What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-04-16 compared with 2025-08-04 · 442 added, 220 removed, 92 unchanged (88% of the section changed)

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Executive Overview

ConnectM is a Delaware corporation headquartered in Marlborough, Massachusetts.

On July 12, 2024 (the “Closing Date”), Monterey Capital Acquisition Corporation (“ MCAC ”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ConnectM Technology Solutions, Inc.

ConnectM (the “Company”) is a Delaware corporation headquartered in Marlborough, Massachusetts.

On July 12, 2024 (the “Merger Closing Date” or the “Merger Closing”), Monterey Capital Acquisition Corporation (“MCAC”) consummated an Agreement and Plan of Merger (the “Merger Agreement”) with ConnectM Technology Solutions, Inc.

(“Legacy ConnectM”) in which MCAC acquired all of the issued and outstanding shares of Common Stock from Legacy ConnectM shareholders (the “Business Combination”) in exchange for 14,500,000 shares of MCAC’s Common Stock.

On the Closing Date, MCAC changed its name to ConnectM Technology Solutions, Inc (“ConnectM”) and we became a publicly listed company.

ConnectM is a constellation of companies connecting and powering next generation equipment, mobility and distributed energy—thus enabling a faster, smarter transition to a modern energy economy.

We deliver an advanced, proprietary Energy Intelligence Network (EIN) platform designed to empower residential and commercial service providers and original equipment manufacturers, to optimize energy efficiency, enhance operational performance, and support sustainable innovation.

Leveraging technology, data, artificial intelligence, and behavioral economics, ConnectM aims to lower energy costs and reduce carbon emissions globally.

Our Service Provider-facing technology platform encompasses marketing to life cycle management, customer care to claims processing, finance to rebates/incentives.

Our architecture combines artificial intelligence with human expertise, continuously learning from the data it generates.

This enables us to refine and improve our technology solutions for B2B customers while maximizing customer lifetime value.

In addition to digitizing electrification end-to-end, we also transform the underlying business model to minimize customer churn while maximizing trust and improving environmental impact.

Our OEM-facing technology platform provides essential hardware and software services for EV fleet management and battery diagnostics—helping to capture data, synthesize that data, and in turn monetizing that data on behalf of our enterprise customers.

By empowering OEMs and mobility companies with connected operations, our portfolio companies directly contribute to their continued explosive growth.

We believe that our cocktail of enhanced user experience, aligned values, and competitive cost enjoys broad appeal.

End user electrification consumption has grown over time to encompass higher value products such as heat pumps, highly efficient air conditioners, solar roof, battery storage, electric vehicles and weatherization.

These progressions can generate increases in customer lifetime value.

We anticipate sustained growth through predictable, recurring revenue streams and automation that reduces costs while meeting our B2B customer needs.

Our data-driven architecture further enhances precision in pricing and implementing electrification solutions, creating additional value for our customers.

We derive revenue through the sale of hardware, software, and services across four different business segments:

our Owned Service Network, Managed Solutions, Transportation, and Logistics.

The key elements of our products and services are discussed in Part I, Item 1.

“Business – Our Products and Services.” Our expenses consist primarily of payroll and benefit costs, facility costs, leasehold improvement amortization, utility costs, repair and maintenance, advertising, insurance, equipment depreciation and professional fees.

On the Merger Closing Date, MCAC changed its name to ConnectM Technology Solutions, Inc.

(“ConnectM”) and it became a publicly listed company.

ConnectM conducts its operations through its subsidiaries and operates a unified, AI-enabled technology platform powering the modern energy economy.

Through this platform, the Company connects OEMs, service providers and end customers to enable electrification, decarbonization and grid-aware energy management across residential, commercial and infrastructure applications.

The Company delivers solutions to its customers for (i) the decarbonization of homes, critical infrastructure and businesses through energy management-as-a-service offerings, including weatherization, HVAC, solar, battery and EV charging solutions, (ii) the facilitation of business-to-business transportation through its online and mobile last-mile delivery platform utilizing contracted drivers, and (iii) the management of connected operations through its industrial internet of things (“IIoT”) platform.

These offerings are integrated and optimized through the Company’s proprietary platform, developed and continuously enhanced by Keen Labs, its AI and technology subsidiary.

The Company also offers physical products as part of its solutions offerings, including AI-enabled heat pump systems for use in the decarbonization of homes and businesses, as well as display clusters, digital control units and vehicle control units used in the management of connected operations.

The Company also provides managed solutions offerings, including human resources management, procurement services, omnichannel marketing and lead generation services, and access to working capital solutions designed to improve operating efficiency and enhance profitability for service providers.

The Company’s platform and associated software continuously collect and analyze operational data, generating actionable insights that customers use for monitoring, optimization and decision-making, and enabling applications such as predictive maintenance and virtual power plant integration.

The Company earns revenue across six operating segments:

● Owned Service Network – Electrification and HVAC service providers delivering energy-efficient installations and long-term performance monitoring to end-users;

● Managed Solutions – Third-party service providers using ConnectM’s AI and back-office platform under managed service agreements;

● Distributed Energy & Renewables (“DER”) – Solar and distributed energy solutions for commercial, residential, consumer, and industrial customers in India, including project development, EPC services and ongoing energy management;

● Transportation – Primarily India-based EV fleet management and battery diagnostics operations serving OEMs and mobility companies;

● Logistics – DeliveryCircle, LLC, a U.S.-based subsidiary offering AI-enabled dispatch, route optimization, and sortation services within the last-mile delivery sector.

● Corporate & Strategic Assets – Corporate-level operations and the Geo Impex India landholding, an approximately 76-acre site near Chatrapur, Odisha, India approved for development into a multimodal logistics park and AI-enabled data center campus;

this segment did not generate revenue during the periods presented.

Collectively, these businesses are interconnected through ConnectM’s data infrastructure, which enables predictive maintenance, energy optimization, and operational efficiency across the energy and logistics ecosystems.

Industry Context and Market Drivers

ConnectM operates at the intersection of three global macro-trends:

Electrification and Decarbonization – Global efforts to replace fossil-fuel-based systems with electrified alternatives, supported by more than $400 billion in funding from the U.S.

Inflation Reduction Act (IRA) and similar programs abroad.

Artificial Intelligence and Data Infrastructure – Rapid adoption of AI-driven monitoring, diagnostics, and control systems across the built environment, projected to exceed $130 billion in global market value by 2030.

Mobility and Logistics Transformation – Electrification of transportation and the digitalization of last-mile logistics, projected to reach over $700 billion globally by 2030.

These structural shifts create sustained tailwinds for ConnectM’s technology and services across residential, commercial, and industrial asset classes.

Revenue Model and Cost Structure

ConnectM generates revenue from hardware, software, and services across its six operating segments:

Owned Service Network, Managed Solutions, Distributed Energy & Renewables, Transportation, Logistics, and Corporate & Strategic Assets:

Hardware revenue includes sales of intelligent devices such as display clusters, digital control units, EV fleet management modules and distributed energy system components, including solar and battery equipment.

Software and platform revenue includes recurring SaaS subscriptions, predictive analytics and asset-management licenses.

Service revenue includes installation, maintenance and repair operations under both owned and managed service models, as well as project development, EPC services and ongoing energy management within the Distributed Energy & Renewables segment.

Logistics revenue includes fees generated from last-mile delivery services, including dispatch, route optimization, sortation and related logistics services provided through the Company’s platform.

Department of Energy, “Inflation Reduction Act Summary and Implementation Guidance,” 2024.

McKinsey & Company, “The State of AI in Energy and Infrastructure 2024.”

Technavio Research, “Global Last-Mile Delivery Market 2023–2027 Outlook,” 2024.

Primary operating expenses include personnel costs, facility leases, depreciation and amortization, technology development, marketing, insurance, and professional services.

ConnectM also incurs additional compliance and reporting costs associated with its public-company status.

Post-Business Combination Outlook

Following the Business Combination, ConnectM continues to integrate its acquired subsidiaries and expand its technology platform capabilities.

Through a series of strategic transactions completed during and subsequent to the fiscal year, the Company has significantly broadened its operational footprint across distributed energy, defense sustainment, and AI-driven infrastructure.

In November 2025, the Company acquired certain assets of Amperics Holdings LLC pursuant to an Asset Purchase Agreement, consisting solely of proprietary technology related to nanotechnology-based energy storage.

The acquired technology, which combines the rapid-response characteristics of supercapacitors with lithium-ion energy density to enable long-cycle-life storage systems suited for grid stabilization, data-center energy buffering, and electric-fleet charging applications, has been integrated into the Company’s Keen Labs subsidiary as a new product line.

Keen Labs subsequently introduced its Hi-C™ and Hi-E™ energy storage product lines, targeting high-power and long-duration distributed energy storage markets, respectively.

In January 2026, the Company acquired a 40% equity interest in Sun Solar LLC, a leading U.S.

residential and small-commercial solar developer and installer.

The transaction increased stockholders’ equity by approximately $6.5 million.

Under a related VPP kit supply agreement, Keen Labs will supply solar panels, batteries, and balance-of-system components to Sun Solar as the Company scales its AI-driven Energy Intelligence Network across Sun Solar’s install base.

ConnectM is consolidating its solar operations under the “Sun Solar Northeast” banner and deploying additional capital to expand solar-plus-storage installations across the Northeast corridor.

In March 2026, the Company acquired Harry Kahn Associates, Inc.

(“HKA”), an 80-year-old defense contractor specializing in mission-critical technical data systems and lifecycle support for U.S.

military platforms, in exchange for 400,000 shares of ConnectM common stock.

HKA’s structured operational datasets, when combined with Keen Labs’ AI platform, are expected to support advanced analytics, predictive maintenance, and digital lifecycle optimization across defense and government infrastructure.

The Company’s strategic priorities for the next twelve months include:

● Expanding Keen Labs’ virtual power plant (“VPP”) and energy-as-a-service capabilities by deploying hybrid battery storage and solar-plus-storage systems through the Sun Solar and Amperics platforms, with the goal of converting one-time equipment sales into recurring grid-services revenue;

● Advancing AI-driven asset health, predictive maintenance, and energy-efficiency analytics across residential, commercial, fleet, and defense applications;

● Scaling defense and government market penetration through HKA’s established customer relationships and Keen Labs’ AI-powered lifecycle management tools;

● Evaluating additional strategic acquisitions within electrification, distributed-energy infrastructure, and defense sustainment to strengthen recurring-revenue streams and expand the Company’s addressable market.

Management believes that the combination of recurring energy-as-a-service and VPP revenue, diversified technology and service offerings spanning electrification, defense sustainment, and distributed energy, and the expanding Keen Labs AI platform positions ConnectM for continued growth and margin improvement through 2026 and beyond.

Recent Developments

In January 2025, the Company entered into a promissory note (the “January 2025 Note”) with the individual from whom the Company acquired a business from in August 2024 which converts the unpaid cash consideration of $170,000 and accrued interest of approximately $6,000 from accounts payable to a sellers note that matures on June 30, 2025.

The unpaid balance of the principal amount bears interest at a rate of 14.0% per annum, except in the event of a default when interest increases to 19.0% per annum.

