Elauwit Connection, Inc 10-Q for FY2026 Q2
Elauwit Connection, Inc. (ELWT)
About this 10-Q
Elauwit Connection, Inc filed this 10-Q on August 19, 2026, covering the quarter ended June 30, 2026 (FY2026 Q2).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.86M
- down 46.4% from $5.33M a year earlier
- Net loss
- $3.13M
- compared with a net loss of $857K a year earlier
- Diluted EPS
- -$0.47
- compared with -$0.17 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
OR
For the Transition Period from to
Commission file number:
(Exact name of registrant as specified in its charter)
| ||
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | | | Trading Symbols | | | Name of each exchange on which registered |
| |
| |
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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).
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 the 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 | | ☐ |
| ☑ |
| 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
As of August 17, 2026,
Table of Contents
| PAGE | |
PART I – FINANCIAL INFORMATION | | |
| | |
ITEM 1. | FINANCIAL STATEMENTS | |
| | |
| Unaudited Condensed Balance Sheets as of June 30, 2026 and December 31,2025 | 3 |
| 4 | |
| 5 | |
| Unaudited Condensed Statements of Cash Flows for the Six Months Ended June 30,2026 and 2025 | 6 |
| 7 | |
| | |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 32 | |
| | |
39 | ||
| | |
39 | ||
| | |
| ||
| | |
41 | ||
| | |
41 | ||
| | |
42 | ||
2
ELAUWIT CONNECTION, INC.
Unaudited Condensed Balance Sheets
(in thousands, except share and per share data)
| | June 30, 2026 | | December 31, 2025 | ||
ASSETS | | | | | | |
Current Assets | | | | | | |
Cash and cash equivalents | | $ | | | $ | |
Accounts receivable, net of allowance for credit losses of $ | |
| | |
| |
Inventories | |
| | |
| |
Network financing receivable, current | |
| | |
| |
Prepaid expenses and other current assets | |
| | |
| |
Total current assets | |
| | | | |
Property and equipment, net | | | | | | — |
Network financing receivable, net of current | |
| | |
| |
Lease right-of-use assets, net | |
| | |
| |
Net investment in lease | |
| | |
| |
Other non-current assets | |
| | |
| |
TOTAL ASSETS | | $ | | | $ | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |
| | |
| |
Current Liabilities | |
| | |
| |
Deferred revenue | | | | | | |
Accounts payable | | | | | | |
Accrued expenses and other current liabilities | |
| | |
| |
Operating lease liabilities, current | |
| | |
| |
Related party debt, current | |
| | |
| |
Note payable, current | |
| | |
| |
Total current liabilities | |
| | |
| |
Operating lease liabilities, net of current | | | | | | — |
Related party debt, net of current | |
| | |
| |
Note payable, net of current | | | | | | |
Deferred revenue, net of current | |
| | |
| |
TOTAL LIABILITIES | |
| | |
| |
| | | | | | |
Commitments and contingencies (see Note 13) | |
| | |
| |
| | | | | | |
STOCKHOLDERS’ EQUITY (DEFICIT) | |
| | |
| |
Preferred stock, $ | |
| |
| ||
Common stock, $ | |
| |
| ||
Additional Paid-in Capital | |
| | |
| |
Accumulated deficit | |
| ( | |
| ( |
Total stockholders’ equity (deficit) | |
| ( | |
| |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | | $ | | | $ | |
See accompanying notes to unaudited condensed financial statements.
3
ELAUWIT CONNECTION, INC.
Unaudited Condensed Statements of Operations
(in thousands, except share and per share data)
| | For the three months ended June 30, | | For the six months ended June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Revenues | | | | | | | | | | | | |
Revenues | | $ | | | $ | | | $ | | | $ | |
Cost of revenues | |
| | |
| | |
| | |
| |
Cost of revenues | |
| | |
| | |
| | |
| |
Gross profit | |
| | |
| | |
| | |
| |
Operating expenses | |
| | |
| | |
| | |
| |
General and administrative | |
| | |
| | |
| | |
| |
Sales and marketing | |
| | |
| | |
| | |
| |
Total operating expenses | |
| | | | | |
| | |
| |
Operating loss | | | ( | | | ( | | | ( | | | ( |
Other expense, net | |
| | |
| | |
| | |
| |
Interest income (expense), net | |
| ( | |
| ( | |
| | |
| ( |
Total other income (expense), net | |
| ( | |
| ( | |
| | |
| ( |
Loss from operations before income taxes | |
| ( | |
| ( | |
| ( | |
| ( |
Income tax expense | |
| | |
| | |
| | |
| |
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Net loss per share, basic and diluted | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Weighted average common shares used in computing net loss per share, basic and diluted | | | | | | | |
| | |
| |
See accompanying notes to unaudited condensed financial statements.
4
ELAUWIT CONNECTION, INC.
Unaudited Condensed Statements of Stockholders’ Equity (Deficit)
(in thousands, except share data)
For the three and six months ended June 30, 2026 and 2025
| | Common Stock | | | Stockholders’ Equity (Deficit) | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | Total | |
| | | | | | | Class A | | Class B | | Additional | | | | | Stock | | Stockholders’ | |||||||||
| | Common Stock | | Common Stock | | Common Stock | | Paid-In- | | Accumulated | | Subscription | | Equity | |||||||||||||
| | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | Capital | | Deficit | | Receivable | | (Deficit) | |||||||
Balance at December 31, 2025 |
| | | $ | — |
| — | | $ | — |
| — | | $ | — | | $ | | | $ | ( | | $ | — | | $ | |
Stock based compensation |
| — | |
| — |
| — | |
| — |
| — | |
| — | |
| | |
| — | |
| — | |
| |
Net loss |
| | |
| |
| | |
| |
| | |
| | |
| | |
| ( | |
| | |
| ( |
Balance at March 31, 2026 (unaudited) |
| | | | — |
| — | | | — |
| — | | | — | | | | | | ( | | | — | | | |
Stock based compensation |
| — | |
| — |
| — | |
| — |
| — | |
| — | |
| | |
| — | |
| — | |
| |
Net loss |
| — | |
| — |
| — | |
| — |
| — | |
| — | |
| — | |
| ( | |
| — | |
| ( |
Balance at June 30, 2026 (unaudited) |
| | | $ | — |
| — | | $ | — |
| — | | $ | — | | $ | | | $ | ( | | $ | — | | $ | ( |
| | Common Stock | | Stockholders’ Equity (Deficit) | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | Total | |
| | | | Class A | | Class B | | Additional | | | | Stock | | Stockholders’ | |||||||||||||
| | Common Stock | | Common Stock | | Common Stock | | Paid-In- | | Accumulated | | Subscription | | Equity | |||||||||||||
| | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | Capital | | Deficit | | Receivable | | (Deficit) | |||||||
Balance at December 31, 2024 |
| — | | $ | — |
| | | $ | — |
| | | $ | — | | $ | | | $ | ( | | $ | ( | | $ | ( |
Repayment of stock subscription receivable | | — | | | — | | — | | | — | | — | | | — | | | — | | | — | | | | | | |
Net loss |
| — | |
| — |
| — | |
| — |
| — | |
| — | |
| — | |
| ( | |
| — | |
| ( |
Balance at March 31, 2025 (unaudited) |
| — | | | — |
| | | | — |
| | | | — | | | | | | ( | | | — | | | ( |
Transfer and conversion of Class B Common Stock to Class A Common Stock | | — | | | — | | | | | — | | ( | | | — | | | — | | | — | | | — | | | — |
Net loss |
| — | |
| — |
| — | |
| — |
| — | |
| — | |
| — | |
| ( | |
| — | |
| ( |
Balance at June 30, 2025 (unaudited) |
| — | | $ | — |
| | | $ | — |
| | | $ | — | | $ | | | $ | ( | | $ | — | | $ | ( |
See accompanying notes to unaudited condensed financial statements.
5
ELAUWIT CONNECTION, INC.
Unaudited Condensed Statements of Cash Flows
(in thousands)
| | For the six months ended June 30 | ||||
| | 2026 | | 2025 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | |
Net loss | | $ | ( | | $ | ( |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | |
| |
Stock-based compensation expense | | | | | | — |
Depreciation and amortization | | | | | | — |
Provision for credit losses | | | | | | — |
Right of use asset amortization expense | |
| | |
| |
Changes in operating assets and liabilities: | |
| | |
| |
Accounts receivable | |
| ( | |
| ( |
Network financing receivable | |
| | |
| ( |
Inventories | |
| ( | |
| |
Prepaid expenses and other assets | |
| | |
| |
Accounts payable | |
| ( | |
| |
Accrued expenses and other current liabilities | |
| | |
| ( |
Deferred revenue | |
| | |
| |
Related party payables | |
| — | |
| ( |
Net investment in lease | |
| | |
| |
Lease right-of-use lease liabilities payments | |
| ( | |
| ( |
Net cash used in operating activities | |
| ( | |
| ( |
| | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | |
| |
Purchases of property and equipment | |
| ( | |
| — |
Net cash used in investing activities | |
| ( | |
| — |
| | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | |
| |
Proceeds from related party debt | |
| | |
| |
Repayment of related party debt | | | ( | | | ( |
Proceeds from SAFE issuance | |
| — | |
| |
Repayment of notes payable | | | ( | | | — |
Proceeds from payment of stock subscription receivable | |
| — | |
| |
Net cash provided by financing activities | |
| | |
| |
NET CHANGE IN CASH | |
| ( | |
| |
CASH and CASH EQUIVALENTS, beginning of period | |
| | |
| |
CASH and CASH EQUIVALENTS, end of period | | $ | | | $ | |
SUPPLEMENTAL CASH FLOW INFORMATION: | |
| | |
| |
Cash payments for interest | | $ | | | $ | |
SUPPLEMENTAL NONCASH DISCLOSURE INVESTING AND FINANCING: | | | | | | |
Lease liabilities arising from obtaining right-of-use asset | | $ | | | $ | |
See accompanying notes to unaudited condensed financial statements.
