UNITED STATES
証券取引委員会
ワシントンDC20549
フォーム
四半期間
または
________ から ________ への移行期間について
コミッションファイル番号：001-08504
（会社設立時の指定名）
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（設立または組織の州またはその他の管轄区域） （I.R.S.雇用者識別番号） |
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（I.R.S. 雇用主識別番号） レキシントン、マサチューセッツ州02421 |
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(主要執行オフィスの住所) |
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（郵便番号） |
取引所の電話番号、市外局番を含む：
法第12条（b）に基づく登録証券
各類のタイトル: |
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取引シンボル |
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登録されている取引所の名称: |
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本登録者が、前述の12か月間（あるいは登録者が当該報告書を提出しなければならなかった短い期間）において、証券取引法第13条または15条（d）で定められた提出すべき報告書を全て提出したかどうかをチェックマークで示し、(2) 本登録者が過去90日間にわたってその提出要件に従っていたかどうかを示します。
規則405に基づき、本章の§232.405に規定されている対話型データファイルを、過去12か月間（またはそのようなファイルを提出する義務があった期間の短い場合）に電子提出したかどうかをチェックマークで示してください。
申請者が大型加速装置、加速装置、ノンアクセル装置、小規模報告会社、または新興グロース会社である場合は、註記欄にチェックマークを付けてください。規則120億2に記載されている「大型加速装置」、「加速装置」、「小規模報告会社」、「新興グロース会社」の定義を参照してください。
大型加速ファイラー |
☐ |
加速ファイラー |
☐ |
☒ |
レポート義務のある中小企業 |
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新興成長企業 |
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新興成長企業の場合は、証券取引法第13条（a）に基づく新しいまたは改訂された財務会計基準の遵守に対する延長移行期間を使用しないことを選択したかどうかにチェックマークをつけてください。 ☐
本登録者が取引所法12b-2条で定義されるシェル企業である場合、はい☐✓印を付しませんでした場合、登録者の内部統制に関するマネジメント評価を報告するよう求められたことを意味します。
2024年11月6日現在、
TABLE OF コンテンツ
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ページ |
第I部分 |
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1 |
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アイテム1. |
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1 |
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1 |
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2 |
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3 |
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5 |
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6 |
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アイテム2. |
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16 |
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項目3。 |
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27 |
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項目4. |
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27 |
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第2部 |
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29 |
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アイテム1. |
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29 |
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項目1A。 |
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29 |
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アイテム2. |
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29 |
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項目3。 |
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29 |
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項目4. |
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29 |
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項目5。 |
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29 |
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項目6。 |
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30 |
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31 |
i
将来予測に関する特別注記
この四半期報告書（以下「報告書」という）には、1933年証券法第27A条（修正後の「証券法」）および1934年証券取引法第21E条に該当する前向きな声明が含まれています（修正後の「証券取引法」）。これらの前向きな声明は、1995年の民事訴訟改革法によって提供される前向きな声明の安全な港によってカバーされることを意図しています。この報告書に含まれる歴史的事実以外のすべての声明、つまり、今後の業績や財務状況、ビジネス戦略や計画、および将来の運営目標に関する声明は前向きな声明です。「予測する」「信じる」「継続する」「できる」「見積もる」「期待する」「意図する」「可能である」「潜在的である」「予測する」「企画する」「可能性がある」「予測する」「計画する」「するべき」「意図する」などの、将来の出来事や結果の不確実性を示す類似の表現は、前向きな声明を識別するために意図されていますが、これらの言葉がない場合でも、その声明が前向きでないことを意味するものではありません。
このレポートに含まれる将来を見据えた記述は、私たちの現在の期待や将来の展開に関する考え、およびそれらが当社に与える影響に基づいています。 当社に影響を及ぼす将来の展開は、予想していたものとは異なる可能性があります。 これらの将来を見据えた記述には、実際の結果やパフォーマンスが、これらの将来を見据えた記述によって示唆された内容とは実質的に異なる原因ともなるリスク、不確実性（一部は私たちのコントロールを超えるものも含む）や、その他の前提条件が含まれます。 これらのリスクや不確実性には、われわれが時折SEC（証券取引委員会）に提出する報告書である「Forms 10-K」「10-Q」「8-K」等で説明される要因を含みます。 これらのリスクや不確実性のうち1つ以上が実現し、またはわれわれの前提のいずれかが誤りであった場合、実際の結果はこれらの将来を見据えた記述で予測されているものとは実質的に異なる可能性があります。 新しい情報や将来の出来事、または適用される証券法に準拠する必要がある場合を除き、当社はいかなる理由があろうとも将来を見据えた記述を更新または修正する義務を負いません。 これらのリスクおよびその他のリスクに関しても「」で説明されています。リスクファクターその他のリスクや不確実性のうち、1つ以上が実現した場合、または当社のいずれかの仮定が誤ったことが判明した場合、実際の結果は、これらの将来を見通す諸表明とは実質的に異なる可能性があります。私たちは、適用可能な証券法に従うかぎり、新しい情報、将来の事象、その他の理由により、前向きな見通しに関する記述を更新または修正する義務を負いません。これらのリスクおよびその他のリスクについては、「リスクファクター本報告書の（取引所法修正第18条が適用されない場合であっても、「取引所法」又は1933年証券法修正第11条及び12条（a）（2）の規定に基づく責任には従わない限り、当社のSECへのいかなる提出書類にも、この報告書及び添付エクスビット99.1の情報をそのまま参照してはならないで ください。
（業種に）関連するイベントおよび状況に依存するため、将来を見据えた声明にはリスクと不確実性が伴います。将来を保証するものではなく、当社の業績、財務状況、流動性、および当社が運営する業種の動向は、本報告書に含まれる将来を見据えた声明で述べられているものと大きく異なる可能性があります。さらに、たとえ当社の業績、財務状況、流動性、および当社が運営する業種の動向が、この報告書に含まれる将来を見据えた声明と一致しているとしても、それらの結果や動向が後発期間の結果や動向を示すものであるとは限らないことにご注意ください。
ii
パートI—ファイ財務情報
アイテム1。Fina財務諸表の準備における見積もりの使用
Phunware, Inc.
概要連結貸借対照表
(千単位、株および1株当たりの情報を除く)
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9月30日, |
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12月31日 |
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2024 |
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2023 |
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資産: |
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(未監査) |
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流動資産: |
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現金及び現金同等物 |
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$ |
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$ |
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信用損失引当金を差し引いた売掛金 $ |
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デジタル通貨 |
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前払費用およびその他の流動資産 |
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中止された稼働部門の流動資産 |
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流動資産合計 |
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有形固定資産、正味額 |
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利用権資産 |
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その他の資産 |
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総資産 |
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$ |
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$ |
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負債および株主資本 |
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流動負債： |
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支払調整 |
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$ |
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$ |
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未払費用 |
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リース債務 |
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前払収益 |
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PhunCoin定期支払い |
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債務 |
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廃止された事業の流動負債 |
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流動負債合計 |
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前払収益 |
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リース債務 |
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負債合計 |
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株主資本（赤字） |
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普通株式、1株当たり0.001ドルの割額株式、承認済み株式総数900,000,000株、発行済み株式577,806,659株、2023年12月31日時点での流通株式540,387,949株、発行済み株式577,805,623株、2023年3月31日時点での流通株式545,459,814株、追加資本金 |
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取得株式の取得原価； |
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追加の資本金 |
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その他の総合損失 |
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( |
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( |
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累積欠損 |
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( |
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株主資本（赤字）合計 |
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( |
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負債および株主資本（赤字）合計 |
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$ |
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$ |
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添付の注記は、これらの未監査の簡約連結財務諸表の統合一体の部分です。
1
Phunware, Inc.
総合損益計算書運営の事業と包括損失
(千単位、株および1株当たりの情報を除く)
(未監査)
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3か月が終わりました |
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9か月が終わりました |
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9月30日、 |
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9月30日、 |
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2024 |
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2023 |
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2024 |
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2023 |
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純収入 |
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$ |
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$ |
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$ |
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$ |
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収益コスト |
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売上総利益 |
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営業経費: |
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セールスとマーケティング |
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一般と管理 |
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研究開発 |
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のれんの減損 |
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営業費用の合計 |
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営業損失 |
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その他の収入 (費用): |
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支払利息 |
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利息収入 |
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借金の消滅による利益（損失） |
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デジタル通貨の売却益 |
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その他の収益、純額 |
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その他の収入 (費用) の合計 |
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税引前損失 |
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所得税費用 |
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継続事業による純損失 |
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非継続事業による純損失 |
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純損失 |
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その他の包括損失（収入） |
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累積翻訳調整 |
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包括的な損失 |
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$ |
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$ |
( |
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$ |
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$ |
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継続事業による1株当たりの純損失（基本および希薄化後） |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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非継続事業による1株当たりの純損失（基本および希薄化後） |
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$ |
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$ |
( |
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$ |
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$ |
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1株当たりの純損失の計算に使用される加重平均株式（基本および希薄化後） |
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添付の注記は、これらの未監査の簡約連結財務諸表の統合一体の部分です。
2
Phunware, Inc.
