10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2024

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

For the transition period from                    to                 

Commission file number: 001-37862

PHUNWARE, INC.

(Exact name of registrant as specified in its charter)

Delaware	30-1205798
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

1002 West Avenue, Austin, Texas	78701
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 512-693-4199

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Common Stock, par value $0.0001 per share	PHUN	The NASDAQ Capital Market

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

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

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

As of May 7, 2024, 8,272,091 shares of common stock, par value $0.0001 per share, were outstanding.

TABLE OF CONTENTS

		PAGE
PART I	FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024 and 2023 (unaudited)	3
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three months ended March 31, 2024 and 2023 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited)	5
	Notes to the Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29
PART II	OTHER INFORMATION	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	32
	Signatures	33

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report (the “Report”) includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Report, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under “Risk Factors” may not be exhaustive.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Report. In addition, even if our results of operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this Report, those results or developments may not be indicative of results or developments in subsequent periods.

ii

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

1

Phunware, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share information)

	March 31, 2024		December 31, 2023
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	21,567	$	3,934
Accounts receivable, net of allowance for doubtful accounts of $86 at March 31, 2024 and December 31, 2023	637		550
Digital assets	19		75
Prepaid expenses and other current assets	385		374
Current assets of discontinued operation	28		28
Total current assets	22,636		4,961
Property and equipment, net	35		40
Right-of-use asset	1,325		1,451
Other assets	276		276
Total assets	$	24,272	$	6,728
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	5,070	$	7,836
Accrued expenses	239		437
Lease liability	656		629
Deferred revenue	1,012		1,258
PhunCoin deposits	1,202		1,202
Current maturities of long-term debt, net	—		4,936
Current liabilities of discontinued operation	—		205
Total current liabilities	8,179		16,503
Deferred revenue	611		651
Lease liability	857		1,031
Total liabilities	9,647		18,185
Commitments and contingencies (Note 7)
Stockholders’ equity (deficit)
Common stock, $0.0001 par value; 1,000,000,000 shares authorized; 8,282,221 shares issued and 8,272,091 shares outstanding as of March 31, 2024; and 3,861,578 shares issued and 3,851,448 shares outstanding as of December 31, 2023	1		—
Treasury stock at cost; 10,130 shares at March 31, 2024 and December 31, 2023	(502)		(502)
Additional paid-in capital	320,840		292,467
Accumulated other comprehensive loss	(418)		(418)
Accumulated deficit	(305,296)		(303,004)
Total stockholders’ equity (deficit)	14,625		(11,457)
Total liabilities and stockholders’ equity (deficit)	$	24,272	$	6,728

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

Phunware, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share information)

(Unaudited)

	Three Months Ended March 31,
	2024		2023
Net revenues	$	921	$	1,344
Cost of revenues	397		1,271
Gross profit	524		73
Operating expenses:
Sales and marketing	443		856
General and administrative	2,471		4,142
Research and development	484		1,769
Total operating expenses	3,398		6,767
Operating loss	(2,874)		(6,694)
Other income (expense):
Interest expense	(108)		(537)
Gain on extinguishment of debt	535		—
Impairment of digital assets	(56)		(50)
Fair value adjustment of warrant liability	—		253
Gain on sale of digital assets	—		3,214
Other income, net	211		102
Total other income	582		2,982
Loss before taxes	(2,292)		(3,712)
Income tax expense	—		—
Net loss from continuing operations	(2,292)		(3,712)
Net loss from discontinued operation, net of $0 tax	—		(557)
Net loss	(2,292)		(4,269)
Other comprehensive income:
Cumulative translation adjustment	—		23
Comprehensive loss	$	(2,292)	$	(4,246)
Net loss per share from continuing operations, basic and diluted	$	(0.33)	$	(1.80)
Net loss per share from discontinued operations, basic and diluted	$	—	$	(0.27)
Weighted-average common shares used to compute loss per share, basic and diluted	6,864,226		2,063,379

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

Phunware, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

(In thousands, except share information)

(Unaudited)

	Common Stock			Treasury stock			Additional Paid-in Capital		Accumulated Deficit		Other Comprehensive Loss		Total Stockholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount
Balances as of December 31, 2023	3,861,578	$	—	(10,130)	$	(502)	$	292,467	$	(303,004)	$	(418)	$	(11,457)
Release of restricted stock	16,000	—		—	—		—		—		—		—
Issuance of common stock in lieu of consulting fees	11,453	—		—	—		35		—		—		35
Common stock issued upon conversion of 2022 Promissory Note	336,550	—		—	—		4,505		—		—		4,505
Sale of common stock & exercise of prefunded warrants, net of issuance costs	3,915,009	1		—	—		23,203		—		—		23,204
Fractional share issuances as a result of reverse stock split	141,631	—		—	—		—		—		—		—
Stock-based compensation expense	—	—		—	—		630		—		—		630
Net loss	—	—		—	—		—		(2,292)		—		(2,292)
Balances as of March 31, 2024	8,282,221	$	1	(10,130)	$	(502)	$	320,840	$	(305,296)	$	(418)	$	14,625

	Common Stock			Treasury stock			Additional Paid-in Capital		Accumulated Deficit		Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balances as of December 31, 2022	2,063,074	$	—	—	$	—	$	275,572	$	(250,219)	$	(472)	$	24,881
Exercise of stock options, net of vesting of restricted shares	1,895	—		—	—		58		—		—		58
Release of restricted stock	16,977	—		—	—		—		—		—		—
Issuance of common stock in lieu of cash bonus & consulting fees	7,454	—		—	—		347		—		—		347
Stock-based compensation expense	—	—		—	—		1,336		—		—		1,336
Cumulative translation adjustment	—	—		—	—		—		—		23		23
Treasury stock repurchase	—	—		(9,230)	(475)		—		—		—		(475)
Net loss	—	—		—	—		—		(4,269)		—		(4,269)
Balances as of March 31, 2023	2,089,400	$	—	(9,230)	$	(475)	$	277,313	$	(254,488)	$	(449)	$	21,901

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Phunware, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2024		2023
Operating activities
Net loss from continuing operations	$	(2,292)	$	(3,712)
Net loss from discontinued operations	—		(557)
Adjustments to reconcile net loss to net cash provided by operating activities:
Gain on sale of digital assets	—		(3,214)
Gain on extinguishment of debt	(535)		—
Stock based compensation	630		1,362
Other adjustments	329		313
Changes in operating assets and liabilities:
Accounts receivable	(82)		(284)
Prepaid expenses and other assets	(11)		(116)
Accounts payable and accrued expenses	(2,893)		(52)
Lease liability payments	(185)		(263)
Deferred revenue	(286)		(114)
Net cash used in operating activities from continued operations	(5,325)		(6,637)
Net cash used in operating activities from discontinued operations	(205)		(745)
Net cash used in operating activities	(5,530)		(7,382)
Investing activities
Proceeds received from sale of digital currencies	—		10,790
Net cash provided by investing activities - continuing operations	—		10,790
Net cash used in investing activities - discontinued operation	—		(6)
Net cash provided by investing activities	—		10,784
Financing activities
Payments on borrowings	—		(4,270)
Proceeds from sales of common stock	23,204		—
Proceeds from exercise of options to purchase common stock	—		58
Payments on common stock repurchases	—		(475)
Net cash provided by (used in) by financing activities	23,204		(4,687)
Effect of exchange rate on cash	(41)		24
Net increase (decrease) in cash and cash equivalents	17,633		(1,261)
Cash at the beginning of the period	3,934		1,955
Cash and cash equivalents at the end of the period	$	21,567	$	694

Supplemental disclosure of cash flow information
Interest paid	$	4	$	434
Income taxes paid	$	26	$	—
Supplemental disclosures of non-cash financing activities:
Issuance of common stock upon conversion of the 2022 Promissory Note	$	4,505	$	—
Issuance of common stock for payment of bonuses and consulting fees	$	35	$	347

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

Phunware, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except share and per share information)

(Unaudited)

1. The Company and Basis of Presentation

The Company

Phunware, Inc. and its subsidiaries (the “Company”, "we", "us", or "our") offers a fully integrated software platform that enables brands to engage, manage and monetize their anytime, anywhere users worldwide. Our mobile experience platform guides users through the entire customer journey. Our location-based technology offers brands mobile engagement, content management and analytics to best interact with their customers. Through our integrated mobile advertising platform of publishers and advertisers, we provide in-app application transactions for mobile audience building, user acquisition, application discovery, audience engagement and audience monetization. Founded in 2009, we are a Delaware corporation headquartered in Austin, Texas.

Basis of Presentation

The condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) and include the Company’s accounts and those of its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

The balance sheet at December 31, 2023 was derived from our audited consolidated financial statements, but these interim condensed consolidated financial statements do not include all the annual disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the year ended December 31, 2023, which are referenced herein. The accompanying interim condensed consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023, are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with the audited financial statements, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to fairly state our financial position as of March 31, 2024 and the results of operations for the three months ended March 31, 2024 and 2023, and cash flows for the three months ended March 31, 2024 and 2023. The results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future interim period.

Certain reclassifications have been made to our condensed consolidated statement of cash flows for the three months ended March 31, 2024. We combined individual line items that we considered to be immaterial and recorded these in our condensed consolidated statement of cash flows as other adjustments to conform to current year presentation. The reclassifications had no impact on previously reported operating, investing or financing activities.

The accompanying condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Discontinued Operations

On November 1, 2023, we committed to a plan to discontinue and wind down the operations of Lyte Technology, Inc. ("Lyte"), which the Company determined met the criteria for classification as a discontinued operation in accordance with Accounting Standards Codification ("ASC") Topic 205-20, Discontinued Operations. Prior periods were recast such that the basis of presentation is consistent with current year presentation. For additional information, see Note 3.

Reverse Stock Split

On February 26, 2024, the Company effected a reverse stock split of its common stock at a ratio of one-for-fifty (the "Reverse Stock Split"). The number of authorized shares and par values of the common stock were not adjusted as a result of the Reverse Stock Split. The accompanying financial statements and notes thereto give retrospective effect to the reverse stock

6

split for all periods presented. All issued and outstanding common stock, options, restricted stock units and warrants exercisable for common stock and per share amounts have been retrospectively adjusted.

