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Item 9A. Controls and Procedures

2025-08-04 compared with 2024-03-13 · 2591 added, 1096 removed, 191 unchanged (95% of the section changed)

Controls and Procedures.

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2023.

Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that during the period covered by this report, our disclosure controls and procedures were not effective due to material weaknesses in internal controls over financial reporting.

Specifically, we did not design and maintain an effective control environment to prevent or detect material misstatements in the financial statements.

The following material weaknesses in internal controls over financial reporting were identified:

● Controls over the accuracy and completeness of information included in our SEC filings including documents filed as exhibits to registration statements and information within registration statements.

● Controls over accuracy and completeness of financial data, specifically accrued expenses.

● Complex financial instruments accounting including relevant literature that applies to the accounting for forward purchase agreements.

● Controls over the protection of funds permitted for withdrawal from the trust, including the timely payment of income and other tax liabilities.

● Ineffective oversight by the board relating to the Company’s recurring non-compliance with an investment management trust agreement.

● Lack of controls over the Company’s tax compliance, specifically the timeliness of remittance of tax payments.

Remediation Efforts to Address Identified Material Weaknesses in Internal Control over Financial Reporting

To address these material weaknesses management has devoted, and plans to continue to devote, significant effort and resources to the remediation and improvement of its internal control over financial reporting, and to provide processes and controls over the internal communications within the Company, financial reporting advisors, legal advisors, and independent registered public accounting firm.

The Company’s efforts include the following:

● The Company implemented additional procedures to ensure that all legal agreements are reviewed by management, third-party accounting advisors and legal advisors before such agreements are executed.

● The Company implemented additional review procedures to ensure completeness and accuracy of financial data and accrued liabilities.

● The Company determined the need to use the expertise of outside financial reporting and valuation advisors to evaluate, research and understand the accounting standards that apply to complex financial instruments.

● The Company implemented additional oversight of the cash availability for the Company’s operational needs, which includes segregation of funds restricted for payment of taxes and the requirement for an additional member of the Company’s management team to review and approve the disbursements from the Trust Account.

Additionally, the Company has implemented monthly reviews of cash disbursements by the audit committee.

We can offer no assurance that these initiatives will ultimately have the intended effects.

Under the supervision and with the participation of our management, including our Chief Executive Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the fiscal year ended December 31, 2024.

Based on this evaluation, our Chief Executive Officer has concluded that, as of December 31, 2024, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting described below.

Management’s Report on Internal Control Over Financial Reporting

As required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financial reporting.

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with U.S.

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with GAAP.

Our internal control over financial reporting includes those policies and procedures that:

● Pertain to the maintenance of records, that in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company,

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.

GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our financial statements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting at December 31, 2023.

● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors, and

● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024.

In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Based on our assessments and those criteria, management determined that we did not maintain effective internal control over financial reporting as of December 31, 2023.

This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm due to our status as an emerging growth company under the JOBS Act.

Based on this assessment, management concluded that our internal control over financial reporting was not effective as of December 31, 2024, due to the material weaknesses described below.

This Annual Report on Form 10-K does not include an attestation report of internal controls from our independent registered public accounting firm due to our status as an emerging growth company under the JOBS Act.

Material Weaknesses in Internal Control Over Financial Reporting

In preparation of its consolidated financial statements to meet the requirements applicable to its current status as a publicly traded company, ConnectM and its independent registered public accounting firm identified material weaknesses in its internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

On April 8, 2025, the Company concluded there were errors that were material to the Company’s previously issued interim consolidated financial statements for the quarterly period ended September 30, 2024 as included in the Company’s Quarterly Report on Form 10-Q for such period (the “Prior Filing”) and the Prior Filing needed to be restated.

The impact of restatement on the consolidated financial statements for the quarterly period ended September 30, 2024 is included in this 10-K for the year ended December 31, 2024, within note 2 to the consolidated financial statements.

The first material weakness identified related to a deficiency in ConnectM’s controls over complex accounting topics centered around the appropriate treatment of specific incremental costs that were directly attributable to the transaction with MCAC and the forward purchase agreement.

Specifically, ConnectM’s accounting and internal control infrastructure did not allow for adequate review processes over this complex accounting topic due to lack of sufficient resources.

Due to this material weakness, material errors were identified and corrected in ConnectM’s audited financial statements for the year ended December 31, 2024.

The second material weakness identified related to a deficiency in ConnectM’s controls over revenue recognition centered around the appropriate timing of the recognition of its solar system services for which ConnectM recognized revenue when it had not fully satisfied its performance obligation.

Specifically, ConnectM’s accounting and internal control infrastructure did not allow for the proper assessment of the timing of revenue recognition for its solar system services due to lack of sufficient resources.

Due to this material weakness, material errors were identified and corrected in ConnectM’s audited financial statements for the year ended December 31, 2024.

There are other material weaknesses identified relating to complex accounting relating to debt and derivatives, contingent consideration, deferred offering costs, management not identifying impaired intangible assets, and to the Company not being able to timely issue their financial statements.

These material weaknesses are due to inadequate staffing at the Company.

An additional material weakness was identified due to the failure to get proper approval from the Board for related party transactions.

Remediation Plan

In light of these facts, our management, including our Chief Executive Officer, is in the process of implementing processes and controls and other post-closing procedures and has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting described above, the consolidated financial statements for the period covered by and included in this Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with US GAAP.

To address our material weakness, we are improving our processes of reviewing financial statements, increasing our communication with third-party service providers around transactions that the Company has entered, and implementing additional procedures to ensure that the review of the Company’s financial statements is supported by sufficient documentation to determine accuracy.

We will not be able to fully remediate these material weaknesses until these steps have been completed and the controls have been operating effectively for a sufficient period of time.

Inherent Limitations on Effectiveness of Controls

While management is working to remediate the material weaknesses, there is no assurance that these remediation efforts, when economically feasible and sustainable, will successfully remediate the identified material weaknesses.

If we are unable to establish and maintain an effective system of internal control over financial reporting, the reliability of our financial reporting, investor confidence in us and the value of our common stock could be materially and adversely affected and the Company could be subject to sanctions or investigations by the SEC or other regulatory authorities.

Effective process and controls over financial reporting is necessary for us to provide reliable and timely financial reports and are designed to reasonably detect and prevent fraud.

Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations.

For as long as we are a “smaller reporting company” under the U.S.

securities laws, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404.

An independent assessment of the effectiveness of internal control over financial reporting could detect problems that our management’s assessment might not.

Undetected material weaknesses in our internal control over financial reporting could lead to financial statement restatements and require us to incur the expense of remediation.

Moreover, we do not expect that process and controls over financial reporting will prevent all errors and all fraud.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must

be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

The failure of our control systems to prevent error or fraud could materially adversely impact us.

Changes in Internal Control over Financial Reporting

Other than changes that have resulted from the material weakness remediation activities noted above, there has been no change in our internal control over financial reporting during the fiscal quarter ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

In light of the material weaknesses described above, we are taking the actions described above to remediate such material weaknesses.

Except as described above, there was not any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

N o t app li cable .

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

Directors, Executive O ﬃ cers and Corporate Governance.

Insider Trading Policy

The Company has adopted an insider trading compliance policy and program applicable to directors, executive officers and employees.

The Company believes this policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the OTC Markets Group Inc.

listing standards.

A copy of the insider trading policy is filed as Exhibit [19.1] to this Form 10K.

Code of Ethics

All of our employees, including our Chief Executive Officer and Chief Financial Officer, are required to abide by our Code of Ethics to ensure that our business is conducted in a consistently legal and ethical manner.

These policies form the foundation of a comprehensive process that includes compliance with corporate policies and procedures, an open relationship among colleagues that contributes to good business conduct, and a commitment to honesty, fair dealing and full compliance with all laws and regulations affecting the Company’s business.

Our policies and procedures cover all major areas of professional conduct, including employment policies, conflicts of interest, intellectual property and the protection of confidential information, as well as strict adherence to laws and regulations applicable to the conduct of our business.

As required by the Sarbanes-Oxley Act of 2002, our Audit Committee has procedures to receive, retain and treat complaints received regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

A copy of the Code of Ethics is filed as Exhibit 14.1 to this Annual Report on Form 10-K.

We will disclose any future amendments to, or waivers from, provisions of these ethics policies and standards on our website as promptly as practicable, as may be required under applicable SEC and Nasdaq rules and, to the extent required, by filing Current Reports on Form 8-K with the SEC disclosing such information.

Directors, Executive Officers and Corporate Governance.

Officers and Directors

Our officers and directors are as follows:

The following table sets forth certain information as of the date of this Report, with respect to our directors, executive officers and significant employees.

Bhaskar Panigrahi

Chairman of the Board and Chief Executive Officer

Bala Padmakumar

Chief Executive Officer and Chairman of the Board

Executive Vice President and Director

Chief Financial Officer

Vice-Chairman of the Board, Corporate Development

Girish Subramanya

Chief Technology Officer

Mahesh Choudhury

Vice President, US Operations

Kevin Stateham

Vice President, Sales and Corporate Development

Kathy Cuocolo(1)(2)(3)

Stephen Markscheid(1)(2)(3)

Bala Padmakumar has been the company’s Chief Executive Officer and the Chairman of the board of directors since September 2021.

Gautam Barua(1)(2)(3)

(1) Member of the Audit Committee

(2) Member of the Compensation Committee

(3) Member of the Nominating and Corporate Governance Committee

Information about our Executive Officers and Directors

Bhaskar Panigrahi is a nominee for the Combined Company’s board of directors and serves as the Chairman of ConnectM and has been Chief Executive Officer of ConnectM since November 2015.

Panigrahi has a rich experience of more than 25 years as a serial entrepreneur and investor.

Panigrahi has an extensive experience in setting up, building, formulating corporate strategy and direction for various successful organizations.

Panigrahi is also an investor in, and board member of, CCI Energy/Fairhaven Wind, Sure Ventures, BluStream Corp, and Blue Cloud Ventures.

Prior to ConnectM, Mr.

Panigrahi was Chairman and co-founder of Cambridge Energy Holdings from 2008 to 2016, and led the launching and building of multiple clean energy ventures including Cambridge Energy Resources (ultra-thin silicon wafers), Cambridge Clean Energy (replacing diesel with Solar and Battery in telecom towers in emerging economy), CCI Energy (community wind and solar projects under long term PPAs), EMX Control (light-weight controllers for renewable installations), and others.

Prior to Cambridge Energy Holdings, Mr.

Panigrahi was co-founder and chairman of Cambridge Technology Enterprises from 2004 to 2010, a global business and technology Services company where Mr.

Panigrahi led a successful initial public offering on both Bombay and National Stock Exchange in India.

Under his leadership, Cambridge Technology grew at 100% compound annual growth rate.

Prior to Cambridge Technology Enterprises, Mr.

Panigrahi served as Chief Executive Officer of CellExchange from 2002 to 2005, which acts as an enterprise systems developer to government enterprises and was named a Washington Technology Fast 50 company.

Panigrahi also served as the Chief Executive Officer of Unique Computing Solutions and e-Solutions Integrator from 2000 to 2002, an internet technology and services firm.

Unique Computing Solutions was named twice on Inc.

500 List of fastest growing private companies, Deloitte Regional Fast 50 and National Fast 500 rosters.

Panigrahi invested in and promoted many other technology companies, including 1Efficiency (Energy Monitor in Commercial Buildings), Mascot Networks (product and solutions provider in education space) and Trading Research Design (financial risk management solution provider).

Panigrahi holds a BS in Computer Science from National Institute of Technology, Suratkal, India.

We believe that Mr.

Panigrahi has the qualifications to be a member of our board of directors because of his extensive experience being chairman and board of directors in multiple companies in the past and his leadership ability to set direction, vision, and leadership with guidance from other directors.

Bala Padmakumar is a nominee for the Combined Company’s board of directors and will serve as Vice Chairman of ConnectM following the Business Combination.

In addition to his role as director, Mr.

Padmakumar will focus on strategic financing, investor communications and strategic roadmap and product development.

Padmakumar has been MCAC’s Chief Executive Officer and the Chairman of the MCAC board of directors since September 2021.

Padmakumar is a broad based entrepreneur and technologist with a strong background in strategic partnerships, product and business development, technology and operations, private equity, and venture capital environments.

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Padmakumar was the Chief Executive Officer at Amperics, Inc., a developer and vendor of high energy density ultracap hybrid storage systems.

Padmakumar also has extensive experience in the clean energy sectors, having been an advisor to Lionrock Batteries Ltd., which creates flexible batteries and high performance separator technology since 2019, an advisor to the board of directors and CEO of Hyperscale Data Center Company, a company focused on energy usage efficiency in hyperscale data centers from 2018 to 2020, and an advisor to the chairman of Advanced Systems Automation Limited in Singapore, where he advised on issues surrounding urban transportation, High Energy Density Li Ion battery (NMC technology) and 3D printing technology from 2017 to 2019.

Padmakumar also has extensive experience in the clean energy

sectors, having been an advisor to Lionrock Batteries Ltd., which creates flexible batteries and high performance separator technology from 2019 to 2024, an advisor to the board of directors and CEO of Hyperscale Data Center Company, a company focused on energy usage efficiency in hyperscale data centers from 2018 to 2020, and an advisor to the chairman of Advanced Systems Automation Limited in Singapore, where he advised on issues surrounding urban transportation, High Energy Density Li Ion battery (NMC technology) and 3D printing technology from 2017 to 2019.

Padmakumar also has broad experience advising on capital raising and corporate strategy, serving as a mentor to OneValley Inc., a global entrepreneurship platform for individuals, startups, and corporations seeking innovation and accelerated growth, and as an advisor to several early-stage companies from audio technologies to SaaS products.

Padmakumar has a Bachelor’s Degree in Technology from the University of Madras in Chemical Engineering and a Master of Science Degree in Chemical Engineering from Stanford University.

Vivek Soni has been the company’s Executive Vice President and a member of the board of directors since September 2021.

Soni has held board and crucial managerial positions at numerous businesses within the cleantech and venture space.

Soni has been an Operating Partner of Prithvi Ventures LLC since January 2021, which is a Climatech fund.

At Prithvi Ventures, Dr.

Soni has played a vital role in investing $30 million since 2021 in the clean transition sector that includes investments in energy storage, electrical vehicle (EV) technology, renewable energy, and novel materials companies.

Since April 2023, Dr.

Soni is a member of the Board of Directors of Rushnu, Inc.

and is a Board Observer at Tandem Repeat Technologies, Inc.

since November 2022.

Since September 2017, Dr.

Soni has been on the Advisory Board of Reading Municipal Light Department, the largest municipal electric utility in Massachusetts and currently is the Chair.

From 2016 to May 2022, he was the Managing Director for TiE Boston Angels, where he created a robust process for syndication and due diligence, and also grew investments threefold over five years.

From 2007 to 2011, he was a Venture Advisor to Nomura International plc’s New and Clean Energy Technology Ventures fund, a late stage Cleantech VC fund.

Since 2006, Dr.

Soni has also been the Managing Partner of Boston Cleantech, a company that enables investors and entrepreneurs to grow businesses in cleantech, energy, chemicals, materials and manufacturing.

His responsibilities include promoting early-stage companies and impact investing in cleantech, carbon capture and sequestration, and solar energy.

Soni is also a member of the boards of directors of A.T.E Private Limited, A.T.E.

Enterprises Private Limited and A.T.E.

Huber Envirotech Private Limited, where he provides expertise on governance, technology, innovation, cleantech, fundraising, acquisitions and global expansion.

Soni was also President, Corporate Technology Strategy and Services at the Aditya Birla Group (a large India based multi-national industrial group) from 2001 to 2004 where he was responsible for R&D activities in manufacture of novel materials and fuel cells.

Soni holds a Bachelor’s Degree in

Technology from the Indian Institute of Technology, New Delhi, India, a Master of Science Degree in Polymer Science & Engineering from the University of Massachusetts, Amherst, a Ph.D.

in Polymer Science & Engineering from the University of Massachusetts, Amherst, and an Executive Development Program certificate from the Kellogg School of Management at Northwestern University.

Daniel Davis has been the company’s Chief Financial Officer since 2021.

Davis is a skilled financial executive with a proven background in managing and growing companies.

Davis served as the Chief Administrative Officer of SeQure Dx, Inc., a company focused on providing off-target diagnostics in gene editing from April 2021 to October 2021, and as the Chief Financial Officer of SeQure Dx, Inc.

from November 2021 to November 2022.

Prior to that, from 2007 through April 2020, Mr.

Davis was a Director in the Life Sciences and Technology Practice at Accounting Management Solutions (“AMS”), and subsequently, following its acquisition, at CliftonLarsonAllen LLP, an accountancy firm.

Davis founded and managed the life sciences practice and provided strategic consulting on complex engagements surrounding fundraising and mergers and acquisitions strategies.

Davis is also co-founder, acting Chief Financial Officer and Director of AngioWave Imaging, LLC, where he led an over-subscribed seed round, and was a key contributor to the strategic plan and drove the forecasting for the five-year plan.

Davis received his B.A.

in Political Science from Brown University and his M.B.A from the University of Pennsylvania, Wharton School of Business.

Leela Gray has been a member of the company’s board of directors since 2021.

Gray is a retired Brigadier General with 30 years in the U.S.

Army, including seven in the U.S.

Army Reserve while in corporate positions developing business expertise.

Ms.Gray has served as a Director of Empower Rideshare, a SaaS company disrupting the ride hailing industry, since November 2021, and Cycurion, Inc., a Network Communications and Information Technology Security Solutions provider, since March 2022.

Between November 2018 and May 2019, Ms.

Gray served as Strategic Advisor to United States Army Cyber Command, playing a key role in innovating and modernizing cyber policy shaped by her market and stakeholder insights, including her tenure at the Department of State, where she created interagency and international partner initiatives in Cyber/Information Warfare.

Prior to that, from August 2016 to July 2018, Ms.

Gray served as a Deputy Commanding General at the U.S.

Army Central Command guiding strategies to transform operations and logistics.

As a National Security senior executive with Top Secret clearance, Ms.

Gray represented the United States internationally, shaped policy, and advised logistics and governance, building on a global perspective that also included two combat operations and one peacekeeping mission.

Since June 2020, Ms.

Gray has been a mentor at Tampa Bay WAVE’s Tech Accelerator programs.

From July 2019 to June 2021, Ms.

Gray served on the Executive Board of Alpha Omicron Pi Fraternity, a $100 million international nonprofit with over 100,000 members.

Gray currently serves on the Advisory Board of Empower Rideshare, SaaS ridesharing company alternative to Uber and Lyft and holds the National Association of Corporate Directors (NACD) Directorship CertificationTM.

Gray earned a Master of Strategic Studies from the United States Army War College, an M.A.

in Journalism from Ball State University, and a B.A.

in Communications from Elon University.

Kathy Cuocolo has been a member of the company’s board of directors since 2021.

We believe that Mr.

Padmakumar has the qualifications to be a member of our Board of Directors because of his broad experience advising on capital raising and corporate strategy, serving as a mentor to individuals, startups, and corporations seeking innovation and accelerated growth, and as an advisor to several early-stage companies from audio technologies to SaaS products.

Girish Subramanya serves as the Global Chief Technology officer and has served as the head of ConnectM’s India operations since June 2018.

Subramanya has served in served positions at ConnectM since November 2007.

Subramanya is a technology enthusiast and an entrepreneur who has led several product launches in his career, with many of them from concept to market ready solution for industries including finance, e-commerce and enterprise segments.

For over a decade Mr.

Subramanya held product management roles at i2 Technologies, a full-service supply chain management company providing consulting, technology, and managed services, Integral Systems, a currency technology partner of financial institutions, and Coreobjects, an end-to-end software development company.

Subramanya co-founded ConnectM to enable large enterprises and product original equipment manufacturers (OEMs) to manage their distributed assets & operations effectively and improve efficiencies using Internet of Things (IoT) technologies along with value creation over time for the businesses they run and for their end customers.

Subramanya conceived and built a core platform & technology stack in the early stages of ConnectM’s growth that significantly contributed in differentiating ConnectM among its peers and positioned itself as a PaaS (Platform as a Service) company that fueled traction in the market and helped acquiring a marquee client base.

During 2020, Mr.

Subramanya pivoted the India business from a cross vertical IoT solutions to electric vehicle industry centric solutions which is being adapted by over 10+ OEMs and infra providers into their products.

Subramanya holds a Master of Computer Applications from the Department of Electronics and Accreditation of Computer Courses (DOEACC), New Delhi, India.

Mahesh Choudhury heads ConnectM’s internal operations including supply chain, information technology (IT), and general administration and has done so since January 2017, including overseeing the finance and information technology functions.

Choudhury has over 25 years of experience in various operational management rolls.

He is very passionate about building and engaging the right technology for climate control and energy management in delivering value to both residential and commercial customers.

Prior to ConnectM, Mr.

Choudhury had 12 years of experience with the electrification and decarbonization industry.

Choudhury is instrumental in defining the remote performance management platform for the heating, ventilation and air conditioning (HVAC) industry.

Prior to ConnectM, he led finance and supply chain at Sustainable New Energy (SNE) from August 2010 to September 2014 and implemented large scale wind and solar energy projects.

Choudhury was a co-founder of Cambridge Clean Energy (CCE) and assisted with developing remote power management technology for powering telecom towers and led the operations globally.

Choudhury also has 17 years of experience with utility/energy management.

Choudhury has an MS degree from Indian Institute of Technology (IIT), India.

Kevin Stateham heads ConnectM’s sales and corporate development operations and has done so since June 2018.

Stateham is a successful business development, sales operations executive and management leader with over two decades of technology industry experience.

In addition, as the head of client relations at ConnectM, Mr.

Stateham plays a key role in driving customer goals, product utilization, business transformation, and revenue expansion by ensuring the engagement, success, retention, and growth of ConnectM customers.

Stateham also manages ConnectM’s mergers and acquisitions, acquiring nine businesses since 2018.

Stateham is a technology industry veteran, with over 25 years leading successful data communications and SaaS companies in key sales and business development roles.

Before ConnectM, Mr.

Stateham was a sales lead at Keen Home Inc, where he grew the company’s business to business sales by 50% year over year.

Prior to Keen Home, Mr.

Stateham was the director of sales at Network Access Solutions, Inc.

where he was responsible for the largest frame relay network conversion to digital subscriber lines with virtual private network (VPN), encompassing over 22,000 United States post offices, and was involved in the company’s successful initial public offering.

Non-Employee Directors

Kathy Cuocolo is a nominee for the Combined Company’s board of directors and has served as a member of the MCAC Board since 2021.

Cuocolo is a versatile executive and director with demonstrated success in developing and managing financial services operations on a global basis.

Cuocolo is currently a director and Audit Chair of Greenbacker Renewable Energy Company LLC and a director at Syntax ETF Trust.

Her prior directorships include President and Director of The China Fund, Inc., which invests primarily in private placements in mainland China, Chairperson of Select Sector ETF Trust, and a director of Guardian Life family of funds.

Her prior directorships include President and Director of The China Fund, Inc.,

which invests primarily in private placements in mainland China, Chairperson of Select Sector ETF Trust, and a director of Guardian Life family of funds.

From 2014 through March 2020, Ms.

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Cuocolo received her CPA license in the Commonwealth of Massachusetts in 1981.

Stephen Markscheid has been a member of our board of directors since 2021.

We believe that Ms.

Cuocolo has the qualifications to be a member of our Board of Directors because of her extensive experience in cleantech, finance/audit, and as independent director in other public companies.

Stephen Markscheid is a nominee the Combined Company’s board of directors and has served as member of the MCAC Board since 2022.

Markscheid is currently the Managing Partner of Aerion Capital and currently serves as a director of Fanhua, Inc.

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in international affairs from Johns Hopkins University in 1980, and an MBA from Columbia University in 1991, where he was class valedictorian.

Number and Terms of Office of Officers and Directors

We currently have five directors.

Our board of directors is divided into two classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a two-year term.

In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on Nasdaq.

The term of office of the first class of directors, consisting of Kathy Cuocolo, Leela Gray and Stephen Markscheid, will expire at our first annual meeting of stockholders.

The term of office of the second class of directors, consisting of Bala Padmakumar and Vivek Soni, will expire at the second annual meeting of stockholders.

Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office.

Our board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate.

Nasdaq listing standards require that a majority of our board of directors be independent.

An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director.

Our board of directors has determined that all of its directors, other than Bala Padmakumar and Vivek Soni, are “independent directors” as defined in the Nasdaq listing standards and applicable SEC rules.

Officer and Director Compensation

None of our officers has received any cash compensation for services rendered to us.

Commencing on May 10, 2022, we agreed to pay our Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support.

Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.

No compensation of any kind, including any finder’s fee, reimbursement, consulting fee or monies in respect of any payment of a loan, will be paid by us to our Sponsor, officers and directors, or any affiliate of our Sponsor or officers, prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that it is).

However, these individuals will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations.

Our audit committee will review on a quarterly basis all payments that were made to our Sponsor, officers or directors, or our or their affiliates.

Any such payments prior to an initial business combination will be made using funds held outside the Trust Account.

Other than quarterly audit committee review of such payments, we do not expect to have any additional controls in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket expenses incurred in connection with identifying and consummating an initial business combination.

After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company.

All of these fees will be fully disclosed to stockholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our stockholders in connection with a proposed initial business combination.

We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management.

It is unlikely the amount of such compensation will be known at the time of the proposed initial business combination, because the directors of the post-combination business will be responsible for determining officer and director compensation.

Any compensation to be paid to our officers will be determined, or recommended to the board of directors for

determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors.

We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our officers and directors may negotiate employment or consulting arrangements to remain with us after our initial business combination.

The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination.

We are not party to any agreements with our officers and directors that provide for benefits upon termination of employment.

We believe that Mr.

Markscheid has the qualifications to be a member of our Board of Directors because of his extensive experience in cleantech and as independent director in other public companies.

Gautam Barua is a nominee for the Combined Company’s board of directors.

Barua is the founder of Aclaria Partners, which he founded in December 2004 and is currently the President.

Barua has distinctive expertise in originating and profitably investing in Environmental, Social and Governance (ESG) opportunities, with a consistently successful and pioneering career in climate and sustainability spanning more than two decades.

Barua has led $80M of profitable clean water and energy deals, founded a market-leading clean energy firm, and advised major corporations on sustainability.

Barua first engaged on ESG in the 1990s, contributing to Nobel Prize-winning work on climate change and carbon sequestration while also working for Yale University’s investments office.

Barua has served in advisory, new business, and mergers and acquisitions roles at McKinsey and Morgan Stanley from 2013 to 2018;

held an appointment as California Deputy State Controller from 2003 to 2004, helping spark creation of a $1.5B cleantech investment program at CalPERS, the largest pension fund in the United States;

served on boards of sustainability and conservation non-governmental organizations;

and been a Silicon Valley executive.

In addition to a Bachelor of Arts cum laude in Economics and Mathematics from Yale University, Mr.

Barua earned a Master of Business Administration with Distinction from Harvard University, where he also completed Executive Education in Entrepreneurship.

We believe that Mr.

Barua has the qualifications to be a member of our Board of Directors because of his experience in cleantech leadership positions and passion for electrification.

Family Relationships

There are no family relationships between the Combined Company’s board of directors and any of its executive officers.

Board of Directors

Director Independence

Nasdaq listing rules require that a majority of the board of directors of a company listed on Nasdaq be composed of “independent directors,” which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director.

The Combined Company’s board of directors has determined that, upon the consummation of the Merger, each of Kathy Cuocolo, Stephen Markscheid and Gautam Barua will be an

independent director under the Nasdaq listing rules and Rule 10A-3 of the Exchange Act.

In making these determinations, the Combined Company’s board of directors considered the current and prior relationships that each non-employee director has with ConnectM and will have with the Combined Company and all other facts and circumstances the Combined Company’s board of directors deemed relevant in determining independence, including the beneficial ownership of our common stock by each non-employee director, and the transactions involving them described in the section titled “ Certain Relationships and Related Transactions .”

Classified Board of Directors

The Combined Company’s board of directors will be divided into three classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term.

Committees of the Board of Directors

Our board of directors has two standing committees:

an audit committee and a compensation committee.

Subject to phase-in rules and a limited exception, Nasdaq rules and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors, and Nasdaq rules require that the compensation committee of a listed company be comprised solely of independent directors.

The standing committees of Combined Company’s board of directors will consist of an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee.

The expected composition of each committee following the Merger is set forth below.

Audit Committee

We have established an audit committee of the board of directors, which consists of Kathy Cuocolo, Stephen Markscheid, and Leela Gray.

Kathy Cuocolo chairs the audit committee.

Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least three members of the audit committee, all of whom must be independent.

Each of Kathy Cuocolo, Stephen Markscheid, and Leela Gray meet the independent director standard under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange Act.

Each member of the audit committee is financially literate and our board of directors has determined that Kathy Cuocolo qualifies as an “audit committee financial expert” as defined in applicable SEC rules.

We have adopted an audit committee charter, which details the principal functions of the audit committee, including:

● the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm engaged by us;

● pre-approving all audit and permitted non-audit services to be provided by the independent registered public accounting firm engaged by us, and establishing pre-approval policies and procedures;

● setting clear hiring policies for employees or former employees of the independent registered public accounting firm, including but not limited to, as required by applicable laws and regulations;

● setting clear policies for audit partner rotation in compliance with applicable laws and regulations;

● obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures, (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues and (iii) all relationships between the independent registered public accounting firm and us to assess the independent registered public accounting firm’s independence;

● reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction;

● reviewing with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any

employee complaints or published reports that raise material issues regarding our consolidated financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.

An Audit Committee of the Combined Company has been established in accordance with Section 3(a)(58)(A) of the Exchange Act and consists of Kathy Cuocolo, Stephen Markscheid and Gautam Barua, each of whom are independent directors and are “financially literate” as defined under the Nasdaq listing standards.

Kathy Cuocolo serves as chairman of the Audit Committee.

The Board has determined that Kathy Cuocolo qualifies as an “audit committee financial expert,” as defined under rules and regulations of the SEC.

The Audit Committee’s duties are specified in the Audit Committee Charter that was adopted at the Effective Time.

Compensation Committee

We have established a compensation committee of the board of directors, which consists of Kathy Cuocolo, Stephen Markscheid, and Leela Gray.

Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least two members of the compensation committee, all of whom must be independent.

Kathy Cuocolo, Stephen Markscheid, and Leela Gray are independent and Mr.

Markscheid serves as Chairman of our compensation committee.

We have adopted a compensation committee charter, which details the principal functions of the compensation committee, including:

● reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, if any is paid by us, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;

● reviewing and approving on an annual basis the compensation, if any is paid by us, of all of our other officers;

● reviewing on an annual basis our executive compensation policies and plans;

● implementing and administering our incentive compensation equity-based remuneration plans;

● assisting management in complying with our proxy statement and annual report disclosure requirements;

● approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;

● if required, producing a report on executive compensation to be included in our annual proxy statement;

● reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.

Notwithstanding the foregoing, as indicated above, other than the payment to our Sponsor of $10,000 per month, for up to 24 months, for office space, utilities and secretarial and administrative support and reimbursement of expenses, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing stockholders, officers, directors or any of their respective affiliates, prior to, or for any services they render in order to effectuate the consummation of an initial business combination.

Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination.

The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser.

However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.

Director Nominations

We do not have a standing nominating committee though we intend to form a corporate governance and nominating committee as and when required to do so by law or Nasdaq rules.

In accordance with Rule 5605 of the Nasdaq rules, a majority of the independent directors may recommend a director nominee for selection by the board of directors.

The board of directors believes that the independent directors can satisfactorily carry out the responsibility of properly selecting or approving director nominees without the formation of a standing nominating committee.

The directors who participate in the consideration and recommendation of director nominees are Kathy Cuocolo,

Leela Gray and Stephen Markscheid.

In accordance with Rule 5605 of the Nasdaq rules, all such directors are independent.

As there is no standing nominating committee, we do not have a nominating committee charter in place.

The board of directors will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders).

Our stockholders that wish to nominate a director for election to our board of directors should follow the procedures set forth in our bylaws.

We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess.

In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders.

Compensation Committee Interlocks and Insider Participation

No member of the compensation committee serves or served during the fiscal year ended December 31, 2023, as a member of the board of directors or compensation committee of a company that has one or more executive officers serving as a member of the board of directors or compensation committee.

Code of Ethics

We have adopted a Code of Ethics applicable to our directors, officers and employees.

We have filed a copy of our Code of Ethics as an exhibit to the registration statement filed in connection with the Initial Public Offering.

You are able to review the Code of Ethics by accessing our public filings at the SEC’s website at www.sec.gov.

In addition, a copy of the Code of Ethics will be provided without charge upon request from us.

We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.

Legal Proceedings Involving Our Officers and Directors

There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such.

Conflicts of Interest

Subject to pre-existing fiduciary or contractual duties as described below, our officers and directors have agreed to present any business opportunities presented to them in their capacity as a director or officer of our company to us.

Certain of our officers and directors presently have fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity.

Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity.

We believe, however, that the fiduciary duties or contractual obligations of our officers or directors have not materially affected our ability to complete our initial business combination.

Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.

Our officers and directors may become officers or directors of another special purpose acquisition company with a class of securities intended to be registered under the Exchange Act, even prior to us entering into a definitive agreement for our initial business combination.

Potential investors should also be aware of the following other potential conflicts of interest:

● None of our officers or directors is required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities.

● In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities with which they are affiliated.

Our management may have conflicts of interest in determining to which entity a particular business opportunity should be presented.

● Our initial stockholders have agreed to waive their redemption rights with respect to any Founder Shares and any public shares held by them in connection with the consummation of our initial business combination.

Additionally, our initial stockholders have agreed to waive their redemption rights with respect to any Founder Shares held by them if we fail to consummate our initial business combination by May 13, 2024.

If we do not complete our initial business combination within such applicable time period, the proceeds of the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of our public shares, and the Private Placement Warrants (and the underlying securities) will expire worthless.

Our initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of (i) 180 days after the date of the consummation of our initial business combination or (ii) the date on which we consummate a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of Class A Common Stock for cash, securities or other property (except as described under the section of our Initial Public Offering prospectus titled “Principal Stockholders Restrictions on Transfers of Founder Shares and Private Placement Warrants”).

Any permitted transferees will be subject to the same restrictions and other agreements of our initial stockholders with respect to any Founder Shares.

Notwithstanding the foregoing, if the closing price of our shares of Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing 150 days after our initial business combination, the Founder Shares will no longer be subject to such transfer restrictions.

With certain limited exceptions, the Private Placement Warrants and the shares of Class A Common Stock underlying such warrants, will not be transferable, assignable or saleable by our Sponsor or its permitted transferees until 30 days after the completion of our initial business combination.

Since our Sponsor and officers and directors may directly or indirectly own common stock and warrants following our Initial Public Offering, our officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination.

● Our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination.

● Our Sponsor, officers or directors may have a conflict of interest with respect to evaluating a business combination and financing arrangements as we may obtain loans from our Sponsor or an affiliate of our Sponsor or any of our officers or directors to finance transaction costs in connection with an intended initial business combination.

Up to $1,500,000 of such Working Capital Loans may be convertible into warrants at a price of $1.00 per warrant (which, for example, would result in the holders being issued 1,500,000 warrants if $1,500,000 of notes were so converted), upon consummation of our initial business combination.

Such warrants would be identical to the Private Placement Warrants, including as to exercise price, exercisability and exercise period.

The conflicts described above may not be resolved in our favor.

In general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:

● the corporation could financially undertake the opportunity;

● the opportunity is within the corporation’s line of business;

● it would not be fair to our company and its stockholders for the opportunity not to be brought to the attention of the corporation.

Accordingly, as a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities.

Furthermore, our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity

is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.

Below is a table summarizing the entities to which our executive officers and directors currently have fiduciary duties or contractual obligations:

NAME OF AFFILIATED COMPANY

Bala Padmakumar

Advantary LLC

Lionrock Batteries

A.T.E Private Limited

Enterprises Private Limited

Huber Envirotech Private Limited

Reading Municipal Light Department

Vice-Chair, Advisory Board

Tandem Repeat, Inc.

Board Observer

AngioWave Imaging, LLC

Director and Chief Financial Officer

Cycurion, Inc.

Empower Rideshare

Board Advisor

Kathy Cuocolo

Syntax ETF Trust

Greenbacker Renewable Energy Company LLC

Director and Audit Chair

Stephen Markscheid

JinkoSolar Holding Co., Ltd.

Zhongjin Technology Services Group Company Limited

UGE International Limited

NanoGraf Corporation

Board Advisor

Intelligent Generation LLC

Board Advisor

Aerion Capital

Managing Partner

Four Leaf Acquisition Corporation

Board Advisor

Hago Energetics, Inc.

Board Advisor

Accordingly, if any of the above executive officers and directors becomes aware of a business combination opportunity which is suitable for any of the above entities to which he or she has current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity.

We are not prohibited from pursuing an initial business combination with a company that is affiliated with our Sponsor, officers or directors.

In the event we seek to complete our initial business combination with such a company, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of FINRA, or from an independent accounting firm, that such an initial business combination is fair to our company from a financial point of view.

In the event that we submit our initial business combination to our public stockholders for a vote, pursuant to the letter agreement, our Sponsor, officers and directors have agreed to vote any Founder Shares held by them and any public shares purchased during or after the offering (including in open market and privately negotiated transactions) in favor of our initial business combination.

Limitation on Liability and Indemnification of Officers and Directors

Our amended and restated certificate of incorporation provides that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware law, as it now exists or may in the future be amended.

In addition, our amended and restated certificate of incorporation provides that our directors are not be personally liable for monetary damages to us or our stockholders for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived an improper personal benefit from their actions as directors.

We have entered into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in our amended and restated certificate of incorporation.

Our bylaws also will permit us to secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit such indemnification.

We have purchased a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors.

These provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty.

These provisions also may have the effect of reducing the likelihood of derivative litigation against officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders.

Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.

We believe that these provisions, the directors’ and officers’ liability insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.

The Compensation Committee consists of Gautam Barua and Stephen Markscheid, each of whom is an independent director.

Stephen Markscheid serves as chairman of the Compensation Committee.

The functions of the Compensation Committee are set forth in a Compensation Committee Charter that was adopted at the Effective Time.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee (the “ Nominating Committee ”) consists of Kathy Cuocolo, Stephen Markscheid and Gautam Barua, each of whom is an independent director under Nasdaq’s listing standards.

Gautam Barua serves as the chairman of the Nominating Committee.

The Nominating Committee is responsible for overseeing the selection of persons to be nominated to serve on the board of directors.

The Nominating Committee considers as potential members of the board of directors persons identified by its members, management, stockholders, investment bankers and others.

The guidelines for selecting nominees, are specified in the Nominating and Corporate Governance Committee Charter which was adopted at the Effective Time.

Code of Conduct and Ethics

ConnectM has a code of conduct and ethics (the “ Code of Ethics ”) for its directors, officers, employees and certain affiliates in accordance with applicable federal securities laws, a copy of which will be available on our website at https://www.connectm.com.

If amend or grant a waiver of one or more of the provisions of our Code of Ethics, we intend to satisfy the requirements under Item 5.05 of Form 8-K regarding the disclosure of amendments to or waivers from provisions of our Code of Ethics that apply to our principal executive officer, principal financial officer and principal accounting officer by posting the required information on our website at https://www.connectm.com.

The information on this website is not part of this Report.

Involvement in Certain Legal Proceedings

Except as disclosed below, to our knowledge, none of our current directors or executive officers has, during the past ten (10) years:

● been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

● had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two (2) years prior to that time;

● been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his or her involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

● been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

● been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity;

● been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Executive Compensation.

Please see “Officer and Director Compensation” under Item 10 of this Annual Report on Form 10-K.

The following section provides compensation information pursuant to the scaled SEC disclosure rules applicable to “emerging growth companies.”

This section discusses the material components of the executive compensation program for our named executive officers who are named in the “ Summary Compensation Table ” below.

In 2024, our “named executive officers” and their positions with ConnectM were as follows:

● Bhaskar Panigrahi, who served as Chairman and Chief Executive Officer;

● Girish Subramanya, who served as Chief Technology Officer;

● Mahesh Choudhury, who served as Vice President, U.S.

● Kevin Stateham, who served as Vice President, Sales and Corporate Development.

This discussion may contain forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs.

Actual compensation programs that we adopt may differ materially from the currently planned programs summarized in this discussion.

As an “emerging growth company” as defined in the JOBS Act, we are not required to include a Compensation Discussion and Analysis section and have elected to comply with the scaled disclosure requirements applicable to emerging growth companies.

The compensation committee of the Board will set ConnectM’s executive compensation philosophy and will oversee compensation and benefits programs for ConnectM.

The compensation committee will oversee and determine the compensation of the Chief Executive Officers and other executive officers of ConnectM.

With respect to base salaries, annual incentive compensation and long-term incentives, it is expected that the compensation committee will establish compensation mix, performance measures, goals, targets and business objectives based on ConnectM’s competitive marketplace.

The compensation committee will determine benefits and severance arrangements, if any, that ConnectM will make available to executive officers.

