Related Parties |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Parties | 16. Related Parties Non-Operating Corporate In September 2018, the Company entered into a 75-month lease for office space. As part of the agreement, INNOVATE was able to pay a lower security deposit and lease payments, and received favorable lease terms as consideration for landlord required cross default language in the event of default of the shared space leased by Harbinger Capital Partners, a company controlled by a former CEO of INNOVATE and formerly a related party, in the same building. With the adoption of ASC 842, as of January 1, 2019, this lease was recognized as a right-of-use asset and lease liability on the Condensed Consolidated Balance Sheets. On May 9, 2023, the Company entered into a Stock Purchase Agreement and Subordinated Unsecured Promissory Note with CGIC, a significant shareholder, in the principal amount of $35.1 million. For the three months ended June 30, 2023, interest expense recognized relating to the contractual interest coupon was $0.5 million. Refer to Note 11. Debt Obligations and Note 15. Preferred Stock and Equity for additional information. Infrastructure Banker Steel previously leases two planes from Banker Aviation, LLC, a related party that is owned by Donald Banker, CEO of Banker Steel. During the first quarter of 2022, one of the two plane leases was terminated. The remaining lease has monthly lease payments of $0.1 million and a total lease liability of $0.6 million. For both the three months ended June 30, 2023 and 2022, DBM incurred lease expense related to these leases of $0.3 million. For the six months ended June 30, 2023 and 2022, DBMG incurred lease expense related to these leases of $0.7 million and $0.6 million, respectively. Banker Steel also had a subordinated 11.0% note payable of $6.3 million to Donald Banker, which was redeemed in full by DBMG on April 4, 2022. For the six months ended June 30, 2022, DBMG incurred interest expense related to this note of $0.2 million. Banker Steel also has a subordinated 4.0% note payable of $10.0 million to Donald Banker as of June 30, 2023. During the quarter ended June 30, 2023, Banker Steel made an early payment of $5.0 million on this subordinated note, reducing the balance from $15.0 million to $10.0 million. Life Sciences During June to December 2022, R2 Technologies entered in various notes totaling $10.8 million with Lancer, a related party, an entity controlled by Avram A. Glazer, the Chairman of INNOVATE's Board of Director. On February 15, 2023 and February 28, 2023, R2 Technologies closed on an additional 18% $0.5 million note and an additional 18% $0.4 million note with Lancer, respectively. On March 31, 2023, R2 Technologies entered into an exchange agreement with Lancer, which terminated all prior outstanding notes and simultaneously issued a new note with an aggregate original principal amount of $13.0 million, which comprised of all prior outstanding principal amounts and unpaid accrued interest. The interest rate on the new note increased from 18% to 20%, and the new maturity date was extended to the earlier of June 30, 2023 or within 5 business days of the date on which R2 Technologies receives an aggregate $20.0 million from the consummation of a debt or equity financing. During the second quarter of 2023, R2 Technologies closed on an aggregate additional $2.7 million in 20% notes with Lancer, increasing the outstanding principal balance to $15.7 million. Subsequent to quarter end, in July 2023, Lancer loaned an additional aggregate $1.1 million to R2 with 20% notes, increasing the total outstanding note principal to $16.8 million. In addition, in July 2023, R2 entered into an amendment with Lancer to extended the maturity date of all prior existing notes to the earlier of August 15, 2023 or within 5 business days of the date on which R2 receives an aggregate $20.0 million from the consummation of a debt or equity financing. For the three and six months ended June 30, 2023, R2 Technologies recognized interest expense related to the contractual interest coupon with Lancer of $0.7 million and $1.2 million, respectively. As a part of the exchange agreement with Lancer on March 31, 2023, the interest up to March 31, 2023 was capitalized into the new principal balance. Future interest will be payable upon maturity of the note. For the three months ended June 30, 2022, R2 Technologies recognized revenues of $0.7 million from sales to a subsidiary of Huadong, a related party of R2 Technologies. For the six months ended June 30, 2023 and 2022, R2 Technologies recognized revenues of $0.2 million and $1.0 million, respectively, from sales to a subsidiary of Huadong, a related party of R2 Technologies. The related receivables totaled $0.6 million as of both June 30, 2023 and December 31, 2022. For the three months ended June 30, 2022, R2 Technologies incurred approximately $0.1 million of stock compensation and royalty expenses that were paid to Blossom Innovations, LLC ("Blossom"), and investor and related party of R2 Technologies. For the six months ended June 30, 2023 and 2022, R2 Technologies incurred approximately $0.1 million and $0.2 million, respectively, of stock compensation and royalty expenses that were paid to Blossom.
|