Elauwit Connection, Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2026

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

For the Transition Period from to

Commission file number: 001-42935

Elauwit Connection, Inc.

(Exact name of registrant as specified in its charter)


Delaware		99-3101171
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1021 Second Avenue, Suite A

Columbia, SC 29209

(Address of principal executive offices) (Zip Code)

(704) 558-3099

(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
Common Stock, par value $0.0001 per share	ELWT	The Nasdaq Stock Market LLC

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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	☐
Non-accelerated filer	☑	Smaller reporting company	☑
		Emerging growth company	☑

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

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

As of August 17, 2026, 6,619,796 shares of the registrant’s common stock, par value $0.0001 per share, were outstanding.

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		PAGE
PART I – FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS

	Unaudited Condensed Balance Sheets as of June 30, 2026 and December 31,2025	3
	Unaudited Condensed Statements of Operations for the Three and Six Months Ended June 30,2026 and 2025	4
	Unaudited Condensed Statements Stockholders’ Equity (Deficit) for the Three and Six Months Ended June,30 2026 and 2025	5
	Unaudited Condensed Statements of Cash Flows for the Six Months Ended June 30,2026 and 2025	6
	Notes to Unaudited Condensed Financial Statements	7

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	32

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39

ITEM 4.	CONTROLS AND PROCEDURES	39

PART II – OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	41

ITEM 6.	EXHIBITS	41

SIGNATURES		42

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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		$	1,180		$	6,154
Accounts receivable, net of allowance for credit losses of $457 and $303 as of June 30, 2026 and December 31, 2025, respectively			3,559			2,407
Inventories			2,897			1,004
Network financing receivable, current			195			213
Prepaid expenses and other current assets			387			550
Total current assets			8,218			10,328
Property and equipment, net			52			—
Network financing receivable, net of current			990			1,078
Lease right-of-use assets, net			418			28
Net investment in lease			386			483
Other non-current assets			36			26
TOTAL ASSETS		$	10,100		$	11,943
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Deferred revenue			5,307			2,886
Accounts payable			1,779			1,813
Accrued expenses and other current liabilities			806			495
Operating lease liabilities, current			54			29
Related party debt, current			973			804
Note payable, current			202			196
Total current liabilities			9,121			6,223
Operating lease liabilities, net of current			384			—
Related party debt, net of current			666			506
Note payable, net of current			393			490
Deferred revenue, net of current			293			308
TOTAL LIABILITIES			10,857			7,527

Commitments and contingencies (see Note 13)

STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock, $0.0001 par value, 100,000 shares authorized as of June 30, 2026 and December 31, 2025; 0 shares issued and outstanding as of June 30, 2026 and December 31, 2025			—			—
Common stock, $0.0001 par value, 14,900,000 shares authorized; 6,619,796 and 6,619,796 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively			—			—
Additional Paid-in Capital			19,129			19,009
Accumulated deficit			(19,886)			(14,593)
Total stockholders’ equity (deficit)			(757)			4,416
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)		$	10,100		$	11,943

See accompanying notes to unaudited condensed financial statements.

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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		$	2,856		$	5,326		$	7,286		$	10,771
Cost of revenues
Cost of revenues			2,413			4,520			6,016			8,707
Gross profit			443			806			1,270			2,064
Operating expenses
General and administrative			3,393			1,503			6,277			3,109
Sales and marketing			150			42			293			64
Total operating expenses			3,543			1,545			6,570			3,173
Operating loss			(3,100)			(739)			(5,300)			(1,109)
Other expense, net
Interest income (expense), net			(27)			(114)			11			(186)
Total other income (expense), net			(27)			(114)			11			(186)
Loss from operations before income taxes			(3,127)			(853)			(5,289)			(1,295)
Income tax expense			4			4			4			4
Net loss		$	(3,131)		$	(857)		$	(5,293)		$	(1,299)
Net loss per share, basic and diluted		$	(0.47)		$	(0.17)		$	(0.80)		$	(0.26)
Weighted average common shares used in computing net loss per share, basic and diluted			6,619,796			5,000,000			6,619,796			5,000,000

See accompanying notes to unaudited condensed financial statements.