Nasdaq listing

On April 13, 2023, we received a notice from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”) because the bid price of the Company’s common stock on the Nasdaq Capital Market had closed below $1.00 per share for the previous 30 consecutive business days. The notice from Nasdaq stated that, under Nasdaq Listing Rule 5810(c)(3)(A), we had been provided a period of 180 calendar days, or until October 10, 2023, to regain compliance with the Bid Price Requirement. On October 10, 2023, we submitted a request to Nasdaq for an additional 180-day extension to regain compliance with the Bid Price Requirement. On October 12, 2023, the Company received a letter from Nasdaq advising that the Company had been granted a 180-day extension to April 8, 2024, to regain compliance with the Bid Price Requirement, in accordance with Nasdaq Listing Rule 5810(c)(3)(A).

On December 21, 2023, the Company received a letter from Nasdaq notifying the Company that, as of December 20, 2023, the Company's common stock had a closing bid price of $0.10 or less for ten consecutive trading days and that, consistent with Nasdaq Listing Rule 5810(c)(3)(A)(iii), the Nasdaq had determined to delist the Company's common stock from the Nasdaq Capital Market. The notice provided the Company an opportunity to appeal the Nasdaq's decision to delist the Company's common stock. On December 22, 2023, we submitted a request for a hearing before the Nasdaq Hearings Panel (the "Panel") to appeal the Nasdaq's delisting determination.

As noted above, we have effected a reverse stock split in order to regain compliance with the Bid Price Requirement, and on March 12, 2024, we received a letter from Nasdaq notifying us that we demonstrated compliance with the requirements to remain listed on the Nasdaq Capital Market, as required by the Panel. The letter also informed the Company that pursuant to Listing Rule 5815(d)(4)(B), the Company will be subject to a mandatory Panel monitor for a period of one year from the date of this letter. If, within that one-year monitoring period, the staff finds the Company again out of compliance with the requirement that was the subject of the exception, notwithstanding Rule 5810(c)(2), the Company will not be permitted to provide the Staff with a plan of compliance with respect to that deficiency and the staff will not be permitted to grant additional time for the Company to regain compliance with respect to that deficiency, nor will the Company be afforded an applicable cure or compliance period pursuant to Rule 5810(c)(3). Instead, the Nasdaq will issue a delist determination letter and the Company will have an opportunity to request a new hearing with the initial Panel or a newly convened hearings panel if the initial Panel is unavailable. The Company will have the opportunity to respond/present to the hearings panel as provided by Listing Rule 5815(d)(4)(C).

There can be no assurance the Company will maintain compliance with the above or any other Nasdaq Listing Rules.

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 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.

7

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. Supplemental Information

Concentrations of Credit Risk

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and trade accounts receivable.

Although we limit our exposure to credit loss by depositing our cash with established financial institutions that management believes have good credit ratings and represent minimal risk of loss of principal, our deposits, at times, may exceed federally insured limits.

Collateral is not required for accounts receivable and we believe the carrying value approximates fair value. The following table sets forth our concentration of accounts receivable, net of specific allowances for doubtful accounts.

	March 31, 2024		December 31, 2023
Customer A	36	%	43	%
Customer B	14	%	16	%
Customer C	4	%	12	%

Discontinued Operation

On November 1, 2023, the Company made the strategic decision to wind down and discontinue the operations of its Lyte reporting segment. We generally completed the wind down of the Lyte operations as of December 31, 2023.

A summary of the Lyte discontinued operation in the condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2023 is set forth below:

Net revenues	$	3,403
Cost of revenues	3,115
Gross profit	288
Operating expenses:
Sales and marketing	272
General and administrative	570
Research and development	3
Total operating expenses	845
Operating loss	$	(557)

Loss per Common Share

Basic loss per common share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per common share is computed by giving effect to all potential shares of common stock, including those related to our outstanding warrants and stock equity plans, to the extent dilutive. For all periods presented, these shares were excluded from the calculation of diluted loss per share of common stock because their inclusion would have been anti-dilutive. As a result, diluted loss per common share is the same as basic loss per common share for all periods presented.

8

The following table sets forth common stock equivalents that have been excluded from the computation of dilutive weighted average shares outstanding as their inclusion would have been anti-dilutive:

	Three Months Ended March 31,
	2024	2023
Warrants	—	132,651
Options	13,011	17,341
Restricted stock units	78,387	109,605
Total	91,398	259,597

4. Revenue

Subscriptions and services revenue consist of platform license subscriptions and application development services. Application transaction revenue is comprised of in-app advertising. Refer to our revenue recognition policy under the subheading, Revenue Recognition, in Note 2, "Summary of Significant Accounting Policies," in our Annual Report on Form 10-K filed with the SEC on March 15, 2024.

Disaggregation of Revenue

The following table sets forth our net revenues by category:

	Three Months Ended March 31,
	2024		2023
Subscriptions and services revenue	$	454	$	1,156
Application transaction	467		188
Net revenues	$	921	$	1,344

The following table sets forth our concentration of revenue sources as a percentage of total net revenues:

	Three Months Ended March 31,
	2024		2023
Customer A	33	%	5	%
Customer B	4	%	30	%
Customer D	14	%	22	%

We generate revenue in domestic and foreign regions and attribute net revenue to individual countries based on the location of the contracting entity. We derived over 98% of our net revenues from within the United States for the three months ended March 31, 2024 and 2023.

Deferred Revenue

Deferred revenue consists of customer billings or payments received in advance of the recognition of revenue under the arrangements with customers. We recognize deferred revenue as revenue only when revenue recognition criteria are met. During the three months ended March 31, 2024, we recognized revenue of $440 that was included in our deferred revenue balance as of December 31, 2023.

Remaining Performance Obligations

Remaining performance obligations were $4,609 as of March 31, 2024, of which we expect to recognize approximately 37% as revenue over the next 12 months and the remainder thereafter.

9

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 $12,809 in a private placement. The 2022 Promissory Note was sold with an original issue discount of $492 and we paid at closing issuance costs totaling $522. After deducting all transaction fees paid by us at closing, net cash proceeds to the Company at closing were $11,795. No interest was to accrue on the 2022 Promissory Note. Beginning on November 1, 2022, our monthly amortization payment was approximately $1,566, which includes a 10% premium until the original maturity date of July 1, 2023. We had the right to defer any monthly payment by one month up to twelve times so long as certain conditions, as defined in the 2022 Promissory Note, were satisfied. In the event we exercise the deferral right, the outstanding balance will automatically increase by 1.85%.

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 5% of the outstanding balance immediately before entering into the waiver agreement. We evaluated the modification in accordance with the guidance as in ASC 470 - Debt, and we concluded that the modification was not an extinguishment of the original debt; therefore, no gain or loss was recognized upon modification.

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 are required to make monthly amortization payments of at least $800 commencing on August 31, 2023 until the 2022 Promissory Note is paid-in-full. Furthermore, the amendment removed the required payment due on August 1, 2023. We also granted the holder certain limited conversion rights, subject to advance payment and volume conditions. Conversions into shares of our common stock made pursuant to the limited conversion rights will be calculated on a conversion price equal to 90% of the lower of (i) the closing trading price of our common stock on the trading day immediately preceding the date for such conversion or (ii) the average closing trading price of our common stock for the five trading days immediately preceding the date for such conversion. If the holder elects to convert pursuant to the limited conversion option, such conversions will reduce the current month’s monthly amortization payment. Any conversions in any given month in excess of the $800 monthly payment will be applied to reduce the following month's required monthly amortization payment. In connection with the amendment, we agreed to pay an extension fee equal to approximately $708. The amendment also provided that the outstanding balance shall accrue interest at a rate of 8% beginning on August 1, 2023, and payment deferrals were no longer permitted.

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 7.5%, or approximately $347, of the outstanding balance of the 2022 Promissory Note. The fee was added to the outstanding balance of 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, which amounted to aggregate principal and interest payments in the amount of $4,505. These conversions were 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, the noteholder agreed to waive an aggregate of $535 in principal and accrued interest. As a result of the conversions, the 2022 Promissory Note has been paid-in-full.

Interest Expense

Interest expense amounted to $108 and $537 for three months ended March 31, 2024 and 2023, respectively.

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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 March 31, 2024 and 2023 was $170 and $325, respectively. The weighted-average remaining lease term for operating leases as of March 31, 2024 was 2.9 years.

Future minimum lease obligations are set forth below:

Future minimum lease obligations years ending December 31,	Lease Obligations
2024 (Remainder)	$	566
2025	463
2026	370
2027	284
	$	1,683
Less: Portion representing interest	(170)
	$	1,513

7. Commitments and Contingencies

Litigation

On March 30, 2021, Phunware filed an action against its former counsel Wilson Sonsini Goodrich & Rosati, PC ("WSGR"), 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, Phunware, Inc., v. Wilson Sonsini Goodrich & Rosati, Professional Corporation, Does 1-25, Case No. 21CV386411. The two actions were then removed to arbitration. Phunware sought affirmative relief in these actions, as stated in the complaints, for damages according to proof, interest and costs of suit. WSGR filed crossclaims against Phunware in these actions related to services provided by WSGR to Phunware and sought to recover fees related to the services at issue in these actions and interest. In March 2024, WSGR and Phunware settled their claims in the arbitration proceeding relating to Case No. 21CV381517 and Phunware paid approximately $2,194 of the outstanding amount alleged to be owed by Phunware to WSGR in that proceeding. The Phunware and WSGR claims related to Case No. 21CV386411 remain pending in arbitration and the remaining balance of the payables amount alleged to be owed by Phunware will continue to be arbitrated. The outcome of this proceeding and the related Phunware and WSGR claims is uncertain. There is $2,159 and $4,321 in accounts payable in our condensed consolidated balance sheets as of March 31, 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. We filed a motion to dismiss Plaintiffs' complaint on May 27, 2022, and on July 15, 2022 Plaintiffs filed their answering brief in opposition to the motion to dismiss and a motion for partial summary judgment. The parties argued their positions before the Court of Chancery during a hearing on April 4, 2023. On June 16, 2023, the Court ruled on the motions without filing a written opinion. From the bench, Vice Chancellor Cook granted Phunware's motion to dismiss on the Texas law claims and denied both the motion to dismiss and motion for partial summary judgment on the Delaware law claims.

