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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2025

☐ 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 November 4, 2025, 20,187,326 shares of common stock, par value $0.0001 per share, were outstanding.

Table of Contents

TABLE OF CONTENTS


		PAGE
PART I	FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024	1
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 (unaudited)	2
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2025 and 2024 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (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	27
Item 4.	Controls and Procedures	27

PART II	OTHER INFORMATION	29
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30

	Signatures	31

Table of Contents

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.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Phunware, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share information)


	September 30,			December 31,
	2025			2024
Assets:	(Unaudited)
Current assets:
Cash and cash equivalents	$	103,783		$	112,974
Accounts receivable, net of allowance for credit losses of $113 and $166 as of September 30, 2025 and December 31, 2024, respectively		350			276
Digital currencies		127			103
Prepaid expenses and other current assets		583			406
Total current assets		104,843			113,759
Non-current assets:
Property and equipment, net		13			24
Right-of-use asset, net		626			840
Other assets		158			158
Total non-current assets		797			1,022
Total assets	$	105,640		$	114,781

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	3,177		$	3,754
Accrued expenses		152			148
Deferred revenue		1,290			1,034
Lease liability		335			313
PhunCoin subscription payable		1,202			1,202
Total current liabilities		6,156			6,451
Deferred revenue		793			528
Lease liability		366			619
Total noncurrent liabilities		1,159			1,147
Total liabilities		7,315			7,598
Commitments and contingencies (See Note 7)		-			-
Stockholders' equity
Common stock, $0.0001 par value, 1,000,000,000 shares authorized; 20,197,456 shares issued and 20,187,326 shares outstanding as of September 30, 2025 and 20,166,665 shares issued and 20,156,535 shares outstanding as of December 31, 2024		2			2
Treasury stock		(502	)		(502	)
Additional paid-in capital		421,421			421,003
Accumulated deficit		(322,596	)		(313,320	)
Total stockholders' equity		98,325			107,183
Total liabilities and stockholders' equity	$	105,640		$	114,781

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

Table of Contents

Phunware, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share information)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2025			2024			2025			2024

Net revenue	$	622		$	665		$	1,765		$	2,597
Cost of revenue		335			343			929			1,281
Gross profit		287			322			836			1,316
Operating expenses:
Sales and marketing		800			619			2,386			1,671
General and administrative		2,308			2,281			8,562			7,051
Research and development		679			612			2,462			1,592
Total operating expenses		3,787			3,512			13,410			10,314
Operating loss		(3,500	)		(3,190	)		(12,574	)		(8,998	)
Other income (expense):
Interest expense		(9	)		(10	)		(23	)		(126	)
Interest income		1,077			381			3,290			760
Gain on extinguishment of debt		-			-			-			535
Other income, net		23			59			31			146
Total other income		1,091			430			3,298			1,315
Loss before taxes		(2,409	)		(2,760	)		(9,276	)		(7,683	)
Income tax expense		-			-			-			-
Net loss		(2,409	)		(2,760	)		(9,276	)		(7,683	)
Net loss per share, basic and diluted	$	(0.12	)	$	(0.25	)	$	(0.46	)	$	(0.88	)
Weighted-average shares used to compute net loss per share, basic & diluted		20,182,247			11,104,174			20,174,508			8,755,908

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

Table of Contents

Phunware, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except share information)

(Unaudited)


											Additional					Total
	Common Stock				Treasury stock						Paid-in		Accumulated			Stockholders’
	Shares		Amount		Shares			Amount			Capital		Deficit			Equity
Balances as of June 30, 2025		20,183,043	$	2		(10,130	)	$	(502	)	$	421,287	$	(320,187	)	$	100,600
Release of restricted stock		14,413		-		-			-			-		-			-
Stock-based compensation expense		-		-		-			-			134		-			134
Net loss		-		-		-			-			-		(2,409	)		(2,409	)
Balances as of September 30, 2025		20,197,456	$	2		(10,130	)	$	(502	)	$	421,421	$	(322,596	)	$	98,325

Balances as of December 31, 2024		20,166,665	$	2		(10,130	)	$	(502	)	$	421,003	$	(313,320	)	$	107,183
Release of restricted stock		16,581		-		-			-			-		-			-
Sales of common stock, net of issuance costs		14,210		-		-			-			80		-			80
Stock-based compensation expense		-		-		-			-			338		-			338
Net loss		-		-		-			-			-		(9,276	)		(9,276	)
Balances as of September 30, 2025		20,197,456	$	2		(10,130	)	$	(502	)	$	421,421	$	(322,596	)	$	98,325