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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		6,619,796		$	—		—		$	—		—		$	—		$	19,009		$	(14,593)		$	—		$	4,416
Stock based compensation		—			—		—			—		—			—			25			—			—			25
Net loss		—			—		—			—		—			—			—			(2,162)			—			(2,162)
Balance at March 31, 2026 (unaudited)		6,619,796			—		—			—		—			—			19,034			(16,755)			—			2,279
Stock based compensation		—			—		—			—		—			—			95			—			—			95
Net loss		—			—		—			—		—			—			—			(3,131)			—			(3,131)
Balance at June 30, 2026 (unaudited)		6,619,796		$	—		—		$	—		—		$	—		$	19,129		$	(19,886)		$	—		$	(757)


		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		—		$	—		2,497,950		$	—		2,502,050		$	—		$	5,859		$	(10,365)		$	(30)		$	(4,536)
Repayment of stock subscription receivable		—			—		—			—		—			—			—			—			30			30
Net loss		—			—		—			—		—			—			—			(442)			—			(442)
Balance at March 31, 2025 (unaudited)		—			—		2,497,950			—		2,502,050			—			5,859			(10,807)			—			(4,948)
Transfer and conversion of Class B Common Stock to Class A Common Stock		—			—		25,000			—		(25,000)			—			—			—			—			—
Net loss		—			—		—			—		—			—			—			(857)			—			(857)
Balance at June 30, 2025 (unaudited)		—		$	—		2,522,950		$	—		2,477,050		$	—		$	5,859		$	(11,664)		$	—		$	(5,805)

See accompanying notes to unaudited condensed financial statements.

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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		$	(5,293)		$	(1,299)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense			120			—
Depreciation and amortization			1			—
Provision for credit losses			154			—
Right of use asset amortization expense			28			26
Changes in operating assets and liabilities:
Accounts receivable			(1,306)			(1,582)
Network financing receivable			106			(470)
Inventories			(1,893)			362
Prepaid expenses and other assets			153			5
Accounts payable			(34)			972
Accrued expenses and other current liabilities			311			(32)
Deferred revenue			2,406			680
Related party payables			—			(111)
Net investment in lease			97			23
Lease right-of-use lease liabilities payments			(9)			(24)
Net cash used in operating activities			(5,159)			(1,450)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment			(53)			—
Net cash used in investing activities			(53)			—

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party debt			500			1,000
Repayment of related party debt			(171)			(342)
Proceeds from SAFE issuance			—			1,000
Repayment of notes payable			(91)			—
Proceeds from payment of stock subscription receivable			—			30
Net cash provided by financing activities			238			1,688
NET CHANGE IN CASH			(4,974)			238
CASH and CASH EQUIVALENTS, beginning of period			6,154			287
CASH and CASH EQUIVALENTS, end of period		$	1,180		$	525
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash payments for interest		$	112		$	166
SUPPLEMENTAL NONCASH DISCLOSURE INVESTING AND FINANCING:
Lease liabilities arising from obtaining right-of-use asset		$	418		$	25

See accompanying notes to unaudited condensed financial statements.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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 5,000,000 Merger Shares (2,497,950 Class A and 2,502,050 Class B) to the owners of Legacy Elauwit based on a 4.11795 share exchange ratio. Prior to the Merger, DeltaMax was a non-operating shell company.

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 4.11795 share exchange ratio. The accumulated deficit of Legacy Elauwit has been carried forward after the Closing. No goodwill or other intangible assets were recorded as the transaction did not constitute the acquisition of a business.

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 1,667,000 shares of common stock at a public offering price of $9.00 per share. The underwriters agreed to purchase the shares at a 7.0% discount to the public offering price, and the Company granted the Representative a 45‑day option to purchase up to an additional 250,050 shares of common stock to cover over‑allotments, if any. The Offering closed on November 6, 2025, and on November 24, 2025 the Company closed on the partial exercise of the Representative’s over-allotment option for an additional 68,989 shares of common stock. The remaining portion of the over-allotment option to purchase 181,061 shares of common stock expired unexercised upon the expiration of the 45-day option period. Gross proceeds from the Offering and the partial exercise of the over-allotment option were approximately $15.0 million and $0.6 million, respectively. The Company incurred additional offering expenses, inclusive of the underwriter discounts, of approximately $2.0 million, which were recorded as deferred offering costs and reclassified to additional paid‑in capital upon completion of the Offering.