In addition to base salary and annual bonuses, we expect ConnectM will grant stock-based awards under the Incentive Plan in future years to promote its interests by providing these executives with the opportunity to acquire equity interests as an incentive for their remaining in its service and aligning the executives’ interests with those of ConnectM’s equity holders.

2024 Summary Compensation Table

The following table provides summary information concerning compensation earned by our named executive officers for the years ended December 31, 2024, 2023 and 2022, for services rendered during the years ended December 31, 2024, 2023 and 2022, respectively.

Non-Qualified

Name and Principal Position

Bhaskar Panigrahi,

Chairman and Chief Executive Officer

Mahesh Choudhury,

Girish Subramanya,

Chief Technology Officer

Kevin Stateham,

VP, Sales and Corporate Development

* Based on a conversion of the U.S.

dollar to Indian rupee (“INR”) of $1.00 to 83.19 INRs as of January 1, 2024.

** Based on a conversion of the U.S.

dollar to Indian rupee (“INR”) of $1.00 to 82.75 INRs as of January 1, 2023.

*** Based on a conversion of the U.S.

dollar to Indian rupee (“INR”) of $1.00 to 74.51 INRs as of January 1, 2022.

Narrative to the Summary Compensation Table

2024 Annual Base Salary

We pay our executives a base salary to compensate them for services rendered to our company.

The base salary payable to our executives is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities.

Equity Compensation

ConnectM’s equity-based incentive awards are designed to align ConnectM’s interests and the interests of its stockholders with those of its employees and consultants, including the named executive officers.

The compensation committee of the board of directors is responsible for approving equity grants.

We currently maintain the ConnectM Technology Solutions, Inc.

2019 Equity Incentive Plan, or the 2019 Plan as well as the 2023 Equity Incentive Plan, or the 2023 Plan, that was approved in connection with the Business Combination.

The terms of the 2019 Plan are described below under “— Incentive Award Plans ” and the terms of the 2023 Plan are described below under “ Description of the 2023 Plan ”.

We have offered awards of stock options to purchase shares of our common stock to eligible service providers, including our named executive officers, pursuant to the 2019 Plan.

As mentioned below, in connection with the completion of the Business Combination and the adoption of the 2023 Plan, no further awards will be granted under the 2019 Plan.

All options are granted with an exercise price per share that is no less than the fair market value of our common stock on the date of grant of each award.

Our stock option awards generally vest over a four-year period and may be subject to acceleration of vesting and exercisability under certain termination and change of control events.

Outstanding Equity Awards at Fiscal Year-End

The following table shows outstanding equity awards held by the Named Executive Officers as of December 31, 2024.

Stock Option Awards

stock options

unexercisable

expiration date

Kevin Stateham

November 15, 2030

Mahesh Choudhury

April 1, 2028

Mahesh Choudhury

November 15, 2030

Option Exercises and Stock Vested

Stock Option Awards

on vesting (#)

Kevin Stateham

Mahesh Choudhury

No other equity-based incentive awards were granted to the named executive officers during 2024, 2023 and 2022.

Other Elements of Compensation

Retirement Savings and Health and Welfare Benefits

We maintain a 401(k) retirement savings plan for our employees, including those who satisfy certain eligibility requirements.

We match 50% of the first 6% of a participant’s annual eligible compensation, up to the IRS limit.

We believe that providing a vehicle for tax-deferred retirement savings though our 401(k) plan adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our named executive officers, in accordance with our compensation policies.

All of our full-time employees are eligible to participate in our health and welfare plans.

These health and welfare plans include medical, dental and vision benefits;

short-term and long-term disability insurance;

and supplemental life and Accidental Death and Dismemberment (AD&D) insurance.

Perquisites and Other Personal Benefits

We determine perquisites on a case-by-case basis and will provide a perquisite to a named executive officer when we believe it is necessary to attract or retain the named executive officer.

Executive Compensation Arrangements

Employment Agreements and Offer Letters

There are no employment agreements or offer letters for our named executive officers.

Director Compensation

ConnectM has not historically maintained a formal non-employee director compensation program and none of ConnectM’s non-employee directors received any compensation from ConnectM during 2024.

We intend to develop a board of directors’ compensation program that is designed to align compensation with ConnectM’s business objectives and the creation of stockholder value, while enabling ConnectM to attract, retain, incentivize and reward directors who contribute to the long-term success of ConnectM.

Post-Business Combination Executive and Director Compensation

Panigrahi serves on the ConnectM’s board of directors as Chairman of the Board does not earn any additional compensation for that role.

His annual salary for serving as Chief Executive Officer is $190,000.

Choudhury earns a salary of $160,000 as Vice President, US Operations of ConnectM, Mr.

Subramanya earns a salary of $66,000 as Chief Technology Officer of ConnectM and Mr.

Stateham earns a salary of $143,000 as Vice President, Sales and Corporate Development of ConnectM.

In the future, ConnectM may further revise its executive and director compensation program from time to time to better align compensation with ConnectM business objectives and the creation of stockholder value, while enabling ConnectM to attract, retain, incentivize and reward individuals who contribute to the long-term success of ConnectM.

Decisions on the executive compensation program will be made by the ConnectM compensation committee.

Summary of the Incentive Plan

On December 30, 2022, the MCAC Board approved and adopted the ConnectM Technology Solutions, Inc.

2023 Equity Incentive Plan (the “ 2023 Plan ”), effective as of and contingent on the consummation of the Business Combination, and subject to approval of MCAC stockholders, which approval was granted on July 12, 2024 in connection with the consummation of the Business Combination.

The material terms of the 2023 Plan are described below.

The purpose of the 2023 Plan is to provide an additional incentive to officers, employees, non-employee directors, independent contractors, and consultants of ConnectM or its affiliates whose contributions are essential to the growth and success of the business of ConnectM and its affiliates, in order to strengthen the commitment of such persons to ConnectM and its affiliates, motivate such persons to faithfully and diligently perform their responsibilities, and attract and retain competent and dedicated persons whose efforts will result in the long-term growth and profitability of ConnectM and its affiliates.

We believe that grants of incentive equity and equity-based awards are essential to attracting and retaining highly qualified service providers.

ConnectM currently maintains the ConnectM Technology Solutions Inc.

2019 Equity Incentive Plan (the “ Prior Plan ”).

In connection with the Business Combination, the combined company assumed the Prior Plan and all awards outstanding under the Prior Plan.

Following the Business Combination, ConnectM will not grant any future awards under the Prior Plan, but all awards under the Prior Plan that are outstanding as of the July 12, 2024 effective date of the 2023 Plan will continue to be governed by the terms, conditions and procedures set forth in the Prior Plan and any applicable award agreement, as those terms may be equitably adjusted in connection with the Business Combination, as described elsewhere in this Report.

2023 Plan Highlights

Some of the key features of the 2023 Plan that reflect the ConnectM Board’s commitment to effective management of incentive compensation are as follows:

● No Liberal Share Recycling on Stock Options or SARs.

The 2023 Plan provides that only shares covering awards that are canceled, forfeited or terminated without issuance of the full number of shares of common stock to which the award is related will again be available for issuance under the 2023 Plan.

The following shares will not be added back to the aggregate plan limit:

(i) shares tendered in payment of the exercise price for an option, (ii) shares ConnectM withholds to satisfy tax withholding obligations, and (iii) shares underlying stock appreciation rights (“ SARs ”) or other awards that are settled in stock.

● No Repricing or Cash Buyouts.

Stock option and SAR repricing is prohibited without stockholder approval under the 2023 Plan.

● No Dividends on Unvested Restricted Shares or Restricted Stock Units.

Under the 2023 Plan, holders of unvested Restricted Stock or Restricted Stock Units will not have any rights to receive dividends with respect to such Awards.

● Minimum Vesting Period.

Generally, all awards will have a minimum vesting period of at least one year, subject to an exception of 5% of the aggregate shares authorized for grant under the 2023 Plan and certain other limited exceptions as described below and in the 2023 Plan.

● No Automatic “Single Trigger” Vesting.

The 2023 Plan does not contain an automatic single-trigger vesting provision that would accelerate awards solely upon a Change in Control (as such term is defined in the 2023 Plan, a “ Change in Control ”).

Description of the 2023 Plan

A description of the provisions of the 2023 Plan is set forth below.

This summary is qualified in its entirety by the detailed provisions of the 2023 Plan, a copy of which is attached as Appendix D to the Rule 424(b)(3) prospectus filed with the Commission by MCAC on June 17, 2024.

Administration

The 2023 Plan will be administered by a committee, which shall consist of two (2) or more members of the ConnectM Board appointed by the ConnectM Board or such other committee of the ConnectM Board to which it has properly delegated power, or if no such committee or subcommittee exists, the ConnectM Board (the “ Committee ”).

To the extent required by applicable law, rule, or regulation, it is intended that each member of the Committee shall qualify as (a) a “non-employee director” under Rule 16b-3, and (b) an “independent director” under the rules of any national securities exchange or national securities association, as applicable.

The Committee is authorized to, among other things:

(a) interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the 2023 Plan and any instrument or agreement relating to, or any award granted under, the 2023 Plan (each, an “ Award ”);

(b) promulgate, amend, and rescind any rules and regulations relating to the 2023 Plan;

and (d) to make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the 2023 Plan.

Except to the extent prohibited by applicable law regulations, the Committee may allocate all or any portion of its responsibilities and powers to any one (1) or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it in accordance with the terms of the 2023 Plan.

Unless otherwise expressly provided in the 2023 Plan, all determinations, interpretations and other decisions under or with respect to the 2023 Plan or any award or any documents evidencing awards granted pursuant to the 2023 Plan are within the sole discretion of the Committee, may be made at any time and are final, conclusive, and binding upon all persons or entities, including, without limitation, ConnectM, any Participant (as defined below), any holder or beneficiary of any award, and any of ConnectM’s stockholders.

The Committee may make grants of the following awards to Eligible Persons (defined below) pursuant to terms and conditions set forth in the applicable award agreement, including, subjecting such awards to performance goals listed in the 2023 Plan:

● Stock Options;

● Stock Appreciation Rights;

● Restricted Stock and Restricted Stock Unit Awards;

● Performance Share Awards;

● Other Stock-Based Awards and Cash-Based Awards.

Eligible Shares

The maximum aggregate number of shares of common stock that may be issued or used for reference purposes or with respect to which awards may be granted under the 2023 Plan was initially to be equal to 10% of the number of shares of ConnectM common stock outstanding immediately following the Business Combination, less 473,929 shares of ConnectM common stock subject to awards under the Prior Plan.

This “ Total Share Reserve ” will be increased automatically on January 1 of each year during the term of the 2023 Plan by a number equal to the lesser of (i) 4% of the shares of common stock outstanding on December 31 of the prior year, or (ii) a smaller number of shares as determined by the ConnectM Board.

As of the date of this Report, the Total Share Reserve is

The maximum number of shares of common stock with respect to which incentive stock options may be granted under the 2023 Plan is equal to 100,000,000 shares.

If any Option, SAR, or Other Stock-Based Awards granted under the 2023 Plan expires, terminates, or is canceled for any reason without having been exercised in full, the number of shares of common stock underlying any unexercised award shall again be available for the purpose of awards under the 2023 Plan.

If any shares of Restricted Stock, Performance Share Awards, or Other Stock-Based Awards denominated in shares of common stock awarded under the 2023 Plan to a Participant (as defined below) are forfeited for any reason, the number of forfeited shares of Restricted Stock, Performance Share Awards, or Other Stock-Based Awards denominated in shares of common stock shall again be available for purposes of awards under the 2023 Plan.

Shares of common stock subject to an award shall not again be made available for issuance or delivery under the 2023 Plan if such shares are (a) tendered in payment of an Option, (b) delivered or withheld by ConnectM to satisfy any tax withholding obligation, or (c) covered by a stock-settled SAR or other Awards that were not issued upon the settlement of the award.

Any award under the 2023 Plan that must be settled solely in cash shall not be counted against the foregoing maximum share limitations.

In no event will the aggregate grant date fair value (as determined in accordance with ASC 718) of Awards to be granted and any other cash compensation paid to any non-employee director in any calendar year exceed $750,000, which limit will be increased to $1,000,000 for any non-employee director in the year in which such non-employee director initially joins the ConnectM Board.

No shares have yet been issued nor awards granted under the 2023 Plan.

Eligible Participants

Any employee, consultant or director of ConnectM or any of its affiliates, or any individual who is reasonably expected by the Committee to become an employee, consultant, or director after the receipt of awards (each, an “ Eligible Person ”) shall be permitted to participate (a “ Participant ”) under the 2023 Plan.

Only Eligible Persons who are also employees of ConnectM or its parent or subsidiaries are eligible to receive incentive stock options under the 2023 Plan.

Eligibility for the grant of an incentive stock option and actual participation in the 2023 Plan shall be determined by the Committee in its sole discretion.

The Committee may grant non-qualified stock options and incentive stock options (“ Options ”) to Eligible Persons under the 2023 Plan.

The holder of an Option will be entitled to purchase a number of ConnectM’s shares of common stock at a specified exercise price during a specified time period, all as determined by the Committee.

Options granted under the 2023 Plan are required to have a per share exercise price that is not less than the fair market value of ConnectM’s common stock underlying such Options on the date such Options are granted (other than in the case of Options that are substitute awards).

The maximum term for Options granted under the 2023 Plan is 10 years from the date of grant.

The purchase price for the shares as to which an Option is exercised may be paid, to the extent permitted by law, either (a) in cash or by certified or bank check at the time the Option is exercised or (b) in the discretion of the Committee, upon such terms as the Committee shall approve, including:

(i) by delivery to ConnectM of other common stock, duly endorsed for transfer to ConnectM, with a fair market value on the date of delivery equal to the Option exercise price (or portion thereof) due for the number of shares being acquired, or by means of attestation whereby the Participant identifies for delivery specific shares of common stock that have an aggregate fair market value on the date of attestation equal to the Option exercise price (or portion thereof) and receives a number of shares of common stock equal to the difference between the number of shares thereby purchased and the number of identified attestation shares of common stock;

(ii) a “cashless” exercise program established with a broker;

(iii) by reduction in the number of shares of common stock otherwise deliverable upon exercise of such Option with a fair market value equal to the aggregate Option exercise price at the time of exercise;

(iv) by any combination of the foregoing methods;

or (v) in any other form of legal consideration that may be acceptable to the Committee.

Stock Appreciation Rights

The Committee may grant stock appreciation rights, or “ SARs ”, under the 2023 Plan, with terms and conditions determined by the Committee pursuant to the 2023 Plan.

The Committee may award SARs in tandem with Options or independent of any Option.

Generally, each SAR will entitle the Participant upon exercise to an amount (in cash, shares, or a combination of cash and shares, as determined by the Committee) equal to the product of (i) the excess of (A) the fair market value on the exercise date of one share of common stock, over (B) the exercise price per share, multiplied by (ii) the number of shares of common stock covered by the SAR.

The exercise price per share of a SAR will be determined by the Committee at the time of grant, but in no event may such amount be less than the fair market value of a share of common stock on the date the SAR is granted.

Restricted Stock and Restricted Stock Units

The Committee may grant restricted shares of ConnectM’s common stock (“ Restricted Stock ”) or restricted stock units (“ Restricted Stock Units ”) representing the right to receive, upon vesting and the expiration of any applicable restricted period, one (1) share of common stock for each Restricted Stock Unit or, in the sole discretion of the Committee, the cash value thereof (or any combination thereof).

If a cash payment is made in lieu of delivering shares of common stock, the amount of such payment shall be

equal to the fair market value of the common stock as of the date on which the applicable restricted period lapsed.

As to Restricted Stock, subject to the other provisions of the 2023 Plan, the holder will generally have the rights and privileges of a stockholder as to such Restricted Stock, including the right to vote such Restricted Stock, but the holder will not have the right to receive dividends on any unvested shares of Restricted Stock.

Participants have no rights or privileges as a stockholder with respect to Restricted Stock Units.

Performance Share Awards

The Committee may grant Performance Share Awards to a Participant that are earned upon the attainment of specific performance goals.

Each Performance Share Award shall be evidenced by an award agreement pursuant to the 2023 Plan with terms and conditions determined by the Committee , including the number of shares of common stock or stock-denominated units subject to the Performance Share Award and the conditions that must be met for the Participant to earn the award.

Other Equity-Based and Cash-Based Awards

The Committee may grant other equity-based or cash-based awards under the 2023 Plan, with terms and conditions determined by the Committee pursuant to the 2023 Plan.

Effect of Certain Corporate Transactions and Events

In the event of any stock or extraordinary cash dividend, stock split, reverse stock split, any extraordinary corporate transaction such as a recapitalization, reorganization, merger, consolidation, combination, exchange, or other change in capitalization, awards granted under the 2023 Plan and any award agreements, the exercise price of options and SARs, the performance goals to which Performance Share Award and cash-based awards are subject, and the maximum number of shares of common stock subject to all awards will be equitably adjusted or substituted, as to the number, price or kind of a share of common stock or other consideration subject to such awards to the extent necessary to preserve the economic intent of the award.

In connection with any Change in Control of ConnectM, the Committee may, in its sole discretion, cause any award (i) to be canceled in consideration of a payment in cash or other consideration in amount per share equal to the excess, if any, of the price or implied price per share of common stock in the Change in Control over the per share exercise, base or purchase price of such award, which may be paid immediately or over the vesting schedule of the award;

(ii) to be assumed, or new rights substituted therefore, by the surviving corporation or a parent or subsidiary of such surviving corporation following the applicable Change in Control;

(iii) to be accelerated as to the vesting, exercise, payment or distribution of the award so that any award to a Participant whose employment is terminated as a result of the Change in Control may be vested, exercised, paid or distributed in full on or before a date fixed by the Committee;

(iv) to be purchased from a Participant whose employment is terminated as a result of the Change in Control, for an amount of cash equal to the amount that could have been obtained upon the exercise, payment or distribution of such rights had such award been currently exercisable or payable;

or (v) to be terminated ;or to make any other adjustment to the awards then outstanding as the Committee deems necessary or appropriate to reflect such transaction or change.

Nontransferability of Awards

Awards under are not be transferable or assignable other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance will be void and unenforceable against ConnectM or any of its subsidiaries.

However, the Committee may determine, in its sole discretion, that a non-qualified stock option may be transferred to a Participant’s family member, or to certain trusts or foundations or other transferees as permitted by the Committee (“ Permitted Transferee ”).

A non-qualified stock option that is transferred to a Permitted Transferee will remain subject to the terms of the 2023 Plan and the applicable award agreement.

Minimum Vesting Requirements

No award may be granted with a lapse of any vesting obligations earlier than at least one year following the date of grant.

Notwithstanding the foregoing, the Committee may grant up to a maximum of five percent of the aggregate number of shares available for issuance under the 2023 Plan (subject to certain equitable adjustments), without regard to this minimum vesting requirement, and the minimum vesting requirement does not apply to (i) any substitute awards (as defined in the 2023 Plan), (ii) shares delivered in lieu of fully vested cash awards, (iii) awards to directors that vest on the earlier of the one-year anniversary of the date of grant or the next annual meeting of shareholders which is at least 50 weeks after the immediately preceding year’s annual meeting, and (iv) the Committee’s discretion to provide for accelerated exercisability or vesting of any award, including in cases of a Participant’s retirement, death or disability or a Change in Control, in the terms of the award or otherwise.

Awards under the 2023 Plan are subject to recovery or “clawback” by ConnectM pursuant to any clawback policy ConnectM may have in effect from time to time.

Amendment and Termination

The ConnectM Board may amend the 2023 Plan at any time, subject to shareholder approval to the extent required by applicable law or regulation or the listing standards of Nasdaq or any other market or stock exchange on which ConnectM’s common stock is at the time primarily traded.

Additionally, shareholder approval will be specifically required to decrease the exercise price of any outstanding Option or SAR granted under the 2023 Plan.

The ConnectM Board may terminate the 2023 Plan at any time.

Unless sooner terminated by the ConnectM Board, the 2023 Plan will terminate on July 12, 2034, the 10-year anniversary of the effective date of the 2023 Plan.

Section 162(m) of the Internal Revenue Code

As a general rule, ConnectM will be entitled to a deduction in the same amount and at the same time as the compensation income is received by the Participant, except to the extent the deduction limits of Section 162(m) of the Code apply.

Section 162(m) of the Code denies a deduction to any publicly held corporation for compensation paid to any “covered employee” in a taxable year to the extent that compensation to such covered employee exceeds $1,000,000.

It is possible that compensation attributable to awards under the 2023 Plan may cause this limitation to be exceeded in any particular year.

Material U.S.

Federal Income Tax Consequences of Awards under the 2023 Plan

The following is a general summary under current law of the principal United States federal income tax consequences related to awards under the 2023 Plan.

This summary deals with the general federal income tax principles that apply and is provided only for general information.

Some kinds of taxes, such as state, local and foreign income taxes and federal employment taxes, are not discussed.

This summary is not intended as tax advice to Participants, who should consult their own tax advisors.

Non-Qualified Options.

The grant of a non-qualified stock option is not a taxable event for the grantee or ConnectM.

Upon exercising a non-qualified stock option, a grantee will recognize ordinary income in an amount equal to the excess of the fair market value of the common stock on the date of exercise over the exercise price.

Upon a subsequent sale or exchange of shares acquired pursuant to the exercise of a non-qualified stock option, the grantee will recognize taxable capital gain or loss, measured by the excess of the amount realized on the disposition over the tax basis of the shares of common stock (generally, the amount paid for the shares plus the amount treated as ordinary income at the time the option was exercised).

If ConnectM complies with applicable reporting requirements and with the restrictions of Section 162(m), ConnectM will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.

A grantee who has transferred a non-qualified stock option to a family member by gift will realize taxable income at the time the non-qualified stock option is exercised by the family member.

The grantee will be subject to withholding of income and employment taxes at that time.

The family member’s tax basis in the shares of common stock will be the fair market value of the shares of common stock on the date the option is exercised.

The transfer of vested non-qualified stock options will be treated as a completed gift for gift and estate tax purposes.

Once the gift is completed, neither the transferred options nor the shares acquired on exercise of the transferred options will be includable in the grantee’s estate for estate tax purposes.

Incentive Stock Options.

The grant of an incentive stock option is not a taxable event for the grantee or for ConnectM.

A grantee will not recognize taxable income upon exercise of an incentive stock option (except to the extent the alternative minimum tax applies), and any gain realized upon a disposition of ConnectM’s common stock received pursuant to the exercise of an incentive stock option will be taxed as long-term capital gain if the grantee holds the shares of common stock for at least two years after the date of grant and for one year after the date of exercise (the “ holding period requirement ”).

ConnectM will not be entitled to any business expense deduction with respect to the exercise of an incentive stock option, except as discussed below.

For the exercise of an incentive stock option to qualify for the foregoing tax treatment, the grantee generally must be an employee of ConnectM or its subsidiary from the date the option is granted through a date within three months before the date of exercise of the option.

If all of the foregoing requirements are met except the holding period requirement mentioned above, the grantee will recognize ordinary income upon the disposition of the common stock in an amount generally equal to the excess of the fair market value of the common stock at the time the incentive stock option was exercised over the option exercise price (but not in excess of the gain realized on the sale).

The balance of the realized gain, if any, will be capital gain.

ConnectM will be allowed a business expense deduction to the extent the grantee recognizes ordinary income, subject to ConnectM’s compliance with Section 162(m) and to certain reporting requirements.

Restricted Stock.

A grantee who is awarded Restricted Stock will not recognize any taxable income for federal income tax purposes in the year of grant if the shares of common stock are nontransferable and subject to a substantial risk of forfeiture.

However, the grantee may elect under Section 83(b) of the Code to recognize compensation income in the year of grant in an amount equal to the fair market value of the common stock on the date of grant (less the purchase price, if any), determined without regard to any restrictions (except any restrictions that will never lapse).

If the grantee does not make such an election, the fair market value of the common stock on the date the restrictions lapse (less the purchase price, if any) will be treated as compensation income to the grantee and will be taxable in the year the restrictions lapse and be subject to withholding taxes.

Restricted Stock Units.

There are no immediate tax consequences of receiving an award of Restricted Stock Units under the 2023 Plan.

A grantee who is awarded Restricted Stock Units will recognize ordinary income in an amount equal to the fair market value of shares issued to such grantee at the end of the restriction period or, if later, the payment date.

Stock Appreciation Rights.

There are no immediate tax consequences of receiving an award of SARs under the 2023 Plan.

Upon exercising an SAR, a grantee will recognize ordinary income in an amount equal to the excess of the fair market value of the common stock on the date of exercise over the exercise price.

Performance Share Awards, Other Stock-Based Awards, and Cash-Based Awards.

The tax treatment with respect to Performance Share Awards, other stock-based awards and cash-based awards will depend on the structure of such awards.

Section 409A.

Awards under the 2023 Plan are intended to either be exempt from or comply with Section 409A of the Internal Revenue Code.

Nevertheless, none of the Company, the Committee or the ConnectM Board have any obligation to take any action to prevent the assessment of any additional tax or penalty on any Participant under Section 409A.

New Plan Benefits

Grants under the 2023 Plan will be made at the discretion of the Committee and are not currently determinable.

The value of awards granted under the 2023 Plan will depend on a number of factors, including the fair market value of ConnectM common stock on future dates, the exercise decisions made by Participants and the extent to which any applicable performance goals necessary for vesting or payment are achieved.

Director and Officer Indemnification Agreements

We have entered into employment agreements whereby we will agree to indemnify the Chief Executive Officer and Chief Financial Officer to the fullest extent permitted by law, for all amounts (including, without limitation, judgments, fines, settlement payments, expenses and reasonable out of pocket attorneys’ fees) incurred or paid by the Chief Executive Officer and Chief Financial Officer in connection with any action, suit, investigation or proceeding, or threatened action, suit, investigation or proceeding, arising out of or relating to the performance by the Chief Executive Officer and Chief Financial Officer of services for, or the acting by the Chief Executive Officer and Chief Financial Officer as a director, officer or executive of, the Company, or any subsidiary of the Company.

Any fees or other necessary expenses incurred by the Chief Executive Officer and Chief Financial Officer in defending any such action, suit, investigation or proceeding shall be paid by the Company in advance, subject to the Company’s right to seek repayment from the Chief Executive Officer and Chief Financial Officer if a determination is made that the Chief Executive Officer and Chief Financial Officer were not entitled to indemnification.

Potential Payments Upon Termination or Change in Control

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth information regarding the beneficial ownership of our common stock as of March 13, 2024 by:

● each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

● each of our executive officers and directors;

● all our executive officers and directors as a group.

Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to the voting securities beneficially owned by them.

The following table does not reflect record or beneficial ownership of the Private Placement Warrants as these warrants are not exercisable within 60 days of March 13, 2024.

PERCENTAGE OF

The following table sets forth information regarding beneficial ownership of our capital stock as of December 31, 2024 by:

● each person, or group of affiliated persons, known by us to beneficially own more than 5% of our Common Stock;

● each of our directors;

● each of our named executive officers;

● all of our current executive officers and directors as a group.

The following table is based upon information supplied by officers, directors and principal stockholders and Schedules 13D and 13G filed with the SEC.

Unless otherwise indicated in a footnote to this table and subject to community property laws where applicable, the Company believes that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned.

Applicable percentages are based on 29,093,289 shares of our Common Stock outstanding on December 31, 2024, adjusted as required by rules promulgated by the SEC.

Unless otherwise indicated, the address for the following stockholders is care of:

ConnectM Technology Solutions, Inc., 2 Mount Royal Avenue, Suite 550, Marlborough, Massachusetts 01752.

Name and Address of Beneficial Owner(1)

Number of Shares

Directors and Executive Officers

Bala Padmakumar(2)

Bhaskar Panigrahi(5)

Girish Subramanya

Kevin Stateham(3)

Mahesh Choudhury(4)

Kathy Cuocolo

Stephen Markscheid

All executive officers and directors as a group (six individuals)

Other 5% holders

Yakira Capital Management, Inc.(3)

Wolverine Asset Management LLC(4)

Periscope Capital Inc.(5)

ATW SPAC Management LLC(6)

Mizuho Financial Group Inc.(7)

Lighthouse Investment Partners, LLC(8)

Entities affiliated with Glazer Capital, LLC(9)

*Less than 1%

1) Unless otherwise noted, the business address of each of the following individuals is c/o Monterey Capital Acquisition Corporation, 419 Webster Street, Monterey, CA 93940.

2) Monterrey Acquisition Sponsor, LLC, the Sponsor, is the record holder of the securities reported herein.

Bala Padmakumar is the managing member of our Sponsor.

Padmakumar shares voting and dispositive power over the Founder Shares held by our Sponsor and may be deemed to beneficially own such shares.

Bala Padmakumar, Daniel Davis, and Vivek Soni are each members of the Sponsor.

All directors and executive officers of ConnectM as a group (eight individuals)

Five Percent Holders of ConnectM:

Bala Padmakumar(2)

Bhaskar Panigrahi(5)

Arumilli, LLC

Win-Light Capital, Co.

(1) Unless otherwise noted, the business address of each of the following individuals is c/o ConnectM Technology Solutions, Inc., 2 Mount Royal Ave., Suite 550, Marlborough, MA 01752.

(2) Monterrey Acquisition Sponsor, LLC, (“ MAS ”), is the record holder of the securities reported herein.

Bala Padmakumar is the managing member of MAS.

Padmakumar shares voting and dispositive power over the founder shares held by MAS and may be deemed to beneficially own such shares.

Each such person disclaims any beneficial ownership of the reported shares other than to the extent of any pecuniary interest they may have therein, directly or indirectly.

3) According to the Schedule 13G/A filed with the SEC on January 26, 2024, the shares reported herein are held by Yakira Partners, L.P., Yakira Enhanced Offshore Fund Ltd., and MAP 136 Segregated Portfolio.

The business address of the holders is 1555 Post Road East, Suite 202, Westport, CT 06880.

4) According to the Schedule 13G filed with the SEC on February 8, 2024, Wolverine Asset Management, LLC (“WAM”) is an investment adviser and has voting and disposition power over the shares held.

The sole member and manager of WAM is Wolverine Holdings, L.P.

(“Wolverine Holdings”).

Bellick and Christopher L.

Gust may be deemed to control Wolverine Trading Partners, Inc.

(“WTP”), the general partner of Wolverine Holdings.

The business address of the holders is 175 West Jackson Boulevard, Suite 340, Chicago, IL 60064.

5) According to the Schedule 13G filed with the SEC on February 9, 2024, Periscope Capital Inc.

(“Periscope”) is the beneficial owner of 257,500 shares of common stock, acts as investment manager of, and exercises investment discretion with respect to, certain private investment funds (each, a “Periscope Fund”) that collectively directly own 242,500 shares of common stock.

The business address of the holders is 333 Bay Street, Suite 1240, Toronto, Ontario, Canada M5H 2R2.

6) According to the Schedule 13G/A filed with the SEC on February 13, 2024, the shares reported herein are held by (1) one or more private funds managed by ATW SPAC Management LLC, a Delaware limited liability company (the “Adviser”), which has been delegated exclusive authority to vote and/or direct the disposition of such Shares held by sub-accounts of one or more pooled investment vehicles managed by a Delaware limited liability company and (2) a private fund managed by an affiliate of

Antonio Ruiz-Gimenez and Kerry Propper are managing members of the Adviser and its affiliate.

The business address of the record holder is 17 State Street, Suite 2100, New York, NY 10004.

7) According to the Schedule 13G filed with the SEC on February 13, 2024, the shares reported herein are held by Mizuho Financial Group, Inc.

and Mizuho Bank, Ltd.

and Mizuho Americas LLC may be deemed to be indirect beneficial owners of said equity securities directly held by Mizuho Securities USA LLC which is their wholly-owned subsidiary.

The business address of the record holder is 1-5-5-, Otemachi, Chiyoda-ku, Tokyo 100-8176, Japan.

8) According to a Schedule 13G/A filed with the SEC on February 14, 2024, Lighthouse Investment Partners, LLC (“Lighthouse”) serves as the investment manager of MAP 136 Segregated Portfolio, a segregated portfolio of LMA SPC (“MAP 136”), MAP 214 Segregated Portfolio, a segregated portfolio of LMA SPC (“MAP 214”), and Shaolin Capital Partners SP, a segregated portfolio of PC MAP SPC (“Shaolin”), each a beneficial owner of the shares reported herein.

Because Lighthouse may be deemed to control MAP 136, MAP 214, and Shaolin, as applicable, Lighthouse may be deemed to beneficially own, and to have the power to vote or direct the vote of, and the power to direct the disposition of the shares reported herein.

The business address of the record holder is 3801 PGA Boulevard, Suite 500, Palm Beach Gardens, FL 33410.

9) According to a Schedule 13G filed with the SEC on February 14, 2024, Glazer Capital, LLC (“Glazer Capital”) and Paul J.

Glazer, who serves as the managing member of Glazer Capital, have shared voting and dispositive power with respect to the shares of common stock held by certain funds and managed accounts to which Glazer Capital serves as an investment manager (collectively, the “Glazer Funds”).

The address for the Glazer Funds and Paul J.

Glazer is 250 West 55th Street, Suite 30A, New York, New York 10019.

The holders of the Founder Shares have agreed (A) to vote any shares owned by them in favor of any proposed initial business combination and (B) not to redeem any shares in connection with a stockholder vote to approve a proposed initial business combination or in connection with a tender offer.

Our Sponsor and our executive officers and directors are deemed to be our “promoters” as such term is defined under the federal securities laws.

The post-business combination shares include 3,790 ,000 shares issuable pursuant to warrants that will be exercisable following the business combination.

(3) Consists of 24,910 shares issuable pursuant to stock options exercisable within 60 days of the date hereof.

(4) Includes 77,620 shares issuable pursuant to stock options exercisable within 60 days of the date hereof.

(5) Consists of (i) 3,593,921 shares held by Avanti Holdings LLC, (ii) 415,045 shares held by Mr.

Panigrahi and (iii) 128,133 shares held by Southwood Partners LP.

Panigrahi is a controlling equityholder of Avanti Holdings LLC and Southwood Partners LP.

Therefore, Mr.

Panigrahi may be deemed to have voting power and dispositive power over the shares held by Avanti Holdings LLC and Southwood Partners LP.

Changes in Control

Our management is not aware of any arrangements which may result in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-K.

Certain Relationships and Related Transactions, and Director Independence.

On October 6, 2021, our Sponsor purchased 2,875,000 shares of our Class B Common Stock, par value $0.0001 per share (the “Founder Shares”), for an aggregate price of $25,000.

On May 10, 2022, our Sponsor forfeited 575,000 Founder Shares for no consideration, which we cancelled, resulting in our Sponsor and directors holding an aggregate of 2,300,000 Founder Shares.

Our Sponsor agreed to forfeit up to 300,000 Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriter, so that the Founder Shares will represent 20.0% of our issued and outstanding shares after the Initial Public Offering.

On May 13, 2022, the underwriter fully exercised the over-allotment option to purchase an additional 1,200,000 Units and the forfeiture provisions lapsed for the 300,000 Founder Shares.

On May 13, 2022, our Sponsor purchased 3,040,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $3.04 million.

These issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

No underwriting discounts or commissions were paid with respect to such sales.

Commencing on May 10, 2022, we agreed to pay our Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support.

The administrative support agreement began on the day the Company first listed on the Nasdaq Global Market and will continue monthly until the completion of the Company’s initial Business Combination or liquidation of the Company.

For the year ended December 31, 2023, the Company incurred $120,000 in administrative support fees, of which $63,600 remains outstanding and is included on the accompanying consolidated balance sheet as “due to Sponsor – related party”.

Also included in “due to Sponsor – related party” as of December 31, 2023 is $4,860 of cash collected on behalf of the Sponsor in connection with the sale of the Founder Shares to the Anchor Investors (Note 5).

Other than the foregoing, no compensation of any kind, including any finder’s fee, reimbursement, consulting fee or monies in respect of any payment of a loan, will be paid by us to our Sponsor, officers and directors, or any affiliate of our Sponsor or officers, prior to, or in connection with any services rendered in order to effectuate, the consummation of an initial business combination (regardless of the type of transaction that it is).

However, these individuals will be reimbursed for any out-of-pocket expenses incurred in connection

with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations.

Our audit committee will review on a quarterly basis all payments that were made to our Sponsor, officers, directors or our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed.

There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.

Our Sponsor previously loaned us $354,100 for a portion of the expenses of our Initial Public Offering.

These loans were non-interest bearing, unsecured and were due at the earlier of June 24, 2022 or the closing of our Initial Public Offering.

The loan was repaid upon the closing of our Initial Public Offering.

In order to finance transaction costs in connection with an intended initial business combination, the Sponsor, an affiliate of the Sponsor or certain of the Company’s officers and directors may, but is not obligated to, loan the Company funds as may be required (the “Working Capital Loans”).

If the Company completes an initial business combination, the Company would repay such loaned amounts out of the proceeds of the Trust Account released to the Company.

Otherwise, such loans would be repaid only out of funds held outside the Trust Account.

In the event that the initial business combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used to repay such loaned amounts.

Up to $1,500,000 of such loans may be convertible into Private Placement Warrants of the post business combination entity, at a price of $1.00 per warrant at the option of the lender.

The warrants would be identical to the Private Placement Warrants issued to the Sponsor.

During the year ended December 31, 2023, the Sponsor loaned the Company $582,457 in the form of Working Capital Loans.

After our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to our stockholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our stockholders.

It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the time of a stockholder meeting held to consider our initial business combination, as applicable, as it will be up to the directors of the post-combination business to determine executive and director compensation.

The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any shares of common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares), are entitled to certain registration rights pursuant to a registration rights agreement.

These holders will be entitled to certain demand and “piggyback” registration rights.

We will bear the expenses incurred in connection with the filing of any such registration statements.

Refer to Note 1 in the accompanying consolidated financial statements for further discussion of the registration rights agreement and certain amendments thereto related to the Business Combination.

In addition to the compensation arrangements with directors and executive officers described under “ Executive and Director Compensation ” and “ Management ,” the following is a description of each transaction since January 1, 2023 and each currently proposed transaction in which:

● we have been or are to be a participant;

● the amount involved exceeded or will exceed $120,000;

● any of our directors, executive officers or beneficial holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals (other than tenants or employees), had or will have a direct or indirect material interest.

Lock-up Agreement

In connection with the Business Combination, we have entered into lock-up agreements with certain of our shareholders restricting the transfer of their shares received as Merger consideration or any securities convertible into or exercisable or exchangeable for shares of Common Stock owned by them nor make any demand for or exercise any right with respect to the registration of such lock-up securities from and after the closing of the Business Combination.

The restrictions under the lock-up agreements began at the closing of the Business Combination and end six (6) months from the Closing Date.

Related Party Policy

Prior to the consummation of the Initial Public Offering, we adopted a code of ethics requiring us to avoid, wherever possible, all conflicts of interests, except under guidelines or resolutions approved by our board of directors (or the appropriate committee of our board of directors) or as disclosed in our public filings with the SEC.

Under our code of ethics, conflict of interest situations will include any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving the company.

A form of our code of ethics is filed as an exhibit to this Annual Report on Form 10-K.

In addition, our audit committee, pursuant to a written charter, is responsible for reviewing and approving related party transactions to the extent that we enter into such transactions.

An affirmative vote of a majority of the members of the audit committee present at a meeting at which a quorum is present will be required in order to approve a related party transaction.

A majority of the members of the entire audit committee will constitute a quorum.

Without a meeting, the unanimous written consent of all of the members of the audit committee will be required to approve a related party transaction.

We also require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.

Our Code of Ethics requires us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the Board (or the audit committee).

Related-party transactions are defined as transactions in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of our common stock, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity).

A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively.

Conflicts of interest may also arise if a person, or a member of his or her family, receives personal benefits as a result of his or her position.

Our audit committee, pursuant to its written charter, is responsible for reviewing and approving related-party transactions to the extent we enter into such transactions.

All ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are available from unaffiliated third parties.

Such transactions will require prior approval by our audit committee and a majority of our disinterested independent directors, or the members of our Board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel.

We will not enter into any such transaction unless our audit committee and a majority of our disinterested independent directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties.

Additionally, we require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.

These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.

Our audit committee will review on a quarterly basis all payments that were made to our Sponsor, officers or directors, or our or their affiliates.

To further minimize conflicts of interest, we have agreed not to consummate an initial business combination with an entity that is affiliated with any of our Sponsor, officers or directors unless we, or a committee of independent directors, have obtained an opinion from an independent investment banking firm or an independent accounting firm that our initial business combination is fair to our company from a financial point of view.

To further minimize conflicts of interest, we have agreed not to consummate our initial business combination with an entity that is affiliated with any of our officers, directors or initial stockholders, unless we have obtained (i) an opinion from an independent investment banking firm, or other firm that commonly provides valuation opinions, that the business combination is fair to our

stockholders from a financial point of view and (ii) the approval of a majority of our disinterested and independent directors (if we have any at that time).

Furthermore, in no event will any of our initial stockholders, officers, directors or their respective affiliates be paid any finder’s fee, consulting fee or other similar compensation prior to, or for any services they render in order to effectuate, the consummation of our initial business combination.

Limitation on Liability and Indemnification of Directors and Officers

Our bylaws provides that our directors and officers will be indemnified by us to the fullest extent authorized by Delaware law as it now exists or may in the future be amended.