6
Note 1. Organization and Nature of Operations
The Company
Elauwit Connection, Inc. (“Elauwit” or the “Company”) is a technology services company that specializes in providing advanced connectivity solutions for buildings by enhancing internet and network infrastructure for property owners and managers. Elauwit provides these solutions by designing and implementing high-speed internet, video, and other technology solutions to ensure seamless connectivity for residents and tenants, with the goal of putting more control in the hands of property owners and allowing them to offer a superior internet experience as a key amenity.
On September 13, 2024 (the “Closing Date”), Legacy Elauwit Connection, Inc., a Delaware corporation, incorporated in December 2019 (“Legacy Elauwit”) and DeltaMax, Inc. (“DeltaMax”), a privately-held Delaware corporation, consummated a merger transaction (the “Merger”), with DeltaMax being the legal successor or surviving corporation. As part of the Merger, DeltaMax changed its name to Elauwit Connection, Inc. and issued an aggregate of
The Merger was accounted for as a reverse recapitalization, with Legacy Elauwit determined to be the accounting acquirer. Accordingly, the unaudited condensed financial statements of the Company represent a continuation of the financial statements of Legacy Elauwit, with the exception of legal capital. Periods prior to the Merger have common stock restated at the
Initial Public Offering
On November 4, 2025, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Craig‑Hallum Capital Group LLC, as representative of the underwriters (the “Representative”), in connection with an underwritten public offering (the “Offering”) of
Pursuant to the Underwriting Agreement, the Company agreed to issue to the Representative, as a portion of the underwriting compensation payable to the Representative, warrants to purchase
7
Put Right Conversion
Prior to the Offering, we entered into a Put-Call Agreement, as amended (the “Put-Call Agreement”), with Baron Hunter Group, LLC (“Baron Hunter”) and Steele Creek Partners LLC (“Steele Creek”), which governs certain rights between the Company and related parties regarding the purchase and sale of common stock. Baron Hunter, of which Daniel McDonough, Jr., our Executive Chairman is the managing member, and Steele Creek, of which Barry Rubens, our Chief Executive Officer is the managing member, were granted the right to sell to Elauwit (the “Put Option”) up to $
Related Party Loan and Debt Activity
On November 7, 2025, the Company repaid all outstanding principal and accrued interest related to the Endurance Loan (as defined below), the Endurance Business Loan (as defined below), the Endurance Promissory Note (as defined below), and the Second Endurance Promissory Note (as defined below), thereby satisfying these obligations in full. See Note 6 for additional information regarding these related party financing arrangements.
Related Party Payables Payoff
On November 7, 2025, the Company repaid the outstanding principal and interest on the Management Agreement (as defined below) and the Deferred Compensation Agreement (as defined below), thereby satisfying these obligations in their entirety. See Note 8 for additional information regarding these related party payables.
Going Concern
As of June 30, 2026, the Company had cash and cash equivalents of approximately $
These conditions raise initial substantial doubt about the Company’s ability to continue as a
On May 14, 2026, the Company entered into a new $
Management expects operating losses and negative cash flows from operations to continue for the foreseeable future as the Company invests in its commercial capabilities; however, management expects such losses and negative cash flows to decrease over time as the Company scales its operations and grows its revenue base.
8
In evaluating the Company’s ability to continue as a going concern for a period of one year from the date these financial statements are issued, management considered the Company’s current liquidity position, the availability of additional borrowings under the May 2026 Term Loan, forecasted cash flows reflecting the anticipated improvement in operating results, and the ability, if necessary, to reduce discretionary spending and other operating costs to preserve liquidity. Based on this assessment, management has concluded that the Company’s current liquidity position, existing available financing and expected cash flows are sufficient to fund operations for at least the next twelve months, and that substantial doubt about the Company’s ability to continue as a going concern does not exist as of the date these financial statements are issued.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain footnotes and other financial information normally required by U.S. GAAP have been condensed or omitted in accordance with instructions for interim financial information and Article 8 of Regulation S-X. In the opinion of management, such statements include all adjustments which are considered necessary for a fair presentation of the unaudited condensed financial statements of the Company as of June 30, 2026 and 2025. The operating results herein are not necessarily an indication of the results that may be expected for the year, or any future periods. The unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the years ended December 31, 2025 and 2024, as included in the Annual Report on Form 10-K dated March 31, 2026 and filed with the Securities and Exchange Commission (“SEC”).
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation. Specifically, the Motherlode Promissory Note, which was previously included within Related Party Debt, has been reclassified and presented separately as Notes Payable to reflect that Motherlode ceased to be a related party of the Company in April 2024 (see Note 7 — Notes Payable). These reclassifications did not affect previously reported total liabilities, total stockholders’ equity, net loss, or cash flows for any period presented
Use of Estimates
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates made by management include assumptions used in estimates of future credit losses under the current expected credit loss impairment model, valuation of SAFE liabilities, revenue recognition, including cost estimates and percentage complete, certain stock-based compensation inputs, provisions for income taxes and related valuation allowances and tax uncertainties. On an ongoing basis, management reviews these estimates and assumptions based on currently available information. Actual results could differ from these estimates.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of demand deposits with financial institutions and accounts receivable. The Company maintains cash balances with financial institutions, which at times, are in excess of amounts insured by the Federal Deposit Insurance Corporation. To date, the Company has not experienced any collection loss with these institutions.
9
Accounts receivable are subject to the risk that the Company’s customers will not pay the amounts due. The Company has established credit and collection policies to mitigate that risk. As of June 30, 2026, the Company had
During the six months ended June 30, 2026 and 2025, the Company had
During the three months ended June 30, 2026 and 2025, the Company had
Segment Reporting
The Company determines its reportable segments in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 280, Segment Reporting (“ASC 280”). The Company evaluates a reporting segment by first identifying its operating segments under ASC 280. The Company then evaluates each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reportable segments. If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated.
The Company has
A reconciliation of total segment revenues to total revenues, which is the same as revenues as presented on the accompanying unaudited condensed statements of operations, and of total segment gross profit and segment operating income (loss) which aggregates to total operating income (loss) from operations is as follows (in thousands):
| | For the three months ended June 30, | | For the six months ended June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Revenues | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Less: | |
| | |
| | |
| | |
| |
Cost of revenues | |
| | |
| | |
| | |
| |
Segment gross profit | |
| | |
| | |
| | |
| |
| | | | | | | | | | | | |
Less(1): | |
| | |
| | |
| | |
| |
Segment compensation expenses (2) | |
| | |
| | |
| | |
| |
Segment travel expenses (3) | |
| | |
| | |
| | |
| |
Other segment expenses (4) | |
| | |
| | |
| | |
| |
Segment operating loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| (1) | The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. |
10
| (2) | Compensation related expenses primarily include salaries and related payroll tax expenses. |
| (3) | Travel related expenses primarily include travel expenses. |
| (4) |
Cash and Cash Equivalents
The Company considers all short-term, highly liquid investments with original maturities of 90 days or less to be cash equivalents. As of June 30, 2026, and December 31, 2025 cash equivalents consisted of money market funds. Money market funds are invested primarily in U.S. government securities and are recorded at fair value, which approximates cost due to their highly liquid nature and short maturities and are classified as Level 1 within the fair value hierarchy.
The Company maintained $
Accounts Receivable, Unbilled Receivables, Network Financing Receivables and Allowance for Credit Losses
Trade accounts receivable are recorded at invoiced amounts, net of allowance for expected credit losses, if applicable, and are unsecured and do not bear interest. In addition, unbilled receivables and network financing receivables are derived from the allocation of contract consideration for services, such as network design and installation, recognized over time, which payment of such consideration received over the contract term, generally between one and several years. Unbilled and network financing receivables are presented net of allowances for credit losses. Unbilled receivables are generally billed within a few months subsequent to the balance sheet date. Network financing receivables are billed monthly in accordance with contract terms, generally over a period of to , concurrent with internet network services.
Network financing receivables represent amounts due from customers for network infrastructure designed, installed, and managed by the Company pursuant to network service agreements, billed monthly in accordance with contract terms generally over a period of to
Under the current expected credit losses (“CECL”) impairment model, the Company develops and documents its allowance for credit losses on trade accounts receivable, unbilled receivables, and network financing receivables. The Company applies different estimation methodologies depending on the nature of the asset class. For trade accounts receivable, the Company uses an aging schedule method, under which reserve percentages of
11
Effective for the year ended December 31, 2025, the Company changed its estimation methodology for trade accounts receivable from a historical loss rate method to an aging schedule method, accounted for prospectively as a change in accounting estimate. The change reflects a refinement in the Company’s measurement approach driven by the growth of the accounts receivable portfolio and the availability of more granular invoice-level aging data, which now support a more precise estimate of expected credit losses. No prior periods have been restated.
The adequacy of the allowance is evaluated on a regular basis. Account balances are written off after all means of collection are exhausted and the balance is deemed uncollectible. Subsequent recoveries are credited to the allowance. Changes in the allowance are recorded as adjustments to provision for credit losses in the periods incurred. At June 30, 2026 and December 31, 2025 the Company recorded an allowance for expected credit losses of approximately $
Inventories
The Company’s inventories are stated at the lower of cost or net realizable value, using specific identification method. The Company’s inventories consist completely of items procured but not yet assigned or shipped to a specific job site and finished goods inventory. Indirect costs relating to long-term contracts, which include expenses such as general and administrative, are charged to expense as incurred.
Deferred Financing Costs
The Company allocates offering costs to the different components of the capital raise on a pro rata basis. Offering costs allocated to common stock are charged directly to additional paid‑in capital.