Table of Contents

Phunware, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except share information)

(Unaudited)


											Additional					Other			Total
	Common Stock				Treasury stock						Paid-in		Accumulated			Comprehensive			Stockholders’
	Shares		Amount		Shares			Amount			Capital		Deficit			Loss			Equity
Balances as of June 30, 2024		8,620,380	$	1		(10,130	)	$	(502	)	$	322,936	$	(307,927	)	$	(418	)	$	14,090
Release of restricted stock		17,264		-		-			-			-		-			-			-
Sales of common stock, net of issuance costs		3,111,136		-		-			-			17,553		-			-			17,553
Stock-based compensation expense		-		-		-			-			242		-			-			242
Net loss		-		-		-			-			-		(2,760	)		-			(2,760	)
Balances as of September 30, 2024		11,748,780	$	1		(10,130	)	$	(502	)	$	340,731	$	(310,687	)	$	(418	)	$	29,125

Balances as of December 31, 2023		3,861,578	$	-		(10,130	)	$	(502	)	$	292,467	$	(303,004	)	$	(418	)	$	(11,457	)
Release of restricted stock		116,381		-		-			-			-		-			-			-
Issuance of common stock in lieu of cash bonus and consulting fees		11,453		-		-			-			35		-			-			35
Common stock issued upon conversion of 2022 Promissory Note		336,550		-		-			-			4,505		-			-			4,505
Sales of common stock & exercise of prefunded warrants, net of issuance costs		7,281,187		1		-			-			42,192		-			-			42,193
Fractional share issuances as a result of reverse stock split		141,631		-		-			-			-		-			-			-
Stock-based compensation expense		-		-		-			-			1,532		-			-			1,532
Net loss		-		-		-			-			-		(7,683	)		-			(7,683	)
Balances as of September 30, 2024		11,748,780	$	1		(10,130	)	$	(502	)	$	340,731	$	(310,687	)	$	(418	)	$	29,125

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

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Phunware, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended
	September 30,
	2025			2024
Operating activities
Net loss	$	(9,276	)	$	(7,683	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on extinguishment of debt		-			(535	)
Stock-based compensation		338			1,532
Other adjustments		235			653
Changes in operating assets and liabilities:
Accounts receivable		(71	)		(561	)
Prepaid expenses and other assets		(177	)		(2,759	)
Accounts payable and accrued expenses		(573	)		(457	)
Lease liability payments		(268	)		(560	)
Deferred revenue		521			(43	)
Net cash used in operating activities from continued operations		(9,271	)		(10,413	)
Net cash used in operating activities from discontinued operations		-			(177	)
Net cash used in operating activities		(9,271	)		(10,590	)
Investing activities
Net cash for investing activities		-			-
Financing activities
Proceeds from sales of common stock, net of issuance costs		80			42,193
Net cash provided by financing activities		80			42,193

Net (decrease) increase in cash and cash equivalents		(9,191	)		31,603
Cash and cash equivalents at the beginning of the period		112,974			3,934
Cash and cash equivalents at the end of the period	$	103,783		$	35,537


Supplemental disclosure of cash flow information
Interest paid	$	23		$	22
Income taxes paid	$	23		$	40
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

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

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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 equips companies with the products, solutions and services necessary to engage, manage and monetize their anytime, anywhere users worldwide. Our technology is available in a cloud-based prepackaged vertical solution application, Software Development Kit ("SDK") form for organizations developing their own application and customized development services. We also provide advertising services that drive 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 as of December 31, 2024 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, 2024, which are referenced herein. The accompanying interim condensed consolidated financial statements as of September 30, 2025 and for the three and nine months ended September 30, 2025 and 2024, 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 September 30, 2025 and the results of operations for the three and nine months ended September 30, 2025 and 2024, and cash flows for the nine months ended September 30, 2025 and 2024. The results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any future interim period.

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.