Notwithstanding the foregoing, as set forth in our bylaws, such indemnification will not extend to any claims our insiders may make to us to cover any loss that they may sustain as a result of their agreement to pay debts and obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us as described in this Report.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act (and is, therefore, unenforceable.).

Certain Relationships and Related Person Transactions

The following is a description of certain relationships and transactions that exist or have existed or that ConnectM has entered into, in each case since January 1, 2023, with its directors, executive officers, or stockholders who are known to ConnectM to beneficially own more than five percent of its voting securities and their respective affiliates and immediate family members.

Sponsor of MCAC

In connection with the closing of the Business Combination, the Company assumed unsecured promissory notes totaling approximately $555,000 that are non-interest bearing and due on demand and advances totaling approximately $132,000 that are non-interest bearing and due on demand with the Sponsor of MCAC.

During September 2024, the Company entered into a note conversion agreement with the Sponsor of MCAC in which the Company converted the outstanding principal on unsecured promissory notes and certain other liabilities owed to the note holders into shares of the Company’s common stock at a conversion price of $2.00 per share with a one-time share reset adjustment (see Note 14), subject to shareholder approval and a maximum aggregate ownership amount of 19.99% for each individual lender.

In connection with these agreements, approximately $555,000 of unsecured promissory notes and approximately $132,000 of accounts payable and accrued expenses were extinguished in exchange for the issuance of 343,248 shares of the Company’s common stock (see Note 12).

In connection with the conversion agreement, the Sponsor of MCAC received a one-time share reset adjustment that were subsequently settled during the quarter ended March 31, 2025 through the issuance of 205,949 shares of the Company’s common stock (see Note 14).

As of December 31, 2024, the fair value of the derivative liabilities associated with the reset adjustment was approximately $158,000 and was included as a component of derivative liabilities on the accompanying consolidated balance sheets.

For the year ended December 31, 2024, the Company recorded a change in fair value on these derivative liabilities of $26,000, which was included as a component of change in fair value of derivative liabilities on the accompanying consolidated statements of operations and comprehensive loss.

Related Party Investors

Immediately following the note conversion agreements in September 2024 with secured promissory note holders in which the Company converted the outstanding principal on the secured promissory notes, including accrued and unpaid interest, and certain other liabilities owed to the note holders into shares of the Company’s common stock (see Note 11), the ownership percentage of the Company’s common stock of two individual lenders individually exceeded 5.0%, triggering a related party relationship.

These two lenders are collectively referred to as the Related Party Investors.

In connection with the conversion agreements, each Related Party Investor received a one-time share reset adjustment that were subsequently settled during the quarter ended March 31, 2025 through the issuance of 1,460,130 and 795,675 shares of the Company’s common stock (see Note 14).

As of December 31, 2024, the fair value of the derivative liabilities associated with the reset adjustment granted to each Related Party Investor was approximately $1,146,000 and $624,000 and were included as a component of derivative liabilities on the accompanying consolidated balance sheets.

For the year ended December 31, 2024, the Company recorded a change

in fair value on these derivative liabilities of $192,000 and $104,000, which were included as a component of change in fair value of derivative liabilities on the accompanying consolidated statements of operations and comprehensive loss.

The Related Party Investors collectively own 100% of an entity that has controlling interest in four customers within the managed solutions operating segment (the “Related Party Managed Solutions Customers”).

The Company acquired one of these customers, GEG, in October 2024 from the entity owned by Related Party Investors (see Note 6).

From the period between when the related party relationship was triggered in September 2024 through December 31, 2024, the Company earned revenue totaling approximately $644,000, incurred cost of revenues totaling approximately $188,000, and incurred selling, general and administrative expenses totaling approximately $517,000 from the remaining three Related Party Managed Solutions Customers.

As of December 31, 2024, the Company was owed approximately $349,000 for managed services from the Related Party Managed Solutions Customers, which was included as a component of accounts receivable on the accompanying consolidated balance sheets and approximately $102,000 for working capital advances from the Related Party Managed Solutions Customers, which was included as a component of working capital advances on the accompanying consolidated balance sheets.

As of December 31, 2024, the Company owed approximately $28,000 to the Related Party Managed Solutions Customers.

Prior to the date the related party relationship was triggered, each Related Party Investors had entered into secured promissory notes that remained outstanding as of December 31, 2024 totaling $1,750,000 and $1,400,000 and were included as a component of debt, net on the accompanying consolidated balance sheets.

Accrued interest on the notes remaining outstanding as of December 31, 2024 totaled approximately $384,000 and $289,000 and are included as a component of accrued expenses on the accompanying consolidated balance sheets.

In September 2016, the Company entered into an unsecured promissory note with a company owned by the Company’s Chief Executive Officer (the “Related Party Lender”) for an original principal sum of INR 16,500,000 ($192,761 at December 31, 2024) (the “2016 Promissory Note”).

The note bears annual interest of 14.0%.

The note does not have a maturity date and the full note balance is to be paid over time in amounts determined by the Company.

In July 2024, the Company borrowed an additional INR 8,300,000 ($96,965 at December 31, 2024) from the Related Party Lender (the “2024 Promissory Note”).

The loan bears interest at 14.0% and matures in July 2031.

The principal and accrued interest is due in full at maturity.

Total interest expense recognized on the promissory notes with the Related Party Lender totaled INR 1,525,193 and INR 994,022 ($18,209 and $14,890, respectively) for the years ended December 31, 2024 and 2023, respectively.

Total interest accrued was INR 8,414,431 and INR 6,240,004 ($98,301 and $67,462, respectively), as of December 31, 2024 and 2023, respectively, and was recorded as a component of accrued expenses on the accompanying consolidated balance sheets.

Related Party Lender

Following the closing of the Business Combination on July 12, 2024 which triggered the conversion of certain convertible notes, a noteholder’s ownership percentage of the Company’s common stock exceeded 5.0%, triggering a related party relationship.

On October 10, 2024, the Company issued this related party a convertible note with a principal amount of $800,000.

The note has an interest rate of 20% and a maturity date of April 8, 2025.

The note is convertible during the first 90 days after issuance at a conversion price of $1.10.

The Company accounts for these convertible notes using the fair value option.

As of December 31, 2024, the carrying amount of the note and accrued interest was $800,000 and $35,945, respectively.

As of December 31, 2024, the fair value of this note was approximately $837,000.

On October 10, 2024, the Company issued this related party a convertible note with a principal amount of $400,000.

The note has an interest rate of 20% and a maturity date of June 1, 2025.

The note is convertible during the first 90 days after issuance at a conversion price of $1.10.

The Company accounts for these convertible notes using the fair value option.

As of December 31, 2024, the carrying amount of the note and accrued interest was $400,000 and $6,137, respectively.

As of December 31, 2024, the fair value of this note was approximately $418,000.

ConnectM’s audit committee will approve only those transactions that it determines are fair to ConnectM and in ConnectM’s best interests.

We have determined that each of Ms.

Markscheid and Mr.

Barua qualify as an independent director, as that term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules.

Principal Accountant Fees and Services.

The following is a summary of fees paid to Adeptus for services rendered for the years ended December 31, 2023 and 2022.

Audit fees consist of fees billed for professional services rendered for the audit of our year-end consolidated financial statements and services that are normally provided by Adeptus in connection with regulatory filings.

The aggregate fees billed by Adeptus for professional services rendered for the audit of our annual financial statements, review of the financial information included in our quarterly reports on Form 10-Q for the respective periods and other required filings with the SEC for the years ended December 31, 2023 and 2022 totaled $90,000 and $0, respectively.

The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.

The following table presents fees for professional services by Adeptus Partners, LLC for the audit of the Company’ financial statements and fees billed for audit-related services, tax services and all other services for the years ended December 31, 2024 and 2023.

Audit Related Fees**

Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards.

For the years ended December 31, 2023 and 2022, we did not incur any costs with Adeptus for consultations concerning financial accounting and reporting standards.

We did not incur any costs with Adeptus for tax planning and tax advice during the years ended December 31, 2023 and 2022.

All Other Fees .

We did not incur any costs with Adeptus for other services during the years ended December 31, 2023 and 2022.

Audit Committee Approval

Our audit committee was formed upon the consummation of the Initial Public Offering.

As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors.

Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this Annual Report on Form 10-K:

Item 15(a)(1) See “Index to Consolidated Financial Statements and Financial Statement Schedules” and (2) Item 8 to this Annual Report on Form 10-K.

Other financial statement schedules have not been included because they are not applicable or the information is included in the consolidated financial statements or notes thereto.

Item 15(a)(3) Exhibits

The following is a list of exhibits filed as part of this Annual Report on Form 10-K.

Exhibit Description

Filed with this Report

Incorporated by Reference herein from Form or Schedule

SEC File/Reg.

Underwriting Agreement, dated May 10, 2022, by and between Monterey Capital Acquisition Corporation and EF Hutton, division of Benchmark Investments, LLC, as representative of the several underwriters

(Exhibit 1.1)

* Audit Fees:

Refers to fees billed for professional services rendered in connection with the audit of our financial statements as of and for the years ended December 31, 2024 and 2023, quarterly reviews, the reviews of registration statements and issuances of consents, and services that are normally provided in connection with statutory and regulatory filings or engagements.

** Audit-Related Fees:

Refers to fees billed outside of the scope of the engagement letter for the audit which are reasonably related to the performance of the audit or review of our consolidated financial statements for the years ended December 31, 2024 and 2023.

Refers to fees for tax compliance services, including preparation of federal and state income tax returns, and tax payment and planning advice .

Pre-Approval Policy

All of the above services were approved by the Audit Committee.

In accordance with the Sarbanes-Oxley Act of 2002, as amended, the Audit Committee’s policy is to pre-approve all audit and non-audit services provided by our independent registered public accounting firm.

On an ongoing basis, management defines and communicates specific projects and categories of service for which the advance approval of the Audit Committee is requested.

The Audit Committee reviews these requests and advises management if the Audit Committee approves the engagement of our independent registered public accounting firm for such services.

Exhibit and Financial Statement Schedules.

Documents filed as part of this Annual Report on Form 10-K:

Financial Statements

FINANCIAL STATEMENTS AND

SUPPLEMENTARY DATA INDEX TO FINANCIAL STATEMENTS

Financial Statements of ConnectM Technology Solutions, Inc.

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Changes in Stockholders’ Deficit

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

The following Exhibits are filed as part of this Annual Report on Form 10-K:

Agreement and Plan of Merger dated as of December 31, 2022, by and among Monterey Capital Acquisition Corporation, Chronos Merger Sub, Inc.

and ConnectM Technology Solutions, Inc.

(Exhibit 2.1)

(incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by the registrant on January 3, 2023)

First Amendment to the Agreement and Plan of Merger dated as of October 12, 2023, by and among Monterey Capital Acquisition Corporation, Chronos Merger Sub, Inc.

and ConnectM Technology Solutions, Inc.

Form 8-K (Exhibit 2.1)

Amended and Restated Certificate of Incorporation of Monterey Capital Acquisition Corporation, filed with the Secretary of State of the State of Delaware on May 10, 2022.

(Exhibit 3.1)

Bylaws of Monterey Capital Acquisition Corporation

(Exhibit 3.3)

Amendment to the Amended and Restated Certificate of Incorporation of Monterey Capital Acquisition Corporation

(Exhibit 3.1)

Specimen Class A Common Stock certificate.

(Exhibit 4.2)

Specimen Unit Certificate

(Exhibit 4.1)

Specimen Warrant Certificate

(Exhibit 4.3)

Specimen Rights Certificate

(Exhibit 4.4)

Warrant Agreement, dated May 10, 2022, by and between Continental Stock Transfer & Trust Company and Monterey Capital Acquisition Corporation.

(Exhibit 4.1)

Amended and Restated Warrant Agreement, dated June 24, 2022, by and between Continental Stock Transfer & Trust Company and Monterey Capital Acquisition Corporation.

(Exhibit 4.1)

Rights Agreement, dated May 10, 2022, by and between Continental Stock Transfer & Trust Company and Monterey Capital Acquisition Corporation.

(Exhibit 4.2)

Description of Registered Securities.

(Exhibit 4.8)

Letter Agreement, dated May 10, 2022, by and among Monterey Capital Acquisition Corporation and certain security holders, officers and directors of Monterey Capital Acquisition Corporation.

(Exhibit 10.1)

Investment Management Trust Agreement, dated May 10, 2022, by and between Continental Stock Transfer & Trust Company and Monterey Capital Acquisition Corporation.

(Exhibit 10.2)

Registration Rights Agreement, dated May 10, 2022, by and among Monterey Capital Acquisition Corporation and certain stockholders.

(Exhibit 10.3)

Exhibit Description

Filed with this Report

Incorporated by Reference herein from Form or Schedule

SEC File/Reg.

Private Placement Warrant Purchase Agreement, dated May 10, 2022, by and between Monterey Capital Acquisition Corporation and Monterrey Acquisition Sponsor, LLC.

(Exhibit 10.4)

Administrative Services Agreement, dated January 7, 2021, by and between Monterey Capital Acquisition Corporation and Monterrey Acquisition Sponsor, LLC

(Exhibit 10.5)

Form of Indemnity Agreement of Monterey Capital Acquisition Corporation.

(Exhibit 10.8)

Securities Subscription Agreement, dated October 6, 2021, between Monterey Capital Acquisition Corporation and Monterrey Acquisition Sponsor, LLC.

(Exhibit 10.6)

Sponsor Support Agreement, dated December 31, 2022, by and among Monterey Capital Acquisition Corporation, Monterrey Acquisition Sponsor, LLC and ConnectM Technology Solutions, Inc.

(Exhibit 10.1)

Company Stockholder Support Agreement, dated December 31, 2022, by and between Monterey Capital Acquisition Corporation, ConnectM Technology Solutions, Inc.

and certain ConnectM Technology Solutions, Inc.

stockholders.

(Exhibit 10.2)

Promissory Note, dated August 22, 2023, issued to ConnectM.

Promissory Note, dated October 23, 2023, issued to ConnectM.

Promissory Note, dated November 16, 2023, issued to ConnectM.

Promissory Note, dated December 18, 2023, issued to Monterrey Acquisition Sponsor, LLC.

Promissory Note, dated December 18, 2023, issued to Monterrey Acquisition Sponsor, LLC

Promissory Note, dated December 18, 2023, issued to Monterrey Acquisition Sponsor, LLC.

Promissory Note, dated December 18, 2023, issued to Monterrey Acquisition Sponsor, LLC

Promissory Note, dated December 18, 2023, issued to Monterrey Acquisition Sponsor, LLC.

Promissory Note, dated December 14, 2023, issued to Monterrey Acquisition Sponsor, LLC.

Promissory Note, dated December 14, 2023, issued to Monterrey Acquisition Sponsor, LLC

Promissory Note, dated December 21, 2023, issued to Monterrey Acquisition Sponsor, LLC

Promissory Note, dated December 27, 2023, issued to Monterrey Acquisition Sponsor, LLC

Amendment to the Investment Management Trust Agreement, dated as of November 6, 2023, by and between Monterey Capital Acquisition Corporation and Continental Stock Transfer & Trust Company.

(Exhibit 10.1)

Form of Code of Ethics.

(Exhibit 14.1)

Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

Certification of Principal Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

Certification of Principal Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Inline XBRL Taxonomy Extension Schema Document.

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Exhibit Description

Filed with this Report

Incorporated by Reference herein from Form or Schedule

SEC File/Reg.

Inline XBRL Taxonomy Extension Definition.

Inline XBRL Taxonomy Extension Label Linkbase Document.

Inline XBRL Taxonomy Presentation Linkbase Document.

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

+ Furnished herewith.

(incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by the registrant on October 16, 2023)

Second Amendment to the Agreement and Plan of Merger dated as of April 12, 2024, by and among Monterey Capital Acquisition Corporation, Chronos Merger Sub, Inc.

and ConnectM Technology Solutions, Inc.

(incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by the registrant on April 12, 2024)

Purchase Agreement (incorporated by reference to Exhibit 2.1 to the Current report on Form 8-K filed by the registrant on August 6, 2024)

Second Amended and Restated Certificate of Incorporation of ConnectM Technology Solutions, Inc.

(incorporated by reference to Exhibit 3.1 to the Current report on Form 8-K filed by the registrant on July 18, 2024).

Amended and Restated Bylaws of ConnectM Technology Solutions, Inc.

(incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on July 18, 2024)

Certificate of Designations of Preferences and Rights of Series A Convertible Preferred Stock filed on May 5, 2025 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on April 23, 2025)

Certificate of Designations of Preferences and Rights of Series B Convertible Preferred Stock filed on May 5, 2025 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on April 23, 2025)

Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on July 18, 2024)

Specimen Warrant Certificate (included in Exhibit 4.3)

Warrant Agreement, dated May 10, 2022, by and between the Company and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 16, 2022)

Description of Securities

Form of Indemnification Agreement of ConnectM Technology Solutions, Inc.

(Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Amended and Restated Registration Rights Agreement, dated July 12, 2024 (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Legacy ConnectM 2019 Equity Incentive Plan (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

ConnectM Technology Solutions, Inc.

2023 Equity Incentive Plan (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Letter Agreement, dated May 10, 2022, by and among Monterey Capital Acquisition Corporation and certain security holders, officers and directors of Monterey Capital Acquisition Corporation (Incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Private Placement Warrant Purchase Agreement, dated May 10, 2022, by and between Monterey Capital Acquisition Corporation and Monterrey Acquisition Sponsor, LLC (Incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Standard Form Commercial Lease, dated as of October, 2022, by and between Sunrise Nominee Trust and Aurai LLC (f/k/a ConnectM Technologies, LLC) (dba Bourque Heating and Cooling Co.

Inc.) (Incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Standard Form Commercial Lease, dated as of February 25, 2018, by and between Maplewood Cutter, LLC and Cazeault Solar & Home LLC, as amended by that certain Letter, dated as of June 8, 2022, by and between Maplewood Cutter, LLC and Cazeault Solar & Home LLC (Incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Lease, dated as of October 31, 2006, by and between Hovey Realty Corporation and Cazeault Solar & Home LLC (Incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Commercial Lease, dated as of May 1, 2019, by and between CB Equities Mt Royal LLC and Legacy ConnectM (Incorporated by reference to Exhibit 10.10 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Leave and License Agreement, dated September 30, 2020, by and between Sree Ramulu Raju and ConnectM Technology Solutions Private Limited (Incorporated by reference to Exhibit 10.11 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Rental Agreement, dated December 1, 2021, by and between Rajesh S.

Gowda and ConnectM Technology Solutions Private Limited (Incorporated by reference to Exhibit 10.12 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Lease Agreement dated April 3, 2023, by and between AirFlow Service Company, Inc.

and Wellington Business Center LLC (Incorporated by reference to Exhibit 10.13 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Warehouse & Fulfillment Services Agreement, dated December 27, 2016, by and between Vnetek Communications, LLC dba Northeast 3PL and Legacy ConnectM (Incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated February 22, 2022, issued by Legacy ConnectM, in favor of Arumilli LLC (Incorporated by reference to Exhibit 10.15 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated February 22, 2022, issued by Legacy ConnectM, in favor of SriSid LLC (Incorporated by reference to Exhibit 10.16 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Secured Subordinated Promissory Note, dated May 18, 2021, issued by ConnectM Babione LLC in favor of Douglas Pence (Incorporated by reference to Exhibit 10.17 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated May 31, 2022, issued by Aurai LLC (f/k/a ConnectM Technology Solutions LLC) in favor of George A.

Neighoff (Incorporated by reference to Exhibit 10.18 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Secured Subordinated Promissory Note, dated February 28, 2022, issued by Aurai LLC (f/k/a ConnectM Technology Solutions LLC) in favor of Robert G.

Bourque and Lise Bourque (Incorporated by reference to Exhibit 10.19 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Secured Subordinated Promissory Note, dated January 24, 2022, issued by Aurai LLC (f/k/a ConnectM Technology Services, LLC) in favor of Timothy Sanborn (Incorporated by reference to Exhibit 10.20 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Secured Subordinated Promissory Note, dated January 24, 2022, issued by Aurai LLC (f/k/a ConnectM Technology Services, LLC) in favor of Russell Cazeault (Incorporated by reference to Exhibit 10.21 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Loan Authorization and Agreement, Small Business Administration Loan #8512657807, Application #3302062637, Doc #L-01-2884676-01, dated July 30, 2021, amending that certain Loan Authorization and Agreement, Small Business Administration Loan #8512657807, Application #3302062637, Doc #L-01-2884676-01, dated June 5, 2020, by and between Legacy ConnectM and the Small Business Administration (Incorporated by reference to Exhibit 10.22 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024).

Management Services Agreement, dated January 24, 2022, by and between Cazeault Solar & Home, LLC and Timothy J.

Sanborn (Incorporated by reference to Exhibit 10.23 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated August 22, 2023, issued by Monterey Capital Acquisition Corporation in favor of Legacy ConnectM (Incorporated by reference to Exhibit 10.24 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated October 23, 2023, issued by Monterey Capital Acquisition Corporation in favor of Legacy ConnectM (Incorporated by reference to Exhibit 10.25 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated November 16, 2023, issued by Monterey Capital Acquisition Corporation in favor of Legacy ConnectM (Incorporated by reference to Exhibit 10.26 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated January 24, 2023, issued by Legacy ConnectM in favor of Arumilli LLC (Incorporated by reference to Exhibit 10.27 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated March 1, 2023, issued by Legacy ConnectM in favor of SriSid LLC (Incorporated by reference to Exhibit 10.28 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated April 10, 2023, issued by Legacy ConnectM in favor of SriSid LLC (Incorporated by reference to Exhibit 10.29 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated May 3, 2023, issued by Legacy ConnectM in favor of Sreenivasa Rao Nalla (Incorporated by reference to Exhibit 10.30 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated May 5, 2023, issued by Legacy ConnectM in favor of Ashish Kulkarni (Incorporated by reference to Exhibit 10.31 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated July 18, 2023, issued by Legacy ConnectM in favor of Arumilli LLC (Incorporated by reference to Exhibit 10.32 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated July 26, 2023, issued by Legacy ConnectM in favor of Arumilli LLC (Incorporated by reference to Exhibit 10.33 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated August 2, 2023, issued by Legacy ConnectM in favor of Arumilli LLC (Incorporated by reference to Exhibit 10.34 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated August 2, 2023, issued by Legacy ConnectM in favor of SriSid LLC (Incorporated by reference to Exhibit 10.45 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated September 15, 2023, issued by Legacy ConnectM in favor of SriSid LLC (Incorporated by reference to Exhibit 10.36 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated September 25, 2023, issued by Legacy ConnectM in favor of SriSid LLC (Incorporated by reference to Exhibit 10.37 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated October 19, 2023, issued by Legacy ConnectM in favor of SriSid LLC (Incorporated by reference to Exhibit 10.38 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated October 27, 2023, issued by Legacy ConnectM in favor of SriSid LLC (Incorporated by reference to Exhibit 10.39 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated November 9, 2023, issued by Legacy ConnectM in favor of SriSid LLC (Incorporated by reference to Exhibit 10.40 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated November 10, 2023, issued by Legacy ConnectM in favor of Arumilli LLC (Incorporated by reference to Exhibit 10.41 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated November 13, 2023, issued by Legacy ConnectM in favor of Ashish Kulkarni (Incorporated by reference to Exhibit 10.42 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated December 15, 2023, issued by Legacy ConnectM in favor of Arumilli LLC (Incorporated by reference to Exhibit 10.43 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated December 15, 2023, issued by Legacy ConnectM in favor of SriSid LLC (Incorporated by reference to Exhibit 10.44 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated April 10, 2024, issued by Legacy ConnectM in favor of Arumilli LLC (Incorporated by reference to Exhibit 10.45 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated April 23, 2024, issued by Legacy ConnectM in favor of SriSid LLC (Incorporated by reference to Exhibit 10.46 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated May 6, 2024, issued by Legacy ConnectM in favor of SriSid LLC (Incorporated by reference to Exhibit 10.47 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated May 8, 2024, issued by Legacy ConnectM in favor of SriSid LLC (Incorporated by reference to Exhibit 10.48 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated May 16, 2024, issued by Legacy ConnectM in favor of SriSid LLC (Incorporated by reference to Exhibit 10.49 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated May 20, 2024, issued by Legacy ConnectM in favor of SriSid LLC (Incorporated by reference to Exhibit 10.50 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated June 1, 2024, issued by Legacy ConnectM in favor of Dinesh Tanna (Incorporated by reference to Exhibit 10.51 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated June 10, 2024, issued by Legacy ConnectM in favor of Ashish Kulkarni (Incorporated by reference to Exhibit 10.52 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated June 17, 2024, issued by Legacy ConnectM in favor of Satish K Tadikonda Trust.

(Incorporated by reference to Exhibit 10.53 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated June 17, 2024, issued by Legacy ConnectM in favor of Kanu Patel (Incorporated by reference to Exhibit 10.54 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated June 20, 2024, issued by Legacy ConnectM in favor of Vikas Desai (Incorporated by reference to Exhibit 10.55 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Credit Agreement, dated February 18, 2022, by and among Legacy ConnectM, SriSid LLC, and Arumilli LLC (Incorporated by reference to Exhibit 10.56 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Security and Intercreditor Agreement, dated February 22, 2022, by and among Legacy ConnectM, SriSid LLC, and Arumilli LLC (Incorporated by reference to Exhibit 10.57 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated December 29, 2022, issued by ConnectM Florida RE LLC in favor of RJZ Holdings LLC (Incorporated by reference to Exhibit 10.58 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Secured Promissory Note, dated December 28, 2022, issued by Aurai LLC in favor of Robert J.

Zrallack (Incorporated by reference to Exhibit 10.59 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated November 28, 2022, issued by Legacy ConnectM, in favor of SriSid LLC (Incorporated by reference to Exhibit 10.60 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated January 18, 2024, issued by Legacy ConnectM in favor of Arumilli LLC (Incorporated by reference to Exhibit 10.61 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated February 2, 2024, issued by Legacy ConnectM in favor of IT Corpz, Inc (Incorporated by reference to Exhibit 10.62 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Promissory Note, dated March 13, 2024, issued by Legacy ConnectM in favor of Arumilli LLC (Incorporated by reference to Exhibit 10.63 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024)

Amendment to Forward Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Current report on Form 8-K filed by the registrant on August 6, 2024)

Note Conversion Agreement by and between the Company and Arumilli LLC, dated as of September 12, 2024 (incorporated by reference to Exhibit 10.1 to the Current report on Form 8-K filed by the registrant on September 17, 2024)

Note Conversion Agreement by and between the Company and SriSid LLC, dated as of September 12, 2024 (incorporated by reference to Exhibit 10.2 to the Current report on Form 8-K filed by the registrant on September 17, 2024)

Standby Equity Purchase Agreement dated as of December 17, 2024 by and between the Company and YA II PN, LTD.

(incorporated by reference to Exhibit 10.1 to the Current report on Form 8-K filed by the registrant on December 26, 2024)

Note Conversion Agreement by and between the Company and Sree Nalla, an individual, dated as of September 12, 2024 (incorporated by reference to Exhibit 10.1 to the Current report on Form 8-K filed by the registrant on February 10, 2025)

Note and Payable Conversion Agreement by and between the Company and IT Corpz Inc., dated as of September 24, 2024 (incorporated by reference to Exhibit 10.2 to the Current report on Form 8-K filed by the registrant on February 10, 2025)

Note Conversion Agreement by and between the Company and Monterrey Acquisition Sponsor LLC, dated as of September 24, 2024 (incorporated by reference to Exhibit 10.3 to the Current report on Form 8-K filed by the registrant on February 10, 2025)

Debt Conversion Agreement by and between the Company and MZHCI, LLC, dated as of November 13, 2024 (incorporated by reference to Exhibit 10.4 to the Current report on Form 8-K filed by the registrant on February 10, 2025)

Debt Conversion Agreement by and between the Company and George A.

Neighoff, an individual, dated as of November 13, 2024 (incorporated by reference to Exhibit 10.5 to the Current report on Form 8-K filed by the registrant on February 10, 2025)

Debt Conversion Agreement by and between the Company and KLR Holdings Inc., dated as of December 1, 2024 (incorporated by reference to Exhibit 10.6 to the Current report on Form 8-K filed by the registrant on February 10, 2025)

Debt Conversion Agreement by and between the Company and Libertas Funding LLC, dated as of September 24, 2024 (incorporated by reference to Exhibit 10.7 to the Current report on Form 8-K filed by the registrant on February 10, 2025)

Marketing Services Agreement by and between the Company and Outside Box Capital Inc., dated as of July 25, 2024 (incorporated by reference to Exhibit 10.8 to the Current report on Form 8-K filed by the registrant on February 10, 2025)

Services Agreement by and between the Company and Jamal Khurshid, an individual, dated December 1, 2024(incorporated by reference to Exhibit 10.9 to the Current report on Form 8-K filed by the registrant on February 10, 2025)

Services Agreement by and between the Company and LU2 Holdings, LLC, dated December 1, 2024(incorporated by reference to Exhibit 10.10 to the Current report on Form 8-K filed by the registrant on February 10, 2025)

Capital Markets Advisory Agreement by and between the Company and Roth Capital Partners LLC, dated July 16, 2024 (incorporated by reference to Exhibit 10.11 to the Current report on Form 8-K filed by the registrant on February 10, 2025)

Transfer Agreement by and between the Company and Srimulli Renewable LLC, dated October 1, 2024 (incorporated by reference to Exhibit 10.12 to the Current report on Form 8-K filed by the registrant on February 10, 2025)

Transfer Agreement by and between the Company and Gregory Kendall, an individual, dated October 1, 2024 (incorporated by reference to Exhibit 10.13 to the Current report on Form 8-K filed by the registrant on February 10, 2025)

Settlement Agreement by and between the Company and Benjamin Securities, Inc., dated October 2, 2024 (incorporated by reference to Exhibit 10.14 to the Current report on Form 8-K filed by the registrant on February 10, 2025)

Convertible Promissory Note, dated December 17, 2024, between ConnectM and YA II PN, LTD.

(incorporated by reference to Exhibit 10.2 to the Current report on Form 8-K filed by the registrant on December 26, 2024)

Registration Rights Agreement, dated December 17, 2024, between ConnectM and YA II PN, LTD.

(incorporated by reference to Exhibit 10.3 to the Current report on Form 8-K filed by the registrant on December 26, 2024)

Termination Agreement dated as of April 2, 2025, by and among (i) Meteora Special Opportunity Fund I, LP, (ii) Meteora Capital Partners, LP, (iii) Meteora Select Trading Opportunities Master, LP, and (iv) ConnectM (incorporated by reference to Exhibit 10.1 to the Current report on Form 8-K filed by the registrant on April 18, 2025)

Code of Ethics

Insider Trading Policy

List of Subsidiaries

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2 002

Includes the following financial and related information on Form 10-K as of and for the 12 months ended December 31, 2024, formatted in Inline Extensible Business Reporting Language (iXBRL):

(1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Income, (3) the Consolidated Statements of Comprehensive Income, (4) the Consolidated Statements of Changes in Stockholders’ Equity, (5) the Consolidated Statements of Cash Flows, and (6) Notes to Consolidated Financial Statements.

The cover page from this Quarterly Report on Form 10-X formatted in Inline XBRL.

Filed herewith

Form 10-K Summary.

Not applicable.

Not included.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Monterey Capital Acquisition Corporation

March 13, 2024

/s/ Bala Padmakumar

Bala Padmakumar

Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated below and on the dates indicated.

/s/ Bala Padmakumar

ConnectM Technology Solutions, Inc.

By (Signature and Title) Bhaskar Panigrahi, Chief Executive Officer and Chairman

Date August 04, 2025

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ Bhaskar Panigrahi

Chief Executive Officer;

August 04, 2025

Bhaskar Panigrahi

(Principal Executive Officer)

March 13, 2024

/S/ Jeff Ervin

Interim Chief Financial Officer

August 04, 2025

(Principal Financial Officer)

/S/ Bala Padmakumar

Vice Chairman

August 04, 2025

Bala Padmakumar

/s/ Daniel Davis

Chief Financial Officer

(Principal Financial and Accounting Officer)

March 13, 2024

/s/ Vivek Soni

March 13, 2024

/s/ Leela Gray

March 13, 2024

/S/ Kathy Cuocolo

March 13, 2024

August 04, 2025

Kathy Cuocolo

/S/ Stephen Markscheid

March 13, 2024

August 04, 2025

Stephen Markscheid

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Operations for the years ended December 31, 2023 and 2022

Consolidated Statements of Changes in Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit) for the years ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

Notes to Consolidated Financial Statements

/S/ Gautam Barua

August 04, 2025

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

of Monterey Capital Acquisition Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Monterey Capital Acquisition Corporation (the Company) as of December 31, 2023 and 2022, and the related consolidated statements of operations, changes in common stock subject to possible redemption and stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

To the Board of Directors and Stockholders of ConnectM Technology Solutions, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of ConnectM Technology Solutions, Inc.

(the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024 and 2023, and the consolidated results of its operations and its cash flows for the years ended December 31, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has a significant working capital deficiency, has incurred significant losses, and needs to raise additional funds to meet its obligations and sustain operations which raises substantial doubt about its ability to continue as a going concern.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 4 to the consolidated financial statements, the Company has a net loss from operations, negative cash flows from operations, and an accumulated deficit and that raises substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 4.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

1 unchanged sentence

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

2 unchanged sentences

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2023.

1 unchanged sentence

Ocean, New Jersey

March 12, 2024

MONTEREY CAPITAL ACQUISITION CORPORATION

August 4, 2025

CONNECTM TECHNOLOGY SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

Current assets

Prepaid expenses

Income taxes receivable

Accounts receivable

Contract asset

Convertible note receivable, related party

Deferred offering costs

Other receivable, related party

Forward purchase agreement derivative asset

Working capital advances

Prepaid expenses and other current assets

Total current assets

Marketable securities held in trust account

Liabilities and Stockholders’ Equity (Deficit)

Right-of-use asset – operating lease

Right-of-use asset – finance lease

Property, plant and equipment, net

Intangible assets, net

Liabilities and Stockholders’ Deficit

Current liabilities

Accrued offering costs

Accrued expenses

Convertible note – related party

Convertible note

Due to Sponsor – related party

Deferred credit – term extension fee funded by acquisition target company

Income taxes payable

Accounts payable

Accrued expenses and other current liabilities

Contingent consideration

Debt, net of debt discount

Convertible debt, at fair value

Derivative liabilities

Operating lease liability

Finance lease liability

Contract liabilities

Total current liabilities

Deferred underwriting fees payable

Forward Purchase Agreement liability

Debt, net of current portion

Operating lease liabilities, net of current portion

Finance lease liabilities, net of current portion

Contingent consideration

Total liabilities

Commitments and Contingencies (Note 19)

Class A common stock, $ 0.0001 par value;

100,000,000 shares authorized;

7,238,125 and 9,200,000 shares subject to possible redemption issued and outstanding as of December 31, 2023 and 2022, respectively

Stockholders’ Equity (Deficit):

Preferred stock, $ 0.0001 par value;

1,000,000 shares authorized;

none issued and outstanding

Class A common stock, $ 0.0001 par value;

100,000,000 shares authorized;

138,000 shares not subject to possible redemption (excluding Class A common stock subject to possible redemption) as of December 31, 2023 and 2022

Class B common stock, $ 0.0001 par value;

10,000,000 shares authorized;

2,300,000 shares issued and outstanding as of December 31, 2023 and 2022

Stockholders’ Deficit:

Preferred stock Series A, $ 0.001 par value, 10,000,000 shares authorized as of December 31, 2024 and 2023 no shares issued or outstanding as of December 31, 2024 and 2023

Common stock, $ 0.0001 par value, 100,000,000 shares authorized as of December 31, 2024 and 2023, respectively, 29,093,289 and 13,338,437 issued and outstanding as of December 31, 2024 and 2023, respectively

Additional paid-in-capital

Accumulated deficit

1 unchanged sentence

( 22,860,351 )

Accumulated other comprehensive income

Total ConnectM Technology Solutions, Inc.'s stockholders’ deficit

( 25,104,263 )

( 9,456,219 )

Noncontrolling interest

Total stockholders’ deficit

1 unchanged sentence

( 9,482,564 )

Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders’ Deficit

Total liabilities and stockholders’ deficit

The accompanying notes are an integral part of these consolidated financial statements.

MONTEREY CAPITAL ACQUISITION CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31,

General and administrative expenses

CONNECTM TECHNOLOGY SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Years Ended December 31,

Costs and expenses:

Cost of revenues

Selling, general and administrative expenses

Loss on impairment

Total costs and expenses

Loss from operations

2 unchanged sentences

Other income (expense):

Dividend and interest income

Loss on change in fair value of Forward Purchase Agreement liability

Interest expense

( 2,714,048 )

( 1,431,354 )

Loss before income taxes

Loss on extinguishment of debt

( 1,645,443 )

Gain on extinguishment of debt

Change in fair value of convertible debt

( 1,707,747 )

Income tax provision

Change in fair value of contingent consideration

Change in fair value of derivative liabilities

Change in fair value of forward purchase agreement

( 8,254,390 )

Day one gain on issuance of SEPA

Gain on forward purchase agreement modification

Loss on forward purchase agreement modification

Other expense

Total other expense, net

( 10,905,859 )

Weighted average shares outstanding of Class A common stock subject to possible redemption

Basic and diluted net loss per share, Class A common stock subject to possible redemption (see Note 2)

Weighted average shares outstanding of Class A common stock not subject to redemption

Basic and diluted net loss per share, Class A common stock (see Note 2) not subject to redemption

Weighted average shares outstanding of Class B common stock

Basic and diluted net loss per share, Class B common stock (see Note 2)

( 1,733,983 )

( 22,508,208 )

( 9,198,854 )

net income (loss) attributable to noncontrolling interests

Net loss attributable to ConnectM Technology Solutions, Inc.

( 22,565,748 )

( 9,149,666 )

Other comprehensive income (loss):

Foreign currency translation adjustment

Comprehensive loss before noncontrolling interests

( 22,514,365 )

( 9,052,053 )

comprehensive loss (income) attributable to noncontrolling interests

Comprehensive loss attributable to ConnectM Technology Solutions, Inc.

( 22,571,905 )

( 9,002,865 )

Weighted average shares outstanding of Common Stock

Basic and diluted net loss per share of Common Stock

The accompanying notes are an integral part of these consolidated financial statements.

MONTEREY CAPITAL ACQUISITION CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ EQUITY (DEFICIT)

CONNECTM TECHNOLOGY SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

Common Stock Subject to

Possible Redemption

Preferred Shares subject to Possible Redemption

Series Seed ‑ 1

Comprehensive

Solutions, Inc.'s

Stockholders’

Equity (Deficit)

Balance – January 1, 2023

Noncontrolling

Stockholders’

Balance, as of December 31, 2022

( 13,710,685 )

( 12,386,857 )

Accretion to redemption value of Class A Common stock subject to possible redemption due to dividend and interest income earned

( 12,364,014 )

Retroactive application of recapitalization

( 2,200,000 )

Accretion to redemption value of Class A Common stock subject to possible redemption due to extension payments

( 3,195,192 )

( 3,983,538 )

Redemption of Class A common stock

( 2,310,929 )

Adjusted balance, as of December 31, 2022

( 13,710,685 )

Stock-based compensation expense

Other comprehensive income

( 9,149,666 )

Balance – December 31, 2023

( 9,198,854 )

Balances, as of December 31, 2023

( 22,860,351 )

Common Stock Subject to

Possible Redemption

Stockholders’

Equity (Deficit)

Balance – January 1, 2022

Issuance of Private Placement Warrants

Issuance of Class A Common stock, net of issuance costs of $ 8,139,659

Issuance of Public Warrants, net of issuance costs of $ 152,515

Issuance of Rights, net of issuance costs of $ 406,736

Fair value of underwriter’s overallotment options exercised

Deemed capital contribution by the Sponsor through transfer of Class B shares

Issuance of Representative Shares

Accretion to redemption value of Class A Common stock subject to possible redemption

( 9,456,219 )

( 9,482,564 )

Stock-based compensation expense

Stock-based compensation to employees

Shares issued for services

Shares issues for settlement

Shares issued for acquisition of Green Energy Gains

Non-controlling unit ownership change

Business combination recapitalization net of transaction costs

( 6,673,642 )

Accretion to redemption value of Class A Common stock subject to possible redemption due to dividend and interest earned

( 6,672,972 )

Balance – December 31, 2022

Conversion of convertible debt and accrued interest

Shares issued in connection with debt settlements

Issuance of common stock for Standby Equity Purchase Agreement

Minority Interest Resulting from DC Acquisition

Foreign currency translation adjustments

( 22,565,748 )

( 22,508,208 )

Balances, as of December 31, 2024

( 45,426,099 )

( 25,104,263 )

( 23,786,507 )

The accompanying notes are an integral part of these consolidated financial statements.

