ConnectM Technology Solutions, Inc.(CNTM) - 2023 Q2 - Quarterly Report

Part I: Financial Information This section presents the company's unaudited financial statements, management's analysis, market risk, and internal controls Unaudited Condensed Consolidated Financial Statements The SPAC reported a net loss for H1 2023, primarily due to a Forward Purchase Agreement liability, with substantial doubt about its going concern ability Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2023 ($) | December 31, 2022 ($) | | :--- | :--- | :--- | | Assets | | | | Cash | $214,623 | $5,938 | | Marketable securities held in trust account | $96,758,886 | $94,209,804 | | Total Assets | $97,095,886 | $94,222,525 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $4,582,589 | $2,058,448 | | Forward Purchase Agreement Liability | $8,870,000 | $2,770,000 | | Total Liabilities | $17,132,589 | $8,508,448 | | Total Stockholders' Deficit | ($16,324,322) | ($8,054,560) | - As of June 30, 2023, 9,200,000 shares of Class A common stock were subject to possible redemption, valued at $96,287,619[7] Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (Unaudited) | Metric | Six Months Ended June 30, 2023 ($) | Six Months Ended June 30, 2022 ($) | | :--- | :--- | :--- | | General and administrative expenses | ($1,352,965) | ($542,902) | | Dividend and interest income | $2,134,285 | $85,018 | | Loss on change in fair value of Forward Purchase Agreement Liability | ($6,100,000) | $0 | | Net Loss | ($5,750,780) | ($488,100) | | Basic and diluted net loss per share, Class A | ($0.49) | ($0.11) | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Activity | Six Months Ended June 30, 2023 ($) | Six Months Ended June 30, 2022 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($618,518) | ($293,229) | | Net cash used in investing activities | ($414,797) | ($92,920,000) | | Net cash provided by financing activities | $1,242,000 | $93,426,015 | | Net Change in Cash | $208,685 | $212,786 | Notes to Condensed Consolidated Financial Statements - The company is a blank check company that entered into a merger agreement with ConnectM Technology Solutions, Inc. on December 31, 2022[19][20] - Management has substantial doubt about the Company's ability to continue as a going concern, as it may be required to dissolve as early as November 13, 2023, if a business combination is not completed[61] - The Forward Purchase Agreement liability, a derivative instrument, was valued at $8.87 million as of June 30, 2023, using Level 3 inputs. The change in fair value resulted in a $6.1 million loss for the first six months of 2023[90][93] - As of June 30, 2023, the company had $579,000 in outstanding Working Capital Loans from its Sponsor, which are convertible into warrants[110] - Subsequent to the quarter end, on August 11, 2023, the company extended its business combination deadline to November 13, 2023, funded by a $920,000 deposit from the merger target, ConnectM[136] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank check status, pending merger, and a $3.77 million working capital deficit, reiterating substantial doubt about its going concern ability - The company is a blank check company formed to effect a business combination and has entered into a merger agreement with ConnectM Technology Solutions, Inc.[142][150] - As of June 30, 2023, the company had cash of $214,623 and a working capital deficit of $3,774,322, raising substantial doubt about its ability to continue as a going concern[151][156] Results of Operations Summary (Unaudited) | Metric | Six Months Ended June 30, 2023 ($) | Six Months Ended June 30, 2022 ($) | | :--- | :--- | :--- | | Net Loss | ($5,750,780) | ($488,100) | | Key Drivers of Loss | G&A expenses, Loss on change in fair value of Forward Purchase Agreement liability | Formation and G&A costs | | Offsetting Income | $2,134,285 in dividend and interest income | $85,018 in dividend and interest income | - The company has a commitment to pay $3.68 million in deferred underwriting commissions, contingent upon the completion of a business combination[163] Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company and is not required to provide the information for this item - As a smaller reporting company defined by Rule 12b-2 of the Exchange Act, the company is not required to provide the information otherwise required under this item[184] Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2023, due to material weaknesses in accounting for complex financial instruments and cash disbursements - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were not effective as of June 30, 2023[186] - Material weaknesses were identified related to the accounting for complex financial instruments, completeness and accuracy of financial data, and the review and approval of cash disbursements[186][188][189] - In a specific control failure, $87,377 of funds withdrawn from the Trust Account for tax payments were inadvertently used for general operating expenses, later replenished by the merger target, ConnectM[190] - The company has implemented and is continuing to implement remediation efforts, including additional review procedures for legal agreements, financial data, and cash oversight, and is utilizing outside advisors for complex accounting matters[191][192] Part II: Other Information This section covers legal proceedings, risk factors, equity sales, other information, and exhibits Legal Proceedings The company reports no legal proceedings - There are no legal proceedings to report[195] Risk Factors As a smaller reporting company, the company is not required to provide the information for this item - The Company is a "smaller reporting company" and is not required to provide the information required by this Item[195] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds for this period - None reported[195] Other Information The company reports no other information - None reported[195] Exhibits This section lists the exhibits filed with the report, including officer certifications and XBRL interactive data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002[197] - XBRL Instance Document and related taxonomy files are included as exhibits[197] Signatures The report was duly signed and authorized by the Chief Executive Officer and Principal Financial Officer on August 23, 2023 - The report was duly signed and authorized on August 23, 2023, by Bala Padmakumar, Chief Executive Officer, and Daniel Davis, who is also listed with the title of Chief Executive Officer (Principal Financial Officer)[199]