An event of default is to have occurred if the unpaid principal and accrued interest thereon is not paid in full prior to the maturity date, if the Company makes an assignment for the benefit of creditors, or if the Company files for bankruptcy or another similar proceeding.

On January 28, 2025, the Company entered into a settlement and stipulation agreement (the “Settlement Agreement”) with Last Horizon, LLC (“Last Horizon”), pursuant to which the Company agreed to issue shares of the Company’s common stock to Last Horizon in exchange for the settlement of an aggregate $8,908,000 (the “Claim”) to resolve outstanding overdue liabilities with one of our lenders and certain of our vendors.

The Company has issued 13,744,131 shares of the Company’s common stock to Last Horizon as Settlement Shares between January 28, 2025 and the date Form 10-K was issued.

The Company has issued 13,744,131 shares of the Company’s common stock to Last Horizon as Settlement Shares between January 28, 2025 and the date this Form 10-K was issued.

The issuance of common stock to Last Horizon pursuant to the terms of the Settlement Agreement is exempt from the registration requirements of the Securities Act pursuant to Section 3(a)(10) thereof, as an issuance of securities in exchange for bona fide outstanding claims.

On March 26, 2025, we were awarded our first Home and Building Electrification (HBE) project in India through a strategic partnership with Zenith Energy Services Pvt.

During the quarter ended March 31, 2025, 2,737,168 shares of our common stock were issued in connection with the share reset derivative liabilities.

On March 26, 2025, the Company was awarded its first Home and Building Electrification (HBE) project in India through a strategic partnership with a local energy services provider.

During the three months ended March 31, 2025, the Company entered into twelve convertible note agreements in exchange for aggregate gross proceeds of $2,530,000 to eleven lenders (the “Q1 2025 Convertible Notes”).

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The Q1 2025 Convertible Notes have maturity dates that range from 40-days to one year from the convertible note issuance date, optional conversion period that ranges from thirty to ninety days, and a conversion price that ranges from $1.00 to $1.15.

The Company entered into convertible note agreements with two related-party investors holding beneficial ownership interests exceeding 5.0% of the Company's common stock.

The aggregate principal amount of these convertible notes was $500,000.

On April 2, 2025, the forward purchase agreement with Meteora was terminated.

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On April 11, 2025, the Company held a special meeting of shareholders.

The shareholders voted to approve a reverse stock split and issuance of up to 25,000,000 shares via a standby equity purchase agreement.

The terms of the reverse stock split are not yet finalized as of the date of this filing.

In April 2025, we acquired all of the issued and outstanding equity securities of Air Temp Service Co, Inc.

("Air Temp") and Solar Energy Systems of Brevard, Inc ("SES") in exchange for the issuance of 4,900,000 shares of our common stock with a fair value of $3,200,000, as determined using the closing share price on the date of issuance in May 2025.

Air Temp Services is considered a related party due to its ownership by SriSid LLC and Arumilli LLC, which are related parties to the Company.

The Company had a Managed Services Agreement in place with Air Temp during the reporting period.

On May 5, 2025, the Company's board of directors designated 100,000 shares of preferred stock as Series A Convertible Preferred Stock, par value $0.0001 per share (the "Series A Stock") and 100,000 shares of preferred stock as Series B Convertible Preferred Stock, par value $0.0001 per share (the "Series B Stock").

The Series A Stock and the Series B Stock have an initial stated value of $100.00 per share, subject to adjustment in the event of a stock split, combination or other similar recapitalization.

Further terms are detailed in the Subsequent Events section.

On May 6, 2025, the Company received a determination letter (the "Delisting Notification") from the Nasdaq Hearings Advisor stating that the Panel has determined to delist the Company's common stock, par value $0.0001 per share from the Nasdaq Capital Market, and Nasdaq suspended the trading of the Company's Common Stock on May 7, 2025 because the Company has not demonstrated compliance with the MVLS Rule, nor does it meet any of the alternative requirements under Nasdaq Listing Rule 5550 (b) and has failed to demonstrate that additional time to regain compliance is appropriate.

On May 15, 2025, the Company completed its acquisition of Cambridge Energy Resources Ltd.

The shareholders voted to approve a reverse stock split and issuance of up to 25,000,000 shares via a standby equity purchase agreement however no shares were issued under the agreement.

As of the date of this filing, the reverse stock split authorized at the April 11, 2025 special meeting had not been effected.

On April 25, 2025, the Company completed its acquisition of Cambridge Energy Resources Pvt.

(“CER”), a privately held India- based Energy-Management-as-a-Service provider, following receipt of all necessary regulatory approvals.

Under the terms of the transaction, ConnectM paid INR 120 million (approximately $1.4 million).

Under the terms of the transaction, the purchase price was approximately $1,108,640 out of which, the Company has paid approximately $719,897 (as discussed in Note 5).

CER brings an established operating presence in India’s rooftop solar and telecommunication energy - management sectors, complementing the Company’s Owned Service Network segment and Energy Intelligence Network.

Management expects the integration of CER to accelerate strategic growth across distributed energy and telecom infrastructure markets in India.

With the acquisition, the Company projects India - based operations to expand from approximately 5% to 15% of global revenue (approximately $10 million annualized) over the next twelve months.

Management expects the integration of CER to accelerate strategic growth across distributed energy and telecom infrastructure markets in India and to contribute to an increased share of the Company’s India-based operations as a percentage of global revenue over the next twelve months.

On April 28, 2025, the Company entered into a stock purchase agreement with W4 Partners LLC (the “Seller”), for the purposes of acquiring from the Seller all of the issued and outstanding equity securities of Air Temp Service Co, Inc.

(“ATS”) and Solar Energy Systems of Brevard, Inc (“SESB”) in exchange for the issuance of 2,200,000 shares of the Company’s common stock.

Per the terms of the stock purchase agreement, if the Company was delisted from the Nasdaq exchange within 90 days of closing, the Company was required to issue an additional 2,700,000 shares of the Company’s common stock.

The total fair value of the 4,900,000 shares of the Company’s common stock issued as consideration to the Seller was approximately $3,199,480, as determined using the closing share price on the date of agreement on April 28, 2025.

On May 5, 2025, the Company’s board of directors designated 100,000 shares of preferred stock as Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Stock”) and 100,000 shares of preferred stock as Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Stock”).

The Series A Stock and the Series B Stock have an initial stated value of $100.00 per share, subject to adjustment in the event of a stock split, combination or other similar recapitalization.

On May 6, 2025, the Company received a determination letter (the “Delisting Notification”) from the Nasdaq Hearings Advisor stating that the Panel had determined to delist the Company’s common stock, par value $0.0001 per share from the Nasdaq Capital Market, and Nasdaq suspended the trading of the Company’s Common Stock on May 7, 2025 because the Company had not demonstrated compliance with the MVLS Rule, nor did it meet any of the alternative requirements under Nasdaq Listing Rule 5550 (b) and had failed to demonstrate that additional time to regain compliance was appropriate.

During April 2025 and May 2025, the Company entered into twenty-five note exchange agreements with twelve of its lenders under which sixteen secured promissory notes totaling $4,435,000, nine convertible notes totaling $1,840,000, and accrued interest and fees totaling $1,189,939 were exchanged for 15,290,930 shares of the Company’s common stock with a fair value of $8,224,386, as determined on the issuance date using the reported closing share price.

Certain of these note exchanges involved related parties, including Arumilli LLC, SriSid LLC, Win - Light Global Co.

Ltd., and W4 Partners LLC.

The Company entered into six promissory note agreements in exchange for aggregate gross proceeds of $735,000 during April 2025 and May 2025.

Each of the notes bears interest at a rate of 20.0% per annum and matures 180 days from its respective issuance date.

Five of the promissory notes were held by W4 Partners LLC, a related party due to its equity ownership in the Company.

During May 2025, we amended three of our business loan and security agreements, extending the maturity dates through November 2026 and December 2026 and reducing monthly payments from approximately $23,000 to $8,000.

During May 2025 and June 2025, we issued 585,000 shares of our common stock to certain advisers with a fair value of approximately $133,000, as determined on the issuance date using the reported closing share price.

During May 2025 and June 2025, we issued 1,622,222 shares of our common stock to its directors and employees as consideration for past services performed with a fair value of approximately $372,000, as determined on the issuance date using the reported closing share price.

During 2025, we issued 2,758,309 shares of our common stock to its directors and employees as consideration for past services performed with a fair value of approximately $512,000, as determined on the issuance date using the reported closing share price.

During May 2025 and June 2025, we sold 3,658,333 shares of our common stock for gross proceeds of approximately $805,000 with a fair value of approximately $948,000, as determined on the issuance date using the reported closing share price.

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One of the Q2 Convertible Notes bears interest at a rate of 20.0% per annum, matures 210 days from the agreement date, and is convertible any time before the maturity date at the option of the holder into shares of the Company’s common stock at a conversion price equal to the lower of (i) $0.25 or (ii) the quotient obtained by dividing (x) the sum of the principal and accrued by unpaid interest by (y) 90.0% of the VWAP on the primary trading market of the Company’s common stock the three trading day period immediately preceding the measurement date.

During July 2025, the Company entered into a convertible note agreement in exchange for aggregate gross proceeds of $500,000 to a lender (the "Q3 2025 Convertible Note").

The Q3 2025 Convertible Note bears interest at a rate of 20.0% per annum and matures 210 days from the agreement date.

The Q3 2025 Convertible Note is convertible any time before the maturity date at the option of the holder into shares of the Company's common stock at a conversion price equal to the lower of (i) $0.25 or (ii) the quotient obtained by dividing (x) the sum of the principal and accrued by unpaid interest by (y) 90.0% of the VWAP on the primary trading market of the Company's common stock the three trading day period immediately preceding the measurement date..

On July 10, 2025, the Company entered into the first amendment to the January 2025 Note (the “Amended January 2025 Note”), under which the Company is required to pay the lender approximately $26,000 towards the principal, approximately $14,000 of accrued interest, and the lender’s legal fees of approximately $3,000.

The Amended January 2025 Note extended the maturity date from June 30, 2025 to August 8, 2025 and increased the interest rate to 18.0% effective July 1, 2025.

On August 14 2025, the Company entered into a Second Amendment to the January 2025 Note (the “Second Amended January 2025 Note”), which extended the maturity date from August 8, 2025 to September 30, 2025 and required payment of an approximately $10,000 forbearance fee to the lender.

This debt was subsequently paid off as on October 21, 2025.

From July 1, 2025 through September 30, 2025, the Company entered into five convertible note agreements in exchange for aggregate gross proceeds of $1,900,000 with four lenders (the “Q3 2025 Convertible Notes”).

The Q3 2025 Convertible Notes bear interest at a rate of 20.0% per annum and mature 210 days from the agreement date.

The Q3 2025 Convertible Notes are convertible any time before the maturity date at the option of the holder into shares of the Company’s common stock at a conversion price equal to the lower of (i) $0.25 or (ii) the quotient obtained by dividing (x) the sum of the principal and accrued by unpaid interest by (y) 90.0% of the VWAP on the primary trading market of the Company’s common stock the three trading day period immediately preceding the measurement date.

