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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-41389

ConnectM Technology Solutions, Inc.

(Exact name of registrant as specified in its charter)


Delaware		87-2898342
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)


2 Mount Royal Avenue, Suite 550 Marlborough, Massachusetts		01752
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 617-395-1333

Not applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Trading Symbol(s)		Name of each Exchange on which Registered
N/A		N/A		N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 26, 2026, there were 5,633,058 shares of common stock of the Company issued and outstanding.

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Report”) contains forward-looking statements. Forward-looking statements include, among others, information concerning our strategy, future operations, future financial position, future revenue, projected expenses, business prospects, and plans and objectives of management. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms. These statements relate to future events or to our future operating or financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements.

Forward-looking statements contained in this Report include, but are not limited to, statements about the following:

●

the Company operates in the early-stage market of modern energy economy (“MEE”) adoption (which includes AI-powered electrification and distributed energy) and has a history of losses and expects to incur significant ongoing expenses;

●

the Company’s management has limited experience in operating a public company;

●

the Company has identified material weaknesses in its internal control over financial reporting and if it is unable to remediate these material weaknesses, or if the Company identifies additional material weaknesses in the future or otherwise fails to maintain an effective internal control over financial reporting, this may result in material misstatements of the Company’s condensed consolidated financial statements or cause the Company to fail to meet its periodic reporting obligations;

●

the Company’s growth strategy depends on the widespread adoption of MEE Services;

●

if the Company cannot compete successfully against other MEE Service Providers, it may not be successful in developing its operations and its business may suffer;

●

with respect to providing electricity on a price-competitive basis, solar systems face competition from traditional regulated electric utilities, from less-regulated third party energy service providers and from new renewable energy companies;

●

the Company’s market is characterized by rapid technological change, which requires it to continue to develop new products and product innovations. Any delays in such development could adversely affect market adoption of its products and its financial results;

●

developments in alternative technologies may materially adversely affect demand for the Company’s offerings; and

●

the possibility that we may be adversely affected by other economic, business or competitive factors and may not be able to manage other risks and uncertainties set forth in the section titled “Risk Factors,” which is incorporated herein by reference.

We caution you that the foregoing list does not contain all of the risks or uncertainties that could affect the Company.

Forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” and elsewhere in this Report. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Report. You should read this Report and the documents that we have filed as exhibits hereto, completely and with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

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TABLE OF CONTENTS


		Page
PART I – FINANCIAL INFORMATION (unaudited)		3
Item 1.	Unaudited Condensed consolidated Financial Statements	3
	Condensed consolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025	3
	Condensed consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2026 and 2025 (unaudited)	4
	Condensed consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2026 and 2025 (unaudited)	5
	Condensed consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (unaudited)	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4.	Controls and Procedures	53
PART II – OTHER INFORMATION		54
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	56
Signatures		57

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PART I - FINANCIAL INFORMATION

Item 1. Unaudited Condensed consolidated Financial Statements

CONNECTM TECHNOLOGY SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(all amounts in USD, except number of shares)


	March 31,		December 31,
	2026		2025
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	2,471,782	$	2,904,430
Accounts receivable - net of allowance for credit loss		3,064,131		3,066,626
Contract asset		145,341		303,910
Inventories, net		594,024		633,798
Prepaid expenses and other current assets		2,173,589		1,261,794
Total current assets		8,448,867		8,170,558
Right-of-use asset – operating lease		103,371		215,385
Right-of-use asset – finance lease		30,936		54,147
Property and equipment, net		19,474,465		20,330,688
Goodwill		2,287,466		5,216,788
Intangible assets, net		2,070,387		2,182,558
Equity method investments		7,406,523		—
Total Assets	$	39,822,015	$	36,170,124
Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable	$	7,075,064	$	7,219,261
Accrued expenses and other current liabilities		2,504,664		2,350,393
Contingent consideration liability		1,534,558		1,441,164
Debt, net of debt discount		8,530,688		7,098,279
Convertible debt, at fair value		6,593,923		5,321,303
Derivative liabilities		292,677		234,389
Deferred consideration		—		396,850
Operating lease liability		67,107		94,340
Finance lease liability		54,614		58,398
Contract liabilities		1,644,081		772,013
3(a)(10) Settlement Agreement, at fair value		3,687,000		3,634,000
Other payable		—		250,000
Deferred tax liabilities		3,887,472		4,039,514
Total current liabilities		35,871,848		32,909,904
Debt, net of current portion		1,698,310		1,180,273
Operating lease liabilities, net of current portion		40,761		130,509
Finance lease liabilities, net of current portion		17,057		43,749
Contingent consideration liability, net of current portion		236,832		330,226
Total liabilities		37,864,808		34,594,661
Commitments and Contingencies (Note 11)
Stockholders’ Deficit:
Preferred stock Series A, $0.0001 par value, 10,000,000 shares authorized as of March 31, 2026 and December 31, 2025 no shares issued or outstanding as of March 31, 2026 and December 31, 2025		—		—
Common stock, $0.0001 par value, 250,000,000 shares authorized as of March 31, 2026 and December 31, 2025, 5,312,911 and 4,789,230 issued and outstanding as of March 31, 2026 and December 31, 2025 respectively (1)		531		479
Additional paid-in-capital		67,775,494		60,164,021
Accumulated deficit		(68,616,894)		(61,671,149)
Accumulated other comprehensive loss		(580,369)		(20,333)
Total ConnectM Technology Solutions, Inc.’s stockholders’ deficit		(1,421,238)		(1,526,982)
Non-controlling interest		3,378,445		3,102,445
Total stockholders’ deficit		1,957,207		1,575,463
Total liabilities and stockholders’ deficit	$	39,822,015	$	36,170,124

(1)	Amounts have been adjusted to reflect the 1-for-32 reverse stock split that became effective for market purposes on April 20, 2026. See Note 2 “Basis of presentation and summary of significant accounting policies” for additional details.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CONNECTM TECHNOLOGY SOLUTIONS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(all amounts in USD, except number of shares)


	Three Months Ended March 31,
	2026			2025
Revenues	$	8,172,553		$	8,988,343
Cost of revenues		6,307,511			5,974,610
Gross profit		1,865,042			3,013,733
Selling, general and administrative expenses		5,090,138			6,287,176
Loss from operations		(3,225,096)			(3,273,443)
Other income (expense):
Interest expense		(574,186)			(493,464)
Loss on issuance of financial instruments		(36,500)			—
Loss on extinguishment of debt and vendor payable		—			(2,715,923)
Gain on extinguishment of debt		—			14,019
Change in fair value of convertible debt		(104,238)			(319,695)
Change in fair value of forward purchase agreement		—			(971,000)
Change in fair value of derivative liabilities		(58,288)			(33,548)
Change in fair value on Section 3(a)(10) Settlement Agreement (Note 9)		(53,000)			605,748

Equity in earnings from Sun Solar		281,523			—
Loss on disposal of businesses		(2,908,964)			—
Other income (expense), net		9,004			209,967
Total other income (expense), net		(3,444,649)			(3,703,896)
Net loss from operations before income taxes		(6,669,745)			(6,977,339)
Income tax benefit		—			—
Net loss	$	(6,669,745)		$	(6,977,339)
Less: net income attributable to noncontrolling interests		276,000			41,071
Net loss attributable to ConnectM Technology Solutions, Inc.	$	(6,945,745)		$	(7,018,410)
Other comprehensive income (loss):
Foreign currency translation adjustments		(560,036)			10,781
Comprehensive loss before noncontrolling interests		(7,229,781)			(6,966,558)
Less: comprehensive income attributable to non-controlling interests		276,000			41,071
Comprehensive loss attributable to ConnectM Technology Solutions, Inc.	$	(7,505,781)		$	(7,007,629)

Weighted average shares outstanding of common stock (1)		5,217,810			992,301
Basic and diluted net loss per share, common stock	$	(1.33)		$	(7.07)

(1)	Amounts have been adjusted to reflect the 1-for-32 reverse stock split that became effective for market purposes on April 20, 2026. See Note 2 “Basis of presentation and summary of significant accounting policies” for additional details.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CONNECTM TECHNOLOGY SOLUTIONS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(all amounts in USD, except number of shares)


									Accumulated
					Additional				Other						Total
	Common Stock (1)				Paid-In		Accumulated		Comprehensive		Stockholders’		Noncontrolling		Stockholders’
	Shares		Amount		Capital (1)		Deficit		Income (Loss)		Deficit		interests		Deficit
Balances, as of January 1, 2025		909,165	$	91		20,155,738	$	(45,426,099)	$	166,007	$	(25,104,263)	$	1,317,756	$	(23,786,507)
Issuance of common stock to settle claim under Section 3(a)10 Settlement Agreement (see Note 9)		114,830		11		3,077,241		—		—		3,077,252		—		3,077,252
Issuance of common stock to settle share reset derivative liabilities (see Note 9)		85,537		8		1,711,997		—		—		1,712,005		—		1,712,005
Other comprehensive income		—		—		—		—		10,781		10,781		—		10,781
Net loss		—		—		—		(7,018,410)		—		(7,018,410)		41,071		(6,977,339)
Balances, as of March 31, 2025		1,109,532	$	110		24,944,976	$	(52,444,509)	$	176,788	$	(27,322,635)	$	1,358,827	$	(25,963,808)

Balance, as of January 1, 2026		4,789,230		479		60,164,021		(61,671,149)		(20,333)	$	(1,526,982)	$	3,102,445	$	1,575,463
Issuance of commitment shares in connection with convertible debt		8,593		1		102,028		—		—		102,029		—		102,029
Issuance of common stock in connection with the conversion of SEPA convertible debt		11,548		1		93,198		—		—		93,199		—		93,199
Issuance of common stock in connection with share exchange agreement to settled accounts payable vendors		6,974		1		70,539		—		—		70,540		—		70,540
Issuance of common stock to BOD and employees		26,406		3		220,754		—		—		220,757				220,757
Issuance of common stock in connection with equity method investment in Sun Solar		468,750		47		7,124,953		—		—		7,125,000		—		7,125,000
Fractional share adjustment due to reverse stock split		1,410		—		—		—		—		—		—		—
Other comprehensive income		—		—		—		—		(560,036)		(560,036)		—		(560,036)
Net loss		—		—		—		(6,945,745)				(6,945,745)		276,000		(6,669,745)
Balances, as of March 31, 2026		5,312,911	$	531		67,775,494	$	(68,616,894)	$	(580,369)	$	(1,421,238)	$	3,378,445	$	1,957,207