MONTEREY CAPITAL ACQUISITION CORPORATION

CONNECTM TECHNOLOGY SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

For the years ended December 31,

Years Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

2 unchanged sentences

Adjustments to reconcile net loss to net cash used in operating activities:

Dividend and interest income

Depreciation and amortization expense

Amortization of debt discount

Stock-based compensation expense

Shares issued for service

Share issued for SEPA

Share issues for settlement of expenses

Stock-based compensation to employees

ROU amortization on finance leases

ROU amortization on operating leases

Provision for inventory shrinkage

Bad debt expense

Impairment loss

Loss (gain) on disposal of property, plant and equipment

Loss on extinguishment of debt

Gain on extinguishment of debt

( 2,257,638 )

Change in fair value of convertible debt

Change in fair value of forward purchase agreement

Gain on modification of forward purchase agreement

( 1,572,236 )

Loss on change in fair value of Forward Purchase Agreement liability

Changes in current assets and liabilities:

Prepaid expenses

Day one gain on issuance of SEPA and convertible note

Change in fair value of contingent consideration

Change in fair value of derivative liabilities

Loss on modification of forward purchase agreement

Changes in operating assets and liabilities:

Accounts receivable

Contract asset

Prepaid expenses and other current assets

Accounts payable

Accrued expenses

Due to Sponsor – related party

Income taxes receivable

Operating lease liabilities

Working Capital Advance

Contract liabilities

Net cash used in operating activities

( 5,959,133 )

( 4,621,692 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Investment of cash into Trust Account

Purchase of property and equipment

Proceeds from sale of property and equipment

Issuance of convertible note receivable

Purchase of additional noncontrolling shares

Cash acquired from acquisition of businesses, net of purchase price paid

Cash paid for capitalized software development costs

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from the Business Combination

Payment for reimbursement of consideration shares related to the Forward Purchase Agreement payment

( 36,727,814 )

Reimbursement for Recycled Shares related to Forward Purchase Agreement

Proceeds from the issuance of debt

Proceeds from the issuance of convertible notes

Cash paid for debt issuance costs

( 1,015,114 )

Redemption of investments in Trust Account for franchise and income taxes

Redemption of investments in Trust Account in connection with Public Share redemptions

Net cash provided by (used in) investing activities

Payments of deferred offering costs

Repayments of debt

( 2,262,401 )

Cash Flows from Financing Activities:

Proceeds from promissory note - related party

Repayment of promissory note- related party

Proceeds from issuance of Public Units

Proceeds from issuance of Private Warrants

Redemptions of Class A common stock shares

( 2,153,487 )

Term extension fees paid by target company

Payment of offering costs on Public Units

Repayments of convertible debt

Advance to Monterey Capital Acquisition Corporation

( 1,933,695 )

Proceeds from convertible note – related party

Proceeds from convertible note

Net cash (used in) provided by financing activities

( 2,491,431 )

Net change in cash

Cash – beginning of period

Cash – end of period

Supplemental Disclosure of noncash information:

Accretion to redemption value of Class A Common stock subject to possible redemption

Deferred underwriting commissions

Issuance of Representative Shares for underwriting services

Deemed capital contribution by the Sponsor through transfer of Class B shares

Proceeds from issuance of convertible notes

Advance from Lender

Payment on finance leases

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Cash, beginning of year

Cash, end of year

Supplemental disclosures of cash flow information:

Cash paid for interest

Cash paid for taxes

Supplemental disclosures of noncash financing information:

Right-of-use asset, operating acquired

Right-of-use asset, finance acquired

Derivative liabilities issued in connection with extinguishment of obligations to lenders and vendors through issuance of common stock

Conversion of convertible debt to common stock

Carrying value of debt exchanged in connection with acquisition of noncontrolling shares

Common stock issued as consideration to acquire a business

Vehicles acquired through issuance of debt

Debt extinguished through repossession of vehicle

Vendor obligation exchanged for debt instrument

Deferred offering costs included in accounts payable

Common stock issued for prepaid expenses

Unpaid purchase price of acquisition

Shares issues in connection with debt conversion agreements

Recapitalization of non-controlling interest

The accompanying notes are an integral part of these consolidated financial statements.

MONTEREY CAPITAL ACQUISITION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION, DESCRIPTION OF BUSINESS, AND GOING CONCERN

Nature of Operations

Monterey Capital Acquisition Corporation (“MCAC” or the “Company”) is a blank check company incorporated as a Delaware company on September 23, 2021.

The Company was formed for the purpose of acquiring, merging with, engaging in capital stock exchange with, purchasing all or substantially all of the assets of, engaging in contractual arrangements, or engaging in any other similar business combination with a single operating entity, or one or more related or unrelated operating entities operating in any sector (“Business Combination”).

On December 31, 2022, MCAC, entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among MCAC, ConnectM Technology Solutions, Inc., a Delaware corporation (“ConnectM”), and Chronos Merger Sub, Inc., a Delaware corporation incorporated on December 28, 2022 and a wholly owned subsidiary of MCAC (“Merger Sub”).

Pursuant to the terms and conditions of the Merger Agreement, a business combination between MCAC and ConnectM will be effected through the merger of Merger Sub with and into ConnectM, with ConnectM surviving the merger as a wholly owned subsidiary of MCAC (the “Merger”).

See Proposed Merger Combination below.

On October 12, 2023, MCAC, Merger Sub and ConnectM entered into a First Amendment to the Merger Agreement (the “Amendment”).

The Amendment extends the date after which either party may terminate the Merger Agreement for convenience (with limited exceptions) from November 13, 2023 to May 13, 2024.

The Amendment also provides that, subject to MCAC obtaining the requisite stockholder approval to amend its Amended and Restated Certificate of Incorporation (the “Amended Charter”) and the Investment Management Trust Agreement by and between MCAC and Continental Stock Transfer & Trust Company, dated May 10, 2022 (the “IMTA Amendment”), with such approval received on November 6, 2023 at MCAC’s special meeting of stockholders, MCAC will extend the date by which MCAC has to consummate a business combination by up to six months and ConnectM will pay to MCAC in the Trust Account the funds necessary to effect such extension (not to exceed $ 414,000 for each monthly extension or $ 2,484,000 in the aggregate for all six monthly extensions).

On November 6, 2023, the stockholders of MCAC held a special meeting of stockholders where the MCAC stockholders approved the Amended Charter and IMTA Amendment.

The Amended Charter provides the board of directors of MCAC with the right to extend the date by which MCAC has to consummate its Business Combination up to an additional six (6) times for one (1) month each time from November 13, 2023 to May 13, 2024 (the “Additional Extension Period”), by depositing into the Trust Account, for each one -month extension, the lesser of (a) $ 414,000 and (b) $ 0.045 for each then-outstanding share of Common Stock (the “Additional Extension Options”).

In connection with the special meeting of stockholders on November 6, 2023, stockholders holding 1,961,875 shares of Class A Common Stock issued in the Initial Public Offering (as defined below) exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account.

As a result, approximately $ 20,961,169 (approximately $ 10.68 per share after removal of interest to pay taxes) was removed from the Trust Account to pay the redeeming stockholders.

As of December 31, 2023, the Company had not commenced any operations.

All activity for the period from September 23, 2021 (inception) through December 31, 2023 relates to the Company’s formation and the Initial Public Offering, activities necessary to identify a potential target and prepare for a Business Combination.

The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest or if at all.

The Company generates non-operating income in the form of interest income from the proceeds derived from the IPO (as defined below).

The Company has selected December 31 as its fiscal year end.

The Company’s sponsor is Monterrey Acquisition Sponsor, LLC, a Delaware limited liability company (the “Sponsor”).

The registration statement for the Company’s initial public offering (the “IPO” or “Initial Public Offering”) was declared effective on May 10, 2022.

On May 13, 2022 (the “IPO date”), the Company consummated its IPO of 9,200,000 units (“Units or “Public Units”), including 1,200,000 Units resulting from the full exercise by the underwriters of their over-allotment option.

Each Unit consists of one share of Class A common stock, $ 0.0001 par value per share (“Common Stock”), one redeemable warrant exercisable into one share of Common Stock at an exercise price of $ 11.50 per share (“Public Warrant”) and one right to receive one -tenth (1/10) of one share of

Common Stock upon consummation of the Company’s initial business combination.

The Units were sold at an offering price of $ 10.00 per Unit, generating gross proceeds of $ 92,000,000 .

Simultaneously with the consummation of the IPO and the sale of the Units, the Company consummated the private placement (“Private Placement”) of 3,040,000 warrants (“Private Warrants”) to the Sponsor at a price of $ 1.00 per Private Warrant, generating total proceeds of $ 3,040,000 , which is described in Note 4.

Transaction costs amounted to $ 8,698,910 , consisting of $ 920,000 of underwriting fees, $ 3,680,000 of deferred underwriting fees that will be paid only if a business combination is entered into, $ 622,882 representing the fair value of the Representative Shares (defined below), $ 2,508,632 representing the fair value of the Transferred Founder Shares (defined below), and $ 967,396 of other offering costs.

At the IPO date, cash of $ 923,563 was held outside of the Trust Account (as defined below) and was available for the payment of the Note (see Note 5), payment of accrued offering costs and for working capital purposes.

At the IPO date, the Sponsor sold to the group of ten qualified institutional buyers and institutional accredited investors, which are not affiliated with the Company (the “Anchor Investors”), a total of 600,000 of Founders shares (“Transferred Founder Shares”) at their original purchase price of approximately $ 0.009 , as compensation for their commitment to purchase the Units sold in the IPO.

Overall, the Anchor Investors purchased 9,108,000 Units in the Initial Public Offering at the offering price of $ 10.00 under separate investment agreements.

The excess of the fair value of the Transferred Founder Shares above the purchase price totaling $ 2,508,632 as of the IPO date was determined to be a contribution from the Sponsor for offering costs in accordance with Staff Accounting Bulletin Topic 5T.

These offering costs were allocated to the Units and charged to stockholders’ equity upon the completion of the IPO.

In conjunction with the Initial Public Offering, the Company issued to the underwriter 138,000 shares of Class A common stock for nominal consideration (the “Representative Shares”).

The fair value of the Representative Shares was accounted for as compensation under Accounting Standards Codification (“ASC”) Topic 718, “Compensation — Stock Compensation” (“ASC 718”), and was included in the offering costs.

The estimated fair value of the Representative Shares as of the IPO date totaled $ 622,882 .

Of the total transaction costs of $ 8,698,910 , $ 8,139,659 was allocated to the Class A common stock subject to possible redemption, $ 152,515 was allocated to the Public Warrants (Note 3), and $ 406,736 was allocated to the Rights (Note 8).

Following the closing of the Initial Public Offering on May 13, 2022, an amount of $ 92,920,000 ($ 10.10 per Unit) from the net proceeds of the sale of the Units in the IPO and the sale of the Private Placement Units was placed in a trust account (the “Trust Account”), to be invested in U.S.

government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company.

Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its tax obligations, the proceeds from this Initial Public Offering will not be released from the Trust Account until the earlier of:

(a) the completion of the Company’s initial business combination, or (b) the redemption of the Company’s public shares if the Company is unable to complete its initial business combination in the prescribed time frame, as defined below.

During the years ended December 31, 2023 and 2022, the Company withdrew $ 1,588,710 and $ 0 , respectively, of dividend and interest income earned in the Trust Account to pay its franchise and income tax obligations.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the Private Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.

There is no assurance that the Company will be able to complete a Business Combination successfully.

The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80 % of the assets held in the Trust Account (as defined below) (excluding the taxes payable on interest earned and less any interest earned thereon that is released for taxes) at the time of the agreement to enter into the initial Business Combination.

However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50 % or more of the outstanding voting securities of the target or otherwise acquires an interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”).

In connection with any proposed initial business combination, the Company will either (1) seek stockholder approval of such initial business combination at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination or do not vote at all, into their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable), or (2) provide its stockholders with the opportunity to sell their shares to the

Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable), in each case subject to the limitations described herein.

If the Company determines to engage in a tender offer, such tender offer will be structured so that each stockholder may tender all of his, her or its shares rather than some pro rata portion of his, her or its shares.

The decision as to whether the Company will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to the Company in a tender offer will be made by the Company, solely in the Company’s discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval.

If the Company determines to allow stockholders to sell their shares to the Company in a tender offer, it will file tender offer documents with the U.S.

Securities and Exchange Commission (“SEC”) which will contain substantially the same financial and other information about the initial business combination as is required under the SEC’s proxy rules.

The Company will proceed with a Business Combination if the Company has net tangible assets of at least $ 5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Business Combination.

On November 6, 2023, the Company’s Charter was amended to eliminate the limitation that the Company shall not redeem public shares to the extent that such redemption would cause the Company’s net tangible assets to be less than $ 5,000,001 (the “Redemption Limitation”).

The amendment will allow the Company to redeem public shares irrespective of whether such redemption would exceed the Redemption Limitation.

If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC prior to completing a Business Combination.

If, however, stockholder approval of the transactions is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules.

Additionally, each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction.

Notwithstanding the foregoing redemption rights, if the Company seeks stockholder approval of its initial business combination and the Company does not conduct redemptions in connection with its initial business combination pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15 % of the shares sold in this Initial Public Offering, referred to as excess shares.

However, the Company’s stockholders will not be restricted to vote all of their shares (including excess shares) for or against the initial business combination.

Additionally, such stockholders will not receive redemption distributions with respect to the excess shares if the Company completes the initial business combination.

The Company’s sponsor, officers and directors (the “initial stockholders”) have agreed not to propose any amendment to the Amended and Restated Certificate of Incorporation that would affect the Company’s public stockholders’ ability to convert or sell their shares to the Company in connection with a business combination as described herein or affect the substance or timing of the Company’s obligation to redeem 100 % of its public shares if the Company does not complete a business combination within 24 months (or if the Company decides to extend the period of time to complete the initial business combination as described herein) from the closing of the Initial Public Offering (the “Combination Period”) unless the Company provides its public stockholders with the opportunity to convert their shares of common stock upon the approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest not previously released to the Company but net of franchise and income taxes payable, divided by the number of then outstanding public shares.

On May 9, 2023, the Company extended the period of time to consummate its Business Combination by three months , from May 13, 2023 to August 13, 2023, pursuant to the deposit of $ 920,000 to the Trust Account by ConnectM (the “First Extension Payment”).

The Company recognized a deferred credit in the amount of $ 920,000 in connection with the First Extension Payment.

On August 11, 2023, the Company further extended the period of time to consummate its Business Combination by an additional three months from August 13, 2023 to November 13, 2023 (the “Second Extension Period”), pursuant to the deposit of $ 920,000 to the Trust Account by ConnectM (the “Second Extension Payment”).

The Second Extension Payment represents the second and final of two three-

month extensions permitted under the Company’s governing documents.

The Company recognized a deferred credit in the amount of $ 920,000 in connection with the Second Extension Payment.

On November 9, 2023, in connection with the MCAC stockholders’ approval of the Amended Charter and IMTA Amendment, the Company further extended the period of time to consummate its Business Combination by an additional one -month period from November 13, 2023 to December 13, 2023 (the “First Additional Extension Period”) pursuant to the Additional Extension Options, by ConnectM’s deposit of approximately $ 325,715 into the Trust Account (the “First Additional Extension Payment”).

On December 11, 2023, the Company further extended the period of time to consummate its Business Combination by an additional one -month period from December 13, 2023 to January 13, 2023 (the “Second Additional Extension Period”) pursuant to the Additional Extension Options, by ConnectM’s deposit of approximately $ 325,716 into the Trust Account (the “Second Additional Extension Period”).

On January 8, 2024, the Company further extended the period of time to consummate its Business Combination by an additional one -month period from January 13, 2024 to February 13, 2024 (the “Third Additional Extension Period”) pursuant to the Additional Extension Options, by ConnectM’s deposit of approximately $ 325,716 into the Trust Account (the “Third Additional Extension Period”).

On February 9, 2024, the Company further extended the period of time to consummate its Business Combination by an additional one -month period from February 13, 2024 to March 13, 2024 (the “Fourth Additional Extension Period”) pursuant to the Additional Extension Options, by ConnectM’s deposit of approximately $ 325,716 into the Trust Account (the “Fourth Additional Extension Period”).

On March 11, 2024, the Company further extended the period of time to consummate its Business Combination by an additional one -month period from March 13, 2024 to April 13, 2024 (the “Fifth Additional Extension Period”) pursuant to the Additional Extension Options, by ConnectM’s deposit of approximately $ 325,716 into the Trust Account (the “Fifth Additional Extension Period”).

If the Company is unable to complete its initial business combination within the Fifth Additional Extension Period, absent an additional extension under the Additional Extension Options, the Company will:

(i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100 % of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including any interest not previously released to the Company (net of taxes payable), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the board of directors of MCAC, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

The Company cannot assure you that it will have funds sufficient to pay or provide for all creditors’ claims.

The Company’s initial stockholders agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if the Company fails to complete its initial business combination within the Combination Period.

However, if the initial stockholders acquire public shares in or after the IPO date, they will be entitled to liquidating distributions from the Trust Account with respect to such public shares if the Company fails to complete a Business Combination within the prescribed time frame.

The underwriter has agreed to waive their rights to their deferred underwriting commission (see Note 7) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the public shares.

In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($ 10.00 ).

In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $ 10.10 per Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes.

This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”).

Moreover, in the event that an executed waiver

is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims.

The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Proposed Business Combination

On December 31, 2022, MCAC, entered into an Agreement and Plan of Merger, as amended by the Amendment, by and among MCAC, ConnectM Technology Solutions, Inc., a Delaware corporation, and Chronos Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of MCAC.

Pursuant to the terms and conditions of the Merger Agreement, as amended by the Amendment, a business combination between MCAC and ConnectM will be effected through the merger of Merger Sub with and into ConnectM, with ConnectM surviving the merger as a wholly owned subsidiary of MCAC.

As a result of the Merger, among other things, each share of ConnectM common stock, par value $ 0.0001 per share, and ConnectM preferred stock, par value $ 0.0001 per share (but excluding shares the holders of which perfect rights of appraisal under Delaware law), will be converted into the right to receive such number of shares of common stock, par value $ 0.0001 per share, of MCAC common stock as calculated based on the Exchange Ratio as set forth in the Merger Agreement.

“Exchange Ratio” is defined in the Merger Agreement to be the quotient of (a) the merger consideration, divided by (b) the number of shares of ConnectM capital stock outstanding as of immediately prior to the Effective Time, including any shares underlying outstanding warrants to purchase ConnectM Common Stock and excluding any shares of ConnectM capital stock held in treasury by ConnectM.

The Merger Consideration is 14,500,000 shares of MCAC Common Stock, subject to an upward adjustment depending on the extent to which MCAC’s transaction expenses exceed $ 8,000,000 .

Consummation of the transactions contemplated by the Merger Agreement are subject to satisfaction or waiver of customary conditions of the respective parties, including receipt of required regulatory approvals, receipt of approval from shareholders of each of the company and ConnectM for consummation of the Merger and certain other actions related thereto by our shareholders.

The Merger Agreement, as amended by the Amendment, may be terminated prior to the time at which the Merger becomes effective as follows:

(i) by mutual written consent of MCAC and ConnectM, (ii) by either MCAC or ConnectM if the Merger is not consummated on or before May 13, 2024 (the “Outside Date”), provided that the failure to consummate the Merger by the Outside Date is not due to a material breach by the party seeking to terminate and which such breach is the proximate cause for the conditions to close not being satisfied, (iii) by either MCAC or ConnectM if the other party has breached any of its covenants or representations and warranties such that closing conditions would not be satisfied at the consummation of the business combination (subject to a 30-day cure period for breaches that are curable), provided that such right to terminate will not be available to either party if it has breached in any material respect its obligations set forth in the Merger Agreement in any manner that will have proximately contributed to the occurrence of the failure of a condition to the consummation of the Merger, (iv) by either MCAC or ConnectM if a governmental entity shall have issued a law or final, non-appealable governmental order, rule or regulation permanently restraining, enjoining or prohibiting the consummation of the Merger, provided that, the party seeking to terminate cannot have breached its obligations under the Merger Agreement in a manner that has proximately contributed to the governmental action, (v) by either MCAC or ConnectM if MCAC stockholder approval shall not have been obtained by reason of the failure to obtain the required vote upon a vote held at the special meeting or any adjournment thereof, (vi) by written notice from MCAC to ConnectM if the Company stockholders do not approve the merger agreement within two days following the date of the Merger Agreement, or (vii) by written notice from ConnectM to MCAC if the board of directors of MCAC shall have publicly withdrawn, modified, withheld or changed its recommendation to vote in favor of the Merger and other proposals, if such notice is given by ConnectM within 15 business days after such action (or inaction) the board of directors of MCAC.

In the event the Merger Agreement is terminated in certain of the circumstances described above, MCAC will be obligated to reimburse ConnectM for up to $ 1,200,000 of its transaction expenses.

In connection with the proposed business combination with ConnectM, MCAC has entered and plans to enter into certain related agreements, including the below.

Sponsor Support Agreement

In connection with the execution of the Merger, the Sponsor entered into a sponsor support agreement with MCAC, certain independent directors of MCAC, and ConnectM, pursuant to which the Sponsor and the independent directors of MCAC have agreed to waive,

subject to, conditioned upon and effective as of immediately prior to, the Effective Time, the adjustment to the conversion ratio set forth in our charter with respect to our Founder Shares and vote all shares of our Class A Common Stock and Class B Common Stock beneficially owned by them in favor of the Merger.

The Sponsor and the independent directors of MCAC have also agreed, that in the event less than all of the holders of our Class B Common Stock execute the Registration Rights Agreement, they will agree to waive certain rights under that certain Registration Rights Agreement, dated May 10, 2022, by and among MCAC, Sponsor and the independent directors.

Company Stockholder Support Agreement

In connection with the execution of the Merger Agreement, MCAC entered into a stockholder support agreement with ConnectM and the Company stockholders, pursuant to which the Company stockholders agreed to vote all shares of ConnectM Stock beneficially owned by them in favor of the Merger.

Lock-Up Agreement/Transfer Restrictions

In connection with the execution of the Merger Agreement, MCAC, the Sponsor, and certain ConnectM Stockholders also entered into lock-up agreements, which shall become effective as of the Effective Time, pursuant to which, subject to certain limited exceptions, each of the Sponsor and the Company stockholders has agreed not to transfer any of its shares of our Class A Common Stock and Class B Common Stock during the period beginning on the closing date of the business combination and ending on the earlier of (A) 180 days after the Closing Date and (B)(x) the date on which the price of our Class A Common Stock equals or exceeds $ 16.50 for any 20 trading days within any 30 trading day period following the 150 th day after the Closing Date, or (y) a Change of Control.

2023 Equity Incentive Plan

MCAC has agreed to approve and adopt an incentive award plan (the “2023 Equity Incentive Plan”), which will be effective as of the Closing and in a form mutually acceptable to the board of directors of MCAC.

The 2023 Equity Incentive Plan shall provide for an initial aggregate share reserve equal to the sum of (a) 10 % of the number of shares of MCAC Common Stock outstanding immediately following the Effective Time after giving effect to the transactions contemplated hereby, plus (b) an annual increase on the first day of each calendar year beginning on the first January 1 following the Closing and ending on and including January 1 of the tenth calendar year thereafter, equal to the lesser of (i) 4 % of the aggregate number of shares of MCAC Common Stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as is determined by the administrator of the 2023 Equity Incentive Plan.

Amended and Restated Registration Rights Agreement

In connection with the Closing, MCAC, the Sponsor, certain existing stockholders of MCAC and certain stockholders of ConnectM who will receive shares of MCAC Common Stock pursuant to the Merger Agreement will enter into an amended and restated registration rights agreement (“Registration Rights Agreement”) mutually agreeable to MCAC and ConnectM and in substantially the form attached to the Merger Agreement, which will become effective upon the consummation of the Merger.

MCAC has agreed that, prior to the Closing, it will request that each holder of our Class B Common Stock execute an amended and restated registration rights agreement (“Registration Rights Agreement”) mutually agreeable to MCAC and ConnectM and in substantially the form attached to the Merger Agreement, among MCAC, certain stockholders of ConnectM and each holder of our Class B Common Stock.

Forward Purchase Agreement

In connection with the execution of the Merger Agreement, MCAC and Meteora Special Opportunity Fund (“Meteora”), entered into the Forward Purchase Agreement for a Forward Purchase Transaction.

Pursuant to the terms of the Forward Purchase Agreement, Meteora intends to purchase in the open market through a broker shares of Class A Common Stock, after the date of the Forward Purchase Agreement from holders of our Class A Common Stock (other than MCAC or affiliates of MCAC), including from those who have elected to redeem shares of our Class A Common Stock pursuant to the redemption rights set forth in our charter, in connection with the execution of the Merger Agreement, up to a maximum of 6,600,000 shares of our Class A Common Stock at a price equal to the estimated redemption price of approximately $ 10.88 per share of our Class A Common Stock (based on the amount of $ 78,702,824 held in the Trust Account as of December 31, 2023, plus $ 30,533 estimated income taxes to be paid into the Trust Account upon receipt of income tax refund from the Internal Revenue Service) to be paid to investors who elect to redeem their shares at MCAC’s redemption deadline (the “Initial Price”);

provided that Meteora may not beneficially own greater than 9.9 % of the issued and outstanding shares on a post-merger pro forma basis.

Meteora has agreed to waive any redemption rights with respect to any shares of our Class A Common

Stock in connection with the Merger.

Such waiver may reduce the number of shares of our Class A Common Stock redeemed in connection with the Merger, which reduction could alter the perception of the potential strength of the Merger.

The number of shares of our Class A Common Stock purchased by Meteora, not including the Share Consideration Shares (as defined below), shall be referred to as the “Recycled Shares.”

The Forward Purchase Agreement provides that not later than one local business day following the closing date of the merger (the “Prepayment Date”), MCAC will pay to Meteora, out of funds held in the Trust Account, a cash amount (the “Prepayment Amount”) equal to (x) the product of the number of Recycled Shares and the Initial Price less (y) an amount equal to 1 % of the product of the number of Recycled Shares and the Initial Price (the “Prepayment Shortfall”).

At the written request of Meteora, the Prepayment Amount must be deposited into an escrow account simultaneously with the Closing.

In addition to the Prepayment Amount, MCAC shall pay directly from the Trust Account on the Prepayment Date, an amount equal to the product of 40,000 and the Initial Price (the “Additional Consideration”), for the purpose of repayment of Meteora having actually purchased additional shares of Class A Common Stock (the “Share Consideration Shares”) from third parties prior to the Closing.

The Additional Consideration shall be free and clear of all obligations of Meteora in connection with signing a definitive agreement for the Forward Purchase Transaction.

From time to time following the Closing, Meteora may sell Recycled Shares at any time and at any sales price, without payment by Meteora of any Early Termination Obligation (as defined in the Forward Purchase Agreement), until such time as the proceeds from the sales equal 100 % of the Prepayment Shortfall.

From time to time following the closing of the merger and prior to the earliest to occur of (a) the third anniversary of the Closing and (b) the date specified by Meteora in a written notice to be delivered to MCAC at Meteora’s discretion after the occurrence of any of a (x) Trigger Event (defined below) or (y) Delisting Event (each as defined in the Forward Purchase Agreement) (in each case, the “Maturity Date”), Meteora may, in its sole discretion, sell some or all of the shares.

On the Maturity Date, the escrow agent shall transfer to Meteora an amount in cash equal to the product of (x)(i) the number of shares as set forth in the initial Pricing Date Notice (as defined in the Forward Purchase Agreement) less (b) the number of Terminated Shares (as defined in the Forward Purchase Agreement) (the “Matured Shares”) multiplied by (y) the Initial Price and Meteora shall transfer to the escrow agent for the benefit of MCAC the Matured Shares less the Maturity Shares and the Penalty Shares (each as defined below).

On the last trading day of each week following the merger, Meteora will pay to the Combined Company the product of the number of shares sold multiplied by the Reset Price.

The “Reset Price” shall initially be the Initial Price and shall be adjusted on the first scheduled trading day of each week commencing with the first week following the thirtieth day after the Closing to be the lowest of (a) the then-current Reset Price, (b) the Initial Price and (c) the VWAP Price of the Shares of the prior week, but not lower than $ 7.50 ;

provided that to the extent that MCAC or the Combined Company offers and sells any shares or securities convertible into shares at a price lower than the Initial Price, the Reset Price, shall be modified to equal such reduced price at which such securities may be issued.

Meteora will retain any sale proceeds in excess of the product of the number of shares sold by Meteora and the Reset Price.

In the event that the VWAP Price of the Class A Common Stock falls below $ 5.00 per share for any 20 trading days during a 30 trading day period beginning 30 days following the closing of the Merger (a “Trigger Event”), then Meteora may elect to accelerate the Maturity Date to the date of such Trigger Event.

At the Maturity Date, the Combined Company is required to purchase from Meteora, subject to Meteora’s consent, all of the unsold shares for consideration equal to an amount, in cash or shares at the sole discretion of Combined Company (the “Maturity Consideration”), equal to (a) in the case of cash, the product of the unsold shares and $ 2.00 , or $ 2.50 , solely in the event of a Registration Failure (as defined in the Forward Purchase Agreement), and (b) in the case of shares, such number of shares (the “Maturity Shares”) with a value equal to the product of the unsold shares and $ 2.00 , or $ 2.50 , solely in the event of a Registration Failure, divided by the VWAP Price of the Shares for the 10 trading days prior to the Maturity Date;

provided that the Maturity Shares used to pay the Maturity Consideration are freely tradable.

If the Maturity Shares are not freely tradable, Meteora shall instead receive such number of shares equal to the product of (i) three (3) and (ii) 6,600,000 minus the Terminated Shares (as defined in the Forward Purchase Agreement) (the “Penalty Shares”);

provided, however, that if the Penalty Shares are freely tradable within 45 days after the Maturity Date, Meteora shall return to appreciate such number of Penalty Shares that are valued in excess of Maturity Consideration based on the 10-day VWAP ending on the date that such shares satisfied the Share Conditions.

In addition, pursuant to the terms and conditions of the Forward Purchase Agreement, ConnectM and the Combined Company agree, from and after December 31, 2022, not to incur in excess of $ 25.0 million of indebtedness through and including the 90th day following the Prepayment Date without the prior written consent of the Meteora.

Trade Date (as defined in the agreement) and upon the first business day of each quarter and (c) expenses actually incurred in connection with the acquisition of the Shares in an amount not to exceed $ 0.05 per Share and $ 0.03 per disposition of each Share.

A break-up fee equal to (i) all of Meteora’s reasonable and documented fees and expenses relating to the Forward Purchase Agreement capped at $ 75,000 plus (ii) $ 500,000 , shall be payable by the Combined Company to Meteora in the event the Forward Purchase Agreement is terminated by MCAC.

In the event that the Merger Agreement is terminated pursuant to its terms prior to the closing of the Business Combination, no break-up fee will be due to Meteora from MCAC or ConnectM.

Use of Funds Restricted for Payment of Taxes

In April 2023, the Company withdrew $ 302,000 of interest and dividend income earned in the Trust Account.

Such amount was restricted for payment of the Company’s income tax liabilities as provided in the Company’s charter.

During the second quarter of 2023, $ 87,000 of these funds were inadvertently used for the payments of general operating expenses.

These funds were replenished to the Company’s operating account by ConnectM on August 21, 2023 in the form of a working capital loan with the same terms as the Working Capital Loans from the Sponsor.

During the third quarter of 2023, additional funds restricted for payment of the Company’s income tax liabilities totaling approximately $ 215,000 were utilized for the payments of general operating expenses.

As of September 30, 2023, the funds were replenished to the Company’s operating account by ConnectM in the form of a working capital loan with the same terms as the Working Capital Loans from the Sponsor.

Between October 12, 2023 and November 10, 2023, additional funds restricted for payment of the Company’s income tax liabilities totaling approximately $ 58,000 were utilized for the payments of general operating expenses and were subsequently replenished to the Company’s operating account on November 13, 2023 by ConnectM in the form of a working capital loan with the same terms as the Working Capital Loans from the Sponsor.

The Company requested and received from Continental Stock Transfer & Trust Company, a waiver of these instances of non-compliance with the Investment Management Trust Agreement by and between the Company and Continental Stock Transfer & Trust Company.

Going Concern Consideration

As of December 31, 2023, the Company had $ 5,947 in cash available for working capital needs.

All remaining cash held in the Trust Account is generally unavailable for the Company’s use, prior to an initial business combination, and is restricted for use either in a Business Combination or to redeem common stock.

Up to $ 100,000 of interest and dividends earned in the Trust Account are available to pay dissolution expenses, if necessary.

The Company may withdraw interest income earned in the Trust Account to pay income and franchise taxes.

During the years ended December 31, 2023 and 2022, $ 1,588,710 and $ 0 , respectively, of dividend and interest income was withdrawn from the trust account for payment of franchise and income taxes.

In addition, in order to fund working capital deficiencies and finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loan”) (see Note 5).

As of December 31, 2023, the Company had $ 739,457 outstanding Working Capital Loans in the form of a convertible note (Note 5) from the Sponsor.

Further, during the year ended December 31, 2023, the Company received $ 445,000 in loans from ConnectM in the same form as the Working Capital Loans (see Note 6).

The proceeds held outside of the Trust Account subsequent to the closing of the IPO may not be sufficient to allow the Company to operate for at least the next 12 months from the issuance of the consolidated financial statements, assuming that a Business Combination is not consummated during that time.

The Company is required to complete a Business Combination within 24 months of the IPO date, subject to the exercise of the Additional Extension Options.

On May 9, 2023, the Company exercised the Extension Option through the First Extension Payment made by ConnectM into the Trust Account.

On August 11, 2023, the Company further extended the period of time available to consummate its Business Combination to November 13, 2023, pursuant to the Second Extension Payment made by ConnectM into the Trust Account.

The Second Extension Payment represented the second and final of two three-month extensions permitted under the Company’s governing documents.

On November 6, 2023, the stockholders of MCAC held a special meeting of stockholders where the MCAC stockholders approved the Amended Charter and IMTA Amendment.

The Amended Charter provides the board of directors of MCAC with the right to extend the date by which MCAC has to consummate its Business Combination up to an additional six (6) times for one (1) month each time from November 13, 2023 to May 13, 2024, by depositing into the Trust Account, for each one -month extension, the lesser of (a) $ 414,000 and (b) $ 0.045 for each then-outstanding share of Common Stock after giving effect to the redemption of shares of Common Stock.

On November 9, 2023, the Company further extended the period of time to consummate its Business Combination by an additional one -month period from November 13, 2023 to December 13, 2023 pursuant to the Additional Extension

Options, by ConnectM’s deposit of approximately $ 325,715 into the Trust Account.

On December 11, 2023, the Company further extended the period of time to consummate its Business Combination by an additional one -month period from December 13, 2023 to January 13, 2023 pursuant to the Additional Extension Options, by ConnectM’s deposit of approximately $ 325,716 into the Trust Account.

On January 8, 2024, the Company further extended the deadline for the consummation of an initial business combination for one additional month from January 13, 2024 to February 13, 2024 pursuant to the deposit of approximately $325,715 into the Trust Account by ConnectM.

On February 9, 2024, the Company further extended the deadline for the consummation of an initial business combination for one additional month from February 13, 2024 to March 13, 2024 pursuant to the deposit of approximately $325,715 into the Trust Account by ConnectM.

On March 11, 2024 the Company further extended the deadline for the consummation of an initial business combination for one additional month from March 13, 2024 to April 13, 2024 pursuant to the deposit of approximately $325,715 into the Trust Account by ConnectM.

If the Company is unable to complete an initial Business Combination before the deadline, currently May 13, 2024, the Company will cease all operations and dissolve.

The Company may need to raise additional capital through loans or additional investments from its Sponsor, stockholders, officers, directors, or third parties.

The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs.

Accordingly, the Company may not be able to obtain additional financing.

If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses.

The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.

In connection with the Company’s assessment of going concern considerations in accordance with the authoritative guidance in Financial Accounting Standards Board’s (“FASB”) ASC Topic 205-40, “Presentation of Financial Statements - Going Concern,” management has determined that the factors discussed above raise substantial doubt about the Company’s ability to continue as a going concern until the earlier of the consummation of the business combination or the date the Company is required to liquidate, no later than 10 business days after May 13, 2024.

These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company believes that the proceeds raised in the IPO and the funds potentially available from loans from the Sponsor, any of their affiliates or third parties will be sufficient to allow the Company to meet the expenditures required for operating its business.

However, if the estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, the Company may have insufficient funds available to operate its business prior to the initial Business Combination.

Moreover, the Company may need to obtain additional financing either to complete the Business Combination or because the Company becomes obligated to redeem a significant number of public shares upon completion of the Business Combination, in which case the Company may issue additional securities or incur debt in connection with such Business Combination.

Risks and Uncertainties

Results of operations and the Company’s ability to complete an Initial Business Combination with ConnectM or another target company may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond its control.

The business could be impacted by various social and political circumstances in the U.S.

and around the world (including wars and other forms of conflict, including rising trade tensions between the United States and China, and other uncertainties regarding actual and potential shifts in the U.S.

and foreign, trade, economic and other policies with other countries, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may also contribute to increased market volatility and economic uncertainties or deterioration in the U.S.

and worldwide.

Specifically, the conflict between Russia and Ukraine and the Israel-Hamas war, and resulting market volatility could adversely affect the Company’s ability to complete a business combination.

In response to the conflict between Russia and Ukraine and Israel and Hamas, the U.S.

and other countries have imposed sanctions or other restrictive actions which could have a material adverse effect on the Company’s ability to complete a Business Combination and the value of the Company’s securities.

The Company cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an Initial Business Combination.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Inflation Reduction Act of 2022

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into federal law.

The IRA provides for, among other things, a new U.S.

federal 1% excise tax on certain repurchases of stock by publicly traded U.S.

domestic corporations and certain U.S.

domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023.

The excise tax is imposed on the

repurchasing corporation itself, not its shareholders from which shares are repurchased.

The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase.

However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year.

In addition, certain exceptions apply to the excise tax.

Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.

Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax.

Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury.

In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined.

The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.

On November 6, 2023, the Company’s stockholders redeemed 1,961,875 Class A common shares for a total of $ 20,961,169 .

The Company evaluated the probability that the excise tax may be due on the Trust Account redemptions and determined that a contingent liability should be calculated and recorded.

As of December 31, 2023, the Company recorded $ 209,612 of excise tax liability calculated as 1% of shares redeemed, included in accrued expenses in the accompanying consolidated balance sheet as of December 31, 2023.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND OPERATIONS

ConnectM Technology Solutions, Inc.

(the “Company”), a Delaware corporation, who conducts its operations through its subsidiaries, is a constellation of companies offering solutions to its customers for the (i) decarbonization of homes and businesses using its AI-driven energy intelligence platform, (ii) facilitation of business-to-business transportation for products using contracted drivers through its online and mobile last mile local delivery platform, and (iii) management of connected operations using its industrial internet of things (“IIoT”) platform.

The Company also provides a managed solutions service offering that includes human resources management, procurement services, omnichannel marketing and lead generation services and access to working capital loans to improve operating efficiencies and enhance profitability.

The platforms and software that are used to deliver the solutions harvest data that is transformed into insights that its customers are able to access and use for analysis and action.

The Company earns revenue outside the United States from its Transportation segments.

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

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.

(“Legacy ConnectM”).

Pursuant to the Merger Agreement, MCAC acquired all of the issued and outstanding shares of common stock from the Legacy ConnectM shareholders (the “Business Combination”) in exchange for 14,500,000 shares of ConnectM’s common stock (the “Share Consideration”) (see Note 5).

On the Closing Date, and in connection with the closing of the Merger Agreement, MCAC changed its name to ConnectM Technology Solutions, Inc (“ConnectM”) and the Company’s common stock began trading on the NASDAQ under the ticker symbol CNTM.

In connection with the closing of the Business Combination, the then-outstanding shares of common stock of Legacy ConnectM, were converted into shares of the common stock of the Company at an exchange ratio of approximately 3.3214 shares of Company common stock for each share of Legacy ConnectM common stock (the “Exchange Ratio”)

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.

While MCAC was the legal acquirer in the Business Combination, because Legacy ConnectM was deemed the accounting acquirer, the historical financial statements of Legacy ConnectM became the historical financial statements of the combined company, upon consummation of the Business Combination.

As a result, the financial statements included in this report reflect (i) the historical operating results of Legacy ConnectM prior to the Business Combination;

(ii) the combined results of MCAC and Legacy ConnectM following the closing of the Business Combination;

(iii) the assets and liabilities of Legacy ConnectM at their historical cost;

and (iv) the Company’s equity structure for all periods presented.

Basis of presentation and principles of consolidation:

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary and are presented in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission.

All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.

GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and include the assets, liabilities, revenues, and expenses of all wholly owned subsidiaries over which the Company exercises control.

All significant intercompany accounts, transactions and profits and losses were eliminated in consolidation.

The Company also consolidated variable interest entities where it has been determined that the Company is the primary beneficiary of those entities’ operations.

Any reference in these footnotes to the applicable guidance is meant to refer to the authoritative U.S.

GAAP as found in the ASC and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Noncontrolling Interest:

The portion of equity not owned by the Company in entities controlled and consolidated by the Company are presented as noncontrolling interest and classified as a component of consolidated stockholders’ deficit, separate from total stockholders’ deficit on the Company’s consolidated balance sheets.

The amount recorded is based on the noncontrolling interest holders’ initial investment, adjusted to reflect the noncontrolling interest holder’s share of earnings or losses from the Company controlled entity, and any distributions received or additional contributions made by the noncontrolling interest holder.