The number of shares issuable upon conversion is determined by dividing the sum of the outstanding principal and accrued interest by the conversion price.

As of the date of this filing, the Company has not made certain scheduled payments under the SEPA Convertible Note or made timely SEC filings and is therefore in default under the agreement.

However, Yorkville has not issued a formal notice of default, and the Company remains in ongoing discussions with Yorkville regarding a potential resolution and restructuring of the outstanding obligations.

The Company is required to maintain a minimum cash balance equal to the lesser of (a) $2,000,000 and (b) the sum of the next three Installment Payments, as defined in the promissory note, coming due.

As of December 31, 2024, the minimum cash balance required was approximately $833,000.

On September 24, 2025, ConnectM entered into a Settlement and Termination Agreement with Libertas Funding, LLC, resolving all outstanding obligations related to a prior Agreement of Sale of Future Receivables and Debt Conversion Agreement.

Under the terms of the settlement, Libertas agreed to terminate its senior secured lien and release all related financing statements and security interests in the Company’s assets.

In consideration, ConnectM acknowledged a remaining debt balance of approximately $3,100,000 and agreed to a structured repayment plan providing for initial weekly payments followed by bi-monthly installments beginning in October 2025, with stepped increases tied to the Company’s planned uplisting to a senior market tier.

The agreement also provides ConnectM with the right to redeem 1,557,796 shares of its common stock held by Libertas for nominal consideration following full repayment of the debt.

The settlement eliminated all prior claims between the parties and restored full ownership control of the related equity securities to the Company’s shareholders

From October 6, 2025 through December 31, 2025, the Company entered into seven convertible note agreements in exchange for aggregate gross proceeds of $2,550,000 with five lenders (the “Q4 2025 Convertible Notes”).

The Q4 2025 Convertible Notes bear interest at a rate of 20.0% per annum and mature 210 days from the agreement dates.

The Q4 2025 Convertible Notes are convertible any time before the maturity date at the option of the holder into shares of the Company’s Common Stock at a conversion price equal to the lower of (i) $0.25 or (ii) the quotient obtained by dividing (x) the sum of the principal and accrued by unpaid interest by (y) 90.0% of the VWAP on the primary trading market of the Company’s Common Stock the three trading day period immediately preceding the measurement date.

The number of shares issuable upon conversion is determined by dividing the sum of the outstanding principal and accrued interest by the conversion price.

On October 23, 2025, the Company entered into a funding agreement with an institutional investment fund pursuant to which it issued a promissory note in the principal amount of $275,000.

The note was issued with a 10% original issue discount, resulting in net proceeds to the Company of $250,000, and carries a one-time interest charge of 10%.

The note matures 12 months from issuance and requires monthly amortization payments beginning 180 days after the issue date.

The Company may prepay the note at any time without penalty in accordance with the terms of the agreement.

The note includes a contingent conversion feature that becomes exercisable only upon the occurrence of an event of default, at which time the holder may elect to convert all or a portion of the outstanding balance into shares of the Company’s Common Stock at a conversion price equal to 75% of the lowest closing bid price during the 15 trading days immediately preceding the conversion date.

In connection with the note, the Company instructed its transfer agent to reserve a sufficient number of shares of Common Stock (initially 5,723,214 shares, subject to adjustment) to satisfy any potential conversions in the event of default.

The proceeds from this financing are being used for working capital and general corporate purposes.

On October 27, 2025, the Company announced the formation of Keen Labs Operations LLC, a wholly owned subsidiary established to consolidate and expand our AI and technology operations.

In December 2025, upon advice of counsel, the Company implemented an updated entity structure and organized Keen Labs, which now serves as the Company’s wholly owned subsidiary for these purposes.

Keen Labs serves as our dedicated technology and innovation arm, housing all of our AI, industrial IoT, battery systems, and distributed energy platforms and products.

The subsidiary provides a focused structure to accelerate product development, improve capital efficiency, and pursue both organic and acquisition-driven growth across the energy transition, logistics, and mobility sectors.

Keen Labs builds on the strong foundation of our existing technology operations, which have demonstrated substantial revenue and margin growth over the past several years.

The subsidiary is expected to serve as the central platform for future technology development and strategic partnerships, enabling us to strengthen our leadership position in AI-powered electrification and the modern energy economy.

On November 3, 2025, we entered into an Asset Purchase Agreement with Amperics Holdings LLC and its parent, Amperics Inc.

(together, “Amperics”), pursuant to which we acquired certain assets related to Amperics’ nanotechnology-based energy-storage business (the “Acquisition”).

We obtained control upon execution and closing of the Asset Purchase Agreement and the related Bill of Sale and Assignment and Assumption Agreement.

Consideration and ownership acquired:

The consideration consisted of 2,700,000 shares of our Common Stock issued to the seller, valued at approximately $864,000 based on the closing price of $0.32 per share on the acquisition date.

No cash consideration was paid.

Because the transaction was structured as an asset purchase, we did not acquire voting equity interests of an acquiree entity, and therefore a percentage ownership disclosure is not applicable.

Contingent consideration:

The Asset Purchase Agreement does not provide for earn-outs or other contingent consideration.

The only potential adjustment is a mechanical equitable adjustment for stock splits occurring between signing and closing.

Assets acquired and liabilities assumed:

Although the Asset Purchase Agreement contemplated the acquisition of contracts, intellectual property (including patents), and other assets, at the acquisition date Amperics had no contracts in place that would give rise to identifiable future economic benefits, the acquired patents had expired and offered no legal protection or separate future economic benefits, and no tangible assets existed.

Accordingly, the sole identifiable asset acquired was proprietary technology related to pseudocapacitors, conductive ink formulations, production techniques, and product specifications.

No liabilities existed or were assumed as of the acquisition date.

Purchase price allocation:

The Company completed its purchase price allocation with the assistance of a third-party valuation specialist.

The entire purchase consideration of approximately $864,000 was allocated to the acquired proprietary technology, which is being amortized on a straight-line basis over an estimated useful life of 10 years.

No goodwill was recognized.

The sole asset acquired was proprietary technology related to Amperics’ nanotechnology-based energy-storage business, which will be integrated into Keen Labs, the Company’s AI and technology subsidiary.

On November 3, 2025, we acquired control of Geo Impex through an Exchange and Acquisition Agreement.

Under the agreement, (i) We acquired approximately 86.22% of the voting equity interests of Geo Impex India in exchange for newly issued shares of our common stock and promissory notes indirectly through our wholly owned subsidiary in India.

The remaining 13.78% is held by third-party shareholders and is reported as non-controlling interest of $984,025.

As part of the consideration, we issued 33,300,000 shares of our common stock valued at approximately $10,656,000 based on the closing price on the acquisition date and a promissory note with a principal amount of $788,900 for a total purchase price of $11,444,900.

The agreement contains no earn-outs or other contingent consideration.

The number of shares issued is subject only to an equitable adjustment for stock splits between signing and closing.

The promissory note has a fixed principal and no variable features.The transaction was evaluated under ASC 805, Business Combinations.

Accounting treatment:

The Company concluded that the transaction did not meet the definition of a business combination and was accounted for as an asset acquisition under U.S.

The allocation of purchase consideration to identifiable assets (including land and related rights) and liabilities have been determined based on their relative fair values at the acquisition date.

No goodwill was recognized.

On November 10, 2025, the Company announced it had entered into a distribution agreement with Greentech Renewables, a U.S.

distributor of solar and electrical products, for the sale and distribution of the Company’s Keen-branded high-efficiency heat pumps and related smart controls.

The agreement is intended to expand the Company’s distribution reach across Greentech’s national contractor network and support broader adoption of the Company’s heat-pump technology developed by its subsidiary, Keen Labs.

On December 29, 2025, ConnectM entered into a Settlement and Termination Agreement (the “Yorkville Agreement”) with Yorkville related to the Company’s December 17, 2024 SEPA.

The Yorkville Agreement provides for continued $250,000 cash payments on alternate Mondays, applied to reduce the outstanding pre-paid advance obligation (including principal, interest and applicable premiums), and confirms the December 15, 2025 payment was applied first to satisfy the $187,500 deferred fee, with the balance applied to the pre-paid advance obligation.

The Yorkville Agreement further provides that, if an underwritten public offering in connection with an uplisting to a national securities exchange is consummated, the SEPA will be terminated immediately prior to the closing, and Yorkville will receive a termination fee in Common Stock valued at $175,000 equal to the price per share of Common Stock in this offering, as well as a 24-month ROFR on any future equity line of credit.

On January 5, 2026, the Company entered into an acquisition agreement to acquire a 40% equity interest in Sun Solar LLC (“Sun Solar”), a U.S.-based residential and small-commercial solar developer and installer, in exchange for 15,000,000 shares of the Company’s common stock.

The investment is accounted for under the equity method of accounting in accordance with ASC 323, as the Company has the ability to exercise significant influence over Sun Solar’s operating and financial policies but does not hold a controlling financial interest.

Concurrently, the Company, through its subsidiary Keen Labs Operations, Inc., entered into a managed services agreement with Sun Solar pursuant to which Keen Labs will provide procurement, marketing and lead generation, and working capital support services in exchange for fees equal to 40% of Sun Solar’s gross revenues, with revenue recognized in accordance with ASC 606 as services are performed.

Sun Solar is also expected to serve as a strategic installation and distribution channel for the Company’s home energy and electrification solutions, including a VPP kit supply agreement with Keen Labs covering solar panels, batteries and balance-of-system components.

The Company intends to align its solar operations with Sun Solar under the “Sun Solar Northeast” banner and deploy additional capital to support the expansion of cutting-edge energy storage and VPP installations.

On January 15, 2026, at a special meeting of stockholders, the Company’s stockholders approved a reverse stock split of the Company’s Common Stock at a ratio between 1-for-5 and 1-for-50, with the final ratio to be determined by the Board of Directors.

On March 26, 2026, the Board approved a 1-for-32 reverse stock split ratio and authorized the Company to effect the reverse stock split at 4:01 p.m.

(Eastern Time) on April 17, 2026, with trading on a split-adjusted basis expected to commence on April 20, 2026, subject to regulatory approval and completion of applicable procedures.

Each thirty-two (32) shares of Common Stock outstanding immediately prior to the effective time will be combined into one share, with fractional shares rounded up to the nearest whole share.

has filed, or is in the process of filing, the necessary documentation with applicable regulatory authorities, including FINRA, and is coordinating with its transfer agent to effect the split.

On January 1, 2026, the Company transferred all HVAC business assets and operations conducted under the Air Temp Service Co.

trade name to A.T.S.

Heating & Cooling LLC (“ATS LLC”), a New Jersey limited liability company, pursuant to a Non-Cash Business Asset Transfer Agreement.

The transaction involved no cash consideration, and ATS LLC did not assume any pre-existing liabilities of the Company, with all obligations arising prior to the effective date retained by the Company.

The Company retained a 1% non-voting, non-distributing equity interest in ATS LLC solely for participation in a shared health benefits arrangement and is entitled to 2% of net proceeds in the event ATS LLC is sold within 24 months of the effective date.

The Company is also subject to a five-year non-compete covenant within ATS LLC’s service territories.