The Company accounts for deferred offering costs in accordance with FASB ASC Topic 340, Other Assets and Deferred Costs, and Staff Accounting Bulletin Topic 5A. Deferred offering costs consist primarily of legal, accounting, consulting, and underwriting fees directly attributable to the Offering.
Upon the closing of the Offering on November 6, 2025, the Company reclassified approximately $
Distinguishing Liabilities from Equity
The Company relies on the guidance provided by FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”), to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.
Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the unaudited condensed balance sheets. The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.
12
Revenue Recognition
Overview
The Company generates revenue from the following sources: (1) network design and installation and (2) internet network services.
In accordance with FASB ASC 606 “Revenue Recognition” (“ASC 606”), the Company recognizes revenue from contracts with customers using a five-step model, which is described below:
| ● | identify the customer contract; |
| ● | identify performance obligations that are distinct; |
| ● | determine the transaction price; |
| ● | allocate the transaction price to the distinct performance obligations; and |
| ● | recognize revenue as the performance obligations are satisfied. |
Identify the customer contract
A customer contract is generally identified when there is approval and commitment from both the Company and its customer, the rights have been identified, payment terms are identified, the contract has commercial substance and collectability is probable. Specifically, the Company obtains written/electronic signatures on contracts with customers.
Identify performance obligations that are distinct
A performance obligation is a promise by the Company to provide a distinct good or service or a series of distinct goods or services. A good or service that is promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and a company’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract. The Company’s network design and installation revenue stream requires significant services to integrate complex activities and equipment into a single deliverable, and is therefore generally accounted for as one distinct performance obligation. The Company’s internet network services revenue stream is composed of two distinct and separately identifiable performance obligations: (1) wired/wireless internet services and (2) hardware and internet services maintenance. The hardware and internet services maintenance performance obligation is a stand-ready obligation.
Determine the transaction price
The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The transaction price for the network design and installation is fixed based on the amount stated in the contract. For contracts in which the Company finances the construction of the network, any interest collected by the Company is excluded from the transaction price. The transaction price for the bulk internet services is determined by the monthly per unit price times the number of units stated in the contract.
The Company evaluates its contracts with customers for the presence of significant financing components. If a significant financing component is identified in a contract and provides a financing benefit to the customer, the transaction price for the contract is adjusted to account for the financing portion of the arrangement, which is recognized as interest income over the financing term using the effective interest method. In determining the appropriate interest rates for significant financing components, the Company evaluates the credit profile of the customer and prevailing market interest rates and selects an interest rate in which it believes would be charged to the customer in a separate financing arrangement over a similar financing term.
13
Allocate the transaction price to distinct performance obligations
When allocating the contract’s transaction price, the Company considers each distinct performance obligation. As the contracts contain multiple performance obligations, and the Company does not have standalone observable prices, the Company notes the contract’s transaction price of each performance obligation based on the standalone selling price, which is determined using an expected cost plus a margin approach.
Recognize revenue as the performance obligations are satisfied
Revenue related to network design and installation revenue stream is recognized over time as the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced date. The best measure of progress toward completion for this performance obligation is costs incurred to date, as the Company has reliable information about the costs it expects to incur in total and the costs actually incurred and because it best depicts the transfer of control to the customer which occurs as it incurs costs on the contracts. For over time contracts using a cost-to-cost measure of progress, the Company has an estimate at completion (“EAC”) process in which the Company reviews the progress and execution of its performance obligations. This EAC process requires management’s judgment relative to assessing risks, estimating contract revenue and costs, and making assumptions for schedule and technical issues. Accordingly, the Company will use an input method of costs incurred to date relative to the estimated total costs to satisfy the performance obligation to record revenue.
Revenue related to wired/wireless internet services is recognized over time as the customer simultaneously receives and consumes the benefits provided by the Company’s performance as the Company performs. The best measure of progress toward completion for this performance obligation is the passage of time as the Company’s efforts are used evenly throughout the performance of the wired and wireless internet services performance obligation. Accordingly, the Company uses an input method of time (in days) elapsed to record revenue as the performance obligation is satisfied evenly over time as the same internet services are provided daily. Revenue will be recorded ratably over the contract term.
Revenue related to hardware and internet services maintenance is recognized over time as the customer simultaneously receives and consumes the benefits provided by the Company’s performance as the Company performs. This performance obligation is a stand-ready obligation in which the Company expects the customer to receive and consume the benefits of the hardware and internet services maintenance throughout the contract period. Accordingly, the Company uses an input method of time (in days) elapsed to record revenue. The Company notes that as this is a stand-ready obligation, the performance obligation is satisfied evenly over a period of time, and revenue will be recorded ratably over the contract term.
Costs to obtain contracts
The Company incurs incremental costs to obtain contracts with their customers for certain contracts, specifically sales commissions. These costs are initially capitalized and amortized over the contract term. As of June 30, 2026 and 2025, the Company had approximately $
14
Significant Judgments
The Company enters into contracts that may include various combinations of equipment, services and network installation. Contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Once the Company determines the performance obligations, it determines the transaction price, which includes estimating the amount of variable consideration to be included in the transaction price, if any. The Company then allocates the transaction price to each performance obligation in the contract based on the stand alone selling price. The corresponding revenue is recognized as the related performance obligations are satisfied. As it relates to Network design and installation revenue, each reporting period, the Company estimates the amount of costs incurred to date as a percentage of total estimated costs to determine the amount of revenue to recognize.
Deferred Revenue and Unbilled Receivables
The timing of revenue recognition, billings and collections results in receivables, unbilled receivables and contract liabilities on its unaudited condensed balance sheets. Under typical payment terms for its contracts accounted for over time, amounts are billed as work progresses in accordance with agreed-upon contractual terms. For certain contracts, billings occur subsequent to revenue recognition, resulting in unbilled receivables. Under ASC 606, unbilled receivables constitute contract assets. For certain contracts, payment terms typically require advanced payments and deposits. Under ASC 606, payments received from customers in excess of revenue recognized to-date results in a contract liability.
Shipping and Handling Costs
Shipping and handling costs charged to customers are included in revenue, while all other shipping and handling costs are included in cost of revenues in the accompanying unaudited condensed statements of operations. Shipping and handling costs were not material during the three and six months ended June 30, 2026 and 2025.
Advertising and Marketing
Advertising and marketing costs are expensed as incurred and included in sales and marketing expense. Advertising and marketing costs were approximately $
Leases
Operating lease assets are included within lease right-of-use assets, net and operating lease liabilities are included in operating lease liabilities, current and operating lease liabilities, net of current on the unaudited condensed balance sheets as of June 30, 2026 and December 31, 2025. The Company has elected not to present short-term leases as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that the Company is reasonably certain to exercise. Lease payments for short-term leases are recognized on a straight-line basis over the term of the lease. All other lease right-of-use assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because the Company’s lease does not provide an implicit rate of return, the Company used an incremental borrowing rate based on the information available at adoption date in determining the present value of lease payments.
The Company assesses whether an arrangement is a lease or contains a lease at inception. For arrangements considered leases or that contain a lease that is accounted for separately, the Company determines the classification and initial measurement of the lease right-of-use assets and operating lease liabilities at the lease commencement date, which is the date that the underlying asset becomes available for use. The Company has elected to account for non-lease components associated with its leases and lease components as a single lease component.
15
The Company recognizes a lease right-of-use asset, which represents the Company’s right to use the underlying asset for the lease term, and an operating lease liability, which represents the present value of the Company’s obligation to make payments arising over the lease term. The operating lease liability is based on the present value of its unpaid minimum lease payments over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental borrowing rate which is the rate the Company pays to borrow on a collateralized basis.
If a lease is modified, the modified contract is evaluated to determine whether it is or contains a lease. If a lease continues to exist, the lease modification is determined to be a separate contract when the modification grants the lessee an additional right-of-use that is not included in the original lease and the lease payments increase commensurate with the standalone price for the additional right-of-use. A lease modification that results in a separate contract will be accounted for in the same manner as a new lease. For a modification that is not a separate contract, the Company reassesses the lease classification using the modified terms and conditions and the facts and circumstances as of the effective date of the modification and recognize the amount of the remeasurement of the operating lease liability for the modified lease as an adjustment to the corresponding lease right-of-use asset.
Share-Based Compensation
The Company accounts for share-based compensation in accordance with FASB ASC Topic 718, Compensation—Stock Compensation. Compensation cost for share-based awards granted to employees, directors, and officers is measured at the grant-date fair value of the award and recognized as expense over the requisite service period, which is generally the vesting period of the award. The fair value of restricted stock units is determined based on the closing price of the Company’s common stock on the grant date. The fair value of stock options is determined using the Black-Scholes option pricing model, which requires the use of subjective assumptions including expected term, expected volatility, risk-free interest rate, and expected dividend yield. The Company has elected to recognize forfeitures as they occur in accordance with ASU 2016-09. The Company adopted the Elauwit Connection, Inc. 2025 Stock Incentive Plan (the “Plan”) in November 2025. See Note 12 — Stock-Based Compensation for additional information regarding the Plan and stock-based compensation activity for the periods.
Income Taxes
The Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse.
The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liabilities. In management’s opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of June 30, 2026 and December 31, 2025,
The Company’s policy for recording interest and penalties associated with tax audits is to record such items as a component of operating expenses. There were
16
The Company had not yet filed its United States federal and state corporate tax returns for the year ended December 31, 2025, but will be filed prior to their extended due date. Net operating losses for these periods will not be available to reduce future taxable income until the returns are filed.
On July 4, 2025, the One Big Beautiful Bill (the “OBBB”) Act, which includes a broad range of tax reform provisions, was signed into law in the United States and the Company continues to assess its impact. The Company has evaluated the impact of the OBBB Act on its 2025 financial statements and determined that the legislation did not have a material impact on the Company’s income tax provision or effective tax rate for the year ended December 31, 2025. The Company currently does not expect the OBBB Act to have a material impact on its estimated annual effective tax rate in 2026.