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The parties engaged in mediation in July 2023 but were unable to reach a settlement, and settlement discussions continue. We intend to vigorously defend against this lawsuit and any appeals. We have not recorded a liability related to this matter because any potential loss is not currently probable or reasonably estimable. Additionally, we cannot presently estimate the range of loss, if any, that may result from this lawsuit. It is possible that the ultimate resolution of the foregoing matter, 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.

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8. Stockholders’ Equity

Common Stock

Total common stock authorized to be issued as of March 31, 2024 was 1,000,000,000 shares, with a par value of $0.0001 per share. At March 31, 2024 and December 31, 2023, there were 8,272,091 and 3,851,448 shares of our common stock outstanding, respectively.

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 $0.0001 per share, for aggregate gross proceeds of up to $100 million, through or to Wainwright, as agent or principal. During the first quarter of 2024, we sold 245,009 shares of our common stock under our sales agreement with Wainwright for aggregate gross cash proceeds of $2,536. Transaction costs were $52. As of March 31, 2024, $85.5 million of shares of our common stock remains issuable pursuant to the sales agreement with Wainwright.

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 million in value of shares of our common stock from time to time over the 24-month term of the purchase agreement. We did not sell any shares of our common stock to Lincoln Park during the first quarter of 2024.

During the first quarter of 2024, we sold an aggregate of 2,696,000 shares of our common stock and issued pre-funded warrants to purchase up to 974,000 shares of our common stock. The aggregate gross proceeds from the offerings were $22,600. Aggregate transaction costs, including placement agent fees, were approximately $1,880. The holders of the pre-funded warrants exercised their rights to purchase 974,000 shares of our common stock.

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 $5 million. The stock repurchase plan may be amended or terminated at any time, in the sole discretion of our board of directors. The authorization permits us to repurchase shares of our common stock from time-to-time through open market repurchases at prevailing market prices, in accordance with federal securities laws. During 2023, we repurchased an aggregate 10,130 shares of our common stock at an aggregate repurchase price of $502.

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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:

	Three Months Ended March 31,
Stock-based compensation	2024		2023
Cost of revenues	$	45	$	253
Sales and marketing	14		97
General and administrative	556		859
Research and development	15		153
Total stock-based compensation	$	630	$	1,362

As of March 31, 2024, there was approximately $1,539 of total unrecognized compensation cost related to our stock benefit plans. These unrecognized compensation costs are expected to be recognized over an estimated weighted-average period of approximately 2.2 years.

Restricted Stock Units

A summary of our restricted stock unit activity for the three months ended March 31, 2024 is set forth below:

	Shares	Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2023	96,808	$	25.21
Granted	9,032	4.13
Released	(27,453)	17.25
Forfeited	—	—
Outstanding as of March 31, 2024	78,387	$	25.58

Stock Options

A summary of our stock option activity under the 2018 Equity Incentive Plan (the "2018 Plan) and related information is as follows:

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	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2023	2,500	$	56.89	4.2	$	—
Granted	—	—
Exercised	—	—
Forfeited	—	—
Outstanding as of March 31, 2024	2,500	$	56.89	3.9	$	—
Exercisable as of March 31, 2024	2,500	$	56.89	3.9	$	—

A summary of our option activity under our 2009 Equity Incentive Plan (the "2019 Plan") and related information is as follows:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2023	14,625	$	39.67	2.9	$	—
Granted	—	—
Exercised	—	—
Forfeited	(4,114)	44.54
Outstanding as of March 31, 2024	10,511	$	37.77	3.8	$	—
Exercisable as of March 31, 2024	10,511	$	37.77	3.8	$	—

Our stock benefit plans had 274,491 and 86,837 shares of common stock reserved for future issuances under our equity incentive plans as of March 31, 2024 and December 31, 2023, respectively. In addition, the shares of common stock reserved for issuance under the 2018 Plan also will include any shares of common stock subject to stock options granted under the 2009 Plan, that expire or otherwise terminate without having been exercised in full and shares of common stock issued pursuant to awards granted under the 2009 Plan that are forfeited. As of March 31, 2024, the maximum number of shares of common stock that may be added to the 2018 Plan pursuant to the foregoing is 10,511.

Furthermore, there were 46,791 and 30,415 shares of common stock available for sale and reserved for issuance under our 2018 Employee Stock Purchase Plan as of March 31, 2024 and December 31, 2023, respectively.

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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.

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:

•Enterprise mobile software development kits (SDKs) including content management, location-based services, marketing automation, business intelligence and analytics, alerts, notifications and messaging, audience engagement and audience monetization;

•Integration of our SDK licenses into existing applications maintained by our customers;

•Cloud-based vertical solutions, which are off-the-shelf, iOS- and Android-based mobile application portfolios, solutions and services that address: the patient experience for healthcare, the shopper experience for retail, the fan experience for sports, the traveler experience for aviation, the luxury resident experience for real estate, the luxury guest experience for hospitality, the student experience for education and the generic user experience for all other verticals and applications; and

•Application transactions for mobile audience building, user acquisition, application discovery, audience engagement and monetization, including our engagement-driven digital asset PhunToken.

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.

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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.

Backlog and Deferred Revenue. Backlog represents future amounts to be invoiced under our current agreements. At any point in the contract term, there can be amounts that we have not yet been contractually able to invoice. Until such time as these amounts are invoiced, they are not recorded in revenue, deferred revenue, accounts receivable or elsewhere in our condensed consolidated financial statements and are considered by us to be backlog. We expect backlog to fluctuate up or down from period to period for several reasons, including the timing and duration of customer contracts, varying billing cycles and the timing and duration of customer renewals. We reasonably expect approximately 46% of our backlog as of March 31, 2024 will be invoiced during the subsequent 12-month period, primarily due to the fact that our contracts are typically one to three years in length.

In addition, our deferred revenue consists of amounts that have been invoiced but have not yet been recognized as revenues as of the end of a reporting period. Together, the sum of deferred revenue and backlog represents the total billed and unbilled contract value yet to be recognized in revenues, and provides visibility into future revenue streams.

The following table sets forth our backlog and deferred revenue:

	March 31, 2024		December 31, 2023
(in thousands)
Backlog	$	2,803	$	2,750
Deferred revenue	1,623		1,909
Total backlog and deferred revenue	$	4,426	$	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, adjusted gross margin and adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") (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:

•Non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;

•Our non-GAAP financial measures do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of ongoing operations; and

•Other companies in our industry may calculate our non-GAAP financial measures differently than we do, limiting their usefulness as comparative measures.

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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 table sets forth the non-GAAP financial measures we monitor.

	Three Months Ended March 31,
(in thousands, except percentages)	2024			2023
Adjusted gross profit (1)	$	569		$	326
Adjusted gross margin (1)	61.8		%	24.3		%
Adjusted EBITDA (2)	$	(2,028)		$	(5,217)

(1)Adjusted gross profit and adjusted gross margin are non-GAAP financial measures. We believe that adjusted gross profit and adjusted gross margin provide supplemental information with respect to gross profit and gross margin regarding ongoing performance. We define adjusted gross profit as net revenues less cost of revenue, adjusted to exclude one-time revenue adjustments, stock-based compensation and amortization of intangible assets. We define adjusted gross margin as adjusted gross profit as a percentage of net revenues.

(2)Adjusted EBITDA is a non-GAAP financial measure. We believe adjusted EBITDA provides helpful information with respect to operating performance as viewed by management, including a view of our business that is not dependent on (i) the impact of our capitalization structure and (ii) items that are not part of day-to-day operations. We define adjusted EBITDA as net loss plus (i) interest expense, (ii) income tax expense, (iii) depreciation, and further adjusted for (iv) non-cash impairment, (v) valuation adjustments and (vi) stock-based compensation expense.

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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 March 31,
(in thousands, except percentages)	2024			2023
Gross profit	$	524		$	73
Add back: Stock-based compensation	45			253
Adjusted gross profit	$	569		$	326
Adjusted gross margin	61.8		%	24.3		%

	Three Months Ended March 31,
(in thousands)	2024		2023
Net loss from continuing operations	$	(2,292)	$	(3,712)
Add back: Depreciation	5		13
Add back: Interest expense	108		537
EBITDA	(2,179)		(3,162)
Add back: Stock-based compensation	630		1,362
Less: Gain on extinguishment of debt	(535)		—
Add back: Impairment of digital currencies	56		50
Less: Fair value adjustment for warrant liabilities	—		(253)
Less: Gain on sale of digital assets	—		(3,214)
Adjusted EBITDA	$	(2,028)	$	(5,217)

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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.

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 mobile connected devices. Depending on the specific terms of each advertising contract, we generally recognize revenue based on the activity of mobile users viewing these ads. Fees from advertisers are commonly based on the number of ads delivered or views or clicks by users on mobile advertisements delivered, and we recognize revenue at the time the user views or clicks on the ad. We sell our ads by cost per thousand impressions and cost per click. In 2021, we commenced PhunToken sales. PhunToken is designed to reward consumers for their activity, such as watching branded videos, completing surveys and visiting points of interest. We recognize revenue related to PhunToken at time of delivery to a customer's ethereum-based wallet.

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 and ethereum blockchain fees paid to deliver PhunToken. As a result, our application transaction gross profit may fluctuate from period to period due to variable costs of advertising traffic.

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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.

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. Our sales and marketing expense may increase in absolute dollars as we increase our sales and marketing organizations as we plan to increase revenue 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 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 as our business grows 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 financings to fund the expansion of our business or to finance strategic acquisitions in the future, which may have an impact on our interest expense.

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Results of Operations

Net Revenues

	Three Months Ended March 31,						Change
(in thousands, except percentages)	2024			2023			Amount		%
Net Revenues
Subscriptions and services revenue	$	454		$	1,156		$	(702)	(60.7)	%
Application transaction	$	467		$	188		279		148.4	%
Net revenues	$	921		$	1,344		$	(423)	(31.5)	%
Subscriptions and services revenue as percentage of total revenue	49.3		%	86.0		%
Application transaction as percentage of total revenue	50.7		%	14.0		%

Net revenues decreased $0.4 million, or 31.5%, for the three months ended March 31, 2024 compared to the corresponding period in 2023.