Management does not expect the transaction to have a material adverse effect on ongoing operations.

Subsequent to December 31, 2025, Greentech Renewables placed additional purchase orders under the previously announced distribution agreement.

In January 2026, Greentech placed a follow-on order of approximately $865,000, and in February 2026, an additional order of approximately $1,000,000, increasing cumulative purchase commitments under the arrangement to approximately $1,865,000.

On March 10, 2026, the Company completed the acquisition of Harry Kahn Associates, Inc.

(“HKA”), a defense-focused technical data development company, in exchange for 400,000 shares of the Company’s common stock.

No cash consideration was paid and no debt was assumed.

HKA provides logistics support analysis databases, technical manuals, and training materials for U.S.

government agencies and defense contractors.

The acquisition expands the Company’s technology platform into the defense and government infrastructure sector and is expected to enable the application of Keen Labs’ AI and data analytics capabilities to predictive maintenance, lifecycle sustainment, and logistics intelligence use cases.

The Company will account for the transaction as a business combination under ASC 805, and the purchase price allocation is preliminary.

Subsequent to December 31, 2025, the Company issued several unsecured convertible promissory notes to certain investors for aggregate gross proceeds of approximately $2,125,150.

During January 2026, the Company issued four convertible promissory notes with aggregate principal of $1,077,150, and in February 2026, the Company issued two convertible promissory notes with principal of $478,000.

In addition, in March and April 2026, the Company issued additional convertible promissory notes with aggregate principal of $570,000, including (i) $224,000 issued on March 30, 2026, (ii) $150,000 issued on March 30, 2026, and (iii) an aggregate of $200,000 issued on April 2, 2026.

The notes bear interest and are convertible into shares of the Company’s common stock at the option of the holders in accordance with their respective terms.

In certain instances, the Company issued shares of common stock as additional consideration in connection with these financings, and the notes may be issued at a discount to face value.

The notes were issued in private placements exempt from registration under the Securities Act of 1933 pursuant to Section 4(a)(2) and/or Regulation D, and the proceeds were used for working capital and general corporate purposes.

Subsequent to December 31, 2025, the Company also entered into multiple promissory note and term loan agreements with third-party lenders, providing aggregate gross proceeds of approximately $1,310,000.

During January and February 2026, the Company issued multiple promissory notes, including notes with principal amounts of $500,000, and $230,000.

In addition, the Company entered into term loan agreements with principal amounts of $500,000 and $80,000 with third-party lenders.

The promissory notes generally bear interest and mature in accordance with their contractual terms, and the term loans are repayable pursuant to scheduled principal and interest payments.

In February 2026, the Company amended one of its existing promissory note agreements to modify certain terms.

Proceeds from these financings were used for working capital and general corporate purposes.

On March 9, 2026, the Company expanded its financing arrangements through an addendum to its existing factoring and security agreement with a lender.

The arrangement provides working capital through the sale of receivables and purchase order financing, including supplier payments made directly by the lender.

Pursuant to the addendum, Keen Labs Operations, Inc.

was added as an additional obligor and is jointly and severally liable with affiliated entities.

The facility is secured by substantially all assets of the applicable entities and includes cross-collateralization and cross-default provisions.

The arrangement includes enforcement mechanisms customary for facilities of this type, including the ability to accelerate obligations and pursue collection remedies upon an event of default.

On March 16, 2026, the Company refinanced and replaced the foregoing facility by entering into a new business loan and security agreement with a lender for $650,000.

After deducting an origination fee of approximately $32,800, the payoff of the remaining balance on the prior facility and other applicable fees, net proceeds of approximately $428,400 were disbursed to the Company.

The new facility requires 36 weekly payments of approximately $25,639 for a total repayment amount of $923,000 and matures in November 2026.

The facility is secured by substantially all assets of the Company and certain of its subsidiaries, includes a personal guarantee from an officer of the Company, and contains customary covenants, including restrictions on additional indebtedness.

Early repayment is permitted without penalty.

On March 20, 2026, the Company entered into an Asset Purchase Agreement to sell certain assets of its Green Energy Gains (“GEG”) business to Forge Team, Inc.

The transaction is part of the Company’s continued focus on optimizing its operating structure and reallocating resources toward higher-margin and technology-enabled solutions.

The transaction includes the transfer of customer relationships, backlog, and certain operating assets, while the Company retains historical liabilities associated with pre-closing operations.

The Company will provide limited transition support to facilitate continuity of operations following closing.

On March 24, 2026, the Company entered into an additional business loan and security agreement with a lender for $350,000.

After deducting applicable fees, net proceeds were disbursed to the Company.

The facility requires periodic payments of future receivables consistent with prior agreements with this lender and is secured by substantially all assets of the Company and certain of its subsidiaries, and includes a personal guarantee from an officer of the Company.

The proceeds from the foregoing financings were used for working capital and general corporate purposes and to support the Company’s near-term liquidity needs.

Convertible Notes

As of December 31, 2025, the Company has a series of outstanding short-term convertible promissory notes (collectively, the “Convertible Notes”), issued between May 2025 to December 2025, as summarized in the table below.

The notes vary by issuance date, principal amount, stated interest rate, and maturity, and may be converted into shares of the Company’s Common Stock at the election of the holders.

The table below sets forth, for each outstanding note, the issuance and maturity dates, original conversion price, stated interest rate, principal amount, and whether the note has been converted as of the reporting date:

Summary of Convertible Notes Outstanding as of December 31, 2025

(Amounts in U.S.

Conversion Option

of Exercisability

Maturity Date

Issuance Date

(from issuance date)

5/26/2025 (1)

10/1/2025 (2)

10/7/2025 (2)

10/23/2025 (3)

11/25/2025 (5)

11/25/2025 (4)

12/2/2025 (4)

12/8/2025 (4)

12/16/2025 (4)

12/17/2024 (6)

From issuance until day 180, the Note’s outstanding principal and accrued interest are convertible, at the holder’s option, into common shares at a price equal to 90% of the lowest daily VWAP of the Company’s common stock during the three trading days immediately preceding the conversion date.

These convertible notes are convertible at a price equal to the greater of (i) $0.05 or (ii) 65% multiplied by the lowest trading price for the common stock during the ten trading days immediately preceding the conversion date.

The conversion price is variable with $0.1418 as floor conversion price.

This convertible note is convertible at a price equal to 75% multiplied by the lowest closing bid price for the common stock during the fifteen trading days immediately preceding the conversion date.

For the first 210 days following issuance, the outstanding principal and accrued interest on each Note are convertible, at the holder’s option, into Common Stock at a price equal to the lower of (1) quotient (rounded down to the nearest whole share) obtained by dividing (x) the sum of the Principal Amount and any interest accrued thereon by (y) 90% of the lowest daily volume weighted average price (the “VWAP”) of the Common Stock on the primary trading market of the Common Stock during the 3 trading day period immediately prior to the applicable measurement date or (2) a fixed conversion price of $0.25.

After the 180- day period, the Notes may convert at their fixed stated conversion price of $0.25.

The Notes are expected to be converted into shares of our Common Stock.

These convertible notes are convertible at a price equal to 65% multiplied by the lowest trading price for the common stock during the ten trading days immediately preceding the conversion date.

The conversion price is variable with $0.1418 as floor conversion price.

The Convertible Notes are convertible at the option of the holder into shares of the Company’s Common Stock at a conversion price determined in accordance with the note agreements.

The number of shares issuable upon conversion is determined by dividing the sum of the outstanding principal and any accrued but unpaid interest by the applicable conversion price.

Several earlier-issued notes have been fully converted as of the balance sheet date.

Subsequent issuances between May 2025 and the date of this Annual Report on Form 10-K (above table) remain outstanding and, if converted, would result in the issuance of up to approximately 10,124,724 shares of Common Stock based on the applicable conversion prices.

These instruments form part of the Company’s capital-structure transition plan aimed at deleveraging the balance sheet and simplifying outstanding debt prior to uplisting.

Management believes conversion or repayment of these notes will reduce interest expense and improve liquidity flexibility.

Further, during the year ended December 31, 2025, the Company also converted $6,155,891 of convertible note principal and accrued interest into 35,011,418 shares of common stock, including certain exchanges following the expiration of original conversion windows.

These negotiated debt-for-equity exchanges under Section 3(a)(9) were determined to be substantial modifications and were accounted for as debt extinguishments.

Accordingly, the Company recognized a gain on extinguishment of $2,261,222, representing the difference between the fair value of shares issued and the carrying amount of the related debt, including any unamortized discounts or premiums.

Known Trends and Uncertainties

The Company operates in markets undergoing significant structural change driven by electrification, distributed energy adoption, artificial intelligence, and digitalization of infrastructure and logistics.

Management believes the following trends, developments, and uncertainties are reasonably likely to have a material impact on the Company’s future operating results, financial condition, and growth trajectory.

Electrification of Buildings and HVAC Systems

The transition from fossil-fuel-based heating systems to electric alternatives—particularly high-efficiency heat pumps continues to accelerate across residential and light commercial markets.

This trend is supported by aging building stock, rising energy costs, and government incentive programs.

As ConnectM’s service network is heavily exposed to HVAC electrification, including installation, monitoring, and optimization services, continued adoption of electric heating technologies represents a significant growth driver.

However, the pace and durability of this trend remain subject to several uncertainties, including:

● the continuation, funding, and implementation timing of federal and state incentive programs;

● consumer adoption rates and perceived return on investment for electrification upgrades;

● availability of skilled labor and installation capacity;

● competing technologies or fuel-price dynamics that may impact adoption decisions.

A slowdown in electrification adoption or a reduction in incentive support could materially impact demand for the Company’s services.

Expansion of Distributed Energy and Energy Storage

The increasing deployment of distributed energy resources, including solar generation and battery storage systems, is transforming how energy is produced, stored, and consumed at the edge of the grid.

Battery storage in particular is expected to play a critical role in load shifting, resilience, and participation in virtual power plant (“VPP”) networks.

ConnectM’s strategy—through its service network and Keen Labs platform—is designed to capture value across the DER lifecycle, including installation, monitoring, optimization, and aggregation into AI-enabled energy networks.

The Company expects continued growth in demand for solar-plus-storage solutions, particularly as grid constraints and peak pricing dynamics intensify.

Key uncertainties include:

● evolving economics of battery storage, including input costs (e.g., lithium, components) and system pricing;

● regulatory frameworks governing VPP participation and grid interconnection;

● utility policies related to net metering and distributed generation compensation;

● the Company’s ability to scale its technology platform to manage increasing volumes of distributed assets.

Artificial Intelligence and Data Infrastructure in Energy Systems

The integration of artificial intelligence into energy, building, and infrastructure systems is accelerating, enabling predictive maintenance, real-time optimization, and autonomous control of connected assets.

ConnectM’s platform and Keen Labs platform are designed to leverage these trends by aggregating operational data and deploying AI models across its installed base.

As adoption of AI-enabled infrastructure increases, the Company expects:

● improved operating efficiencies and service margins through automation and predictive analytics;

● new revenue opportunities tied to data services, optimization, and asset performance management;

● enhanced competitive positioning through proprietary data accumulation and model training.