Basic and Diluted Net Loss per Share of Common Stock
The Company calculates basic net loss per share by dividing net loss by the weighted average number of common shares outstanding during the reporting period. A net loss cannot be diluted so when the Company is in a net loss position, basic and diluted loss per common share are the same. If in the future the Company achieves profitability, the denominator of a diluted earnings per common share calculation will include both the weighted average number of shares outstanding and the number of common stock equivalents, if the inclusion of such common stock equivalents would be dilutive.
Fair Value of Financial Instruments
The Company measures the fair value of financial assets and liabilities based on the guidance of FASB Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.
Fair Value Measurements
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an ordinary transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
| ● | Level 1 - quoted prices in active markets for identical assets or liabilities; |
| ● | Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable; and |
| ● | Level 3 - inputs that are unobservable. |
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, approximates the carrying amounts in the unaudited condensed balance sheets, primarily due to their short-term nature. Based upon current borrowing rates with similar maturities the carrying value of long-term debt, and related party loans payable approximates fair value. The estimated fair value of the Company’s SAFE liabilities is based on Level 3 inputs. Refer to Note 10.
Recently Adopted Accounting Standards
In November 2024, the FASB issued ASU 2024-04, Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments (“ASU 2024-04”), which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The Company adopted ASU 2024-04 on January 1, 2026 on a prospective basis. The adoption did not have an impact on the Company’s unaudited condensed financial statements as the Company has no convertible debt outstanding.
17
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 introduces a practical expedient that permits entities to assume that current conditions as of the balance sheet date remain unchanged throughout the remaining life of the asset when developing an estimate of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The Company adopted ASU 2025-05 on January 1, 2026. The Company did not elect to apply the practical expedient and continues to apply its existing methodology for estimating expected credit losses on current trade accounts receivable, as described above. The adoption did not have a material impact on the Company’s unaudited condensed financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public business entities to disclose, in interim and annual reporting periods, additional information about specified categories of expenses included in commonly presented income statement line items (such as cost of revenues and selling, general and administrative expenses). In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”), which clarifies that the amendments in ASU 2024-03 are effective for all public business entities for annual reporting periods beginning after December 15, 2026 and for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied either on a prospective or retrospective basis. The Company is currently assessing the potential impact that ASU 2024-03, as clarified by ASU 2025-01, will have on its unaudited condensed financial statement disclosures and has not yet selected an adoption method or elected to early adopt.
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”). ASU 2025-06 modernizes the cost recognition guidance for internal-use software development costs by replacing the existing project-stage based model with a principles-based framework, incorporates website development guidance previously codified in Subtopic 350-50, and updates certain disclosure requirements. ASU 2025-06 is effective for all entities for annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently assessing the potential impact that ASU 2025-06 will have on its unaudited condensed financial statements.
Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s unaudited condensed financial statement presentation or disclosures.
Note 3. Revenue and Deferred Revenue
The following table provides the Company’s revenues disaggregated by revenue stream (in thousands):
| | For the three months ended | | For the six months ended | ||||||||
| | June 30, 2026 | | June 30, 2025 | | June 30, 2026 | | June 30, 2025 | ||||
Revenue: | | | | | | | | | | | | |
Network design and installation | | $ | | | $ | | | $ | | | $ | |
Internet network services and hardware and internet service | |
| | |
| | |
| | |
| |
Total | | $ | | | $ | | | $ | | | $ | |
18
Remaining performance obligations represent the transaction price of Company orders for which work has not been performed as of the end of a fiscal period and for contracts with substantive termination penalties. As of June 30, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations was $
Changes in the Company’s current deferred revenue balance for the six months ended June 30, 2026 and 2025, were as follows (in thousands):
| | Deferred Revenues | |
Balance as of January 1, 2025 | | $ | |
Additions included in deferred revenue as of end of period | |
| |
Revenue recognized from opening balance | |
| ( |
Balance as of June 30, 2025 | | $ | |
| | | |
Balance as of January 1, 2026 | | $ | |
Additions included in deferred revenue as of end of period | |
| |
Revenue recognized from opening balance | |
| ( |
Balance as of June 30, 2026 | | $ | |
Deferred revenue balances primarily consist of customer deposits and billings in excess of revenue, for which the Company has a contractual right to bill, related to the Company’s network design and installation performance obligations. As of June 30, 2026, the Company’s deferred revenue balance of $
Changes in the Company’s network financing receivable balance for the six months ended June 30, 2026 and 2025, were as follows (in thousands):
| | Network financing receivable | |
Balance as of January 1, 2025 | | $ | |
Additional unbilled revenue recognized | |
| |
Amounts billed during the period | |
| ( |
Balance as of June 30, 2025 | | $ | |
| | | |
Balance as of January 1, 2026 | | $ | |
Additional unbilled revenue recognized | |
| |
Amounts billed during the period | |
| ( |
Balance as of June 30, 2026 | | $ | |
19
Note 4. Accounts Receivable
Receivables are recorded and carried at the original invoiced amount or, for unbilled receivables, at the recognized revenue amount less an allowance for credit losses (in thousands).
| | June 30, 2026 | | December 31, 2025 | ||
Trade accounts receivable | | $ | | | $ | |
Unbilled receivables | |
| | |
| |
Allowance for credit losses | |
| ( | |
| ( |
Accounts receivable | | $ | | | $ | |
Trade accounts receivable and unbilled receivables as of June 30, 2026 was $
As of June 30, 2026 and December 31, 2025, the Company recorded an allowance for credit losses of approximately $
Note 5. Leases
Lessee
During the three months ended June 30, 2026 and 2025, operating lease expense was $
During the three months ended June 30, 2026 and 2025, the Company had short-term lease expense of $
During the three months ended June 30, 2026 and 2025, the Company had variable lease expense of $
The lease liability is based on the present value of its unpaid minimum lease payments over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental borrowing rate which is the rate the Company pays to borrow on a collateralized basis.
The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s operating leases, as of June 30, 2026:
Weighted average remaining lease term (in years) - operating leases | |
| |
Weighted average discount rate - operating leases |
| | % |
20
South Carolina Office Lease Agreement
On January 1, 2023, the Company initially entered into a lease for Suite 130 of 1700 Alta Vista Drive in Columbia, SC in which the initial term was January 1, 2023 through December 31, 2023. At the end of the initial lease term (December 31, 2023), the lease became a month to month lease in which either party (the Company or the lessor) could
Lease Modification
On January 2, 2025, the Company entered into its first amendment to the South Carolina Office Lease (“Amended SC Lease”) to expand into an additional suite with approximately
Columbia SC Lease
On April 1, 2026, the Company entered into an operating lease for approximately
Future lease payments for all operating lease obligations as of June 30, 2026, for the following fiscal years and thereafter, are as follows (in thousands):
Year ending December 31: | | Operating Lease | |
2026 (remainder) | | $ | |
2027 | | | |
2028 | | | |
2029 | | | |
2030 | | | |
Thereafter | | | |
Total minimum lease payments | | | |
Less effects of discounting | |
| ( |
Present value of future minimum lease payments | | | |
Less: current portion of operating lease liabilities | | | ( |
Operating lease liabilities, net of current | | $ | |
21
Lessor
The Company owns certain networks and places them at customer sites under sales-type lease arrangements. The Company evaluates new leases pursuant to FASB ASC 842: Leases to determine lease classification. A lease is classified by a lessor as a sales-type lease if the significant risks and rewards of ownership reside with the customer.