The earnings or losses from the entity attributable to noncontrolling interests are reflected in net income attributable to noncontrolling interests on the accompanying consolidated statements of operations and comprehensive loss.

All significant intercompany accounts, transactions, and profits and losses were eliminated in consolidation.

CORRECTION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

Management of the Company determined on April 8, 2025, during the preparation of consolidated financial statements for the year ended December 31, 2024, that there were errors that were material to the Company’s previously issued interim consolidated financial statements for the quarterly period ended September 30, 2024 (the “Restated Period”), as included in the Company’s Quarterly Report on Form 10-Q for such period (the “Prior Filing”) and the Prior Filing needs to be restated.

The Company’s Prior Filing, as well as any reports, related to earnings releases, investor presentations or similar communications of the Company’s Prior Filing should no longer be relied upon.

Identified errors consisted of the following:

● Note conversion agreements were entered into during September 2024 that were determined to be debt restructurings requiring recognition as extinguishments and share issuances at the time the conversion agreements were entered into were not accounted for as such.

As such, the shares of Company common stock to be issued upon conversion were considered issued and outstanding for accounting purposes irrespective of the timing of when the shares were issued, though not considered issued or outstanding for legal purposes.

Accordingly, the shares underlying those agreements were not properly accounted for or disclosed as share issuances and the associated obligations were not properly accounted for or disclosed as extinguishments in the Prior Filing.

Additionally, there were embedded derivatives contained within each conversion agreement that were not properly identified, recorded at fair value at issuance, re-measured to fair value at the end of the reporting period, or disclosed in the Prior Filing.

This has led to the overstatement of net loss, understatement of common stock, understatement of additional paid-in capital, overstatement of debt, and understatement of derivative liabilities in the Prior Filing.

● True-up adjustments in the Company’s master service agreements were improperly classified as revenue instead of as a reduction to operating expenses in the Prior Filing.

This has led to an overstatement of the Company’s revenue and selling, general and administrative expenses in the Prior Filing.

● Fees paid on the Forward Purchase Agreement were improperly classified as change in fair value of forward purchase agreement, a component of other income (expense), instead of additional paid-in capital in the Prior Filing.

The has led to an overstatement of additional paid-in capital and an overstatement of gain on forward purchase agreement modification in the Prior Filing.

● Fees that were direct and incremental to the Business Combination were not accrued for as of the Closing Date.

This has led to an understatement of accrued expenses and an overstatement of additional paid-in capital in the Prior Filing.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The impact of the restatements on the line items within the previously reported unaudited condensed consolidated financial statement as of and for the nine months ended September 30, 2024 included in the Company’s Form 10-Q filed with the SEC on December 16, 2024 are as follows:

Consolidated Balance Sheet as of September 30, 2024 (unaudited) (in thousands)

As Previously Reported

Accrued Expenses

Due to Related Party

Due to Libertas

Derivative liabilities

Total current liabilities

Total liabilities

Additional paid-in capital

Accumulated deficit

Stockholders’ deficit

Total stockholders’ deficit

Unaudited Consolidated Statement of Operations and Comprehensive Loss for the three months ended September 30, 2024 (in thousands)

As Previously Reported

Selling, general and administrative expenses

Loss from operations

Interest expense

Loss on extinguishment of debt

Gain on extinguishment of debt

Change in fair value of forward purchase agreement

Gain on forward purchase agreement modification

Change in fair value on derivative liabilities

Total other income (expense)

Loss before income taxes

Net loss attributable to shareholders

Comprehensive loss

Comprehensive loss attributable to shareholders

Basic and diluted net loss per share, common stock

Weighted average shares outstanding of common stock

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Unaudited Consolidated Statement of Operations and Comprehensive Loss for the nine months ended September 30, 2024 (in thousands)

As Previously Reported

Selling, general and administrative expenses

Loss from operations

Interest expense

Loss on extinguishment of debt

Gain on extinguishment of debt

Change in fair value of forward purchase agreement

Gain on forward purchase agreement modification

Change in fair value on derivative liabilities

Total other income (expense)

Loss before income taxes

Net loss attributable to shareholders

Comprehensive loss

Comprehensive loss attributable to shareholders

Basic and diluted net loss per share, common stock

Weighted average shares outstanding of common stock

Unaudited Consolidated Statement of Stockholders’ Deficit for the three months ended September 30, 2024 (in thousands)

As Previously Reported

Additional paid-in capital

Accumulated deficit

Stockholders’ deficit

Total stockholders’ deficit

Unaudited Consolidated Statement of Stockholders’ Deficit for the nine months ended September 30, 2024 (in thousands)

As Previously Reported

Additional paid-in capital

Accumulated deficit

Stockholders’ deficit

Total stockholders’ deficit

Unaudited Consolidated Statement of Cash Flows for the nine months ended September 30, 2024 (in thousands)

As Previously Reported

Loss on extinguishment of debt

Gain on extinguishment of debt

Change in fair value of forward purchase agreement

Gain on modification of forward purchase agreement

Change in fair value on derivative liabilities

Net cash used in operating activities

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reclassifications:

Certain prior period amounts have been reclassified to conform to the current year presentation.

Emerging growth company:

The Company is an “emerging growth company”, as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.

The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Offering Costs

Offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the IPO and were charged to temporary equity, equity and/or expense upon the completion of the Initial Public Offering.

The fair value of the Representative Shares was accounted for as compensation under ASC 718, was included in the offering costs at the IPO date.

In addition, under the guidance in Staff Accounting Bulletin 107 Topic 5T, Accounting for Expenses or Liabilities Paid by Principal Stockholder(s), the Company included in offering costs amounts incurred by the Sponsor through the sale of Founder Shares to Anchor Investors on behalf of the Company (Note 5).

The excess of the fair value of the Founder Shares was deemed a contribution from the Sponsor for offering costs and working capital.

Business Combination Costs

Costs incurred in relation to a potential business combination may include legal, accounting and other expenses.

Any such costs are expensed as incurred.

The Company incurred approximately $ 1.2 million and $ 0.6 million, respectively, of Business Combination costs for the years ended December 31, 2023 and 2022.

Net Loss per Common Stock share

The Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share” (“ASC 260”).

Net loss per share is computed by dividing net loss by the weighted average number of Common Stock outstanding during the period.

The weighted average shares for the period from September 23, 2021 (inception) through May 13, 2022 were reduced for the effect of an aggregate of 300,000 Class B Common Stock that were subject to forfeiture until the initial public offering.

The Company’s consolidated statements of operations include a presentation of net loss per share subject to possible redemption in a manner similar to the two-class method of income per share.

With respect to the accretion of the Class A Common Stock subject to possible redemption and consistent with ASC 480-10-S99-3A, the Company deemed the fair value of the Class A Common Stock subject to possible redemption to approximate the contractual redemption value and the accretion has no impact on the calculation of net loss per share.

The Company’s Public Warrants (see Note 3) and Private Warrants (see Note 4) could, potentially, be exercised or converted into common stock and then share in the earnings of the Company.

However, these warrants were excluded when calculating diluted loss per share because such inclusion would be anti-dilutive for the periods presented.

As a result, diluted loss per share is the same as basic loss per share for all periods presented.

A reconciliation of net loss per share is as follows for the year ended December 31, 2023:

Allocation of undistributable losses

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups (“JOBS”) Act.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as to those standards apply to private companies.

The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act.

As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Use of estimates:

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts financial assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period .

Making estimates requires management to exercise significant judgment.

Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.

It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.

Accordingly, the actual results could differ significantly from those estimates.

The Company’s most significant estimates and judgments involve the identification of intangible assets in business combination, valuation of acquired assets and assumed liabilities in a business combinations, classification of financial instruments as equity or liability, valuation of equity-classified and liability-classified financial instruments, the useful lives of long-lived assets, assumptions used in assessing impairment of long-lived assets , valuation of contingent consideration obligations, and the valuation of convertible debt reported at fair value.

Segment reporting :

ASC 280, Segment Reporting (“ASC 280”), defines operating segments as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and in assessing performance.

The Company’s CODM is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources.

The CODM focuses on operating (loss) income from operations as the primary measure to manage the business.

Segment operating (loss) income from operations is (loss) income before interest expense, other expense, other income, unallocated corporate costs, and income taxes.

There are four operating and reportable segments based on the level at which the CODM reviews operating results, assesses performance and makes decisions regarding resource allocation as follows:

(1) Owned service network segment consists of our owned service providers who serve as a single point solution provider for homeowners and light commercial building owners for their electrification and decarbonization needs, including system design, installation, monitoring, maintenance and repair.

The owned service providers use the Company’s technology platform, which provides maintenance, repair, and installation guidance and optimization (the “Technology Platform”), in servicing the homeowners and light commercial building owners.

(2) Managed solutions segment provides third party residential and light commercial service providers with access to the Technology Platform as well as a selection of servicing offerings that the managed solutions customer can select from, including human resources management, procurement services, omnichannel marketing and lead generation as well as access to short-term working capital loans.

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

(4) Transportation segment focuses on the sale of hardware to original equipment manufacturers (“OEMs”).

OEMs have the option to buy access to the Technology Platform to remotely monitor the performance of the hardware.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Cash and cash equivalents:

The Company considers all highly liquid instruments with a maturity date of three months or less at the time of purchase and money market accounts to be cash equivalents.

The Company had no cash equivalents at December 31, 2024 and December 31, 2023.

As of December 31, 2024, the Company had $1,319,078 that exceeded FDIC insurance limits of $ 250,000 .

Fair value measurements:

ASC 820, Fair Value Measurements (“ASC 820”), clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability.

As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

● Level 1 – Inputs based on unadjusted quoted market prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

● Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active or for which all significant inputs are observable or can be corroborated by observable market data.

● Level 3 – Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The inputs are both unobservable for the asset and liability in the market and significant to the overall fair value measurement.

An asset’s or a liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Assets and liabilities measured at fair value are based on one or more of the following techniques noted in ASC 820:

● Market approach:

Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

● Cost approach:

Amount that would be required to replace the service capacity of an asset (replacement cost).

● Income approach:

Techniques to convert future amounts to a single present value amount based upon market expectations (including present value techniques, option pricing, and excess earnings models).

ASC 825-10 “ Financial Instruments ” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (the “Fair Value Option”).

The Fair Value Option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs.

The Company measures the fair value of certain convertible note payables on a recurring basis under the Fair Value Option (see Note 10 and Note 14).

Accordingly, changes in fair value related to changes in the Company’s credit risk were recognized as a component of accumulated other comprehensive income while all other changes in fair value were recognized in the consolidated statements of operations and comprehensive loss.

The Company’s financial instruments with a carrying value that approximates fair value consist of cash, accounts receivable, contract asset, convertible note receivable-related party, inventory, deferred offering costs, other receivable-related party, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities, accrued expenses-related party and contract liabilities due to their liquid or short-term nature or expected settlement dates of these instruments.

If these financial instruments were recorded at fair value, they would be based on Level 1 inputs, except for short-term borrowings and notes receivable, related parties, net which would be based on Level 2 and Level 3 inputs, respectively.

The Company’s non-financial assets, such as intangible assets, and financial assets are adjusted to fair value when an impairment charge is recognized.

The impairment charges recognized on non-financial assets that consist of investment, goodwill and acquired intangible assets are based on Level 3 inputs, including a comparison of the Company’s results with expectations and expectation for future profits.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company’s financial instruments that are measured at fair value on a recurring basis consist of forward purchase agreement derivative asset, forward purchase agreement put option, contingent consideration obligation, convertible debt and derivative liabilities (see Note 15).

Related parties:

The Company considers parties to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions or owns more than 5.0% of the Company’s common stock.

Parties are also considered to be related if they are subject to common control or significant influence of the same party, such as a family member or relative, shareholder, or a related corporation.

The Company reviews the relationships of its vendors, customers, shareholders, and board members to determine whether there are any parties that meet the criteria to be considered related.

Any party that is deemed to be related to the Company is referred to as an “affiliate” or “related party” in these consolidated financial statements.

Accounts receivable and allowance for credit losses :

Accounts receivable are carried at original invoice amount, less any estimate made for credit losses.

The allowance for credit losses is based on the expected credit losses on receivables in an amount equal to the estimated probable losses net of recoveries.

The Company currently monitors financial conditions of the companies it has receivables from on a continuing basis.

After considering current economic conditions and specific and financial stability of its receivables, an allowance for credit losses is maintained in the consolidated balance sheets at a level which management believes is sufficient to cover all probable future credit losses as of the consolidated balance sheet date based on specific reserves and an expectation of future economic conditions that might impact collectability.

Changes in circumstances relating to these factors may result in the need to increase or decrease our allowance for credit losses in the future.

There was no allowance for credit losses recorded as of December 31, 2024 and 2023.

There were two customers who individually accounted for more than 10.0% of accounts receivable as of December 31, 2024.

The customers Air Temp Services and Tire Rack accounted for 18 % and 36 % of the receivable respectively.

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.

Inventories are stated at the lower of cost (determined by average cost method) or net realizable value.

The valuation of inventories requires the Company to estimate obsolete or excess inventory as well as inventory that is not of saleable quality.

The Company employs a variety of methodologies to determine the net realizable value of its inventory.

While a portion of the calculation to record inventory at its net realizable value is based on the age of the inventory and lower of cost or net realizable value calculations, a key factor in estimating obsolete or excess inventory requires the Company to estimate the future demand for its products.

If actual demand is less than the Company’s estimates, impairment charges, which are recorded to cost of sales, may need to be recorded in future periods.

Inventory in excess of saleable amounts is not valued, and the remaining inventory is valued at the lower of cost or net realizable value.

As of December 31, 2024 and 2023, an allowance for obsolete or slow-moving inventory was not required.

The Company recognized a provision for inventory shrinkage of $ 23,926 and $ 187,098 for the years ended December 31, 2024 and 2023.

Inventories consist of parts and finished goods.

Parts primarily consist of manufacturing hardware, wiring, and piping.

Inventories consisted of the following:

Finished Goods

Convertible notes receivable, related party:

The Company recorded convertible notes receivable for advances made to MCAC during the year ended December 31, 2023 for working capital purposes.

The convertible notes receivable were non-interest bearing and were to be repaid upon consummation of a Business Combination.

At the Company’s option, the convertible notes receivable could be converted into stock purchase warrants of MCAC at $ 1.00 per warrant.

The Company accounts for these convertible notes receivable in accordance with ASC 310, Receivables .

At the close of the Business Combination (see Note 1 and Note 5), the convertible notes receivable was neither repaid nor converted into stock purchase warrants of MCAC and were instead eliminated in consolidation.

Prepaid expenses and other current assets :

Prepaid expenses and other current assets include prepaid insurance, prepaid rent, and advances to service providers, which are expected to be recognized, received or realized within the next 12 months.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Working capital advances to managed solutions segment customers :

These are funds advanced by the Company to customers of its Managed Solutions segment to support their short-term working capital needs, such as purchasing inventory, financing operational expenses, or bridging cash flow gaps.

The advances are generally provided under agreements that allow the Company to recoup the funds through future payments, service fees, or revenue-sharing arrangements tied to the customer’s use of the Managed Solutions platform .

Property and Equipment:

Property and equipment are stated at cost, net of accumulated depreciation, or if acquired in a business combination, at fair value as of the date of acquisition.

Depreciation is computed using the straight-line method, based upon the following estimated useful lives:

Classification

Furniture and fixtures

Machinery and equipment

Property improvements

Major renewals and improvements are capitalized, while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed as incurred.

When property and equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss on the disposition is recorded in the consolidated statements of operations and comprehensive loss as a component of other (expense) income.

Intangible assets:

Intangible assets include internally developed software and acquired intangible assets.

Acquired identifiable intangible assets include tradenames, customer relationships, intellectual property, internally developed software, acquired technology, and noncompetition agreements that are amortized over their estimated useful lives using the pattern in which the economic benefits of the asset are consumed or otherwise used.

Classification

Customer Relationships

Noncompetition Agreements

Acquired Technology

Intellectual Property

Internally Developed Software

As it relates to customer relationships, that pattern is generally based upon the forecasted undiscounted cash flows established at the time of acquisition.

For all other intangible assets, that pattern is generally on a straight line basis.

Software development costs:

Costs are incurred related to internally developed software that powers the Company’s platforms that are accessed by customers.

The Company capitalizes certain internal use software development costs associated with creating and enhancing internally developed software related to its platforms.

Software development activities generally consist of three stages (i) the research and planning stage, (ii) the application and development stage, and (iii) the post-implementation stage.

Costs incurred in the planning and post-implementation stages of software development, or other maintenance and development expenses that do not meet the qualification for capitalization are expensed as incurred.

Costs incurred in the application and infrastructure development stage, including significant enhancements and upgrades, are capitalized.

Capitalized costs include personnel and related employee benefits expenses for employees or consultants who are directly associated with and who devote time to software projects, and external direct costs of materials obtained in developing the software.

Software development costs, when placed in service, are amortized on a straight-line basis over their estimated useful life upon initial release of the software or additional features.

During the years ended December 31, 2024 and 2023, the Company capitalized costs totaling $ 186,103 and $ 35,588 , respectively.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Business combination:

The Company accounts 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.

The results of operations for an acquired business are included in the Company’s consolidated financial statements from the date of acquisition.

Deferred offering costs:

Commissions, legal fees and other costs that are direct and incremental costs directly related to the Business Combination transaction were capitalized as deferred offering costs until the consummation of the transaction.

Offering costs totaling approximately $ 3,960,397 were reclassified to additional paid-in capital upon the closing of the Business Combination (see Note 5).

Impairment of long-lived assets:

In accordance with ASC 360, Impairment or Disposal of Long-Lived Assets (“ASC 360”), the Company reviews the carrying values of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable.

Based on the existence of one or more indicators of impairment, the Company measures any impairment of long-lived assets using the projected discounted cash flow method at the asset group level.

The estimation of future cash flows requires significant management judgment based on the Company’s historical results and anticipated results and is subject to many factors.

The discount rate that is commensurate with the risk inherent in the Company’s business model is determined by its management.

An impairment loss would be recorded if the Company determined that the carrying value of long-lived assets may not be recoverable.

The impairment to be recognized is measured by the amount by which the carrying values of the assets exceed the fair value of the assets.

The Company assessed its long-lived assets for any impairment and concluded that there were indicators of impairment on the long-lived assets during the years ended December 31, 2024 and 2023.

Impairment indicators identified at December 31, 2024 were recurring losses for two consecutive years at two subsidiaries and significantly declining sales at one of those subsidiaries.

Impairment indicators at December 31, 2023 were the decisions to wind down the operations of two subsidiaries during the year ended December 31, 2023.

An impairment loss of approximately $ 1,568,000 and $ 157,103 was recognized on goodwill for the years ended December 31, 2024 and 2023, respectively.

An impairment loss of approximately $ 836,000 and approximately $ 25,000 was recognized on intangibles for the years ended December 31, 2024 and 2023, respectively due to covenants not met for a non-compete agreement.

The assumptions used in the impairment analyses represent Level 3 inputs.

Derivative financial instruments:

The Company accounts for derivative instruments in accordance with ASC 815, Derivatives and Hedging (“ASC 815”).

The Company’s objectives and strategies for using derivative instruments, and how the derivative instruments and related hedged items are accounted for affect the consolidated financial statements.

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risk.

The Company evaluates all of its financial instruments, including notes payable and warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.

The Company applies significant judgment to identify and evaluate complex terms and conditions in its contracts and agreements to determine whether embedded derivatives exist.

Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met.

The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract.

Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the consolidated statements of operations and comprehensive loss each period.

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

An evaluation of specifically identified conditions is made to determine whether the fair value of the derivative issued is required to be classified as equity or as a derivative liability.

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

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 consolidated balance sheet date.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Notes payable and notes payable – related party:

The Company has entered into notes payable with third-party and related party lenders.

Notes payable and notes payable – related parties are recorded net of any debt issuance costs incurred.

Debt issuance costs, including original issuance discounts, are amortized to interest expense using the effective interest method over the contractual term of the obligation.

Convertible notes payable:

The Company evaluates convertible notes payable 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 is calculated and the resulting gains and losses from the change in fair value of the convertible notes associated with non-credit components were recognized in income, while the change in fair value associated with credit components were recognized in accumulated other comprehensive income (“AOCI”), and subsequently released from AOCI upon maturity (see Note 10 and Note 14).

The change in fair value (inclusive of any Day 1 Gains or Losses) of $1,572,861 and $ 25,446 was recorded as a component of other income (expense) in the accompanying consolidated statements of operations and comprehensive loss as the change in fair value of the convertible debt was not attributable to instrument specific credit risk during the years ended December 31, 2024 and 2023.

Gains and losses on extinguishment of liabilities:

The Company recognizes gains and losses on extinguishment of liabilities, including accounts payable and debt obligations, with unrelated parties as the difference between the reacquisition price and the net carrying amount of the associated obligation, as a component of other expense (income), net in the consolidated statements of operations.

The Company classifies the gains and losses on extinguishment of liabilities with related parties as a reduction of capital in the accompanying statements of changes in stockholders’ deficit or as a component of other expense (income), net in the accompanying consolidated statements of operations and comprehensive loss based on the facts and circumstances of each extinguishment transaction.

Revenue Recognition:

The Company follows the guidance of ASC 606, Revenue from Contracts with Customers (“ASC 606”).

Under ASC 606, revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods or services.

The Company’s revenue is generated from customers located in the U.S, India, the United Kingdom and the United Arab Emirates.

Revenue is recognized based on a five step model that includes (1) Identification of the contract with a customer, (2) Identification of the performance obligations in the contract, (3) Determination of the transaction price, (4) Allocation of the transaction price to the performance obligations in the contract, (5) Recognition of revenue when, or as, the Company satisfies a performance obligation.

Installation and Maintenance Services

Installation and maintenance services consists of equipment sales, installation of equipment and service agreements associated with equipment sold to customers (i.e., maintenance visits, remote technical support, etc.).

These services represent multiple performance obligations that are combined into a single unit of accounting.

Each transaction is a distinct performance obligation, priced on a standalone basis.

The transaction price is determined at service or contract inception and reflects the amount of consideration to which we expect to be entitled in exchange for the services provided to the customer and is reported net of discounts that may be offered.

Discounts, if any, are generally explicitly stated in a contract as a fixed percentage of the transaction price related to the performance obligations within the contract.

As projects are expected to be completed within one year, the practical expedient to recognize revenue in the amount billable to the end consumer was elected.

Performance obligations related to our managed solutions contracts are generally satisfied over time.

For services transferred over time, revenue is recognized based on amounts invoiced to the end consumer as the Company has concluded that the invoice amount directly corresponds with the value of services provided to the end consumer.

Management considers this a faithful depiction of the transfer of control as services are substantially the same and have the same pattern of transfer over the life of the contract.

As such, revenue related to unsatisfied performance obligations that will be billed in future periods has not been disclosed.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Logistics Services

Logistic services revenue consists of delivery fees paid by customers for completed deliveries.

The Company generates revenues at the point in time when the products requested by the Company’s customer are delivered to the end destination.

Revenue is generally billed weekly and collected within a week of when a product delivery is completed.

Product sales

Product sales are made to original equipment manufacturers (“OEMs”).

Revenue is recognized upon transfer of control of goods to the customer, which occurs when title to goods is passed and risk of loss is transferred to the customer, which is generally upon shipment of goods to the customer.

The amount of revenue recognized is net of discounts that the Company may offer to a customer.

Based on historical experience, estimated returns are determined not material as of December 31, 2024 and 2023 and as such no reserve for future estimated returns has been recorded for the years then ended.

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

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

Software Subscriptions

We derive subscription revenue from software access fees, which comprise subscription fees from customers accessing our IIoT platform.

Our contract terms are generally for a twelve-month term and access fees are billed annually in advance and generally recognized over the term of the service period.

Subscription revenue gives the customer the right to access our platform.

In accordance with ASC 606, a ‘right to access’ license is recognized over the license period.

We derive usage fees based on actual customer users accessing the IIoT platform during a given month.

Usage fees are billed monthly in arrears and recognized in the month the user access offered.

Managed Solutions

Managed solutions revenue represents support services provided to a customer, including human resources management, procurement services, omnichannel marketing and lead generation.

These services represent multiple performance obligations that are combined into a single unit of accounting.

The Company is primarily responsible for fulfilling the promise to provide the specified good or service to the customer.

Through its provision of human resources management services, the Company was determined to have the control over direction the actions of the customer’s employees and as such was also determined to be primarily responsible for fulfilling the promise to provide the customer’s specified good or service to the customer’s end consumer.

Accordingly, the Company is a principal in transactions and presents revenue on a gross basis.

Judgment is required in determining whether the Company is the principal or the agent in the provision of managed solutions services.

The Company evaluates the presentation of revenue on a gross or net basis based on whether it is responsible for fulfilling the promise (gross) or whether the customer is responsible for fulling the promise to the customer’s end consumer (net).

The Company is contractually obligated to provide the service offerings selected by a customer, which as of December 31, 2024 include human resources management, procurement services, omnichannel marketing and lead generation for all customers.

In performing the human resources management services, the Company has complete authority over the customer’s employees as the customer’s employees become employees of the Company, at which point the responsibility of directing the customer’s employees’ actions becomes solely that of the Company.

The Company has the authority to make changes to the pricing guidelines and therefore sets the price of the customer’s products and services to the end consumer.

Additionally, the credit risk associated with collectability of the customer’s end consumer is solely that of the Company based on the terms of the agreements between the Company and the customer.

As a result, the Company acts as the principal by providing the ongoing service support that enables its customers to conduct business without interruption.

The Company’s performance obligation mirrors that of the customer’s performance obligation to the customer’s end consumer.

Accordingly, the Company recognizes revenue based on when the Company’s customer considers its performance obligation is satisfied.

As projects are expected to be completed within one year, the practical expedient to recognize revenue in the amount billable to the end consumer was elected.

Performance obligations related to our managed solutions contracts are generally satisfied over time.

For services transferred over time, revenue is recognized based on amounts invoiced to the end consumer as the Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

has concluded that the invoice amount directly corresponds with the value of services provided to the end consumer.

Management considers this a faithful depiction of the transfer of control as services are substantially the same and have the same pattern of transfer over the life of the contract.

As such, revenue related to unsatisfied performance obligations that will be billed in future periods has not been disclosed.

Pricing for our services is established in the customer contract and is set as a percentage of the customer’s revenue for a week.

Quarterly, a working capital true up adjustment may be processed if costs incurred by the customer exceed the percentage of the customer’s revenue.

If a working capital true up adjustment is determined necessary, it is recorded as a reduction of sales, general and administrative expenses as it represents the customer’s reimbursement of costs incurred by the Company.

Contract Assets and Liabilities

Contract liabilities include deferred revenues related to advanced payments for services and the amount contract billings exceed recognized revenue on a contract.

As of December 31, 2024 and 2023, contract liabilities consisted solely of advanced payments received from customers.

Contract assets include certain costs that were incurred on contracts in advance of the satisfaction of the performance obligation and the amount recognized revenue exceeds contract billings on a contract.

Contract assets consisted of commissions, labor, and material costs that were incurred for projects where the performance obligation was not complete as of December 31, 2024 and 2023.

These costs will be reclassified to cost of revenues and recognized in the same manner as the corresponding performance obligation.

Any costs to fulfill where the period of benefit is less than one year are expensed as incurred.

The portion of contract assets and liabilities that will be recognized within one-year of the reporting periods are reflected within current assets and current liabilities, respectively, on the accompanying consolidated balance sheets.

The remaining portion to be recognized beyond one-year of the reporting period will be recognized as a non-current asset and a non-current liability.

The following table summarizes the contract asset activity for the years ended December 31, 2024 and 2023:

Balance as of January 1, 2023

Deferral of costs on contracts where performance obligations were not complete

Balance as of December 31, 2023

Recognition of costs on contracts where performance obligations completed during the period

Deferral of costs on contracts where performance obligations were not complete

Balance as of December 31, 2024

The following table summarizes the contract liability activity for the years ended December 31, 2024 and 2023:

Balance as of January 1, 2023

Recognition of revenue recorded as a contract liability as of January 1, 2023

Customer advance payments

Balance as of December 31, 2023

Recognition of revenue recorded as a contract liability as of December 31, 2023

( 1,075,911 )

Customer advance payments

Balance as of December 31, 2024

Limited Warranty

The Company provides limited warranties that include a one-year warranty on any labor provided on installation services and a ten-year warranty on structural damage for certain installation services.

Warranties are not considered separate performance obligations as they were determined to be assurance type warranties.

Based on historical experience, warranties are determined to not be material as of December 31, 2024 and 2023 and as such no reserve for future warranty claims has been recorded for the years then ended.

Costs to Obtain a Contract

The Company incurs costs to obtain contracts in the form of commissions paid to its sales personnel, a third party service provided and a third party financing company made available to our customers, which are eligible to be capitalized as an asset and

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

amortized over the life of the contract.

As all projects are completed within a year, the practical expedient to expense costs to obtain contracts as they are incurred was elected.

The commission and financing fee expenses for the years ended December 31, 2024 and 2023 were $ 608,433 and $ 264,270 , respectively, and are recorded as a component of selling, general and administrative expenses on the accompanying consolidated statements of operations and comprehensive loss.

The Company determines if an arrangement is a lease at inception of the contract.

Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of operating lease liabilities, and operating lease liabilities, net of current portion in the accompanying consolidated balance sheets.

Finance leases are accounted for as long-term assets, with the current and long-term portions of debt disclosed in the accompanying consolidated balance sheets.

The Company accounts for leases with an original maturity of one year or less using the short-term lease practical expedient.

These short-term leases are not recognized on the consolidated balance sheets and are accounted for using the straight-line method over the lease term.

ROU assets represent the Company’s right to use underlying assets for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the leases.

ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

The discount rate used to calculate the present value for lease payments is the Company’s incremental borrowing rate, which is determined based on information available at lease commencement and is equal to the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment.

The Company uses the implicit rate when readily determinable.

The Company has entered into operating leases for corporate offices having remaining lease terms of one to three years .

The Company has entered into finance leases primarily for vehicles and equipment, having initial terms of three years .

The Company’s real estate leases may include one or more options to renew , with the renewal extending the lease term for an additional one to five years .

The exercise of lease renewal option is at the Company’s sole discretion.

In general, the Company does not consider renewal option to be reasonably likely to be exercised, therefore renewal option are generally not recognized as part of the ROU assets and lease liabilities.

Lease costs for lease payments are recognized on a straight-line basis over the lease term, unless there is a transfer of title or purchase option reasonably certain to be exercised.

The Company does not record operating leases with an initial term of twelve months or less (“short-term leases”) in the consolidated balance sheets.

The Company’s vehicle leases may include transfer rights or options to purchase at the end of the lease that the Company is reasonably certain to exercise.

Interest expense is recognized using the effective interest rate method, and the ROU asset is amortized over the useful life of the underlying asset.

Certain of the Company’s lease agreements contain both lease and non-lease components, which are generally accounted for as a single lease component.

Cost of revenues:

Cost of revenues includes payroll and benefit costs of employees and direct costs associated with the delivery charges from independent contractors who perform a performance obligation directly as well as inventory utilized in the satisfaction of the performance obligation.

It also includes any shipping and handling services for the Company’s inventory.

Selling, general and administrative expenses:

Selling, general and administrative expenses include payroll and benefit costs of employees who are not directly involved with the satisfaction of a performance obligation, facility costs, leasehold improvement amortization, utility costs, repair and maintenance, advertising, insurance, equipment depreciation and professional fees.

Advertising expenses:

Advertising expenses include the costs incurred to promote the products, services, or brand to the public.

These expenses are intended for generating awareness to customers and driving sales through various forms of advertising.

Common types of advertising expenses include costs for media placements, production of advertisements, and marketing campaigns across platforms like television, digital, print, and outdoor channels.

Advertising expenses were approximately $ 955,000 and approximately $ 691,000 for the years ended December 31, 2024 and 2023 respectively.

Stock-based compensation:

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation , under which shared based payments that involve the issuance of common stock to employees and nonemployees and meet the criteria for equity-classified awards are recognized in the consolidated financial statements as stock-based compensation expense based on the fair value on the date of grant.

The fair value of the share based payment is calculated and then recognized as compensation expense over the requisite service period.

The Company issues stock option awards to employees and nonemployees.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company utilizes the Black-Scholes model to determine the fair value of the stock option awards, which requires the input of subjective assumptions.

These assumptions include estimating (a) the length of time grantees will retain their vested stock options before exercising them for employees and the contractual term of the option for nonemployees (“expected term”), (b) the volatility of the Company’s common stock price over the expected term, (c) expected dividends, and (d) the fair value of a share of common stock prior to the Business Combination.

After the closing of the Business Combination, the Company’s board of directors determined the fair value of each share of common stock underlying stock-based awards based on the closing price of the Company’s common stock as reported by the NASDAQ on the date of grant.

The Company has elected to recognize the adjustment to share-based compensation expense in the period in which forfeitures occur.

The assumptions used in the Black-Scholes model are management’s best estimates, but the estimates involve inherent uncertainties and the application of management judgment (see Note 13).

As a result, if other assumptions had been used, the recorded share-based compensation expense could have been materially different from that depicted in the consolidated financial statements

The Company accounts 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, Derivatives and Hedging (“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 the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s 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 the years ended December 31, 2024 and 2023, all of the Company's warrants were accounted for as equity classified instruments.

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.

The Company assesses the classification of its warrants at each reporting date to determine whether a change in classification between equity and liability is required.

Comprehensive loss:

Comprehensive loss is comprised of net loss and all changes to the consolidated statements of equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders.

For the Company, comprehensive loss for the years ended December 31, 2024 and 2023 consisted of net loss and unrealized loss from foreign currency translation adjustment.

N et loss per share:

Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period, excluding the effects of any potential dilutive securities.

Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common share equivalents had been issued and if the additional common shares were dilutive.

Loss per share excludes all potential dilutive shares of common shares if their effect is anti-dilutive.

For the years ended December 31, 2024 and 2023, potentially dilutive common shares consist of the common shares issuable upon the exercise of common stock options and warrants (using the treasury stock method) and the conversion of convertible notes payable.

Conversion features of notes payable may have a variable conversion feature, amending the number of conversion shares based on the market price of the stock.

In a period in which the Company has a net loss, all potentially dilutive securities are excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact.

Diluted net loss per share includes the potential dilutive effect of common stock equivalents as if such securities were converted or exercised during the period, when the effect is dilutive.

Given the Company is in a net loss position for the years ended December 31, 2024 and 2023, there is no difference between basic and diluted net loss per share.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the potentially dilutive securities excluded from the computation of diluted shares outstanding because the effect of including these potential shares was anti-dilutive:

Convertible notes payable that convert into common stock

Foreign Currency:

The Company’s consolidated financial statements are presented in the reporting currency of the U.S.

The function currency for all consolidated entities is the U.S.

dollar, with the exception of one subsidiary which is located in India, whose function currency is the Indian Rupee (INR).

Assets and liabilities of the Company are translated into the reporting currency using the exchange rate in effect at the consolidated balance sheet dates.

Equity transactions are translated using the historical exchange rate in effect on the date of the transaction, except for the change in accumulated deficit during the year, which is the results of the operations translation process.

Results of operations and cash flows are translated using the weighted average exchange rates in effect during the period.

As a result, amounts relating to the assets and liabilities reported on the consolidated statements of cash flows may not necessarily agree with the changes in the corresponding balances on the accompanying consolidated balance sheets.

Translation adjustments resulting from the process of translating the local currency financial statements into the reporting currency are recorded as a component of comprehensive income (loss).

For the years ended December 31, 2024 and 2023, the realized foreign currency exchange gain (loss) was $ 36,579 and $ 0 , respectively and is included as a component of other (expense) income on the accompanying consolidated statements of operations and comprehensive loss.

For the years ended December 31, 2024 and 2023, the unrealized foreign currency exchange gain was de minimis and is included as a component of other (expense) income on the accompanying consolidated statements of operations and comprehensive loss.

Income Taxes:

Income taxes are accounted for under the asset and liability method whereby deferred tax assets and liabilities are determined based on temporary difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income.

A valuation allowance is established when management estimates that it is more likely than not that deferred tax assets will not be realized.

Realization of deferred tax assets is dependent upon future pre-tax earnings, the reversal of temporary differences between book and tax income, and the expected rates in future periods.

The Company is required to evaluate the tax positions taken in the course of preparing its tax returns to determine whether tax positions are more likely than not of being sustained by the applicable tax authority.

Tax benefits of positions not deemed to meet the “more-likely-than-not” threshold would be recorded as a tax expense in the current year.

The amount recognized is subject to estimate and management judgment with respect to the likely outcome of each uncertain tax position.

The amount that is ultimately sustained for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount that is initially recognized.

The Company recognizes interest and penalties related to income tax matters in general and administrative expense The Company has not identified any uncertain income tax positions as of December 31, 2024 and 2023.

The Company operates within multiple taxing jurisdictions and in the normal course of business its tax returns are examined in various jurisdictions.

The reversal of the accruals for uncertain tax positions is recorded when examinations are effectively settled, statutes of limitation are closed, or tax laws are changed.

We are no longer subject to U.S.

federal, state and local, or non-U.S.

income tax examinations by tax authorities for years before 2020.

Recently issued accounting pronouncements, adopted

In August 2020, ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), to simplify accounting for certain financial instruments.

ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock and amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce from-over-substance-based accounting conclusions.

The Company adopted ASU 2020-06 effective January 1, 2024, and the adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting — Improvements to Reportable Segment Disclosures .

ASU 2023-07 requires entities to disclose significant segment expense categories and amounts for each reportable segment and is effective for fiscal years beginning after December 15, 2023.

The Company adopted ASU 2023-07 effective January 1, 2024, and the adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Recently issued accounting pronouncements, not yet adopted

ASU 2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”) incorporates several disclosure and presentation requirements currently residing in SEC Regulation S-X and S-K into the ASC.

The amendments are applied prospectively and are effective when the SEC removes the related requirements from Regulation S-X and S-K.

Any amendments the SEC does not remove by June 30, 2027 will not be effective.

Early adoption is prohibited.

The Company is currently evaluating the potential impact of this guidance on its disclosures.

ASU 2023-09, Income Taxes (“ASU 2023-09”), requires disclosure of specific categories and disaggregation of information in the rate reconciliation table and expands disclosures related to income taxes paid.

The new standard is effective for fiscal years beginning after December 15, 2024 and is to be applied prospectively.

The Company is currently evaluating the impact, if any, adoption will have on its consolidated financial statements and disclosures.

ASU 2024-02, Codification Improvements-Amendments to Remove References to the Concepts Statements (“ASU 2024-02”) updates accounting standards for revenue recognition (ASC 606), lease accounting (ASC 842), and impairment of long-lived assets (ASC 360).

ASU 2024-02 provides enhanced guidance for estimating variable consideration, accounting for contract modifications, determining lease terms, and simplifying impairment testing for long-lived assets.

It also introduces increased disclosure requirements for financial instruments and derivatives.

ASU 2024-02 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact, if any, adoption will have on its consolidated financial statements and disclosures.

ASU 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”), requires public companies to disaggregate key expense categories, such as inventory purchases, employee compensation and depreciation in their financial statements.

This aims to improve investor insight into company performance.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted.

The Company is currently evaluating the impact, if any, adoption will have on its consolidated financial statements and disclosures.

The Company does not believe that any other recently issued accounting pronouncements not yet adopted will have a material effect on its consolidated financial statements.

GOING CONCERN

The Company’s consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business.

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.

The Company 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 the Company’s ability to continue as a going concern for at least one year from issuance of these consolidated financial statements.

The Company’s ability to continue as a going concern is dependent upon the management of expenses and ability to obtain necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due, and upon profitable operations.

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.

As of the date of this filing, the Company has not made certain scheduled payments under the SEPA Convertible Note and is therefore in technical 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 .

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

If additional equity or debt financing is required from outside sources, the Company may not be able to raise it on terms acceptable to it or at all.

If the Company is unable to raise additional capital on acceptable terms when needed, its results of operations and financial condition would be materially and adversely affected.

Any such financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact the Company’s business.

Based on the foregoing, management has concluded there is substantial doubt as to the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities should the Company be unable to continue as a going concern.

REVERSE RECAPITALIZATION

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

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.

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 resulted 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.

Outstanding stock options, whether vested or unvested, to purchase shares of Legacy ConnectM common stock granted under the 2019 Equity Incentive Plan (the “2019 Plan”) (“Legacy Options”) converted into stock options for shares of the Company’s common stock upon the same terms and conditions that were in effect with respect to the Legacy Options immediately prior to the Business Combination, after giving effect to the Exchange Ratio (see Note 13).

Legacy Options are granted under the Company’s 2023 Equity Incentive Plan (the “2023 Plan”) (see Note 13), and as such are excluded from the Share Consideration.

Outstanding warrants to purchase shares of Legacy ConnectM common stock (“Legacy Warrants”) converted into warrants for shares of the Company’s common stock upon the same terms and conditions that were in effect with respect to the Legacy Warrants immediately prior to the Business Combination after giving effect to the Exchange Ratio (see Note 12).

Outstanding warrants to purchase shares of MCAC Class A common stock will remain outstanding at the Closing Date.

The warrants will become exercisable 30 days after the completion of the Business Combination and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation (see Note 12).