However, uncertainties include:

● the pace of enterprise and customer adoption of AI-driven solutions;

● competition from larger technology platforms and OEM-integrated software offerings;

● evolving data governance, privacy, and cybersecurity requirements;

● the capital and operating costs required to scale AI infrastructure.

Digitalization and Optimization of Logistics and Mobility

The logistics and transportation sectors are undergoing rapid digital transformation, driven by e-commerce growth, demand for faster delivery times, and increasing cost pressures.

At the same time, fleet electrification and sustainability requirements are reshaping operational models.

Through its logistics and transportation segments, ConnectM provides AI-enabled routing, dispatch, and fleet analytics solutions.

Management believes that continued digitalization of last-mile logistics and fleet operations will drive demand for these solutions, particularly as customers seek to improve efficiency and reduce costs.

Uncertainties impacting this trend include:

● variability in e-commerce growth and shipping volumes;

● competitive pressures from large logistics platforms and in-house enterprise solutions;

● adoption rates of EV fleets and related infrastructure;

● macroeconomic conditions affecting shipping demand and customer spending.

Government Spending and Policy Support for Energy Transition and AI

Government policy remains a critical driver of demand across the Company’s core markets.

Programs supporting electrification, renewable energy deployment, energy efficiency, and grid modernization—such as those authorized under the Inflation Reduction Act—have created substantial market tailwinds.

In addition, increasing government investment in artificial intelligence, infrastructure resilience, and digital systems may create new opportunities for ConnectM, particularly where its technology intersects with energy systems, smart infrastructure, and public-sector deployments.

However, these opportunities are subject to significant uncertainties, including:

● changes in political priorities, budget allocations, or regulatory frameworks;

● delays in program implementation or disbursement of funds;

● evolving compliance and reporting requirements;

● the Company’s ability to access and compete for government-related contracts.

A reduction or delay in government support could adversely affect market demand across multiple segments.

Macroeconomic and Supply Chain Considerations

The Company’s operations are influenced by broader macroeconomic conditions, including interest rates, inflation, and supply chain dynamics.

Higher interest rates may impact consumer financing for electrification projects, while inflationary pressures may affect equipment costs and labor availability.

In addition, global supply chains for key components—such as semiconductors, batteries, and HVAC equipment—remain subject to disruption, which could impact project timelines, margins, and customer demand.

Technology Evolution and Competitive Dynamics

The markets in which the Company operates are characterized by rapid technological innovation and evolving competitive landscapes.

Advances in HVAC systems, battery technologies, AI platforms, and logistics software could accelerate market growth but may also introduce competitive risks.

The Company’s future performance will depend on its ability to:

● continue innovating through Keen Labs and its tech platform;

● integrate acquisitions and expand its service network efficiently;

● differentiate its offerings through data, software, and end-to-end service capabilities.

Failure to adapt to technological change or competitive pressures could materially impact the Company’s results.

Comparability of Financial Information

Our historical operations and consolidated balance sheets may not be comparable to our operations and balance sheets as a result of the Business Combination and becoming a public company.

Business Combination and Public Company Costs

On July 12, 2024, we consummated the merger contemplated by the Merger Agreement with Legacy ConnectM surviving the merger as a wholly owned subsidiary of MCAC.

Since becoming a public company, ConnectM has expanded its corporate, accounting, legal, and compliance infrastructure to meet ongoing reporting and governance requirements applicable to public companies.

This transition has resulted, and is expected to continue to result, in higher general and administrative expenses, including those related to directors’ and officers’ liability insurance, director compensation, investor relations, and increased internal and external accounting, legal, audit, compliance, and administrative costs.

Reverse Recapitalization

On July 12, 2024, ConnectM consummated the Business Combination contemplated by the Merger Agreement with Legacy ConnectM surviving the merger as a wholly owned subsidiary of MCAC.

Immediately prior to the closing of the Business Combination:

● Each outstanding share of Legacy ConnectM preferred stock was converted into Legacy ConnectM Common Stock based on a one-to-one ratio.

The Business Combination is accounted for with a retrospective application of the Business Combination that results in 2,427,791 shares of preferred stock converting into the same number of shares of Legacy ConnectM common stock

● convertible note payable totaling $2,250,000 were converted into shares of Legacy ConnectM common stock at $7.00 per share, resulting in the issuance of 321,428 shares of Legacy ConnectM common stock.

Upon consummation of the Business Combination, each share of Legacy ConnectM stock issued and outstanding was cancelled and converted into the right to receive 3.3214 shares of the Company’s common stock.

Upon the closing of the Business Combination, MCAC’s certificate of incorporation was amended and restated to, among other things, set the total number of authorized shares of capital to 110,000,000 shares, of which 100,000,000 were designated as common stock, $0.0001 par value per share, and of which 10,000,000 shares were designated as preferred stock, $0.0001 par value per share.

● The Business Combination is accounted for with a retrospective application of the Business Combination that results in 2,427,791 shares of preferred stock converting into the same number of shares of Legacy ConnectM Common Stock convertible note payable totaling $2,250,000 were converted into shares of Legacy ConnectM Common Stock at $7.00 per share, resulting in the issuance of 321,428 shares of Legacy ConnectM Common Stock.

Upon consummation of the Business Combination:

● Each share of Legacy ConnectM stock issued and outstanding was cancelled and converted into the right to receive 3.3214 shares of the Company’s Common Stock.

Upon the closing of the Business Combination:

● MCAC’s certificate of incorporation was amended and restated to, among other things, set the total number of authorized shares of capital to 110,000,000 shares, of which 100,000,000 were designated as Common Stock, $0.0001 par value per share, and of which 10,000,000 shares were designated as preferred stock, $0.0001 par value per share.

● On September 25, 2025, the Company filed a Certificate of Amendment (the “ Amendment ”) to the Company’s Second Amended and Restated Certificate of Incorporation with the Delaware Secretary of State.

The Amendment had the effect of increasing the total number of authorized shares of the Company’s Common Stock, $0.0001 par value per share, from 100,000,000 to 250,000,000.

The Amendment had no effect on the number of authorized shares of preferred stock.

● Accordingly, following the filing of the Amendment, effective September 25, 2025, the Company’s authorized capital stock consisted of 260,000,000 shares, representing (i) 250,000,000 shares of Common Stock, and (ii) 10,000,000 shares of preferred stock.

The Amendment was approved by the Company’s Board of Directors on August 13, 2025, and by the Company’s stockholders on September 24, 2025.

Legacy ConnectM was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification (“ ASC ”) 805, Business Combinations (“ ASC 805 ”).

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The net assets of MCAC were stated at fair value, with no goodwill or other intangible assets recorded.

As a result of the Business Combination, we became a publicly traded company, which will require us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.

We expect 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, legal and administrative resources, including increased audit, compliance and legal fees.

As a result of the Business Combination, ConnectM became a publicly traded company, which required it hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.

The Company incurred additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources, including increased audit, compliance and legal fees.

Key Factors Affecting Operating Results

We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including but not limited to those discussed in Item 1A “Risk Factors”.

We expect to derive future revenue from (i) our existing high margin recurring revenue products, (ii) our expanded service offerings leveraging our existing customer and developer networks, (iii) expanding our existing software capabilities through development of additional software tools that are capable of analyzing prospective customer properties to assist in identifying attractive opportunities for us and our customers, and (iv) an expanded customer base through client referrals and our customized, relationship-focused sales process.

The Company believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including but not limited to those discussed in Item 1A “Risk Factors”.

We expect to derive future revenue from (i) our existing high margin recurring revenue products, (ii) our expanded service offerings leveraging our existing customer and developer networks, (iii) expanding our existing software and AI capabilities through development of additional software tools aimed at solving pain points and increasing profitability for service providers, OEMs and other enterprise customers, (iv) an expanded customer base through client referrals and our customized, relationship-focused sales process, and (v) a continued focus on internation expansion for sales and distribution of our products and services.

Reportable Segments

Our reportable operating segments include:

● Owned Service Network focuses on the decarbonization of homes and businesses by providing installation and maintenance services to residential and light commercial customers for heat and cooling solutions and advanced solar solutions.

The installed equipment is connected to the Company’s AI-driven energy intelligence platform to ensure peak performance and efficiency of the equipment as well as allow the Company to remotely monitor maintenance needs.

ConnectM’s reportable operating segments include:

● Owned Service Network focuses on the deployment of modern energy economy solutions into enterprises, infrastructure providers, and homes and businesses by providing installation and maintenance services for electrified heating and cooling solutions and distributed energy solutions (including solar and battery).

The installed equipment is connected to the Company’s tech platform to ensure peak performance and efficiency of the equipment as well as allowing the Company to remotely monitor maintenance needs.

● Managed Solutions provides a selection of servicing offerings that customers can select that include human resources management, procurement services, omnichannel marketing and lead generation as well as access to short-term working capital loans.

● Logistics focuses on the facilitation of business-to-business transportation of heavy goods using the Company’s last mile delivery software.

● Transportation focuses on the management of connected operations using the Company’s IIoT platform to remotely monitor the performance of equipment for original equipment manufacturers (“OEMs”).

● Distributed Energy & Renewables (“DER”) focuses on the delivery of solar and distributed energy solutions for commercial, residential, consumer, and industrial customers in India through the Company’s Cambridge Energy Resources subsidiary, including project development, EPC services and ongoing energy management.

● Logistics focuses on the facilitation of business-to-business transportation of commercial and other heavy goods using the Company’s last mile delivery platform and software.

● Transportation focuses on the management of connected operations using the Company’s IIoT platform to remotely monitor and control the performance of equipment for original equipment manufacturers and other enterprise customers.

● Corporate & Strategic Assets holds the Company’s Geo Impex landholding near Chatrapur, Odisha, India, a strategic real estate asset approved for development into a multimodal logistics park and AI-enabled data center.

This segment did not generate revenue during the periods presented and primarily reflects corporate-level activities and the carrying value of the land asset.

Key Components of Our Results of Operations

Our revenue is derived from customer contracts and consists of equipment and product sales, installation of equipment, service agreements associated with equipment sold to customers, provision of managed services, and delivery services.

Key Components of Our Results of Operations

ConnectM’s revenue is derived from contracts with customers and is recognized in accordance with ASC 606, comprising (i) installation and maintenance services for solar energy systems and HVAC solutions across customers, (ii) logistics and delivery services, (iii) product sales of hardware with embedded software to OEMs and wholesale distribution of heat pump equipment and smart controls through national distribution partners, (iv) software subscription services providing access to the Company’s IIoT platform, (v) managed solutions including HR, procurement, marketing and lead generation services, and (vi) distributed energy and renewables services, including EPC activities and sale of electricity under power purchase agreements.

We fulfill obligations and recognize revenue under a contract with a customer by transferring products and services in exchange for consideration from the customer.

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Under our contracts in the managed solutions segment, working capital adjustments may be processed quarterly, if year-to-date costs incurred by the customer exceed the percentage of the customer’s revenue and are recorded as a reduction of selling, general and administrative expenses as it represents the customer’s reimbursement of costs incurred by us.

We exclude from revenue the taxes collected from customers and remitted to government authorities related to sales of our inventory.