縮小された合併財務諸表 株主資本（赤字）の変動
（単位：千、シェア情報を除く）
(未監査)
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追加 |
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他 |
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総計 |
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普通株式 |
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自己株式 |
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出資 |
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累積 |
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包括的 |
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株主の |
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株式 |
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数量 |
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株式 |
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数量 |
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2002年に設立されたKingSett Capitalは、機関投資家と超高純資産のクライアントとの共同投資で、持続可能でプレミアムなリスク加重リターンを提供する、カナダをリードするプライベートエクイティ不動産会社です。KingSettは、グローバル不動産サステナビリティベンチマーク（GRESB）調査において、リストに掲載されていない同業種の純財産部門で第1位、北アメリカの多様化したオフィス/リストに掲載されていない純財産部門で第2位にランクインし、持続可能性への取り組みが評価されました。業界のリーダーとして、KingSettは不動産セクターを前進させ、様々な不動産物件、開発、共同事業、住宅ローンの新しい投資機会を探し続けることに専念しています。 |
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赤字 |
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損失 |
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純資産(赤字) |
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2024年6月30日の残高 |
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$ |
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$ |
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制限株の解除 |
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普通株式の売却、発行費用の手数料引落額を差し引いたもの |
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株式報酬費用 |
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最終損失 |
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2024年9月30日の残高 |
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$ |
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$ |
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2023年12月31日の残高 |
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$ |
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制限付き株式の解放 |
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- |
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現金ボーナスやコンサルティング料金の代わりに普通株式の発行 |
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- |
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2022年の約束手形の換金による普通株式の発行 |
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- |
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普通株式の売却と引受なしワラントの行使、発行費用の差し引き |
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- |
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逆分割に伴う株式の分売 |
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- |
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株式報酬費用 |
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- |
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- |
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最終損失 |
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- |
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- |
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( |
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( |
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||||
2024年9月30日の残高 |
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$ |
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( |
) |
$ |
( |
) |
$ |
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$ |
( |
) |
$ |
( |
) |
$ |
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||||
3
Phunware, Inc.
株主資本（赤字）の短信式連結変動計算書
（単位：千、シェア情報を除く）
(未監査)
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追加 |
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他 |
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総計 |
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普通株式 |
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自己株式 |
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出資 |
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累積 |
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包括的 |
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株主の |
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株式 |
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数量 |
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株式 |
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数量 |
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2002年に設立されたKingSett Capitalは、機関投資家と超高純資産のクライアントとの共同投資で、持続可能でプレミアムなリスク加重リターンを提供する、カナダをリードするプライベートエクイティ不動産会社です。KingSettは、グローバル不動産サステナビリティベンチマーク（GRESB）調査において、リストに掲載されていない同業種の純財産部門で第1位、北アメリカの多様化したオフィス/リストに掲載されていない純財産部門で第2位にランクインし、持続可能性への取り組みが評価されました。業界のリーダーとして、KingSettは不動産セクターを前進させ、様々な不動産物件、開発、共同事業、住宅ローンの新しい投資機会を探し続けることに専念しています。 |
|
赤字 |
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損失 |
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純資産(赤字) |
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||||||||
2023年6月30日の残高 |
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$ |
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( |
) |
$ |
( |
) |
$ |
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$ |
( |
) |
$ |
( |
) |
$ |
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||||
制限株の解除 |
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- |
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コンサルティング料の代わりに普通株式の発行 |
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- |
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|||||||
2022年約束手形の換金に伴う普通株式の発行 |
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- |
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普通株式の売却、発行費用の手数料引落額を差し引いたもの |
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- |
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株式報酬費用 |
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- |
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- |
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- |
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累積翻訳調整 |
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- |
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- |
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( |
) |
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( |
) |
||||
最終損失 |
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- |
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- |
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- |
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( |
) |
|
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( |
) |
|||
2023年9月30日の残高 |
|
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$ |
|
|
( |
) |
$ |
( |
) |
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
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||||
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||||||||
2022年12月31日の残高 |
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$ |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
) |
$ |
|
||||||
オプションの行使、制限付き株式の授権発生高を差し引いたもの |
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- |
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制限付き株式の解除 |
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- |
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|||||||
2018年従業員株式購入計画のもとでの普通株式の発行 |
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- |
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|||||||
コンサルティング手数料に代わる普通株式の発行 |
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- |
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2022年譲渡証書に基づく普通株式の交換による普通株式の発行 |
|
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- |
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- |
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- |
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|||||
普通株式の販売、発行コストを差し引いた純額 |
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- |
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- |
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||||||
株式報酬費用 |
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- |
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- |
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- |
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|||||
累積翻訳調整 |
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- |
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- |
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自己株式の取得 |
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- |
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( |
) |
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( |
) |
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( |
) |
||||
最終損失 |
|
- |
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- |
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( |
) |
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( |
) |
||||
2023年9月30日の残高 |
|
|
$ |
|
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( |
) |
$ |
( |
) |
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
||||
添付の注記は、これらの未監査の簡約連結財務諸表の統合一体の部分です。
4
Phunware, Inc.
簡単にまとめた連結決算報告書 キャッシュフロー計算書
営業活動によるキャッシュフロー：
(未監査)
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9か月が終わりました |
|
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9月30日、 |
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2024 |
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2023 |
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営業活動 |
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純損失 |
|
$ |
( |
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$ |
( |
) |
非継続事業による純損失 |
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( |
) |
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継続事業による純損失 |
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( |
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( |
) |
純損失を営業活動に使用された純現金と調整するための調整： |
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デジタル資産の売却益 |
|
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( |
) |
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借金の消滅による利益（損失） |
|
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( |
) |
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のれんの減損 |
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株式ベースの報酬 |
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その他の調整 |
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営業資産および負債の変動： |
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売掛金 |
|
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( |
) |
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( |
) |
前払費用およびその他の資産 |
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( |
) |
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買掛金と未払費用 |
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( |
) |
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( |
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リース負債の支払い |
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( |
) |
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( |
) |
繰延収益 |
|
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( |
) |
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( |
) |
継続事業による営業活動に使用された純現金 |
|
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( |
) |
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( |
) |
非継続事業による営業活動に使用された純現金 |
|
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( |
) |
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( |
) |
営業活動に使用された純現金 |
|
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( |
) |
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( |
) |
投資活動 |
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||
デジタル通貨の売却による収入 |
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||
投資活動（継続事業）によって提供される純現金 |
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||
投資活動に使用された純現金-非継続事業 |
|
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( |
) |
|
投資活動によって提供される純現金 |
|
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||
資金調達活動 |
|
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||
借入金の支払い |
|
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( |
) |
|
普通株式の売却による収入、発行費用を差し引いたもの |
|
|
|
|
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|
||
普通株式を購入するためのオプションの行使による収入 |
|
|
|
|
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|
||
株式買戻しの支払い |
|
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( |
) |
|
財務活動による純現金 |
|
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||
|
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|
||
為替レートが現金に与える影響 |
|
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|
||
現金および現金同等物の純増加 |
|
|
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|
||
期首における現金および現金同等物 |
|
|
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|
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|
||
期末の現金および現金同等物 |
|
$ |
|
|
$ |
|
||
|
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|
|
|
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|
||
キャッシュフロー情報の補足開示 |
|
|
|
|
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|
||
利息が支払われました |
|
$ |
|
|
$ |
|
||
支払った所得税 |
|
$ |
|
|
$ |
|
||
非現金金融活動の補足開示： |
|
|
|
|
|
|
||
2022年の約束手形の転換時の普通株式の発行 |
|
$ |
|
|
$ |
|
||
賞与やコンサルティング料の支払いのための普通株式の発行 |
|
$ |
|
|
$ |
|
||
デジタル資産の非現金交換 |
|
$ |
|
|
$ |
|
||
2018年の従業員株式購入プランに基づく普通株式の発行、以前に発生したもの |
|
$ |
|
|
$ |
|
||
添付の注記は、これらの未監査の簡約連結財務諸表の統合一体の部分です。
5
Phunware, Inc.