(1)	Amounts have been adjusted to reflect the 1-for-32 reverse stock split that became effective for market purposes on April 20, 2026. See Note 2 “Basis of presentation and summary of significant accounting policies” for additional details.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CONNECTM TECHNOLOGY SOLUTIONS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(all amounts in USD)


		Three Months Ended March 31,
		2026			2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(6,669,745)		$	(6,977,339)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense			213,009			81,378
Amortization of debt discount			235,548			77,903
Stock-based compensation expense			220,757			—
ROU amortization on finance leases			23,211			25,826
ROU amortization on operating leases			14,955			7,741
Provision for credit losses			121,456			—
Loss on issuance of financial instruments			36,500			—
Loss on extinguishment of debt and vendor payable			—			2,715,923
Gain on extinguishment of debt			—			(14,019)
Change in fair value of convertible debt			104,238			319,695
Change in fair value of forward purchase agreement			—			971,000
Loss on termination of lease			—			37,196
Loss on disposal of businesses			2,908,964			—
Equity in earnings from Sun Solar			(281,523)			—
Change in fair value of derivative liabilities			58,288			33,548
Change in fair value of 3(a)(10) Settlement Agreement (Note 9)			53,000			(605,748)
Changes in operating assets and liabilities:
Accounts receivable			(50,678)			(1,936,317)
Contract asset			158,569			39,624
Other receivable			—			(84,260)
Inventory			20,747			(241,928)
Prepaid expenses and other current assets			(935,401)			532,325
Other assets			—			(19,999)
Accounts payable			(73,190)			1,183,729
Accrued expenses			163,551			643,393
Operating lease liabilities			(15,170)			(12,865)
Working capital advances			—			27,514
Contract liabilities			882,078			369,873
Net cash used in operating activities			(2,810,836)			(2,825,807)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(1,155)			(2,844)
Proceeds from disposal of GEG			31,717			—
Cash paid for capitalized software development costs			(89,000)			(149,828)
Net cash used in investing activities			(58,438)			(152,672)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of debt			1,324,920			—
Proceeds from the issuance of convertible notes			1,611,000			2,530,000
Repayments of debt			(606,335)			(321,181)
Repayments on convertible notes			(502,433)			—
Proceeds from factoring receivable arrangements			1,547,072			—
Repayments of factoring receivable arrangements			(502,557)			—
Payments of deferred consideration			(387,406)			—
Payment on finance leases			(30,476)			(30,349)
Net cash provided by financing activities			2,453,785			2,178,470
Effect of exchange rate changes on cash and cash equivalents			(17,159)			10,210
Net decrease in cash and cash equivalents			(432,648)			(789,799)
Cash and cash equivalents, beginning of the period			2,904,430			2,407,843
Cash and cash equivalents, end of the period		$	2,471,782		$	1,618,044
Supplemental disclosures of cash flow information:
Cash paid for interest		$	81,089		$	29,649
Issuance of shares for equity method investment		$	7,125,000		$	—
Issuance of commitment shares in connection with convertible debt		$	102,029		$	—
Issuance of common stock in connection with the conversion of SEPA convertible debt		$	93,199		$	—
Conversion of advance funding other payable liability into convertible debt upon execution of debt agreement		$	250,000			—
Carrying value of accounts payable extinguished with 3(a)(10) Settlement Agreement		$	—		$	5,278,077
Carrying value of debt extinguished with 3(a)(10) Settlement Agreement		$	—		$	3,630,000
Financed insurance premium in prepaid expense		$	—		$	74,309
Exchange of operating lease liability for accounts payable on terminated lease		$	—		$	59,037
De-recognition of right of use of asset, operating on terminated lease		$	—		$	39,929
Extinguishment of operating lease liability on terminated lease		$	—		$	2,733
Extinguishment of accounts payable through issuance of debt		$	—		$	175,950
Fair value of shares issued to settle Claim under 3(a)(10) Settlement Agreement		$	—		$	3,077,252
Fair value of shares issued to settle the share reset derivative liabilities		$	—		$	1,712,005
Consideration receivable from disposal of GEG		$	68,283		$	—
Settlement of accounts payable through issuance of shares		$	70,540		$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CONNECTM TECHNOLOGY SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026

AND 2025

NOTE 1: ORGANIZATION AND OPERATIONS

ConnectM Technology Solutions, Inc. (the “Company”, “we” and/or “our”), a Delaware corporation, conducts its operations through its subsidiaries as a constellation of technology-driven businesses powering the modern energy economy. The Company’s mission is to reshape how energy is used in homes, businesses, transportation, infrastructure, and logistics to create a higher quality of life, lower costs, and help chart a course for a more sustainable future.

The Company delivers solutions to its customers for (i) the decarbonization of homes, critical infrastructure and businesses through energy management-as-a-service offerings, including weatherization, HVAC, solar, battery and EV charging solutions, and through the wholesale distribution of AI-enabled heat pump equipment and smart controls, (ii) the facilitation of business-to-business transportation through its online and mobile last-mile delivery platform utilizing contracted drivers, and (iii) the management of connected operations through its industrial internet of things (“IIoT”) platform. These offerings are integrated and optimized through the Company’s proprietary platform, developed and continuously enhanced by Keen Labs, its AI and technology subsidiary.

The Company also offers physical products as part of its solutions offerings. These include AI-enabled heat pump systems for use in the decarbonization of homes and businesses, as well as solar panels, inverters, battery storage systems, and related balance-of-system components, which are procured and distributed by the Company’s wholly-owned subsidiary, Keen Labs Operations, Inc., to installation partners, including Sun Solar, LLC. The Company also offers display clusters, digital control units, and vehicle control units used in the management of connected operations, which are sold in the India market through the Company’s subsidiary, ConnectM India Private Limited (“CMI”).

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

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

The Company is actively rationalizing its segment portfolio to focus on its highest-quality, U.S.-based verticals that contribute positively to operating results. During the three months ended March 31, 2026, certain HVAC, solar, and other home service operations within the Owned Service Network segment were divested or wound down as the Company shifted its decarbonization strategy toward product-led and technology-enabled offerings. Concurrently, the Company recast its segment reporting structure to separately present its Keen Labs segment, which conducts the Company’s technology platform operations and U.S. wholesale procurement and distribution of solar, energy storage, and related balance-of-system components through Keen Labs Operations, Inc., and which contributed approximately $1,850,000 of product sales revenue during the quarter under VPP kit supply arrangements with installation partners. The remaining Owned Service Network and Managed Solutions operations are subject to ongoing strategic review. In addition, as further described in Note 15, Subsequent Events, the Company has entered into a share exchange agreement with Blue Cloud Softech Solutions Ltd. (“BCSSL”) pursuant to which the Company expects to transfer its Cambridge Energy Resources, India-based Transportation, and Geo Impex operations to BCSSL in exchange for BCSSL equity (the “BCSSL Transaction”). Upon consummation of the BCSSL Transaction, the Distributed Energy & Renewables segment is expected to be substantially eliminated.

The Company reports its results through seven operating segments: Owned Service Network, Managed Solutions, Distributed Energy & Renewables, Keen Labs, Logistics, Transportation, and Other. The Company earns revenue outside the United States from its Distributed Energy & Renewables and Transportation segments.

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NOTE 2: BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation: The accompanying condensed 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”). The Company has evaluated its relationships with other entities and has determined that it does not have any variable interest entities for which it is the primary beneficiary. 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”).

These condensed consolidated financial statements include the accounts of the Company, its majority owned subsidiaries, and its controlled subsidiaries over which the Company exercises majority board control; investment in joint ventures, in which the Company shares equal control with its partner, are accounted for under the equity method. Intercompany accounts, transactions, profits and losses have been eliminated in consolidation. Investments in entities where the Company holds at least a 20% ownership interest and has the ability to exercise significant influence, but not control, over the investee are accounted for using the equity method of accounting.

These condensed consolidated financial statements are presented in United States Dollars (“USD” or $), which is the functional currency of the Company.

These interim consolidated statements have been prepared pursuant to the rules and regulations of the SEC, which permit reduced disclosure for interim periods. 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, changes in stockholders’ deficit, operating results and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2025, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on April 16, 2026.

Reclassifications: Certain prior period amounts have been reclassified to conform to the current year presentation.

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 of 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, and determination of their useful life, valuation of acquired assets and assumed liabilities in a business combination, assessment of financial instruments as equity or liability, valuation of equity-classified and liability classified financial instruments, the useful lives of long-lived assets, goodwill, identified intangible assets, assumptions used in assessing impairment of long lived assets and goodwill, valuation of contingent consideration obligations, and the valuation of PPA for assets acquisition, 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. Effective for the three months ended March 31, 2026, the Company recast its segment structure to separately present its Keen Labs segment, which had previously been reported within Distributed Energy & Renewables. Prior-period segment information has been recast to conform to the current period presentation. There are seven 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 enterprises, infrastructure providers, homeowners, and light commercial building owners for their electrification and decarbonization needs, including system design, installation, monitoring, maintenance and repair of solar energy systems and HVAC solutions. 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.

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(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)

Distributed Energy & Renewables (“DER”) focuses on the delivery of solar and distributed energy solutions for commercial, residential, consumer, and industrial customers in India, including project development, EPC services and ongoing energy management, conducted through the Company’s Cambridge Energy Resources (“CER”) subsidiary. The DER segment’s operations are included within the scope of the BCSSL Transaction described in Note 15, Subsequent Events. Upon consummation of the BCSSL Transaction, the DER segment is expected to be substantially eliminated, and the Company will evaluate the appropriate financial statement presentation in accordance with ASC 205-20 in future filings.

(4)

Keen Labs segment focuses on the development of AI, control, and energy intelligence platforms that underpin the Company’s modern energy economy solutions, conducted primarily through Keen Labs Operations, Inc. The segment’s portfolio includes industrial IoT hardware, the Hi-C™ line of hybrid energy storage systems, the Hi-E™ line of lithium iron phosphate long - duration and virtual power plant (“VPP”)-enabling storage systems, smart heat pumps, and connected vehicle technologies, each integrated through the segment’s software platform to optimize performance across fleets, facilities, and distributed energy assets. The segment also conducts the Company’s U.S. wholesale procurement and distribution of solar panels, inverters, batteries, and related balance-of-system components to installation partners under VPP kit supply arrangements. The Keen Labs segment is not affected by the BCSSL Transaction and is expected to remain a core continuing operations segment of the Company.

