Business Combination and Acquisitions - ConnectM Technology Solutions, Inc. completed its business combination on July 12, 2024, with an exchange ratio of 3.3213477 for Legacy ConnectM common stock[228]. - The company issued a total of 14,422,449 shares of common stock to Legacy ConnectM stockholders at the closing of the business combination[229]. - ConnectM acquired 46% of DeliveryCircle's equity interests and 57% of its voting interests for $0.5 million plus contingent consideration based on revenue growth and EBITDA[232][233]. - The contingent consideration is estimated at approximately $0.6 million, based on a Monte Carlo simulation[233]. - The base amount for contingent payments starts at $355,000 for the year 2024 and increases annually, reaching $924,525 by 2030[236]. - The Company has a five-year non-competition and non-solicitation covenant with the seller of DeliveryCircle[243]. - The company plans to acquire DeliveryCircle for $0.5 million plus contingent consideration of $0.6 million[369][371]. Financial Performance - The Company reported revenues of $19,972,000 for the year ended December 31, 2023, compared to $15,441,000 for the year ended December 31, 2022, representing a 29% increase[259]. - For the nine months ended September 30, 2024, the Company generated revenues of $17,299,000, up from $15,484,000 for the same period in 2023, indicating an increase of 12%[257]. - Revenue for the three months ended September 30, 2024 increased by approximately $1.7 million, or 39%, to $6.1 million compared to $4.4 million for the same period in 2023[277]. - Revenue for the nine months ended September 30, 2024 increased by approximately $1.8 million, or 12%, to $17.3 million compared to $15.5 million for the same period in 2023[278]. - Revenue for the year ended December 31, 2023 increased by approximately $4.5 million, or 29%, to $20.0 million compared to $15.4 million for the year ended December 31, 2022[279]. - The net loss for the nine months ended September 30, 2024, was $16,998,000, compared to a net loss of $5,032,000 for the same period in 2023, reflecting a significant increase in losses[257]. - The Company reported a loss from operations of $7,465,000 for the year ended December 31, 2023, compared to a loss of $3,867,000 for the year ended December 31, 2022[259]. - The net loss for the year ended December 31, 2023 was $9.2 million, compared to a net loss of $3.5 million in 2022[355][356]. Expenses and Costs - The Company incurred selling, general, and administrative expenses of $12,320,000 for the year ended December 31, 2023, compared to $7,315,000 for the year ended December 31, 2022, marking a 68% increase[259]. - Selling, general and administrative expenses increased by $5.0 million, or 68%, to $12.3 million for the year ended December 31, 2023, from $7.3 million for the year ended December 31, 2022[302]. - Selling, general and administrative expenses for the nine months ended September 30, 2024, increased by $3.0 million, or 34%, to $11.8 million from $8.8 million for the same period in 2023[301]. - Interest expense increased by $1.1 million to $1.4 million for the year ended December 31, 2023, from $0.3 million for the year ended December 31, 2022[307]. - The Company expects operating costs to increase in the foreseeable future due to expansion efforts and investments in operations[267]. - The Company anticipates an increase in selling, general, and administrative expenses as it scales headcount and complies with public company regulations[269]. Cash Flow and Financing - The Company raised $3.5 million in net cash from financing activities for the nine months ended September 30, 2024, primarily from proceeds of $80.1 million from a business acquisition[353]. - The Company has an accumulated deficit of $39.9 million as of September 30, 2024[343]. - The Company has a working capital deficit totaling $31.2 million as of September 30, 2024[343]. - The Company converted $2,652,250 of promissory notes into 1,326,125 shares of common stock at a conversion price of $2.00 per share as part of a Note Conversion Agreement[254]. - The total amount outstanding under secured promissory note agreements as of September 30, 2024, was $11.3 million, up from $7.4 million as of December 31, 2023[322]. - The company issued $9.0 million in long-term debt facilities during 2023, contributing significantly to financing activities[359]. - The company issued an additional $5.5 million of secured promissory notes during 2023, with interest rates ranging from 18% to 24%[319]. - During the nine months ended September 30, 2024, the company issued fourteen additional secured promissory notes totaling $4.1 million, accruing interest at 24%[320]. Market and Compliance - The Company has been notified by Nasdaq that it failed to meet the $50,000,000 market value of listed securities requirement for continued listing, with a compliance period until March 3, 2025[251][252]. - Management has concluded there is substantial doubt about the Company's ability to continue as a going concern within one year after the date the financial statements are issued[345]. Operational Insights - The Company generated non-operating income from dividends and interest on marketable securities held in the Trust Account prior to the closing of the Business Combination[255]. - The Company expects a large portion of future revenue increases to be attributable to its growing managed services business[279]. - The increase in revenues was primarily driven by the Company's new managed services offering and OEM/EV segment, while declines were noted in the electrification and decarbonization segments due to inclement weather[277][278]. - The Company experienced incremental cost of revenues of $0.4 million associated with its Managed Services, which did not exist in 2022[284]. - Gross margin for the Managed Services segment increased approximately $0.6 million, or 3,981%, for the three months ended September 30, 2024, indicating significant growth potential[288]. - Gross margin for the Decarbonization segment decreased approximately $1.1 million, or 41%, to $1.6 million for the nine months ended September 30, 2024 compared to $2.8 million for the same period in 2023[290]. - Gross margin for the Electrification segment decreased by $0.3 million, or 11%, to $2.2 million for the year ended December 31, 2023 compared to $2.5 million for the year ended December 31, 2022[294]. - Gross margin for the Decarbonization segment increased by approximately $1.5 million, or 101%, to $3.0 million for the year ended December 31, 2023, from $1.5 million for the year ended December 31, 2022[296]. - Gross margin for the OEM/EV segment decreased by approximately $0.4 million to $(0.4) million for the year ended December 31, 2023, from $14 thousand for the year ended December 31, 2022[297]. - Gross margin for the Managed Services segment was approximately $0.2 million for the year ended December 31, 2023, with expectations for significant future growth[298].
ConnectM Technology Solutions, Inc.(CNTM) - 2024 Q3 - Quarterly Report