未監査の要約財務諸表への注記連結財務諸表
(千単位、株および1株当たりの情報を除く)
(未監査)
1. 企業と提示の基準
会社
Phunware, Inc.およびその子会社（以下「会社」、「私たち」、「私たち」、「私たち」とする）は、世界中のいつでもどこでもユーザーを取り込み、管理し、収益化するための完全に統合されたソフトウェアプラットフォームを提供しています。当社のモバイルエクスペリエンスプラットフォームは、ユーザーを顧客の旅を通じて案内します。当社の位置情報テクノロジーは、ブランドにモバイルエンゲージメント、コンテンツ管理、および分析を提供し、お客様と最適にやり取りするための手助けをします。パブリッシャーと広告主の統合されたモバイル広告プラットフォームを通じて、モバイルの観客構築、ユーザー獲得、アプリケーションの発見、観客とのエンゲージメント、および観客の収益化を提供しています。2009年に設立された当社は、テキサス州オースティンに本社を置くデラウェア州の法人です。
「Performance-Based Awards（成果に基づく受賞）」は、第7.7条に基づき、委員会によって設定されたパフォーマンス目標や他の事業目標の達成に依存して現金、株式またはその他の受賞を受け取るための受賞です。
簡約統一財務諸表は、米国で一般的に受け入れられている会計原則（「米国GAAP」）に従って作成され、会社および完全子会社の口座が含まれています。すべてのグループ間取引および残高は、連結に際して除去されています。
2023年12月31日付けの貸借対照表は、監査済みの連結財務諸表から導かれていますが、これらの四半期の簡約統一財務諸表には、米国GAAPで必要とされるすべての年次開示が含まれていません。これらの四半期の簡約統一財務諸表は、2023年12月31日付けの監査済み連結財務諸表およびそれに言及されている注記と併せてご参照いただきたい。2024年9月30日および2024年、2023年9月30日までの三か月および九か月にわたる当社の同様に対象外の四半期財務諸表は、未監査です。未監査の四半期の簡約統一財務諸表は、SECの四半期財務諸表の規則と規定に基づいて、監査済みの財務諸表と一致するように作成されています。米国GAAPに従って作成された財務諸表に通常含まれる特定の情報および脚注開示は、これらの規則および規定に従って簡約化または省略されています。経営陣の見解では、財務諸表は2024年9月30日時点の当社の財政状態および2024年および2023年9月30日までの三か月および九か月間の業績、および2024年9月30日および2023年に終了した現金の流れを公正に示すために検討されたすべての調整（通常の再発生調整を含む）が反映されていると判断されます。2024年9月30日までの三か月および九か月間の結果は、2024年12月31日までの年間収益、今後の四半期業績に期待される結果を必ずしも示しているわけではありません。
我々は、過去の財務諸表に対するある再分類を行い、売上高や包括損益の要約連結財務諸表、キャッシュ・フローの要約損益計算書を更新しました。以前は取り扱いを考慮していなかった個々の項目を表示し、現在年度の表示に合わせるため取り扱いを考慮している個々の項目を組み合わせました。再分類により、これまで報告されていた純損失、および運用、投資、財務活動に影響はありませんでした。
添付の要約連結財務諸表は、資産の実現と負債の充足を通常のビジネス手続きの中で考慮して作成されています。
中止された事業
2023年11月1日、当社はLyte Technology, Inc.（以下、「Lyte」という）の事業を中止し、解散させる計画を決定しました。会社は、会計基準コーディネーション（「ASC」）Topic 205-20に従い、これを中止事業に分類する基準を満たすと判断しました。 中止された事業過去の期間は、表示の基礎が現在年度の表示と一致するよう再構築されました。詳細については、注記3を参照してください。
株式併合
2024年2月26日、会社は普通株式の逆株式分割（「逆株式分割」）を実施し、比率1対50で実施しました。逆株式分割の結果、普通株式の承認済み株式数および割当額は調整されませんでした。添付の財務諸表と注記は、今までの全期間にわたって逆株式分割の追溯効果を与えています。発行済みの全普通株式、オプション、制限付き株式ユニット、普通株式に行使される認可株式及び1株当たりの金額は全て追溯的に調整されました。
6
ナスダックの上場
2023年4月13日、ナスダック株式市場LLC（「ナスダック」）から、前回の30連続営業日にわたり会社の普通株式の買気配が株価1.00ドル未満で終了したため、会社がナスダック・キャピタル市場のナスダック・リスティング規則5550（a）（2）（「買気配要件」）に違反していないことを示す連絡を受けました。ナスダックからの通知によると、ナスダック・リスティング規則5810（c）（3）（A）に従い、180日間または2023年10月10日までの180営業日の期間を提供され、買気配要件との遵守を回復することができるようになりました。2023年10月10日、当社は買気配要件との遵守を回復するための追加の180日間延長を求めるためにナスダックに申請しました。2023年10月12日、会社は2024年4月8日までの180日間延長がナスダックから認められたという内容のナスダックからの通知書を受け取りました。この措置は、ナスダック・リスティング規則5810（c）（3）（A）に従って行われました。
2023年12月21日、当社はナスダックからの通知を受け取りました。通知によると、2023年12月20日時点で当社の普通株式の終値が10連続取引日で0.10ドル以下であり、ナスダックはナスダック・リスティング規則5810（c）（3）（A）（iii）に従い、当社の普通株式をナスダック・キャピタル市場から上場廃止することを決定しました。この通知により、当社はナスダックの決定を申し立てる機会が提供されました。2023年12月22日、会社はナスダック・審判パネル（「パネル」）の前で聴聞を請求するための申請書を提出しました。
前述のように、当社は買気配要件との遵守を回復するために逆株式分割を実施しました。2024年3月12日、当社はナスダックからの通知を受け取り、パネルによる要件の遵守を示したことを通知されました。この通知は、リスト掲載規則5815（d）（4）（B）に基づき、会社は通知書の日付から1年間、強制的なパネル監視下に置かれることを知らされました。1年間の監視期間中に、スタッフがその例外の対象となる要件の遵守を再び確認できない場合、リスト規則5810（c）（2）にもかかわらず、会社はその欠陥に関する遵守計画をスタッフに提出することは許可されず、スタッフは当該欠陥に関する遵守を回復するための追加の時間を付与することはできません。また、リスト規則5810（c）（3）に従って当該欠陥に関する該当する修正や遵守期間が与えられることもありません。代わりに、ナスダックは上場廃止決定書を発行し、会社は、初期パネルまたは初期パネルが利用できない場合は、新たに構成された聴聞パネルに新たに聴聞を請求する機会を有します。リスト規則5815（d）（4）（C）によって提供されるように、会社は聴聞パネルに対応／提示する機会が提供されます。
2024年11月7日、会社は、ナスダックからの通知を受け取りました。Stephen Chenが2024年10月22日をもって監査委員会から辞任した結果、会社はナスダックの監査委員会の構成要件に準拠していないことが通知されました。ナスダックの上場規則5605に規定された監査委員会は、ナスダックの上場規則5605(c)(2)(A)に従い、独立取締役として定義される適切な要件に合致する少なくとも3名のメンバーからなる必要があります。Stephen Chen氏の辞任により、会社の監査委員会は現在、Elliot Han氏とRahul Mewawalla氏の2名のメンバーで構成されており、それぞれがナスダックの上場規則5605(a)(2)および証券取引法1934年修正法（以下、「取引所法」という）のRule 10A-3(b)(1)で規定される独立要件を満たしています。さらに、ナスダック上場規則5605(c)(4)に従い、会社はナスダック上場規則5605に適合するための回復期間を与えられ、この回復期間は、会社の次回の株主総会または2025年10月22日のいずれか早い時点で期限切れとなります。株主総会が2025年4月21日より前に開催される場合、回復期間は2025年4月21日に切れます。回復期間内に適合しない場合、ナスダックは会社に証券の上場廃止を通知します。その際、会社は上場廃止決定を審議パネルに申し立てることができます。会社は、ナスダックの上場規則5605に基づく監査委員会の要件に適合するための選択肢を検討および評価するプロセスにあります。
会社が監査委員会の構成要件に適合することやその他のナスダックの上場規則を遵守することを保証することはできません。
2. Summary of Significant Accounting Policies
There have been no changes in significant accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2023, except as set forth below.
Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40), (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts
7
on an entity’s own equity. We adopted ASU 2020-06 on January 1, 2024. The adoption of ASU 2020-06 did not have a material impact on our condensed consolidated financial statements and disclosures.
Recent Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, (“ASU 2023-09”). ASU 2023-09 requires entities to disclose specific tax rate reconciliation categories, as well as income taxes paid disaggregated by jurisdiction, amongst other disclosure enhancements. For public entities, ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the disclosure requirements related to the new standard.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires us to make certain estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates and such differences could be material.