Platform revenue decreased $0.7 million, or (60.7)%, for the three months ended March 31, 2024 compared to the corresponding period in 2023, primarily due to $0.3 million related to a customer contract termination, which occurred in 2023 and $0.2 million decrease in customer reimbursable expenses.

Application transaction revenue increased $0.3 million, or 148.4%, for the three months ended March 31, 2024 compared to the corresponding period in 2023, due to the timing of advertising campaigns.

Cost of Revenues, Gross Profit and Gross Margin

	Three Months Ended March 31,							Change
(in thousands, except percentages)	2024				2023			Amount		%
Cost of Revenues
Subscriptions and services revenue	$	214			$	1,191		$	(977)	(82.0)	%
Application transaction	$	183			$	80		103		128.8	%
Total cost of revenues	$	397			$	1,271		$	(874)	(68.8)	%
Gross Profit
Subscriptions and services revenue	$	240			$	(35)		$	275	(785.7)	%
Application transaction	$	284			$	108		$	176	163.0	%
Total gross profit	$	524			$	73		$	451	617.8	%
Gross Margin
Subscriptions and services revenue	52.9		%		(3.0)		%
Application transaction	60.8		%		57.4		%
Total gross margin	56.9		%	%	5.4		%

Total gross profit increased $0.5 million, or 617.8%, for the three months ended March 31, 2024 compared to the corresponding period of 2023, as a result of a decrease of $0.2 million in stock-based compensation expense and higher application transaction revenue and gross profit.

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Operating Expenses

	Three Months Ended March 31,				Change
(in thousands, except percentages)	2024		2023		Amount		%
Operating expenses
Sales and marketing	$	443	$	856	$	(413)	(48.2)	%
General and administrative	2,471		4,142		(1,671)		(40.3)	%
Research and development	484		1,769		(1,285)		(72.6)	%
Total operating expenses	$	3,398	$	6,767	$	(3,369)	(49.8)	%

Sales and Marketing

Sales and marketing expense decreased $0.4 million, or (48.2)%, for the three months ended March 31, 2024 compared to the corresponding period 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 $1.7 million, or 40.3%, for the three months ended March 31, 2024 compared to the corresponding period of 2023, due to a $0.9 million decrease in payroll and related expenses as a result of lower headcount, $0.4 million decrease in consulting expenses and $0.3 million decrease in stock-based compensation expense.

Research and Development

Research and development expense decreased $1.3 million, or (72.6)%, for the three months ended March 31, 2024 compared to the corresponding period of 2023, primarily due to a decrease in payroll and related expenses as a result of lower headcount.

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Other expense

	Three Months Ended March 31,
(in thousands, except percentages)	2024		2023
Other income (expense)
Interest expense	$	(108)	$	(537)
Loss on extinguishment of debt	535		—
Impairment of digital assets	(56)		(50)
Gain on sale of digital assets	—		3,214
Fair value adjustment of warrant liability	—		253
Other income	211		102
Total other income	$	582	$	2,982

During the three months ended March 31, 2024, we recorded other income of $0.6 million primarily as a result of a gain on the extinguishment of our 2022 Promissory Note.

During the three months ended March 31, 2023, we recorded other income of $3.0 million primarily as a result of gains on sales of our digital asset holdings.

24

Liquidity and Capital Resources

As of March 31, 2024, we held total cash of $21.6 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 may issue up to $200 million in common stock, preferred stock, warrants and units. Contained therein, was a prospectus supplement pursuant to which we may sell up to $100 million of our common stock in an “at the market offering” pursuant to an At Market Issuance Sales Agreement (the "ATM Agreement") we entered into with H.C. Wainwright & Co., LLC on January 31, 2022. During the three-month period ended March 31, 2024, the Company sold approximately 245,009 share pursuant to the ATM Agreement at an average price of approximately $10.35 per share, resulting in approximately $2.5 million of net proceeds to the Company after deducting commissions and other offering expenses. As of the date of this Report, shares of our common stock with a maximum aggregate offering price of up to $85.5 million may be sold pursuant to the sales agreement.

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 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 three-month period ended March 31, 2024, we did not sell any shares to Lincoln Park. As of the date of this Report, $29.0 million in value of shares of our common stock remains issuable pursuant to the purchase agreement with Lincoln Park.

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.

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.

25

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 financings, or issue securities under our effective registration statement described above. In the event that 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.

26

The following table summarizes our cash flows for the periods presented:

	Three Months Ended March 31,
(in thousands, except percentages)	2024		2023
Consolidated statement of cash flows
Net cash used in operating activities	$	(5,530)	$	(7,382)
Net cash provided by investing activities	$	—	$	10,784
Net cash provided by (used in) by financing activities	$	23,204	$	(4,687)

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 $5.5 million of cash from operating activities during the three months ended March 31, 2024, resulting in a net loss of $2.3 million. The net loss included non-cash charges of $0.4 million, primarily consisting of stock-based compensation. In addition, certain changes in our operating assets and liabilities resulted in a cash decrease of $3.5 million, primarily relating to a decrease in accounts payable and accrued expenses.

We utilized $7.4 million of cash from operating activities during the three months ended March 31, 2023, resulting in a net loss of $4.3 million. The net loss included a gain on the sale of digital assets of $3.2 million and non-cash charges of $1.8 million, primarily consisting of stock-based compensation. In addition, certain changes in our operating assets and liabilities resulted in a cash decreases of $1.7 million, primarily relating to a decrease in deferred revenue.

Investing Activities

Investing activities for the three months ended March 31, 2023 consisted mainly of the sales of our digital asset holdings.

Financing Activities

Our financing activities during the three months ended March 31, 2024 consisted of various sales 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.

Our financing activities during the three months ended March 31, 2023 consisted of payments on our 2022 Promissory Note of $4.3 million and $0.5 million for repurchases of shares of our common stock.

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.

27

Off-Balance Sheet Arrangements

Through March 31, 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.

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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

28

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.

Our planned remediation efforts to address the above material weaknesses are ongoing and include designing and implementing ITGCs to manage user access and program changes across our key systems and investing in the hiring of additional personnel and/or implementing additional compensating controls in our accounting function due to limited personnel. 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.

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 March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

29

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.

30

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

Insider Trading Arrangements

From time to time, our officers or members of our board of directors may enter into Rule 10b5-1 trading plans, which allow for the purchase or sale of common stock under pre-established terms at times when directors and officers might otherwise be prevented from trading under insider trading laws or because of self-imposed blackout periods. Such trading plans are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. Other than as described below, during the three months ended March 31, 2024, none of the Company’s directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-10b5-1 trading arrangement” as each term is defined in Item 408 of Regulation S-K.

Michael Snavely, our Chief Executive Officer, an officer for the purposes of Section 16 of the Exchange Act, entered into a prearranged stock trading plan on March 14, 2024. Mr. Snavely's trading plan provides for the sale of up to 30,732 shares of the Company's common stock between June 13, 2024 and June 13, 2025. The trading plan is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and Phunware's policies regarding transactions in securities of the Company.

31

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	Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K (File No. 001-37862), filed with the SEC on January 2, 2019).
3.2	Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K (File No. 001-37862), filed with the SEC on November 4, 2022).
3.3	Certificate of Amendment to the Certificate of Incorporation filed February 23, 2024 (Inccorporated by reference to Exhibit 3.1 of the Registrant's Form 8-K (File No. 00-37862) filed with the SEC on February 28, 2024.)
4.1	Description of Securities (Incorporated by reference to Exhibit 4.15 of the Registrant's Form 10-K (File No. 001-37862), filed with the SEC on March 31, 2021).
10.1	Form of Securities Purchase Agreement dated as of January 16, 2024 (Incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K (File No. 001-37862), filed with the SEC on January 18, 2024).
10.2	Placement Agency Agreement dated January 16, 2024, by and between Phunware, Inc. and Roth Capital Partners, LLC (Incorporated by reference to Exhibit 10.2 of the Registrant's Form 8-K (File No. 001-37862), filed with the SEC on January 18, 2024).
10.3	Form of Securities Purchase Agreement dated as of January 18, 2024 (Incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K (File No. 001-37862), filed with the SEC on January 23, 2024).
10.4	Placement Agency Agreement dated January 18, 2024, by and between Phunware, Inc. and Roth Capital Partners, LLC (Incorporated by reference to Exhibit 10.2 of the Registrant's Form 8-K (File No. 001-37862), filed with the SEC on January 23, 2024).
10.5	Form of Securities Purchase Agreement dated as of February 7, 2024 (Incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K (File No. 001-37862), filed with the SEC on February 9, 2024).
10.6	Placement Agency Agreement dated February 7, 2024, by and between Phunware, Inc. and Roth Capital Partners, LLC (Incorporated by reference to Exhibit 10.2 of the Registrant's Form 8-K (File No. 001-37862), filed with the SEC on February 9, 2024).
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)	Certification of the Principal Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350*
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema*
101.CAL	XBRL Taxonomy Calculation Linkbase*
101.LAB	XBRL Taxonomy Label Linkbase*
101.PRE	XBRL Definition Linkbase Document*
101.DEF	XBRL Definition Linkbase Document*
104	Cover Page Interactive Data File*

*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.

32

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.

May 13, 2024	Phunware, Inc.
	By:	/s/ Michael Snavely
		Name:	Michael Snavely
		Title:	Chief Executive Officer
			(Principal Executive Officer)

May 13, 2024	By:	/s/ Troy Reisner
		Name:	Troy Reisner
		Title:	Chief Financial Officer
			(Principal Accounting and Financial Officer)

33

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Michael Snavely, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Phunware Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 13, 2024	/s/ Michael Snavely
	Michael Snavely Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Troy Reisner, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Phunware Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 13, 2024	/s/ Troy Reisner
	Troy Reisner Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Michael Snavely, Chief Executive Officer (Principal Executive Officer) of Phunware, Inc. (the “Company”), and Troy Reisner, Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, each hereby certifies that, to the best of his knowledge:

1.The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2024, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and

2.The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 13, 2024 Phunware, Inc.