The Company had net investment in sales-type leases as of June 30, 2026 and December 31, 2025 of $
The table below reconciles the undiscounted cash flows to be received to the net investment in sales-type leases recorded in the unaudited condensed balance sheets (in thousands):
2026 (remainder) | | | |
2027 |
| | |
2028 |
| | |
2029 |
| | |
2030 |
| | |
Thereafter |
| | |
Total minimum lease payments | | $ | |
Less: unearned interest | |
| ( |
Net investment in sales-type leases | | $ | |
Interest income recognized on lease arrangements is included in interest income, net, on the unaudited condensed statements of operations, and is presented below (in thousands):
| For the three months ended June 30, | | For the six months ended June 30, | |||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
| $ | | | $ | | | $ | | | $ | | |
Total lease income | | $ | | | $ | | | $ | | | $ | |
Note 6. Related Party Debt
The Company’s related party debt consisted of (in thousands):
| | June 30, 2026 | | December 31, 2025 | ||
Related Party Debt, current: |
| | |
| | |
Network Service Agreements, current | | $ | | | $ | |
Related Party Debt, non-current: | | | | | | |
Network Service Agreements, net of current | |
| | |
| |
May 2026 Term loan | | | | | | — |
Related Party Debt total | | $ | | | $ | |
Network Service Agreements
The Company has entered into certain network service agreements (the “Network Service Agreements” or the “NSAs”) with various customers, pursuant to which the Company will perform or has performed the design, installation, and management of a telecommunications network for the customer in financed project amounts ranging from $
22
31, 2025, the NSAs had aggregate carrying balances of approximately $
As part of each Project Financing, the Company sold an undivided interest in the NSA, to Endurance Opportunities, and interest shall accrue at a rate of
Endurance Loan (April 1, 2024)
On April 1, 2024 the Company entered into a fixed rate loan agreement (the “Endurance Loan”) with Endurance Opportunities I LLC (“Endurance Opportunities”), a related party controlled by Endurance Financial LLC (‘Endurance Financial’), which is an entity controlled by certain of the Company’s directors and members of management. Under the agreement, Endurance Opportunities loaned $
Endurance Business Loan (November 12, 2024)
On November 12, 2024, the Company entered into a fixed rate loan agreement (the “Endurance Business Loan”) with Endurance Opportunities, a related party, where Endurance Opportunities loaned $
Endurance Promissory Note (March 1, 2025)
On March 1, 2025, the Company entered into a fixed rate loan agreement (the “Endurance Promissory Note”) with Endurance Financial, where Endurance Financial loaned $
Second Endurance Promissory Note (March 25, 2025)
On March 25, 2025, the Company entered into a fixed rate loan agreement (the “Second Endurance Promissory Note”) with Endurance Financial, where Endurance Financial loaned $
23
of ninety days and bore interest at
24
Endurance Business Loan (May 14, 2026)
On May 14, 2026, the Company’s entered into the May 2026 Term Loan with Endurance Opportunities. In connection with the May 2026 Term Loan, the Company issued the May 2026 Note in favor of Endurance Opportunities with a principal amount of $
As of June 30, 2026 the future minimum principal payments on all related party debt, excluding accrued interest amounts, were as follows (in thousands):
| | Future Minimum Principal | |
Years ending December 31: | | Payments | |
2026 (remainder) | | $ | |
2027 | |
| |
2028 | |
| |
2029 | |
| |
2030 | |
| |
Total future payments | | $ | |
Note 7. Notes Payable
Notes payable consist of the following (in thousands):
| | June 30, 2026 | | December 31, 2025 | ||
Motherlode Promissory Note, current | | $ | | | $ | |
Motherlode Promissory Note, net of current | |
| | |
| |
Total note payable | | $ | | | $ | |
Motherlode Promissory Note (April 12, 2024)
On April 12, 2024, the Company entered into a promissory note (the “Motherlode Promissory Note”) with Motherlode, LLC (“Motherlode”), pursuant to which Motherlode loaned the Company $
25
As of June 30, 2026 the future minimum principal payments on notes payable, excluding accrued interest amounts, were as follows (in thousands):
| | Future Minimum Principal | |
Years ending December 31: | | Payments | |
2026 (remainder) | | $ | |
2027 | |
| |
2028 | |
| |
2029 | |
| |
Total future payments | | | |
Note 8. Related Party Payables
Management Agreement (December 6, 2019, was not renewed post 2022)
On December 6, 2019 the Company entered into a management agreement (the “Management Agreement”) with Elauwit Connection, LLC, a Wyoming limited liability company (“Elauwit LLC”), a related party, that was dissolved in October 2024, whereby certain key persons of Elauwit LLC, provided management services to manage all aspects of the Company, subject to supervision and oversight by the Company’s board of directors (the “Board”). The key persons (“Key Persons”) who supervised all services include the Executive Chairman and the Chief Executive Officer of the Company. In consideration of the services provided by the Key Persons, the Company paid Elauwit LLC a sum of $
Subsequent to November 30, 2022, the Company continued making payments under an informal agreement to same Key Persons. For the three and six months ended June 30, 2026 and 2025, the Company incurred expenses of $
Deferred Compensation Agreement (August 20, 2024)
On August 20, 2024 the Company entered into a deferred compensation agreement, as amended (the “Deferred Compensation Agreement”) with certain executives of the Company, whereby the executives, deferred a certain portion of their salaries. The deferred salaries bore interest of
26
Note 9. Equity Offerings
Common Stock
Amendment to the Certificate of Incorporation
On June 16, 2025, the Company amended and restated its certificate of incorporation to, among other things, (i) provide for a classified structure for the election of directors; (ii) increase the number of shares of common stock, par value $
On August 14, 2025, the Company amended and restated its certificate of incorporation to, among other things, (i) authorize
Initial Public Offering
On November 4, 2025, the Company entered into the Underwriting Agreement with the Representative, for the Offering of
Pursuant to the Underwriting Agreement, the Company issued to the Representative warrants to purchase an aggregate of
Put Right Settlement
In connection with the Put-Call Agreement, Baron Hunter and Steele Creek were each granted the right to sell to the Company up to $
27
Note 10. SAFE
Strategic Investment
On January 6, 2025, the Company entered into a Simple Agreement for Future Equity (the “SAFE Agreement” or “SAFE”) with an investor (the “Investor”). Pursuant to the terms of the SAFE Agreement, the Company received an aggregate amount of $
The SAFE was recorded as a liability in accordance with the applicable accounting guidance due to the potential for the Company to settle the fixed outstanding balance of the SAFE liability in a variable number of shares. The initial fair value of the SAFE liability was $
Note 11. Employee Benefit Plan
In April 2024, the Company established a Safe Harbor 401(k) contribution plan under Section 401(k) of the Internal Revenue Code (“401(k) Plan”). Under the terms of the 401(k) Plan, all full-time employees were eligible to make voluntary contributions as a percentage or defined amount of compensation. The Company made matching contributions based on
The Company incurred expenses of approximately $
Note 12. Stock-Based Compensation
In November 2025, the Company adopted the Elauwit Connection, Inc. 2025 Stock Incentive Plan (the “Plan”), which permits the grant of stock options, restricted stock units (“RSUs”), performance-vesting restricted stock units (“PSUs”) and other stock-based awards. The Plan initially authorized
On January 28, 2026, the Compensation Committee of the Board of Directors approved RSU awards to certain employees of the Company totaling
Additionally, on January 28, 2026, the Compensation Committee authorized the Company’s 2026 employee bonus program, which provides for cash and equity-based incentive compensation. The cash component consists of an annual incentive opportunity representing
28
The remaining
During the second quarter of 2026, the Compensation Committee of the Board of Directors approved RSU awards to certain employees and non-employee directors of the Company totaling
RSU and PSU activity for the six months ended June 30, 2026 was as follows:
| | | | Weighted – Average | |
RSU | | Number of RSUs | | Fair Value | |
Unvested at December 31, 2025 |
| — | | — | |
Granted |
| | | $ | |
Vested |
| — | |
| — |
Forfeited |
| — | |
| — |
Unvested at June 30, 2026 |
| | | $ | |
During the second quarter of 2026, the Compensation Committee of the Board of Directors approved performance stock unit awards under the Company’s 2026 bonus plan totaling
| | | | Weighted-Average | |
PSU (at target) | | Number of PSUs | | Fair Value | |
Unvested at December 31, 2025 |
| — |
| | — |
Granted |
| | | $ | |
Vested |
| — | |
| — |
Forfeited |
| ( | |
| |
Unvested at June 30, 2026 |
| | | $ | |
Black-Scholes | | Option Inputs |
| |
Expected volatility |
| | | % |
Expected term (years) |
| | | |
Risk-free interest rate |
| | | % |
Expected dividend yield |
| | % | |
Grant-date fair value per option | | $ | | |
Stock-based compensation expense was approximately $
29
Note 13. Commitments and Contingencies
The Company is periodically involved in legal proceedings, legal actions and claims arising in the ordinary course of business. Management does not believe that there is any pending or threatened proceeding against the Company, which, if determined adversely, would have a material adverse effect on the Company’s business, results of operations, cash flows, or financial condition.
Note 14. Net Loss per Share
Participating securities have the effect of diluting both basic and diluted earnings per share during periods of income. During periods of loss, no loss is allocated to the participating securities since the holders have no contractual obligation to share in the losses of the Company.
The Company calculates basic net loss per share by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted net loss per share is computed by giving effect to all potentially dilutive securities. Because the Company was in a net loss position for all periods presented, basic and diluted net loss per share are the same, as the inclusion of all potentially dilutive securities would have been anti-dilutive.
The following potentially dilutive securities were excluded from the computation of diluted net loss per share for the periods presented because their inclusion would have been anti-dilutive:
| | For the three months ended June 30, | | For the six months ended June 30, | ||||
| | 2026 | | 2025 | | 2026 | | 2025 |
Representative’s Warrants | | | | — | | | | — |
Restricted Stock Units | | | | — | | |
| — |
Performance Stock Units | | | | — | | | | — |
Stock Options | | | | — | | | | — |
Total | | | | — | | | | — |
Note 15. Income Taxes
The Company’s provision for income taxes is calculated by applying an estimated annual effective tax rate to year-to-date pre-tax income or loss and adjusting for any discrete tax items recognized in the period, in accordance with FASB Accounting Standards Codification (“ASC”) 740-270, Income Taxes — Interim Reporting.
For the three and six months ended June 30, 2026 and 2025, the Company recorded income tax expense of approximately $
The Company did not recognize any material discrete tax items during the three and six months ended June 30, 2026 or 2025. On July 4, 2025, the OBBB Act, which includes a broad range of tax reform provisions, was signed into law in the United States. The Company evaluated the impact of the OBBB Act on its unaudited condensed financial statements as of and for the year ended December 31, 2025 and determined that it did not have a material impact on its income tax provision or effective tax rate. The Company does not currently expect the OBBB Act to have a material impact on its estimated annual effective tax rate for 2026 and continues to monitor any guidance issued thereunder.
30
As a result of the Company’s Offering completed in November 2025 (see Note 9), the Company may have experienced an “ownership change” within the meaning of Section 382 of the Internal Revenue Code. If an ownership change has occurred, the Company’s ability to utilize its U.S. federal and state net operating loss carryforwards and certain other tax attributes generated prior to the ownership change to offset future taxable income would be subject to annual limitations. The Company has not completed a formal Section 382 analysis as of the date of these financial statements. Any limitation is not expected to result in additional cash tax expense in the current period given the Company’s continued cumulative loss position and the related full valuation allowance against the deferred tax assets associated with the affected attributes.
As of June 30, 2026 and December 31, 2025, the Company had
Note 16. Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through August 19, 2026, the date the financial statements were issued.
The Company did not identify any subsequent events requiring disclosure.
31
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion reviews the operating results of Elauwit Connection, Inc. (“Elauwit,” the “Company,” “we,” “our,” or “us”) for the three months ended June 30, 2026 (the “second quarter”), the six months ended June 30, 2026 (the “six months”), the respective prior year periods ended June 30, 2025 (the “prior year periods”), and our financial condition as of June 30, 2026, and should be read in conjunction with our financial statements and notes thereto included elsewhere in this report and our other documents filed with the Securities and Exchange Commission (“SEC”). Forward-looking statements in this Quarterly Report on Form 10-Q (this “Form 10-Q”) are qualified by the cautionary statement included under the next subheading, “Forward-Looking Statements.”