Nasdaq listing

On July 24, 2025, the Company notified Nasdaq that, as a result of the resignation of Rahul Mewawalla from the Company's audit committee in connection with entering into an agreement with the Company, the Company was not in compliance with Nasdaq's audit committee compositions requirements set forth in Nasdaq Listing Rule 5605, which requires the Company to have an audit committee of at least three members, each of whom must be an independent director as defined under Nasdaq Listing Rule 5605(a)(2) and meet the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). On August 7, 2025 (the "Rescission Date"), the Company rescinded the agreement that necessitated Mr. Mewawalla's resignation from the audit committee. As a result, Mr. Mewawalla would continue his service as an independent member of the Company's audit committee. Subsequent to the Rescission Date, the Company determined that as a result of the rescission that it is was no longer out of compliance with Nasdaq Listing Rule 5605(a)(2). See Note 11 for additional discussion on the agreement and rescission with Mr. Mewawalla.

We have not been notified of any non-compliance with listing requirements by Nasdaq as a result of the matters described above. There can be no assurance Nasdaq will agree with the Company's determination with respect to Nasdaq Listing Rule 5605 or maintain compliance with 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, 2024, except as set forth below.

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Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). The amendments in the update require disclosure, in the notes to the financial statements, of specified information about certain costs and expenses. An entity is not precluded from providing additional voluntary disclosures that may provide investors with additional decision-useful information. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the disclosure requirements related to this new standard.

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. Early adoption is permitted. The Company is evaluating the disclosure requirements related to this new standard.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make certain estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates and such differences could be material.

3. Supplemental Information

Concentrations of Credit Risk

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash, trade accounts receivable and our digital asset holdings.

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.

There is currently no clearing house for our digital assets, including our bitcoin holdings, nor is there a central or major depository for the custody of our digital assets. There is a risk that some or all of our digital asset holdings could be lost or stolen. There can be no assurance that the exchanges or custodians will maintain adequate insurance or that such coverage will cover losses with respect to our digital asset holdings. Further, transactions denominated in digital assets are irrevocable. Stolen or incorrectly transferred digital assets may be irretrievable. As a result, any incorrectly executed transactions could adversely affect our financial condition.

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 credit losses.


	September 30, 2025	December 31, 2024
Customer A	22%	-%
Customer B	20%	-%
Customer C	16%	-%
Customer D	14%	13%
Customer E	10%	-%
Customer F	-%	23%
Customer G	4%	23%

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 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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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:


	September 30,
	2025		2024
Options		1,883		3,705
Restricted stock units		18,839		50,525
Total		20,722		54,230

4. Revenue

Software subscriptions and services revenue consist of platform license subscriptions and application development services. Advertising 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 31, 2025.

Disaggregation of Revenue

The following table sets forth our net revenue by category:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Software subscriptions and services	$	446	$	464	$	1,514	$	1,434
Advertising	176		201			251		1,163
Net revenue	$	622	$	665	$	1,765	$	2,597

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


	Three months ended September 30,		Nine months ended September 30,
	2025	2024	2025	2024
Customer A	12%	13%	5%	7%
Customer G	20%	18%	28%	14%
Customer H	-%	(3)%	-%	13%
Customer I	-%	-%	-%	12%

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 98% of our net revenue from within the United States for the three and nine months ended September 30, 2025 and over 99% of our net revenue from within the United States for the three and nine months ended September 30, 2024.

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 nine months ended September 30, 2025, we recognized revenue of $1,088 that was included in our deferred revenue balance as of December 31, 2024.

Remaining Performance Obligations

Remaining performance obligations were $4,928 as of September 30, 2025, of which we expect to recognize approximately 35% as revenue over the next 12 months and the remainder thereafter.

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5. Debt

2022 Promissory Note

Refer to Note 8, “Debt,” in our Annual Report on Form 10-K filed with the SEC on March 31, 2025 for further information on our 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, which was recorded as a gain on extinguishment of debt in the statement of operations for the nine months ended September 30, 2024. As a result of the conversions, the 2022 Promissory Note has been paid-in-full.

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 31, 2025.

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. Lease expense for the three months ended September 30, 2025 and 2024 was $84 and $172, respectively. Lease expense for the nine months ended September 30, 2025 and 2024 was $252 and $516, respectively. The weighted-average remaining lease term for operating leases as of September 30, 2025 was 2.0 years.