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 116,690 shares of common stock (representing 7% of the number of shares of common stock sold in the Offering) (the “Representative’s Warrants”). In connection with the closing of the partial over-allotment option exercise on November 24, 2025, the Company also issued Representative’s Warrants to purchase up to 4,830 shares of common stock to the Representative. The Representative’s Warrants were exercisable at $10.35 per share, became exercisable on May 2, 2026 and expire on November 2, 2030.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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 $1.0 million in shares of common stock at a discount of 10% below the offering price. On November 13, 2025, both Baron Hunter and Steele Creek exercised their respective Put Options. On November 14, 2025, the Company repurchased 123,456 shares of common stock from each of Baron Hunter and Steele Creek at a price of $8.10 per share, resulting in total payments of $1.0 million to each of Baron Hunter and Steele Creek.

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 $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 had used approximately $5.2 million, respectively, 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 Offering, 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.

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.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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 two customers that accounted for approximately 57% of the Company’s accounts receivable balance, comprising 35% and 22%, respectively. As of December 31, 2025, the Company had four customers that accounted for approximately 59% of the Company’s accounts receivable balance, comprising 29%, 17%, 8%, and 5%, respectively.

During the six months ended June 30, 2026 and 2025, the Company had four and two customers, respectively, that individually accounted for 10% or more of the Company’s total revenues. The four customers in 2026 accounted for approximately 15.6%, 11.0%, 10.8%, and 10.5%, respectively. The two customers in 2025 accounted for approximately 32.4% and 12.1% of the Company’s total revenues, respectively.

During the three months ended June 30, 2026 and 2025, the Company had two and three customers, respectively, that individually accounted for 10% or more of the Company’s total revenues, comprising approximately 17.7% and 12.5% for 2026 and 21.6%, 14.1%, and 11.2% for 2025, respectively.

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 one operating segment and one reportable segment. The Company identifies the Chief Operating Decision Maker (“CODM”) to be a group consisting of the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”). The Company’s principal operations are in the United States. The CODM utilizes and regularly reviews gross profit and loss from operations as measures of segment profit or loss. These measures enable the CODM to assess the overall level of available resources and determine how best to deploy resources.

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		$	2,856		$	5,326	$	7,286	$	10,771

Less:
Cost of revenues			2,413			4,520		6,016		8,707
Segment gross profit			443			806		1,270		2,064

Less(1):
Segment compensation expenses (2)			2,070			752		3,543		1,568
Segment travel expenses (3)			187			56		376		131
Other segment expenses (4)			1,286			737		2,651		1,474
Segment operating loss		$	(3,100)		$	(739)	$	(5,300)	$	(1,109)

(1)	The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

(2)	Compensation related expenses primarily include salaries and related payroll tax expenses.

(3)	Travel related expenses primarily include travel expenses.

(4)	Other segment expenses for each reportable segment includes all other operating expenses such as management fees, professional fees, insurance, rent and other.

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 $930 thousand of deposits in financial institutions in excess of federally insured limits of $250 thousand at June 30, 2026. The Company has not experienced any losses in such accounts and management believes it is not exposed to significant credit risk on its cash deposits.

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 five to seven years, 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 five to seven years, concurrent with the delivery of internet network services. The majority of the Company’s network financing receivables are financed through participation and agency agreements with Endurance Opportunities, under which the Company sells an undivided participation interest in the underlying network service agreement (see Note 6 — Related Party Debt). Because the Company retains a repurchase obligation under these arrangements, the network financing receivables remain on the Company’s balance sheet and the related financing is recorded as debt. The Company also has a limited number of self-financed network financing receivables for which no third-party financing has been obtained. The Company retains the credit risk associated with customer nonpayment on all network financing receivables, whether financed through Endurance Opportunities or self-financed.

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 50%, 75%, and 100% are applied to invoices aged 91–120 days, 121–180 days, and over 180 days past due, respectively. Invoices aged 90 days or fewer are reserved at a de minimis rate supported by historical collection experience. For unbilled receivables and network financing receivables, the Company uses a historical loss rate method. No write-offs or credit losses have been recorded on unbilled receivables or network financing receivables since inception, resulting in a historical loss rate of zero; accordingly, no allowance has been recorded against these balances as of June 30, 2026 and December 31, 2025. The Company also considers reasonable and supportable current information in determining its estimated loss rates, such as external forecasts, macroeconomic trends or other factors including customers’ credit risk and historical loss experience. At June 30, 2026 and December 31, 2025, no macroeconomic factors were noted that would impact the Company’s expected credit losses.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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 $0.5 million and $0.3 million, respectively, related entirely to trade accounts receivable. For the six months ended June 30, 2026, the Company recorded provision for credit losses of approximately $0.2 million.

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 $2.0 million of deferred offering costs to additional paid-in capital as a direct reduction of offering proceeds.

