
 
—%
 
 
2%
 
 
 
 
 
 
 
Significant increases or decreases to any of these inputs would result in a significantly higher or lower liability.
Investment in debt securities - AFS
The investment in debt securities is stated at fair value as described in Note 3. Investments. The terms of the securities are such that they are highly likely to convert into Class D Units of AeroFlexx. The fair value of the debt securities is estimated on an as-converted basis using a Black-Scholes model incorporating breakpoints upon which each tranche of AeroFlexx equity participates in distributions.

 
 
 
 
 
 
 
 
 
 
October 2, 2024
 
 
December 31, 2024
Volatility
 
 
120.00%
 
 
120.00%
Time to liquidity
 
 
2 years
 
 
2 years
Discount for lack of marketability
 
 
18.00%
 
 
31.00%
Weighted average cost of capital
 
 
45.00%
 
 
45.00%
Risk-free rate
 
 
3.51%
 
 
4.23%
 
 
 
 
 
 
 
Earnout Shares
Upon Closing of the Business Combination, Earnout Shares were issued to previous Innventure Members and contingently issued to Sponsors (as defined and further described in Note 10. Earnout Shares). The fair value of the Earnout Shares was determined using a Monte Carlo valuation model that utilizes significant assumptions, including expected volatility, expected term, and risk-free rate, to determine the probability of achieving common share price and revenue milestones. The shares may vest upon either the achievement of the common share price milestone or revenue or event-based milestone specific to each of three tranches. Specifically, the future stock price of the Company and revenues of Accelsius and AeroFlexx are simulated assuming a Geometric Brownian Motion (GBM) in a risk-neutral framework. The Earnout Share payoff is calculated based on the contractual terms, and then discounted at the term-matched risk-free rate. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the Earnout Shares. Discounting conventions of revenue-based milestones are mid-period assuming annual
revenue forecasts are earned on average at the mid-period of the forecast period. The value of the Earnout Shares is calculated as the average present value over all future modeled payoffs.
The inputs used in simulating the Company’s stock price include, the term, stock price, volatility, risk-free rate and dividend yield. Prior to the Business Combination, the Company never paid or declared dividends, thus the dividend yield is estimated to be 0% as of December 31, 2024. The following table summarizes the inputs used in simulating the Company’s stock price for purposes of valuing the Earnout Shares:

 
 
 
 
 
 
 
 
 
 
October 2,
2024
 
 
December 31,
2024
Term
 
 
7 years
 
 
6.8 years
Stock price
 
 
$10.87
 
 
$13.85
Volatility
 
 
56.00%
 
 
56.00%
Risk-Free Rate
 
 
3.62%
 
 
4.42%
Dividend Yield
 
 
—%
 
 
—%
 
 
 
 
 
 
 
The Milestone One and Milestone Two Earnout Shares are equity classified and the Milestone Three Earnout Shares are liability classified, as further described in Note 10. Earnout Shares. The assumptions used in measuring fair value of Milestone One and Milestone Three are considered Level 3 inputs, which include weighted average cost of capital risk premium, operational leverage ratio, revenue risk premium and revenue volatility.
Milestone One
The following table summarizes the unobservable inputs used in estimating the fair value of the Earnout Shares based on revenue for Accelsius (Milestone One):

 
 
 
 
 
 
 
October 2,
2024
Revenue risk premium
 
 
6.10%
Revenue volatility
 
 
44.00%
 
 
 
 
Milestone Two
Milestone Two is contingent on the Company’s formation of a new subsidiary, in partnership with an MNC, as determined using the Innventure LLC’s “DownSelect” process, within the Vesting Period. The probability of achievement based on the Company’s analysis was 98% on October 2, 2024.
Milestone Three
The following table summarizes the unobservable inputs used in estimating the fair value of the Earnout Shares based on revenue for AeroFlexx (Milestone Three):

 
 
 
 
 
 
 
 
 
 
October 2,
2024
 
 
December 31,
2024
Revenue risk premium
 
 
30.60%
 
 
36.10%
Revenue volatility
 
 
165.00%
 
 
176.00%
 
 
 
 
 
 
 
For further information on the Earnout Shares, refer to Note 10. Earnout Shares.
Warrants
The Company issued freestanding warrants to the WTI Lenders in connection with the WTI Facility (as defined and further described in Note 5. Borrowings and Note 11. Warrants). The fair value measurement of WTI Warrants is based on unobservable inputs (Level 3 fair value measurement).
The fair value of the WTI Warrants was determined using a Monte Carlo valuation model in which the future stock price is simulated assuming a GBM in a risk-neutral framework. The model utilizes significant assumptions including stock price, stock price volatility, and credit spread. The credit spread relates to estimated counterparty credit risk of Innventure being able to make payments related to the WTI Lenders’ put right, in which the WTI Lenders may exchange the WTI Warrants for a total cash payment of $15,000 after the four-year anniversary of issuance. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve.

 
 
 
 
 
 
 
 
 
 
October 22,
2024
 
 
December 31,
2024
Stock Price
 
 
$11.50
 
 
$13.85
Stock Price Volatility
 
 
56.00%
 
 
56.00%
Credit Spread
 
 
18.60%
 
 
18.80%
 
 
 
 
 
 
 
Other
Our financial instruments that are not re-measured at fair value include prepaid expenses and other current assets, due from related parties, other assets, accounts payable, accrued expenses, accrued employee benefits, other current liabilities and other liabilities as the carrying amounts approximate fair value due to the short maturity terms of these instruments.