The Company excludes from revenue the taxes collected from customers and remitted to government authorities related to sales of our inventory.

Shipping and handling costs that are billed to customers are included in net sales.

Cost of Revenue

Cost of Revenue consists of personnel-related expenses, including salaries, benefits and stock-based compensation, and facility costs for our operations and manufacturing teams.

Cost of Revenue consists of personnel-related expenses, including salaries, benefits and stock-based compensation, and facility costs for the Company’s operations and manufacturing teams.

Cost of Revenue also includes expenses for costs of equipment and professional services related to the maintenance or installation of equipment.

ConnectM expects its operations costs to increase in the foreseeable future as it continues to invest in the expansion of its operations.

The Company expects its operations costs to increase in the foreseeable future as it continues to invest in the expansion of its operations.

Selling, General and Administrative

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General and administrative expenses also include expenses for outside professional services, including legal, auditing and accounting services, recruitment expenses, travel expenses and certain non-income taxes, insurance, and other administrative expenses.

We expect our selling, general and administrative expenses to increase for the foreseeable future as it scales headcount with the growth of its business, and because of operating as a public company, including compliance with the rules and regulations of the SEC, legal, audit, increased insurance expenses, investor relations activities, and other administrative and professional services.

Other Expense, net

Other income (expense), net consists primarily of interest expense incurred on our debt obligations, remeasurement gains or losses associated with the change in the fair value on our convertible notes payable and forward purchase agreement derivative liabilities, gains and losses on the extinguishment of liabilities, a gain on the modification of our forward purchase agreement and other miscellaneous income or expenses incurred throughout the period.

The Company expects its selling, general and administrative expenses to increase for the foreseeable future as it scales headcount with the growth of its business, and because of operating as a public company, including compliance with the rules and regulations of the SEC, legal, audit, increased insurance expenses, investor relations activities, and other administrative and professional services.

Loss on impairment of intangible assets and goodwill

Loss on impairment of intangible assets and goodwill consist of non-cash charges recognized when the carrying value of certain intangible assets exceeds their recoverable amount.

This includes impairment losses related to customer relationships and trademarks associated with ATS and SESB, which were assessed for recoverability based on changes in circumstances and business conditions impacting the expected future economic benefits attributable to these assets.

The Company performs impairment assessments whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable.

The recognition of such losses reflects management’s ongoing evaluation of the continued utility and value of acquired intangibles in the context of the Company’s evolving operations and strategic priorities.

Other income (expense), net

Other income (expense), net consists primarily of interest expense incurred on our debt obligations, remeasurement gains or losses associated with the change in the fair value on our convertible notes payable and forward purchase agreement derivative liabilities, gains and losses on the extinguishment of liabilities, a gain on the modification of our forward purchase agreement, the bargain purchase gain from our CER acquisition, and other miscellaneous income or expenses incurred throughout the year.

Results of Operations

The following table summarizes our financial results for the period indicated:

Years Ended December 31,

Year Ended December 31,

Costs and expenses:

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Selling, general and administrative expenses

Loss on impairment

Total Cost and Expenses

Loss on impairment of intangible assets and goodwill

Loss from operations

Total other expense, net

Revenue increased $2,680,646, or 13.4%, to $22,652,885 for the year ended December 31, 2024 from approximately $19,972,000 for the year ended December 31, 2023.

This increase was primarily driven primarily by the Company’s new managed solutions offering, which yielded an increase in revenues of $ 3,812,088 for the year ended December 31, 2024, and increases in the Company’s transportation segment with an increase to revenue of $4,307,602 for the year ended December 31, 2024.

This increase was primarily offset by declines in the Company’s owned service network segment of $6,207,326.

These decreases in the electrification and decarbonization segments were mostly driven by inclement weather during the year ended December 31, 2024, which caused a decline in solar installations during this period.

Revenue increased approximately $13,184,000, or 58%, to $35,837,000 for the year ended December 31, 2025 from $22,653,000 for the year ended December 31, 2024.

This increase was primarily driven by the Company’s new Logistics segment, established in

connection with the Delivery Circle acquisition completed in August 2024, and expanding Owned Service Network through the acquisitions of additional service providers and geographic market expansion.

Costs and Expenses

Cost of Revenues increased approximately $1,771,000, or 11.9%, to $16,706,177 for the year ended December 31, 2024 from approximately $14,935,000.

This increase was primarily driven by an increase in our managed solutions offering segments $4,002,916, which increased along with the revenues for this segment, as described above, and higher material costs for the year ended December 31, 2024.

This increase was primarily offset by the Company’s owned service network segments and transportation segments, which yielded a decrease in cost of revenues for the year ended December 31, 2024 of $5,520,576 and $158,565, respectively.

Selling, general and administrative expenses increased approximately $2,825,134, or 22.9% to $15,145,429 for the year ended December 31, 2024 from approximately $12,320,000 for the year ended December 31, 2023.

The increase was primarily due to the Company incurring approximately $2,859,000 of onetime costs associated with its initial public offering for the year ended December 31, 2024.

Loss on impairment increased approximately $2,222,000, or 1,221.7%, to $2,403,628 for the year ended December 31, 2024 from approximately $182,000 for the year ended December 31, 2023.

The increase was due to the Company recording impairment losses during the year ended December 31, 2024 attributed to recurring losses for two consecutive years at two subsidiaries and significantly declining sales at one of those subsidiaries.

Cost of Revenues increased by approximately $7,665,000, or 46%, to $24,371,000 for the year ended December 31, 2025 from approximately $16,706,000 for the year ended December 31, 2024.

This increase was primarily driven by the introduction of our new Logistics segment established in connection with the Delivery Circle acquisition completed in August 2024, which added approximately $5,780,000 in cost of revenue, which was driven by the increase in revenues for this segment, as described above, for the year ended December 31, 2025.

Selling, General and Administrative expenses

Selling, general and administrative expenses increased by approximately 8,357,000 or 55% to $23,503,000 for the year ended December 31, 2025 from $15,145,000 for the year ended December 31, 2024.

The increase was primarily driven by approximately $3,020,000 of increased operating costs associated with becoming a public company in July 2024 and our expanding Owned Service Network through the acquisitions of additional service providers and geographic market expansion.

Approximately $1,429,000 of selling, general and administrative expenses from our new Logistics segment, and increased marketing costs in our Owned Service Network segment of approximately $1,620,000 for the year ended December 31, 2025.

Loss on impairment of intangible assets and goodwill

Loss on impairment of intangible assets and goodwill decreased approximately $1,855,000, or 77%, to $548,000 for the year ended December 31, 2025 from approximately $2,404,000 for the year ended December 31, 2024.

The decrease was primarily due to the Company having recorded significantly higher impairment losses in the prior year attributed goodwill and intangible assets of approximately $1,568,000 and 835,000, respectively.

The impairment charge of $548,000 for the year ended December 31, 2025 reflects a reduced level of such losses on the customer relationships and trademarks associated with ATS and SESB, as the extent of the triggering conditions that existed in the prior year did not recur at the same magnitude during the current year.

Other Income (Expense)

Interest expense increased $1,282,694 to $2,714,048 for year ended December 31, 2024 from $1,431,354 for the year ended December 31, 2023.

This increase was primarily driven by the issuance of the Company’s secured promissory notes and convertible notes throughout the years ended December 31, 2024 and 2023.

During the year ended December 31, 2024, we amended certain of our debt agreements and concluded that the amended terms of the agreements were substantially different from the terms of the initial agreements.

As a result of this determination, we accounted for this amendment as extinguishments of the previous debt facility and recognized a loss of extinguishment of debt of $1,645,443.

We also recognized expenses attributable to the changes in fair value of our forward purchase agreement of $8, 254,390 and a change in the fair value of convertible notes of $1,707,747.

During the year ended December 31, 2024, we recognized a gain on extinguishment of certain of our debt agreements of $2,257,638 and a gain on our forward purchase agreement modification of $1,572,236 related to the conversion of the convertible notes in connection with the transaction with MCAC and further the new convertible notes.

Year Ended December 31,

Interest expense

Loss on issuance of financial instruments

Loss on extinguishment of debt and vendor payable

Gain on Extinguishment of debt

Change in fair value of forward purchase agreement

Change in fair value of convertible debt

Loss on forward purchase agreement

Gain on forward purchase agreement

Change in fair value of derivative liabilities

Change in fair value of contingent consideration

Day one gain on issuance of SEPA

Gain on modification of liabilities

Bargain purchase gain

Change in fair value on 3(a)(10) Settlement Agreement (Note 12)

Other income (expense), net

Total other income (expense), net

Total other expense, net decreased to approximately $(3,488,000) for the year ended December 31, 2025 from approximately $10,906,000 for the year ended December 31, 2024, an improvement of approximately $7,418,000 or 68%.

The major components of the year-over-year change are discussed below.

Interest expense.

Interest expense decreased to approximately $1,303,000 for the year ended December 31, 2025 from approximately $2,714,000 for the year ended December 31, 2024, a decrease of approximately $1,411,000 or 52%.

This decrease was primarily driven by a reduction in outstanding debt of approximately $7,261,000 resulting from the conversion of certain promissory notes into common stock during 2025.

Debt extinguishment, issuance, and modification activity.

During the year ended December 31, 2025, the Company recognized a net loss on extinguishment of debt and vendor payables of approximately $(442,000) and a loss on issuance of financial instruments of approximately $45,000, partially offset by a gain on modification of liabilities of approximately $195,000, for a net charge of approximately $292,000.

The loss on extinguishment resulted from amendments to certain debt and vendor agreements where the revised terms were determined to be substantially different from the original terms, requiring extinguishment accounting.

During the year ended December 31, 2024, the Company recognized a net gain on extinguishment of debt of approximately $2,258,000, partially offset by a loss on extinguishment of approximately $1,645,000, for a net gain of approximately $613,000.

The year-over-year unfavorable change of approximately $905,000 reflects the absence of the prior-year gain on extinguishment and higher extinguishment losses in the current year.

Fair value changes on financial instruments.

The Company recognized the following fair value changes during the years ended December 31, 2025 and 2024:

The change in fair value of the forward purchase agreement resulted in a loss of approximately $971,000 for the year ended December 31, 2025 compared to a loss of approximately $8,254,000 for the year ended December 31, 2024, an improvement of approximately $7,283,000.

The significant reduction in the prior-year period loss reflects the decline in the fair value of the forward purchase agreement as the instrument approached its settlement terms and the underlying share price volatility stabilized.

The change in fair value of convertible debt resulted in a loss of approximately $2,146,000 for the year ended December 31, 2025 compared to a loss of approximately $1,708,000 for the year ended December 31, 2024, an increase of approximately $439,000.

This increase was primarily attributable to the reduction in outstanding convertible debt balances carried at fair value during 2025 as a result of debt conversions and settlements.

The change in fair value of derivative liabilities resulted in a loss of approximately $365,000 for the year ended December 31, 2025 compared to a loss of approximately $187,000 for the year ended December 31, 2024, an increase of approximately $178,000, driven by additional derivative instruments recognized in connection with convertible notes issued during 2025.