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.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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 $208 thousand and $169 thousand, respectively, of costs to obtain contracts capitalized, which are presented within prepaid expenses and other current assets. The Company recognized approximately $11 thousand and $0 of amortization of costs to obtain contracts for the three months ended June 30, 2026 and 2025, respectively, and approximately $14 thousand and $0 of amortization of costs to obtain contracts for the six months ended June 30, 2026 and 2025, respectively, which is included in sales and marketing expense in the accompanying unaudited condensed statements of operations.

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Notes to Unaudited Condensed Financial Statements

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 $150 thousand and $42 thousand for the three months ended June 30, 2026 and 2025, respectively, and approximately $293 thousand and $64 thousand for the six months ended June 30, 2026 and 2025, respectively.

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.

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Notes to Unaudited Condensed Financial Statements

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, no liability for unrecognized tax benefits was required to be recorded.

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 no amounts accrued for penalties and interest as of June 30, 2026 and December 31, 2025. The Company does not expect its uncertain tax positions to change during the next twelve months. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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		$	1,620		$	4,646		$	4,996		$	9,616
Internet network services and hardware and internet service			1,236			680			2,290			1,155
Total		$	2,856		$	5,326		$	7,286		$	10,771

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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 $38.9 million (which represents the amount of the Company’s backlog). $17.4 million of the backlog relates to the network design and installation performance obligations and $21.5 million relates to internet network services and hardware and internet services performance obligations. Additionally, $15.4 million of the Company’s backlog relates to jobs that are contracted but not yet started as of June 30, 2026. The Company estimates that approximately $10.5 million of the remaining performance obligations as of June 30, 2026 will be completed and recognized as revenue during 2026, with the remainder recognized between 2027 and 2032.

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	$	6,215
Additions included in deferred revenue as of end of period		4,891
Revenue recognized from opening balance		(4,211)
Balance as of June 30, 2025	$	6,895

Balance as of January 1, 2026	$	3,194
Additions included in deferred revenue as of end of period		5,292
Revenue recognized from opening balance		(2,886)
Balance as of June 30, 2026	$	5,600

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 $5.6 million was classified as $5.3 million in current liabilities and $0.3 million in non-current liabilities in the accompanying unaudited condensed balance sheets.

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	$	513
Additional unbilled revenue recognized		406
Amounts billed during the period		(17)
Balance as of June 30, 2025	$	902

Balance as of January 1, 2026	$	1,291
Additional unbilled revenue recognized		—
Amounts billed during the period		(106)
Balance as of June 30, 2026	$	1,185

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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		$	3,422		$	1,997
Unbilled receivables			594			713
Allowance for credit losses			(457)			(303)
Accounts receivable		$	3,559		$	2,407

Trade accounts receivable and unbilled receivables as of June 30, 2026 was $3.4 million and $0.6 million, respectively. Trade accounts receivable represent amounts billed to customers for services rendered and network infrastructure installed. Unbilled receivables represent revenue recognized in excess of amounts billed to customers, primarily related to the allocation of contract consideration for network design and installation services recognized over time. As of June 30, 2026, the Company had unbilled receivables of approximately $0.6 million, which are expected to be billed within the next twelve months.

As of June 30, 2026 and December 31, 2025, the Company recorded an allowance for credit losses of approximately $0.5 million and $0.3 million, respectively, related to trade accounts receivable based on the aging schedule methodology described in Note 2.

Note 5. Leases

Lessee

During the three months ended June 30, 2026 and 2025, operating lease expense was $34 thousand and $14 thousand, respectively, and during the six months ended June 30, 2026 and 2025, operating lease expense was $48 thousand and $28 thousand, respectively.

During the three months ended June 30, 2026 and 2025, the Company had short-term lease expense of $20 thousand and $7 thousand, respectively, and during the six months ended June 30, 2026 and 2025, short-term lease expense was $39 thousand and $23 thousand, respectively.

During the three months ended June 30, 2026 and 2025, the Company had variable lease expense of $3 thousand and $0, respectively, and during the six months ended June 30, 2026 and 2025, variable lease expense was $10 thousand and $10 thousand, respectively

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	4.92
Weighted average discount rate - operating leases	15.50	%

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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 terminate the lease at any time with 30 days’ notice. The Company leased this space on a month to month basis for six months until June 30, 2024. On May 31, 2024, the Company entered into a new lease with the same lessor for the original Suite 130 and an additional space, Suite 140. The term of the new lease is from July 1, 2024 to June 30, 2026. Total rent is $3,150 per month from July 1, 2024 to June 30, 2025 and $3,276 per month from July 1, 2025 to June 30, 2026.