3. 補足情報
信用リスクの集中
当社の信用リスクの集中度にさらされている金融機関は、主に現金と取引アカウントの売掛金です。当社は、経営陣が良好な信用格付けを持ち、元本の損失のリスクが最小限であると考える確立された金融機関に現金を預けることで信用損失への露出を制限していますが、時折、預金額が連邦で保険されている限度を超過する場合があります。
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2024年9月30日 |
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2023年12月31日 |
顧客A |
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% |
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顧客B |
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顧客C |
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カスタマーD |
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顧客E |
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% |
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顧客F |
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% |
中止された種類
2023年11月1日、会社はLyteレポートセグメントの種類を停止し、中止する戦略的決定を行いました。通常、Lyteの操作を2023年12月31日までに終了しました。
財務諸表および包括的損失の要約において、Lyteの中止された種類は以下に示されています。 2023年9月30日（3か月および9か月終了時）におけるLyteの中止された種類の概要は以下の通りです。
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期間は3ヶ月間 |
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9か月間 |
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2023年9月30日 |
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純売上高 |
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$ |
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$ |
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売上総利益 |
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粗利益 |
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( |
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( |
) |
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営業費用： |
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営業・マーケティング |
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一般管理費用 |
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のれん資産の減損 |
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営業費用合計 |
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営業損失 |
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$ |
( |
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$ |
( |
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の商標の減損
の商業取引としてのGoodwillは、取得されたビジネスのコストが取得日の適正価値の合計を上回る余剰部分として発生し、取得された有形財産および識別可能な無形資産の取得時の適正価値から引当てられる負債を差し引いたものである。
8
ASC 350に従うと、 無形資産—資産価値とその他私たちは、商慣行に従い、資産価値が損耗の兆候を示すかどうかを年次またはより頻繁に評価し、資産金額が損なわれている可能性があることを示すイベントや状況がある場合には、善良なる回復価額を償却することはありません。
2023年9月30日現在、割引キャッシュフローモデルを使用して数量的評価を実施しました。実施された分析に基づき、当社の報告単位の帳簿価額がその各自の公正価値を超えていることが判明し、非金銭的な減損損失が発生しました。$
上記の資産価値減損分析は、割引キャッシュフローモデル（収益アプローチ）を使用し、レベル3の観測されない投入を活用しました。この分析における重要な仮定には、将来のキャッシュフロー予測、加重平均資本コスト、終端成長率、税率などが含まれます。将来のキャッシュフローの見積りは、現在の規制環境や経済情勢、最近の運用結果、および計画されたビジネス戦略に基づいています。これらの見積りは、連邦、州、地方の規制の変更や経済の低迷によって否定的に影響を受ける可能性があります。将来のキャッシュフローの見積りは、その性質上、主観的であり、実際の結果は見積りと大きく異なる可能性があります。私たちは、利用される仮定と見積もりが合理的かつ適切であると考えています。
一般株式の損失
1株当たりの基本損失は、報告期間中に発生した普通株主に帰属する純損失を、発行済みの普通株式の加重平均数で除算して計算されます。希薄化後1株当たりの損失は、私たちの発行済みワラントおよび株式エクイティプランに関連するすべての潜在的な株式を、希薄化の範囲内において効果的に処理して計算されます。表示されたすべての期間において、これらの株式は希薄化されているため、希薄化後1株当たりの損失は、基本的な1株当たりの損失と同じです。
以下の表は、希薄化後の加重平均発行済株式数の計算から除外された普通株式に等しいものを示しています。それらを含めると希薄化を防ぐことになります。
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9月30日, |
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2024 |
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2023 |
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warrants |
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オプション |
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制限株式ユニット |
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総計 |
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4。収入
サブスクリプションとサービス収益は、プラットフォームライセンスサブスクリプションとアプリケーション開発サービスで構成されています。アプリケーショントランザクション収益はアプリ内広告で構成されています。小見出しの下にある当社の収益認識ポリシーを参照してください。 収益認識、 注2に、」重要な会計方針の要約、」 2024年3月15日にSECに提出されたフォーム10-kの年次報告書に記載されています。
収益の細分化
次の表は、当社の純収益をカテゴリー別に示しています。
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9月30日に終了した3か月間 |
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9月30日に終了した9か月間 |
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2024 |
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2023 |
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2024 |
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2023 |
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サブスクリプションとサービス収入 |
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$ |
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$ |
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$ |
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$ |
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アプリケーショントランザクション |
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純収入 |
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$ |
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$ |
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$ |
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$ |
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9
次の表は、総純収益に占める当社の収益源の集中の割合を示しています。
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9月30日に終了した3か月間 |
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9月30日に終了した9か月間 |
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2024 |
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2023 |
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2024 |
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2023 |
お客様 A |
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カスタマー C |
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お客様 G |
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% |
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% |
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% |
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お客様 H |
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お客様 I |
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私たちは国内外の地域で収益を生み出し、契約主体の所在地に基づいて純収益を個々の国に帰属させます。私たちは派生しました
繰延収益
繰延収益とは、顧客への請求または顧客との取り決めに基づいて収益が計上される前に受け取った支払いで構成されます。繰延収益は、収益認識基準が満たされた場合にのみ収益として認識されます。2024年9月30日に終了した9か月間、$の収益を認識しました
残りの履行義務
残りの履行義務は $
5. Debt
2022 Promissory Note
On July 6, 2022, we entered into a note purchase agreement and completed the sale of an unsecured promissory note (the “2022 Promissory Note”) with an original principal amount of $
On March 15, 2023, we elected to defer monthly payment obligations for April, May, June and July 2023, as permitted, at the time, by the 2022 Promissory Note. In connection therewith, we entered into a waiver agreement with the holder waiving the Payment Deferral Conditions, as defined in the 2022 Promissory Note. For agreeing to waive the Payment Deferral Conditions, we agreed to compensate the noteholder an amount equal to
On August 14, 2023, we entered into an amendment to the 2022 Promissory Note with the noteholder. The amendment extended the maturity date to May 31, 2024 and provided that effective August 1, 2023, we were required to make monthly amortization payments of at least $
10
Effective December 6, 2023, the Company entered into an acknowledgement and agreement with the noteholder to which the parties (a) memorialized the noteholder’s waiver of the Company’s obligations to satisfy minimum balance reduction requirements in cash for each of October 2023 and November 2023 and the minimum balance reduction requirement for December 2023. As consideration for the acknowledgement and agreement, we agreed to pay the noteholder a fee in an aggregate amount equal to
During the first quarter of 2024, we issued
Interest Expense
Interest expense amounted to $
6. Leases
Further information regarding our other office leases and accounting thereof are located in Note 2, “Summary of Significant Accounting Policies,” and Note 9, “Leases,” in our Annual Report on Form 10-K filed with the SEC on March 15, 2024.
We recognize lease expense on a straight-line basis over the lease term with variable lease expense recognized in the period in which the costs are incurred. The components of lease expense are included in general and administrative expense in our condensed consolidated statement of operations and comprehensive loss. Lease expense for the three months ended September 30, 2024 and 2023 was $
Future minimum lease obligations are set forth below:
Future minimum lease obligations years ending December 31, |
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Lease |
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2024 (Remainder) |
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$ |
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2025 |
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2026 |
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2027 |
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$ |
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Less: Portion representing interest |
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( |
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$ |
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7. Commitments and Contingencies
Litigation
On March 30, 2021, Phunware filed an action against its former counsel Wilson Sonsini Goodrich & Rosati, PC (“WSGR”), which is styled Phunware, Inc., v. Wilson Sonsini Goodrich & Rosati, Professional Corporation, Does 1-25, Case No. 21CV381517, in the Superior Court of the State of California for the County of Santa Clara. On July 30, 2021, Phunware filed a second action against WSGR in the Superior Court of the State of California for the County of Santa Clara, which is styled Phunware, Inc., v. Wilson Sonsini Goodrich & Rosati, Professional Corporation, Does 1-25, Case No. 21CV386411. The
11
in accounts payable in our condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively, relating to these WSGR claims.
On February 18, 2022, certain stockholders filed a lawsuit against Phunware and certain of its prior and then existing individual officers and directors. The case, captioned Wild Basin Investments, LLC, et al. v. Phunware, Inc., et al., was filed in the Court of Chancery of the State of Delaware (Cause No. 2022-0168-LWW). Plaintiffs allege that they invested in Phunware through various early rounds of financing while the Company was private and that following completion of the business combination transactions resulting in Phunware becoming a public company these stockholders received new shares of Phunware common stock and Phunware warrants that were but should not have been subjected to a 180-day “lock up” period. Plaintiffs also allege that Phunware’s stock price dropped significantly during the lock up period and seek damages, costs and professional fees. On or about October 24, 2024, Plaintiffs, Phunware and individual director and officer defendants entered into a Confidential Settlement Agreement, and on about October 28, 2024, Phunware, the individual director and officer defendants and the applicable Phunware insurers entered into a Settlement Agreement and Mutual Release (collectively, the “Settlement Agreements”). The Settlement Agreements collectively provide for, among other things, the settlement and release of the Plaintiffs' claims against the individual director and officer defendants, certain agreements between the Plaintiffs and Phunware, including the Plaintiffs' agreement to stay collection of any judgment obtained by the Plaintiffs against Phunware until the settlement or conclusion of the pending WSGR arbitration proceeding. Further, the Settlement Agreements provide for a payment of $
It is possible that the ultimate resolution of the foregoing matters, or other similar matters, if resolved in a manner unfavorable to us, may be materially adverse to our business, financial condition, results of operations or liquidity.
From time to time, we are and may become involved in various legal proceedings in the ordinary course of business. The outcomes of our legal proceedings are inherently unpredictable, subject to significant uncertainties, and could be material to our operating results and cash flows for a particular reporting period. In addition, for the matters disclosed above that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies.
8. Stockholders’ Equity
Common Stock
Total common stock authorized to be issued as of September 30, 2024, was
On January 31, 2022, we entered into an At Market Issuance Sales Agreement with H.C. Wainwright & Co., LLC (“Wainwright”), pursuant to which we may offer and sell, from time to time, shares of our common stock, par value $
On June 4, 2024, we entered into an Equity Distribution Agreement with Canaccord Genuity LLC (“Canaccord”), as representative of certain agents, pursuant to which we may offer and sell, from time to time, shares of our common stock, par value $
During the nine months ended September 30, 2024, we sold an aggregate of
12
On August 22, 2023, we entered into a common stock purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right, but not the obligation, to sell to Lincoln Park up to $
In a series of offerings during the first quarter of 2024, we sold an aggregate of
Stock Repurchase Plan
On January 5, 2023, our board of directors authorized and approved a stock repurchase program for the repurchase of outstanding shares of our common stock with an aggregate value of up to $
9. Stock-Based Compensation
There have been no material changes to the terms of our various equity incentive plans since the filing of our Annual Report on Form 10-K. Refer to Note 13, “Stock-Based Compensation,” in our Annual Report on Form 10-K filed with the SEC on March 15, 2024 for more information.
