ConnectM Files 10-Q, Announces Third Quarter 2024 Financial Results

By: ConnectM Technology Solutions, Inc. via GlobeNewswire

December 16, 2024 at 09:28 AM EST

~ Results In-Line with Previously Announced Third Quarter Preliminary Results ~

~ Third Quarter Revenue Increased 39% to $6.1 Million YoY and 11% from Second Quarter 2024 ~

~ FY2024 Projected Revenue of $20.0 Million, Representing a 20% YoY Increase ~

~ On Track to Achieve Operating Cash Flow Breakeven by The First Quarter of 2025 ~

MARLBOROUGH, Mass., Dec. 16, 2024 (GLOBE NEWSWIRE) -- ConnectM Technology Solutions, Inc. (Nasdaq: CNTM) (“ConnectM” or the “Company”), a technology company focused on the electrification economy, has filed its 10-Q with the Securities and Exchange Commission (the “SEC”) and released its financial results for the quarter ended September 30, 2024.

Third Quarter and First Nine Months 2024 Financial Results

Revenue for the third quarter of 2024 increased to $6.1 million compared to $4.4 million in the same year ago period. Revenue in the first nine months of 2024 increased 12% to $17.3 million, when compared to $15.5 million in the same prior year period.
- Cost of revenue for the third quarter of 2024 increased to $4.2 million compared to $3.7 million in the same year ago period. Cost of revenue in the first nine months of 2024 was $11.0 million, in line with $11.0 million in the same prior year period.
Net loss attributable to shareholders for the third quarter of 2024 was $12.2 million compared to $2.6 million in the comparable prior year period. For the first nine months of 2024, net loss attributable to shareholders increased to $17.0 million, as compared to a net loss of $5.0 million in the comparable prior year period.

2024 Operational Updates

Successfully completed De-SPAC and began trading on the Nasdaq Global Market in July 2024.
Launched AI-powered heat pump integrated with ConnectM's Energy Intelligence Network powered by the Company’s proprietary data model, for residential and light commercial use, optimized for performance, energy efficiency and reducing customer costs.
Entered into agreement to acquire a controlling interest in DeliveryCircle, a nationwide technology enabled final mile delivery company which connects businesses looking for a last-mile delivery solution. This strategic acquisition expands ConnectM’s Transportation & Logistics segment in the United States.
Eliminated $13.7 million of debt with debt-to-equity swap to deleverage the balance sheet.

Subsequent Events

Entered into Managed Services Agreement (“MSA”) with Devlin Energy, expanding ConnectM’s business portfolio mix and revenue generation with an array of residential and commercial distributed energy capabilities.
Completed acquisition of Green Energy Gains Inc., a Massachusetts Home Performance Contractor of energy and weatherization assessments, and instrumental in the distribution and installation of ConnectM’s electric heat pumps, augmenting the Company’s Building Electrification segment.
ConnectM’s AI-powered heat pump received AHRI’s (Air-Conditioning Heating and Refrigeration Institute) Cold Climate Certification, awarded to products that demonstrate superior heating efficiency.

Outlook

For the fourth quarter and full year 2024, the Company expects revenues of approximately $7 million and $24 million respectively.

About ConnectM Technology Solutions, Inc.

ConnectM is a technology company focused on advancing the electrification economy by integrating electrified energy assets with its AI-powered technology solutions platform. The Company provides residential and light commercial buildings and all-electric original equipment manufacturers with a proprietary Energy Intelligence Network platform to accelerate the transition to solar and all-electric heating, cooling, and transportation. Leveraging technology, data, artificial intelligence, contemporary design, and behavioral economics, ConnectM aims to make electrification more user-friendly, affordable, precise, and socially impactful. As a vertically integrated company with wholly owned service networks and a comprehensive technology stack, ConnectM empowers customers to reduce their reliance on fossil fuels, lower overall energy costs, and minimize their carbon footprint.

For more information, please visit: https://www.connectm.com/

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. All statements, other than statements of present or historical fact included in this press release, regarding our future financial performance and our strategy, expansion plans, future operations, future operating results, estimated revenues, losses, projected costs, prospects, plans and objectives of management are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “continue,” “project” or the negative of such terms or other similar expressions. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release. We caution you that the forward-looking statements contained herein are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control.