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 1,950 additional square feet for a total of approximately 5,950 square feet of office space. The Amended SC Lease commencement date is January 2, 2025 and runs concurrently with the existing terms and conditions of the lease, through June 30, 2026. The Company determined that the lease payments increased commensurate with the standalone price for the additional right of use and as such, it is accounted for as a new lease, commencing on January 2, 2025. As such, the Company recorded an additional right-of-use asset and lease liability upon lease commencement of the new lease. Total rent is $1,536 per month from February 1, 2025 to June 30, 2025 and $1,598 per month from July 1, 2025 to June 30, 2026. The Amended SC Lease expired on June 30, 2026 and was not renewed or extended.

Columbia SC Lease

On April 1, 2026, the Company entered into an operating lease for approximately 10,927 square feet of office and warehouse space in Columbia, South Carolina. The lease has an initial term of approximately five years and commenced on May 1, 2026. Aggregate undiscounted base rent payments under the lease are approximately $611 thousand. Upon commencement, the Company recognized a right-of-use asset and corresponding operating lease liability of approximately $418 thousand. The Company has a standby letter of credit with a financial institution for $120,000 associated with the lease.

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)		$	57
2027			116
2028			120
2029			125
2030			125
Thereafter			59
Total minimum lease payments			602
Less effects of discounting			(164)
Present value of future minimum lease payments			438
Less: current portion of operating lease liabilities			(54)
Operating lease liabilities, net of current		$	384

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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 $0.4 million and $0.5 million, respectively.

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)		62
2027		124
2028		124
2029		124
2030		109
Thereafter		8
Total minimum lease payments	$	551
Less: unearned interest		(165)
Net investment in sales-type leases	$	386

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
Lease income - sales-type leases		$	17	$	14	$	29	$	28
Total lease income		$	17	$	14	$	29	$	28

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		$	973		$	804
Related Party Debt, non-current:
Network Service Agreements, net of current			166			506
May 2026 Term loan			500			—
Related Party Debt total		$	1,639		$	1,310

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 $50 thousand to $550 thousand (the “Project Financing”). During the three and six months ended June 30, 2026 and 2025, the Company did not enter into any NSAs. The Company notes $0.5 million of the amount financed during 2024 relates to the sales-type lease (see Note 5). As of June 30, 2026 and December

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

31, 2025, the NSAs had aggregate carrying balances of approximately $1.1 million and $1.3 million, respectively. Repayments on the NSAs are made monthly and range from $21 thousand to $28 thousand.

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 16.5% per annum, with respect to any payments owed to Endurance Opportunities by the Company, or advances owed to Endurance Opportunities by the Company, not made when due. In exchange, for the financing, the Company and Endurance Opportunities have entered into various participation and agency agreements (the “Participation and Agency Agreements), whereby Endurance Opportunities is granted an undivided participation interest entitling Endurance Opportunities to receive payments in relation to each respective NSA. At any time the Participation and Agency Agreement is outstanding, the Company shall have the right to repurchase Endurance’s interest at par value, with par meaning all outstanding principal, unpaid interest, and fees. If Endurance Opportunities’ interest under these Participation and Agency Agreements remains outstanding twenty four (24) months after the service activation date under each respective NSA, Endurance Opportunities shall have the option to require repurchase by the Company of Endurance Opportunities’ interest, at par value. As a result, at June 30, 2026, certain of the network financing arrangements are fully classified as current due to this provision. Interest expense related to these network service agreements are presented net of interest income received from network financing receivables, which accrues interest income at the same rate as the NSAs.

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 $1.0 million to the Company in exchange for the Endurance Loan. The Endurance Loan had a maturity date of May 1, 2029 and bore interest at 18.0%, compounded annually. Monthly payments were required under the Endurance Loan of $15 thousand through October 2024 and $19 thousand, thereafter through maturity. During the three and six months ended June 30, 2026 and 2025, the Company incurred $0 thousand and $26 thousand of interest expense, respectively, and $0 thousand and $52 thousand of interest expense, respectively, which is recognized in interest expense in the unaudited condensed statements of operations. In connection with the Offering, the Endurance Loan was fully settled prior to December 31, 2025.