By:	/s/ Michael Snavely
	Name:	Michael Snavely
	Title:	Chief Executive Officer
		(Principal Executive Officer)

By:	/s/ Troy Reisner
	Name:	Troy Reisner
	Title:	Chief Financial Officer
		(Principal Accounting and Financial Officer)

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Phunware, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Cover Page - shares	3 Months Ended
	Mar. 31, 2024	May 07, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2024
Document Transition Report	false
Entity File Number	001-37862
Entity Registrant Name	PHUNWARE, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	30-1205798
Entity Address, Address Line One	1002 West Avenue
Entity Address, City or Town	Austin
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78701
City Area Code	512
Local Phone Number	693-4199
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	PHUN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		8,272,091
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2024
Entity Central Index Key	0001665300

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 21,567	$ 3,934
Accounts receivable, net of allowance for doubtful accounts of $86 at March 31, 2024 and December 31, 2023	637	550
Digital assets	19	75
Prepaid expenses and other current assets	385	374
Current assets of discontinued operation	28	28
Total current assets	22,636	4,961
Property and equipment, net	35	40
Right-of-use asset	1,325	1,451
Other assets	276	276
Total assets	24,272	6,728
Current liabilities:
Accounts payable	5,070	7,836
Accrued expenses	239	437
Lease liability	656	629
Deferred revenue	1,012	1,258
PhunCoin deposits	1,202	1,202
Current maturities of long-term debt, net	0	4,936
Current liabilities of discontinued operation	0	205
Total current liabilities	8,179	16,503
Deferred revenue	611	651
Lease liability	857	1,031
Total liabilities	9,647	18,185
Commitments and contingencies (Note 7)
Stockholders’ equity (deficit)
Common stock, $0.0001 par value; 1,000,000,000 shares authorized; 8,282,221 shares issued and 8,272,091 shares outstanding as of March 31, 2024; and 3,861,578 shares issued and 3,851,448 shares outstanding as of December 31, 2023	1	0
Treasury stock at cost; 10,130 shares at March 31, 2024 and December 31, 2023	(502)	(502)
Additional paid-in capital	320,840	292,467
Accumulated other comprehensive loss	(418)	(418)
Accumulated deficit	(305,296)	(303,004)
Total stockholders’ equity (deficit)	14,625	(11,457)
Total liabilities and stockholders’ equity (deficit)	$ 24,272	$ 6,728

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 86	$ 86
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, shares issued (in shares)	8,282,221	3,861,578
Common stock, shares outstanding (in shares)	8,272,091	3,851,448
Treasury stock (in shares)	10,130	10,130

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Statement [Abstract]
Net revenues	$ 921	$ 1,344
Cost of revenues	397	1,271
Gross profit	524	73
Operating expenses:
Sales and marketing	443	856
General and administrative	2,471	4,142
Research and development	484	1,769
Total operating expenses	3,398	6,767
Operating loss	(2,874)	(6,694)
Other income (expense):
Interest expense	(108)	(537)
Gain on extinguishment of debt	535	0
Impairment of digital assets	(56)	(50)
Fair value adjustment of warrant liability	0	253
Gain on sale of digital assets	0	3,214
Other income, net	211	102
Total other income	582	2,982
Loss before taxes	(2,292)	(3,712)
Income tax expense	0	0
Net loss from continuing operations	(2,292)	(3,712)
Net loss from discontinued operation, net of $0 tax	0	(557)
Net loss	(2,292)	(4,269)
Other comprehensive income:
Cumulative translation adjustment	0	23
Comprehensive loss	$ (2,292)	$ (4,246)
Net loss per share from continuing operations, basic (in dollars per share)	$ (0.33)	$ (1.80)
Net loss per share from continuing operations, diluted (in dollars per share)	(0.33)	(1.80)
Net loss per share from discontinued operations, basic (in dollars per share)	0	(0.27)
Net loss per share from discontinued operations, diluted (in dollars per share)	$ 0	$ (0.27)
Weighted-average common shares used to compute loss per share, basic (in shares)	6,864,226,000	2,063,379,000
Weighted-average common shares used to compute loss per share, diluted (in shares)	6,864,226,000	2,063,379,000

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Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Total	Common Stock	Treasury stock	Additional Paid-in Capital	Accumulated Deficit	Other Comprehensive Loss
Beginning balance (in shares) at Dec. 31, 2022		2,063,074,000
Beginning balance at Dec. 31, 2022	$ 24,881	$ 0	$ 0	$ 275,572	$ (250,219)	$ (472)
Beginning balance (in shares) at Dec. 31, 2022			0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options, net of vesting of restricted shares (in shares)		1,895,000
Exercise of stock options, net of vesting of restricted shares	58			58
Release of restricted stock (in shares)		16,977,000
Issuance of common stock in lieu of cash bonus & consulting fees (in shares)		7,454,000
Issuance of common stock in lieu of cash bonus & consulting fees	347			347
Common stock issued upon conversion of 2022 Promissory Note	0
Stock-based compensation expense	1,336			1,336
Cumulative translation adjustment	23					23
Treasury stock repurchase (in shares)			(9,230,000)
Treasury stock repurchase	(475)		$ (475)
Net loss	(4,269)				(4,269)
Ending balance (in shares) at Mar. 31, 2023		2,089,400,000
Ending balance at Mar. 31, 2023	21,901	$ 0	$ (475)	277,313	(254,488)	(449)
Ending balance (in shares) at Mar. 31, 2023			(9,230,000)
Beginning balance (in shares) at Dec. 31, 2022		2,063,074,000
Beginning balance at Dec. 31, 2022	$ 24,881	$ 0	$ 0	275,572	(250,219)	(472)
Beginning balance (in shares) at Dec. 31, 2022			0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock repurchase (in shares)	(10,130)
Treasury stock repurchase	$ (502)
Ending balance (in shares) at Dec. 31, 2023	3,851,448	3,861,578,000
Ending balance at Dec. 31, 2023	$ (11,457)	$ 0	$ (502)	292,467	(303,004)	(418)
Ending balance (in shares) at Dec. 31, 2023	(10,130)		(10,130,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Release of restricted stock (in shares)		16,000,000
Issuance of common stock in lieu of cash bonus & consulting fees (in shares)		11,453,000
Issuance of common stock in lieu of cash bonus & consulting fees	$ 35			35
Common stock issued upon conversion of 2022 Promissory Note (in shares)		336,550,000
Common stock issued upon conversion of 2022 Promissory Note	4,505			4,505
Sale of common stock & exercise of prefunded warrants, net of issuance costs (in shares)		3,915,009,000
Sale of common stock & exercise of prefunded warrants, net of issuance costs	23,204	$ 1		23,203
Fractional share issuances as a result of reverse stock split (in shares)		141,631,000
Stock-based compensation expense	630			630
Cumulative translation adjustment	0
Net loss	$ (2,292)				(2,292)
Ending balance (in shares) at Mar. 31, 2024	8,272,091	8,282,221,000
Ending balance at Mar. 31, 2024	$ 14,625	$ 1	$ (502)	$ 320,840	$ (305,296)	$ (418)
Ending balance (in shares) at Mar. 31, 2024	(10,130)		(10,130,000)

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Operating activities
Net loss from continuing operations	$ (2,292)	$ (3,712)
Net loss from discontinued operations	0	(557)
Adjustments to reconcile net loss to net cash provided by operating activities:
Gain on sale of digital assets	0	(3,214)
Gain on extinguishment of debt	(535)	0
Stock based compensation	630	1,362
Other adjustments	329	313
Changes in operating assets and liabilities:
Accounts receivable	(82)	(284)
Prepaid expenses and other assets	(11)	(116)
Accounts payable and accrued expenses	(2,893)	(52)
Lease liability payments	(185)	(263)
Deferred revenue	(286)	(114)
Net cash used in operating activities from continued operations	(5,325)	(6,637)
Net cash used in operating activities from discontinued operations	(205)	(745)
Net cash used in operating activities	(5,530)	(7,382)
Investing activities
Proceeds received from sale of digital currencies	0	10,790
Net cash provided by investing activities - continuing operations	0	10,790
Net cash used in investing activities - discontinued operation	0	(6)
Net cash provided by investing activities	0	10,784
Financing activities
Payments on borrowings	0	(4,270)
Proceeds from sales of common stock	23,204	0
Proceeds from exercise of options to purchase common stock	0	58
Payments on common stock repurchases	0	(475)
Net cash provided by (used in) by financing activities	23,204	(4,687)
Effect of exchange rate on cash	(41)	24
Net increase (decrease) in cash and cash equivalents	17,633	(1,261)
Cash at the beginning of the period	3,934	1,955
Cash and cash equivalents at the end of the period	21,567	694
Supplemental disclosure of cash flow information
Interest paid	4	434
Income taxes paid	26	0
Supplemental disclosures of non-cash financing activities:
Issuance of common stock upon conversion of the 2022 Promissory Note	4,505	0
Issuance of common stock for payment of bonuses and consulting fees	$ 35	$ 347

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Condensed Consolidated Statements of Operations and Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Statement [Abstract]
Net loss from discontinued operation, tax	$ 0	$ 0

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The Company and Basis of Presentation

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The Company and Basis of Presentation

The Company and Basis of Presentation

The Company

Phunware, Inc. and its subsidiaries (the “Company”, "we", "us", or "our") offers a fully integrated software platform that enables brands to engage, manage and monetize their anytime, anywhere users worldwide. Our mobile experience platform guides users through the entire customer journey. Our location-based technology offers brands mobile engagement, content management and analytics to best interact with their customers. Through our integrated mobile advertising platform of publishers and advertisers, we provide in-app application transactions for mobile audience building, user acquisition, application discovery, audience engagement and audience monetization. Founded in 2009, we are a Delaware corporation headquartered in Austin, Texas.

Basis of Presentation

The condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) and include the Company’s accounts and those of its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

The balance sheet at December 31, 2023 was derived from our audited consolidated financial statements, but these interim condensed consolidated financial statements do not include all the annual disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the year ended December 31, 2023, which are referenced herein. The accompanying interim condensed consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023, are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with the audited financial statements, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to fairly state our financial position as of March 31, 2024 and the results of operations for the three months ended March 31, 2024 and 2023, and cash flows for the three months ended March 31, 2024 and 2023. The results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future interim period.

Certain reclassifications have been made to our condensed consolidated statement of cash flows for the three months ended March 31, 2024. We combined individual line items that we considered to be immaterial and recorded these in our condensed consolidated statement of cash flows as other adjustments to conform to current year presentation. The reclassifications had no impact on previously reported operating, investing or financing activities.

The accompanying condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Discontinued Operations

On November 1, 2023, we committed to a plan to discontinue and wind down the operations of Lyte Technology, Inc. ("Lyte"), which the Company determined met the criteria for classification as a discontinued operation in accordance with Accounting Standards Codification ("ASC") Topic 205-20, Discontinued Operations. Prior periods were recast such that the basis of presentation is consistent with current year presentation. For additional information, see Note 3.

Reverse Stock Split

On February 26, 2024, the Company effected a reverse stock split of its common stock at a ratio of one-for-fifty (the "Reverse Stock Split"). The number of authorized shares and par values of the common stock were not adjusted as a result of the Reverse Stock Split. The accompanying financial statements and notes thereto give retrospective effect to the reverse stock

split for all periods presented. All issued and outstanding common stock, options, restricted stock units and warrants exercisable for common stock and per share amounts have been retrospectively adjusted.

Nasdaq listing

On April 13, 2023, we received a notice from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”) because the bid price of the Company’s common stock on the Nasdaq Capital Market had closed below $1.00 per share for the previous 30 consecutive business days. The notice from Nasdaq stated that, under Nasdaq Listing Rule 5810(c)(3)(A), we had been provided a period of 180 calendar days, or until October 10, 2023, to regain compliance with the Bid Price Requirement. On October 10, 2023, we submitted a request to Nasdaq for an additional 180-day extension to regain compliance with the Bid Price Requirement. On October 12, 2023, the Company received a letter from Nasdaq advising that the Company had been granted a 180-day extension to April 8, 2024, to regain compliance with the Bid Price Requirement, in accordance with Nasdaq Listing Rule 5810(c)(3)(A).

On December 21, 2023, the Company received a letter from Nasdaq notifying the Company that, as of December 20, 2023, the Company's common stock had a closing bid price of $0.10 or less for ten consecutive trading days and that, consistent with Nasdaq Listing Rule 5810(c)(3)(A)(iii), the Nasdaq had determined to delist the Company's common stock from the Nasdaq Capital Market. The notice provided the Company an opportunity to appeal the Nasdaq's decision to delist the Company's common stock. On December 22, 2023, we submitted a request for a hearing before the Nasdaq Hearings Panel (the "Panel") to appeal the Nasdaq's delisting determination.

As noted above, we have effected a reverse stock split in order to regain compliance with the Bid Price Requirement, and on March 12, 2024, we received a letter from Nasdaq notifying us that we demonstrated compliance with the requirements to remain listed on the Nasdaq Capital Market, as required by the Panel. The letter also informed the Company that pursuant to Listing Rule 5815(d)(4)(B), the Company will be subject to a mandatory Panel monitor for a period of one year from the date of this letter. If, within that one-year monitoring period, the staff finds the Company again out of compliance with the requirement that was the subject of the exception, notwithstanding Rule 5810(c)(2), the Company will not be permitted to provide the Staff with a plan of compliance with respect to that deficiency and the staff will not be permitted to grant additional time for the Company to regain compliance with respect to that deficiency, nor will the Company be afforded an applicable cure or compliance period pursuant to Rule 5810(c)(3). Instead, the Nasdaq will issue a delist determination letter and the Company will have an opportunity to request a new hearing with the initial Panel or a newly convened hearings panel if the initial Panel is unavailable. The Company will have the opportunity to respond/present to the hearings panel as provided by Listing Rule 5815(d)(4)(C).

There can be no assurance the Company will maintain compliance with the above or any other Nasdaq Listing Rules.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

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 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.

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Supplemental Information

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supplemental Information

Supplemental Information

Concentrations of Credit Risk

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and trade accounts receivable.

Although we limit our exposure to credit loss by depositing our cash with established financial institutions that management believes have good credit ratings and represent minimal risk of loss of principal, our deposits, at times, may exceed federally insured limits.

Collateral is not required for accounts receivable and we believe the carrying value approximates fair value. The following table sets forth our concentration of accounts receivable, net of specific allowances for doubtful accounts.

	March 31, 2024		December 31, 2023
Customer A	36	%	43	%
Customer B	14	%	16	%
Customer C	4	%	12	%

Discontinued Operation

On November 1, 2023, the Company made the strategic decision to wind down and discontinue the operations of its Lyte reporting segment. We generally completed the wind down of the Lyte operations as of December 31, 2023.

A summary of the Lyte discontinued operation in the condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2023 is set forth below:

Net revenues	$	3,403
Cost of revenues	3,115
Gross profit	288
Operating expenses:
Sales and marketing	272
General and administrative	570
Research and development	3
Total operating expenses	845
Operating loss	$	(557)

Loss per Common Share

Basic loss per common share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per common share is computed by giving effect to all potential shares of common stock, including those related to our outstanding warrants and stock equity plans, to the extent dilutive. For all periods presented, these shares were excluded from the calculation of diluted loss per share of common stock because their inclusion would have been anti-dilutive. As a result, diluted loss per common share is the same as basic loss per common share for all periods presented.

The following table sets forth common stock equivalents that have been excluded from the computation of dilutive weighted average shares outstanding as their inclusion would have been anti-dilutive:

	Three Months Ended March 31,
	2024	2023
Warrants	—	132,651
Options	13,011	17,341
Restricted stock units	78,387	109,605
Total	91,398	259,597

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Revenue

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Subscriptions and services revenue consist of platform license subscriptions and application development services. Application transaction revenue is comprised of in-app advertising. Refer to our revenue recognition policy under the subheading, Revenue Recognition, in Note 2, "Summary of Significant Accounting Policies," in our Annual Report on Form 10-K filed with the SEC on March 15, 2024.

Disaggregation of Revenue

The following table sets forth our net revenues by category:

	Three Months Ended March 31,
	2024		2023
Subscriptions and services revenue	$	454	$	1,156
Application transaction	467		188
Net revenues	$	921	$	1,344

The following table sets forth our concentration of revenue sources as a percentage of total net revenues:

	Three Months Ended March 31,
	2024		2023
Customer A	33	%	5	%
Customer B	4	%	30	%
Customer D	14	%	22	%

We generate revenue in domestic and foreign regions and attribute net revenue to individual countries based on the location of the contracting entity. We derived over 98% of our net revenues from within the United States for the three months ended March 31, 2024 and 2023.

Deferred Revenue

Deferred revenue consists of customer billings or payments received in advance of the recognition of revenue under the arrangements with customers. We recognize deferred revenue as revenue only when revenue recognition criteria are met. During the three months ended March 31, 2024, we recognized revenue of $440 that was included in our deferred revenue balance as of December 31, 2023.

Remaining Performance Obligations

Remaining performance obligations were $4,609 as of March 31, 2024, of which we expect to recognize approximately 37% as revenue over the next 12 months and the remainder thereafter.

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Debt

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Debt

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 $12,809 in a private placement. The 2022 Promissory Note was sold with an original issue discount of $492 and we paid at closing issuance costs totaling $522. After deducting all transaction fees paid by us at closing, net cash proceeds to the Company at closing were $11,795. No interest was to accrue on the 2022 Promissory Note. Beginning on November 1, 2022, our monthly amortization payment was approximately $1,566, which includes a 10% premium until the original maturity date of July 1, 2023. We had the right to defer any monthly payment by one month up to twelve times so long as certain conditions, as defined in the 2022 Promissory Note, were satisfied. In the event we exercise the deferral right, the outstanding balance will automatically increase by 1.85%.

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 5% of the outstanding balance immediately before entering into the waiver agreement. We evaluated the modification in accordance with the guidance as in ASC 470 - Debt, and we concluded that the modification was not an extinguishment of the original debt; therefore, no gain or loss was recognized upon modification.

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 are required to make monthly amortization payments of at least $800 commencing on August 31, 2023 until the 2022 Promissory Note is paid-in-full. Furthermore, the amendment removed the required payment due on August 1, 2023. We also granted the holder certain limited conversion rights, subject to advance payment and volume conditions. Conversions into shares of our common stock made pursuant to the limited conversion rights will be calculated on a conversion price equal to 90% of the lower of (i) the closing trading price of our common stock on the trading day immediately preceding the date for such conversion or (ii) the average closing trading price of our common stock for the five trading days immediately preceding the date for such conversion. If the holder elects to convert pursuant to the limited conversion option, such conversions will reduce the current month’s monthly amortization payment. Any conversions in any given month in excess of the $800 monthly payment will be applied to reduce the following month's required monthly amortization payment. In connection with the amendment, we agreed to pay an extension fee equal to approximately $708. The amendment also provided that the outstanding balance shall accrue interest at a rate of 8% beginning on August 1, 2023, and payment deferrals were no longer permitted.

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 7.5%, or approximately $347, of the outstanding balance of the 2022 Promissory Note. The fee was added to the outstanding balance of 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, which amounted to aggregate principal and interest payments in the amount of $4,505. These conversions were 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, the noteholder agreed to waive an aggregate of $535 in principal and accrued interest. As a result of the conversions, the 2022 Promissory Note has been paid-in-full.

Interest Expense

Interest expense amounted to $108 and $537 for three months ended March 31, 2024 and 2023, respectively.

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Leases

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Leases

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 March 31, 2024 and 2023 was $170 and $325, respectively. The weighted-average remaining lease term for operating leases as of March 31, 2024 was 2.9 years.