In connection with the Business Combination,

● certain MCAC shareholders exercised their right to redeem certain of their outstanding shares for cash, resulting in the redemption of 3,665,639 shares of MCAC Class A common stock for gross redemption payments of $ 41,652,720 .

● certain MCAC shareholders who held rights issued at MCAC’s IPO automatically received 920,000 shares of MCAC Class A common stock, which was one-tenth of one share of MCAC common stock.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

● an investor purchased 3,248,466 shares of MCAC Class A common stock on the Closing Date in the open market from certain MCAC shareholders from those who elected to redeem shares of MCAC pursuant to the terms of a forward purchase agreement entered into effective December 31, 2022 (see Note 14).

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S.

Under this method of accounting, MCAC was treated as the acquired company for financial reporting purposes (see Note 1).

Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of the Company issuing shares 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.

Prior to the Business Combination Legacy ConnectM and MCAC filed separate standalone federal, state and local income tax returns.

As a result of the Business Combination Legacy ConnectM will file a consolidated income tax return.

Although, for legal purposes, MCAC acquired Legacy ConnectM, and the transaction represents a reverse acquisition for federal income tax purposes.

MCAC will be the parent of the consolidated group with Legacy ConnectM a subsidiary, but in the year of the closing of the Business Combination, Legacy ConnectM will file a full year tax return with MCAC joining in the return the day after the Closing Date.

As a result of the Business Combination, there was a negative equity recapitalization into additional paid in capital of $ 2,704,909 .

In addition, the Company incurred offering costs of $ 3,968,063 , which were also treated as a reduction of additional paid in capital.

The following table reconciles the elements of the Business Combination to the consolidated statements of cash flows and the consolidated statements of changes in stockholders’ deficit for the year ended December 31, 2024:

Cash - MCAC's trust and cash (net of redemption)

transaction costs and advisory fees paid

( 2,670,961 )

Net Business Combination financing

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The number of shares of the Company’s common stock issued immediately following the consummation of the Business Combination were:

Common stock, outstanding prior to Business Combination

redemption of MCAC shares

( 3,665,639 )

Net loss to common stock

Common stock of MCAC

MCAC founder shares

Rights issued to MCAC shareholders

Shares outstanding in connection with forward purchase agreement

Business Combination and forward purchase agreement financing shares

Legacy ConnectM shares

Total shares of common stock immediately after Business Combination

Issuance of shares of common stock after Business Combination

Total shares of common stock at December 31, 2024

The number of Legacy ConnectM shares was determined as follows:

Legacy ConnectM shares

Legacy ConnectM shares, effected for Exchange Ratio

Recapitalization applied to common stock outstanding at December 31, 2022

Issuance of Old ConnectM shares prior to closing of Business Combination

Conversion of convertible notes payable to common stock prior to Business Combination

Recapitalization applied to Series Seed preferred stock outstanding at December 31, 2022

Recapitalization applied to Series Seed-1 preferred stock outstanding at December 31, 2022

Recapitalization applied to Series A-1 preferred stock outstanding at December 31, 2022

Recapitalization applied to Series B-1 preferred stock outstanding at December 31, 2022

Recapitalization applied to Series B-2 preferred stock outstanding at December 31, 2022

Shares of common stock reserved for issuance for the exercise of the Legacy Options and Legacy Warrants totaled 473,929 and 77,494 , respectively, after giving effect for the Exchange Ratio.

BUSINESS COMBINATIONS

Delivery Circle

On August 5, 2024, the Company entered into a Membership Purchase Agreement (the “Purchase Agreement”) with an individual (“Seller”), for the purposes of acquiring from the Seller certain of the issued and outstanding equity securities of DeliveryCircle, LLC, (“DC”).

DC is engaged in the business of providing dispatch and delivery services and related software.

Pursuant to the Purchase Agreement, ConnectM purchased from the Seller certain membership interests in DC, comprised of 842,157 Class A Units, 207,843 Class P Units and 3,063 Series A Units (the “Acquired Interests”), which account for forty-six percent ( 46.0 %) of the equity interests and fifty-seven percent ( 57.0 %) of the voting interests of DC.

In addition, in connection with ConnectM’s acquisition of the Acquired Interests, ConnectM will have the right to appoint four out of the seven voting members to DC’s board of directors.

ConnectM purchased the Acquired Interests in exchange for $ 520,000 cash consideration plus contingent consideration.

The contingent consideration is the lesser of a base amount, 20 % of revenue growth from the previous year, or 37% of EBITDA for the current year, is paid annually in February of the subsequent calendar year for the prior fiscal year and is applicable to the years ended December 31, 2024 through 2031.

The Company used a Monte Carlo simulation model to calculate the contingent consideration’s fair value of approximately $ 576,000 (see Note 15).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The fair value of the purchase consideration in the acquisition is as follows:

Contingent consideration at fair value

Noncontrolling interest at fair value

The following table summarizes the fair values of the assets acquired and liabilities assumed and noncontrolling interest at the date of acquisition:

Accounts receivable

Prepaid expenses and other assets

Intangible assets

Accounts payable

Accrued expenses and other current liabilities

Total identifiable net assets

After allocating the purchase price to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, the Company recorded goodwill of approximately $ 791,000 .

Goodwill largely consists of expected synergies to be realized from new ownership and is expected to not be deductible for income tax purposes.

The identified intangible assets of DC’s consist of the following:

Identified intangible asset

Customer relationships

Developed technologies

Fair value of identifiable intangible assets

The identifiable intangible assets were valued using the income approach with the assistance of third-party appraisers.

The income approach requires several judgements and assumptions, including growth rates, discount rates, customer attrition rates, expected levels of cash flows, and tax rate.

The Company recorded a payable for the cash consideration the date of closing and subsequently paid $ 350,000 in December 2024.

As of December 31, 2024, the unpaid cash consideration payable totaled $ 170,000 and is included as a component of accounts payable on the accompanying consolidated balance sheets.

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.

As of June 30, 2025, the original principal of approximately $ 176,000 and accrued and unpaid interest of approximately $ 14,000 remained outstanding.

In July 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.

Green Energy Gains

On October 9, 2024, ConnectM entered into a purchase agreement with the owners of Green Energy Gains (“GEG”), whereby the Company has acquired all of the issued and outstanding capital stock of GEG in exchange for the issuance of 160,000 shares of the

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Company common stock with a fair value of $ 161,440 as determined using the closing share price on the date of issuance.

As of acquisition date, one of the indirect owners of GEG was also the related party investor of the Company (see Note 18).

GEG provides home energy assessments and modeling services that identify weatherization opportunities to reduce a home’s utility costs.

The acquisition of GEG is expected to expand the Company’s customer base for its other products and services after no cost GEG home energy assessments are completed.

Prior to the acquisition, GEG was a customer in the Company’s managed services reporting segment.

In connection with the acquisition, the pre-existing obligations owed to the Company from GEG were settled and total consideration was increased accordingly.

The fair value of the purchase consideration in the acquisition is as follows:

Fair value of shares of the Company's common stock issued

Settlement of note receivable from GEG

Settlement of accounts receivable from GEG

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:

Accounts receivable

Property and equipment

Intangible assets

Accounts payable

Accrued expenses and other current liabilities

Total identifiable net assets

After allocating the purchase price to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, the Company recorded goodwill of approximately $ 259,000 .

Goodwill largely consists of expected synergies to be realized from new ownership and is expected to not be deductible for income tax purposes.

The identified intangible assets of GEG’s consist of the following:

Identified intangible asset

Customer relationships

Acquired technologies

Total fair value of identifiable intangible assets

The identifiable intangible assets were valued using the income approach with the assistance of third-party appraisers.

The income approach requires several judgements and assumptions, including growth rates, discount rates, customer attrition rates, expected levels of cash flows, and tax rate (see Note 15).

ConnectM acquired 60 % of Green Energy Gains by issuing 88,000 common shares at fair market value of $ 1 per share from Srimulli Renewables LLC and 40 % by issuing 72,000 common shares at fair market value of $ 1 per share from Greg Kendall.

The two members of Srimulli Renewables LLC are also ConnectM shareholders, each holding more than 4.9 % of total shares outstanding.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

GOODWILL AND INTANGIBLE ASSETS, NET

The changes in the carrying amount of goodwill for the years ended December 31, 2024 and 2023 were as follows:

Service Network

Transportation

Balance as of January 1, 2023

Balance as at December 31, 2023

( 1,568,309 )

Balance as at December 31, 2024

Intangible assets, net

Identifiable intangible assets consist of the following at December 31, 2024:

Weighted Average Remaining Amortization Period (years)

Accumulated Amortization

Customer relationships

Noncompetition agreements

Intellectual property

Acquired technology

Internally developed software

Total intangible assets, net

Identifiable intangible assets consist of the following at December 31, 2023:

Accumulated Amortization

Customer relationships

Noncompetition agreements

Intellectual property

Internally developed software

Total intangible assets, net

( 1,127,928 )

Weighted average shares outstanding, basic and diluted

Basic and diluted net loss per share

A reconciliation of net loss per share is as follows for the year ended December 31, 2022:

Allocation of undistributable losses

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Intangible assets are amortized over their estimated useful lives of 3 to 15 years using the straight-line method.

Amortization expense was $ 480,012 and $ 517,175 for the years ended December 31, 2024 and 2023, respectively.

Amortization expense over the next five years and thereafter is as follows:

Year ending December 31,

The above does not include $ 168,397 of capitalized costs for internally developed software that are still in the development stage and not subject to amortization.

As of December 31, 2024, the weighted average remaining amortization period of intangible assets is approximately 7.3 years.

The Company recorded a goodwill and intangible impairment of $ 2,403,628 and $ 181,853 during the twelve months ending December 31, 2024, and December 31, 2023

PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following at fair value as of December 31:

Furniture and fixtures

Machinery and equipment

Property improvements

Property and Equipment

Accumulated Depreciation

During the year ended December 31, 2024, the Company recorded a loss on disposal of approximately $ 8,000 for a vehicle that was repossessed by the lender.

The Company reduced the carrying value of the associated vehicle loan by the estimated fair value of the vehicle of approximately $ 23,000 as of the date of the repossession.

During the year ended December 31, 2023, the Company abandoned vehicles with a net book value of $ 29,242 which is included in selling, general and administrative expenses on the accompanying consolidated statements of operations.

Depreciation expense was $ 265,652 and $ 259,222 for the years ended December 31, 2024 and 2023, respectively.

ACCUMULATED OTHER COMPREHENSIVE INCOME

Shareholders’ equity includes certain items classified as accumulated other comprehensive income in the Consolidated Balance Sheets, including:

● Cumulative translation adjustment (CTA) relates to our non-U.S.

subsidiary companies that have designated a functional currency other than the U.S.

We are required to translate the subsidiary functional currency financial statements to dollars using a combination of historical, period-end, and average foreign exchange rates.

This combination of rates creates the foreign currency translation adjustment component of other comprehensive income.

The Company recorded $ 166,007 and $ 114,624 of accumulated other comprehensive income as of December 31, 2024 and December 31, 2023.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONVERTIBLE DEBT

Convertible debt consisted of the following as of December 31:

Amended 2022 Convertible Notes

2023 Convertible Notes

2024 Convertible Notes

Assumed 2024 Note

SEPA Convertible Note

Convertible notes payable

2022 and 2023 Convertible Notes

In September of 2022, the Company issued convertible notes for gross proceeds of $ 1,350,000 , as amended on February 22, 2023 to clarify the mechanics of the conversion feature (the “Amended 2022 Convertible Notes”).

The Amended 2022 Convertible Notes include an automatic conversion upon the occurrence of a Qualified Financing (as defined in the agreement), whereby the Amended 2022 Convertible Notes convert at a quotient, the numerator of which is the entire principal of the convertible notes and any interest accrued and the denominator is the lesser of 80 % of the price per share to be sold in a financing event, or $ 7.00 per share, adjusted for stock dividend, stock split, combination, or other similar recapitalization with respect to such class or series.

The amendment was accounted for as a modification.

The Amended 2022 Convertible Notes mature on the earlier of two years from the date of issuance (September 2024), or upon the consummation of a Qualified Financing.

Interest is charged at an annual simple rate of 5.0 %, which increases to 8.0 % upon the occurrence of an event of default as defined in the agreement.

The Company is not required to make principal payments on these notes.

During the year ended December 31, 2023, the Company issued an additional $ 900,000 of convertible notes with the same terms as described above (the “2023 Convertible Notes”).

The Company elected the Fair Value Option for the Amended 2022 Convertible Notes and the 2023 Convertible Notes, and therefore measured the Amended 202 Convertible Notes and the 2023 Convertible Notes at issuance and each subsequent reporting period, with changes in fair value recognized in earnings (see Note 14).

The Amended 2022 Convertible Notes and the 2023 Convertible Notes, including accrued interest, converted into 1,067,592 shares of the Company’s stock at the close of the Business Combination at a fair value of $ 3,779,116 (see Note 5).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2024 Convertible Notes

The Company issued eleven individual convertible notes in exchange for gross proceeds of $ 2,440,000 to various lenders in 2024 (the “2024 Convertible Notes”).

The 2024 Convertible Notes bear interest rate at a rate of 20.0 % per annum.

A summary of the individual convertible notes was:

Issuance Date

Gross Proceeds

Conversion Price

Conversion Option Period of Exercisability

(from issuance date)

Maturity Date

(from issuance date)

* These notes are with an investor who owns more than 5 % of the Company’s stock

The 2024 Convertible Notes are convertible at the option of the holder into shares of the Company’s common stock at a conversion price.

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

During 2024, the Company extended the period the conversion option was exercisable.

The extensions to the conversion periods were accounted for as modifications.

The 2024 Convertible Notes may be prepaid in full or in part by the Company at any time without penalty.

The Company elected the fair value option for the 2024 Convertible Notes and therefore measured the 2024 Convertible Notes at fair value at issuance and each subsequent reporting period, with changes in fair value recognized in earnings.

Nine of these convertible notes totaling $ 1,840,000 were extinguished in exchange for the issuance of shares of the Company’s common stock in May 2025 pursuant to note exchange agreements (see Note 21).

The 2024 Convertible Notes were convertible into 1,759,945 shares of the Company’s common stock at December 31, 2024.

Assumed 2024 Note

On the Closing Date, the Company assumed MCAC’s promissory note totaling $ 3,680,000 (the “Assumed 2024 Note”) that matures in July 2025.

The Company is obligated to pay 10.0 % of the aggregate gross proceeds from any sale of equity or equity derivative instruments of the Company while the Assumed 2024 Note is outstanding.

Five days prior to the maturity date (and only five days prior to the maturity date), the Company may elect to convert the Assumed 2024 Note into shares of the Company’s common stock based at the average volume weighted average price value for the five -business day period preceding the maturity date (subject to compliance with applicable rules of the Nasdaq).

The Assumed 2024 Note becomes due and payable following specified events of default if (i) the holder of the Assumed 2024 Note provides written notice if Company defaults on any payments due under the terms of the Assumed 2024 Note or (ii) automatically if the Company commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under bankruptcy or other similar laws.

The Company has not received written notice from the holder of the Amended 2024 Note in regards to the missed initial mandatory payment as of December 31, 2024.

The Assumed 2024 Convertible Note is non-interest bearing, except in the case of an Event of Default (as defined in the agreement), at which point the interest rate increases to a rate of 10.0 % per annum until such event of default is cured.

The Company paid $ 50,000 of the initial mandatory payment of $ 500,000 within thirty calendar days of the effective date of the Assumed 2024 Note, and as such,

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

triggered an event of default.

During February 2025, the Note was extinguished as part of a settlement agreement that the Company entered into with a third party to settle its liabilities that were past due and/or in default (see Note 21).

The Company elected the fair value option for the Note and therefore measured the Note at fair value at assumption and each subsequent reporting period, with changes in fair value recognized in earnings (see Note 15).

The shares of the Company’s common stock to be issued to settle the above liabilities is dependent on the share price at a future date, and as such, it is not an amount that can be estimated as of December 31, 2024.

There is no limit to the number of shares that can be issued to settle the agreements in the respective arrangements.

SEPA Convertible Note

In December 2024, in connection with and pursuant to the terms of its Standby Equity Purchase Agreement (the “SEPA”) entered into with YA II PN, LTD., an exempt limited partnership from the Cayman Islands (“Yorkville”) (see Note 12), Yorkville agreed to advance to the Company, in exchange for convertible promissory notes, an aggregate principal amount of up to $ 4,500,000 , $ 2,500,000 of which was funded during December 2024 in exchange for the issuance by the Company of a Convertible Promissory Note (the “SEPA Convertible Note”).

The Company received net proceeds of $ 2,300,000 after a non-cash original issue discount of 8.0 %, or $ 200,000 .

The SEPA Convertible Note has a maturity date in December 2025 and accrues interest at 7.0 % per annum, subject to increase to 18.0 % per annum upon the occurrence of an event of default as defined in the agreement (the “Additional Interest”).

The Company was also required to pay commitment fees of $ 375,000 .

Of this amount, $ 187,500 was due up front in the form of shares, for which the Company issued 264,456 shares.

The remaining amount is due in cash on the six-month anniversary date of the agreement.

Yorkville has the right to convert any portion of the outstanding principal into shares of the Company’s common stock at (a) $ 2.00 per share at any time (the “Fixed Price”) or (b) 93.0 % of the lowest daily variable weighted average price (the “VWAP”) during the ten consecutive trading days immediately preceding the conversion date, but not lower than the floor price of $ 0.1418 (the “Variable Price”).

As long as the Company is current in its payment obligations, Yorkville is only entitled to convert at the Fixed Price.

The number of shares issuable upon conversion is equal to the amount of principal to be converted (as specified by the holder) divided by either the Fixed Price or the Variable Price as defined in the agreement.

Yorkville will not have the right to convert any portion of the principal to the extent that after giving effect to such conversion, Yorkville would beneficially own in excess of 4.99 % of the total number of shares of the Company’s common stock outstanding after giving effect to such conversion.

Additionally, the Company, at its option, shall have the right, but not the obligation, to redeem early a portion or all amounts outstanding under the Promissory Notes at a redemption amount equal to the outstanding principal balance being repaid or redeemed, plus a 7.0 % prepayment premium, plus all accrued and unpaid interest;

provided that (i) the Company provides Yorkville with no less than ten trading days’ prior written notice thereof and (ii) on the date such notice is issued, the VWAP of the Company’s common stock is less than the Fixed Price.

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

Commencing in March 2025, the Company is required to make monthly principal and interest payments totaling $ 277,778 (increasing to $ 500,000 after the second tranche of advances are received) in cash or an Advance Notice (as defined in the SEPA, see Note 12).

The Company elected the Fair Value Option for the SEPA Convertible Note and therefore measured the SEPA Convertible Note at fair value at issuance and each subsequent reporting period, with changes in fair value recognized in earnings (see Note 15).

There is no limit to the number of shares that can be issued to settle the agreements in the respective arrangements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Debt consists of the following as of December 31:

Secured Promissory Notes

Small Business Administration Loans

Paycheck Protection Program Loans

Promissory Note

Vehicle Notes

Real Estate Promissory Note

Business Loan and Security Agreement

Sale of Future Receipts

debt issuances costs

notes payable, current portion

( 7,019,499 )

( 11,935,580 )

Notes payable, net of debt issuance costs and current portion

The Company recorded the interest expense of $ 2,714,048 and $ 1,431,354 for the twelve months ending December 31, 2024, and December 31, 2023 respectively.

The accrued interest as of December 31, 2024, and December 31, 2023 were $ 985,025 and $ 879,876 respectively.

Secured Promissory Notes

The Company's promissory notes have original maturity dates ranging between 9 and 36 months .

The notes bear interest at rates ranging between 9.25 % and 24 %.

During the year ended December 31, 2024, $ 6,834,020 of principal was extinguished via debt conversion agreements (see Note 14).

In connection with the issuance of the secured promissory notes issued in February 2022 (the “2022 Notes”), the Company issued Legacy Warrants to each lender that may be converted into shares of common stock of the Company.

There were 23,332 Legacy Warrants that were issued in connection with the issuance of the February 2022 Notes that have an exercise price of $ 12.00 per share (see Note 12).

The fair value of the Legacy Warrants was $ 82,861 and was recorded as a debt discount.

Amortization expense related to the debt discount amounted to $ 27,620 and $ 27,620 for the years ended December 31, 2024 and 2023, respectively, and is recorded as interest expense on the accompanying consolidated statements of operations and comprehensive loss.

For all secured promissory notes, the interest is charged at an annual simple rate.

For the 2022 Notes, interest increases to 12 % upon the occurrence of an event of default as defined in the secured promissory note agreements.

During the year ended December 31, 2023, the Company modified individual notes with original maturity dates prior to December 31, 2023 to extend the maturity date to the earlier of May 31, 2024 or the Closing Date.

During September 2024, the Company entered into four note conversion agreements with four of the secured promissory note holders in which the Company converted the outstanding principal and interest on the secured promissory notes, into shares of the Company’s common stock at a conversion price of $ 2.00 per share with a one-time share reset adjustment (see Note 14), subject to shareholder approval and a maximum aggregate ownership amount of 19.99 % for each individual lender.

In connection with these agreements, $ 6,834,020 of secured promissory notes and $ 1,064,080 of accounts payable and accrued expenses were extinguished in exchange for the issuance of 3,949,050 shares of the Company’s common stock (see Note 12).

Two of the lenders total ownership of the Company’s common stock exceeded 5.0 % as a result of the share issuances in connection with the note conversion agreements.

These lenders continue to hold certain Secured Promissory Notes as of December 31, 2024 (see Note 18).

As of December 31, 2024, the Company has not made certain scheduled payments and is therefore in technical default under two of the secured promissory notes entered into in June 2024.

The total outstanding principal and accrued interest under these notes was approximately $ 250,000 as of December 31, 2024.

However, neither noteholder has issued a formal notice of default, and both have

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

continued to work cooperatively with the Company.

Management is engaged in discussions with the noteholders regarding repayment arrangements and believes a mutually satisfactory resolution will be reached.

Small Business Administration (“SBA”) Loans

In 2020, the Company received loan proceeds of $ 150,000 under a SBA loan agreement that matures in June 2050.

In 2021, this loan was amended to increase the total borrowing to $ 475,000 .

In 2022 the Company assumed two additional SBA loans for $ 150,000 each in connection with two acquisitions that mature in June 2050.

Interest on all SBA loan agreements accrues on the anniversary date of the initial borrowing at 3.75 % on the outstanding balance.

All SBA loan agreements are collateralized by the Company’s tangible and intangible personal property.

Paycheck Protection Program Loan

On May 4, 2020, the Company received loan proceeds of $ 151,000 under the Paycheck Protection Program (the “PPP”).

The PPP was established as part of the Coronavirus Aid, Relief, and Economic Security Act and provides for loans to qualifying businesses for amounts up to 2.5 times the average monthly payroll expenses of the business, subject to certain limitations.

The PPP loan matures in May 2025.

Payments were not required under the loan for a period from six months from the date of the initial borrowing, upon which payments are required to be made monthly.

Interest accrues at 1.0 % annually on the outstanding balance.

The PPP loan is collateralized by all tangible and intangible personal property of the Company.

Promissory Note

In October 2024, the Company entered into a promissory note to extinguish an obligation to a vendor in which the Company promised to pay the vendor a principal amount of $ 119,000 , interest through October 15, 2024 totaling approximately $ 17,000 , attorney’s fees of $ 4,000 and additional interest from October 16, 2024 through the date of repayment of 18.0 % per annum.

Principal payments of $ 20,000 are due on the 25 th of each month commencing on October 25, 2024.

If five payments are made timely, the vendor agrees to waive the remaining balance due on the promissory note.

The promissory note may be prepaid without penalty.

Business Loan and Security Agreements

The Company entered into three business loan and security agreements with one lender as follows:

Maturity Date

(from issuance

Gross Proceeds

December 31, 2024

Interest rate

May 2024 BLS Agreement

July 2024 BLS Agreement

August 2024 BLS Agreement

The Company receives a 5.0 % prepayment discount on the May 2024 BLS Agreement and the July 2024 BLS Agreement.

The August 2024 BLS Agreement provides the following terms for prepayments:

● For prepayment made prior to three months after the Loan Date, $ 122,000 minus repayments to date,

● For prepayment made between three and six months after the Loan Date, $ 127,000 minus repayments to date,

● For prepayment made more than six months after the Loan Date, a 5 % discount may be applied to the remaining payment.

The Company triggers an event of default under these agreements if repayments are not made in accordance with the repayment schedule, if the Company defaults on a loan with a bank or financial institution, and other matters as defined in the agreements.

In the event of a default, the lender may declare remaining outstanding amounts due and payable less a 5.0 % discount on the remaining unpaid balance and the stated interest rate is adjusted to be the lower of 18.0 % per annum or the maximum rate allowed by law.

Each loan is collateralized by the assets of the subsidiary the debt was taken out for and each is guaranteed by an officer of the Company.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In May 2025, the Company amended each of the business loan and security agreements, changing the required periodic payments and extending the maturity date on the respective agreement as follows:

May 2024 BLS Agreement :

The monthly payment was reduced from approximately $ 7,000 to a monthly payment of approximately $ 3,000 and the maturity date was extended from December 2025 to December 2026.

July 2024 BLS Agreement :

The monthly payment was reduced from approximately $ 3,000 to a monthly payment of approximately $ 2,000 and the maturity date was extended from February 2026 to November 2026.

August 2024 BLS Agreement :

The monthly payment was reduced from approximately $ 13,000 to a monthly payment of approximately $ 3,000 and the maturity date was extended from May 2025 to December 2026.

Vehicle Notes

The Company has thirteen vehicles that were acquired through the issuance of vehicle loans that were outstanding as of December 31, 2024.

The maturities of these vehicle notes outstanding range from 2026 through 2029.

Interest rates range from 4.99 % to 17.37 %.

The Company defaulted on two of the vehicle notes during the year ended December 31, 2024 and the lender repossessed one of the vehicles.

The Company reduced the carrying value of the note by the fair value of the vehicles of approximately $ 23,000 at the time of the repossession.

The Company owes the lenders approximately $ 13,000 as of December 31, 2024.

The second vehicle was repossessed during the subsequent year.

The Company entered into several seller notes as part of agreements to acquire certain of its wholly owned subsidiaries as follows:

Interest Rate

Maturity Date

December 31, 2024

December 31, 2023

November 2025

Mortgage of certain real property which has a book value of $ 200,000 as of December 31, 2024

Equity securities of acquired company owned by ConnectM

December 2026

Equity securities of acquired company owned by ConnectM

December 2026

Equity securities of acquired company owned by ConnectM

February 2025

Equity securities of acquired company owned by ConnectM

February 2028

Equity securities of acquired company owned by ConnectM

The December 2022 Seller Note is in default and under legal proceedings (see Note 19).

During September 2024, the Company entered into a note conversion agreement with the holders of the holder of the May 2022 seller note in which the Company converted outstanding principal of $ 91,000 , into 72,800 shares of the Company’s common stock at a

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

conversion price of $ 1.25 per share with a one-time consideration adjustment (see Notes 12 and 14), subject to shareholder approval and a maximum aggregate ownership amount of 19.99 % for the holder of the seller note.

This was accounted for as debt extinguishment.

Real Estate Promissory Note

On December 29, 2022, the Company entered into a Real Estate Promissory Note for land in Florida for a principal sum of $ 370,000 , which is collateralized by real estate with a maturity date of July 29, 2023.

The Real Estate Promissory Note is secured by a mortgage on the property.

The carrying value of the note, including accrued interest as of the filing date, is $ 442,000 .

This note is in default and under legal proceedings (see Note 19).

Business Line of Credit

In January 2023, the Company opened a business line of credit with American Express and borrowed $ 74,400 .

The maximum amount the Company can take out on the line of credit is $ 74,400 .

The line of credit has an interest rate of 13.0 %.

This business line of credit matured in September of 2023 and was repaid by the Company.

There was no current availability under this business line of credit as of December 31, 2024.

Sale of Future Receipts

On April 25, 2023, the Company entered into a sale of future receipts agreement (the “April 2023 SFR Agreement”) whereby the Company sold and assigned $ 1,597,144 of future receipts in exchange for net cash proceeds of $ 1,176,000 , including a fee of $ 24,000 .

As a result, the Company recorded a discount of $ 421,144 .

The Company was required to remit a minimum of $ 30,174 of weekly sales receipts until the future receipts assigned under the April 2023 SFR Agreement were repaid in full.

Accordingly, the term was determined to be approximately one year .

On November 2, 2023, the Company refinanced the April 2023 SFR Agreement to reduce the minimum weekly sales remittance to $ 17,700 and extend the repayment period to November 2024 (the “November 2023 SFR Refinancing Agreement”).

Additionally, the Company was forgiven for $ 162,080 of the debt outstanding, which was recorded as a component of “loss on extinguishment of debt” in the accompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2023, and incurred an incremental fee of $ 100,000 .

The Company applied extinguishment accounting to the November 2023 SFR Refinancing Agreement.

On August 7, 2023, the Company entered into a sale of future receipts agreement (the “August 2023 SFR Agreement”) whereby the Company sold and assigned $ 1,290,000 of future receipts in exchange for net proceeds of $ 980,000 , including a fee of $ 20,000 .

As a result the Company recorded a discount of $ 310,000 .

The Company was required to remit a minimum of $ 25,595 of weekly sales receipts until the future receipts assigned under the August 2023 SFR Agreement were repaid in full.

Accordingly, the term was determined to be approximately one year .

On November 9, 2023, the Company refinanced the August 2023 SFR Agreement to borrow an incremental $ 370,543 (the “Second November 2023 SFR Refinancing Agreement”).

Additionally, the Company was forgiven for $ 130,000 of the debt outstanding, which was recorded as a component of “loss on extinguishment of debt” in the accompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2023, and incurred an incremental fee of $ 221,000 .

The Company applied extinguishment accounting to the Second November 2023 SFR Refinancing Agreement.

As a result of the amendments entered into during 2023, the Company wrote off all remaining debt discounts totaling approximately $ 662,000 , which is recorded within loss on extinguishment of debt on the accompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2023.

On January 4, 2024, the Company entered into a sale of future receipts agreement (“the January 2024 SFR Agreement”) whereby the Company sold and assigned $ 452,000 of future receipts in exchange for net cash proceeds of $ 343,000 , including a fee of $ 7,000 .

As a result, the Company recorded a discount of $ 101,500 .

The Company was required to remit a minimum of approximately $ 9,000 of weekly sales receipts until the future receipts assigned under the January 2024 SFR Agreement were repaid in full.

Accordingly, the term was determined to be approximately one year .

On January 30, 2024, the Company entered into a second sale of future receipts agreement, amending the January 2024 SFR Agreement, (the “Amended January 2024 SFR Agreement”) whereby the Company increased the amount of future receipts sold and assigned to the lender to $ 2,600,000 in exchange for net cash proceeds of approximately $ 2,077,000 , including a fee of approximately $ 3,000 .

As a result, the Company recorded a discount of approximately $ 523,000 .

The Company was required to remit a minimum of

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

approximately $ 52,000 of weekly sales receipts until the future receipts assigned under the Amended January 2024 SFR Agreement were repaid in full.

Accordingly, the term was determined to be approximately one year .

In connection with the Second January 30, 2024 SFR Agreement, the Company received an additional $ 1,054,286 (the “Additional Advance”).

Such amounts received were provided to the Company in error and are due and payable in full to the lender.

During September 2024, the Company entered into a note conversion agreements with one of the sale of future receipts agreement holders in which the Company converted the outstanding principal on the Amended January 2024 SFR Agreement, including accrued and unpaid interest, and the Additional Advance into shares of the Company’s common stock at a conversion price of $ 2.00 per share with a two share reset adjustments and a make-whole payment (see Note 14), subject to shareholder approval and a maximum aggregate ownership amount of 19.99 % for each individual lender.

In connection with these agreements, $ 3,115,592 of secured promissory notes were extinguished in exchange for the issuance of 1,557,796 shares of the Company’s common stock (see Note 12).

On May 23, 2024, the Company entered into a sale of future receipts agreement (the “May 2024 SFR Agreement”) whereby the Company sold and assigned approximately $ 149,000 of future receipts in exchange for net cash proceeds of approximately $ 118,000 , including a fee of approximately $ 3,000 .

As a result, the Company recorded a discount of approximately $ 31,000 .

The Company is required to remit a minimum of approximately $ 12,000 of monthly sales receipts until the future receipts assigned under the May 2024 SFR Agreement were repaid in full.

Accordingly, the term of this agreement is approximately one year .

In May 2025, the Company was issued a stipulation of settlement from the Supreme Court of the State of New Work, Count of Erie, under which it was required to pay $ 240,000 to settle the balance owed of approximately $ 302,000 on the May 2024 SFR Agreement.

The Company is to repay the settlement balance through a conditional release of funds of approximately $ 17,000 held by a third party and monthly payments totaling approximately $ 14,000 until the settlement balance is paid in full.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In October 2024, the Company entered into a sale of future receipts agreement (the “October 2024 SFR Agreement”) with the same lender of the May 2024 SFR Agreement whereby the Company sold and assigned approximately $ 310,000 of future receipts in exchange for net cash proceeds of approximately $ 170,000 , including a fee of approximately $ 3,000 and repayment of approximately $ 78,000 outstanding under the May 2024 SFR Agreement.

As a result, the Company recorded a discount of approximately $ 63,000 .

The Company is required to remit a minimum of approximately 8.0 % of monthly sales receipts until the future receipts assigned under the October 2024 SFR Agreement were repaid in full.

Accordingly, the term of this agreement is approximately one year .

The October 2024 SFR Agreement was accounted for as an extinguishment of the May 2024 SFR Agreement and approximately $ 9,000 loss on extinguishment was recorded on the accompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2024.

On May 28, 2024, the Company entered into a second sale of future receipts agreement (the “Second May 2024 SFR Agreement”) whereby the Company sold and assigned $ 125,000 of future receipts in exchange for net cash proceeds of approximately $ 98,000 , including a fee of approximately $ 2,000 .

As a result, the Company recorded a discount of approximately $ 27,000 .

The Company is required to remit a minimum of approximately $ 6,000 of bi-weekly sales receipts until the future receipts assigned under the Second May 2024 SFR Agreement were repaid in full.

Accordingly, the term of this agreement is approximately one year .

In May 2025, the Company was issued a stipulation of settlement from the Supreme Court of the State of New Work, Count of Erie, under which it was required to pay $ 140,000 to settle the balance owed of approximately $ 184,000 on the Second May 2024 SFR Agreement.

The Company is to repay the settlement balance through a conditional release of funds of approximately $ 42,000 held by a third party and monthly payments totaling approximately $ 8,000 until the settlement balance is paid in full.

In November 2024, the Company entered into a sale of future receipts agreement (the “November 2024 SFR Agreement”) with the same lender of the Second May 2024 SFR Agreement whereby the Company sold and assigned approximately $ 201,000 of future receipts in exchange for net cash proceeds of approximately $ 97,000 , including a repayment of $ 60,000 outstanding under the Second May 2024 SFR Agreement.

As a result, the Company recorded a discount of approximately $ 41,000 .

The Company is required to remit a minimum of approximately $ 8,000 of bi-weekly sales receipts until the future receipts assigned under the November 2024 SFR Agreement were repaid in full.

Accordingly, the term of this agreement is approximately one year .

The November 2024 SFR Agreement was accounted for as an extinguishment of the Second May 2024 SFR Agreement and approximately $ 7,000 loss on extinguishment was recorded on the accompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2024.

On July 24, 2024, the Company entered into a sale of future receipts agreement (the “July 2024 SFR Agreement”) whereby the Company sold and assigned approximately $ 209,000 of future receipts in exchange for net cash proceeds of approximately $ 144,000 , including a fee of $ 6,000 .

As a result, the Company recorded a discount of approximately $ 65,000 .

The Company is required to remit 10.0 % of daily receipts until the until the future receipts assigned under the July 2024 SFR Agreement were repaid in full.

The estimated term of this agreement is approximately one year , based on expected daily collections.

The July 2024 SFR Agreement includes an option for early payoff with discounts on the remaining balances.

In November 2024, the Company entered into a sale of future receipts agreement (the “Second November 2024 SFR Agreement”) with the same lender of the July 2024 SFR Agreement whereby the Company sold and assigned approximately $ 313,000 of future receipts in exchange for net cash proceeds of approximately $ 96,000 , including a fee of approximately $ 9,000 and repayment of approximately $ 120,000 outstanding under the July 2024 SFR Agreement.

As a result, the Company recorded a discount of approximately $ 88,000 and interest expense of approximately $ 9,000 .

The Company is required to remit a minimum of approximately $ 7,000 of weekly sales receipts until the future receipts assigned under the Second November 2024 SFR Agreement were repaid in full.

Accordingly, the term of this agreement is approximately one year .

The Second November 2024 SFR Agreement was accounted for as an extinguishment of the July 2024 SFR Agreement and approximately $ 34,000 loss on extinguishment was recorded on the accompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2024.

On September 19, 2024, the Company into a sale of future receipts agreement (the “September 2024 SFR Agreement”) whereby the Company sold and assigned approximately $ 107,000 of future receipts in exchange for net cash proceeds of $ 74,000 , including a fee of $ 2,000 .

As a result, the Company recorded a discount of $ 33,000 .

The Company is required to remit 6.32 % of weekly sales receipts until the until the future receipts assigned under the September 2024 SFR Agreement were repaid in full.

The estimated term of this agreement is approximately one year , based on expected daily collections.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

On November 8, 2024, the Company entered into a sale of future receipts agreement (the “November 2024 SFR Agreement”) whereby the Company sold and assigned approximately $ 112,000 of future receipts in exchange for net cash proceeds of approximately $ 76,000 , including a fee of approximately $ 4,000 .

As a result, the Company recorded a discount of approximately $ 36,000 .

The Company is required to remit a minimum of approximately $ 5,000 of weekly sales receipts until the future receipts assigned under the May 2024 SFR Agreement were repaid in full.

Accordingly, the term of this agreement is approximately one year .

Since the Company has significant continuing involvement in the generation of future cash flows due under these agreements among other indicators, pursuant to ASC 470-10-25-2, Debt- Sales of Future Revenues or Other Various Measures of Income , the Company has reflected any future commitments associated with these agreements as debt.

The discounts on the various sale of future receipts agreements are recorded as an adjustment to the related liability within the debt, net on the accompanying consolidated balance sheets as of December 31, 2024 and 2023.

These discounts are amortized over the life of the respective loans via the effective interest method.

This amortization is recorded as a component of interest expense on the accompanying consolidated statement of operations.

Future maturities for notes payable as of December 31, 2024 is as follows:

STOCKHOLDERS’ DEFICIT

As discussed in Note 1 and Note 5, on July 12, 2024, the Company consummated the Business Combination, which has been accounted for as a reverse recapitalization.

Pursuant to the Certificate of Incorporation as amended on July 12, 2024 and as a result of the reverse recapitalization, the Company has retrospectively adjusted the Legacy ConnectM preferred shares and Legacy ConnectM common shares issued and outstanding prior to July 12, 2024 to give effect to the Exchange Ratio used to determine the number of shares of common stock of the combined entity into which they were converted.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company is authorized to issue 100,000,000 shares of common stock at $ 0.0001 par and 10,000,000 shares of preferred stock at $ 0.0001 par.

As of December 31, 2024 and 2023 there was 29,093,289 and 13,338,437 , respectively, of common stock issued and outstanding and no shares of preferred stock issued and outstanding.

The following shares of common stock are reserved for future issuance:

Legacy Warrants

Public Warrants

Private Placement Warrants

July 2024 Warrants

Legacy Options

2023 Equity Incentive Plan

The rights, preferences and privilege of common stock are as follows:

Voting rights – the common stock possesses all voting power of the Company.

Each share of common stock is entitled to one vote.

Dividend rights – the holders of common stock are entitled to receive dividends and other distributions, as and if declared by the Board out of assets or funds of the Company legally available and shall share equally on a per share basis.

Liquidation – in the event of any liquidation, dissolution or winding up of the Company, after payment or provision of payment of the debts and other liabilities of the Company, the holders of common stock are entitled to receive the remaining assets of the Company available for distribution ratably in proportion to the number of shares of common stock held by them

Common stock issuances:

In January, 2024, the Legacy ConnectM issued 5,000 shares of Legacy ConnectM common stock with a fair value of approximately $ 35,000 .

These shares of Legacy ConnectM common stock were exchanged for 16,607 shares of the Company’s common stock on the Closing Date (see Note 5).

In July 2024, immediately prior to the closing of the Business Combination, Legacy ConnectM issued 321,429 shares of Legacy ConnectM common stock in connection with the conversion of certain convertible debt instruments (see Note 10).

These shares of Legacy ConnectM common stock were exchanged for 1,067,592 shares of the Company’s common stock on the Closing Date (see Note 5).

These shares had a fair value of $ 3,779,223 .

In July 2024, the Company consummated the Business Combination, in which 6,701,421 shares of the Company’s common stock were issued (see Note 5).

In October 2024, the Company issued 160,000 shares of the Company’s common stock as consideration in acquisition of a business with a fair value of approximately $ 161,000 , as determined by the closing share price on the date of issuance (see Note 6).

In October 2024, the Company reached a legal settlement with a vendor relating to past due amounts owed.