(5)

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

(6)

Transportation segment focuses on the sale of hardware, software and technical services for electric vehicles to original equipment manufacturers (“OEMs”). OEMs have the option to buy access to the Technology Platform to remotely monitor the performance of the hardware.

(7)

Other segment encompasses corporate-level operations and the Company’s investment in Geo Impex India Private Limited, which holds approximately 76 acres of land near Chatrapur, Odisha, India, together with related entitlements and approvals for the development of a multimodal logistics park and AI-enabled data center campus. This segment did not generate revenue or incur material segment-level operating expenses during the periods presented. The segment’s principal asset is the underlying landholding and associated development rights.

Inventories: 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 its methodology 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 March 31, 2026 and December 31, 2025, an allowance for obsolete or slow-moving inventory was not required. The Company did not recognize a provision for inventory shrinkage for the three months ended March 31, 2026 and December 31, 2025.

Inventories consist of parts and finished goods that include material, labor and manufacturing overhead costs. Parts primarily consist of manufacturing materials, hardware, wiring, and piping. Inventories consisted of the following:


		March 31,			December 31,
		2026			2025
Parts		$	412,087		$	472,079
Finished Goods			181,937			161,719
Total		$	594,024		$	633,798

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Non-controlling Interest: The portion of equity not owned by the Company in entities controlled and consolidated by the Company are presented as non-controlling interest and classified as a component of condensed consolidated stockholders’ deficit, separate from total stockholders’ deficit on the Company’s condensed consolidated balance sheets. The amount recorded is based on the non-controlling interest holders’ initial investment, adjusted to reflect the non-controlling interest holder’s share of earnings or losses from the Company controlled entity, and any distributions received or additional contributions made by the non-controlling interest holder. Changes to the Company’s ownership that do not result in a loss of control are accounted for as equity transactions. The earnings or losses from the entity attributable to non-controlling interests are reflected in net income attributable to non-controlling interests on the accompanying condensed consolidated statements of operations and comprehensive loss. All significant intercompany accounts, transactions, and profits and losses were eliminated in consolidation.

Equity method investment: The Company accounts for investments in entities over which it has the ability to exercise significant influence, but not control or joint control, using the equity method of accounting in accordance with ASC Topic 323, Investments—Equity Method and Joint Ventures. Significant influence is generally presumed to exist when the Company holds 20% or more of the voting interest of an investee (or, for investments in limited liability companies and similar entities that maintain specific ownership accounts, when the Company holds more than a minor interest), although the determination requires judgment and consideration of all relevant facts and circumstances, including representation on the investee’s board of directors, participation in policy-making processes, material intra-entity transactions, interchange of managerial personnel, and technological dependency.

Under the equity method, the investment is initially recorded at cost and subsequently adjusted to recognize the Company’s proportionate share of the investee’s net income or loss, other comprehensive income or loss, and any distributions received. The Company’s share of the investee’s earnings or losses is recognized in the condensed consolidated statements of operations and comprehensive loss within “Equity in earnings (loss) of equity method investee.” Distributions received reduce the carrying amount of the investment. The Company eliminates its proportionate share of intra-entity profits and losses on transactions with equity method investees to the extent of its ownership interest, with the elimination recorded against equity in earnings (loss) and the carrying amount of the investment.

Any difference between the cost of the investment and the Company’s proportionate share of the underlying equity in the net assets of the investee at the acquisition date (basis difference) is allocated to the identifiable assets and liabilities of the investee based on their fair values, with any remaining unallocated amount recorded as equity method goodwill. Basis differences allocated to amortizable assets are amortized over the assets’ estimated useful lives as a reduction of equity method earnings; equity method goodwill is not amortized.

The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. An impairment loss is recognized when the decline in fair value below the carrying amount is determined to be other than temporary.

See Note 5 — Investment in Sun Solar for further information regarding the Company’s equity method investment.

Business combination and asset acquisition: The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, which would meet the requirements of a business. If determined to be a business combination, the Company accounts for the transaction under the acquisition method of accounting in accordance with ASC Topic 805 Business Combinations (“ASC 805”), which requires the acquiring entity in a business combination to recognize the fair value of all assets acquired, liabilities assumed, and any non-controlling interest in the acquiree and establishes the acquisition date as the fair value measurement point. Accordingly, the Company recognizes assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities, and non-controlling interest in the acquiree based on the fair value estimates as of the date of acquisition. The Company recognizes and measures goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired.

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The consideration for the Company’s business acquisitions may include future payments that are contingent upon the occurrence of a particular event or events. The obligations for such contingent consideration payments are recorded at fair value on the acquisition date. The contingent consideration obligations are then evaluated each reporting period. Changes in the fair value of contingent consideration, other than changes due to payments, are recognized as a gain or loss and recorded within change in the fair value of contingent consideration liabilities in the unaudited condensed consolidated statements of operations and comprehensive loss.

If determined to be an asset acquisition, the Company accounts for the transaction under ASC 805-50, which requires the acquiring entity in an asset acquisition to recognize assets acquired and liabilities assumed based on the cost to the acquiring entity on a relative fair value basis, which includes transaction costs in addition to consideration given. No gain or loss is recognized as of the date of acquisition unless the fair value of non-cash assets given as consideration differs from the assets’ carrying amounts on the acquiring entity’s books. Consideration transferred that is non-cash will be measured based on either the cost (which shall be measured based on the fair value of the consideration given) or the fair value of the assets acquired and liabilities assumed, whichever is more reliably measurable. Goodwill is not recognized in an asset acquisition and any excess consideration transferred over the fair value of the net assets acquired is allocated to the identifiable assets based on relative fair values.

Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred.

Acquisitions of non - controlling equity interests that do not result in control of the investee are outside the scope of ASC 805 and are accounted for under the Company’s policy for equity method investments described above.

Net 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 three months ended March 31, 2026 and 2025, 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 three months ended March 31, 2026 and 2025, there is no difference between basic and diluted net loss per share.

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:


Options			14,810
Warrants			408,359
Issuable shares upon potential conversion of convertible notes			2,079,108
Total			2,502,277

Convertible notes payable - The Company has elected the fair value option under ASC 825-10 to measure its convertible notes payable at fair value at each reporting date, with changes in fair value recognized in the unaudited condensed consolidated statements of operations. As a result of this election, the Company is not required to separately evaluate or bifurcate embedded conversion features under ASC 470, as the entire hybrid instrument is carried at fair value. Debt issuance costs associated with convertible notes for which the fair value option has been elected are expensed as incurred rather than deferred and amortized.

The change in fair value (inclusive of any Day 1 Gains or Losses) of approximately $(140,738) and $(319,695) was recorded as a component of other income (expense) in the accompanying unaudited condensed 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 three months ended March 31, 2026 and 2025.

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When convertible notes are converted into equity in accordance with their original contractual terms, the Company reclassifies the carrying amount of the liability to equity, and no gain or loss on extinguishment is recognized.

Reverse Stock Split - At a special meeting of stockholders held on January 15, 2026, the stockholders of the Company approved a reverse stock split of the Company’s Common Stock at a ratio between 1-for-5 and 1-for-50, with the final ratio to be determined by the Company’s Board of Directors (the “Board”) in its discretion.

The Board subsequently approved a 1-for-32 reverse stock split (the “Reverse Stock Split”) and authorized the Company to effect the Reverse Stock Split for state law purposes at 4:01 p.m. Eastern Time on April 17, 2026 (the “Effective Time”), such that the Company’s common stock began trading at market open on April 20, 2026 on a post-Reverse Stock Split-adjusted basis.

Mechanics of the Reverse Stock Split

As a result of the Reverse Stock Split, every 32 shares of the Company’s Common Stock issued and outstanding were automatically combined and converted into one (1) share of Common Stock, with any resulting fractional shares rounded up to the nearest whole share. The Reverse Stock Split did not change the par value of the common stock or the number of authorized shares.

Impact on Shares Outstanding

The following table sets forth the number of shares of Common Stock issued and outstanding immediately before and immediately after the Effective Time of the Reverse Stock Split:


Shares Outstanding		Pre-Split		Post-Split
Common Stock - issued and outstanding		169,968,082		5,312,911

All shares of the Company’s Common Stock, per-share data and related information included in the accompanying condensed consolidated financial statements have been retroactively adjusted as though the Reverse Stock Split had been effected prior to all periods presented.

Accounting Treatment and Retroactive Restatement

The Reverse Stock Split became effective subsequent to the balance sheet date of March 31, 2026 but prior to the issuance of these condensed consolidated financial statements. In accordance with ASC 260-10-55-12, all share and per-share data contained in these financial statements, including all comparative prior period information, have been retroactively restated to reflect the 1-for-32 Reverse Stock Split as though it had occurred at the beginning of the earliest period presented. Accordingly, proportionate adjustments have been made to the number of shares of Common Stock issuable upon, and the exercise or conversion prices applicable to, the Company’s outstanding stock options, warrants, and convertible notes, consistent with the anti-dilution provisions of the applicable instruments. The aggregate par value of the Common Stock was reduced proportionally with a corresponding reclassification from Common Stock to additional paid-in capital in stockholders’ deficit.

Significant Accounting Policies — During the three months ended March 31, 2026, there were no changes to the Company’s significant accounting policies from its disclosures in the Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on April 16, 2026.

Reclassifications — Certain prior period amounts have been reclassified to conform to the current year presentation.

Recently issued accounting pronouncements, not yet adopted

The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board. Management periodically reviews newly issued accounting standards to determine their potential impact on the Company’s consolidated financial statements and related disclosures.

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.

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In March 2024, the SEC issued its final climate disclosure rules (Rule 1), which require the disclosure of climate-related information in annual reports and registration statements, beginning with annual reports for the year ending December 31, 2025. The rules require disclosure in the audited financial statements of certain effects of severe weather events and other natural conditions above certain financial thresholds, as well as amounts related to carbon offsets and renewable energy credits or certificates, if material. We are currently evaluating the impact of the new rules and continue to monitor the status of the related legal challenges.

ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. In November 2024, the FASB issued this ASU that requires more detailed disclosure about certain costs and expenses presented in the income statement, including inventory purchases, employee compensation, selling expense and depreciation expense. The new guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The guidance does not affect recognition or measurement in our consolidated financial statements.

ASU 2024-04 Debt - Debt with Conversion and Other Options - Induced Conversions of Convertible Debt Instruments. In November 2024, the FASB issued this ASU which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversions or extinguishments. The amendments in this update are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

In May 2025, the FASB issued Accounting Standards Update No. 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (“ASU 2025-03”). ASU 2025-03 changes how companies determine the accounting acquirer in certain business combinations involving variable interest entities. The new guidance requires considering the factors used for other acquisition transactions to assess which party is the accounting acquirer. ASU 2025-03 is effective for the Company’s annual reporting periods beginning on January 1, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting this new accounting guidance on its financial statements and related disclosures.

In May 2025, the FASB issued Accounting Standards Update No. 2025-04, Compensation – Stock Compensation (Topic 718) and Revenue from Contracts With Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer (“ASU 2025-04”). ASU 2025-04 revises the definition of a performance condition, eliminates the forfeiture policy election for service conditions, and clarifies that the variable consideration constraint in Topic 606 does not apply to share-based consideration payable to customers. The new guidance requires entities to consistently account for share-based awards granted to customers by clarifying the treatment of vesting conditions and ensuring alignment with Topic 606 and Topic 718. ASU 2025-04 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adopting this new accounting guidance on its financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06- Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06), which is intended to simplify the capitalization guidance for internal-use software by removing references to project stages and clarifying when the capitalizing of eligible costs is required. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have had a material impact on the entity. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-11.

The Company does not believe any other new accounting pronouncements issued by the FASB that have not become effective will have a material impact on its consolidated financial statements.

NOTE 3: GOING CONCERN

The Company’s condensed 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.

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Conditions and Events Raising Substantial Doubt

As of March 31, 2026, the Company had cash and cash equivalents of approximately $2,472,000 and a working capital deficit of approximately $27,423,000. The Company incurred a net loss of approximately $6,670,000 and net cash used in operating activities of approximately $2,811,000 for the three months ended March 31, 2026. In addition, the Company’s common stock was delisted from the Nasdaq Capital Market in May 2025, which may limit access to capital markets and adversely impact the Company’s ability to raise additional financing.

These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are issued.

Management’s Evaluation

Management has evaluated the significance of these conditions in relation to the Company’s ability to meet its obligations as they become due within one year after the issuance date of these consolidated financial statements. The Company’s recurring losses from operations, negative operating cash flows, working capital deficit and limited liquidity are expected to continue to require additional funding to support ongoing operations and satisfy existing obligations. The delisting of the Company’s common stock further constrains access to capital and may increase the cost of financing. As a result, management has concluded that, absent the successful execution of its plans, the Company may be unable to meet its obligations as they become due.

Management’s Plans to Alleviate Substantial Doubt

Management is actively pursuing multiple initiatives intended to improve liquidity and support the Company’s ability to continue as a going concern, including:

●

raising additional capital through equity and/or debt financing arrangements;

●

continuing to expand revenue-generating activities across all segments;

●

improving operating margins through cost management initiatives, including reductions in discretionary spending and optimization of operating expenses; and

●

pursuing strategic partnerships, customer contracts and other business arrangements to enhance cash flows.

While management believes these plans are reasonable and within its control, there can be no assurance that such plans will be successfully implemented or will generate sufficient liquidity to meet the Company’s obligations. Accordingly, substantial doubt about the Company’s ability to continue as a going concern remains.

The condensed 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 that might result from the outcome of this uncertainty.

NOTE 4: DISPOSALS

During the three months ended March 31, 2026, the Company completed the divestitures described below as part of the strategic rationalization of its Owned Service Network segment. Neither disposition represents a strategic shift that has, or will have, a major effect on the Company’s operations or financial results, and accordingly, neither qualifies for presentation as a discontinued operation under ASC 205-20-45-1B. The results of the disposed businesses through their respective disposal dates remain included within continuing operations.

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Air Temp Service Co.

On January 1, 2026, the Company’s wholly-owned subsidiary Air Temp Service Co., Inc. (“ATSCI”) transferred all of its HVAC service operations conducted under the “Air Temp Service Co.” trade name to A.T.S. Heating & Cooling LLC (“ATS LLC”), a newly formed New Jersey limited liability company, pursuant to a Non-Cash Business Asset Transfer Agreement. The transferred assets included vehicles, equipment, marketing materials, building leases used in operations, and the “Air Temp Service Co.” trade name and associated goodwill, together with all rights and responsibilities necessary to operate the previously-conducted HVAC business. The Company received no cash consideration and ATS LLC did not assume any pre-Closing liabilities of ATSCI; all such obligations were retained by the Company.

In connection with the transfer, ATSCI retained a 1% non-voting, non-distributing membership interest in ATS LLC solely to facilitate participation in a shared health benefits arrangement. The retained interest carries no voting, distribution, or residual rights, is not separately transferable, and automatically terminates upon modification of the underlying benefits plan. Based on these terms, the Company concluded that the fair value of the retained interest is de minimis, and the interest was assigned a carrying amount of zero in the disposal accounting. ATSCI is also entitled to 2% of the net proceeds in the event ATS LLC is sold within 24 months of the effective date. This contingent right represents a gain contingency under ASC 450-30-25-1 and was not recognized as an asset at the disposal date; any future amount received will be recognized when realized. ATSCI is also subject to a five-year non-compete and non-solicit within ATS LLC’s service territories. As a result of the transaction, ATS is no longer affiliated with the Company.

The Company accounted for the transfer as the disposal of a business and deconsolidated ATSCI in accordance with ASC 805-10-55 and ASC 810-10-40. The full carrying amount of the goodwill of approximately $2,613,000 attributable to the Company’s prior acquisition of ATSCI. The Company recognized a loss on disposal of approximately $2,665,001, which is included in other income / (expense), net in the unaudited condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2026.

Green Energy Gains

On March 20, 2026, the Company completed the sale of its Green Energy Gains, Inc. (“GEG”) business — a Massachusetts-based energy audit and weatherization contractor operating under the MassSave Home Performance Contractor program — to Forge Team, Inc. (“Forge”), pursuant to an Asset Purchase Agreement dated March 20, 2026. The transferred assets included the GEG trade name and domain names, customer database and CRM, customer backlog and scheduled appointments, field equipment, tools, materials, inventory, vehicles, and all goodwill associated with the disposed business. The Company retained all pre-Closing accounts receivable and cash, and Forge did not assume any pre-Closing liabilities of the Company except as expressly provided in the Asset Purchase Agreement. The Company also retained sole responsibility for warranty and remediation work arising from services performed prior to closing.

Total consideration was $100,000, consisting of $50,000 in cash, of which $31,717 was received by March 31, 2026, $18,283 was received in April 2026, and $50,000 was placed into holdback. Of the total holdback, $30,000 is considered a Disclosure Holdback, which is releasable upon the Company’s delivery of a completed disclosure schedule and $20,000 is considered a General Holdback, which is releasable 90 days after closing, subject to successful employee transition, verification of customer data and backlog accuracy, confirmation of an active BPI certification, and the absence of any material breach of the Company’s representations and warranties. The Company concluded that the holdbacks represent indemnification security for the Company’s general representations and warranties and not contingent consideration; the full $100,000 was recognized as consideration at closing, with the $68,283 holdback recorded as a non-cash investing item.

The Company accounted for the transaction as the disposal of a business under ASC 805-10-55 and ASC 810-10-40. In accordance with ASC 350-20-40-3, goodwill of $259,347 specifically attributable to the disposed business was included in its carrying amount in determining the loss on disposal. The Company recognized a loss on disposal of approximately $243,963, which is included in other income (expense), net in the unaudited condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2026. The loss reflects total consideration of $100,000 less net identifiable assets disposed of approximately $84,000 and goodwill of $259,000 attributable to the disposed business. Following the closing, the Company is providing 60 days of transitional assistance to Forge at no additional cost and is subject to a three-year non-compete covering Massachusetts energy audit and weatherization services. The Company is also retaining certain vehicle lease obligations through the earlier of formal lease transfer or April 30, 2026.

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NOTE 5: INVESTMENT IN SUN SOLAR – EQUITY METHOD

On January 5, 2026 (the “Closing Date”), ConnectM Technology Solutions, Inc. (the “Company”) acquired 400,000 membership units of Sun Solar, LLC (“Sun Solar”), a Missouri limited liability company engaged in residential and small-commercial solar development and installation. The 400,000 units acquired represent 40% of Sun Solar’s 1,000,000 issued and outstanding membership units and were purchased from Sun Solar’s pre-closing sole member (the “Seller”). Following the closing, the Seller retains 60% of Sun Solar’s membership interests and continues to serve as Sun Solar’s sole Manager.

As sole consideration for the acquired interests, the Company issued 468,750 shares of its common stock, $0.0001 par value per share (the “Exchange Shares”), to the Seller as restricted securities under Rule 506 of Regulation D.

The investment is intended to establish Sun Solar as a strategic installation and distribution channel for the Company’s Keen Labs segment, including solar panels, inverters, battery storage systems and related balance-of-system components distributed in the U.S. through the Company’s wholly-owned subsidiary, Keen Labs Operations, Inc. (“Keen Labs”). In connection with the investment, the Company expects to support Sun Solar’s growth through product supply, technology integration and operational support, including the deployment of solar-plus-storage systems designed to participate in virtual power plant (“VPP”) programs. The Company is also evaluating transitioning certain of its U.S. solar installation activities within the Sun Solar platform and may provide additional capital to support the expansion of Sun Solar’s installation capacity and geographic reach.

The Company accounts for its investment in Sun Solar under the equity method of accounting in accordance with ASC Topic 323, Investments—Equity Method and Joint Ventures.

The investment in Sun Solar was initially recorded at $7,125,000, representing the fair value of the 468,750 Exchange Shares issued as consideration. In subsequent periods, the carrying amount of the investment is adjusted to recognize the Company’s 40% proportionate share of Sun Solar’s net income or loss, less any distributions received and any other-than-temporary impairment. The Company’s share of Sun Solar’s earnings or losses is presented in Equity in earnings (loss) of Sun Solar within other income (expense) on the unaudited condensed consolidated statements of operations and comprehensive loss.