Future minimum lease obligations are set forth below:


Future minimum lease obligations years ending December 31,	Lease Obligations
2025 (Remainder)	$	91
2026		370
2027		284
		745
Less: Portion representing interest		(44	)
	$	701

7. Commitments and Contingencies

Litigation

On March 30, 2021, Phunware filed an action against its former counsel Wilson Sonsini Goodrich & Rosati, PC (“WSGR”), which is styled Phunware, Inc., v. Wilson Sonsini Goodrich & Rosati, Professional Corporation, Does 1-25, Case No. 21CV381517, in the Superior Court of the State of California for the County of Santa Clara. On July 30, 2021, Phunware filed a second action against WSGR in the Superior Court of the State of California for the County of Santa Clara, which is styled Phunware, Inc., v. Wilson Sonsini Goodrich & Rosati, Professional Corporation, Does 1-25, Case No. 21CV386411. The 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. Phunware filed an amended complaint in this proceeding on October 29, 2025 and held an arbitration management conference for this proceeding on November 6, 2025. The outcomes of this proceeding and the related Phunware claims and WSGR claims are uncertain. There is approximately $2.2 million in accounts payable in our condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024, 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

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Phunware becoming a public company these stockholders received new shares of Phunware common stock and Phunware warrants that were but should not have been subjected to a 180-day “lock up” period. Plaintiffs also allege that Phunware’s stock price dropped significantly during the lock up period and seek damages, costs and professional fees. On or about October 24, 2024, Plaintiffs, Phunware and individual director and officer defendants entered into a Confidential Settlement Agreement, and on about October 28, 2024, Phunware, the individual director and officer defendants and the applicable Phunware insurers entered into a Settlement Agreement and Mutual Release (collectively, the “Settlement Agreements”). The Settlement Agreements collectively provide for, among other things, the settlement and release of the Plaintiffs' claims against the individual director and officer defendants, certain agreements between the Plaintiffs and Phunware, including the Plaintiffs' agreement to stay collection of any judgment obtained by the Plaintiffs against Phunware until the settlement or conclusion of the pending WSGR arbitration proceeding. Further, the Settlement Agreements provided for a payment of $2.8 million from the Company’s insurers to the Plaintiffs, as well as a payment of $0.2 million from the insurers to Phunware and the release of the insurers’ subrogation claims against Phunware recoveries from WSGR or its insurers in the WSGR arbitration proceeding. Phunware's insurers made the $2.8 million and $0.2 million payments on or about December 4, 2024. The Plaintiffs claims against Phunware in this lawsuit remain in effect. A bench trial occurred in March 2025, and no ruling has been issued to date. We intend to vigorously defend against the remaining claims in this lawsuit and any appeals. We have not recorded a liability related to this matter because any potential loss is not currently probable or possible to reasonably estimate. Additionally, we cannot presently estimate the range of loss, if any, that may result from this lawsuit.

Prior to the issuance of a ruling in the Wild Basin litigation, Phunware, the Wild Basin Plaintiffs and WSGR intend to engage in settlement discussions and mediation in November and December 2025 to attempt to resolve their respective claims in the above described litigation and arbitration proceeding in whole or in part.

Further reference is made to Note 11 for discussion regarding an additional related party legal proceeding.

It is possible that the ultimate resolution of the foregoing matters, or other similar matters, if resolved in a manner unfavorable to us, may be materially adverse to our business, financial condition, results of operations or liquidity.

From time to time, we are and may become involved in various legal proceedings in the ordinary course of business. The outcomes of our legal proceedings are inherently unpredictable, subject to significant uncertainties, and could be material to our operating results and cash flows for a particular reporting period. In addition, for the matters disclosed above that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies.

8. Stockholders’ Equity

Common Stock

Total common stock authorized to be issued as of September 30, 2025, was 1,000,000,000 shares, with a par value of $0.0001 per share. As of September 30, 2025 and December 31, 2024, there were 20,187,326 and 20,156,535 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 could 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. We terminated our agreement with Wainwright effective June 3, 2024.

On June 4, 2024, we entered into an Equity Distribution Agreement with Canaccord Genuity LLC (“Canaccord”), as representative of certain agents, pursuant to which we could 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 $120 million, through the agents. Additionally, on November 1, 2024, we entered into an Amended and Restated Equity Distribution Agreement with Canaccord, as representative of certain agents, pursuant to which we increased the aggregate amount of shares of our common stock that we could sell under our at-the-market facility to an aggregate offering price of approximately $171.5 million. On February 9, 2025, the registration statement which registered the shares issuable under the Amended and Restated Equity Distribution Agreement expired and the agreement with Canaccord terminated.

During the nine months ended September 30, 2025, we sold an aggregate of 14,210 shares of our common stock under our Equity Distribution Agreement with Canaccord for aggregate gross cash proceeds of $0.1 million. During the nine months ended September 30, 2024, we sold an aggregate of 3,611,187, shares of our common stock under our sales agreement with Wainwright and Equity Distribution Agreement with Canaccord for aggregate gross cash proceeds of $22.2 million. Transaction costs were $0.7 million.

In a series of offerings 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

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were $22.6 million. Aggregate transaction costs, including placement agent fees, were approximately $1.9 million. The holders of the pre-funded warrants exercised their rights to purchase all 974,000 shares of our common stock.

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 31, 2025 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 September 30,				Nine months ended September 30,
Stock-based compensation	2025		2024		2025		2024
Cost of revenue	$	16	$	51	$	46	$	144
Sales and marketing		9		20		27		51
General and administrative		105		154		261		1,281
Research and development		4		17		4		56
Total stock-based compensation	$	134	$	242	$	338	$	1,532

As of September 30, 2025, there was approximately $296 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 0.79 years.

Restricted Stock Units

A summary of our restricted stock unit activity for the nine months ended September 30, 2025 is set forth below:


	Shares			Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2024		38,420		$	23.01
Granted		-			-
Released		(16,581	)		23.17
Forfeited		(3,000	)		14.00
Outstanding as of September 30, 2025		18,839		$	24.29

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, 2024		2,500		$	56.89
Granted		-			-
Exercised		-			-
Forfeited		(1,500	)	$	38.15
Outstanding as of September 30, 2025		1,000		$	85.00	6.86	$	-
Exercisable as of September 30, 2025		1,000		$	85.00	6.86	$	-

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


	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2024		1,190		$	91.61
Granted		-			-
Exercised		-			-
Forfeited		(307	)	28.48
Outstanding as of September 30, 2025		883		$	113.56		2.50	$	-
Exercisable as of September 30, 2025		883		$	113.56		2.50	$	-

Our stock benefit plans had 1,232,639 and 220,006 shares of common stock reserved for future issuances under our equity incentive plans as of September 30, 2025 and December 31, 2024, 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 September 30, 2025, the maximum number of shares of common stock that may be added to the 2018 Plan pursuant to the foregoing is 883.

Furthermore, there were 63,167 and 46,791 shares of common stock available for sale and reserved for issuance under our 2018 Employee Stock Purchase Plan as of September 30, 2025 and December 31, 2024, respectively.

10. Segment Reporting

Business segments are components of an enterprise about which discrete financial information is available that is evaluated regularly by the chief operating decision maker (the "CODM") to assess operating performance and allocate resources. Our CODM is our chief executive officer. Our operations are organized by management into operating segments by line of business. The CODM evaluates performance and allocates resources based on the segment operating income (loss) of the operating segments. The Company does not allocate its corporate expense function across its operating segments. We have two reportable segments: (i) software subscriptions and services and (ii) advertising. No segment-level asset information has been disclosed as our CODM does not review asset information by segment. Reportable segment information is set forth below:

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	Software Subscriptions & Services			Advertising			Corporate			Three months ended September 30, 2025
Net revenue	$	446		$	176		$	-		$	622
Cost of revenue		276			59			-			335
Gross profit		170			117			-			287

Operating expenses:
Compensation		777			153			434			1,364
Consulting and professional fees		213			-			1,402			1,615
Facilities and insurance		7			1			386			394
Stock-based compensation		8			5			105			118
Other segment expenses(1)		133			7			156			296
Total operating expenses		1,138			166			2,483			3,787
Operating loss		(968	)		(49	)		(2,483	)		(3,500	)

Other income		-			-			1,091			1,091
Loss before taxes	$	(968	)	$	(49	)	$	(1,392	)	$	(2,409	)

	Software Subscriptions & Services			Advertising			Corporate			Nine months ended September 30, 2025
Net revenue	$	1,514		$	251		$	-		$	1,765
Cost of revenue		821			108			-			929
Gross profit		693			143			-			836

Operating expenses:
Compensation		2,349			392			1,521			4,262
Consulting and professional fees		724			-			5,322			6,046
Facilities and insurance		39			3			1,312			1,354
Stock-based compensation		16			13			263			292
Other segment expenses(1)		368			25			1,063			1,456
Total operating expenses		3,496			433			9,481			13,410
Operating loss		(2,803	)		(290	)		(9,481	)		(12,574	)

Other income		-			-			3,298			3,298
Loss before taxes	$	(2,803	)	$	(290	)	$	(6,183	)	$	(9,276	)