In accordance with the settlement, as additional consideration, the Company was required to issue 125,000 shares to the vendor.

The fair value of these shares was $ 133,750 .

This expense is included in general and administrative expenses in the consolidated statements of operations and comprehensive loss.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

During the year ended December 31, 2024, the Company issued shares of the Company’s common stock to extinguish obligations to certain vendors and lenders (see Note 11 and Note 19) as follows:

Issuance Date

Shares Issued

* Related party transaction.

See Note 18 – Related Party Transactions for additional information.

The Company determined the fair value of its common stock for each issuance using the closing share price on the date of issuance.

During the year ended December 31, 2024, the Company issued shares of the Company’s common stock to vendors as consideration for services to be performed (see Note 13) as follows:

Issuance Date

Shares Issued

The Company determined the fair value of its common stock for each issuance using the closing share price on the date of issuance.

Standby Equity Purchase Agreement

In December 2024, the Company entered into a SEPA with YA II PN, LTD., an exempt limited partnership from the Cayman Islands (“Yorkville”).

Pursuant to the SEPA, the Company shall have the right, but not the obligation, to sell to Yorkville up to $ 25,000,000 of shares of the Company’s common stock at the Company’s request any time during the commitment period commencing on December 17, 2024 (the Effective Date”) and continuing for a term of three years (“Purchased Put Option”).

Yorkville agrees to advance to the Company $ 4,500,000 (the “Pre-Paid Advance”), less a discount of 8.0 %.

of the principal amount, as evidenced by convertible promissory notes in two tranches.

The first tranche of $ 2,500,000 was advanced to the Company on the Effective Date of the SEPA (see Note 10) and the second tranche of $ 2,000,000 to be advanced on the later of (i) the initial registration statement becoming effective and (ii) the Company’s receipt of shareholder approval to issue shares of the Company’s common stock in excess of the exchange cap, as defined in the SEPA.

The SEPA will automatically terminate on the earlier to occur of (i) January 1, 2028, provided that if any Pre-Paid Advance is then outstanding, termination shall be delayed until such date that all Pre-Paid Advances are repaid, and (ii) the date on which Yorkville shall have made payment of advances pursuant to the SEPA for Common Stock equal to the commitment amount of $ 25,000,000 .

Each advance that the Company issues in writing to Yorkville under the SEPA (each, an “Advance,” and notice of such request, an “Advance Notice”) may be in an amount of Common Stock up to the aggregate daily trading volume of Common Stock for the five trading days prior to the Company requesting an Advance.

The purchase price for the shares of Common Stock set forth in the Advance is determined by multiplying the market price of the Company’s common stock by 97 % of the lowest daily VWAP during the applicable three consecutive trading day pricing period for any Advance Notice delivered by the Company Additionally, the Company may establish a minimum acceptable price in each Advance Notice below which the Company will not be obligated to make any sales to Yorkville.

Once the Company draws on the SEPA, the related number of shares issuable constitutes a forward contract to issue common stock (“Forward Contract”).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to the terms of the SEPA, at any time that there is a balance outstanding under the SEPA Convertible Note, Yorkville has the right to receive shares to pay down the principal balance, and may select the timing and delivery of such shares (via an “Investor Notice”), in an amount up to the outstanding principal balance on the SEPA Convertible Note at a purchase price equal $ 2.00 per share of the Company’s common stock (the “Fixed Price”).

If the Company is not current on its payment obligations, the Yorkville is entitled to a purchase price equal to (i) 93 % of the lowest daily Volume Weighted Average Price (“VWAP”) of the Company’s common stock on Nasdaq during the 10 consecutive Trading Days immediately preceding the Conversion Date or other date of determination (the “Variable Price”).

The Variable Price shall not be lower than $ 0.1418 per share (the “Floor Price”), (ii) the Variable Price at any time on or after the determination of the Valuation Date of the forward purchase agreement (see Note 14), or (iii) the Variable Price on the earlier of March 17, 2025 or the effective date of the initial registration statement.

Any purchase under an Advance would be subject to certain limitations, including that Yorkville shall not purchase or acquire any shares that would result in it and its affiliates beneficially owning more than 4.99 % of the then outstanding voting power or number of shares of the Company’s common stock or any shares that, aggregated with shares issued under all other earlier Advances, would exceed 19.99 % of all shares of the Company’s common stock of the Company outstanding on the date of the SEPA, unless Company shareholder approval was obtained allowing for issuances in excess of such amount.

As consideration, the Company agreed (i) and paid a structuring fee in the amount of $ 25,000 and (ii) to pay a commitment fee of $ 375,000 , of which (a) one -half of the commitment fee was paid through the issuance of 264,456 shares of the Company’s common stock with a fair value of $ 187,500 , as determined using the closing price on the date of issuance and (b) one -half of the commitment fee is due on June 17, 2025 in cash (or by way of an Advance).

The structuring fee and commitment fee were expensed in full immediately following the consummation of the SEPA, according to ASC 815, and recorded within the general and administrative expense line item in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2024.

Pursuant to the terms of the SEPA, the proceeds of the SEPA are restricted from being used

● to repay any advances or loans to executives, directors, or employees

● to make payments on related party obligations

● to repay advances or loans to Related Lenders, as defined in the SEPA, without the prior written consent of Yorkville or until the balance under the Pre-Paid Advances is less than $ 1,000,000

● to fund or facilitated, directly or indirectly, any activities or business with a person, entity, territory, or country subject to Sanctions, as defined in the SEPA, or is a Sanctioned Country, as defined in the SEPA

● in any manner that will result in a violation of Sanctions or applicable laws

● to loan, invest or transfer any cash proceeds, or property acquired with cash proceeds from the Pre-Paid Advance to a subsidiary without approval from Yorkville

While amounts are outstanding under the Pre-Paid Advance, the Company

● may not effect a reverse stock split or share consolidation.

● shall prepay amounts owed under the Pre-Paid Advance in an amount equal to 20.0 % of the net proceeds of a new financing transaction to Yorkville, unless waived by Yorkville

● shall pay 100.0 % of proceeds received from any disbursements of the FPA to Yorkville, unless waived by Yorkville

Yorkville retains the right of participation for twelve months from the Effective Date of the SEPA to participate in an amount up to 25.0 % of a financing transaction, as defined in the SEPA.

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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.

Public Warrants:

On May 10, 2022, MCAC completed an initial public offering that included warrants for shares of common stock (the “Public Warrants”).

Each Public Warrant entitles the holder to the right to purchase one share of common stock at an exercise price of $ 11.50 per share.

No fractional shares will be issued upon exercise of the Public Warrants.

The Company may elect to redeem the Public Warrants, in whole and not in part at a price of $ 0.01 per Public Warrant if (i) 30 days ’ prior written notice of redemption is provided to the holders, and (ii) the last reported sale price of the Company’s common stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 -trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders.

Upon issuance of a redemption notice by the Company, the warrant holders have a period of 30 days to exercise for cash, or on a cashless basis.

On the Closing Date, there were 9,200,000 Public Warrants issued and outstanding .

Private Placement Warrants:

Simultaneous with MCAC’s initial public offering in May 2022, MCAC’s sponsor purchased warrants at a purchase price of $ 1.00 per warrant in a private placement (the “Private Placement Warrants”).

The Private Placement Warrants may not be redeemed by the Company so long as the Private Placement Warrants are held by the initial purchasers, or such purchasers’ permitted transferees.

The Private Placement Warrants have terms and provisions identical to those of the Public Warrants, including as to exercise price, exercisability and exercise period, except if the Private Placement Warrants are held by someone other than the initial purchasers’ permitted transferees, then the Private Placement Warrants are redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

On the Closing Date, there were 3,040,000 Private Placement Warrants issued and outstanding .

July 2024 Warrants:

On July 10, 2024, MCAC issued 750,000 warrants (the “July 2024 Warrants”) in respect to the cancellation and conversion of $ 750,000 of principal underlying certain convertible promissory notes by and between MCAC and its Sponsor, with each whole warrant entitling the holder to purchase one share of MCAC’s Class A Common Stock at a price of $ 11.50 per share.

Legacy Warrants :

In connection with the issuance of the 2022 Notes, Legacy Warrants with an exercise price of $ 12.00 per warrant were issued.

Such warrants are exercisable into one share of the Company’s common stock at any point for a period of ten years from the date of issuance on February 22, 2032.

The warrants are exercisable.

The warrants are not transferable, nor do they carry any voting rights or other rights of a shareholder.

The holders of the warrants cannot net settle, and all exercises of such warrants must be completed in cash.

A summary of warrants activity is as follows:

Weighted-average

Exercise Price

Contractual Life

Outstanding at January 1, 2023

Outstanding at December 31, 2023

Outstanding at December 31, 2024

Exercisable at December 31, 2024

As of December 31, 2024 the outstanding and exercisable warrants have an intrinsic value of $ 0 and $ 0 , respectively.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Purchase of subsidiary’s stock

In May 2024, the Company paid $ 60,000 and settled a Sellers Note of approximately $ 109,000 to acquire shares of a subsidiary from a noncontrolling interest holder (see Note 11).

The Company’s ownership of the subsidiary increased from 90.0 % as of December 31, 2023 to 95.0 % as of May 31, 2024.

STOCK BASED COMPENSATION

2019 Equity Incentive Plan

For periods prior to the reverse recapitalization (See Note 5), the 2019 Plan as approved by the board of directors (the “Board”), permitted the granting of stock options (including both nonqualified stock options and incentive stock options) to directors, executive officers, employees, consultants, advisors, independent contractors and other service providers of the Company, who, in the opinion of the Board, are in a position to make a significant contribution to the success of the Company.

As of December 31, 2024, there were 473,922 shares of the Company’s common stock authorized for issuance under 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 option exercise price for all grantees equals the stock’s estimated fair value on the date of the grant, after giving effect to the Exchange Ratio.

The Board determined the fair value of common stock at the time of grant by considering a number of objective and subjective factors, including independent third-party valuations of the Company’s common stock, operating and financial performance, the lack of liquidity of capital stock, and general and industry-specific economic outlook, amongst other factors.

The Company believes the fair value of the stock options granted to nonemployees is more readily determinable than the fair value of the services received.

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:

● Expected volatility in the market value of the underlying common stock:

The expected volatility was determined by examining the historical volatilities of a group of industry peers, as the Company did not have any trading history for the Company’s common stock.

● Expected term:

For employees, the expected term is determined using the “simplified” method as prescribed by the SEC’s Staff Accounting Bulletin No 107, Share-Based Payment, to estimate on a formula basis the expected term of the Company’s employee stock options which are considered to have “plain vanilla” characteristics.

For nonemployees, the expected term represents the contractual term of the option.

● Risk-free interest rate:

The risk-free interest rate was based upon quoted market yields for the United States Treasury instruments with terms that were consistent with the expected term of the Company’s stock options.

● Expected dividend yield of the underlying common stock:

The expected dividend yield was based on the Company’s history and management’s current expectation regarding future dividends.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

A summary of the activity under the 2019 Plan at December 31, 2024 and 2023, and changes during the same periods is presented below:

Weighted-average

Exercise Price

Contractual Life

Outstanding at January 1, 2023

Outstanding at December 31, 2023

Outstanding at December 31, 2024

Vested and exercisable at December 31, 2023

Vested and exercisable at December 31, 2024

As of December 31, 2024, the options outstanding and exercisable have an intrinsic value of approximately $ 288,000 and $ 288,000 , respectively.

Share-based compensation expense during the years ended December 31, 2024 and 2023 was less than $ 1,000 .

As of December 31, 2024, there was no unrecognized compensation cost related to share-based payments.

2023 Equity Incentive Plan

The Company’s shareholders approved the 2023 Plan on July 10, 2024 in connection with the Business Combination.

The 2023 Plan is administered by the Board.

The selection of participants, allotment of shares, determination of price and other conditions are approved by the Board at its sole discretion in order to attract and retain personnel instrumental to the success of the Company.

Under the 2023 Plan, shares of the Company’s common stock may be granted in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted awards, performance share awards, cash awards, and other equity-based awards.

The maximum aggregate number of shares of the Company’s common stock that may be issued under the 2023 Plan is equal to 10 % of the outstanding shares of the Company’s common stock on the Closing Date less the number of shares of the Company’s common stock subject to the Legacy Options (the “Total Share Reserve”.

The Total Share Reserve will be increased automatically on January 1 of each year during the term of the 2023 Plan by the lesser of (i) 4.0 % of the shares of common stock outstanding on December 31 of the prior year, or (ii) a smaller number of shares as determined by the Board.

The maximum number of shares of Company’s common stock with respect to which incentive stock options may be granted under the 2023 Plan is 100,000,000 shares.

As of December 31, 2024, the Total Share Reserve was 2,113,405 shares of the Company’s common stock.

No grants have been authorized to date by the Company’s Board and the compensation committee under the 2023 Plan.

During July 2024, the Company entered into a twelve-month capital markets advisory agreement (the “CMA Agreement”) under which the Company would compensate the vendor $ 1,500,000 , payable in either cash consideration or stock consideration at the Company’s election.

The CMA Agreement provided the vendor with a share reset adjustment such that the vendor would receive additional shares if the five -day VWAP of the Company’s common stock was less than $ 10.00 per share, subject to a floor of $ 2.50 per share.

At issuance, the Company determined that the obligation would be predominantly settled in a fixed number of shares equal to the floor price of $ 2.50 per share.

Accordingly, the Company determined 600,000 shares of its common stock would be issued to settle its obligation under the CMA Agreement and determined the fair value of the CMA Agreement was $ 1,428,000 using the closing share price on the date of issuance.

For the year ended December 31, 2024, $ 659,077 was recognized as selling, general and administrative expense on the accompanying consolidated statements of operations and comprehensive loss for these restricted stock grants.

As of December 31, 2024, $ 768,923 of unrecognized expense is included as a component of prepaid expenses on the accompanying consolidated balance sheets and is expected to be recognized over a weighted average service period of 0.5 years

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Restricted stock grants

During July 2024, the Company entered into a six-month term marketing services agreement under which the company issued 150,000 restricted shares of the Company’s common stock with a fair value of $ 178,500 , as determined on the issuance date using the reported closing share price, as consideration for services to be performed.

The restriction is lifted at the time the shares are included on a registration statement that is declared effective.

During December 2024, the Company entered into service agreements with two service providers under which the company issued 100,000 and 35,000 restricted shares of the Company’s common stock with a fair value of $ 91,000 and $ 31,850 , respectively, as determined on the issuance date using the reported closing share price, as consideration for services to be performed over a four-month and six-month service period, respectively.

The restriction on the shares is lifted at the time the shares are included on a registration statement that is declared effective

As of December 31, 2024, there were 285,000 restricted shares of the Company’s common stock that were issued and outstanding were unvested.

For the year ended December 31, 2024, $ 178,396 was recognized as selling, general and administrative expense on the accompanying consolidated statements of operations and comprehensive loss for these restricted stock grants.

As of December 31, 2024, $ 122,954 of unrecognized expense is included as a component of prepaid expenses on the accompanying consolidated balance sheets and is expected to be recognized over a weighted average service period of 0.2 years.

There were no restricted stock grants prior to July 2024.

DERIVATIVE FINANCIAL INSTRUMENTS

Forward Purchase Agreement:

On December 31, 2022, MCAC, Meteora Special Opportunity Fund (“Meteora”), and Legacy ConnectM entered into a forward purchase agreement (the “FPA”) providing for an over-the counter prepaid equity forward transaction relating to MCAC’s Class A common stock.

Pursuant to the terms of the FPA, at the closing of the Business Combination, Meteora purchased directly from the stockholders of MCAC 3,248,466 shares of Class A common stock (the “Recycled Shares”) at a price of $ 11.36301754 per share (the “Initial Price”), which is the price equal to the redemption price at which holders of Class A common stock were permitted to redeem their shares in connection with the Business Combination.

The FPA liability was recorded as part of the Business Combination, and as such was recorded at MCAC’s historical cost on the Closing Date.

The FPA was accounted for as a derivative financial instrument that was re-measured to fair value in each reporting period, with changes in fair value recognized in the consolidated statements of operations and comprehensive loss (see Note 14).

In accordance with the terms of the FPA, immediately subsequent to the closing of the Business Combination, the Company paid to Meteora an aggregate cash amount of approximately $ 36,543,000 (the “Prepayment Amount”), which was equal to (i) the product of (a) the Recycled Shares and (b) the Initial Price, (ii) less 1.0 % of the product of (a) the Recycled Shares and (b) the Initial Price (the “Prepayment Shortfall”).

In addition to the Prepayment amount, the Company paid one -half of 1.0 % of the Prepayment Shortfall, approximately $ 185,000 , to Meteora that is due back to the Company on the earlier of (a) the effective date of the registration statement or (b) the OET Date (as defined in the FPA).

The Company also paid to Meteora a cash amount equal to (a) the product of 40,000 and the Initial Price (the “Additional Consideration”), approximately $ 455,000 , to reimburse Meteora for additional shares Meteora acquired from third parties prior to the Closing Date, (b) the product of the Prepayment Amount and 0.75 %, approximately $ 277,000 , and (c) brokerage expenses of approximately $ 164,000 .

In August 2024, the Company and Meteora amended the FPA (the FPA as amended, the “2024 FPA” and the amendment to the FPA, the “FPA Amendment”), primarily changing the

● settlement method provision from physical settlement to cash settlement.

● maturity date to be the earliest to occur of (a) the third anniversary of the Closing Date, (b) the date specified by Meteora in a written notice delivered to the Company after the occurrence of (i) a Trigger Event (as defined in the 2024 FPA) or (ii) a Delisting Event (as defined in the 2024 FPA), (c) the date specified by Meteora in a written notice at Meteora’s sole discretion.

● Prepayment Shortfall to 0.5 % of the product of the number of Recycled Shares and the Initial Price and permitting the Company to request shortfall payments in intervals of $ 300,000 after Meteora has recovered 120.0 % of the Prepayment Shortfall.

Accordingly, the Company wrote off the other receivable totaling $ 185,000 owed from Meteora for one -half of

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

the 1.0 % of the Prepayment Shortfall that was included as a component of other current assets on the accompanying consolidated balance sheets.

● Reset Price to the lower of (a) the then current Reset Price, (b) the Initial Price, (c) the volume-weighted average price (the “VWAP”) of the Shares of the prior week, but not lower than $ 2.00 , provided the Reset Price may be further reduced pursuant to a Dilutive Offering Reset (as defined in the FPA)

In addition the FPA Amendment added terms around the Settlement Amount and the Settlement Amount Adjustment, both defined in the 2024 FPA.

There were no shares sold pursuant to the FPA between the Closing Date and the date the FPA Amendment was executed.

The FPA Amendment was deemed to be a modification and the Company recognized a gain of $ 1,547,236 on the modification of the FPA, which is net of the amount due from Meteora for one -half of the 1.0 % of the Prepayment Shortfall, and is included as a component of other income (expense) in the consolidated statements of operations and comprehensive loss.

In December 2024, the Company and Meteora amended the 2024 FPA (the 2024 FPA as amended, the “Amended 2024 FPA” and the amendment to the 2024 FPA, the “Second FPA Amendment”), whereby Meteora waived the requirement to adjust the Reset Price for a dilutive offering and the VWAP Trigger Event through December 31, 2025 that may occur in connection with the Company entering into the SEPA (see Note 12).

In exchange for the entering into the Second FPA Amendment, the Company released 500,000 shares of the Company’s common stock held by Meteora from their designation as Recycled Shares.

The Second FPA Amendment’s most significant changes deleted the definitions of Reset Price and Prepayment Shortfall from the FPA Amendment and replaced these as follows:

● Reset Price to the lower of (a) the then current Reset Price, (b) the Initial Price, (c) the VWAP of the Shares of the prior week, but not lower than $ 2.00 , and (d) the price per share of the issuance of any shares upon conversion of amounts due to Yorkville pursuant to the SEPA (other than the issuance of shares to pay the SEPA commitment fee), but not lower than $ 1.00 ;

provided the Reset Price may be further reduced pursuant to a Dilutive Offering Reset (as defined in the FPA)

● Prepayment shortfall to 0.5 % of the product of the number of Recycled Shares and the Initial Price and permitting the Company to request shortfall payments in intervals of $ 300,000 (at any time up to forty-five calendar days prior to the Valuation Date) after (i) Meteora has recovered 130.0 % of the Prepayment Shortfall and (ii) the VWAP Price over the ten trading days prior to an Additional Shortfall Request multiplied by the then current number of shares (excluding unregistered shares) held by Meteora less Shortfall Sale Shares be at least seven times greater than the Additional Shortfall Request and (iii) the average daily value traded over the prior ten trading days be at least seven times greater than the Additional Shortfall Request (with (i), (ii), and (iii) collectively the “Equity Conditions”).

Meteora has the right, but not the obligation to waive the Equity Conditions for each Additional Shortfall Request.

During the year ended December 31, 2024, Meteora sold 1,044,576 shares pursuant to the 2024 FPA and the Company received cash proceeds of $ 1,000,000 .

On April 2, 2025, the Company entered into a mutual termination agreement with Meteora to terminate the Amended 2024 FPA (the “FPA Termination Agreement”) in exchange for termination consideration of $ 500,000 .

Pursuant to the FPA Termination Agreement, the 1,618,948 shares of the Company’s common stock that Meteora held as of the termination date of April 2, 2025 were deemed free and clear of all obligations, the number of Recycled Shares was equal to zero , and the Prepayment Shortfall was deemed to be zero .

The Company received the termination consideration from Meteora in April 2025.

Debt conversion adjustment obligations

Share Reset Derivative Liabilities:

In connection with five conversion agreements entered into during September 2024 (see Note 11, Note 18 and Note 19), the Company provided vendors and lenders with a one-time share reset adjustment (the “Share Reset”) such that the vendors and lenders would receive additional shares equal to the difference between the number of shares of the Company’s common stock that would be issued at the reset price on the reset date less the number of Conversion Shares.

Three of these conversion agreements were with related parties (see Note 18).

The reset price was set to be the greater of the VWAP of the Company’s common stock for the five trading days preceding the reset date or $ 1.25 .

The reset day was defined as the earlier of (i) six months from the date of the conversion agreement and (ii) the date that

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

a registration statement registering the conversion shares is declared effective.

If the reset price is less than $ 2.00 per share, additional shares shall be issued to the vendors and lenders equal to the quotient obtained by dividing the (i) product of (A) the conversion price of $ 2.00 less the reset price and (b) the number of Conversion Shares by (ii) the reset price.

The Share Reset feature was analyzed in accordance with ASC 815 and determined to be a financial instrument that was required to be bifurcated and accounted for as a derivative liability that was recorded at fair value at inception and re-measured to fair value each reporting period (see Note 15).

In March 31, 2025, 2,737,168 shares were issued in accordance with the terms of the Share Reset on five of the related conversion agreements extinguishing the Company’s obligations under those agreements.

November 2024 Consideration Adjustment Derivative Liabilities:

In connection with two conversion agreements entered into during November 2024 (see Note 11 and Note 19), the Company provided a vendor and a lender with a one-time consideration adjustment (the “November 2024 Consideration Adjustment”) such that the vendor and lender would receive a payment equal to the product of (i) the conversion price of $ 1.25 less the reset price and (ii) the number of the Conversion Shares held by the vendor and lender on the reset date in cash, or other immediately available funds, if the reset price is less than $ 1.25 per share.

The reset price was set to be the greater of the VWAP of the Company’s common stock for the five trading days preceding the reset date or $ 1.25 .

The reset date was defined as the later of (i) ninety days from the date of the conversion agreement and (ii) the date that a registration statement registering the conversion shares is declared effective.

The November 2024 Consideration Adjustment feature was analyzed in accordance with ASC 815 and determined to be a financial instrument that was required to be bifurcated and accounted for as a derivative liability that was recorded at fair value at inception and re-measured to fair value each reporting period (see Note 15).

December 2024 Consideration Adjustment Derivative Liability:

In connection with one conversion agreement entered into during December 2024 (see Note 19), the Company provided a vendor with a one-time consideration adjustment (the “December 2024 Consideration Adjustment”) after the reset date such that the vendor is required to sell the Conversion Shares after the reset date over a twenty day period (with no more than 5.0 % of shares sold per trading day) (collectively, the “Sale Dates”).

The vendor is entitled to receive a payment in cash, or other immediately available funds, equal to the amount the proceeds from the Sale Dates is less than the difference of the carrying value of the associated converted outstanding obligations.

The December 2024 Consideration Adjustment feature was analyzed in accordance with ASC 815 and determined to be a financial instrument that was required to be bifurcated and accounted for as a derivative liability that was recorded at fair value at inception and re-measured to fair value each reporting period (see Note 15).

First Reset Shares, Second Reset Shares and Make-Whole Payment Derivative Liabilities:

In connection with one conversion agreement entered into September 2024 in connection with the Amended January 2024 SFR Agreement (see Note 18), the Company provided a lender with two share reset adjustments and a make-whole payment provision such that the lender would receive additional shares as follows:

● On the first reset date, which is eighteen weeks from the date a registration statement filed with the SEC registering the conversion shares is declared effective, if the first reset price, calculated as the greater of the VWAP of the Company’s common stock for the five trading days preceding the first reset date or $ 1.25 , is less than $ 2.00 , then the Company shall, at the lender’s election, either

o issue to the lender an additional number of shares of the Company’s common stock equal to the quotient obtained by dividing the product of (a) the conversion price of $ 2.00 less the first reset price and (b) the number of Conversion Shares held by the lender on the first reset date by (c) the first reset price (the “First Reset Shares”) or

o pay to the lender an amount equal to the product of (a) the conversion price of $ 2.00 less the first reset price and (b) the number of Conversion Shares held by the lender on the first reset date.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

● On the second reset date, which is thirty-six weeks from the date a registration statement filed with the SEC registering the conversion shares is declared effective, if the second reset price, calculated as the greater of the VWAP of the Company’s common stock for the five trading days preceding the second reset date (the “Second Reset Date Market Price”) or $ 1.25 , is less than $ 2.00 , then the Company shall, at the lender’s election, either

o issue to the lender an additional number of shares of the Company’s common stock equal to the quotient obtained by dividing the product of (a) the first reset price less the second reset price and (b) the number of Conversion Shares held by the lender on the second reset date by (c) the second reset price (the “Second Reset Shares”) or

o pay to the lender an amount equal to the product of (a) the first reset price less the second reset price and (b) the number of Conversion Shares held by the lender on the second reset date.

● On the second reset date, if the Second Reset Date Market Price is less than $ 1.25 , then the Company owes the lender an amount equal to the product of (a) $ 1.25 less the Second Reset Date Market Price and (b) the number of Conversion Shares, including the second reset shares held by the lender on the second reset date (the “Make-Whole Payment”).

The First Reset Shares, the Second Reset Shares, and the Make-Whole Payment were analyzed in accordance with ASC 815 and determined to be financial instruments that was required to be bifurcated and accounted for as a single derivative liability that was recorded at fair value at inception and re-measured to fair value each reporting period (see Note 15).

SEPA Derivative Liability

The SEPA (see Note 12) was determined to be a freestanding financial instrument which did not meet the criteria to be accounted for as a derivative instrument or to be recognized within equity.

Pursuant to ASC 815, the Company will therefore recognize the SEPA Option as an asset or liability, measured at fair value at the date of issuance and in subsequent reporting periods, with changes in fair value recognized in earnings.

The SEPA Option was determined to have a fair value of $ 65,114 on the date of issuance and at December 31, 2024 (see Note 15).

Shares to be issued at settlement of derivative liabilities

The shares of the Company’s common stock to be issued to settle the above derivative liabilities is dependent on the share price at a future date, and as such, it is not an amount that can be estimated as of December 31, 2024.

There is no limit to the number of shares that can be issued to settle the agreements in the respective arrangements.

FAIR VALUE MEASUREMENTS

The following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities, including financial liabilities for which the Company has elected the fair value option, measured and recorded at fair value on a recurring basis as of December 31, 2024:

Forward purchase agreement

Derivative liabilities

Contingent consideration

Convertible debt

Total liabilities

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth by level, within the fair value hierarchy, the Company’s liabilities, including financial liabilities for which the Company has elected the fair value option, measured and recorded at fair value on a recurring basis as of December 31, 2023:

Convertible notes payable

Total liabilities

The Company did no t have any assets measured and recorded at fair value on a recurring basis as of December 31, 2023.

The Company did no t make any transfers into or out of Level 3 of the fair value hierarchy during the years ended December 31, 2024 and 2023.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a reconciliation of our assets and liabilities measured at fair value using Level 3 inputs:

Forward purchase agreement

Derivative liabilities

Contingent consideration

Convertible debt

Balance, December 31, 2023

( 2,178,685 )

Net loss to common stock

Conversion to shares of Legacy ConnectM's common stock

Assumed from Business Combination

( 27,189,660 )

1 unchanged sentence

( 4,042,050 )

Weighted average shares outstanding, basic and diluted

Basic and diluted net loss per share

Marketable Securities Held in Trust Account

At December 31, 2023 and 2022, the assets held in the Trust Account were substantially held in a treasury trust fund investing in U.S.

Treasury Bills and U.S.

Treasury Notes.

These securities are presented on the consolidated balance sheet at fair value at the end of each reporting period.

Earnings on these securities are included in dividend and interest income in the accompanying consolidated statements of operations and are automatically reinvested.

The fair value for these securities is determined using quoted market prices in active markets.

During the years ended December 31, 2023 and 2022, the Company withdrew $ 1,588,710 and $ 0 , respectively, of dividend and interest income from the Trust Account for payment of franchise and income tax obligations.

During the year ended December 31, 2022 the Company received a $ 55,466 unconditional and non-refundable reimbursement for certain general and administrative expenses incurred by the Company, from a potential target.

This amount was recorded as other income in the accompanying consolidated statement of operations for the year ended December 31, 2022.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying consolidated balance sheet, primarily due to their short-term nature.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000.

The Company has not experienced losses on these accounts.

Share-Based Payment Arrangements

The Company accounts for stock awards in accordance with Accounting Standards Codification (“ASC”) 718, “Compensation — Stock Compensation,” which requires that all equity awards be accounted for at their fair value.

Fair value is measured on the grant date and is equal to the underlying value of the stock.

Costs equal to these fair values are recognized ratably over the requisite service period based on the number of awards that are expected to vest, or in the period of grant for awards that vest immediately and have no future service condition.

For awards that vest over time, cumulative adjustments in later periods are recorded to the extent actual forfeitures differ from the Company’s initial estimates;

previously recognized compensation cost is reversed if the service or performance conditions are not satisfied, and the award is forfeited.

Class A Common Stock Subject to Possible Redemption

The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”).

Common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value.

Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity.

At all other times, common stock is classified as stockholders’ equity.

The Company’s common stock sold as part of the Initial Public Offering, features certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events.

Accordingly, all common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.

The redemption values as of December 31, 2023 and 2022, include $ 100,000 that can be used to pay any dissolution expenses, should a dissolution event occur.

The redemption value of the Class A common stock subject to possible redemption will be reduced by the estimated dissolution expenses to be paid from the interest earned in the trust account, up to $ 100,000 , if and when a dissolution is deemed probable.

The reconciliation of Class A common stock subject to possible redemption as of December 31, 2023 and 2022 is as follows:

Gross proceeds from sale of Public Units

Proceeds allocated to Public Warrants (Note 3)

( 4,940,000 )

Proceeds allocated to Rights (Note 3)

Change in fair value

( 8,254,390 )

Proceeds allocated to underwriter’s overallotment option (Note 7)

Issuance costs allocated to Class A common stock subject to possible redemption

( 1,707,747 )

Accretion to redemption value of Class A common stock subject to possible redemption

Accretion to redemption value of Class A common stock subject to possible redemption due to dividend and interest income earned

Class A common stock subject to possible redemption as of December 31, 2022

Accretion to redemption value of Class A common stock subject to possible redemption due to extension payments

Accretion to redemption value of Class A common stock subject to possible redemption due to dividend and interest income earned

Redemption of Class A common stock

Reclass out of Level 3

Gain from modification

Releases of Recycled Shares as consideration for Forward Purchase Agreement modification

Day one gain on issuance

Cash payments

cash received

( 1,000,000 )

Class A common stock subject to possible redemption as of December 31, 2023

Derivative Financial Instruments

The Company issued warrants to its investors and accounts for warrant instruments as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance in ASC 480 and ASC 815, “Derivatives and Hedging” (“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 meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own stock and whether the holders of the warrants could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

At the IPO date, the Public Warrants and Rights (see Note 3) and Private Warrants (see Note 4) were accounted for as equity instruments as they meet all of the requirements for equity classification under ASC 815 based on current expected terms, which are subject to change.

The Forward Purchase Agreement with Meteora entered into on December 31, 2022 resulted in Meteora holding a put option on shares to be purchased pursuant to the agreement, up to the maximum of 6,600,000 .

Pursuant to ASC 815, Derivatives and Hedging, this instrument meets the definition of a derivative and accordingly will be recognized at fair value.

The fair value of this put option liability was estimated at $ 18,370,000 and $ 2,770,000 at December 31, 2023 and 2022, respectively, assuming Meteora will purchase the maximum number of shares at the consummation of the Business Combination.

The Forward Purchase Agreement liability resulted in the recognition of a $ 15,600,000 and $ 2,770,000 loss on the change in fair value of Forward Purchase Agreement Liability in the Company’s consolidated statements of operations for the years ended December 31, 2023 and 2022, respectively.

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date.

GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

These tiers include:

● Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;

● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy.

In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

As of December 31, 2023 and 2022, the Company held Level 1 financial instruments, which are the Company’s marketable securities held in the Trust Account.

The Forward Purchase Agreement liability was valued as of December 31, 2023 and 2022 using the Black-Scholes Option Pricing Model, assuming that Meteora will purchase the maximum number of shares of 6,600,000 at the business combination date, Meteora will receive $ 12.88 and $ 12.20 per share, respectively, upon the put option exercise and hold the shares until the end of its estimated contractual maturity period of 3.25 years.

The fair value of the resulting put option at December 31, 2023 and 2022, was adjusted for 80 % and 12 % probability of the completion of a business combination, respectively.

Additionally, the valuation utilized a 41.7 % and 43.2 % volatility rate as of December 31, 2023 and 2022, respectively, and a 4.0 % and 4.2 % discount rate as of December 31, 2023 and 2022, respectively.

As such, the Forward Purchase Agreement liability is considered to be a recurring Level 3 fair value measurement.

During the year ended December 31, 2022, the Company issued an overallotment option to the underwriter (see Note 8), the fair value of which was measured using the Black Scholes Option Pricing Model with significant unobservable inputs.

The overallotment option was fully exercised on the IPO date.

The fair value was based on the share price of the underlying shares and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends.

Therefore, the overallotment liability is considered to be a Level 3 financial instrument.

The fair value of the overallotment liability at the IPO date of $ 52,147 was determined using the Black Scholes option pricing model based on the following assumptions:

Ending balance, December 31, 2024

( 4,229,478 )

( 8,542,323 )

Convertible Notes Payable (fair value option)

The Company’s carrying value and fair value for the convertible notes payable for which the Company elected the fair value option is as follows:

December 31, 2024

December 31, 2023

Carrying Value

Amended 2022 Convertible Notes

2023 Convertible Notes

2024 Convertible Notes

Assumed 2024 Note

SEPA Convertible Note

The change in fair value on convertible debt resulted in a loss of approximately $ 1,708,000 and a gain of approximately $ 25,000 for the years ended December 31, 2024 and 2023, which was recorded as a component of other income on the accompanying consolidated statements of operations and comprehensive loss.

Amended 2022 Convertible Notes, 2023 Convertible Notes, and 2024 Convertible Notes:

The Amended 2022 Convertible Notes, 2023 Convertible Notes, and 2024 Convertible Notes are re-measured to fair value at each reporting period using the following relevant assumptions:

December 31, 2024

December 31, 2023

Discount rate

Probability of conversion at maturity scenario

Probability of voluntary conversion scenario

Probability of automatic conversion scenario

Remaining term for conversion at maturity scenario

0.01 - 0.28 years

0.88 - 1.38 years

Remaining term for voluntary conversion scenario

0.01 - 0.03 years

Remaining term for automatic conversion scenario

Assumed 2024 Note:

The fair value of the Assumed 2024 Note is re-measured to fair value at each reporting period using unobservable inputs, the most significant of which was the expected average volume weighted average price for a share of the Company’s common stock for the five -business day period preceding the maturity date of the Company at the maturity date.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPA Convertible Note:

The fair value of the SEPA Convertible Note was determined utilizing a Monte Carlo simulation considering the following relevant assumptions:

December 31, 2024

December 17, 2024

Remaining term

Risk-free rate

Conversion price for payments to be made through issuance of Company's common stock

Payments to be made through issuance of shares of Company's common stock

Payments to be made in cash

Forward Purchase Agreement

The change in fair value on the forward purchase agreement resulted in a net loss of approximately $ 8,254,390 and a gain on modification of the forward purchase agreement was approximately $ 1,572,236 for the year ended December 31, 2024, which was recorded as a component of other income on the accompanying consolidated statements of operations and comprehensive loss.

The fair value of the FPA was re-measured to fair value at assumption and immediately prior to the modification utilizing a Black-Scholes option pricing model that utilizes the following relevant assumptions:

August 2, 2024 (modification)

July 12, 2024 (assumption)

Expected term

Price per share of Company's common stock

Exercise price

Risk-free interest rate

Dividend rate

Expected life (in years)

The table below presents the changes in Level 3 liabilities measured at fair value on a recurring basis during the year ended December 31, 2023.

Balance at January 1, 2023

Change in fair value of Forward Purchase Agreement Liability

Balance at December 31, 2023

The table below presents the changes in Level 3 liabilities measured at fair value on a recurring basis during the year ended December 31, 2022

Overallotment

Balance at January 1, 2022

Issuance of overallotment option

Exercise of overallotment option

Change in fair value of Forward Purchase Agreement Liability

Balance at December 31, 2022

Promissory Note — Related Party

The Sponsor had agreed to loan the Company an aggregate of up to $ 400,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”).

The Note was non - interest bearing and payable on the earlier of June 24, 2022 or the consummation of the Initial Public Offering.

The Note totaled $ 0 as of December 31, 2023 and 2022, respectively.

The Note balance of $ 354,100 as of the IPO date was repaid on May 16, 2022 from the proceeds of the Initial Public Offering not placed in the Trust Account.

Working Capital Loan

The Working Capital Loans (Note 5) are issued in the form of convertible notes.

The embedded feature to convert the Working Capital Loans into Private Warrants at a price of $ 1.00 per warrant (the “Embedded Feature”) does not meet the definition of a derivative under ASC 815 and is not required to be accounted for separately, as it is eligible for the scope exception under ASC 815-10-15-74(a) related to contracts indexed to the Company’s own stock.

Due to Sponsor – related party

The Due to Sponsor – related party balance as of December 31, 2023 totaled $ 68,460 , of which $ 63,600 represents unpaid monthly administrative fees and $ 4,860 represents cash collected on behalf of the Sponsor in connection with the sale of the Founder Shares to the Anchor Investors (Note 5).

These funds will be remitted to the Sponsor in the normal course of business.

The Due to Sponsor balance as of December 31, 2022 of $ 9,960 includes $ 5,100 in unpaid monthly administrative fees and $ 4,860 in cash collected on behalf of the Sponsor in connection with the sale of the Founder Shares to the Anchor Investors (Note 5).

The Company adopted ASC 740, “Income Taxes”, at its inception.

Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets, including tax loss and credit carry-forwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities.

The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company recognizes the tax benefits of uncertain tax positions only when the positions are “more likely than not” to be sustained assuming examination by tax authorities and determined to be attributed to the Company.

The determination of attribution, if any, applies for each jurisdiction where the Company is subject to income taxes on the basis of laws and regulations of the jurisdiction.

The application of laws and regulations is subject to legal and factual interpretation, judgement, and uncertainty.

Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations, and court rulings.

Therefore, the actual liability of the various jurisdictions may be materially different from management’s estimate.

As of December 31, 2023 and 2022, the Company has no accrued interest or penalties related to uncertain tax positions.

The Company is subject to income tax examinations by major taxing authorities since inception.

Recent Accounting Standards

The Company does not expect any recently issued standards to have a material impact on the Company’s consolidated financial statements.

NOTE 3 — INITIAL PUBLIC OFFERING

On May 13, 2022, the Company sold 9,200,000 Units at a price of $ 10.00 per Unit.

Each Unit consists of one share of Common Stock, par value $ 0.0001 per share, one Public Warrant and one right to receive one -tenth (1/10) of one share of Common Stock upon consummation of the initial business combination (each a “Right”).

Each Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $ 11.50 per share.

Each warrant will become exercisable 30 days after the completion of the initial Business Combination and will expire five years after the completion of the initial Business Combination, or earlier upon redemption or liquidation (see Note 8).

NOTE 4 — PRIVATE PLACEMENT

On May 13, 2022, in the private placement that occurred simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 3,040,000 warrants (each a “Private Warrant”) at a price of $ 1.00 per warrant, for an aggregate purchase price of $ 3,040,000 .

Each Private Warrant entitles the holder to purchase one share of Class A common stock, subject to adjustment.

The proceeds from the private placement of the Private Warrants funded the trust account, IPO issuance costs and will fund the future operations prior to the business combination.