Based on the indicators in ASC Topic 323, Investments - Equity Method and Joint Ventures, the 40% non-controlling membership interest, representation on Sun Solar’s board, material intra-entity product sales of approximately $1,850,000 from the Company’s wholly-owned subsidiary Keen Labs Operations, Inc. to Sun Solar during the three months ended March 31, 2026, and Sun Solar’s technological dependency on Keen Labs products, the Company has the ability to exercise significant influence, but not control, over Sun Solar. Because Sun Solar is a limited liability company that maintains specific ownership accounts for its members, the Company accounts for the investment under the equity method by analogy in accordance with ASC 323-30-25-1.

The initial $7,125,000 carrying amount of the investment in Sun Solar exceeded the Company’s 40% share of Sun Solar’s historical net assets at the Closing Date. In accordance with ASC 323-10-35-13, this basis difference is being provisionally allocated to Sun Solar’s identifiable assets and liabilities based on their respective fair values at the Closing Date, with any unallocated residual recognized as equity method goodwill. The Company is in the process of completing this allocation (with the assistance of a third-party valuation specialist) and accordingly, the amounts recorded as of the date of these unaudited condensed consolidated financial statements are provisional. Once finalized, amounts allocated to amortizable assets will be amortized over their respective useful lives as a reduction of the Company’s share of Sun Solar’s earnings; equity method goodwill is not amortized but is evaluated for other-than-temporary impairment under ASC 323-10-35-32. The Company’s share of Sun Solar’s net income for the three months ended March 31, 2026 does not include any basis - difference amortization that may result from the completed allocation.

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NOTE 6: INTANGIBLE ASSETS, NET

Intangible assets, net

Identifiable intangible assets consist of the following at March 31, 2026:


		Weighted Average
		Remaining Amortization					Accumulated
		Period (years)		Gross Amount			Amortization			Net Amount
Customer relationships		12.4		$	1,441,045			(1,070,234)		$	370,811
Trade name		4.9			868,355			(661,197)			207,158
Noncompetition agreement		0.9			91,167			(85,237)			5,930
Intellectual property		0.0			15,862			(15,862)			—
Intangible assets: Proprietary technology		6.6			864,000			(51,429)			812,571
Internally developed software		2.7			740,018			(343,398)			396,620
Intangible assets: Patent		8.3			19,324			(8,696)			10,628
Developed technology		3.4			440,530			(173,861)			266,669
Total intangible assets, net				$	4,480,301		$	(2,409,914)		$	2,070,387

Identifiable intangible assets consist of the following at December 31, 2025:


		Weighted Average
		Remaining Amortization					Accumulated
		Period (years)		Gross Amount			Amortization			Net Amount
Customer relationships		12.7		$	1,445,244			(1,020,533)		$	424,711
Trade name		5.0			868,355			(634,917)			233,438
Noncompetition agreement		1.1			91,167			(83,537)			7,630
Intellectual property		0.0			15,862			(15,862)			—
Intangible assets: Proprietary technology		6.8			864,000			(20,571)			843,429
Internally developed software		3.0			676,895			(331,559)			345,336
Intangible assets: Patent		8.5			19,324			(8,374)			10,950
Developed technology		3.6			440,530			(123,466)			317,064
Total intangible assets, net				$	4,421,377		$	(2,238,819)		$	2,182,558

Intangible assets are amortized over their estimated useful lives of 3 to 25 years using the straight-line method. Amortization expense was approximately $108,000 and $54,000 for the three months ended March 31, 2026 and 2025, respectively. Amortization expense over the next five years and thereafter is as follows:


Years ending December 31,		Amount
2026 (nine months)		$	436,133
2027			426,362
2028			380,961
2029			255,447
2030			187,350
Thereafter			384,134
Total		$	2,070,387

The above amounts do not include $160,400 of capitalized costs for internally developed software that are still in the development stage and not yet subject to amortization.

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NOTE 7: CONVERTIBLE DEBT

The fair value of convertible debt as on:


		March 31, 2026			December 31, 2025
2026 convertible notes		$	1,798,510		$	—
2025 convertible notes			3,649,413			3,778,303
SEPA Convertible note			1,146,000			1,543,000
		$	6,593,923		$	5,321,303

2026 Convertible Notes

The Company entered into nine convertible note agreements with a total principal of $2,007,150 issued at a discount for proceeds of $1,861,000 during the quarter ended March 31, 2026 (the “Q1 2026 Convertible Notes”). The Q1 2026 Convertible Notes bear interest at rates ranging from 10.0% to 20.0% per annum, with certain notes bearing one-time interest charges ranging from 10.0% to 14.0% and the remaining notes bearing interest at 20.0% per annum. The Q1 2026 Convertible Notes have maturity dates that range from 210 days to one year from the convertible note issuance date, optional conversion periods that range up to 210 days or upon default, and conversion prices that range from $8.00 to $12.80 for fixed-price notes. Certain notes contain variable conversion price provisions as described below.


Issuance Date	Principal Amount		Conversion Price			Conversion Option Period of Exercisability (from issuance date)	Maturity Date (from issuance date)
1/1/2026	$	250,000	$	8.00		210-days	210-days
1/7/2026		228,000	$	1.20	*	Upon Default	365-days
1/13/2026		250,000	$	8.00		210-days	210-days
1/14/2026		100,000	$	8.00		210-days	210-days
1/20/2026		227,150	$	1.20	*	Upon Default	365-days
1/22/2026		250,000	$	1.04	*	Upon Default	365-days
1/27/2026		250,000	$	8.00		210-days	210-days
2/12/2026		228,000	$	1.20	*	Upon Default	365-days
3/30/2026		224,000	$	1.12	*	Upon Default	365-days
	$	2,007,150

* The conversion price upon default has been calculated using the VWAP-based conversion price as per the respective agreements. This price may vary depending on the market conditions prevailing on the reporting date.

As of issuance and at March 31, 2026, the fair value of the remaining 2026 Convertible Notes was determined to be $1,861,000 and $1,798,510 respectively (see Note 9).

The 2026 Convertible Notes were convertible into 1,109,421 shares of the Company’s common stock on March 31, 2026.

SEPA Convertible Note

In December 2024, in connection with its Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, LTD. (“Yorkville”), the Company issued a Convertible Promissory Note (the “SEPA Convertible Note”) with an original principal amount of $2,500,000 and received net proceeds of $2,300,000 after an 8.0% original issue discount.

During the three months ended March 31, 2026, the Company made three cash payments totaling $375,000, of which $343,543 was applied to principal, $7,409 to accrued interest, and $24,048 to prepayment premiums. In addition, Yorkville converted $52,297 of principal and $11,194 of accrued interest into post split – 11,548 shares of common stock at a variable price of $5.50 per share pursuant to Section 3(a)(9) of the Securities Act of 1933.

As of March 31, 2026, the outstanding principal balance of the SEPA Convertible Note was approximately $991,135. The fair value of the SEPA Convertible Note was approximately $1,146,000 as of March 31, 2026, and is included within “Convertible debt, at fair value” under current liabilities on the condensed consolidated balance sheets. The change in fair value recognized in earnings was $71,119, for the three months ended March 31, 2026 and is included in “Other income (expense), net” in the condensed consolidated statements of operations and comprehensive loss.

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NOTE 8: DEBT

Debt consists of the following as of March 31, 2026 and December 31, 2025:


Description		March 31, 2026			December 31, 2025
Secured Promissory Notes		$	1,332,962		$	1,344,610
Small Business Administration Loans			902,113			904,911
Promissory Note			874,985			144,985
Vehicle Notes			277,054			298,439
Seller Notes			1,087,868			1,097,869
Avanti Notes (Related Party)			268,572			279,076
Real Estate Promissory Note			370,000			370,000
Business Loan and Security Agreement			924,478			1,056,305
Sale of Future Receipts			2,615,834			518,388
Purchase Order Financing			172,000			—
Notes Payable			2,896,033			2,921,033
Total		$	11,721,899		$	8,935,616
Less: debt discount and issuance costs			(1,492,901)			(657,064)
Less: notes payable, current portion			(8,530,688)			(7,098,279)
Notes payable, net of debt issuance costs and current portion		$	1,698,310		$	1,180,273

The Company recorded the interest expense of $331,968 and $263,485 for the three months ended March 31, 2026, and March 31, 2025, respectively. The accrued interest as of March 31, 2026, and December 31, 2025 were $620,202 and $392,253 respectively.

Promissory Notes

In January and February 2026, the Company’s subsidiary, Global Impex LLC, entered into two promissory notes with third-party lenders in aggregate principal amount of $730,000, each maturing January 31, 2029 and bearing interest at 14.0% per annum on a 360-day basis with all principal and accrued interest due at maturity. The notes are prepayable subject to a prepayment premium of 5.5% of the original principal amount, less accrued interest, if prepaid within 90 days of issuance.

Sale of future receipts

During the three months ended March 31, 2026, the Company entered into five sale-of-future-receipts agreements in which it sold and assigned an aggregate of approximately $2,604,000 of future receipts in exchange for aggregate net cash proceeds of approximately $1,547,072, resulting in aggregate discounts of approximately $1,056,928 recorded as debt discount and amortized to interest expense over the related contractual terms. The agreements require weekly remittances and have remaining terms ranging from approximately six months to one year. The gross carrying value of sale-of-future-receipts obligations increased to approximately $2,615,834 at March 31, 2026 from $518,388 at December 31, 2025.

Business Loan and Security Agreement:

On January 25, 2026, the Company entered into a term loan agreement (the “January 2026 Term Loan”) whereby the Company borrowed a principal amount of $80,000 at a fixed annual interest rate of 16.50%. The Company was required to make 24 equal monthly installment payments of approximately $3,933 throughout the term of the loan, resulting in aggregate principal and interest payments of approximately $94,393. Accordingly, the term was determined to be two years.

On March 9, 2026, the Company entered into a term loan agreement (the “March 2026 Term Loan”) whereby the Company borrowed a principal amount of $90,000 at a fixed annual interest rate of 21.50%. The Company was required to make 18 equal monthly installment payments of approximately $5,894 throughout the term of the loan, resulting in aggregate principal and interest payments of approximately $106,084. Accordingly, the term was determined to be one and a half years.