Stock-Based Compensation
Compensation costs that have been included in our condensed consolidated statements of operations and comprehensive loss for all stock-based compensation arrangements is set forth below:
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Three months ended September 30, |
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Nine months ended September 30, |
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Stock-based compensation |
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2024 |
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2023 |
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2024 |
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2023 |
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Cost of revenues |
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$ |
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Sales and marketing |
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General and administrative |
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Research and development |
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Total stock-based compensation |
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$ |
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$ |
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$ |
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$ |
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As of September 30, 2024, there was approximately $
Restricted Stock Units
A summary of our restricted stock unit activity for the nine months ended September 30, 2024 is set forth below:
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Weighted |
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Outstanding as of December 31, 2023 |
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$ |
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Granted |
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Released |
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Forfeited |
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( |
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Outstanding as of September 30, 2024 |
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$ |
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13
Stock Options
A
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Number of |
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Weighted |
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Weighted |
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Aggregate |
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Outstanding as of December 31, 2023 |
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$ |
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$ |
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Granted |
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Exercised |
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Forfeited |
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Outstanding as of September 30, 2024 |
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$ |
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$ |
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Exercisable as of September 30, 2024 |
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$ |
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$ |
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A summary of our option activity under our 2009 Equity Incentive Plan (the “2009 Plan”) and related information is as follows:
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Number of |
|
|
Weighted |
|
|
Weighted |
|
Aggregate |
|
|||
Outstanding as of December 31, 2023 |
|
|
|
|
$ |
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|||
Exercised |
|
|
|
|
|
|
|
|
|
|
|
|||
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
|
|||
Outstanding as of September 30, 2024 |
|
|
|
|
$ |
|
|
|
$ |
|
||||
Exercisable as of September 30, 2024 |
|
|
|
|
$ |
|
|
|
$ |
|
||||
Our stock benefit plans had
Furthermore, there were
14
10. Subsequent Events
On October 24, 2024, we delivered notice to Lincoln Park terminating the common stock purchase agreement dated August 22, 2023, with Lincoln Park effective October 25, 2024.
On November 1, 2024, we filed a registration statement on Form S-3 pursuant to Rule 462(b) of the Securities Act (the “462(b) Registration Statement”) which increased the aggregate amount of securities we may offer under the existing shelf registration statement on Form S-3 (File No. 333-262461) (the “Original Registration Statement”) by a proposed additional aggregate offering price of approximately $
From October 1, 2024 through November 8, 2024, we sold an additional
15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this section to “we,” “us,” “our,” or “the Company” refer to Phunware, Inc. References to “management” or “management team” refer to our officers and directors.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes thereto presented in “Part I – Item 1. Financial Statements.” As discussed in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those discussed in the section titled “Risk Factors” and elsewhere in this Report.
Certain figures, such as interest rates and other percentages, included in this section have been rounded for ease of presentation. Percentage figures included in this section have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in our condensed consolidated financial statements or in the associated text. Certain other amounts that appear in this section may similarly not sum due to rounding.
Key Events & Recent Developments
On October 22, 2024, Michael Snavely tendered his resignation as Chief Executive Officer, and as a member of our Board of Directors, effective immediately. On the same date, our Board of Directors appointed Mr. Stephen Chen, our then existing Chairperson of our Board of Directors, as Interim Chief Executive Officer. In connection therewith, while Mr. Chen will continue to serve as member of the Board of Directors, effective October 22, 2024, Mr. Chen resigned as Chairperson of the Board and as a member of the Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.
On November 1, 2024, Troy Reisner notified the Company that he intends to step down as our Chief Financial Officer and depart the Company on or after November 15, 2024 and prior to November 30, 2024. The Company has initiated a search for potential candidates to replace Mr. Reisner.
Please see the section captioned "Liquidity and Capital Resources" for additional discussion on additional recent developments.
Overview
Phunware, Inc. offers a fully integrated software platform that equips companies with the products, solutions and services necessary to engage, manage and monetize their mobile application portfolios globally at scale. Our platform provides the entire mobile lifecycle of applications, media and data in one login through one procurement relationship. Our offerings include:
In October 2024, we announced the commencement of the development of a new generative AI-driven software development platform that will democratize access to world-class design, user experience and content creation so that businesses of any size can design, create, build, and deploy high-quality custom mobile applications in days or even hours. The platform is designed to harness and integrate the power of generative AI in a manner that will enable businesses to quickly develop and monetize custom mobile app solutions at a lower cost, making them accessible to small and medium-sized businesses.
We intend to continue investing for long-term growth. We have invested and expect to continue investing in the expansion of our ability to market, sell and provide our current and future products and services to customers globally. We also expect to continue investing in the development and improvement of new and existing products and services to address customers’ needs. We currently do not expect to be profitable in the near future.
16
Key Business Metrics
Our management regularly monitors certain financial measures to track the progress of our business against internal goals and targets. We believe that the most important of these measures include backlog and deferred revenue.
Bookings, Backlog and Deferred Revenue. We define these measures and purpose as follows:
The following table sets forth our software and subscriptions bookings:
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Bookings – subscriptions and services |
|
$ |
476 |
|
|
$ |
387 |
|
|
$ |
2,222 |
|
|
$ |
555 |
|
The follow table sets forth our deferred revenue and backlog:
(in thousands) |
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Backlog |
|
$ |
3,153 |
|
|
$ |
2,750 |
|
Deferred revenue |
|
|
1,866 |
|
|
|
1,909 |
|
Total backlog and deferred revenue |
|
$ |
5,019 |
|
|
$ |
4,659 |
|
Non-GAAP Financial Measures
Adjusted Gross Profit, Adjusted Gross Margin and Adjusted EBITDA
We report our financial results in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We also use certain non-GAAP financial measures that fall within the meaning of Securities and Exchange Commission Regulation G and Regulation S-K Item 10(e), which may provide users of the financial information with additional meaningful comparison to prior period results. Our non-GAAP financial measures include adjusted gross profit (derived from the GAAP measure of gross profit), adjusted gross margin (derived from the GAAP measure of gross margin) and adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) (derived from the GAAP measure of net loss from continuing operations) (our “non-GAAP financial measures”). Management uses these measures (i) to compare operating performance on a consistent basis, (ii) to calculate incentive compensation for our employees, (iii) for planning purposes including the preparation of our internal annual operating budget and (iv) to evaluate the performance and effectiveness of operational strategies.
Our non-GAAP financial measures should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. They are not measurements of our financial performance under GAAP and should not be considered as alternatives to revenue or net loss, as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other businesses. Our non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations include:
17
We compensate for these limitations to our non-GAAP financial measures by relying primarily on our GAAP results and using our non-GAAP financial measures only for supplemental purposes. Our non-GAAP financial measures include adjustments for items that may not occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our business and complicate comparisons of our internal operating results and operating results of other peer companies over time. For example, it is useful to exclude non-cash, stock-based compensation expenses because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and these expenses can vary significantly across periods due to timing of new stock-based awards. We may also exclude certain discrete, unusual, one-time, or non-cash costs in order to facilitate a more useful period-over-period comparison of our financial performance. Each of the normal recurring adjustments and other adjustments described in this paragraph help management with a measure of our operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses.
The following tables set forth the most comparable GAAP financial measures from which our non-GAAP financial measures are derived as well as the non-GAAP financial measures we monitor.
GAAP Financial Measures |
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
|
||||||||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
||||
Gross profit |
|
$ |
322 |
|
|
$ |
631 |
|
|
$ |
1,316 |
|
|
$ |
1,241 |
|
|
Gross margin |
|
|
48.4 |
% |
|
|
50.4 |
% |
|
|
50.7 |
% |
|
|
31.9 |
% |
|
Net loss from continuing operations |
|
$ |
(2,760 |
) |
|
$ |
(13,717 |
) |
|
$ |
(7,683 |
) |
|
$ |
(21,843 |
) |
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
||||||||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
||||
Adjusted gross profit (1) |
|
$ |
373 |
|
|
$ |
711 |
|
|
$ |
1,461 |
|
|
$ |
1,685 |
|
|
Adjusted gross margin (1) |
|
|
56.1 |
% |
|
|
56.8 |
% |
|
|
56.3 |
% |
|
|
43.3 |
% |
|
Adjusted EBITDA (2) |
|
$ |
(2,885 |
) |
|
$ |
(3,314 |
) |
|
$ |
(7,308 |
) |
|
$ |
(12,794 |
) |
|
Reconciliation of Non-GAAP Financial Measures
The following tables set forth a reconciliation of the most directly comparable GAAP financial measure to each of the non-GAAP financial measures discussed above.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
||||||||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
||||
Gross profit |
|
$ |
322 |
|
|
$ |
631 |
|
|
$ |
1,316 |
|
|
$ |
1,241 |
|
|
Add back: Stock-based compensation |
|
|
51 |
|
|
|
80 |
|
|
|
145 |
|
|
|
444 |
|
|
Adjusted gross profit |
|
$ |
373 |
|
|
$ |
711 |
|
|
$ |
1,461 |
|
|
$ |
1,685 |
|
|
Adjusted gross margin |
|
|
56.1 |
% |
|
|
56.8 |
% |
|
|
56.3 |
% |
|
|
43.3 |
% |
|
18
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net loss from continuing operations |
|
$ |
(2,760 |
) |
|
$ |
(13,717 |
) |
|
$ |
(7,683 |
) |
|
$ |
(21,843 |
) |
Add back: Depreciation |
|
|
4 |
|
|
|
21 |
|
|
|
12 |
|
|
|
63 |
|
Add back: Interest expense |
|
|
10 |
|
|
|
264 |
|
|
|
126 |
|
|
|
1,354 |
|
Less: Interest income |
|
|
(381 |
) |
|
|
- |
|
|
|
(760 |
) |
|
|
- |
|
EBITDA |
|
|
(3,127 |
) |
|
|
(13,432 |
) |
|
|
(8,305 |
) |
|
|
(20,426 |
) |
Add back: Stock-based compensation |
|
|
242 |
|
|
|
838 |
|
|
|
1,532 |
|
|
|
3,662 |
|
Add back/less: Loss (gain) on extinguishment of debt |
|
|
- |
|
|
|
237 |
|
|
|
(535 |
) |
|
|
237 |
|
Add back: Impairment of goodwill |
|
|
- |
|
|
|
9,043 |
|
|
|
- |
|
|
|
9,043 |
|
Less: Gain on sale of digital assets |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5,310 |
) |
Adjusted EBITDA |
|
$ |
(2,885 |
) |
|
$ |
(3,314 |
) |
|
$ |
(7,308 |
) |
|
$ |
(12,794 |
) |
Components of Results of Operations
Revenue and Gross Profit
There are a number of factors that impact the revenue and margin profile of the services and technology offerings we provide, including, but not limited to, solution and technology complexity, technical expertise requiring the combination of products and types of services provided, as well as other elements that may be specific to a particular client solution.