FORWARD-LOOKING STATEMENTS
In addition to historical information, this Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which provides a “safe harbor” for forward-looking statements made by us. All statements, other than statements of historical facts, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, results of operations, financial position, business outlook, business trends, and other information, may be forward-looking statements. Words such as “aim,” “anticipate,” “believe,” “can,” “continue,” “could,” “expect,” “may,” “opportunity,” “plan,” “potential,” “will,” “would” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that our expectations, beliefs, estimates, and projections will occur or can be achieved. Actual results may vary materially from what is expressed in or indicated by the forward-looking statements.
These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or anticipated results, including:
| ● | our history of losses; |
| ● | our ability to obtain additional financing and fund our operations; |
| ● | our market opportunity; |
| ● | the effects of increased competition and innovations by new and existing competitors in our market and our ability to adapt to and anticipate changes in technology; |
| ● | our adoption and use of artificial intelligence; |
| ● | our ability to maintain and grow relationships with property owners and network partners and increase our customer base; |
| ● | our ability to consistently win competitive request for proposal processes, become a preferred or sole supplier for new-build projects, increase our gross margins with newer customer relationships, and capitalize on the opportunities in our pipeline; |
| ● | our reliance on manufacturers to obtain the materials necessary to provide our services; |
| ● | the potential effects of delays or disruptions in property development; |
| ● | the future growth of the network services industry and demands of our customers; |
| ● | the significant investment required to deploy our Network-as-a-Service solutions; |
| ● | our ability to pay our debts as they come due; |
| ● | our ability to grow the business and effectively manage or sustain our growth; |
| ● | future revenue, hiring plans, expenses and capital expenditures; |
| ● | our ability to comply with new or modified laws and regulations that currently apply or become applicable to our business or the business of our customers; |
| ● | our ability to maintain the listing of our common stock on The Nasdaq Stock Market LLC (“Nasdaq”) and comply with Nasdaq’s listing standards; |
| ● | our ability to recruit and retain key employees and management personnel; |
| ● | our financial performance and capital requirements; |
| ● | our ability to maintain, protect, and enhance our intellectual property; |
| ● | the material weaknesses in our internal control over financial reporting and the potential insufficiency of our disclosure controls and procedures to detect errors or acts of fraud; and |
| ● | the potential lack of liquidity and trading of our securities. |
32
BUSINESS OVERVIEW
We are a customer-centric service provider of broadband Internet networks for the multifamily and student housing community sectors across the United States. Our managed WiFi networks provide community-wide Internet access for residents, guests, property management staff, and third-party technology vendors at each community we serve. We provide our service offering wholesale to REITs, community ownership groups, and community management companies, engaged in our target real estate sectors, who then offer the service to their residents.
In building out a managed WiFi network, we provide network design, project management, network engineering, network installation, and quality control. As part of our service delivery model, we provide dedicated bandwidth, 24/7 network monitoring, network maintenance, and resident support.
Our mission is to be the leading experience provider of Internet access solutions. For our community ownership customers, this means clear communication and timely execution. For the end users of our service, residents and their guests, this means dedication to the objective of providing an excellent resident experience. We differentiate ourselves in the area of resident experience by building reliable networks, responding to service requests quickly, establishing support protocols that lead to industry-leading first touch resolution metrics, and communicating effectively with key stakeholders throughout.
While anyone can claim top tier operational capabilities, we have grown quickly through word-of-mouth, as a trusted partner for real estate development and ownership groups. We have an excellent track record of repeat business from parties we contract with. Internet access has become a utility, but unlike electricity and water, reliability is not something community owners can take for granted. Our performance has created the opportunity to expand within ownership portfolios and is a key aspect of our growth strategy moving forward.
We closely monitor the challenges and needs of development and ownership groups in the real estate sectors in focus. A continued theme has been the fragmented market of service providers in the space in which we operate and issues stemming out of such. We view these issues to be a large opportunity for our business and an indication that consolidation is likely in the near future. We aim to be a driver of consolidation.
RESULTS OF OPERATIONS
Comparison of the Three and Six Months ended June 30, 2026 and 2025
Summary
| ● | Total revenue decreased 46.4% and 32.4% for the second quarter and six months, respectively, compared to the prior year periods. The decrease primarily reflects declines in certain nonrecurring and project-based activities given the more volatile nature of project-based revenues. |
| ● | Gross margin was 15.5% and 17.4% for the second quarter and six months, respectively, compared to 15.1% and 19.2% for the prior year periods, primarily from network construction activities and timing of network activations. Over time, we expect our gross margin to increase as higher-margin recurring service fees constitute a growing share of revenues. |
| ● | Operating expenses for the second quarter and six months increased 129.3% and 107.1%, respectively, over the prior year periods, primarily driven by continued growth in our project management and network engineering functions, as well as expenses associated with operating as a publicly traded company. |
| ● | Backlog as of June 30, 2026 was $38.9 million, compared to $35.9 million as of June 30, 2025. |
| ● | Contracted units as of June 30, 2026 were 42,687, compared to 32,094 as of June 30, 2025. |
| ● | Activated units as of June 30, 2026 were 27,134, compared to 13,960 as of June 30, 2025. |
| ● | Billed units as of June 30, 2026 were 22,967, compared to 8,733 as of June 30, 2025. |
| ● | Recurring service revenue was $1.2 million for the second quarter compared to $0.7 million for the prior year period. |
Revenue
Revenue for the three months ended June 30, 2026 decreased $2.5 million, or 46.4%, to $2.9 million, compared to $5.3 million for the three months ended June 30, 2025. Revenue for the six months ended June 30, 2026 decreased $3.5 million, or 32.4%, to $7.3 million, compared to $10.8 million for the six months ended June 30, 2025.
33
The decrease was primarily driven by lower network design and installation revenue of $1.6 million and $5.0 million for the three and six months ended June 30, 2026, respectively, compared to $4.6 million and $9.6 million for the three and six months ended June 30, 2025, respectively, reflecting the timing of project starts and the completion in 2025 of several large network construction projects that did not recur at the same level in 2026. Network design and installation revenue is project-based and recognized over time using a cost-to-cost input method and, as a result, is inherently lumpy from quarter to quarter as we continue to build our recurring revenue base with the continued completion of construction projects converting to recurring revenues.
Recurring revenue, which is recognized ratably over the contract term as the Company provides ongoing managed network services to community owners and their residents, increased $0.6 million, or 81.8%, to $1.2 million for the three months ended June 30, 2026, compared to $0.7 million for the three months ended June 30, 2025, and increased $1.1 million, or 98.2%, to $2.3 million for the six months ended June 30, 2026, compared to $1.2 million for the six months ended June 30, 2025. The increase reflects the ramp in recurring service revenue from networks deployed in 2024 and 2025 that reached activation and began billing under long-term service agreements during the periods, which the Company expects to continue to grow as a share of total revenue as additional construction projects complete and convert to ongoing recurring service contracts.
Cost of Revenue
Cost of revenue decreased $2.1 million, or 46.6%, to $2.4 million for the three months ended June 30, 2026, compared to $4.5 million for the three months ended June 30, 2025. Cost of revenue decreased $2.7 million, or 30.9%, to $6.0 million for the six months ended June 30, 2026, compared to $8.7 million for the six months ended June 30, 2025.
The decrease was primarily driven by reduced direct project costs, including hardware, contracted labor and project management, corresponding to lower network design and installation revenue in the periods.
Gross Profit
Gross profit decreased 45.1% to $0.4 million for the three months ended June 30, 2026, compared to $0.8 million for the three months ended June 30, 2025. Gross profit decreased 38.5% to $1.3 million for the six months ended June 30, 2026, compared to $2.1 million for the six months ended June 30, 2025.
Our gross margin for the three months ended June 30, 2026 was 15.5%, compared to 15.1% for the three months ended June 30, 2025. Our gross margin for the six months ended June 30, 2026 was 17.4%, compared to 19.2% for the six months ended June 30, 2025. The change in gross margin was primarily attributable to network construction activities with an increased rate of network activations in the second quarter whereby we recognize the majority of contribution from a given project. Over time, we expect our gross margin to increase as higher-margin recurring service revenue continues to grow as a share of total revenue.
Operating Expenses
Operating expenses were $3.5 million for the second quarter compared to $1.5 million for the prior year period. Operating expenses were $6.6 million for the six months ended June 30, 2026 compared to $3.2 million for the six months ended June 30, 2025. The increase was driven by:
| ● | Public company costs. Following the November 2025 initial public offering, we have incurred increased audit, legal, insurance, investor relations, and Sarbanes-Oxley readiness expenditures, which are reflected in general and administrative expense and were not present, or were present at significantly lower levels, in the prior year period. |
| ● | Personnel costs. Continued investment in our project management, network engineering, finance, and operational functions, including increased headcount and the addition of certain executive and senior management positions following our initial public offering (the “IPO”). |
Operating Loss
Operating loss was $3.1 million for the three months ended June 30, 2026, compared to an operating loss of $0.7 million for the three months ended June 30, 2025. Operating loss was $5.3 million for the six months ended June 30, 2026, compared to an operating loss of
34
$1.1 million for the six months ended June 30, 2025. The increase in operating loss was primarily driven by the higher operating expenses described above.
Interest Income (Expense)
Interest expense was $0.03 million for the three months ended June 30, 2026, compared to interest expense of $0.1 million for the prior year period. Interest income was less than $0.01 million for the six months ended June 30, 2026, compared to interest expense of $0.2 million for the prior year period. The shift primarily reflects interest earned on cash proceeds from our IPO and a reduction in interest expense due to the repayment of related party debt outstanding during the prior year period.
