Quarterly Report for Quarter Ending March 31, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

References in this report (the "Quarterly Report") to "we," "us" or the "Company" refer to CONX Corp. References to our "management" or our "management team" refer to our officers and directors, and references to the "Sponsor" or "nXgen" refer to nXgen Opportunities, LLC. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes related thereto which are included elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under "Cautionary Note Regarding Forward-Looking Statements," and the section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC on November 28, 2025.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek" and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the "Risk Factors" section of Part II, Item 1A of this Quarterly Report and in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC on November 28, 2025. The Company's securities filings can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

We were incorporated in the State of Nevada as a blank check company on August 26, 2020. Today, we are a diversified operating company seeking opportunities to power the next generation of innovators in communications and connectivity. Our mission is to partner with emerging companies with quality management and strong and differentiated business models with the ability to scale. Our Chairman and Director, Charles W. Ergen, is Chairman and co-founder of EchoStar and DISH and beneficially owned approximately 90.4% of the total voting power of EchoStar's outstanding shares as of December 22, 2025. Our Chief Executive Officer, Jason Kiser served as Treasurer of DISH from 2008 to 2023, and has been employed by entities owned or controlled by Mr. Ergen for over 35 years.

We are engaged principally in two lines of business:

Results of Operations

We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance). We also incur operating expenses related to our business segments. Additionally, we recognize non-cash gains and losses within other income (expense) related to changes in recurring fair value measurement of our derivative warrant liabilities at each reporting period.

Subsequent to the completion of the Business Combination, we generate revenues from rent received under the Seller Lease Agreement. Subsequent to the completion of the acquisition of RED Technologies, RED Technologies generated revenues that were not material to the Company's results of operations for the period presented.

The following table sets forth our results of operations for the periods presented. The data has been derived from the unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q which include, in our opinion, all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair statement of the financial position and results of operations for the interim periods presented. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods.

Results for the three months ended March 31, 2025 and 2024:

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For the three months ended March 31, 2025, the Company generated total revenues of $845,250, compared to no revenues for the three months ended March 31, 2024. Revenues for the 2025 period consisted of $770,818 of rental income from the Company's real estate property and $74,432 of sales income from its Red Technology operating subsidiary.

Depreciation and amortization expense was $404,276 for the three months ended March 31, 2025, compared to none for the three months ended March 31, 2024. General and administrative expenses totaled $1,023,365 for the three months ended March 31, 2025, compared to $1,072,033 for the three months ended March 31, 2024. As a result, the Company reported a loss from operations of $582,391 for the three months ended March 31, 2025, compared to a loss from operations of $1,072,033 for the three months ended March 31, 2024.

Other income (expense), net, was $5,770,506 for the three months ended March 31, 2025, compared to income of $3,435,654 for the three months ended March 31, 2024. The change was primarily driven by:

Income before income taxes was $5,188,115 for the three months ended March 31, 2025, compared to income of $2,363,621 for the three months ended March 31, 2024. After income tax expense of $175,118 for the 2025 period, compared to income tax expense of $10,336 for the same period in 2024, the Company reported net income of $5,012,997 for the three months ended March 31, 2025, compared to net income of $2,373,957 for the three months ended March 31, 2024.

Liquidity and Capital Resources

On November 3, 2020, we consummated our initial public offering (the "Initial Public Offering") of 75,000,000 Units at a price of $10.00 per Unit generating gross proceeds of $750.0 million. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 11,333,333 Private Placement Warrants to nXgen at a price of $1.50 per warrant, generating gross proceeds of $17 million.

Following the Initial Public Offering and the sale of the Private Placement Warrants, a total of $750.0 million was placed in the Trust Account. We incurred $42.3 million in transaction costs, including $15 million of underwriting fees, $26.3 million of deferred underwriting fees (which deferred underwriting commission was waived by the underwriters) and $1 million of other costs in connection with our Initial Public Offering and the sale of the Private Placement Warrants.