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 $0.3 million to the Company. The Endurance Business Loan had a maturity date of May 2026 and bore interest at 16.5% per year. During the three and six months ended June 30, 2026 and 2025, the Company incurred $0 thousand and $10 thousand, respectively, and $0 thousand and $21 thousand, respectively, of interest expense, which is recognized in interest expense in the unaudited condensed statements of operations.

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 $0.5 million to the Company. The Endurance Promissory Note had a maturity date of eighteen months and bore interest at 16.5%. Quarterly payments of interest were required with outstanding principal amount of the loan due on the maturity date. For the three and six months ended June 30, 2026 and 2025, the Company incurred $0 thousand and $21 thousand, respectively, and $0 thousand and $28 thousand, respectively, of interest expense which is recognized in interest expense in the unaudited condensed statements of operations. In connection with the Offering, the Endurance Promissory Note was fully settled prior to December 31, 2025.

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 $0.5 million to the Company. The Second Endurance Promissory Note had a maturity date

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

of ninety days and bore interest at 16.5%. Monthly payments of interest were required with outstanding principal amount of the loan due on the maturity date. For the three and six months ended June 30, 2026 and 2025, the Company incurred $0 thousand and $20 thousand, respectively, and $0 thousand and $22 thousand, respectively, of interest expense, which is recognized in interest expense in the unaudited condensed statements of operations. On July 7, 2025, the Second Endurance Promissory Note was modified to extend the term of the note an additional 90 days, to September 25, 2025. All other provisions of the loan remained the same. The debt modification was deemed not substantive and was accounted for as a debt modification. On September 24, 2025, the Second Endurance Promissory Note was modified to extend the term of the note to October 31, 2025. All other provisions of the previously modified loan remain the same. The debt modification was deemed not substantive and was accounted for as a debt modification. In connection with the Offering, the Second Endurance Promissory Note was fully settled prior to December 31, 2025.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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 $500 thousand 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 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 of the May 2026 Note due on the maturity date. Each subsequent commercial promissory note issued in accordance with the May 2026 Term Loan will have the same terms and conditions as the May 2026 Note. For the six months ended June 30, 2026, the Company incurred $8 thousand of interest expense which is recognized in interest expense in the unaudited condensed statements of operations.

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)	$	171
2027		341
2028		341
2029		742
2030		44
Total future payments	$	1,639

Note 7. Notes Payable

Notes payable consist of the following (in thousands):


		June 30, 2026			December 31, 2025
Motherlode Promissory Note, current		$	202		$	196
Motherlode Promissory Note, net of current			393			490
Total note payable		$	595		$	686

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 $1.0 million. The Motherlode Promissory Note bears interest at 6.0% per annum, compounded annually, requires monthly principal and interest installments of $19 thousand, and matures on April 30, 2029. Motherlode was a related party of the Company at the time the Motherlode Promissory Note was issued, and ceased to be a related party of the Company effective April 12, 2024. For the three and six months ended June 30, 2026 and 2025, the Company incurred interest expense of $10 thousand and $19 thousand, respectively, and $23 thousand and $25 thousand, respectively, related to the Motherlode Promissory Note, which is included in interest expense, net in the accompanying unaudited condensed statements of operations. As of June 30, 2026 and December 31, 2025, the outstanding principal balance of the Motherlode Promissory Note was $0.6 million and $0.7 million, respectively.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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)		$	103
2027			208
2028			221
2029			63
Total future payments			595

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 $45 thousand per month during the initial year of the Management Agreement, subject to potential annual increases and other compensation, as determined by the Board. The term of the agreement was three (3) years commencing on December 1, 2019 and terminated on November 30, 2022. Beginning in December 2020, the Key Persons elected to defer portions of their consideration. On August 20, 2024, as part of the Deferred Compensation Agreement, defined below, the Company agreed to pay the Key Persons $0.5 million, at an interest rate of 3.25%, on cumulative balances owed. For the three and six months ended June 30, 2026 and 2025 the Company incurred $0 thousand and $3 thousand of interest expense, respectively, and $0 thousand and $7 thousand of interest expense, respectively, which is recognized in interest expense in the unaudited condensed statements of operations. As of December 31, 2025 the deferred compensation had been repaid in full with the Offering in November 2025.

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 $0 thousand and $90 thousand, respectively, and $0 thousand and $180 thousand, respectively, included in general and administrative expenses on the unaudited condensed statements of operations.

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 3.25%, on all cumulative balances outstanding as of February 1, 2022. The Company agreed to pay each of the executives $2.5 thousand per month and there was no fixed maturity date. For the three and six months ended June 30, 2026 and 2025, the Company incurred $0 thousand and $1 thousand of interest expense, respectively, and $0 thousand and $2 thousand of interest expense, respectively, which is recognized in interest expense in the unaudited condensed statements of operations. As of December 31, 2025, the Deferred Compensation Agreement had been repaid in full with the Offering in November 2025.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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 $0.0001 per share, authorized for issuance to 14,900,000, consisting of 12,000,000 shares of Class A common stock and 2,900,000 shares of Class B common stock; (iii) authorize the Board of Directors to issue up to 100,000 shares of preferred stock, par value $0.0001 per share.

On August 14, 2025, the Company amended and restated its certificate of incorporation to, among other things, (i) authorize 15,000,000 of capital stock which is divided into two classes, with 14,900,000 shares designated as common stock, $0.0001 par value per share (the “common stock”), and 100,000 shares designated as Preferred Stock, par value $0.0001 per share (the “Preferred Stock”) and (ii) provide that the holders of common stock hold all voting power.

Initial Public Offering

On November 4, 2025, the Company entered into the Underwriting Agreement with the Representative, for the Offering of 1,667,000 shares of common stock at a public offering price of $9.00 per share. The underwriters agreed to purchase the shares at a 7.0% discount to the public offering price. The Offering closed on November 6, 2025, resulting in gross proceeds of approximately $15.0 million. On November 24, 2025, the Company closed the sale of an additional 68,989 shares of common stock, representing the partial exercise of the Representative’s 45-day over-allotment option, resulting in additional gross proceeds of approximately $0.6 million. In total, the Company issued 1,735,989 shares of common stock in the offering for aggregate gross proceeds of approximately $15.6 million, before deducting underwriting discounts and commissions and other offering expenses. After deducting underwriting discounts and commissions of approximately $1.3 million and other offering costs of approximately $0.7 million, the Company received net proceeds of approximately $13.6 million. The underwriting discounts, commissions, and other offering costs were recorded as a reduction of additional paid-in capital.

Pursuant to the Underwriting Agreement, the Company issued to the Representative warrants to purchase an aggregate of 121,520 shares of common stock (representing 7% of the total shares sold in the Offering, including shares sold upon partial exercise of the over-allotment option). The Representative’s Warrants are exercisable at $10.35 per share, are initially exercisable beginning on May 2, 2026, and expire on November 2, 2030.

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 $1.0 million in shares of common stock at a price of $8.10 per share, representing a 10% discount to the Offering price. On November 13, 2025, each of Baron Hunter and Steele Creek exercised its put option. On November 14, 2025, the Company repurchased an aggregate of 123,456 shares of common stock from each of Baron Hunter and Steele Creek, for an aggregate of 246,912 shares, at $8.10 per share, for aggregate cash consideration of approximately $2.0 million. The repurchased shares were retired.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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 $1.0 million (the “SAFE Amount”). In the event of a liquidity event, as defined in the SAFE Agreement, the Investor was entitled to the amount payable on the number of shares of common stock equal to the SAFE Amount divided by the price per share in the liquidity event multiplied by a discount price of 85%.

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 $1.0 million. Subsequent changes in fair value at each reporting period are recognized in the unaudited condensed statements of operations as changes in fair value of SAFE liability. On November 6, 2025, upon the closing of the Offering, the SAFE liability was extinguished by automatic conversion into 130,719 shares of common stock. Accordingly, no SAFE liability was outstanding as of June 30, 2026 or December 31, 2025, and no gain or loss related to the SAFE was recognized in the unaudited condensed statements of operations for the three and six months ended June 30, 2026.

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 100% of each employee’s contribution up to the first 3% of pay and then on 50% of employee contributions on the next 2% of pay of the employee’s eligible compensation.

The Company incurred expenses of approximately $36 thousand and $18 thousand related to matching contributions for the three months ended June 30, 2026 and 2025, respectively, and approximately $65 thousand and $32 thousand related to matching contributions for the six months ended June 30, 2026 and 2025, respectively.

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 700,000 shares of common stock for issuance, subject to an annual evergreen increase.

On January 28, 2026, the Compensation Committee of the Board of Directors approved RSU awards to certain employees of the Company totaling 16,552 RSUs. The RSUs vest in full on the one-year anniversary of the grant date, subject to continued service. The grant-date fair value of the RSUs was determined based on the closing price of the Company’s common stock on the Nasdaq Capital Market on January 28, 2026. Compensation cost is recognized on a straight-line basis over the one-year requisite service period.