If the Company does not complete an initial business combination within the Combination Period, the remaining proceeds, after payments from the sale of the Private Warrants, will be included in the liquidating distribution to the public stockholders and the Private Warrants will be worthless (see Note 8).

NOTE 5 — RELATED PARTY TRANSACTIONS

Founder Shares

In October 2021, the Sponsor paid $ 25,000 , or approximately $ 0.009 per share, to cover certain offering costs in consideration for 2,875,000 shares of Class B common stock, par value $ 0.0001 (the “Founder Shares”).

On May 10, 2022, the Sponsor surrendered 575,000 Founder Shares, for no consideration, resulting in the Sponsor and directors continuing to hold 2,300,000 Founder Shares.

Up to 300,000 Founder Shares were subject to forfeiture to the extent that the over-allotment option (see Note 7) was not exercised in full by the underwriter.

As the Underwriters exercised their overallotment option in full at the IPO date, the forfeiture provisions lapsed for 300,000 Founder Shares.

On October 28, 2021, the Sponsor transferred 25,000 Founder Shares to each of Kathy Cuocolo, Leela Gray and Stephen Markscheid, the independent directors of MCAC.

In addition, at the IPO date, the Sponsor sold 60,000 Founder Shares to each Anchor Investor, or the aggregate of 600,000 Founders Shares to the group of ten Anchor Investors (see Note 1).

The proceeds of $ 4,860 from the sale were collected by the Company on behalf of the Sponsor and are included in Due to Sponsor – related party on the accompanying consolidated balance sheets as of December 31, 2023 and 2022, respectively.

Working Capital Loans

In order to fund working capital deficiencies and finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”).

The Company will repay the Working Capital Loans upon the completion of a Business Combination.

In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.

During the years ended December 31, 2023 and 2022, the Sponsor loaned the Company $ 582,457 and $ 157,000 in Working Capital Loans, respectively.

The Working Capital Loans are to be repaid upon consummation of a Business Combination, without interest, or, at the lender’s option, up to $ 1.5 million of the outstanding Working Capital Loans are convertible into Private Warrants at a price of

$ 1.00 per warrant.

As of December 31, 2023 and 2022, the Company had $ 739,457 and $ 157,000 , respectively, borrowed under the Working Capital Loans from the Sponsor included in Convertible note – related party in the accompanying consolidated balance sheets.

Administrative Support Agreement

In conjunction with the IPO closing, the Company entered into the administrative support agreement under which it pays the Sponsor a total of $ 10,000 per month for office space, secretarial and administrative services.

Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees.

The Company incurred $ 120,000 and $ 75,000 under the agreement during the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023 and 2022, $ 63,600 and $ 5,100 , respectively, was due under the administrative support agreement, included in Due to Sponsor - related party (see Note 2) on the consolidated balance sheet.

NOTE 6 — CONVERTIBLE NOTE

During the years ended December 31, 2023 and 2022, the Company received $ 445,000 and $ 0 , respectively, from ConnectM in the form of convertible notes, with terms identical to those of the Working Capital Loans (Note 5) from the Sponsor.

As of December 31, 2023, $ 445,000 was due to ConnectM, included in convertible note on the consolidated balance sheet.

NOTE 7 — INCOME TAXES

The Company’s general and administrative expenses are generally considered start-up costs and are not currently deductible.

During the years ended December 31, 2023 and 2022, $ 913,808 and $ 240,507 , respectively, of income tax expense was recorded in accompanying consolidated statements of operations.

The reconciliation of the U.S.

statutory income tax rate to the Company’s effective tax rate for the years ended December 31, 2023 and 2022 is as follows:

For the year ended December 31,

Statutory Federal Tax

Business combination costs

Loss on Forward Purchase Agreement liability

Change in valuation allowance

Effective Tax Rate

The income tax provision consisted of the following for the years ended December 31, 2023 and 2022:

Change in valuation allowance

Income tax provision

The Company’s net deferred tax assets consist of the following as of December 31, 2023 and 2022:

Deferred tax asset

Net operating loss carryforward

Startup/Organization expenses

Total deferred tax assets

Probability of completing the Business Combination

The FPA Amendment provide two settlement options whereby the 2024 FPA can be settled either at maturity if shares of the Company’s common stock are trading above $ 2.00 per share (the “Maturity Settlement Scenario”) or at the Company’s request for a prepayment short-fall whereby the Company requests Meteora to sell shares (the “Prepayment Shortfall Scenario”).

The Second FPA Amendment also provides a Maturity Settlement Scenario and a Prepayment Shortfall Scenario, with a revised definition for the Prepayment Shortfall Scenario (see Note 14).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The fair value of the 2024 FPA was re-measured to fair value at each subsequent reporting period and immediately prior to its modification in December 2024 and the fair value of the Amended 2024 FPA was measured at fair value immediately subsequent to the modification in December 2024 and each subsequent reporting period utilizing a Monte Carlo simulation model that applies a probability of occurrence to the present value of each settlement scenario.

Amended 2024 FPA

December 31, 2024

December 16, 2024

(modification)

December 16, 2024

(modification)

Probability of maturity settlement scenario

Probability of prepayment shortfall settlement scenario

Recycled Shares held by Meteora

Price per share of Company's common stock

Remaining term

Risk-free interest rate

Forecasted price per share of Company's common stock at maturity

Expected margin from Meteora's sale of Recycled Shares

Contingent consideration obligation

The change in fair value of the contingent consideration obligation resulted in a loss of approximately $ 60,000 for the year ended December 31, 2024, which was recorded as a component of other income on the accompanying consolidated statements of operations and comprehensive loss.

The fair value of the contingent consideration obligation was measured to fair value at inception and re-measured at each reporting period utilizing a Monte Carlo simulation considering the following relevant assumptions:

December 31, 2024

August 5, 2024

(acquisition)

Operating leverage

Revenue volatility

EBITDA volatility

Earnout risk free rate

Long-term risk-free rate

Weighted average cost of capital

Correlation between revenue and EBITDA

Discount rate

Term to payment

0.1 - 7.1 years

0.5 - 7.5 years

Derivative Liabilities

The change in fair value of the derivative liabilities resulted in a loss of approximately $ 187,000 and a day one gain on the issuance of the SEPA was approximately $ 135,000 for the year ended December 31, 2024, which were recorded as a component of other income on the accompanying consolidated statements of operations and comprehensive loss.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Debt conversion share adjustment obligations:

The fair value of the derivative liabilities issued in connection with the September 2024 debt conversion agreements were determined using Monte Carlo simulations considering the following relevant assumptions at the date of issuance and each subsequent reporting period:

December 31, 2024

September 24, 2024

September 12, 2024

Price per share of Company's common stock

Equity volatility

Reset price floor

Reset price ceiling

Remaining term - First Reset Date

0.19 - 0.62 years

0.50 - 0.89 years

Forecasted per share of Company's common stock - Reset Date

Risk-fee rate - Reset Date

Drift term - Reset Date

Forecasted five day VWAP per share of Company's common stock - First Reset Date

Risk-fee rate - First Reset Date

Drift term - First Reset Date

Remaining term - Second Reset Date

Forecasted five day VWAP per share of Company's common stock - Second Reset Date

Risk-fee rate - Second Reset Date

Drift term - Second Reset Date

November 2024 Consideration Adjustment Derivative Liabilities:

The fair value of the November 2024 Consideration Adjustment Derivative Liabilities was determined using a Monte Carlo simulation considering the following relevant assumptions at the date of issuance and each subsequent reporting period:

December 31, 2024

November 13, 2024

Remaining term

Price per share of Company's common stock

Risk-free rate

Forecasted per share of Company's common stock - Reset Date

December 2024 Consideration Adjustment Derivative Liability:

The fair value of the December 2024 Consideration Adjustment Derivative Liability was determined using a Monte Carlo simulation considering the following relevant assumptions at the date of issuance and each subsequent reporting period:

December 31, 2024

December 27, 2024

Remaining term

Price per share of Company's common stock

Risk-free rate

Forecasted per share of Company's common stock - Sale Dates

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPA Derivative Liability:

The fair value of the SEPA Derivative Liability was determined using a Monte Carlo simulation considering the following relevant assumptions at the date of issuance and each subsequent reporting period:

December 31, 2024

December 17, 2024

Remaining term

Risk-free rate

Conversion price for payments to be made through issuance of Company's common stock

Payments to be made through issuance of shares of Company's common stock

Payments to be made in cash

Prepayment premium

The Company has operating and finance leases for its corporate offices, call centers and vehicles.

The following table provides a summary of the components of lease costs, which are included within cost of revenue and selling, general and administrative on the accompanying consolidated statements of operations and comprehensive loss, for the years ended December 31:

Operating lease costs

Short-term lease costs

Finance lease costs

Amortization of ROU assets

Interest on lease liabilities

Total lease costs

The following table provides the weighted-average lease terms and discount rates for the Company’s operating and finance leases at December 31:

Weighted-average remaining lease term (in years)

Operating leases

Finance leases

Weighted-average discount rate

Operating leases

Finance leases

The following tables provides a summary of lease liability maturities as of December 31, 2024:

Operating Leases

Total undiscounted lease payments

imputed interest

Total lease liabilities

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The components of the income tax provision (benefit) are as follows:

Years ended December 31,

Total Current

Total Deferred

Total income taxes

The Company is subject to a federal income tax rate of 21.0 %.

Additionally, the Company is subject to a blended state income tax rate of 6.3 % net of federal benefits.

Lastly, the Company is subject to a foreign income tax rate as it relates to its India-based subsidiary of 0.0 %.

The Company has an effective tax rate of 0.0 % for the years ended December 31, 2024 and 2023, due to the fact that the Company is in a full valuation allowance position.

The principal components of deferred income tax assets, net, were as follows:

Years ended December 31,

Deferred tax assets

Amortization and impairment

Net operating losses

Deferred tax assets

Valuation allowance

Deferred tax asset, net of allowance

As of December 31, 2023 and 2022, the Company has U.S.

federal net operating loss carryovers of $ 0 .

In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing future deductible amounts become deductible.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance.

The Company has no uncertain tax positions related to federal and state income taxes.

The Company is subject to income tax examinations by major taxing authorities since inception.

In the event that the Company is assessed interest or penalties at some point in the future, it will be classified in the financial statements as tax expense.

NOTE 8 — COMMITMENTS AND CONTINGENCIES

Registration Rights

The holders of the Founder Shares, Private Placement Warrants (as defined below) (including securities contained therein) issued in connection with the Initial Public Offering and Private Placement warrants (including securities contained therein) that may be issued upon conversion of Working Capital Loans (see Note 5), and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and Public Warrants (and underlying Class A common stock) that may be issued upon conversion of the Working Capital Loans and Class A common stock issuable upon conversion of the Founder Shares, are entitled to registration rights pursuant to a registration rights agreement to be signed at the effective date of the Initial Public Offering, requiring us to register such securities for resale (in the case of the Founder Shares, only after conversion of the Class A common stock).

The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities.

In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial business combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act.

The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering securities.

Underwriting Agreement

At the IPO date, the Company granted the underwriter a 45 -day option from the date of the Initial Public Offering to purchase up to 1,200,000 additional Units to cover over-allotments, if any, at the price paid by the underwriter in the Initial Public Offering.

This overallotment option was exercised in full at the IPO date.

The underwriter received a cash discount of $ 0.10 per unit, or $ 0.92 million in the aggregate at the closing of the Initial Public Offering.

In addition, $ 0.40 per share, or $ 3.68 million in the aggregate will be payable to the underwriter for deferred underwriting commissions solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

In addition, in conjunction with the Initial Public Offering, the Company issued to the underwriter 138,000 shares of Class A common stock for nominal consideration (the “Representative Shares”).

The holders of the Representative Shares agreed (a) that they will not transfer, assign or sell any such shares without the Company’s prior consent until the completion of the initial Business Combination, (ii) to waive their redemption rights (or right to participate in any tender offer) with respect to such shares in connection with the completion of the initial Business Combination and (iii) to waive their rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete the initial Business Combination within the Combination Period.

The representative shares are deemed to be underwriters’ compensation by FINRA pursuant to FINRA Rule 5110.

Other Commitments and Contingencies

In connection with the execution of the Merger Agreement, MCAC entered into the Forward Purchase Agreement with Meteora.

Pursuant to the terms of the Forward Purchase Agreement, MCAC agreed to pay to Meteora an amount equal to the reasonable and documented attorney fees and other reasonable out-of-pocket expenses related thereto actually incurred by Meteora or its affiliates in connection with this Forward Purchase Transaction not to exceed (a) $ 75,000 , (b) a quarterly fee of $ 5,000 (initially payable on the Trade Date (as defined in the agreement) and upon the first business day of each quarter and (c) expenses actually incurred in connection with the acquisition of the Shares in an amount not to exceed $ 0.05 per Share and $ 0.03 per disposition of each Share.

In addition, a break-up fee equal to (i) all of Meteora’s reasonable and documented fees and expenses relating to the Forward Purchase Agreement

capped at $ 75,000 plus (ii) $ 500,000 , shall be payable by the Combined Company to Meteora in the event the Forward Purchase Agreement is terminated by MCAC.

Refer to Note 1 for further discussion of the Forward Purchase Agreement.

NOTE 9 — STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $ 0.0001 and with such designations, voting and other rights and preferences as may be determined from time to time by the board of directors of MCAC.

As of December 31, 2023 and 2022 there were no shares of preferred stock issued or outstanding.

Class A Common Stock — The Company is authorized to issue 100,000,000 shares of Class A common stock, with a par value of $ 0.0001 per share.

Holders of Class A common stock are entitled to one vote for each share.

As of December 31, 2023 and 2022, there were 7,376,125 and 9,338,000 , respectively, shares of Class A common stock issued and outstanding.

Of the total Class A common stock shares issued and outstanding, 7,238,125 and 9,200,000 shares are included in temporary equity as of December 31, 2023 and 2022, respectively, in accordance with the Company’s accounting policy described in Note 2.

Class B Common Stock — The Company is authorized to issue 10,000,000 shares of Class B common stock, with a par value of $ 0.0001 per share.

Holders of the Class B common stock are entitled to one vote for each share.

A total of 2,875,000 Class B shares were issued to the Sponsor on October 6, 2021.

On May 10, 2022, the Sponsor surrendered 575,000 founder shares, for no consideration, resulting in the Sponsor and directors continuing to hold 2,300,000 shares of Class B common stock of which an aggregate of up to 300,000 shares were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part so that the number of Founder Shares will equal 20 % of the Company’s issued and outstanding shares of common stock after the Initial Public Offering.

As the Underwriters exercised their overallotment option in full at the IPO date the forfeiture provisions lapsed for 300,000 Founder Shares.

As of December 31, 2023 and 2022, there were 2,300,000 shares of Class B common stock issued and outstanding.

Holders of Class A common stock and holders of Class B common stock vote together as a single class on all other matters submitted to a vote of the Company’s stockholders except as otherwise required by law.

The Class B common stock will automatically convert into Class A common stock at the time of a Business Combination at a ratio such that the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20 % of the sum of (i) the total number of shares of common stock issued and outstanding upon completion of the Initial Public Offering, plus (ii) the total number of shares of Class A common stock issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of a Business Combination, excluding any shares of Class A common stock or equity-linked securities exercisable for or convertible into shares of Class A common stock issued, deemed issued, or to be issued, to any seller in the Business Combination and any Private Warrants issued to the Sponsor, its affiliates or any member of the Company’s management team upon conversion of Working Capital Loans.

In no event will the Class B common stock convert into Class A common stock at a rate of less than one-to-one.

Warrants — As of December 31, 2023 and 2022, 9,200,000 Public Warrants and 3,040,000 Private Placement Warrants (the “Warrants”) were outstanding.

The Public and Private Placement Warrants were issued in the same form at the IPO date.

Each Warrant entitles the holder to purchase one share of Class A common stock at a price of $ 11.50 per share.

In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of the initial business combination at a Newly Issued Price of less than $ 9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the board of directors of MCAC and, in the case of any such issuance to the sponsor or its affiliates, without taking into account any Founder Shares held by the sponsor or such affiliates, as applicable, prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60 % of the total equity proceeds, and interest thereon, available for the funding of the initial business combination on the date of the consummation of the initial business combination (net of redemptions), and (z) the Market Value is below $ 9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115 % of the greater of the Market Value and the Newly Issued Price, and the $ 18.00 per share redemption trigger price described below will be adjusted (to the nearest cent) to be equal to 180 % of the greater of the Market Value and the Newly Issued Price.

The Warrants will become exercisable 30 days after the completion of a Business Combination.

However, no Warrant shall be exercisable for cash and the Company shall not be obligated to issue shares of common stock upon exercise of a Warrant unless the

common stock issuable upon such Warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the Warrants.

In the event that the condition in the immediately preceding sentence is not satisfied with respect to a Warrant, the holder of such Warrant shall not be entitled to exercise such Warrant for cash and such Warrant may have no value and expire worthless, in which case the purchaser of a Unit containing such Public Warrants shall have paid the full purchase price for the Unit solely for the shares of Common Stock underlying such Unit.

Warrants may not be exercised by, or securities issued to, any registered holder in any state in which such exercise would be unlawful.

The Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.

Once the warrants become exercisable, the Company may redeem the outstanding warrants:

● in whole and not in part;

● at a price of $ 0.01 per warrant;

● upon not less than 30 days ’ prior written notice of redemption given after the warrants become exercisable (the “ 30 - day redemption period”) to each warrant holder;

● if, and only if, the reported last sale price of the Class A common stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, rights issuances, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 - trading day period commencing once the warrants become exercisable and ending three days before we send the notice of redemption to the warrant holders.

If the Company calls the warrants for redemption as described above, the Company’s management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants on a “cashless basis,” the Company’s management will consider, among other factors, the cash position, the number of warrants that are outstanding and the dilutive effect on the Company’s stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of the warrants.

In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value.

The “fair market value” for this purpose shall mean the average reported last sale price of the Class A common stock for the 10 trading days ending on the third day prior to the date on which the notice of redemption is sent to the holders of warrants.

Rights — As of December 31, 2023 and 2022, 9,200,000 Rights were outstanding.

Each holder of the Rights issued at the IPO date will automatically receive one -tenth (1/10) of one share of Class A common stock upon consummation of the initial Business Combination.

No additional consideration will be required to be paid by a holder of Rights in order to receive his, her, or its additional Class A common stock upon consummation of an initial business combination.

The Class A common stock issuable upon exchange of the Rights will be freely tradable (except to the extent held by affiliates of the Company).

If the Company is unable to complete the initial Business Combination within the Combination Period, and the Company liquidates the funds held in the Trust Account, holders of Rights will not receive any of such funds for their rights, nor will they receive any distribution from the assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless.

NOTE 10 — STOCK-BASED COMPENSATION

In October 2021, the Sponsor transferred 25,000 shares of Class B common stock to each of the three independent director nominees as compensation for their service on the board of directors of MCAC.

If the director nominee does not become a director of the Company at the time of the IPO, is removed from office as director, or voluntarily resigns his position with the Company before a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company (“the Triggering Event”), all of such purchaser’s shares shall be returned to Sponsor.

As such, the service period for these awards will not start until the IPO date.

Further, considering that in case the business combination does not occur these awards will be forfeited, it was deemed that the above terms result in the vesting provision whereby the share awards would vest only upon the consummation of a business combination or change of control event.

As a result, any compensation expense in relation to these grants would be not recognized until the Triggering Event.

As a result, the Company recorded no compensation expense for any periods through December 31, 2023.

The fair value of the Founder Shares on the grant date was approximately $ 0.87 per share.

The valuation performed by the Company determined the fair value of the shares on the date of grant by applying a discount based upon a) the probability of a successful IPO, b) the probability of a successful business combination, and c) the lack of marketability of the Founder Shares.

The aggregate grant date fair value of the awards amounted to approximately $ 65,000 .

Total unrecognized compensation expense related to unvested Founder Shares at December 31, 2023 and 2022 amounted to approximately $ 65,000 and is expected to be recognized upon the Triggering Event.

NOTE 11 — SUBSEQUENT EVENTS

The Company did not identify any subsequent events that require adjustment or disclosure in the consolidated financial statements, other than what has already been disclosed in the notes above.

( 8,888,489 )

( 5,207,943 )

Total deferred tax assets

Deferred tax liabilities

Depreciation, amortization, and impairment

Deferred tax liabilities

Net deferred tax assets

As of December 31, 2024 and 2023, the Company had Federal and state net operating loss carryforwards of approximately $ 34,598,000 and $ 31,092,000 which are available to offset future taxable income.

They are due to expire starting in 2026.

Federal net operating losses occurring after December 31, 2017, of approximately $ 31,182,000 may be carried forward indefinitely.

A valuation allowance has been established for the full amount of net deferred income tax assets as management has concluded that it is more likely than not that the benefits from such assets will not be realized.

RELATED PARTY TRANSACTIONS

Sponsor of MCAC

In connection with the closing of the Business Combination, the Company assumed unsecured promissory notes totaling approximately $ 555,000 that are non-interest bearing and due on demand and advances totaling approximately $ 132,000 that are non-interest bearing and due on demand with the Sponsor of MCAC.

During September 2024, the Company entered into a note conversion agreement with the Sponsor of MCAC in which the Company converted the outstanding principal on unsecured promissory notes and

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

certain other liabilities owed to the note holders into shares of the Company’s common stock at a conversion price of $ 2.00 per share with a one-time share reset adjustment (see Note 14), subject to shareholder approval and a maximum aggregate ownership amount of 19.99 % for each individual lender.

In connection with these agreements, approximately $ 555,000 of unsecured promissory notes and approximately $ 132,000 of accounts payable and accrued expenses were extinguished in exchange for the issuance of 343,248 shares of the Company’s common stock (see Note 12).

As of December 31, 2024, the fair value of the derivative liabilities associated with the reset adjustment was approximately $ 158,000 and was included as a component of derivative liabilities on the accompanying consolidated balance sheets.

For the year ended December 31, 2024, the Company recorded a change in fair value on these derivative liabilities of $ 26,000 , which was included as a component of change in fair value of derivative liabilities on the accompanying consolidated statements of operations and comprehensive loss.

Related Party Investors

These two lenders are collectively referred to as the Related Party Investors.

As of December 31, 2024, the fair value of the derivative liabilities associated with the reset adjustment granted to each Related Party Investor was approximately $ 1,146,000 and $ 624,000 and were included as a component of derivative liabilities on the accompanying consolidated balance sheets.

For the year ended December 31, 2024, the Company recorded a change in fair value on these derivative liabilities of $ 192,000 and $ 104,000 , which were included as a component of change in fair value of derivative liabilities on the accompanying consolidated statements of operations and comprehensive loss.

The Related Party Investors collectively own 100 % of an entity that has controlling interest in four customers within the managed solutions operating segment (the “Related Party Managed Solutions Customers”).

The Company acquired one of these customers, GEG, in October 2024 from the entity owned by Related Party Investors (see Note 6).

From the period between when the related party relationship was triggered in September 2024 through December 31, 2024, the Company earned revenue totaling approximately $ 644,000 , incurred cost of revenues totaling approximately $ 188,000 , and incurred selling, general and administrative expenses totaling approximately $ 517,000 from the remaining three Related Party Managed Solutions Customers.

As of December 31, 2024, the Company was owed approximately $ 349,000 for managed services from the Related Party Managed Solutions Customers, which was included as a component of accounts receivable on the accompanying consolidated balance sheets and approximately $ 102,000 for working capital advances from the Related Party Managed Solutions Customers, which was included as a component of working capital advances on the accompanying consolidated balance sheets.

As of December 31, 2024, the Company owed approximately $ 28,000 to the Related Party Managed Solutions Customers.

Prior to the date the related party relationship was triggered, each Related Party Investors had entered into secured promissory notes that remained outstanding as of December 31, 2024 totaling $ 1,750,000 and $ 1,400,000 and were included as a component of debt, net on the accompanying consolidated balance sheets.

Accrued interest on the notes remaining outstanding as of December 31, 2024 totaled approximately $ 384,000 and $ 289,000 and are included as a component of accrued expenses on the accompanying consolidated balance sheets.

Related Party Lender

The Company has two unsecured promissory notes with a company owned by the Company’s chief executive officer (see Note 11).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

On October 10, 2024, the Company issued this related party a convertible note with a principal amount of $ 800,000 .

The note has an interest rate of 20 % and a maturity date of April 8, 2025.

The note is convertible during the first 90 days after issuance at a conversion price of $ 1.10 .

The Company accounts for these convertible notes using the fair value option.

As of December 31, 2024, the carrying amount of the note and accrued interest was $ 800,000 and $ 35,945 , respectively.

As of December 31, 2024, the fair value of this note was approximately $ 837,000 .

On October 10, 2024, the Company issued this related party a convertible note with a principal amount of $ 400,000 .

The note has an interest rate of 20 % and a maturity date of June 1, 2025.

The note is convertible during the first 90 days after issuance at a conversion price of $ 1.10 .

The Company accounts for these convertible notes using the fair value option.

As of December 31, 2024, the carrying amount of the note and accrued interest was $ 400,000 and $ 6,137 , respectively.

As of December 31, 2024, the fair value of this note was approximately $ 418,000 .

COMMITMENTS AND CONTINGENCIES

Legal and regulatory proceedings:

The Company is subject to various routine litigation, legal proceedings, and regulatory matters, that arise in the ordinary course of its business.

T he Company reviews its lawsuits, regulatory matters, and other legal proceedings on an ongoing basis and provides disclosure and records loss contingencies in accordance with the loss contingencies accounting guidance.

In accordance with such guidance, the Company establishes accruals for such matters when potential losses become probable and can be reasonably estimated.

If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, the Company discloses the possible loss in the consolidated financial statements

The Company accrues for potential liability arising from legal proceedings and regulatory matters when it is probable that such liability has been incurred and the amount of the loss can be reasonably estimated.

This determination is based upon currently available information for those proceedings in which the Company is involved, taking into account its best estimate of such losses for those cases for which such estimates can be made.

The Company’s estimate involve significant judgement, given the varying stages of proceedings (including issues regarding class certification and the scope of many of the claims), and the related uncertainty of the potential outcomes of these proceedings.

In making determinations of the likely outcome of pending litigation, the Company considers many factors, including, but not limited to, the nature of the claims, the Company’s experience with similar types of claims, the jurisdiction in which the matter is filed, input from outside legal counsel, the likelihood of resolving the matter through alternative mechanisms, the matter’s current status and the damages sought or demands made.

Accordingly, the Company’s estimate will change from time to time, and actual losses could be more or less than the current estimate.

As of December 31, 2024 and 2023, there are no matters for which a reserve is required to be established.

On February 26, 2024, a suit was filed against the Company alleging various contract claims arising out of a business the Company acquired in 2022 and certain real estate from which the Company operates, including breach of the stock purchase agreement and certain promissory notes in connection with the business acquisition as well as breach of a services agreement with the seller of the business.

The Company believes the claims have no merit and plans to assert counterclaims.

As of December 31, 2024, the case was in arbitration.

In January 2025, the Company entered into a settlement agreement related to a dispute on an employment agreement under which the Company is required to issue 26,087 shares of the Company’s common stock to an individual promptly within seven-days of the execution of the agreement unless the individual has revoked the agreement as permitted.

As per the terms of the existing settlement agreement, the individual is provided a one-time adjustment payable in case on the reset date if the reset price is less than $ 1.15 , then the Company owes the individual an amount equal to the product of (a) $ 1.15 less than VWAP of the Company’s common stock for the five trading days preceding the reset date and (b) the 26,087 shares of the Company’s common stock.

The reset date is the later of (a) ninety days from the date of the agreement or (b) the date that the registration statement is declared effective.

As of the date these consolidated financial statements were issued, the shares of the Company’s common stock have not yet been issued as the individual’s legal counsel’s opinion is pending.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Settlement of vendor obligations through issuance of shares of the Company’s common stock with make - whole provision:

Extinguishment of Vendor Obligations:

On September 24, 2024, the Company entered into a conversion agreement with a vendor in which the Company converted the outstanding obligations owed to the vendor into shares of the Company’s common stock at a conversion price of $ 2.00 per share with a one-time share reset adjustment (see Note 14), subject to shareholder approval and a maximum aggregate ownership amount of 19.99 % for the vendor.

In connection with this agreement, approximately $ 539,000 of accounts payable and accrued expenses were extinguished in exchange for the issuance of 269,648 shares of the Company’s common stock (see Note 12).

On November 13, 2024, the Company entered into a debt conversion agreement with a vendor in which the Company converted the outstanding obligations owed to the vendor into shares of the Company’s common stock at a conversion price of $ 1.25 per share with a one-time consideration adjustment (see Note 14).

In connection with this agreement, approximately $ 170,000 of accounts payable and accrued expenses were extinguished in exchange for the issuance of 136,000 shares of the Company’s common stock (see Note 12).

On December 27, 2024, the Company entered into a debt conversion agreement with a vendor in which the Company converted the outstanding obligations owed to the vendor into shares of the Company’s common stock at a conversion price of $ 1.25 per share with a one-time consideration adjustment (see Note 14).

In connection with this agreement, approximately $ 258,000 of accounts payable and accrued expenses were extinguished in exchange for the issuance of 206,234 shares of the Company’s common stock (see Note 12).

Settlement Agreement:

The Company entered into a capital markets advisory agreement in June 2024 and subsequent amendment in July 2024 whereby the Company would pay the capital market advisor $ 600,000 as consideration for services provided in connection with the Business Combination.

The Company made cash payments totaling $ 75,000 during June 2024.

On October 2, 2024, the Company entered into a settlement agreement with a capital market advisor, pursuant to which the Company was required to make cash payments for the unpaid balance totaling $ 525,000 and issue 125,000 shares of the Company’s common stock as additional consideration.

The initial consideration of $ 600,000 were for services directly attributable to the Business Combination and reflected as offering costs that were recorded as a reduction to additional paid-in capital at closing of the Business Combination.

On October 2, 2024, the Company issued 125,000 shares of the Company’s common stock with a fair value of $ 133,750 , as determined on the issuance date using the reported closing share price and recorded the additional consideration as a component of selling, general and administrative expenses on the accompanying consolidated statements of operations and comprehensive loss.

As of December 31, 2024, there were no amounts outstanding under this settlement agreement to the capital market advisor.

Retirement plan:

The Company maintains a defined contribution plan under Section 401(k) of the Internal Revenue Code and a defined contribution plan for employee’s individual retirement arrangements (IRA’s).

Employees may contribute between 1 % and 100 % of their wages, subject to the IRS limitations.

The Company has elected to make matching contributions of 100 % of the first 3 % of an employee’s compensation for both defined contribution plans.

For the years ended December 31, 2024 and 2023, the Company contributed approximately $ 76,000 and $ 77,000 , respectively.

REPORTABLE SEGMENTS

The Company’s operations are organized into four reporting segments:

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

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

During the current year, the Company changed its reportable segments to better align with the way management evaluates performance and allocates resources.

Accordingly, the prior year segment information has been recast to conform to the current year presentation.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Selected information by reportable segment is presented in the following tables:

Year ended December 31, 2024

Owned Service Network

Transportation

Cost of revenue

Selling, general and administrative expenses

Facility costs

Insurance expenses

Marketing and investor relations expenses

Operational expenses

Compensation and related benefits

Travel & entertainment

Vehicle expenses

MSA Working Capital Adjustment*

( 3,377,288 )

Total selling, general and administrative expenses

Loss on impairment

Income/(Loss) from operations

( 3,012,874 )

( 7,715,925 )

( 11,602,349 )

Other expense, net

( 10,905,859 )

( 2,990,995 )

( 18,621,784 )

( 22,508,208 )

Capital expenditures

* The MSA Working Capital Adjustment reflects a timing - related adjustment to Managed Solutions revenue and expenses.

In accordance with the Company's revenue recognition policy and ASC 606, the Company did not recognize solar installation revenue associated with certain Managed Services Agreements (MSAs) due to the absence of final certificates of completion as of the reporting date.

The adjustment also includes total segment costs and expenses incurred in excess of recognized revenue during the reporting period.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2023

Owned Service Network

Transportation

Cost of revenue

Selling, general and administrative expenses

Facility costs

Insurance expenses

Marketing and investor relations expenses

Operational expenses

Compensation and related benefits

Travel & entertainment

Vehicle expenses

Total selling, general and administrative expenses

Loss on impairment

Income/(Loss) from operations

( 2,432,379 )

( 1,123,432 )

( 3,832,987 )

( 7,464,871 )

Other expense, net

( 1,733,983 )

( 2,432,379 )

( 1,123,432 )

( 5,566,970 )

( 9,198,854 )

Capital expenditures

The Company’s total assets located outside the United States is approximately $ 1,260,000 .

The following table summarizes disaggregated revenue information by geographic area based upon the customer’s country of domicile:

Year Ended December 31, 2024

Transportation

United States

Year Ended December 31, 2023

Transportation

United States

SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the consolidated balance sheet date up to the date that the consolidated financial statements were issued.

Based upon this review, other than as described below or within these consolidated financial statements, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Issuances of shares of Company’s common stock

Consideration paid to vendors:

During May 2025, the Company entered into a services agreement with a vendor under which the Company issued 100,000 restricted shares of the Company’s common stock with a fair value of approximately $ 25,000 , as determined on the issuance date using the reported closing share price, as consideration for services to be performed over a three-month service period.

Nonemployee grants:

During May 2025 and June 2025, the Company issued 485,000 shares of the Company’s common stock to certain advisers with a fair value of approximately $ 108,000 , as determined on the issuance date using the reported closing share price.

Director and employee grants:

During May 2025 and June 2025, the Company issued 1,622,222 shares of the Company’s 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.

Sale of Company’s common stock:

Pursuant to six securities purchase agreements entered into during May 2025 and June 2025, the Company sold 3,658,333 shares of the Company’s common stock for gross proceeds of approximately $ 805,000 at a per share issuance price that ranged between $ 0.18 and $ 0.25 per share.

Note exchange agreements:

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 conversion price of the convertible notes was modified from the stated rate in the respective convertible notes agreements to the five -day VWAP preceding the conversion date.

Shares of the Company’s common stock under these note exchange agreements were issued pursuant to the exemption from registration provided by Section 3(a)(9) of the Securities Act that such issuance did not constitute a public offering.

Business combination:

In April 2025, the Company entered into a stock purchase agreement with an entity (the “Seller”), for the purposes of acquiring from the Seller 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 2,200,000 shares of the Company’s common stock.

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

As a result of the Company’s delisting (see Note 3), the Company issued 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 $ 3,200,000 , as determined using the closing share price on the date of issuances, 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.

Air Temp is engaged in the business of the maintenance, repair, installation and sale of residential and commercial heating and cooling systems and other products and related services and SES is engaged in the business of the maintenance, repair, installation and sale of solar heating systems and related services.

Prior to the closing of this acquisition, both Air Temp and SES were customers in the Company’s managed solutions reporting segment.

Share reset issuances

In connection with five conversion agreements entered into during September 2024 (see Note 11, Note 14, Note 18 and Note 19), the Company provided vendors and lenders with a one-time share reset adjustment (the “Share Reset”) such that the vendors and lenders would receive additional shares equal to the difference between the number of shares of the Company’s common stock that would be issued at the reset price on the reset date less the number of Conversion Shares.

Three of these conversion agreements were with related parties (see Note 18).

On March 31, 2025, 2,737,168 shares were issued in accordance with the terms of the Share Reset on five of the related conversion agreements extinguishing the Company’s obligations under those agreements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Settlement Agreement pursuant to Section 3(a)(10)

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 a lender and certain of its vendors.

On January 29, 2025, a Federal court in Florida entered an order (the “Order”) approving, among other thing, the fairness of the terms and conditions of an exchange pursuant to Section 3(a)(10) of the Securities Act in accordance with a stipulation of settlement, pursuant to the Agreement between the Company and Last Horizon.

Last Horizon commenced action against the Company to recover the Claim, which Last Horizon had purchased from certain vendors of the Company pursuant to the terms of separate purchase agreements between Last Horizon and the lender and each of such vendors.

The Order provides for the full and final settlement of the Claim and the related action.

The Settlement Agreement became effective and binding upon execution of the Order by the Court on January 29, 2025.

Pursuant to the terms of the Settlement Agreement approved by the Order, the Company agreed to issue to Last Horizon shares (the “Settlement Shares”) of the Company’s common stock.

The Settlement Agreement provides that the Settlement Shares will be issued in one or more tranches, as necessary, sufficient to satisfy the Claim through the issuance of securities issued pursuant to Section 3(a)(10) of the Securities Act.

Pursuant to the Agreement, Last Horizon may deliver requests to the Company for additional shares of common stock to be issued to Last Horizon until the Claim is paid in full, provided that any excess shares issued to Last Horizon will be cancelled

The issuance of Common Stock to Last Horizon pursuant to the terms of the Agreement approved by the Order 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, where the terms and conditions of such issuance are approved by a court after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear.

The Agreement provides that in no event will the number of shares of Common Stock issued to Last Horizon or its designee in connection with the Agreement, when aggregated with all other shares of Common Stock then beneficially owned by Last Horizon and its affiliates (as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations thereunder), result in the beneficial ownership by Last Horizon and its affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and the rules and regulations thereunder) at any time of more than 4.9 % of the Common Stock.

The Company issued 13,744,131 shares of the Company’s common stock with a fair value of approximately $ 8,709,000 , as determined by the closing price on the date the shares were issued, to partially settle the obligation to Last Horizon between January 29, 2025 and the date these consolidated financial statements were issued.

Convertible note agreement issuances

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

The Q1 2025 Convertible Notes bear interest at a rate of 20.0 % per annum.

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 .

The Company entered into six convertible note agreements in exchange for aggregate gross proceeds of $ 1,026,000 to six lenders during April 2025, May 2025, and June 2025 (the “Q2 2025 Convertible Notes”).

The Q2 2025 Convertible Notes bear interest at a rate of 20.0 % per annum.

Five of the Q2 2025 Convertible Notes have maturity dates that range from 40-days to one year, optional conversion periods that range from thirty to 180 days , and conversion prices that either range from $ 0.60 to $ 1.15 or is convertible at a conversion price equal to 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.

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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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..

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

Promissory note agreement issuances

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.

Designation of Convertible Preferred Stock Classes

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.

The Series A Stock and the Series B Stock do not have voting rights.

The Series A Stock and the Series B Stock will accrue dividends at the rate of 12.0 % and 18.0 %, respectively, per annum of the stated value on a quarterly basis per calendar quarter and will be due and payable within five business days of the end of each such calendar quarter, with payment subject to the board of directors approval.

The Series A Stock and the Series B Stock are not entitled to receive any dividends or distributions paid on the common stock or any other class of preferred stock.

The Series A Stock and the Series B Stock is convertible into shares of common stock, par value $ 0.0001 per share at the option of the holder at a number of conversion shares equal to (a) the stated value plus then accrued but unpaid dividends (the “Liquidation Amount”) divided by (b) 90.0 % and 95.0 %, respectively, of the VWAP as of the date of the notice of conversion.

The Company will reserve from its authorized and unissued common stock a number of shares of common stock equal to at least 150.0 % of the number of conversion shares then issuable on conversion of all shares of the Series A Stock and Series B Stock, assuming a VWAP determined on the first business day of each calendar month.

In no event shall any holder of Series A Stock or Series B Stock be entitled to elect to complete any conversion to the extent that the number of conversion shares, to be issued to such holder exceed the sum of (1) the number of shares of common stock beneficially owned by such holder and its affiliates, except as permitted by the terms of the preferred stock, and (2) the number of shares of common stock issuable upon the conversion of the portion of the Series A Stock or Series B Stock with respect to which the determination of this provision is being made, would result in beneficial ownership by such holder and its affiliates of more than 9.99 % of the outstanding shares of common stock, unless the holder elects to increase or waive the limitation.

The Series A Stock and the Series B Stock are entitled to receive distributions prior to payment to holders of common stock an amount per share equal to the Preferred Liquidation Amount, which ranks pari passu with and payable to the same extent of any other class of Preferred Stock currently designated or that may be designated in the future.

The Company may elect at any time, at the sole discretion of the board of directors to redeem all, but not less than all of the Series A Stock or the Series B Stock by paying an amount in cash equal to 115.0 % of the Liquidation Amount.

Forward Purchase Agreement termination

On April 2, 2025, the Company entered into a mutual termination agreement with Meteora to terminate the Amended 2024 FPA (the "FPA Termination Agreement") in exchange for termination consideration of $ 500,000 .

Pursuant to the FPA Termination Agreement, the 1,618,948 shares of the Company's common stock that Meteora held as of the termination date of April 2, 2025 were

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

deemed free and clear of all obligations, the number of Recycled Shares was equal to zero , and the Prepayment Shortfall was deemed to be zero .

The Company received the termination consideration from Meteora in April 2025.

Reverse stock split

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 the consolidated financial statements were issued.

Nasdaq delisting

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.

SEPA Convertible Note technical default

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.

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

Acquisition of Cambridge Energy Resources

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

(“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).

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.

This acquisition further strengthens ConnectM’s international expansion strategy and aligns with government initiatives in India to reach 500 GW of non-fossil fuel energy capacity by 2030, bolstered by significant investment in renewable energy and 5G deployment.

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 9A. Controls and Procedures