Future minimum lease obligations are set forth below:

Future minimum lease obligations years ending December 31,	Lease Obligations
2024 (Remainder)	$	566
2025	463
2026	370
2027	284
	$	1,683
Less: Portion representing interest	(170)
	$	1,513

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

On March 30, 2021, Phunware filed an action against its former counsel Wilson Sonsini Goodrich & Rosati, PC ("WSGR"), 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, Phunware, Inc., v. Wilson Sonsini Goodrich & Rosati, Professional Corporation, Does 1-25, Case No. 21CV386411. The two actions were then removed to arbitration. Phunware sought affirmative relief in these actions, as stated in the complaints, for damages according to proof, interest and costs of suit. WSGR filed crossclaims against Phunware in these actions related to services provided by WSGR to Phunware and sought to recover fees related to the services at issue in these actions and interest. In March 2024, WSGR and Phunware settled their claims in the arbitration proceeding relating to Case No. 21CV381517 and Phunware paid approximately $2,194 of the outstanding amount alleged to be owed by Phunware to WSGR in that proceeding. The Phunware and WSGR claims related to Case No. 21CV386411 remain pending in arbitration and the remaining balance of the payables amount alleged to be owed by Phunware will continue to be arbitrated. The outcome of this proceeding and the related Phunware and WSGR claims is uncertain. There is $2,159 and $4,321 in accounts payable in our condensed consolidated balance sheets as of March 31, 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. We filed a motion to dismiss Plaintiffs' complaint on May 27, 2022, and on July 15, 2022 Plaintiffs filed their answering brief in opposition to the motion to dismiss and a motion for partial summary judgment. The parties argued their positions before the Court of Chancery during a hearing on April 4, 2023. On June 16, 2023, the Court ruled on the motions without filing a written opinion. From the bench, Vice Chancellor Cook granted Phunware's motion to dismiss on the Texas law claims and denied both the motion to dismiss and motion for partial summary judgment on the Delaware law claims.

The parties engaged in mediation in July 2023 but were unable to reach a settlement, and settlement discussions continue. We intend to vigorously defend against this lawsuit and any appeals. We have not recorded a liability related to this matter because any potential loss is not currently probable or reasonably estimable. Additionally, we cannot presently estimate the range of loss, if any, that may result from this lawsuit. It is possible that the ultimate resolution of the foregoing matter, 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.

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Stockholders' Equity

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Common Stock

Total common stock authorized to be issued as of March 31, 2024 was 1,000,000,000 shares, with a par value of $0.0001 per share. At March 31, 2024 and December 31, 2023, there were 8,272,091 and 3,851,448 shares of our common stock outstanding, respectively.

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 $0.0001 per share, for aggregate gross proceeds of up to $100 million, through or to Wainwright, as agent or principal. During the first quarter of 2024, we sold 245,009 shares of our common stock under our sales agreement with Wainwright for aggregate gross cash proceeds of $2,536. Transaction costs were $52. As of March 31, 2024, $85.5 million of shares of our common stock remains issuable pursuant to the sales agreement with Wainwright.

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 million in value of shares of our common stock from time to time over the 24-month term of the purchase agreement. We did not sell any shares of our common stock to Lincoln Park during the first quarter of 2024.

During the first quarter of 2024, we sold an aggregate of 2,696,000 shares of our common stock and issued pre-funded warrants to purchase up to 974,000 shares of our common stock. The aggregate gross proceeds from the offerings were $22,600. Aggregate transaction costs, including placement agent fees, were approximately $1,880. The holders of the pre-funded warrants exercised their rights to purchase 974,000 shares of our common stock.

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 $5 million. The stock repurchase plan may be amended or terminated at any time, in the sole discretion of our board of directors. The authorization permits us to repurchase shares of our common stock from time-to-time through open market repurchases at prevailing market prices, in accordance with federal securities laws. During 2023, we repurchased an aggregate 10,130 shares of our common stock at an aggregate repurchase price of $502.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

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:

	Three Months Ended March 31,
Stock-based compensation	2024		2023
Cost of revenues	$	45	$	253
Sales and marketing	14		97
General and administrative	556		859
Research and development	15		153
Total stock-based compensation	$	630	$	1,362

As of March 31, 2024, there was approximately $1,539 of total unrecognized compensation cost related to our stock benefit plans. These unrecognized compensation costs are expected to be recognized over an estimated weighted-average period of approximately 2.2 years.

Restricted Stock Units

A summary of our restricted stock unit activity for the three months ended March 31, 2024 is set forth below:

	Shares	Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2023	96,808	$	25.21
Granted	9,032	4.13
Released	(27,453)	17.25
Forfeited	—	—
Outstanding as of March 31, 2024	78,387	$	25.58

Stock Options

A summary of our stock option activity under the 2018 Equity Incentive Plan (the "2018 Plan) and related information is as follows:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2023	2,500	$	56.89	4.2	$	—
Granted	—	—
Exercised	—	—
Forfeited	—	—
Outstanding as of March 31, 2024	2,500	$	56.89	3.9	$	—
Exercisable as of March 31, 2024	2,500	$	56.89	3.9	$	—

A summary of our option activity under our 2009 Equity Incentive Plan (the "2019 Plan") and related information is as follows:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2023	14,625	$	39.67	2.9	$	—
Granted	—	—
Exercised	—	—
Forfeited	(4,114)	44.54
Outstanding as of March 31, 2024	10,511	$	37.77	3.8	$	—
Exercisable as of March 31, 2024	10,511	$	37.77	3.8	$	—

Our stock benefit plans had 274,491 and 86,837 shares of common stock reserved for future issuances under our equity incentive plans as of March 31, 2024 and December 31, 2023, respectively. In addition, the shares of common stock reserved for issuance under the 2018 Plan also will include any shares of common stock subject to stock options granted under the 2009 Plan, that expire or otherwise terminate without having been exercised in full and shares of common stock issued pursuant to awards granted under the 2009 Plan that are forfeited. As of March 31, 2024, the maximum number of shares of common stock that may be added to the 2018 Plan pursuant to the foregoing is 10,511.

Furthermore, there were 46,791 and 30,415 shares of common stock available for sale and reserved for issuance under our 2018 Employee Stock Purchase Plan as of March 31, 2024 and December 31, 2023, respectively.

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (2,292)	$ (4,269)

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Insider Trading Arrangements

3 Months Ended

Mar. 31, 2024

shares

Trading Arrangements, by Individual

Non-Rule 10b5-1 Arrangement Adopted

false

Rule 10b5-1 Arrangement Terminated

false

Non-Rule 10b5-1 Arrangement Terminated

false

Michael Snavely [Member]

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

Michael Snavely, our Chief Executive Officer, an officer for the purposes of Section 16 of the Exchange Act, entered into a prearranged stock trading plan on March 14, 2024. Mr. Snavely's trading plan provides for the sale of up to 30,732 shares of the Company's common stock between June 13, 2024 and June 13, 2025. The trading plan is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and Phunware's policies regarding transactions in securities of the Company.

Name

Michael Snavely

Title

Chief Executive Officer

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

March 14, 2024

Arrangement Duration

365 days

Aggregate Available

30,732

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) and include the Company’s accounts and those of its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

The balance sheet at December 31, 2023 was derived from our audited consolidated financial statements, but these interim condensed consolidated financial statements do not include all the annual disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the year ended December 31, 2023, which are referenced herein. The accompanying interim condensed consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023, are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with the audited financial statements, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to fairly state our financial position as of March 31, 2024 and the results of operations for the three months ended March 31, 2024 and 2023, and cash flows for the three months ended March 31, 2024 and 2023. The results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future interim period.

Certain reclassifications have been made to our condensed consolidated statement of cash flows for the three months ended March 31, 2024. We combined individual line items that we considered to be immaterial and recorded these in our condensed consolidated statement of cash flows as other adjustments to conform to current year presentation. The reclassifications had no impact on previously reported operating, investing or financing activities.

The accompanying condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements Not Yet Adopted

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 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

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.

Concentrations of Credit Risk

Concentrations of Credit Risk

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and trade accounts receivable.

Although we limit our exposure to credit loss by depositing our cash with established financial institutions that management believes have good credit ratings and represent minimal risk of loss of principal, our deposits, at times, may exceed federally insured limits.

Collateral is not required for accounts receivable and we believe the carrying value approximates fair value.

Loss per Common Share

Loss per Common Share

Basic loss per common share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per common share is computed by giving effect to all potential shares of common stock, including those related to our outstanding warrants and stock equity plans, to the extent dilutive. For all periods presented, these shares were excluded from the calculation of diluted loss per share of common stock because their inclusion would have been anti-dilutive. As a result, diluted loss per common share is the same as basic loss per common share for all periods presented.

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Supplemental Information (Tables)

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedules of Concentration Risk

The following table sets forth our concentration of accounts receivable, net of specific allowances for doubtful accounts.

	March 31, 2024		December 31, 2023
Customer A	36	%	43	%
Customer B	14	%	16	%
Customer C	4	%	12	%

The following table sets forth our concentration of revenue sources as a percentage of total net revenues:

	Three Months Ended March 31,
	2024		2023
Customer A	33	%	5	%
Customer B	4	%	30	%
Customer D	14	%	22	%

Schedule of Disposal Group, Including Discontinued Operations

A summary of the Lyte discontinued operation in the condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2023 is set forth below:

Net revenues	$	3,403
Cost of revenues	3,115
Gross profit	288
Operating expenses:
Sales and marketing	272
General and administrative	570
Research and development	3
Total operating expenses	845
Operating loss	$	(557)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following table sets forth common stock equivalents that have been excluded from the computation of dilutive weighted average shares outstanding as their inclusion would have been anti-dilutive:

	Three Months Ended March 31,
	2024	2023
Warrants	—	132,651
Options	13,011	17,341
Restricted stock units	78,387	109,605
Total	91,398	259,597

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Revenue (Tables)

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue

The following table sets forth our net revenues by category:

	Three Months Ended March 31,
	2024		2023
Subscriptions and services revenue	$	454	$	1,156
Application transaction	467		188
Net revenues	$	921	$	1,344

Schedules of Concentration Risk

The following table sets forth our concentration of accounts receivable, net of specific allowances for doubtful accounts.

	March 31, 2024		December 31, 2023
Customer A	36	%	43	%
Customer B	14	%	16	%
Customer C	4	%	12	%

The following table sets forth our concentration of revenue sources as a percentage of total net revenues:

	Three Months Ended March 31,
	2024		2023
Customer A	33	%	5	%
Customer B	4	%	30	%
Customer D	14	%	22	%

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Leases (Tables)

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Schedule of Future Minimum Annual Lease Obligations

Future minimum lease obligations are set forth below:

Future minimum lease obligations years ending December 31,	Lease Obligations
2024 (Remainder)	$	566
2025	463
2026	370
2027	284
	$	1,683
Less: Portion representing interest	(170)
	$	1,513

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of 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:

	Three Months Ended March 31,
Stock-based compensation	2024		2023
Cost of revenues	$	45	$	253
Sales and marketing	14		97
General and administrative	556		859
Research and development	15		153
Total stock-based compensation	$	630	$	1,362

Schedule of Restricted Stock Unit Activity

A summary of our restricted stock unit activity for the three months ended March 31, 2024 is set forth below:

	Shares	Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2023	96,808	$	25.21
Granted	9,032	4.13
Released	(27,453)	17.25
Forfeited	—	—
Outstanding as of March 31, 2024	78,387	$	25.58

Schedule of Stock Option Activity

A summary of our stock option activity under the 2018 Equity Incentive Plan (the "2018 Plan) and related information is as follows:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2023	2,500	$	56.89	4.2	$	—
Granted	—	—
Exercised	—	—
Forfeited	—	—
Outstanding as of March 31, 2024	2,500	$	56.89	3.9	$	—
Exercisable as of March 31, 2024	2,500	$	56.89	3.9	$	—

A summary of our option activity under our 2009 Equity Incentive Plan (the "2019 Plan") and related information is as follows:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2023	14,625	$	39.67	2.9	$	—
Granted	—	—
Exercised	—	—
Forfeited	(4,114)	44.54
Outstanding as of March 31, 2024	10,511	$	37.77	3.8	$	—
Exercisable as of March 31, 2024	10,511	$	37.77	3.8	$	—

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The Company and Basis of Presentation (Details)	Feb. 26, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Stockholders' equity note, stock split, conversion ratio	0.02

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Supplemental Information- Schedule of Concentration Risk (Details) - Accounts Receivable - Customer Concentration Risk	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Customer A
Product Information [Line Items]
Concentration risk (as a percent)	36.00%	43.00%
Customer B
Product Information [Line Items]
Concentration risk (as a percent)	14.00%	16.00%
Customer C
Product Information [Line Items]
Concentration risk (as a percent)	4.00%	12.00%

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Supplemental Information - Schedule of Discontinued Operation (Details) - Discontinued Operations - Lyte Technology, Inc. $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Net revenues	$ 3,403
Cost of revenues	3,115
Gross profit	288
Operating expenses:
Sales and marketing	272
General and administrative	570
Research and development	3
Total operating expenses	845
Operating loss	$ (557)

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Supplemental Information- Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	91,398	259,597
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	0	132,651
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	13,011	17,341
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	78,387	109,605

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Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Disaggregation of Revenue [Line Items]
Net revenues	$ 921	$ 1,344
Subscriptions and services revenue
Disaggregation of Revenue [Line Items]
Net revenues	454	1,156
Application transaction
Disaggregation of Revenue [Line Items]
Net revenues	$ 467	$ 188

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Revenue - Schedule of Concentration Risk (Details) - Revenue from Contract with Customer Benchmark - Customer Concentration Risk	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Customer A
Concentration Risk [Line Items]
Concentration risk, percentage	33.00%	5.00%
Customer B
Concentration Risk [Line Items]
Concentration risk, percentage	4.00%	30.00%
Customer C
Concentration Risk [Line Items]
Concentration risk, percentage	14.00%	22.00%

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Revenue - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Disaggregation of Revenue [Line Items]
Deferred revenue recognized	$ 440
Remaining performance obligation	$ 4,609
United States | Sales Revenue, Net | Geographic Concentration Risk
Disaggregation of Revenue [Line Items]
Concentration risk, percentage	98.00%	98.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01
Disaggregation of Revenue [Line Items]
Percent of revenue expected to be recognized over next 12 months (as a percent)	37.00%
Remaining performance obligation, expected timing (in months)	12 months

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Debt - Narrative (Details) $ in Thousands					3 Months Ended
	Dec. 06, 2023 USD ($)	Aug. 14, 2023 USD ($) day	Mar. 15, 2023	Jul. 06, 2022 USD ($)	Mar. 31, 2024 USD ($) shares	Mar. 31, 2023 USD ($)
Debt Instrument [Line Items]
Common stock issued upon conversion of 2022 Promissory Note					$ 4,505	$ 0
Interest expense					$ 108	$ 537
2022 Promissory Note
Debt Instrument [Line Items]
Common stock issued upon conversion of 2022 Promissory Note (in shares) | shares					336,550
Common stock issued upon conversion of 2022 Promissory Note					$ 4,505
Debt instrument waived amount					$ 535
2022 Promissory Note | Notes Payable
Debt Instrument [Line Items]
Principal amount of note				$ 12,809
Original issue discount				492
Other issuance costs				522
Proceeds from issuance of debt				11,795
Monthly amortization payments				$ 1,566
Debt premium (as a percent)				10.00%
Payment deferral period				1 month
Number of times a payment may be deferred				12
Debt amount increase (as a percent)				0.0185
Compensation agreed to be paid (as a percent)			5.00%
Conversion price (as a percent)		90.00%
Threshold trading days | day		5
Extension fee		$ 708
Interest rate (as a percent)		8.00%
Noteholder fee as percentage of outstanding balance	7.50%
Noteholder fee	$ 347
2022 Promissory Note | Notes Payable | Minimum
Debt Instrument [Line Items]
Monthly amortization payments		$ 800

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Leases - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Leases [Abstract]
Lease expense	$ 170	$ 325
Weighted-average remaining lease term	2 years 10 months 24 days

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Leases - Future Minimum Lease Obligations (Details) $ in Thousands	Mar. 31, 2024 USD ($)
Leases [Abstract]
2024 (Remainder)	$ 566
2025	463
2026	370
2027	284
Total lease payments	1,683
Less: Portion representing interest	(170)
Operating lease liabilities	$ 1,513

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Commitments and Contingencies (Details) - WSGR Case $ in Thousands	1 Months Ended
	Mar. 31, 2024 USD ($)	Dec. 31, 2023 USD ($) claim
Other Commitments [Line Items]
Loss contingency	$ 2,159	$ 4,321
Pending Litigation
Other Commitments [Line Items]
Number of actions | claim		2
Settled Litigation
Other Commitments [Line Items]
Litigation paid	$ 2,194

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Stockholders' Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		12 Months Ended
	Jan. 31, 2022	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023	Aug. 22, 2023	Jan. 05, 2023
Class of Stock [Line Items]
Common stock, shares authorized (in shares)		1,000,000,000		1,000,000,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001		$ 0.0001
Common stock, shares outstanding (in shares)		8,272,091		3,851,448
Sale of stock (in shares)		2,696,000
Proceeds from sales of common stock		$ 23,204	$ 0
Stock offering costs		1,880
Treasury stock (in shares)		$ 22,600
Stock repurchase program authorized (in shares)						5,000,000
Treasury stock repurchased (in shares)				10,130
Treasury stock acquired			$ 475	$ 502
Pre-Funded Warrants
Class of Stock [Line Items]
Purchase of warrants (in shares)		974,000
At Market Issuance Sales Agreement
Class of Stock [Line Items]
Aggregate offering price	$ 100,000
Sale of stock (in shares)		245,009
Proceeds from sales of common stock		$ 2,536
Stock offering costs		52
Common stock, remaining amount issuable		$ 85,500
Sale Agreement With Lincoln Park
Class of Stock [Line Items]
Agreement term (in months)					24 months
Sale Agreement With Lincoln Park | Maximum
Class of Stock [Line Items]
Value of common stock to be issued					$ 30,000

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Stock-Based Compensation - Compensation Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	$ 630	$ 1,362
Cost of revenues
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	45	253
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	14	97
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	556	859
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	$ 15	$ 153

XML

Stock-Based Compensation - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock compensation expense	$ 1,539
Weighed-average period of costs amortized	2 years 2 months 12 days
Common stock reserved for issuance (in shares)	274,491	86,837
2018 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of common stock shares (in shares)	10,511
2018 Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for issuance (in shares)	46,791	30,415

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Stock-Based Compensation - Restricted Stock Unit Activity (Details) - Restricted stock units	3 Months Ended
	Mar. 31, 2024 $ / shares shares
Shares
Outstanding, beginning balance (in shares) | shares	96,808
Granted (in shares) | shares	9,032
Released (in shares) | shares	(27,453)
Forfeited (in shares) | shares	0
Outstanding, ending balance (in shares) | shares	78,387
Weighted Average Grant Date Fair Value
Outstanding, beginning balance (in dollars per share) | $ / shares	$ 25.21
Granted (in dollars per share) | $ / shares	4.13
Released (in dollars per share) | $ / shares	17.25
Forfeited (in dollars per share) | $ / shares	0
Outstanding, ending balance (in dollars per share) | $ / shares	$ 25.58

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Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
2018 Equity Incentive Plan
Number of Shares
Beginning balance (in shares)	2,500
Granted (in shares)	0
Exercised (in shares)	0
Forfeited (in shares)	0
Ending balance (in shares)	2,500	2,500
Options exercisable (in shares)	2,500
Weighted Average Exercise Price
Beginning balance (in dollars per share)	$ 56.89
Granted (in dollars per share)	0
Exercised (in dollars per share)	0
Forfeited (in dollars per share)	0
Ending balance (in dollars per share)	56.89	$ 56.89
Options exercisable (in dollars per share)	$ 56.89
Weighted Average Remaining Contractual Term (years)
Outstanding	3 years 10 months 24 days	4 years 2 months 12 days
Exercisable	3 years 10 months 24 days
Aggregate Intrinsic Value
Outstanding	$ 0	$ 0
Exercisable	$ 0
2019 Stock Option and Incentive Plan
Number of Shares
Beginning balance (in shares)	14,625
Granted (in shares)	0
Exercised (in shares)	0
Forfeited (in shares)	(4,114)
Ending balance (in shares)	10,511	14,625
Options exercisable (in shares)	10,511
Weighted Average Exercise Price
Beginning balance (in dollars per share)	$ 39.67
Granted (in dollars per share)	0
Exercised (in dollars per share)	0
Forfeited (in dollars per share)	44.54
Ending balance (in dollars per share)	37.77	$ 39.67
Options exercisable (in dollars per share)	$ 37.77
Weighted Average Remaining Contractual Term (years)
Outstanding	3 years 9 months 18 days	2 years 10 months 24 days
Exercisable	3 years 9 months 18 days
Aggregate Intrinsic Value
Outstanding	$ 0	$ 0
Exercisable	$ 0