The change in fair value of the 3(a)(10) Settlement Agreement resulted in a loss of approximately $722,000 for the year ended December 31, 2025, with no comparable amount in the prior year as the agreement was entered into in January 2025.

The change in fair value of contingent consideration resulted in a loss of approximately $111,000 for the year ended December 31, 2025 compared to a loss of approximately $60,000 for the year ended December 31, 2024.

In the aggregate, fair value changes on financial instruments resulted in a net loss of approximately $3,594,000 for the year ended December 31, 2025 compared to a net loss of approximately $10,209,000 for the year ended December 31, 2024, an improvement of approximately $6,615,000.

Bargain purchase gain.

During the year ended December 31, 2025, the Company recognized a bargain purchase gain of approximately $2,121,000 in connection with the acquisition of Cambridge Energy Resources Pvt.

(“CER”), where the fair value of net assets acquired exceeded the purchase consideration.

No comparable gain was recognized in the prior year.

Day one gain on issuance of SEPA.

During the year ended December 31, 2024, the Company recognized a day-one gain of approximately $135,000 on the issuance of the SEPA derivative liability, with no comparable amount in the current year.

Other income (expense), net.

Other income, net increased to approximately $304,000 for the year ended December 31, 2025 from approximately $83,000 for the year ended December 31, 2024, an increase of approximately $221,000, primarily attributable to miscellaneous income items recognized during the current year.

Liquidity and Capital Resources

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The Company had a working capital deficit of approximately $24,739,000 at December 31, 2025 and incurred a net loss and generated negative cash flow from operating activities of approximately $16,058,000 and $7,888,000, respectively, for the year ended December 31, 2025.

As of December 31, 2024, the Company had cash of approximately $2,408,000.

The Company had a working capital deficit of approximately $26,247,000 at December 31, 2024 and incurred a net loss and generated negative cash flow from operating activities of approximately $22,508,000 and $5,959,000, respectively, for the year ended December 31, 2024.

These are indicators of substantial doubt as to our ability to continue as a going concern for at least one year from issuance of our consolidated financial statements.

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Net cash used in operating activities

Net cash used in investing activities

Net cash received from (used in) investing activities

Net cash provided by financing activities

Net used in operating activities

Net cash used in operating activities for the year ended December 31, 2024 was $5,959,133.

Net cash used in operating activities consisted primarily of net loss of approximately $22,508,000 offset by approximately $13,261,000 of noncash items, primarily related to the loss on extinguishment of debt of $1,645,443, loss on fair value measurement of debt of $1,707,747, change in fair value of forward purchase agreement put option liability resulting in a loss of $8,254,390 depreciation and amortization of long-lived assets and intangible assets of $745,741 offset by a gain on modification of forward purchase agreement of $1,572,236, impairment loss on goodwill and intangible assets of $2,403,628 and the gain on extinguishment of debt of $2,257,638.

In addition, for the year ended December 31, 2024, net changes in operating assets and liabilities resulted in cash provided by operating activities of $3,287,725.

Net cash used in operating activities for the year ended December 31, 2023 was $ 4,621,692.

Net cash used in operating activities consisted primarily of net loss of $9,198,854, offset by $2,174,197 of noncash items, primarily related to the depreciation and amortization of long-lived assets and intangible assets of $776,397, amortization of the Company’s debt discount recorded on its different debt facilities of $346,557, a write down of inventory due to obsolescence of $187,098, a loss on impairment of $181,853, and a loss on the extinguishment of debt of $370,320.

In addition, for the year ended December 31, 2023, net changes in operating assets and liabilities resulted in cash provided by operating activities of $2,402,965.

Net cash used in investing activities

Net cash used in investing activities for year ended December 31, 2024 was $107,665.

Investing activities primarily included the purchase of capitalized software development costs of $186,103 and purchases of property and equipment of $27,044, cash paid for a noncontrolling interest of $60,000 offset by proceeds received from acquisitions of businesses of $152,482.

Net cash used in investing activities for the year ended December 31, 2023 was $465,711.

Investing activities primarily included the issuance of convertible notes to MCAC for $445,000, with other immaterial investing activities primarily relating to the purchase of property and equipment and capitalized software.

Net cash used in operating activities

Net cash used in operating activities for the year ended December 31, 2025 was approximately $9,792,000.

Net cash used in operating activities consisted primarily of net loss of approximately $16,058,000 offset by approximately $7,413,000 of non-cash items, primarily related to the loss on extinguishment of debt and vendor payable of approximately $3,010,000, depreciation and amortization of long-lived assets and intangible assets of approximately $815,000 offset by a bargain purchase gain of approximately $2,121,000.

In addition, for the year ended December 31, 2025, net changes in operating assets and liabilities resulted in cash provided by operating activities of approximately $1,147,000.

Net cash used in operating activities for the year ended December 31, 2024 was approximately $5,959,000.

Net cash used in operating activities consisted primarily of net loss of approximately $22,508,000 offset by approximately $13,261,000 of noncash items, primarily related to the loss on extinguishment of debt of approximately $1,645,000, loss on fair value measurement of debt of approximately $17,078,000, change in fair value of forward purchase agreement put option liability resulting in a loss of approximately $8,254,000 depreciation and amortization of long-lived assets and intangible assets of approximately $746,000 offset by a gain on modification of forward purchase agreement of approximately $1,572,000, impairment loss on goodwill and intangible assets of approximately $2,403,000 and the gain on extinguishment of debt of approximately $2,258,000.

In addition, for the year ended December 31, 2024, net changes in operating assets and liabilities resulted in cash provided by operating activities of approximately $3,288,000.

Net cash received from investing activities

Net cash received from investing activities for year ended December 31, 2025 was approximately $429,000.

Investing activities primarily included the purchase of capitalized software development costs of approximately $162,000 which was offset by proceeds received from acquisitions of businesses of approximately $559,000.

Net cash received from investing activities for year ended December 31, 2024 was approximately $108,000 and primarily included the purchase of capitalized software development costs of approximately $186,000 and purchases of property and equipment of approximately $27,000, cash paid for a noncontrolling interest of $60,000 offset by proceeds received from acquisitions of businesses of approximately $152,000.

Net cash provided by financing activities

Net cash provided by financing activities for the year ended December 31, 2024 was $7,286,542.

Financing activities consisted primarily of proceeds from the business acquisition of $35,770,959, proceeds advance from lenders of $1,057,275, the issuance of debt of $6,614,400 and the issuance of convertible debt of $4,940,000, and Reimbursement for Recycled Shares related to Forward Purchase Agreement of $1,000,000.

These financing activities were offset by cash transferred in connection with forward purchase agreement of $36,727,814 and payments on the Company’s debt facilities of $2,262,401, repayment of convertible debt of $50,000, cash paid for debt issuance costs of $1,015,114, advance to related party Monterey Capital Acquisition Corporation of $1,933,695 and payment on finance leases of $107,068.

Net cash provided by financing activities for the year ended December 31, 2023 was $4,227,160.

Financing activities consisted primarily of the issuance of different debt facilities of $9,047,344 offset by the payment of extension fees into MCAC’s trust account of $2,491,431, payments on the Company’s debt facilities of $2,153,487, payments of deferred offering costs of $984,857, and payments on finance leases of $90,409.

Net cash provided by financing activities for the year ended December 31, 2025 was approximately $9,828,000.

Financing activities consisted primarily of proceeds advance from lenders of $250,000, the issuance of debt of approximately $3,435,000 and the issuance of convertible debt of approximately $8,762,000, proceeds from factoring receivable arrangements of $736,000, proceeds from stock subscription agreement of $805,000, proceeds from premium financing obligations of approximately $326,000 and proceeds from Forward Purchase Agreement of $500,000.

These financing activities were offset by payments on the Company’s debt facilities of approximately $2,518,000, repayment of convertible debt of approximately $638,000, repayment of deferred consideration of approximately $676,000, repayment of premium financing obligations of approximately $326,000, repayments on factoring receivable arrangements of approximately 736,000 and payment on finance leases of approximately $93,000.

Net cash provided by financing activities for the year ended December 31, 2024 was approximately $7,287,000.

Financing activities consisted primarily of proceeds from the business acquisition of approximately $35,771,000, proceeds advance from lenders of approximately $1,057,000, the issuance of debt of approximately $6,614,000 and the issuance of convertible debt of $4,940,000, and Reimbursement for Recycled Shares related to Forward Purchase Agreement of $1,000,000.

These financing activities were offset by cash transferred in connection with forward purchase agreement of approximately $36,728,000 and payments on the Company’s debt facilities of approximately $2,262,000, repayment of convertible debt of $50,000, cash paid for debt issuance costs of approximately $1,015,000, advance to related party Monterey Capital Acquisition Corporation of approximately $1,934,000 and payment on finance leases of approximately $107,000.

Off-Balance Sheet Arrangements

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Commitments and Contractual Obligations

We are required to maintain a minimum cash balance equal to the lesser of (a) $2,000,000 and (b) the sum of the next three Installment Payments, as defined in the promissory note, coming due by our standby equity purchase agreement with YA II PN, LTD as described in Note 12 to our audited consolidated financial statements.

As of December 31, 2024, our minimum cash balance requirement was approximately $833,000.

On December 29, 2025, ConnectM entered into a Settlement and Termination Agreement (the “Yorkville Agreement”) with Yorkville related to the Company’s December 17, 2024 SEPA.

As of the date of this filing, the Company has approximately $1,900,000 in unfulfilled purchase orders from Greentech Renewables for Keen-branded heat pump equipment and smart controls, pursuant to orders placed in January 2026 and February 2026.

The Company expects to fulfill these orders in the ordinary course of business during fiscal year 2026.

We incur contractual obligations and financial commitments in the normal course of our operations and financing activities.

Contractual obligations include future cash payments required under existing contracts, such as debt and lease agreements.

These obligations may result from both general financing activities and from commercial arrangements that are directly supported by related operating activities.

Critical Accounting Policies and Significant Management Estimates

This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting periods.

The preparation of these consolidated financial statements requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting periods.

We base our estimates and judgments on historical experience and on various other factors that we believe are reasonable under the circumstances.

Actual results may differ from these estimates under varying assumptions or conditions.

While our significant accounting policies are described in Note 3 to our audited consolidated financial statements, we believe that the following accounting estimates require a greater degree of judgment and complexity.

Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

Derivative Financial Instruments

We evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815, Derivatives and Hedging (“ASC 815”).

Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met and depend on the nature of the host contract.

Derivative financial instruments are recognized at fair value on the grant date with changes in the fair value reported recognized in the consolidated statements of operations and comprehensive loss and each reporting date and are included in this Report under “Item 8.

Financial Statements”.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

Bifurcated embedded derivatives are classified with the related host contract on the Company’s consolidated balance sheets.

Derivative assets and liabilities are classified in the consolidated balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

Any change in one of the significant assumptions detailed below or the terms of the underlying agreements of our derivative financial instruments would likely have an impact on the concluded fair value of the derivative financial instruments.

See Note 14 - Derivatives and Note 15 - Fair Value Measurements to our audited consolidated financial statements for additional detail of the valuation methodologies and related assumptions utilized in determining the fair value or our derivative financial instruments

Forward Purchase Agreement (“FPA”)

Our FPA was initially recorded as a part of our Business Combination and was recorded at MCAC’s fair value on the Closing Date.