In addition, we caution you that the forward-looking statements regarding the Company contained in this press release are subject to the risks and uncertainties described in the “Cautionary Note Regarding Forward-Looking Statements” section of the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024. Such filing identifies and addresses other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and ConnectM is under no obligation to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

Contact:
MZ North America
(203) 741-8811
ConnectM@mzgroup.us

CONNECTM TECHNOLOGY SOLUTIONS, INC. (SUCCESSOR TO MONTEREY CAPITAL ACQUISITION CORPORATION) CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2024 (UNAUDITED) AND DECEMBER 31, 2023 (AUDITED) (in thousands, except share and per share amounts)

	September 30,			December 31,
	2024			2023
Assets
Current assets
Cash	$	1,882		$	1,160
Accounts receivable, net		1,863			685
Contract asset		—			344
Convertible note receivable		—			445
Inventory		320			277
Deferred offering costs		—			1,297
Due from Monterey Capital Acquisition Corporation		—			2,491
Forward purchase agreement		2,196			—
Prepaid expenses and other assets		1,191			651
Total current assets		7,452			7,350
Right-of-use asset - operating lease		199			284
Right-of-use asset - finance lease		167			252
Property, plant and equipment, net		996			1,138
Goodwill		3,037			2,247
Intangible assets, net		1,851			1,841
Investment recorded at cost		45			45
Total Assets	$	13,747		$	13,157

Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable	$	10,357		$	3,860
Accrued expenses		4,631			1,718
Due to Libertas		1,057			—
Due to related party		686			—
Current portion of debt, related party		85			85
Current portion of debt, net of debt discount		15,966			11,935
Current portion of convertible debt, at fair value		4,392			2,179
Current portion of operating lease liability		114			115
Current portion of finance lease liability		114			99
Current portion of contingent consideration		199			—
Contract liabilities		662			1,121
Income taxes payable		386			—
Total current liabilities		38,649			21,112
Non-current portion of operating lease liability		118			173
Non-current portion of debt, related party		99			—
Non-current portion of finance lease liability		115			203
Noncurrent portion of debt, net of debt discount		1,417			1,150
Contingent consideration		377			—
Total liabilities		40,775			22,638

Commitments and Contingencies (Note 9)
Mezzanine Equity
Series Seed Convertible Preferred Shares; 0 and 2,139,050 shares authorized, issued, and outstanding as of September 30,2024 and December 31, 2023, respectively		—			2,200
Series Seed-1 Convertible Preferred Shares; 0 and 302,642 shares authorized, issued, and outstanding as of September 30,2024 and December 31, 2023, respectively		—			293
Series A-1 Convertible Preferred Shares; 0 and 2,467,990 shares authorized, issued, and outstanding as of September 30,2024 and December 31, 2023, respectively		—			3,195
Series B-1 Convertible Preferred Shares; 0 and 2,158,357 shares authorized, issued, and outstanding as of September 30,2024 and December 31, 2023, respectively		—			3,984
Series B-2 Convertible Preferred Shares; 0 and 995,509 shares authorized, issued, and outstanding as of September 30,2024 and December 31, 2023, respectively		—			2,311
Total mezzanine equity		—			11,983

Stockholders’ Deficit:
Preferred stock Series A, $0.001 par value, 10,000,000 and 1,000,000 shares authorized as of September 30, 2024 and December 31, 2023, respectively, 0 shares issued or outstanding as of September 30, 2024 and December 31, 2023, respectively		—			—
Common stock, $0.0001 par value, 100,000,000 shares authorized as of September 30, 2024 and December 31, 2023, respectively, 21,124,057 and 5,291,381 issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		2			—
Additional paid-in-capital		11,425			1,307
Accumulated deficit		(39,910	)		(22,860	)
Accumulated other comprehensive income		144			115
Stockholders’ deficit		(28,340	)		(21,438	)
Noncontrolling interests		1,311			(26	)
Total stockholders’ deficit		(27,029	)		(21,464	)
Total liabilities, mezzanine equity and stockholders’ deficit	$	13,747		$	13,157

CONNECTM TECHNOLOGY SOLUTIONS, INC. (SUCCESSOR TO MONTEREY CAPITAL ACQUISITION CORPORATION) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 (Unaudited) (in thousands, except share and per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenues	$	6,074		$	4,384		$	17,299		$	15,484
Costs and expenses:
Cost of revenues		4,200			3,716			11,010			11,020
Selling, general and administrative expenses		4,900			2,843			11,773			8,780
Loss on impairment of intangible assets		—			—			406			—
Loss from operations		(3,026	)		(2,175	)		(5,890	)		(4,316	)

Other income (expense):
Interest expense		(667	)		(472	)		(1,820	)		(902	)
Loss on extinguishment of debt		—			—			(592	)		—
Change in fair value of convertible notes		(1,623	)		182			(1,623	)		182
Change in fair value of forward purchase agreement		(8,575	)		—			(8,575	)		—
Gain on forward purchase agreement modification		1,443			—			1,443			—
Other income (expense), net		270			(149	)		59			4
Total other income (expense)		(9,152	)		(439	)		(11,108	)		(716	)