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Purchase Order Financing Facility

On September 18, 2025, County Comfort Services, LLC (“CCS”), a wholly owned subsidiary, entered into a Factoring & Security Agreement to provide purchase-order and accounts-receivable financing of up to $4,000,000. Under the facility, the lender may advance up to 85% of eligible receivables (generally up to 60 days from invoice date) or, for approved purchase orders, up to the cost of product plus shipping prior to invoicing. The facility is secured by a first-priority lien on substantially all of CCS’s accounts receivable and a blanket security interest in other assets and is guaranteed by the Company.

Interest/fees and repayment terms - For accounts receivable financing, charges accrue at 1.55% for the first 30 days after advance, plus 0.55% for each additional 10-day period thereafter; invoices outstanding more than 60 days incur an additional 1.00% per 10-day period (minimum $25 per invoice). For purchase order (“PO”) financing, charges accrue at 1.625% per 15-day period from the date funds are advanced to the vendor until the related invoice is verified and funded. The agreement includes a 12-month term, minimum annual volume equal to 100% of the facility amount, and standard reporting covenants. On March 9, 2026, the Company entered into an addendum to the facility extending PO financing to Keen Labs Operations, Inc., an affiliated entity. During the three months ended March 31, 2026, the Company utilized the facility to finance two purchase orders totaling approximately $1,942,577 for HVAC equipment purchases from Keen Labs Operations, Inc. Borrowings against this purchase order is approximately $172,000, which are still outstanding as on March 31, 2026.

NOTE 9: 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 March 31, 2026:


		Level I			Level II			Level III			Total
Liabilities
Derivative liabilities		$	—		$	—		$	292,677		$	292,677
3(a)(10) Settlement Agreement			—			—			3,687,000			3,687,000
Contingent consideration*			—			—			236,832			236,832
Convertible debt			—			—			6,593,923			6,593,923
Total liabilities		$	—		$	—		$	10,810,432		$	10,810,432

*	Contingent Consideration also includes current portion of crystallized contingent consideration amounting to $510,556 and RJZ settlement amounting to $1,024,002 which are not included in the table above as these are not fair valued.

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, 2025:


		Level I			Level II			Level III			Total
Assets
Forward purchase agreement		$	—		$	—		$	—		$	—
Total assets		$	—		$	—		$	—		$	—
Liabilities
Derivative liabilities		$	—		$	—		$	234,389		$	234,389
3(a)(10) Settlement Agreement			—			—			3,634,000			3,634,000
Contingent consideration*			—			—			330,226			330,226
Convertible debt			—			—			5,321,303			5,321,303
Total liabilities		$	—		$	—		$	9,519,918		$	9,519,918

*	Contingent Consideration also includes current portion of crystallized contingent consideration amounting to $417,163 and RJZ settlement amounting to $1,024,001 which are not included in the table above as these are not fair valued.

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The following table provides a reconciliation of our assets and liabilities measured at fair value using Level 3 inputs:


		Forward Purchase Agreement			Derivative liabilities			3(a)(10) Settlement Agreement			Contingent consideration (1)			Convertible debt
Balance, December 31, 2025		$	—		$	(234,389)		$	(3,634,000)		$	(330,226)		$	(5,321,303)
Cash payment/(receipt)			—			—			—			—			533,890
Issuances			—			—			—			—			(1,861,000)
Commitment shares issued															102,030
Settlement through issuance of Company’s common stock			—			—			—			—			93,198
Change in fair value			—			(58,288)			(53,000)			—			(104,238)
Loss on issuance of financial instruments			—			—			—			—			(36,500)
Reclass from level 3			—			—			—			93,394			—
Ending balance, March 31, 2026		$	—		$	(292,677)		$	(3,687,000)		$	(236,832)		$	(6,593,923)

(1)	Contingent Consideration also includes current portion of crystallized contingent consideration amounting to $510,556 and RJZ settlement amounting to $1,024,002 which are not included in the table above as these are not fair valued.

Fair Value of Level 3 Financial Instruments

Certain financial instruments, including SEPA convertible notes, instruments related to 3(a)10 Settlement Agreement and Derivative Liabilities contain embedded features that require bifurcation and measurement at fair value under ASC 815. These instruments are classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs.

In prior periods, the Company utilized a Monte Carlo simulation model to estimate fair value where valuation depended on future stock price variability and path-dependent assumptions. As of March 31, 2026, for certain convertible notes, the reset provisions were based on the Company’s closing stock price at year-end and were not dependent on future contingent events, and accordingly fair value was determined using the intrinsic value of the reset feature at the measurement date. For other convertible notes where the settlement outcome remained uncertain, the Company applied a probability-weighted pay-off approach, assigning probabilities to each potential settlement scenario (e.g., cash repayment, conversion, or default) to estimate the fair value of the embedded derivative at the reporting date.

Convertible Notes Payable

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:


		March 31, 2026						December 31, 2025
		Carrying Value			Fair Value			Carrying Value			Fair Value
2025 Convertible Notes		$	3,236,210		$	3,649,413		$	3,212,250		$	3,778,303
2026 Convertible Notes			2,007,150			1,798,510			—			—
SEPA Convertible Note		$	991,135			1,146,000			1,386,975			1,543,000
		$	6,234,495		$	6,593,923		$	4,599,225		$	5,321,303

The change in fair value on convertible debt resulted a loss of approximately $104,000 and $320,000 for the three months ended March 31, 2026 and 2025, respectively, which was recorded as a component of other income (expense) on the accompanying condensed consolidated statements of operations and comprehensive loss.

2026 Convertible Notes, and 2025 Convertible Notes: The 2026 Convertible Notes, and 2025 Convertible Notes are re-measured to fair value at each reporting period using the following relevant assumptions:


		March 31, 2026			December 31, 2025
Discount rate			20.0-201.0	%		20.0 - 65.0	%
Probability of conversion at maturity scenario			50.0-95.0	%		30.0 -100.0	%
Probability of voluntary conversion scenario/event of default scenarios			5.0-50.0	%		0.0 - 70.0	%
Remaining term for conversion at maturity scenario/event of default scenarios			0.25 years			0.01 - 0.52 years
Remaining term for voluntary conversion scenario			0.36 years			0.01 - 0.52 years

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SEPA Convertible Note:

The fair value measurement of the SEPA Convertible Note is classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs (refer to Note 7).

The fair value of the SEPA Convertible Note as of March 31, 2026 was $1,146,000, as determined by an independent third-party valuation firm using a discounted cash flow methodology applied to the scheduled installment payments. The key assumptions used in the valuation were as follows:


Assumptions	March 31, 2026			December 31, 2025
Valuation technique		Discounted cash flow of scheduled installment payments			Discounted cash flow of scheduled installment payments
Outstanding balance	$	991,135			1,386,975
Bi-weekly payment amount		250,000			250,000
Expected IPO / settlement date		June 30, 2026			March 31, 2026
Discount rate		16.0	%		15.0	%
Fair value of outstanding balance	$	978,000			1,368,000
Termination fee (payable in Common Stock at IPO price)	$	168,000			175,000
Fair value of SEPA (post-termination)	$	—			—
Total fair value of Pre-Paid Advance Obligation	$	1,146,000			1,543,000

The discount rate of 16.0% was selected based on an analysis of market-based rates of return, including the ICE BofA CCC & Lower US High Yield Index (13.9%), the S&P U.S. High Yield Corporate Bond CCC index (16.8%), and the Pepperdine Private Capital Markets mezzanine required rate of return (19.0%). The fair value measurement is subject to estimation uncertainty, as it is sensitive to changes in the discount rate and the timing of the expected IPO. Pursuant to the Settlement and Termination Agreement, the SEPA was terminated, and its value was determined to be zero; accordingly, the remaining obligation consists solely of the scheduled installment payments and the termination fee.

3(a)(10) Settlement Agreement

On January 28, 2025, the Company entered into a Settlement Agreement and Stipulation (the “Settlement Agreement”) with Last Horizon, LLC (“Last Horizon”), pursuant to which the Company agreed to issue shares of its common stock to Last Horizon in exchange for the settlement of bona fide outstanding liabilities totaling approximately $8,908,077 (the “Claim”) that Last Horizon had acquired from various Company creditors. The Settlement Agreement was approved by the Circuit Court of the 12th Judicial Circuit of the State of Florida, and the issuance of common stock to Last Horizon is exempt from the registration requirements of the Securities Act pursuant to Section 3(a)(10) thereof.

The Company elected the fair value option under ASC 825 for the 3(a)(10) Settlement Agreement obligation. The obligation represents a freestanding financial instrument indexed to the Company’s common stock and is classified as a liability in accordance with ASC 480, as it embodies an obligation that may be settled with a variable number of shares. The liability is remeasured at fair value at each reporting date, with changes in fair value recognized in other (expense) income, net in the consolidated statements of operations and comprehensive loss.

The change in fair value of the 3(a)(10) Settlement Agreement obligation resulted in a loss of approximately $53,000 and $606,000 for the three months ended March 31, 2026 and 2025, respectively.

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The fair value measurement is classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs. As of March 31, 2026, the fair value of the 3(a)(10) Settlement Agreement obligation was $3,687,000, as determined by an independent third-party valuation firm using a Monte Carlo simulation with 50,000 trials under a scenario-based framework. The valuation considered two scenarios: (i) a base case scenario (95.0% probability), under which the Conversion Price equals the lower of $1.09 or 85.0% of the market price, and (ii) a default scenario (5.0% probability), under which the Conversion Price (pre-split) equals the lower of $1.09 or 75.0% of the market price. The Company’s stock price was simulated using Geometric Brownian Motion through the expected last share issuance date of August 18, 2026. Key assumptions as of March 31, 2026 were as follows:


Input	Value
Stock price as of valuation date	$	0.20
Equity volatility		89.0	%
Risk-free rate		3.7	%
Expected term		0.46 year
Drift term		3.6	%

Derivative Liabilities

The change in fair value of derivative liabilities resulted in a loss of approximately $58,000 and $34,000 for the three months ended March 31, 2026 and 2025, respectively, which were recorded as a component of other income on the accompanying consolidated statements of operations and comprehensive loss.

Shares to be issued at settlement of derivative liabilities

The shares of the Company’s common stock to be issued in settlement of the above derivative liabilities are dependent on the share price at a future date and, as such, cannot be exactly determined as of March 31, 2026. Accordingly, an estimate has been made using the option pricing model to determine the liability value.

NOTE 10: RELATED PARTY TRANSACTIONS

The following is a description of certain relationships and transactions that exist or have existed or that the Company has entered into, in each case since January 1, 2025, with its directors, executive officers, or stockholders who are known to the Company to beneficially own more than ten 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, 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 (pre-split) of the Company’s common stock.

In connection with the conversion agreement, the Sponsor of MCAC received a one-time share reset adjustment that was settled during the quarter ended March 31, 2025 through the issuance of 205,949 shares (pre-split) of the Company’s common stock (see Note 4). The derivative was settled during 2025 and no derivative liability was outstanding as of March 31, 2026. For the three months ended March 31, 2026 and 2025, the Company recorded a change in fair value on these derivative liabilities of $0 and $30,000 which was included as a component of change in fair value of derivative liabilities on the accompanying condensed consolidated statements of operations and comprehensive loss.

Avanti Notes

In November 2025, in connection with the acquisition of controlling interest in Geo Impex & Logistics Pvt. Ltd., the Company assumed a note payable of approximately $279,000 due to Avanti, maturing on October 31, 2026.

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There was no interest expense recognized on the promissory notes with the Related Party Lender for the three months ended March 31, 2026 and 2025, respectively.

Keen Labs Supply and Services Agreement with Sun Solar, LLC

In connection with the equity method investment (Note 5), Keen Labs Operations, Inc. (“Keen Labs”), a wholly-owned subsidiary of the Company, entered into a Supply and Services Master Agreement (the “Keen Labs MSA”) with Sun Solar, effective January 6, 2026, pursuant to which Keen Labs procures and supplies solar panels, inverters, batteries, and related balance-of-system components to Sun Solar at actual invoiced product cost (including procurement and logistics fee) plus marketing and other professional services after adding a mark-up of 10%. The Keen Labs MSA is non-exclusive, terminable by either party upon 30 days’ written notice. Additional services, including marketing, supply chain consulting, and working capital support, may be provided under separate statements of work.

During the three months ended March 31, 2026, the Company recognized revenue of approximately $1,849,925 and cost of revenue of approximately $1,168,772 under the Keen Labs MSA, reported within the Keen Labs segment.

The Company recorded a equity in earnings of Sun Solar of approximately $281,523 for the three months ended March 31, 2026, which is included in “Other income (expense), net” in the condensed consolidated statements of operations and comprehensive loss. In accordance with ASC 323-10-35-7, the Company eliminated its proportionate share (40%) of unrealized intra-entity gross profit on Keen Labs products remaining in Sun Solar’s inventory at March 31, 2026, totaling approximately $57,217, which reduced both equity in earnings and the carrying amount of the equity method investment. The carrying value of the Company’s investment in Sun Solar was approximately $7,406,523 as of March 31, 2026.

Shares Issued to Related Parties

During the three months ended March 31, 2026, the Company issued 26,406 shares of restricted common stock to its non-employee directors as compensation for board service. The shares were fully vested upon issuance and are subject to customary transfer restrictions under applicable securities laws. The Company recognized approximately $221,000 of stock-based compensation expense, included in selling, general and administrative expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss, equal to the grant-date fair value of the awards.

NOTE 11: 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. The 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 these 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 estimates involve significant judgment, 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 March 31, 2026 and December 31, 2025, other than the reserve recorded in connection with the Florida Solar acquisition litigation described below, there were no matters for which a reserve was required to be established.

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Florida Solar acquisition litigation (Zrallack and RJZ Holdings LLC v. Aurai LLC, ConnectM Florida RE LLC, and Florida Solar Products, Inc.; Florida 19th Judicial Circuit—St. Lucie County)

On February 26, 2024, Robert J. Zrallack and RJZ Holdings LLC (the “Plaintiffs”) filed suit against Aurai LLC (“Aurai”), ConnectM Florida RE LLC (“ConnectM Florida RE”), and Florida Solar Products, Inc. (“Florida Solar”) (collectively, the “Subsidiaries”), each wholly owned subsidiaries of ConnectM Technology Solutions, Inc. (“ConnectM” or the “Company”), in connection with the Company’s 2022 acquisition of Florida Solar and related real estate transactions.

The matter was compelled to arbitration pursuant to the Stock Purchase Agreement. Following evidentiary hearings conducted in June and July 2025, the arbitrator issued an Interim Arbitration Award on September 11, 2025. Subsequent orders were entered addressing modification and attorneys’ fees and costs. On December 25, 2025, the arbitrator issued a Final Award incorporating prior rulings.

The Final Award includes:

●

Approximately $446,945 awarded in connection with claims relating to a mortgage and promissory note (plus continuing per diem interest);

●

Approximately $1,342,480 in damages relating to additional claims under the Stock Purchase Agreement (plus continuing per diem interest);

●

Attorneys’ fees and costs totaling approximately $418,138 as of September 11, 2025, with interest accruing thereafter;

●

Arbitrators’ fees and costs totaling approximately $74,013; and

●

Certain equitable and payment-related relief, including obligations relating to specified debt instruments and credit card balances.

In aggregate, Plaintiffs’ motion to confirm seeks entry of judgment totaling approximately $2,500,000 plus continuing interest.

On December 30, 2025, Plaintiffs filed a motion to confirm the arbitration award in the Circuit Court for the 19th Judicial Circuit (St. Lucie County, Florida), later amended on January 7, 2026. On January 7, 2026, Plaintiffs also served post-award discovery requests styled as “discovery in aid of execution.” The Subsidiaries filed a motion to strike such discovery and for a protective order on the basis that no final judgment has been entered and discovery in aid of execution is premature.

As of the date of this filing:

●

The arbitration award has not yet been confirmed by the court;

●

No final enforceable judgment has been entered;

●

Post-award motion practice remains pending; and

●

The Subsidiaries are pursuing available legal remedies, including seeking vacatur and opposing confirmation.

Following a hearing held on April 30, 2026, the court denied the Company’s motion to vacate and granted Plaintiffs’ motion to confirm the arbitration award. Plaintiffs’ counsel subsequently circulated a proposed final judgment which, if entered substantially in its current form, would include aggregate damages, attorneys’ fees, costs, foreclosure-related relief, statutory interest, and other payment obligations totaling in excess of $2.5 million. The Company is evaluating its remaining legal options, including a potential appeal of the order confirming the arbitration award.

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The Company has recorded a litigation reserve of $1,024,002 in connection with this matter based on management’s assessment of probable loss under ASC 450. The amount reserved reflects management’s current estimate of probable exposure; however, the total amount sought by Plaintiffs significantly exceeds the recorded reserve. The ultimate outcome of the confirmation proceedings, any motion to vacate, and related enforcement proceedings cannot be predicted with certainty. The final resolution of this matter could result in adjustments to the amount reserved, which could be material to the Company’s consolidated financial statements in the period such adjustment is determined.

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. During the three months ended March 31, 2026 and 2025 there were no employer contributions to the plan.

NOTE 12: REVENUES

The following table summarizes disaggregated revenue information by geographic area based upon the customer’s country of domicile:


		Three Months Ended March 31,
		2026			2025
United States		$	7,645,403		$	8,254,356
India			527,150			733,987
			8,172,553			8,988,343

As a practical expedient, the Company has elected not to disclose the aggregate amount of the transaction price allocated to unsatisfied performance obligations, as our contracts have an original expected duration of less than one year.

Contract Assets

Contract assets consist of work in process for unrecognized revenue. The following table summarizes the contract asset activity for the three months ended March 31, 2025 and 2026:


Balance as of January 1, 2025	$	206,750
Recognition of costs on contracts where performance obligations completed during the period		(206,750)
Deferral of costs on contracts where performance obligations were not complete	$	167,126
Balance as of March 31, 2025		167,126

Balance as of January 1, 2026		303,910
Recognition of costs on contracts where performance obligations completed during the period		(287,375)
Deferral of costs on contracts where performance obligations were not complete	$	128,806
Balance as of March 31, 2026	$	145,341

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Contract Liabilities

Contract liabilities represent obligations to transfer goods or services to a customer for which the Company has received consideration in advance of performance. The following table summarizes the contract asset activity for the three months ended March 31, 2026 and 2025:


Balance as of January 1, 2025	$	602,469
Recognition of revenue recorded as a contract liability as of January 1, 2025		(389,375)
Customer advance payments		759,308
Balance as of March 31, 2025		972,402

Balance as of January 1, 2026		772,013
Recognition of revenue recorded as a contract liability as of January 1, 2026		(490,756)
Customer advance payments		1,362,824
Balance as of March 31, 2026	$	1,644,081

NOTE 13: INCOME TAXES

We determine the interim tax benefit (provision) by applying an estimate of the annual effective tax rate to the year-to-date pretax book income (loss) and adjusting for discrete items during the reporting period, if any. Tax jurisdictions with losses for which tax benefits cannot be realized, as well as significant unusual or infrequently occurring items that are separately reported, are excluded from the annual effective tax rate.

Our tax rate for the three months ended March 31, 2026 of 21% was in line with the federal statutory rate of 21% and overall was impacted by the effect of valuation allowances on deferred tax assets, the forecasted mix of earnings in domestic and international jurisdictions, the effect of cross-border tax laws, nondeductible executive compensation, a benefit related to stock-based compensation, tax credits, state taxes, and uncertain tax positions.

While our tax rate for the three months ended March 31, 2025 of 21% was in line with the federal statutory rate of 21%, it was overall impacted by the effect of valuation allowances on deferred tax assets, the forecasted mix of earnings in domestic and international jurisdictions, U.S. taxation of foreign earnings including GILTI (Global Intangible Low Taxed Income) tax, net of Section 250 deduction (largely driven by research and development capitalization), Subpart F income, a benefit related to stock-based compensation, tax credits, state taxes, and uncertain tax positions.

For the three months ended March 31, 2026 and 2025, the Company recorded no income tax expense (benefit), respectively, due to the generation of net operating losses, the benefits of which have been fully reserved.

The Company has evaluated the positive and negative evidence bearing upon its ability to realize its deferred tax assets, which primarily consist of net operating loss carry forwards. The Company has considered its history of cumulative net losses, estimated future taxable income and prudent and feasible tax planning strategies and has concluded that it is more likely than not that the Company will not realize the benefits of its deferred tax assets. As a result, as of December 31, 2025 and March 31, 2026, the Company has maintained a full valuation allowance against its net deferred tax assets.

NOTE 14: REPORTABLE SEGMENTS

The Company’s operations are organized into seven reporting segments: Owned Service Network, Managed Solutions, Distributed Energy & Renewables, Keen Labs, Logistics, Transportation, and Other. 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.

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Selected information by reportable segment is presented in the following tables:


		Three Months Ended March 31, 2026
														Distributed
		Owned Service			Managed									Energy &
		Network			Solutions			Logistics			Transportation			Renewables			Keen Labs		Other			Total
Revenues		$	2,349,896			334,241			3,111,340			407,941			119,209		1,849,926			—		$	8,172,553
Cost of revenue			1,918,536			227,899			2,427,097			460,927			67,237		1,205,815			—			6,307,511
Selling, general and administrative expenses
Facility costs			77,241			12,102			—			14,720			24,468		—			12,674			141,205
Insurance expenses			91,333			8,798			21,945			170			157		—			129,514			251,917
Marketing expenses			136,641			33,940			—			—			136		163,642			213,728			548,087
Operational expenses			428,414			(52,114)			255,256			29,667			31,414		365,056			895,108			1,952,801
Compensation and related benefits			602,622			96,611			328,412			133,844			71,441		124,451			439,344			1,796,725
Travel & entertainment			19,782			(1,221)			14,256			11,622			—		—			44,615			89,054
Vehicle expenses			89,377			6,960			—			—			—		—			1,003			97,340
Depreciation			31,144			—			—			4,907			59,392		—			9,646			105,089
Amortization			25,559			—			41,464			8,629			1,089		—			31,179			107,920
Total selling, general and administrative expenses			1,502,113			105,076			661,333			203,559			188,097		653,149			1,776,811			5,090,138
(Loss) income from operations			(1,070,753)			1,266			22,910			(256,545)			(136,125)		(9,038)			(1,776,811)			(3,225,096)
Other income (expense), net		$	(3,118,146)		$	—		$	5,769		$	(43,447)		$	—		(2,807)		$	(567,541)		$	(3,726,172)
Equity in earnings of Sun Solar			—			—			—			—			—		—			281,523			281,523
Net loss		$	(4,188,899)		$	1,266		$	28,679		$	(299,992)		$	(136,125)		(11,845)		$	(2,062,829)		$	(6,669,745)
Total assets		$	4,291,230		$	731,774		$	3,756,092		$	981,712		$	3,697,589		1,376,541		$	24,987,077		$	39,822,015
Capital expenditures			1,155			—			—			—			—		—			—			1,155

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	Three Months Ended March 31, 2025
													Distributed
	Owned Service			Managed									Energy &
	Network			Solutions			Logistics			Transportation			Renewables			Keen Labs		Other			Total
Revenues	$	4,247,541			1,756,368			2,537,430			447,004			—		—			—		$	8,988,343
Cost of revenue		2,229,825			1,341,191			2,009,534			394,060			—		—			—			5,974,610
Selling, general and administrative expenses
Facility costs		35,841			101,033			—			13,554			—		—			—			150,428
Insurance expenses		40,419			22,730			13,695			198			—		—			99,920			176,962
Marketing expenses		1,452,102			74,784			—			1,167			—		—			537,044			2,065,097
Operational expenses		493,218			(538,229)			321,537			71,885			—		—			1,357,011			1,705,422
Compensation and related benefits		865,261			659,299			—			48,446			—		—			240,185			1,813,191
Travel & entertainment		29,050			3,244			8,450			4,572			—		—			54,926			100,242
Vehicle expenses		66,150			99,979			—			—			—		—			—			166,129
Depreciation		53,335			—			—			2,037			—		—			—			55,372
Amortization		34,335			—			9,335			10,341			—		—			322			54,333
Total selling, general and administrative expenses		3,069,711			422,840			353,017			152,200			—		—			2,289,408			6,287,176
(Loss) income from operations		(1,051,995)			(7,663)			174,879			(99,256)			—		—			(2,289,408)			(3,273,443)
Other (expense) income, net		(55,905)			—			—			—			—		—			(3,647,991)			(3,703,896)
Net (loss) income from operations before income taxes	$	(1,107,900)		$	(7,663)		$	174,879		$	(99,256)		$	—		—		$	(5,937,399)		$	(6,977,339)
Total assets	$	4,503,230		$	—		$	3,195,017		$	1,731,343		$	—		—		$	3,325,071		$	12,754,661
Capital expenditures	$	—		$	—		$	—		$	—		$	—		—		$	—		$	—

As of March 31, 2026 and December 31, 2025 the Company’s total assets located outside the United States were approximately $20,748,000 and $20,000,000, respectively. For the three months ended March 31, 2026, two customers represented more than 10% of total company revenue and for the three months ended March 31, 2025, no single customer represented more than 10% of total company revenue.

The following tables summarize disaggregated revenue information by geographic area based upon the customer’s country of domicile:


		Three Months Ended March 31, 2026
		Owned Service			Managed									Distributed Energy &
		Network			Solutions			Logistics			Transportation			Renewables			Keen Labs		Other			Total
United States		$	2,349,896		$	334,241		$	3,111,340		$	—		$	—		1,849,926		$	—		$	7,645,403
Other			—			—			—			407,941			119,209		—			—			527,150
Total		$	2,349,896		$	334,241		$	3,111,340		$	407,941		$	119,209		1,849,926		$	—		$	8,172,553


		Three Months Ended March 31, 2025
		Owned Service Network			Managed Solutions			Logistics			Transportation			Distributed Energy & Renewables			Keen Labs		Other			Total
United States		$	3,960,558		$	1,756,368		$	2,537,430		$	—			—		—		$	—		$	8,254,356
Other			286,983			—			—			447,004			—					—			733,987
Total		$	4,247,541		$	1,756,368		$	2,537,430		$	447,004			—		—		$	—		$	8,988,343

NOTE 15: SUBSEQUENT EVENTS

The Company has evaluated subsequent events from March 31, 2026 through the date these interim financial statements were issued, in accordance with ASC 855, Subsequent Events. No events were identified that require adjustment to the accompanying financial statements. All subsequent events identified are non-recognized subsequent events.

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Divestiture of India Operations — Blue Cloud Share Swap Transaction

On April 6, 2026, the Company entered into a definitive Share Swap Agreement with Blue Cloud Softech Solutions Limited (“Blue Cloud”) (BSE: 539607), a publicly listed Indian technology and infrastructure company, pursuant to which Blue Cloud will acquire 100% of the issued and outstanding equity shares of Global Impex Inc. (“GIX”), a Delaware corporation and subsidiary of the Company, in exchange for newly issued equity shares of Blue Cloud on a preferential basis. GIX holds, directly and through its subsidiaries, the Company’s India-based operating platform, including ConnectM Technology Solutions Private Limited, Cambridge Energy Resources Private Limited, CER Microgrids Private Limited, CER Rooftop Private Limited, and Geo Impex & Logistics Private Limited. GIX is included in the “other” segment.

Under the terms of the agreement, Blue Cloud will issue an aggregate of 170,000,000 equity shares of face value ₹1 each at an issue price of ₹21.93 per share (the “BCSSL Consideration Shares”) to the shareholders of GIX in exchange for 212,500,000 equity shares of GIX, reflecting a swap ratio of 100 Blue Cloud shares for every 125 GIX shares. Of the total consideration shares, ConnectM is expected to receive 160,000,000 shares and AstraBridge Inc., a minority shareholder of GIX, is expected to receive 10,000,000 shares. The implied aggregate transaction value is approximately $39.6 million based on closing exchange rate. The share valuations were determined by an independent IBBI-registered valuer in accordance with the Companies Act, 2013 and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

Upon closing, ConnectM’s 160,000,000 Blue Cloud shares would represent approximately 17.33% of Blue Cloud’s post-issue equity share capital of 923,081,600 shares. The BCSSL Consideration Shares will rank pari passu with existing Blue Cloud equity shares and will be subject to a lock-in period of six months from the date of trading approval, in accordance with Regulation 167 of the SEBI ICDR Regulations.

On May 4, 2026, Blue Cloud’s shareholders approved the transaction at an Extraordinary General Meeting, including the increase in authorized share capital, the preferential issuance of equity shares for consideration other than cash, and all related resolutions required under Indian corporate and securities law. The transaction remains subject to additional conditions precedent, including receipt of in-principle approval from BSE Limited for the preferential allotment, execution and delivery of all transfer instruments and board resolutions to effect the transfer of GIX shares, and satisfaction of other customary regulatory requirements. Based on the expected regulatory timeline, management currently anticipates that closing will occur during the fourth quarter of calendar year 2026.

The India operations held through GIX contributed approximately $2.0 million in revenue during fiscal year 2025, or approximately 5.8% of the Company’s consolidated annual revenue of $35.8 million. The Company has reviewed its existing merchant cash advance agreements and convertible note instruments and has confirmed that no financial covenants or cross-default provisions are triggered by, or tied to, the India-based assets or operations being divested.

Upon closing, the Company’s Blue Cloud shareholding accounting evaluation is under consideration, with final classification and measurement under U.S. GAAP to be determined based on then-applicable facts and circumstances, including the availability of quoted market prices, the existence of transfer restrictions during the lock-in period, the Company’s level of influence over Blue Cloud, and other relevant considerations. The Company expects the transaction to result in a non-cash gain, subject to final accounting determination at closing.

Acquisition of Harry Kahn Associates, Inc.

On March 10, 2026, the Company entered into an Exchange Agreement (the “HKA Exchange Agreement”) with the stockholders of Harry Kahn Associates, Inc. (“HKA”), a defense-focused technical data development company headquartered in Hagerstown, Maryland. The HKA Exchange Agreement provided for the Company’s acquisition of 100% of the issued and outstanding capital stock of HKA in exchange for 12,500 shares of the Company’s common stock. Closing of the transaction was conditioned upon, among other items, the transfer of the consideration shares to the HKA stockholders, which occurred on April 3, 2026. Accordingly, the Company will account for the acquisition of HKA as a business combination under ASC 805 effective April 3, 2026, the closing date.

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ConnectM Technology Solutions, Inc. 10-Q