Platform Subscriptions and Services
Subscription revenue is derived from software license fees, which are comprised of subscription fees from customers licensing our Software Development Kits (SDKs), that include access to our platform. Services revenue is derived from development services around designing and building new applications or enhancing existing applications. Support revenue is comprised of support and maintenance fees of customer applications, software updates and technical support for application development services for a support term.
Subscriptions and services gross profit is equal to subscriptions and services revenue less the cost of personnel and related costs for our support and professional services employees, external consultants, stock-based compensation and allocated overhead. Costs associated with our development and project management teams are generally recognized as incurred. Costs directly attributable to the development or support of applications relating to platform subscription customers are included in cost of sales, whereas costs related to the ongoing development and maintenance of our software platform are expensed in research and development. As a result, platform subscriptions and services gross profit may fluctuate from period to period.
Application Transaction Revenue
We also generate revenue by charging advertisers to deliver advertisements (ads) to users of digitally connected devices. Depending on the specific terms of each advertising contract, we generally recognize revenue when the ad loads onto the device of a user. We generally sell our ads by cost per thousand impressions and generally, an impression results when the user has the potential to see the ad.
Application transaction gross profit is equal to application transaction revenue less cost of revenue associated with application transactions. Application transaction gross profit is impacted by the cost of advertising traffic we pay to our suppliers and amount of traffic which we can purchase from those suppliers. As a result, our application transaction gross profit may fluctuate from period to period due to variable costs of advertising traffic.
Gross Margin
Gross margin measures gross profit as a percentage of revenue. Gross margin is generally impacted by the same factors that affect changes in the mix of platform and hardware revenue.
Operating Expenses
Our operating expenses include sales and marketing expenses, general and administrative expenses and research and development expenses. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, stock-based compensation and, in sales and marketing expense, commissions.
19
Sales and Marketing Expense. Sales and marketing expense is comprised of compensation, commission expense, variable incentive pay and benefits related to sales personnel, along with travel expenses, other employee related costs, including stock-based compensation and expenses related to marketing programs and promotional activities. In order to grow revenues, we may increase the size and spend of our sales and marketing organization. As a result, our sales and marketing expenses may increase in absolute dollars but may fluctuate as a percentage of our total revenue from period to period.
General and Administrative Expense. General and administrative expense is comprised of compensation and benefits of administrative personnel, including variable incentive pay and stock-based compensation, bad debt expenses and other administrative costs such as facilities expenses, professional fees and travel expenses. We incur general and administrative expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and listing standards of Nasdaq, additional insurance expenses, investor relations activities and other administrative and professional services. We also expect, over time, to increase the size of our general and administrative function to support the growth of our business. As a result, our general and administrative expenses may increase in absolute dollars but may fluctuate as a percentage of our total revenue from period to period.
Research and Development Expense. Research and development expenses consist primarily of employee compensation costs and overhead allocation. We believe that continued investment in our platform is important for our growth. As a result, our research and development expenses may increase in absolute dollars but may fluctuate as a percentage of revenue from period to period.
Interest Expense
Interest expense includes interest related to our outstanding debt, including amortization of discounts and deferred issuance costs.
Refer to Note 5 “Debt” in the notes to the condensed consolidated financial statements included Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on our debt offerings.
We also may seek additional debt financing to fund the expansion of our business or to finance strategic acquisitions in the future, which may have an impact on our interest expense.
Results of Operations
Net Revenues
|
|
Three Months Ended September 30, |
|
|
Change |
|
|
||||||||||
(in thousands, expect percentages) |
|
2024 |
|
|
2023 |
|
|
Amount |
|
|
% |
|
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Platform subscriptions and services |
|
$ |
464 |
|
|
$ |
697 |
|
|
$ |
(233 |
) |
|
|
(33.4 |
) |
% |
Application transaction |
|
|
201 |
|
|
|
555 |
|
|
|
(354 |
) |
|
|
(63.8 |
) |
% |
Total revenue |
|
$ |
665 |
|
|
$ |
1,252 |
|
|
$ |
(587 |
) |
|
|
(46.9 |
) |
% |
Platform subscriptions and services as a percentage of total revenue |
|
|
69.8 |
|
% |
|
55.7 |
|
% |
|
|
|
|
|
|
||
Application transactions as a percentage of total revenue |
|
|
30.2 |
|
% |
|
44.3 |
|
% |
|
|
|
|
|
|
||
Platform revenues as a percentage of total revenue |
|
|
100.0 |
|
% |
|
100.0 |
|
% |
|
|
|
|
|
|
||
|
|
Nine Months Ended September 30, |
|
|
Change |
|
|
||||||||||
(in thousands, expect percentages) |
|
2024 |
|
|
2023 |
|
|
Amount |
|
|
% |
|
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Platform subscriptions and services |
|
$ |
1,434 |
|
|
$ |
2,439 |
|
|
$ |
(1,005 |
) |
|
|
(41.2 |
) |
% |
Application transaction |
|
|
1,163 |
|
|
|
1,453 |
|
|
|
(290 |
) |
|
|
(20.0 |
) |
% |
Total revenue |
|
$ |
2,597 |
|
|
$ |
3,892 |
|
|
$ |
(1,295 |
) |
|
|
(33.3 |
) |
% |
Platform subscriptions and services as a percentage of total revenue |
|
|
55.2 |
% |
|
|
62.7 |
% |
|
|
|
|
|
|
|
||
Application transaction as a percentage of total revenue |
|
|
44.8 |
% |
|
|
37.3 |
% |
|
|
|
|
|
|
|
||
Platform revenue as a percentage of total revenue |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
||
20
Net revenues decreased $0.6 million, or (46.9)%, for the three months ended September 30, 2024 compared to the corresponding period in 2023, as a result of additional development fees recognized in 2023 and timing of advertising campaigns.
Net revenues decreased $1.3 million, or (33.3)%, for the nine months ended September 30, 2024 compared to the corresponding period in 2023, primarily due to $0.3 million due to a specific customer contract termination, $0.2 million in revenue recognized in 2023 related to a customer onboarding and $0.2 million for customers who were customers in 2023, but are no longer customers in 2024. Further decreases of $0.3 million are the result of advertising campaigns.
Cost of Revenues, Gross Profit and Gross Margin
|
|
Three Months Ended September 30, |
|
|
Change |
|
|
||||||||||
(in thousands, expect percentages) |
|
2024 |
|
|
2023 |
|
|
Amount |
|
|
% |
|
|
||||
Cost of Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Platform subscriptions and services |
|
$ |
270 |
|
|
$ |
425 |
|
|
$ |
(155 |
) |
|
|
(36.5 |
) |
% |
Application transaction |
|
|
73 |
|
|
|
196 |
|
|
|
(123 |
) |
|
|
(62.8 |
) |
% |
Total cost of revenue |
|
$ |
343 |
|
|
$ |
621 |
|
|
$ |
(278 |
) |
|
|
(44.8 |
) |
% |
Gross Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Platform subscriptions and services |
|
$ |
194 |
|
|
$ |
272 |
|
|
$ |
(78 |
) |
|
|
(28.7 |
) |
% |
Application transaction |
|
|
128 |
|
|
|
359 |
|
|
|
(231 |
) |
|
|
(64.3 |
) |
% |
Total gross profit |
|
$ |
322 |
|
|
$ |
631 |
|
|
$ |
(309 |
) |
|
|
(49.0 |
) |
% |
Gross Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Platform subscriptions and services |
|
|
41.8 |
% |
|
|
39.0 |
% |
|
|
|
|
|
|
|
||
Application transaction |
|
|
63.7 |
% |
|
|
64.7 |
% |
|
|
|
|
|
|
|
||
Total gross margin |
|
|
48.4 |
% |
|
|
50.4 |
% |
|
|
|
|
|
|
|
||
|
|
Nine Months Ended September 30, |
|
|
Change |
|
|
||||||||||
(in thousands, expect percentages) |
|
2024 |
|
|
2023 |
|
|
Amount |
|
|
% |
|
|
||||
Cost of Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Platform subscriptions and services |
|
$ |
861 |
|
|
$ |
2,151 |
|
|
$ |
(1,290 |
) |
|
|
(60.0 |
%) |
|
Application transaction |
|
|
420 |
|
|
|
500 |
|
|
|
(80 |
) |
|
|
(16.0 |
%) |
|
Total cost of revenue |
|
$ |
1,281 |
|
|
$ |
2,651 |
|
|
$ |
(1,370 |
) |
|
|
(51.7 |
%) |
|
Gross Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Platform subscriptions and services |
|
$ |
573 |
|
|
$ |
288 |
|
|
$ |
285 |
|
|
|
99.0 |
% |
|
Application transaction |
|
|
743 |
|
|
|
953 |
|
|
|
(210 |
) |
|
|
(22.0 |
%) |
|
Total gross profit |
|
$ |
1,316 |
|
|
$ |
1,241 |
|
|
$ |
75 |
|
|
|
6.0 |
% |
|
Gross Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Platform subscriptions and services |
|
|
40 |
% |
|
|
12 |
% |
|
|
|
|
|
|
|
||
Application transaction |
|
|
64 |
% |
|
|
66 |
% |
|
|
|
|
|
|
|
||
Total gross margin |
|
|
51 |
% |
|
|
32 |
% |
|
|
|
|
|
|
|
||
Total gross profit decreased $0.3 million, or (49)%, three months ended September 30, 2024 compared to the corresponding period in 2023, primarily as a result of the issues resulting in decreased revenue described above.
Total gross profit increased $0.1 million, or 6.0%, for the nine months ended September 30, 2024 compared to the corresponding period of 2023, as a result of a decrease of $0.3 million in stock-based compensation expense. Although the Company experienced a decrease of revenue, the company improved gross margin on customer projects in 2024.
21
Operating Expenses
|
|
Three Months Ended September 30, |
|
|
Change |
|
|
||||||||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
Amount |
|
|
% |
|
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales and marketing |
|
$ |
619 |
|
|
$ |
839 |
|
|
$ |
(220 |
) |
|
|
(26.2 |
%) |
|
General and administrative |
|
|
2,281 |
|
|
|
2,985 |
|
|
|
(704 |
) |
|
|
(23.6 |
%) |
|
Research and development |
|
|
612 |
|
|
|
1,042 |
|
|
|
(430 |
) |
|
|
(41.3 |
%) |
|
Impairment of goodwill |
|
|
- |
|
|
|
9,043 |
|
|
|
(9,043 |
) |
|
|
(100.0 |
%) |
|
Total operating expenses |
|
$ |
3,512 |
|
|
$ |
13,909 |
|
|
$ |
(10,397 |
) |
|
|
(74.8 |
%) |
|
|
|
Nine Months Ended September 30, |
|
|
Change |
|
|
||||||||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
Amount |
|
|
% |
|
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales and marketing |
|
$ |
1,671 |
|
|
$ |
2,837 |
|
|
$ |
(1,166 |
) |
|
|
(41.1 |
%) |
|
General and administrative |
|
|
7,051 |
|
|
|
11,397 |
|
|
|
(4,346 |
) |
|
|
(38.1 |
%) |
|
Research and development |
|
|
1,592 |
|
|
|
4,023 |
|
|
|
(2,431 |
) |
|
|
(60.4 |
%) |
|
Impairment of goodwill |
|
|
- |
|
|
|
9,043 |
|
|
|
(9,043 |
) |
|
|
(100.0 |
%) |
|
Total operating expenses |
|
$ |
10,314 |
|
|
$ |
27,300 |
|
|
$ |
(16,986 |
) |
|
|
(62.2 |
%) |
|
Sales and Marketing
Sales and marketing expense decreased $0.2 million, or (26.2)% and $1.2 million, or (41.1)%, for the three and nine months ended September 30, 2024, respectively, compared to the corresponding periods of 2023, primarily due to a decrease in payroll and related expenses as a result of lower headcount.
General and Administrative
General and administrative expense decreased $0.7 million, or (26.3)%, for the three months ended September 30, 2024 compared to the corresponding period of 2023, due to a $0.5 million decrease in payroll and related expenses as a result of lower headcount, $0.4 million decrease in stock-based compensation expense and $0.1 million in facilities costs. These decreases were partially offset by an increase of $0.3 million decrease in professional expenses, mainly related to legal fees.
General and administrative expense decreased $4.3 million, or (38.1)%, for the nine months ended September 30, 2024 compared to the corresponding period of 2023, due to $1.8 million decrease in payroll and related expenses as a result of lower headcount, $1.5 million decrease in stock-based compensation expense, $0.7 million decrease in professional expenses, mainly related to legal fees and $0.3 million decrease in facilities expenses.
Research and Development
Research and development expense decreased $0.4 million, or (41.3)%, and $2.4 million, or (60.4)%, for the three and nine months ended September 30, 2024, respectively, compared to the corresponding periods of 2023, primarily as a result of decrease in payroll and related expenses as a result of lower headcount.
Impairment of goodwill
We recorded an impairment of goodwill related to our Phunware operating segment for the three and nine months ended September 30, 2023. Refer to Note 3, "Supplemental Information," in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
22
Other expense
|
|
Three Months Ended September 30, |
|
|
|||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
||
Other income (expense) |
|
|
|
|
|
|
|
||
Interest expense |
|
$ |
(10 |
) |
|
$ |
(264 |
) |
|
Interest income |
|
|
381 |
|
|
|
- |
|
|
Gain (loss) on extinguishment of debt |
|
|
- |
|
|
|
(237 |
) |
|
Other income, net |
|
|
59 |
|
|
|
62 |
|
|
Total other income (expense) |
|
$ |
430 |
|
|
$ |
(439 |
) |
|
|
|
Nine Months Ended September 30, |
|
|
|||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
||
Other income (expense) |
|
|
|
|
|
|
|
||
Interest expense |
|
$ |
(126 |
) |
|
$ |
(1,354 |
) |
|
Interest income |
|
|
760 |
|
|
|
- |
|
|
Gain (loss) on extinguishment of debt |
|
|
535 |
|
|
|
(237 |
) |
|
Gain on sale of digital currencies |
|
|
- |
|
|
|
5,310 |
|
|
Other income, net |
|
|
146 |
|
|
|
497 |
|
|
Total other income |
|
$ |
1,315 |
|
|
$ |
4,216 |
|
|
During the three months ended September 30, 2024, we recorded other income of $0.4 million, primarily as a result of interest income from cash and cash equivalents. In addition, we incurred a $2.8 million charge related to a partial settlement of a lawsuit with an offsetting $2.8 million recovery to reflect proceeds to be paid by insurance carriers related to the settlement. Refer to Note 7, “Commitments and Contingencies,” in the notes to the condensed consolidated financial statements included in Item I, Part I of this Quarterly Report on Form 10-Q for further discussion related to the settlement and insurance recovery. During the three months ended September 30, 2023, we recorded other expense of approximately $0.4 million, primarily as a result of interest expense and a loss on extinguishment of debt on our 2022 Promissory Note, as amended.
During the nine months ended September 30, 2024, we recorded other income of $1.3 million, primarily as a result of interest income and a recognized gain on the extinguishment of the 2022 Promissory Note. In addition, we incurred a $2.8 million charge related to a partial settlement of a lawsuit with an offsetting $2.8 million recovery to reflect proceeds to be paid by insurance carriers related to the settlement. Refer to Note 7, “Commitments and Contingencies,” in the notes to the condensed consolidated financial statements included in Item I, Part I of this Quarterly Report on Form 10-Q for further discussion related to the settlement and insurance recovery. During the nine months ended September 30, 2023, we recorded other income of $4.2 million, primarily as a result of gains on sales of our digital asset holdings. This was partially offset due to interest expense related to the 2022 Promissory Note.
Liquidity and Capital Resources
As of September 30, 2024, we held total cash of $35.5 million, all of which was held in the United States. We have a history of operating losses and negative operating cash flows. As we continue to focus on growing our revenues, we expect these trends to continue into the foreseeable future.
On February 1, 2022, we filed a Form S-3, which was subsequently declared effective by the SEC on February 9, 2022, pursuant to which we could issue up to $200 million in common stock, preferred stock, warrants and units. Contained therein, was a prospectus supplement pursuant to which we could sell up to $100 million of our common stock in an “at the market offering” pursuant to an At Market Issuance Sales Agreement we entered into with H.C. Wainwright & Co., LLC (“Wainwright”) on January 31, 2022. We terminated our agreement with Wainwright effective June 3, 2024.
On July 6, 2022, we entered into a note purchase agreement and completed the sale of an unsecured promissory note (referred to herein as the 2022 Promissory Note) with an original principal amount of $12.8 million in a private placement. After deducting all transaction fees paid by us at closing, net cash proceeds to us at closing were $11.8 million. No interest was to accrue on the 2022 Promissory Note. On August 14, 2023, we entered into an amendment to the 2022 Promissory Note with the noteholder. The amendment extended the maturity date to June 1, 2024 and provided that effective August 1, 2023, we were required to make monthly amortization payments of at least $800 thousand commencing on August 31, 2023 until the 2022 Promissory Note is paid-in-full. We also granted the noteholder certain limited conversion rights, which if elected by the noteholder, would reduce the required monthly payment. The limited conversion rights were subject to advance payment and volume conditions. The amendment also provided that the outstanding balance shall accrue interest at a rate of 8% and payment deferrals are no longer permitted under the 2022 Promissory Note. During the first quarter of 2024, we issued 336,550 shares of our common stock to the holder of the 2022 Promissory Note. These conversions were
23
made pursuant to the terms of the amended 2022 Promissory Note. In addition, conversions were made in connection with the Company granting the holder additional conversion rights. As a result of the conversions, the 2022 Promissory Note has been paid-in-full.
On August 22, 2023, we entered into a common stock purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right, but not the obligation, to sell to Lincoln Park up to $30.0 million in value of shares of our common stock from time to time over the 24-month term of the purchase agreement. Concurrently with entering into the purchase agreement, we also entered into a registration rights agreement with Lincoln Park pursuant to which the Company agreed to register the sale of the shares of the Company’s common stock that have been and may be issued to Lincoln Park under the purchase agreement pursuant to the Company’s existing shelf registration statement on Form S-3. During the nine months ended September 30, 2024, we did not sell any shares to Lincoln Park. On October 24, 2024, we terminated the common stock purchase agreement with Lincoln Park effective October 25, 2024.
On January 16, 2024, we entered into a definitive securities purchase agreement with certain institutional investors for the purchase and sale of an aggregate of 800,000 shares of our common stock and pre-funded warrants to purchase up to 950,000 shares of our common stock for gross proceeds of approximately $7 million. The holders of the pre-funded warrants have exercised their rights to purchase all of the underlying common stock.
On January 18, 2024, we entered into a definitive securities purchase agreement with certain institutional investors for the purchase and sale of an aggregate of 1,096,000 shares of our common stock and pre-funded warrants to purchase up to 24,000 shares of our common stock for gross proceeds of approximately $5.6 million. The holders of the pre-funded warrants have exercised their rights to purchase all of the underlying common stock.
On February 9, 2024, we consummated a registered public offering of an aggregate of 800,000 shares of our common stock. We entered into securities purchase agreements with certain institutional investors, and as a result of the registered public offering, we raised gross proceeds of approximately $10 million.
On June 4, 2024, we entered into an Equity Distribution Agreement with Canaccord Genuity LLC (“Canaccord”), as representative of certain agents, pursuant to which we may offer and sell, from time to time, shares of our common stock for aggregate gross proceeds of up to $120 million, through the agents.
During the nine months ended September 30, 2024, we sold an aggregate of 3,611,187 shares of our common stock under our At Market Issuance Sales Agreement with Wainwright and Equity Distribution Agreement with Canaccord for aggregate gross cash proceeds of approximately $22.2 million. Transaction costs were $0.7 million. From October 1, 2024 through the date of this Report, we sold additional shares of our common stock under the Equity Distribution Agreement, as amended, with Canaccord for aggregate gross proceeds $81.1 million. On November 1, 2024, we entered into an Amended and Restated Equity Distribution Agreement with Canaccord, as representative of certain agents, pursuant to which we increased the aggregate amount of shares of our common stock that we may sell under our at-the-market facility to an aggregate offering price of $171,520,779. As of the date of this Report, up to $70.8 million of shares of our common stock remain available for offer and sale pursuant to the Amended and Restated Equity Distribution Agreement with Canaccord. Refer to Note 10 “Subsequent Events” in the notes to the condensed consolidated financial statements included Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on our Amended and Restated Equity Distribution Agreement with Canaccord.
Although we expect to generate operating losses and negative operating cash flows in the future, based on the financing events described above, management believes it has sufficient cash on hand for at least one year following the filing date of this Quarterly Report on Form 10-Q.
Our future capital requirements will depend on many factors, including our pace of growth, subscription renewal activity, the timing and extent of spend to support development efforts, the expansion of sales and marketing activities and the market acceptance of our products and services. We believe that it is likely we will in the future enter into arrangements to acquire or invest in complementary businesses, technologies and intellectual property rights. We may be required to seek additional equity or debt financing, or issue securities under our effective registration statement described above. If additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us, or at all. If we are unable to raise additional capital when desired and/or on acceptable terms, our business, operating results and financial condition could be adversely affected.
The accompanying consolidated financial statements have been prepared assuming we will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the ordinary course of business.
The following table summarizes our cash flows for the periods presented:
24
|
|
Nine Months Ended September 30, |
|
|||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
||
Consolidated statement of cash flows |
|
|
|
|
|
|
||
Net cash provided used in operating activities |
|
$ |
(10,590 |
) |
|
$ |
(15,869 |
) |
Net cash provided by investing activities |
|
$ |
- |
|
|
$ |
15,383 |
|
Net cash provided by financing activities |
|
$ |
42,193 |
|
|
$ |
1,379 |
|
Operating Activities
The primary source of cash from operating activities is receipts from sales of our various product and service offerings to customers. The primary uses of cash from operating activities are payments to employees for compensation and related expenses, publishers and other vendors for the purchase of digital media inventory and related costs, sales and marketing expenses and general operating expenses.
We utilized $10.6 million of cash from operating activities during the nine months ended September 30, 2024, resulting in a net loss of $7.7 million. The net loss included non-cash charges of $1.6 million, primarily consisting of stock-based compensation. In addition, certain changes in our operating assets and liabilities resulted in a cash decrease of $4.3 million, primarily relating to a decrease in accounts payable and accrued expenses and lease liability payments.
We utilized $15.9 million of cash from operating activities during the nine months ended September 30, 2023, resulting in a net loss from continuing operations of $21.8 million. The net loss included non-cash charges of $9.0 million primarily related to an impairment of goodwill and stock-based compensation, offset by gain on the sale of digital assets. In addition, certain changes in our operating assets and liabilities resulted in a cash decrease of $1.7 million, primarily relating to a decrease in deferred revenue and lease liability payments. Further cash decreases were the result of $1.3 million from the discontinued operations of Lyte.
Investing Activities
Investing activities for the nine months ended September 30, 2023 consisted mainly of the sales of our digital asset holdings.
Financing Activities
Our financing activities during the nine months ended September 30, 2024 consisted of various sales of our common stock.
Our financing activities during the nine months ended September 30, 2023 consisted of $6.9 million in proceeds from the sale of our common stock. We also had payments on our 2022 Promissory Note of $5.1 million and $0.5 million for repurchases of shares of our common stock.
Refer to the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for information on the Company's financing activities.
Contractual Obligations
Information set forth in Note 6, “Leases,” in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference.
Off-Balance Sheet Arrangements
Through September 30, 2024, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K, such as the use of unconsolidated subsidiaries, structured finance, special purpose entities or variable interest entities.
Indemnification Agreements
In the ordinary course of business, we provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, solutions to be provided by the Company or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with directors and certain current and former officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of, or are related to, their status or service as directors, officers or employees.
25
Recent Accounting Pronouncements
Refer to Note 2, “Summary of Significant Accounting Policies,” in the notes to the condensed consolidated financial statements included in Item I, Part I of this Quarterly Report on Form 10-Q for analysis of recent accounting pronouncements applicable to our business.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Except for the changes described in Note 2, “Summary of Significant Accounting Policies,” in the notes to the condensed consolidated financial statements included in Item I, Part I of this Quarterly Report on Form 10-Q, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 15, 2024.
26
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers (as defined below), or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer (together, the “Certifying Officers”), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Report.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, management identified a material weakness in internal control over financial reporting related to the design of information technology general controls (“ITGCs”) related to user access, program change and appropriate segregation of duties for certain IT applications. Further, as a result of cost cutting measures and headcount turnover in our accounting function, business process controls across the Company’s financial reporting processes were not effectively designed and implemented due to a lack of segregation of duties between preparer and reviewer.
We are actively engaged in the implementation of a remediation plan to ensure that controls contributing to the material weakness described above are designed appropriately and will operate effectively. We implemented additional ITGCs to manage user access and program changes across our key systems. Further, we have implemented additional review controls to ensure proper segregation of duties in our financial reporting processes. However, on November 1, 2024, Troy Reisner, notified the Company he intends to step down as Chief Financial Officer and depart the Company on or after November 15, 2024 and prior to November 30, 2024. This may result in a delay in the completion of the implementation of this remediation plan.
Management believes that the remediation measures described above, if successfully implemented, will strengthen our internal control over financial reporting and remediate the material weakness we have identified. However, the material weakness in our internal control over financial reporting will not be considered remediated until the new controls are fully implemented, in operation for a sufficient period of time, tested and concluded by management to be designed and operating effectively.
Management is committed to continuous improvement of our internal control over financial reporting and will continue to diligently review our financial reporting controls and procedures. However, we cannot provide any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts. Management will test, evaluate and audit the implementation of these new processes and internal controls to ascertain whether they are designed and operating effectively to provide reasonable assurance that they will prevent or detect a material error in the Company’s financial statements.
Changes in Internal Control over Financial Reporting
Except as set forth above, there were no changes in our internal control over financial reporting identified in conjunction with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls
Our management, including our Certifying Officers, do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent
27
limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
28
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The information set forth under the “Litigation” subheading in Note 7, “Commitments and Contingencies,” in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference.
Item 1A. Risk Factors
Important risk factors that could affect our operations and financial performance, or that could cause results or events to differ from current expectations, are described in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K filed with the SEC on March 15, 2024 for the year ended December 31, 2023 or contained elsewhere in this Report. The risks and uncertainties described within our Form 10-K for the year ended December 31, 2023 are not the only risks we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
29
Item 6. Exhibits
Unless otherwise noted, the exhibits listed on the accompanying Exhibit Index are filed or incorporated by reference (as stated therein) as part of this Quarterly Report on Form 10-Q.
EXHIBIT INDEX
Exhibit No. |
|
Description |
3.1 |
|
|
3.2 |
|
|
3.3 |
|
|
4.1 |
|
|
31.1* |
|
Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)* |
31.2* |
|
Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)* |
32.1(1) |
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded with the Inline XBRL document.* |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema* |
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)* |
* |
Filed herewith |
(1) |
The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. |
30
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.
November 8, 2024 |
Phunware, Inc. |
|
|
|
|
|
By: |
/s/ Stephen Chen |
|
Name: |
Stephen Chen |
|
Title: |
Interim Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
|
|
November 8, 2024 |
By: |
/s/ Troy Reisner |
|
Name: |
Troy Reisner |
|
Title: |
Chief Financial Officer |
|
|
(Principal Accounting and Financial Officer) |
31