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 25% of the program, together with quarterly cash incentives, and is accrued ratably over fiscal 2026 in accordance with ASC 710, Compensation—General.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

The remaining 75% of the annual incentive opportunity is equity-based in the form of performance stock units (“PSUs”) which were granted on April 2, 2026. Compensation expense associated with the PSUs is recognized in accordance with ASC 718, Compensation—Stock Compensation, on a straight-line basis over the 36-month requisite service period ending on the April 2, 2029 vesting date, subject to the applicable performance and service conditions. The number of PSUs to be issued may range from 0% to a maximum of 200% of targeted amounts, as defined in the individual PSU grant awards, depending on the achievement of performance measures at the end of the performance period. The expected cost of the shares is based on the date of grant fair value and the Company’s assessment of the probability that the performance condition will be achieved at target (100%). Any related compensation expense is recognized when the probability is likely that the performance criteria will be achieved. Forfeitures are recognized as they occur.

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 19,972 RSUs and stock option awards to purchase 11,788 shares of the Company’s common stock. Additionally, the Company granted 9,764 RSU’s to other individuals as part of their employment agreements.

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		46,288		$	5.97
Vested		—			—
Forfeited		—			—
Unvested at June 30, 2026		46,288		$	5.97

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 91,766 PSUs at target.


				Weighted-Average
PSU (at target)		Number of PSUs		Fair Value
Unvested at December 31, 2025		—			—
Granted		91,766		$	6.50
Vested		—			—
Forfeited		(9,916)			6.50
Unvested at June 30, 2026		81,850		$	6.50


Black-Scholes		Option Inputs
Expected volatility			50.55	%
Expected term (years)			5.5
Risk-free interest rate			3.75	%
Expected dividend yield			0	%
Grant-date fair value per option		$	3.27

Stock-based compensation expense was approximately $95 thousand and $120 thousand for the three and six months ended June 30, 2026, respectively, and was included within general and administrative expense. Stock-based compensation expense was zero for the three and six months ended June 30, 2025. As of June 30, 2026, the Company had unrecognized compensation cost of approximately $0.2 million related to outstanding service stock-based awards that is expected to be recognized over the remaining requisite service periods. The maximum potential stock-based compensation expense for the outstanding performance-based share awards is approximately $1.1 million.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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	121,520		—		121,520		—
Restricted Stock Units	46,288		—		46,288		—
Performance Stock Units	81,850		—		81,850		—
Stock Options	11,788		—		11,788		—
Total	261,446		—		261,446		—

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 $4 thousand for each period. In assessing the realizability of its deferred tax assets, the Company considers all available positive and negative evidence, including its history of cumulative losses, projections of future taxable income, the reversal of existing taxable temporary differences, and prudent and feasible tax planning strategies. As a result of this assessment, the Company continues to conclude that it is more likely than not that the deferred tax assets will not be realized as of June 30, 2026, and accordingly continues to maintain a full valuation allowance against its net deferred tax assets. There were no material changes to the Company’s valuation allowance position during the three and six months ended June 30, 2026.

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.

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ELAUWIT CONNECTION, INC.

Notes to Unaudited Condensed Financial Statements

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 no liability for unrecognized tax benefits. There were no material changes to the Company’s unrecognized tax benefits during the three and six months ended June 30, 2026, and the Company does not expect any material change in the next twelve months.

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.

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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.

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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

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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.

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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.

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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.

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Backlog as of June 30, 2026 was $38.9 million, compared to $35.9 million as of June 30, 2025.

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Contracted units as of June 30, 2026 were 42,687, compared to 32,094 as of June 30, 2025.

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Activated units as of June 30, 2026 were 27,134, compared to 13,960 as of June 30, 2025.

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Billed units as of June 30, 2026 were 22,967, compared to 8,733 as of June 30, 2025.

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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.

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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:

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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.

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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

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$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.

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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).

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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.

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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.

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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.

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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.

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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		Business Loan Agreement, by and between Elauwit Connection, Inc. and Endurance Opportunities I LLC, dated as of May 14, 2026		May 15, 2026		10-Q		001-42935
10.2		Form of Commercial Promissory Note, by and between Elauwit Connection, Inc. and Endurance Opportunities I LLC		May 15, 2026		10-Q		001-42935
31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		Filed herewith		-		-
31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		Filed herewith		-		-
32		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		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		-		-

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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)