The FPA was amended in August 2024 (the “FPA Amendment”) and December 2024 (the “Second FPA Amendment”).

We re-measured the FPA to fair value at assumption and immediately prior to the FPA Amendment using a Black-Scholes pricing model which included certain subjective assumptions based on the term of the host contract including expected term, the estimated volatility of our stock price over the term.

The FPA Amendment and the Second FPA Amendment provided two separate settlement options.

We re-measured the FPA to fair value immediately prior to the December 2024 amendment, subsequent to the December 2024 amendment, and at December 31, 2024 using a Monte Carlo simulation model that applies a probability of occurrence to the present value of each settlement scenario.

Debt Conversion Adjustments and SEPA Derivative Liability

Our bifurcated embedded derivatives include the debt conversion adjustment provisions included in nine conversion agreements and the SEPA derivative liability.

The fair value of these derivatives was determined utilizing a Monte Carlo simulation model in order to incorporate subjective assumptions based on the terms of the specific host contracts and represent our best estimate at the valuation date.

The inputs to the model for each instrument include significant assumptions such as the drift term, volume-weighted average price (“VWAP”) based on a specified period of time as defined in the host contract and the estimated volatility of our stock price over the term which was determined by examining the historical volatilities of a group of industry peers, as the Company did not have significant trading history for our ConnectM common stock.

Convertible Debt

We evaluate convertible debt in accordance with ASC 470, “Debt with Conversion and Other Options” (“ASC 470”) to determine if embedded conversion features present in the convertible instrument shall be recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital.

Debt issuance costs are allocated proportionately to the debt host and conversion feature.

Convertible notes payable are reflected at fair value as the Company elected to measure these financial instruments with the fair value option.

Each period, the fair value of the convertible notes payable are calculated and the resulting gains and losses from the change in fair value of the convertible notes associated with non-credit components are recognized in income, while the change in fair value associated with credit components are recognized in accumulated other comprehensive income (“AOCI”), and subsequently released from AOCI upon maturity.

Significant assumptions used in the calculation of fair value for the Amended 2022 Convertible Notes, 2023 Convertible Notes and 2024 convertible notes include the probabilities of the various conversion scenarios based on the terms of the host contract which include the estimated probability of conversion at maturity, voluntary conversion and automatic conversion.

The Assumed 2024 Note is re-measured to fair value each reporting period with the most significant unobservable input used in the calculation of the is the expected average volume weighted average price for a share of our common stock for the five-business day period preceding the maturity date of the Company at the maturity date.

The fair value of the SEPA Convertible Note was determined using a Monte Carlo simulation model which incorporates subjective assumptions based on the terms of the specific host contract and represent our best estimate at the valuation date.

We included the estimated volatility of our stock price over the term of the note as of the measurement date, the remaining term of the host contract at the measurement date, the risk-free interest rate based upon United States Treasury interest rates appropriate for the expected term, and the estimated drift term.

Any change in one of the significant assumptions detailed above would likely have an impact on the concluded fair value of the SEPA Convertible Note.

See Notes 10 – Convertible Debt and Note 15 - Fair Value Measurements to our audited consolidated financial statements for additional detail.

Contingent Consideration Obligation

The fair value of the Contingent Consideration Obligation was determined using a Monte Carlo simulation model which incorporates subjective assumptions based on the terms of the specific host contract and represent our best estimate at the valuation date.

We included the estimated revenue and EBITDA volatility over the term, the term to payment of the host contract at the measurement date, the earnout and long-term risk-free interest rates based upon United States Treasury interest rates appropriate for the expected term.

Any change in one of the significant assumptions detailed above would likely have an impact on the concluded fair value of the Contingent Consideration Obligation.

Business Combinations

We account for business combinations using the acquisition method of accounting.

Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value.

Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities.

Determining the fair value of assets acquired, liabilities assumed, and noncontrolling interest requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items.

Reverse Recapitalization

Legacy ConnectM was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”).

The determination was primarily based on Legacy ConnectM’s shareholders prior to the Business Combination having a majority of the voting interests in the combined company, Legacy ConnectM’s ability to exert control over the majority of the board of directors of the combined company, Legacy ConnectM’s ability to maintain control of the board of directors on a go-forward basis, Legacy ConnectM’s senior management comprising the senior management of the combined company;

and Legacy ConnectM’s operations prior to the Business Combination comprise the ongoing operations of the combined company.

Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy ConnectM issuing stock for the net assets of MCAC, accompanied by a recapitalization.

The net assets of MCAC were stated at fair value with no goodwill or other intangible assets recorded.

See Note 5 – Reverse recapitalization to our audited consolidated financial statements for additional detail.

Long lived assets

We determined that long-lived assets, which include our goodwill and intangible assets, represent critical accounting estimates, as they involve significant judgment, estimates, and assumptions and to the extent that our estimates and assumptions materially change or if actual circumstances differ from those in the assumptions, our financial statements could be materially impacted.

Acquired intangible assets are initially valued at fair value using generally accepted valuation methods appropriate for the type of intangible asset.

Intangible assets with definite lives are amortized over their estimated useful lives and are reviewed for impairment if indicators of impairment arise.

Intangible assets assessed as having indefinite lives are not amortized, but are assessed for indicators that the useful life is no longer indefinite or for indicators of impairment each period.

Indicators we review, as applicable, include whether there has been a significant adverse change in the extent or manner in which our assets are being used, a significant adverse change in legal factors affecting our assets, customer attrition, and/or a cash flow loss.

Each reporting period, we evaluate the estimated remaining useful life of our intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization.

During the year ended December 31, 2024, we identified impairment indicators to our long lived assets attributed to recurring losses for two consecutive years at two subsidiaries and significantly declining sales at one of those subsidiaries.

During the year ended December 31, 2023, we identified impairment indicators attributed to our decision to wind down the operations of two subsidiaries and based upon the contractual terms of a noncompete agreement in connection with an acquisition.

We recognized an impairment loss of $1,567,812 and $157,103 on our goodwill for the years ended December 31, 2024 and 2023, respectively.

We recognized an impairment loss on our intangible assets of $835,816 and $24,750 for the years ended December 31, 2024 and 2023, respectively.

Share-based Compensation

We account for share-based payments that involve the issuance of shares of our common stock to employees and nonemployees and meet the criteria for share-based awards as stock-based compensation expense based on the grant-date fair value of the award.

We have elected to recognize the adjustment to stock-based compensation expense in the period in which forfeitures occur.

We recognize compensation expense for awards with only service conditions on a straight-line basis over the requisite service period for the entire award.

If factors change, and we utilize different assumptions including the probability of achieving performance conditions, share-based compensation cost on future award grants may differ significantly from share-based compensation cost recognized on past award grants.

If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate any remaining unearned share-based compensation cost or incur incremental cost.

Share-based compensation cost affects our compensation and benefits expenses.

In addition to the below, see Note 13 – Stock Based Compensation to our audited consolidated financial statements for additional detail.

For periods prior to the Business Combination, we issued stock option awards to employees and nonemployees under the Legacy ConnectM 2019 Equity Incentive Plan (the “2019 Plan”).

Legacy Options converted into an option to purchase a number of shares of Company common stock equal to the product of the number of shares of Legacy ConnectM common stock and the Exchange Ratio at an exercise price per share equal to the exercise price of the Legacy Option divided by the Exchange Ratio.

Each exchanged option is governed by the same terms and conditions applicable to the Legacy Option prior to the Business Combination.

No further grants can be made under the 2019 Plan.

The fair value of each option is estimated on the date of the grant using the Black-Scholes option-pricing model in order to measure the compensation cost associated with the award.

This model incorporates the following assumptions for inputs:

the expected volatility in the market value of the underlying common stock, the expected term of the contractual option, the risk-

free interest rate based upon quoted market yields for United State Treasury instruments with terms that were consistent with the expected term of the stock options and the expected dividend yield of the underlying common stock.

For periods subsequent to the Business Combination share-based awards will be issued under the 2023 Equity Incentive Plan (the “2023 Plan”) which was approved on July 10, 2024 in connection with the Business Combination and will be administered by our Board.

As of December 31, 2024, no awards were issued under to date under the 2023 Plan.

We account for warrants as either equity- classified or liability classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing liabilities from equity (“ASC 480”), and ASC 815.

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of our control, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance, modification, and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.

Changes in the estimated fair value of the liability-classified warrants are recognized as a non-cash gain or loss on the accompanying consolidated statements of operations and comprehensive loss.

We assess the classification of our warrants at each reporting date to determine whether a change in classification between equity and liability is required.

We determined that income taxes involve critical accounting estimates because management makes significant estimates, assumptions, and judgments to determine our provision for income taxes, deferred tax assets and liabilities, and any valuation allowance recorded against deferred tax assets, and to the extent that our estimates and assumptions materially change, or if actual circumstances differ materially from those in the assumptions, our financial statements could be materially impacted.

We utilize the asset and liability method for computing our income tax provision.

Deferred tax assets and liabilities reflect the expected future consequences of temporary differences between the financial reporting and tax bases of assets and liabilities as well as operating loss, capital loss, and tax credit carryforwards, using enacted tax rates.

We assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not likely, we establish a valuation allowance.

Assessing the need for a valuation allowance requires a great deal of judgement and we consider all available evidence, both positive and negative, to determine whether it is more likely than not that our deferred tax assets are recoverable.

We evaluate all available evidence including, but not limited to, history of earnings and losses, forecasts of future taxable income, and the weight of evidence that can be objectively verified.

See Note 17 - Income taxes of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for details of changes in our valuation allowance for the years ended December 31, 2024 and 2023.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement.

Interest and penalties related to unrecognized tax benefits are recognized within provision for income taxes.

federal tax purposes, digital asset transactions are treated on the same tax principles as property transactions.

We recognize a gain or loss when digital assets are exchanged for other property, in the amount of the difference between the fair market value of the property received and the tax basis of the exchanged digital assets.

Receipts of digital assets in exchange for goods or services are included in taxable income at the fair market value on the date of receipt.

Please refer to Note 2 “Summary of Significant Accounting Policies” in the notes to these consolidated financial statements included in this annual report for a description of significant accounting policies.

Reportable Segments

Our operations are organized into four reporting segments:

owned service network, transportation, logistics, and managed solutions.

Our operations are organized into six reporting segments:

Owned Service Network, Transportation, Logistics, Distributed Energy & Renewables, Managed Solutions, and Corporate & Strategic Assets.

The structure is designed to allow us to evaluate the performance of our different solutions offerings, provide improved service and drive future growth in a cost-efficient manner.

See Note 20 to the Consolidated Financial Statements for certain segment information about our business required by GAAP.

See Note 19 to the Consolidated Financial Statements for certain segment information about our business required by U.S.

Recently Issued and Adopted Accounting Standards

2 unchanged sentences

As a smaller reporting company, we are not required to make disclosures under this Item.

Financial Statements and Supplementary Data.

Our financial statements and the notes thereto begin on page F-1 of this Annual Report.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis