Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2025

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual financial statements for the year ended December 31, 2024. Certain information or footnote disclosures normally included in the unaudited condensed consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s annual report on Form 10-K for the period ended December 31, 2024, as filed with the SEC on November 28, 2025. The interim results for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the period ended December 31, 2025 or for any future periods.

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 Deposit Insurance Corporation coverage limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.

We routinely assess the financial strength of significant customers. As discussed in Note 1, the Property is leased to one tenant pursuant to the Seller Lease Agreement. As the tenant currently has liquidity concerns evidenced by going concern disclosure in its public filings, we will continue to monitor the realization of the rent receivable under the Seller Lease Agreement.

Reclassifications

Certain prior-period amounts have been reclassified to conform to the current-period presentation. Specifically, rent receivable previously classified within current assets has been reclassified to non-current assets to reflect the portion of rent receivable that is not expected to be collected within twelve months. This reclassification was made to improve comparability between periods and did not impact previously reported net income, total assets, total liabilities, stockholders’ equity, or cash flows.

Debt and Equity Securities

The Company accounts for its investments in accordance with ASC 320, Investments - Debt Securities, ASC 326 - 30, Financial Instruments - Credit Losses - Available - for - Sale Debt Securities, and ASC 321, Investments - Equity Securities. Securities with original maturities of three months or less at the date of purchase are classified as cash equivalents. All other debt and equity securities are classified as available-for-sale and are carried at fair value as of each balance sheet date.

Unrealized gains and losses on available-for-sale securities are recorded in other comprehensive income (loss), net of applicable income taxes, until realized. Realized gains and losses are recognized in other income (expense), net in the consolidated statements of operations when the securities are sold or otherwise disposed of.

The Company evaluates its available-for-sale securities for other-than-temporary impairment at each reporting date. In making this assessment, management considers the duration and severity of any decline in fair value, the financial condition and near-term prospects of the issuer, and the Company’s intent and ability to hold the investment until recovery of its amortized cost basis.

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting, in accordance with ASC 805. The identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree are recognized at their fair values on the acquisition date. The excess of the consideration transferred over the fair value of net assets acquired is recorded as Goodwill. Acquisition-related costs are expensed as incurred and are included in other expenses in the Consolidated Statements of Operations.

Intangible Assets

Intangible assets consist primarily of acquired developed technologies, customer relationships, trademarks, and trade names. Finite-lived intangible assets are amortized over their estimated useful lives on a straight-line basis. Amortization expense is included in General and Administrative Expenses, as appropriate. Indefinite-lived intangible assets are not amortized but are tested annually for impairment or more frequently if events or changes in circumstances indicate the asset might be impaired.

Impairment of Long-Lived Assets

In accordance with ASC 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Recoverability is assessed by comparing the carrying value to the undiscounted future cash flows the asset is expected to generate. If the carrying amount exceeds undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and the asset’s fair value.

Research and Development Tax Credit

The Company recognizes the benefit of research and development (“R&D”) tax credits as a reduction to income tax expense in the period the related qualified expenditures are incurred and when realization is more likely than not. Deferred tax assets related to unutilized R&D credits are evaluated for recoverability based on expected future taxable income and other relevant factors.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation — Stock Compensation. The Company maintains the 2024 Non-Employee Director Stock Incentive Plan, which authorizes grants of non-statutory stock options to non-employee directors. Option awards are measured at fair value on the grant date using the Black-Scholes option-pricing model and recognized as expense on the grant date when the awards are fully vested. Stock-based compensation expense is included in general and administrative expenses.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements,” equals or approximates the carrying amounts represented in the unaudited condensed consolidated balance sheets.

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 consist of:

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Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

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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; and

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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

Segment Reporting

The Company operates through two reportable business segments as it reports financial information separately to its Chief Executive Officer, who is the Company’s chief operating decision maker.

The Company routinely evaluates whether its operating and reportable segments continue to reflect the way the CODM evaluates the business. The determination is based on: (1) how the Company’s CODM evaluates the performance of the business, including resource allocation decisions, and (2) whether discrete financial information for each operating segment is available.

As of March 31, 2025 and December 31, 2024, the Company’s operating and reportable segments include:

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Technology & Telecommunications – The Technology & Telecommunications segment is comprised of Red Technologies and derives revenue from providing cloud-based solutions and operated 5G connectivity solutions that democratize access to 5G technology for companies aiming to modernize their communications infrastructure in both the U.S. and European markets.

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Infrastructure & Real Estate - The Infrastructure & Real Estate segment includes the operation of our commercial Property in Littleton, Colorado, comprising the headquarters of DISH Wireless. We derive revenue primarily from rent received from the operation of real estate property.

When evaluating the Company’s performance and making key decisions regarding resource allocation the CODM reviews the following key metrics:


By Reportable Segment		France			North America			Consolidated

Revenue		$	74,432		$	770,818		$	845,250

Depreciation and Amortization			5,463			398,813			404,276
General and administrative expenses			571,431			451,934			1,023,365
Other Income			—			5,792,207			5,792,207
Other Expenses			6,897			14,804			21,701

Net Income (Loss)		$	(509,359)		$	5,697,474		$	5,188,115

Revenues are attributed to geographic areas based on the location of the customer, with the Technology & Telecommunications segment generating revenue primarily in France and the Infrastructure & Real Estate segment generating revenue in North America. Substantially all long-lived assets are located in North America.

Segment asset information is not presented because it is not used by the CODM at the segment level.

Convertible Preferred Stock

The Company accounts for convertible preferred stock in accordance with ASC 480 and related guidance. Convertible preferred stock is classified as a liability if it is mandatorily redeemable or redeemable at the option of the holder upon events outside the Company’s control. Such instruments are initially measured at fair value on the issuance date and subsequently at redemption value, with changes recognized in earnings if applicable.

Derivative Financial Instruments

The Company evaluated the Public and Private Warrants and the Equity Forward as either equity-classified or liability-classified instruments based on an assessment of the warrants’ specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”), and ASC 815, “Derivatives and Hedging” (“ASC 815”).

The Company’s Public and Private Warrants derivative instruments are recorded at fair value as of the Initial Public Offering (November 3, 2020) and re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. Derivative assets and liabilities are classified on the consolidated balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the Balance Sheet date. The Company has determined the Warrants are a derivative instrument. As the warrants meet the definition of a derivative, the warrants are measured at fair value at issuance and at each reporting date in accordance with ASC 820, “Fair Value Measurements and Disclosures,” with changes in fair value recognized in the consolidated statements of operations in the period of change.

The Equity Forward was a liability classified instrument in accordance with ASC 480 because the underlying instrument contains a contingent redemption feature. The Equity Forward was recorded at fair value on the date of issuance and re-valued at each reporting period, with changes in the fair value reported in the consolidated statements of operations.

Investments and Cash Held in Trust Account

Upon the closing of the Initial Public Offering and the Private Placement, the Company was required to place net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement in a Trust Account, which had been 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 money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by management of the Company. Investments held in the Trust Account were classified as trading securities and presented on the Balance Sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in the Trust Account were included in interest income on investments held in Trust Account in the accompanying Consolidated Statements of Operations.

Effective October 12, 2022, the Company converted all of its investments in the Trust Account into cash, which remained in the Trust Account. On September 29, 2023, the Company instructed Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account, to hold all funds in the Trust Account in an interest-bearing deposit account with a financial institution in the United States. Accordingly, following the transfer to an interest-bearing deposit account, the amount of interest income (which we were permitted to use to pay our taxes and up to $100,000 of dissolution expenses) again increased. On the Closing Date, approximately $20.58 million of funds held in the Trust Account were used to pay the redemption of 1,941,684 shares of Class A common stock and $55,734 of funds were withdrawn for tax disbursements. The Trust Account was closed and $1,503,969 of funds remaining in the Trust Account were released to the Company pursuant to the trust agreement.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. The determination of the fair value of the warrant and equity forward liabilities, goodwill and intangible assets and equity investment is a significant accounting

estimate included in these unaudited condensed consolidated financial statements. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. As of March 31, 2025, the Company had cash of $288,466 and cash equivalents of $114,911,897, for total cash and cash equivalents of $115,200,363. As of December 31, 2024, the Company had cash and cash equivalents totaling $117,521,935.

Fixed Assets, Net of Accumulated Depreciation

Property and equipment are stated at cost less depreciation and impairment losses, if any. Because the Company and Seller are entities under common control, the Property was initially recorded on our Consolidated Balance Sheets at the Seller’s cost less accumulated depreciation. Property and equipment are stated at cost less accumulated depreciation and impairment losses, if any. Because the Company and the Seller are entities under common control, the Property was initially recorded on the Company’s Consolidated Balance Sheets at the Seller’s historical cost less accumulated depreciation. The difference between the purchase consideration and the carrying value of the Property was recorded as an adjustment to accumulated deficit.

Depreciation is recorded on a straight-line basis over useful lives ranging from 3 to 40 years. Repair and maintenance costs are charged to expense when incurred. Renewals and improvements that add value or extend the asset’s useful life are capitalized.

Revenue Recognition

In general, the Company commences rental revenue recognition when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. Contractual rental revenue is reported on a straight-line basis over the term of the lease. Rent Receivable, as reported on the Consolidated Balance Sheets, represents cumulative rental income earned in excess of rent payments received pursuant to the terms of the lease agreement.

The Company must estimate the collectability of its Rent Receivable balances related to rental revenue. When evaluating the collectability of such balances, management considers the tenant’s creditworthiness, changes in the tenant’s payment patterns, and current economic trends. The Company writes off the tenant’s receivable balances if the Company considers the balances no longer probable of collection.

Red Technologies provides cloud-based 5G connectivity solutions to companies seeking to modernize their communications infrastructure. For the periods presented, the Company did not generate material revenue, as its activities have been primarily focused on research and development.

Future revenues may arise from licensing arrangements, collaboration agreements, or service contracts. The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, when control of the promised goods or services is transferred to the customer.

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Licensing and collaboration revenues are recognized when the customer obtains control of the license or access to the technology.

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Service revenues are recognized over time as the services are performed.

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Upfront or advance payments received before performance obligations are satisfied are recorded as deferred revenue and recognized when the related goods or services are delivered.

Because Red Technologies’ operations to date have focused on product development, no material revenue has been recognized for the periods presented.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company evaluates and may have an allowance for doubtful accounts to estimate expected credit losses in accordance with ASC 326, which is based on historical collection experience, the aging of receivables, customer credit quality, and current and expected economic conditions.

Net income Per Share of Common Stock


	For the Three Months Ended				For the Three Months Ended
	March 31, 2025				March 31, 2024
	Class A		Class B		Class A		Class B
Basic net income per share
Numerator:
Net income (loss) attributable to common stock	$	5,012,997	$	—	$	238,107	$	2,135,850
Denominator:
Basic weighted average shares outstanding		18,928,585		—		2,090,269		18,750,000
Basic net income per share		0.26		—		0.11		0.11
Diluted net income per share
Numerator:
Net income (loss) attributable to common stock		5,012,997		—		238,107		2,135,850
Denominator:
Basic weighted average common shares used in computing basic net income per common share		18,928,585		—		2,090,269		18,750,000
Add: effect of dilutive stock options		15,000
Add: weighted average of Series A Redeemable Convertible Preferred Stock, as converted		17,391,300		—
Weighted average common shares used in computing diluted net income per common share		36,334,885		—		2,090,269		18,750,000
Weighted average common share outstanding using the two-class method		36,334,885		—		2,090,269		18,750,000
Diluted income applicable to common shareholders per common share	$	0.14	$	—	$	0.11	$	0.11

Net income per share of common stock is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding for the period. Income and losses are shared pro rata between the two classes of shares. Accretion associated with the Class A common stock subject to possible redemption is excluded from earnings per share as the redemption value approximates fair value. The calculations above take into account the effect of the Company’s convertible preferred stock on an as-converted basis. When calculating its diluted net income (loss) per share, however, the Company has not considered the effect of the (i) Warrants issued in connection with the Initial Public Offering, and (ii) the Private Placement Warrants since the exercise of such warrants is anti-dilutive.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the unaudited condensed consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets 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 included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the unaudited condensed consolidated financial statements recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of March 31, 2025 and December 31, 2024. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of March 31, 2025 and December 31, 2024. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, which requires additional disclosure of income taxes, including disaggregation of the effective tax rate reconciliation and information on income taxes paid. This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this standard on its disclosures.

In July 2025, the FASB issued ASU 2025-05, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. The ASU provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. This guidance is effective for annual reporting periods beginning after December 15, 2025, and for interim periods within those annual reporting periods, with early adoption permitted. The amendments in ASU 2025-05 should be applied prospectively. The Company is currently evaluating the impact of this ASU and believes that the adoption will not have a material impact on the condensed consolidated financial statements and related disclosures.

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our Consolidated financial statements.

CONX Corp. 10-Q