Net Loss
Net loss increased $2.3 million and $4.0 million to net loss of $3.1 million and $5.3 million for the three and six months ended June 30, 2026 and 2025, respectively, compared to net loss of $0.9 million and $1.3 million for the prior year periods, respectively. The reasons for the increase in net loss are discussed above.
Non-GAAP Measures
Adjusted earnings before interest (income) expense, income taxes, depreciation and amortization (“EBITDA”) is provided for informational purposes only and is not a measure of financial performance under accounting principles generally accepted in the U.S. (“GAAP”).
Management believes the presentation of adjusted EBITDA, reflecting non-GAAP adjustments, provides important supplemental information to investors and other users of our financial statements in evaluating the operating results of the Company. In particular, by excluding expenses that are not directly related to our operating performance, we are able to present a view of our underlying business that the management team uses to analyze our historical performance and plan for our future performance. Adjusted EBITDA is a key metric used by management and the Board of Directors to assess the Company’s financial and operating performance. This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for net income (loss) determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.
The following tables present a reconciliation of adjusted EBITDA to net loss (the most comparable GAAP measure) in accordance with GAAP for the three and six months ended June 30, 2026 and 2025:
| | For the three months ended June 30, | | For the six months ended June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Net Loss | | $ | (3,131) | | $ | (857) | | $ | (5,293) | | $ | (1,299) |
Addback: | | | | | | | |
| | |
| |
Income tax expense | | | 4 | | | 4 | |
| 4 | |
| 4 |
Interest expense, net | | | 27 | | | 114 | |
| (11) | |
| 186 |
Depreciation and amortization | | | 1 | | | — | |
| 1 | |
| — |
EBITDA | | | (3,099) | | | (739) | | | (5,299) | | | (1,109) |
Addback: | | | | | | | |
| | |
| |
Stock based compensation expense | | | 95 | | | — | |
| 120 | |
| — |
Adjusted EBITDA | | $ | (3,004) | | $ | (739) | | $ | (5,179) | | $ | (1,109) |
Key Performance Metrics
Management uses recurring service revenue, contracted units, activated units, billed units, and backlog as key performance metrics to assess our financial performance and results of operations. The measures of recurring service revenue, contracted units, activated units, billed units, and backlog may vary across the internet services or real estate industries. Therefore, our recurring service revenue, contracted units, activated units, billed units, and backlog measures are not necessarily comparable to similarly titled measures reported by other companies.
35
We define recurring service revenue as the monthly recurring service revenue initiated by network activation under our long-term service agreements. Management believes that the Company’s ability to retain and expand revenue from existing customers is an indicator of the long-term value of its customer relationships and potential future business opportunities.
We define contracted units as the total number of individual units waiting to be built or in the process of being installed across the properties using our networks along with the individual units we currently serve. We believe this metric is useful to investors because it illustrates the total number of units we will serve once the construction process is complete.
We define activated units as the total number of individual units that are fully installed and on, but not yet collecting revenue due to onboarding process, across the properties using our networks. We believe this metric is useful for investors because it illustrates the total number of individual units we will collect revenue on once the onboarding process is complete, and can be tracked over time to show the reach of our networks.
We define billed units as the total number of individual units we are currently collecting revenue on across the properties using our networks. We believe this metric is useful to investors because it illustrates the total number of individual units we collect revenue on and can be tracked over time to show the reach of our networks. We believe it is more useful to compare total billed units as opposed to total customers or total subscribers because our revenue is more closely tied to the number of units we serve than the total number of customers or subscribers.
Backlog is defined as the aggregate amount of a contract price allocated to remaining performance obligations. Total backlog can include network design and installation performance obligations and internet network services and hardware and internet services performance obligations. We believe tracking backlog is useful to investors because it illustrates the remaining performance obligations under our contracts and the revenue we expect to recognize in the future.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2026, the Company had cash and cash equivalents of approximately $1.2 million and net working capital deficit of approximately $0.9 million. The Company has incurred recurring net losses from operations and negative cash flows from operating activities since inception, with an accumulated deficit of approximately $19.9 million as of June 30, 2026. During the six months ended June 30, 2026, the Company used approximately $5.2 million in cash for operating activities.
These conditions raise initial substantial doubt about the Company’s ability to continue as a going concern. On November 6, 2025, the Company completed the IPO, raising gross proceeds of approximately $15.0 million. As of June 30, 2026, the Company has no required debt repayments other than scheduled monthly principal and/or interest payments on its outstanding promissory notes and Network Service Agreements (see Notes 6 and 7).
On May 14, 2026, the Company entered into a new $2.0 million business loan agreement (the “May 2026 Term Loan”) with Endurance Opportunities (as defined below), an existing related-party lender. In connection with the May 2026 Term Loan, the Company issued a commercial promissory note in favor of Endurance Opportunities with a principal amount of $500 thousand (the “May 2026 Note”) and agreed to issue three additional commercial promissory notes in favor of Endurance Opportunities, each with a principal amount of $500 thousand. The May 2026 Note bears interest at a fixed rate of 15.5% per annum, requires monthly interest payments, and matures 36 months from the closing date. The Company closed on the May 2026 Term Loan during the second quarter of 2026 and used the proceeds for general working capital and continued network deployment activities. See Note 6, “Related Party Debt,” for additional information.
Management expects operating losses and negative cash flows from operations to continue for the foreseeable future as the Company invests in its commercial capabilities; however, management expects such losses and negative cash flows to decrease over time as the Company scales its operations and grows its revenue base.
In evaluating the Company’s ability to continue as a going concern for a period of one year from the date these financial statements are issued, management considered the Company’s current liquidity position, the availability of additional borrowings under the May 2026 Term Loan, forecasted cash flows reflecting the anticipated improvement in operating results, and the ability, if necessary, to reduce discretionary spending and other operating costs to preserve liquidity. Based on this assessment, management has concluded that the Company’s current liquidity position, existing available financing and expected cash flows are sufficient to fund operations for at least
36
the next twelve months, and that substantial doubt about the Company’s ability to continue as a going concern does not exist as of the date these financial statements are issued.
Liquidity
Our primary liquidity requirements are for working capital, debt repayment and Network-as-a-Service (NaaS) project deployment. Although income taxes are not currently a significant use of funds, after the benefits of our net operating loss carryforwards are fully recognized, they could become a material use of funds, depending on our future profitability and future tax rates. Our liquidity needs have been met primarily through equity offerings and related party loans.
As of June 30, 2026, we had approximately $1.2 million in cash and cash equivalents. As of December 31, 2025, we had approximately $6.2 million in cash and cash equivalents. During the six months ended June 30, 2026 and 2025, we used net cash in operating activities of $5.2 million and $1.5 million, respectively. As of June 30, 2026 and December 31, 2025, we had a working capital deficit of $0.9 million and working capital surplus of $4.1 million, respectively. Key drivers of our working capital position have been, and continue to be, network construction receivables and deferred revenue.
Capital Resources
On November 6, 2025, we closed our IPO and sold the underwriters 1,667,000 shares of common stock for gross proceeds of approximately $15.0 million, before deducting underwriting discounts and commissions and other offering expenses. On November 24, 2025, we closed on the partial exercise of the underwriters’ over-allotment option to purchase 68,989 shares of common stock for additional gross proceeds of approximately $0.6 million. See Note 1, “Organization and Nature of Operations,” for additional information.
As of June 30, 2026 and December 31, 2025, we had total outstanding debt of $2.2 million and $2.0 million, respectively.
On April 12, 2024, we issued a promissory note to Motherlode, LLC (“Motherlode”) for $1.0 million as part of an agreement to repurchase and retire Series Seed Preferred Shares previously issued to Motherlode. See Note 7, “Notes Payable,” for additional information.
We have financing arrangements with Endurance Financial LLC (“Endurance Financial”), the manager of Endurance Opportunities I LLC (“Endurance Opportunities”), and Endurance Opportunities. On March 1, 2025 and March 25, 2025, we issued commercial promissory notes to Endurance Financial in exchange for $1.0 million in total, that have a term of 18 months and 221 days, respectively, and on November 12, 2024, we issued a commercial promissory note to Endurance Opportunities in exchange for $0.3 million, that has a term of 18 months, using certain accounts receivable as collateral for each of the commercial promissory notes (collectively, the “Endurance Notes”). The purpose of these facilities was to support our working capital position. On April 1, 2024, we entered into a Fixed Rate Loan Agreement with Endurance Opportunities for $1.0 million to refinance previously held long-term debt (the “Fixed Rate Loan Agreement”). On November 7, 2025, we paid off the outstanding principal and interest of the Fixed Rate Loan Agreement and the Endurance Notes, thereby satisfying these obligations in their entirety. See Note 6, “Related Party Debt,” for additional information.
During the six months ended June 30, 2026, we entered into the May 2026 Term Loan with Endurance Opportunities, pursuant to which we issued the May 2026 Note in a principal amount of $500 thousand and agreed to issue three additional commercial promissory notes in the same form as the May 2026 Note in favor of Endurance Opportunities, each with a principal amount of $500 thousand. The May 2026 Note has a maturity date of 36 months and bears interest at 15.5% per annum on the outstanding principal balance. Monthly payments of interest are required under the May 2026 Note, with the outstanding principal amount due on the maturity date. In 2025 and 2024, we entered into various participation and agency agreements with Endurance Opportunities pursuant to which Endurance provided us with the financing necessary to support our Network-as-a-Service (NaaS) product offerings under certain network service agreements (the “NSAs”). During the six months ended June 30, 2026 and fiscal 2025, we financed $0 million and $0.3 million, respectively, from Endurance Opportunities, and as of June 30, 2026, the NSAs had a balance of $1.1 million. See Note 6, “Related Party Debt,” for additional information.
On January 6, 2025, we entered into a simple agreement for future equity (“SAFE”) agreement with an investor, pursuant to which we received an aggregate amount of $1.0 million. Following the closing of the IPO, the SAFE converted into 130,719 shares of common stock. See Note 10, “SAFE,” for additional information.
37
Cash Flow Analysis
Operating Activities
Net cash used in operating activities was $5.2 million for the six months ended June 30, 2026, compared to $1.5 million for the six months ended June 30, 2025. The $3.7 million increase reflects a larger net loss driven primarily by elevated general and administrative expenses associated with operating as a publicly traded company, increases in accounts receivable and inventories from growing construction activity, and growth in deferred revenue from new construction contracts, partially offset by changes in other working capital items.
Investing Activities
Net cash used in investing activities was $0.1 million for the six months ended June 30, 2026, reflecting purchases of property and equipment. There were no cash flows from investing activities for the six months ended June 30, 2025.
Financing Activities
Net cash provided by financing activities was $0.2 million for the six months ended June 30, 2026, compared to net cash provided by financing activities of $1.7 million for the six months ended June 30, 2025. The change primarily reflects lower financing activity in 2026 compared to the prior-year period, partially offset by proceeds from the May 2026 Term Loan.
CRITICAL ACCOUNTING ESTIMATES
The preparation of the financial statements in conformity with GAAP requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. The following accounting policies are based on, among other things, judgments and assumptions made by management that include inherent risks and uncertainties. Management’s estimates are based on historical experience, the relevant information available at the end of each period, and their judgment. Although management believes the judgment applied in preparing estimates is reasonable based on circumstances and information known at the time, actual results could differ materially from these estimates under different assumptions or market conditions. See Note 2, “Summary of Significant Accounting Policies,” for information about our significant accounting policies.
Accounts Receivable, Unbilled Receivables, Network Financing Receivables and Allowance for Credit Losses
The estimation of expected credit losses on the Company’s accounts receivable, unbilled receivables, and network financing receivables requires significant management judgment and is therefore a critical accounting estimate.
Under the current expected credit loss (“CECL”) impairment model, the Company applies different estimation methodologies depending on the nature of the receivable. For trade accounts receivable, the Company applies an aging schedule method, under which reserve percentages of 50%, 75%, and 100% are applied to invoices aged 91 to 120 days, 121 to 180 days, and over 180 days past due, respectively. Invoices aged 90 days or fewer are reserved at a de minimis rate based on historical collection experience. For unbilled receivables and network financing receivables, the Company applies a historical loss rate method. The Company has not experienced any credit losses on unbilled receivables or network financing receivables since inception; accordingly, the historical loss rate applied to those balances is zero and no allowance has been recorded against those balances as of June 30, 2026 or December 31, 2025.
Effective for the year ended December 31, 2025 and continuing for the three and six months ended June 30, 2026, the Company changed its estimation methodology for trade accounts receivable from a historical loss rate method to an aging schedule method, accounted for prospectively as a change in accounting estimate. The change reflects the growth of the trade accounts receivable portfolio and the availability of more granular invoice-level aging data, which now support a more precise estimate of expected credit losses. As of June 30, 2026 and December 31, 2025, the Company’s allowance for credit losses related to trade accounts receivable was approximately $0.5 million and $0.3 million, respectively.
38
Significant judgments in determining the allowance include the selection of aging buckets and reserve percentages, the assessment of qualitative factors (including current economic conditions, customer-specific credit considerations, and the overall credit profile of our customer base), and the identification of macroeconomic factors that could affect future loss rates.
Changes in any of these inputs could result in a material change in the allowance for credit losses and the related provision in the periods of change. See Note 2 — Summary of Significant Accounting Policies and Note 4 — Accounts Receivable for additional information.
Revenue Recognition
We generate revenue from the following sources: (1) network design and installation and (2) internet network services. In accordance with Accounting Standards Codification (“ASC”) 606 “Revenue Recognition,” there is significant judgment required in determining when to recognize revenue as performance obligations are satisfied. Recognition of network design and installation revenue occurs in line with incurred costs along set project milestones, with the most meaningful being delivery of provisioned network hardware to a customer’s community, installation of the fiber backbone, and installation of endpoint electronics. Recognition of internet network services revenue occurs monthly as services are delivered.
Income Taxes
We account for income taxes using an asset and liability approach. Our provision for income taxes requires management to make significant estimates and judgments regarding the determination of deferred tax assets and liabilities, as well as the likelihood of realizing the benefits of positions taken in our tax returns. We evaluate our deferred tax assets each reporting period to determine whether a valuation allowance is necessary based on the weight of available evidence, including expectations of future taxable income. Actual results could differ from these estimates, which could have a material effect on our financial condition and results of operations.
Recent Accounting Pronouncements
See Note 2, “Summary of Significant Accounting Policies,” for information about recent accounting pronouncements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required to provide the information required by this item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2026 pursuant to Rule 13a-15 under the Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2026, our disclosure controls and procedures were not effective, due to the existence of material weaknesses in our internal control over financial reporting that we have yet to fully remediate. Specifically, management identified the following material weaknesses:
Entity-Level Controls and Risk Assessment — We did not maintain sufficiently designed and documented entity-level controls, including a comprehensive risk assessment process, to identify and respond to risks of material misstatement across the organization. As a small company with limited accounting and finance personnel, we rely in part on third-party consultants for certain accounting, financial reporting, and related activities, and we did not maintain an appropriate control environment to evidence that access and review level controls were being performed over the work of such consultants or over key financial reporting processes generally.
Revenue Recognition — We did not maintain effective controls over the application of ASC 606 to ensure that revenue transactions and related billings were properly evaluated, recorded, and disclosed in accordance with GAAP, including the appropriate recognition and presentation of related balance sheet accounts.
39
We are actively engaged in the design and implementation of remediation measures to address each of the material weaknesses described above. Until such remediation measures are fully implemented and operating effectively for a sufficient period of time, these material weaknesses will continue to exist.
Changes in Internal Control Over Financial Reporting
Except as described below, there were no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Remediation Plan
Management is actively implementing measures to remediate the material weaknesses described above and to strengthen our internal control environment. These measures include, but are not limited to:
Entity-Level Controls and Risk Assessment — We are enhancing our entity-level controls by formalizing a comprehensive risk assessment framework, establishing documented policies and procedures for identifying and evaluating risks of material misstatement, and implementing additional levels of management review over our financial reporting processes.
Revenue Recognition — We are strengthening our controls over revenue recognition by implementing additional reconciliation and analytical review procedures over contract revenue, unbilled revenue, and deferred revenue balances; enhancing management review of percentage-of-completion calculations and related journal entries; and evaluating potential system enhancements, including an enterprise resource planning system, remediation will not be considered complete until the enhanced controls have been implemented and have operated effectively for a sufficient period of time to enable management to conclude, through testing, that the controls are operating effectively.
Remediation will not occur until the plan is implemented and there has been appropriate time for us to conclude through testing that the control operates effectively.
40
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be party to or otherwise involved in various legal proceedings and claims arising in the ordinary course of business. Management does not believe that there is any pending or threatened proceeding against us, which if determined adversely, would have a material adverse effect on our business, results of operations, or financial condition.
ITEM 6. EXHIBITS
| | | | | | Incorporated by Reference | ||
Exhibit Number | | Description | | Filing Date | | Form | | File No. |
10.1 | | | May 15, 2026 | | 10-Q | | 001-42935 | |
10.2 | | | May 15, 2026 | | 10-Q | | 001-42935 | |
31.1 | | | Filed herewith | | - | | - | |
31.2 | | | Filed herewith | | - | | - | |
32 | | | Furnished herewith | | - | | - | |
101 | | Materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in Extensible Business Reporting Language (XBRL); (i) Unaudited Condensed Balance Sheets, (ii) Unaudited Condensed Statements of Operations, (iii) Unaudited Condensed Statements of Stockholders’ Deficit, (iv) Unaudited Condensed Statements of Cash Flows, and (v) related Notes to Financial Statements. | | Filed herewith | | - | | - |
104 | | Cover Page Interactive Data File (included in Exhibit 101) | | Filed herewith | | - | | - |
41
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ELAUWIT CONNECTION, INC. | | | |
| | | |
By: | /s/ Barry Rubens | | Date: August 19, 2026 |
| Barry Rubens | | |
| Chief Executive Officer | | |
| (Principal Executive Officer) | | |
| | | |
By: | /s/ James Di Bartolo | | Date: August 19, 2026 |
| James Di Bartolo | | |
| Chief Financial Officer | | |
| (Principal Financial Officer) | | |
42
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Barry Rubens, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of Elauwit Connection, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | [Paragraph omitted pursuant to Exchange Act Rules 13a-14(a) and 15d-15(a)]; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 19, 2026
/s/ Barry Rubens | |
Barry Rubens | |
Chief Executive Officer | |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, James Di Bartolo, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of Elauwit Connection, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | [Paragraph omitted pursuant to Exchange Act Rules 13a-14(a) and 15d-15(a)]; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 19, 2026
/s/ James Di Bartolo | |
James Di Bartolo | |
Chief Financial Officer | |
Exhibit 32
Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Barry Rubens, Chief Executive Officer, and James Di Bartolo, Chief Financial Officer of Elauwit Connection, Inc. (the “Company”), each certify in his capacity as an officer of the Company that he has reviewed the Quarterly Report of the Company on Form 10-Q for the period ended June 30, 2026 (the “Report”) and that:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August 19, 2026 | /s/ Barry Rubens |
| Barry Rubens |
| Chief Executive Officer |
| (Principal Executive Officer) |
| |
Date: August 19, 2026 | /s/ James Di Bartolo |
| James Di Bartolo |
| Chief Financial Officer |
| (Principal Financial Officer) |
The purpose of this statement is solely to comply with Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.