Loss before income taxes		(12,178	)		(2,614	)		(16,998	)		(5,032	)

Income tax benefit		—			—			—			—
Net loss	$	(12,178	)	$	(2,614	)	$	(16,998	)	$	(5,032	)

Net income (loss) attributable to noncontrolling interests		60			(7	)		52			(28	)
Net loss attributable to shareholders’	$	(12,238	)	$	(2,607	)	$	(17,050	)	$	(5,004	)

Foreign currency translation adjustments		19			26			29			92
Comprehensive loss	$	(12,159	)	$	(2,588	)	$	(16,969	)	$	(4,940	)

Comprehensive income (loss) attributable to noncontrolling interest		60			(7	)		52			(28	)
Comprehensive loss attributable to common stockholders	$	(12,219	)	$	(2,581	)	$	(17,021	)	$	(4,912	)

Weighted average shares outstanding of common stock		20,171,922			21,124,057			15,643,799			21,124,057
Basic and diluted net loss per share, common stock	$	(0.61	)	$	(0.12	)	$	(1.09	)	$	(0.24	)

CONNECTM TECHNOLOGY SOLUTIONS, INC. (SUCCESSOR TO MONTEREY CAPITAL ACQUISITION CORPORATION) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 (Unaudited) (in thousands)

	For the Nine Months Ended September 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(16,998	)	$	(5,032	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		188			201
Amortization of intangible assets		319			377
Amortization of debt discount		60			250
Stock-based compensation expense		36			—
ROU amortization on finance leases		86			134
ROU amortization on operating leases		85			135
Gain on disposal of property and equipment		—			(22	)
Loss on impairment of intangible assets		406			—
Loss on extinguishment of debt		592			—
Unrealized loss (gain) on fair value measurement of debt		1,623			(182	)
Change in fair value of forward purchase agreement		8,575			—
Gain on modification of forward purchase agreement		(1,443	)		—
Changes in operating assets and liabilities:
Accounts receivable		(559	)		(52	)
Contract asset		344			—
Inventory		(42	)		(178	)
Prepaid expenses		(26	)		(68	)
Accounts payable		2,722			531
Accrued expenses		1,296			386
Operating lease liabilities		(56	)		(133	)
Contract liabilities		(459	)		130
Net cash used in operating activities		(3,251	)		(3,523	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(59	)		(49	)
Proceeds from the sale of property and equipment		—			57
Investment in cost method investment		—			(45	)
Issuance of convertible note		—			(375	)
Cash paid for noncontrolling interest		(60	)		—
Cash acquired in Delivery Circle Acquisition		699			—
Cash paid for capitalized software development costs		(129	)		(35	)
Net cash provided by (used in) investing activities		451			(447	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Gross proceeds from the business combination		80,095			—
Cash paid in connection with forward purchase agreement		(37,624	)		—
Proceeds from forward purchase agreement		766			—
Proceeds from the issuance of debt		5,874			6,828
Proceeds from the issuance of convertible notes		740			900
Proceeds from related party debt		99			—
Cash paid for debt issuance costs		(788	)		(731	)
Payments of deferred offering costs		(1,243	)		(1,782	)
Payments of debt		(1,765	)		—
Advance to Monterey Capital Acquisition Corporation		(1,934	)		—
Advance from lender		1,057			(1,840	)
Payments on convertible notes		(50	)		—
Payments for redemptions of preferred stock		(41,653	)		—
Payment on finance leases		(73	)		(111	)
Net cash provided by financing activities		3,501			3,264

Effect of exchange rate changes on cash and cash equivalents		21			102
Increase (decrease) in cash and cash equivalents		722			(604	)
Cash, beginning of year		1,160			1,923
Cash, end of year	$	1,882		$	1,319

Supplemental disclosures of cash flow information:
Cash paid for interest	$	486			275
Cash paid for taxes	$	—		$	—

Supplemental disclosures of noncash financing information:
Recognition of right-of-use asset, operating	$	—		$	200
Recognition of right-of-use asset, finance	$	—		$	56
Vehicles acquired through issuance of debt	$	—		$	316
Conversion of preferred stock to common stock	$	11,982		$	—
Conversion of convertible debt to common stock	$	3,779		$	—
Recapitalization of ACA noncontrolling interests	$	111		$	—
Prepaid insurance financed through funding agreement	$	435		$	—

ConnectM Files 10-Q, Announces Third Quarter 2024 Financial Results

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