On March 1, 2023, nXgen agreed to loan the Company an aggregate of up to $250,000 for working capital purposes. The Company issued a promissory note to nXgen to evidence the loan. On November 2, 2023, the Company issued an amended and restated promissory note (the "Restated Note") in the principal amount of up to $550,000 to nXgen. The Restated Note amended, restated, replaced and superseded that certain promissory note dated March 1, 2023, in the principal amount of $250,000. On March 25, 2024, the Company issued an amended and restated promissory note (the "Second Restated Note") to nXgen. The Second Restated Note amended, restated, replaced and superseded the Restated Note to increase the principal amount available for borrowings thereunder from up to $550,000 to up to $900,000. The Second Restated Note did not bear interest, matured on the date of consummation of the Business Combination and was subject to customary events of default. The Second Restated Note was to be repaid only to the extent that the Company had funds available to it outside of its Trust Account established in connection with its Initial Public Offering. As of December 31, 2024, the Company had borrowed $900,000 under the Second Restated Note. As of the May 1, 2024, the Company satisfied and discharged its obligations under the Second Restated Note by repaying in full the principal amount to nXgen.

For the three months ended March 31, 2025, net cash provided by operating activities was $1,218,867, primarily reflecting adjustments for non-cash items such as general and administrative expenses, the change in fair value of derivative warrant liabilities, change in fair value of contingent consideration, interest income earned on investments, and changes in working capital, including accrued expenses and income taxes payable. For the three months ended March 31, 2024, net cash used in operating activities was $405,027.

For the three months ended March 31, 2025, net cash used in investing activities was $3,540,440, which included the purchase of available for sale securities. For the three months ended March 31, 2024, net cash provided by investing activities was $0.

For the three months ended March 31, 2025, net cash used in financing activities was $0. For the three months ended March 31, 2024, net cash provided by financing activities was $500,000 related to the cash received from the working capital loan.

As of March 31, 2025, the Company had cash and cash equivalents of $115,200,363. As of March 31, 2024 we had operating cash of $103,135 and investments held in the Trust Account of $22,216,917.

On May 1, 2024, the Company completed its Asset Acquisition. In addition, on May 1, 2024, the Company completed the Equity Forward Transaction, resulting in cash proceeds to the Company aggregating approximately $200 million. In connection with the Transaction, the Company entered into the Seller Lease Agreement, which results in annual rental revenue of approximately $3 million.

Management has evaluated the Company's ability to continue as a going concern and determined that the Company's sources of liquidity will be sufficient to meet its obligations for at least one year from the issuance date of the March 31, 2025 financial statements. Accordingly, no conditions or events raise substantial doubt about the Company's ability to continue as a going concern.

Critical Accounting Policies and Estimates

The preparation of the unaudited condensed consolidated financial statements and related disclosures in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting policies, except as described below.

Preferred Stock Liability

We account for our Preferred Stock as a liability due to the conversion feature being considered non-substantive under applicable accounting guidance. However, the Company determined that the redemption features associated with the Preferred Stock are to be considered as clearly and closely related to the host contract and, therefore, do not require separate reporting at fair value for each reporting period.

In accordance with ASC 480-10 and after considering several factors, the Company determined that the issue price of $11.50 per share is deemed to be (or approximate) the fair value of the Preferred Stock at the issuance date. Because the settlement date for the Preferred Stock varies based on specified conditions, the Company's determined that the Preferred Stock should be measured subsequently at the same per share amount as the issue price, which is the price that would be paid by the Company if the Preferred Stock were redeemed at the reporting date.

Business Combination

The Company accounts for business combinations in accordance with ASC 805, Business Combinations, allocating the purchase consideration to the identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with any excess recorded as goodwill.

The fair value determinations involve significant judgment and the use of estimates, particularly for identifiable intangible assets such as non-compete agreements and regulatory authorizations. Valuations are developed using income and cost approaches that rely on assumptions regarding forecasted cash flows, growth rates, discount rates, and useful lives.

Because these estimates are inherently subjective and depend on forward-looking assumptions, changes in market conditions or revisions to key inputs could materially affect the allocation of purchase consideration, the amount of goodwill recognized, and subsequent amortization expense.

Recent Accounting Standards

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

Off-Balance Sheet Arrangements

As of March 31, 2025, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.