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	Software Subscriptions & Services			Advertising			Corporate			Three months ended September 30, 2024
Net revenue	$	464		$	201		$	-		$	665
Cost of revenue		270			73			-			343
Gross profit		194			128			-			322

Operating expenses:
Compensation		724			138			424			1,286
Consulting and professional fees		173			-			1,117			1,290
Facilities and insurance		13			1			431			445
Stock-based compensation		37			-			154			191
Other segment expenses(1)		144			-			156			300
Total operating expenses		1,091			139			2,282			3,512
Operating loss		(897	)		(11	)		(2,282	)		(3,190	)

Other income		-			-			430			430
Income (loss) before taxes	$	(897	)	$	(11	)	$	(1,852	)	$	(2,760	)

	Software Subscriptions & Services			Advertising			Corporate			Nine months ended September 30, 2024
Net revenue	$	1,434		$	1,163		$	-		$	2,597
Cost of revenue		861			420			-			1,281
Gross profit		573			743			-			1,316

Operating expenses:
Compensation		2,202			371			1,408			3,981
Consulting and professional fees		230			-			2,524			2,754
Facilities and insurance		25			1			1,282			1,308
Stock-based compensation		106			-			1,282			1,388
Other segment expenses(1)		321			6			556			883
Total operating expenses		2,884			378			7,052			10,314
Operating loss		(2,311	)		365			(7,052	)		(8,998	)

Other income		-			-			1,315			1,315
Income (loss) before taxes	$	(2,311	)	$	365		$	(5,737	)	$	(7,683	)

(1)

Other segment expenses represent marketing, information technology related expenses, travel and other general operating expenses.

11. Related Party Transactions

On July 13, 2025, the Company and Rahul Mewawalla, a Class I Director and the Company's then Chairperson of the Board, executed an Executive Chairman and Chief AI Architect Agreement (the "EC Agreement"). Among other provisions, the EC Agreement provided for (i) cash compensation in the amount of $50 per month, payable per the Company’s regular payroll cycle for a term of six months, (ii) continued cash and equity compensation that is due and payable in accordance with the Company's compensation policy for its board members and (iii) nomination of Mr. Mewawalla as a member of the Board at the Company's 2026 annual meeting of stockholders.

On August 4, 2025, the Board formed a special committee consisting of its other two disinterested independent directors to consider the circumstances under which the EC Agreement was entered into. The special committee concluded that Mr. Mewawalla made intentional, material misrepresentations to induce the Company to enter into the EC Agreement and that there was a proper basis

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to rescind the EC Agreement. The Company then rescinded the EC Agreement and notified Mr. Mewawalla in writing of such rescission on August 7, 2025.

On October 1, 2025, Mr. Mewawalla filed a demand for arbitration against the Company with the American Arbitration Association (Case No. 01-25-004-9738) alleging, among other things, that the Company breached the EC Agreement, ineffective rescission of the EC Agreement, unpaid compensation, retaliation/wrongful termination, defamation and violations of other Washington state employment-related laws. Mr. Mewawalla seeks relief of amounts due, double damages where applicable, interest, fees, cost and punitive damages where applicable. He further seeks specific performance and injunctive relief, including a declaration that the EC Agreement remains in force and continued service and compliance with the EC Agreement. The Company responded to Mr. Mewawalla's arbitration demand claims for injunctive relief on November 6, 2025. The Company rejects Mr. Mewawalla's allegations and claims and plans to vigorously dispute and defend against all allegations and claims made by Mr. Mewawalla.

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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.

Key Events & Recent Developments

On October 31, 2025, the Company filed its annual proxy statement on Schedule 14A, which stated the Company plans to hold its 2025 Annual Meeting of Stockholders on December 17, 2025. Among other stockholder proposals, the Company nominated Mr. Jeremy Krol, the Company's Interim Chief Executive Officer, and Mr. Ed Lu for election to serve as Class I directors until the 2028 annual meeting of stockholders and until their successor has been elected and qualified, or until their earlier death, resignation or removal.

Overview

We offer a mobile-application cloud-based platform that equips companies with the products, solutions and services necessary to engage, manage and monetize their mobile application portfolios. Our offerings include:

•

A cloud-based application framework vertical solution license for iOS and Android-based mobile applications (apps). We have focused a majority of our recent sales efforts on addressing the patient experience for healthcare and the luxury guest experience for hospitality. However, our product capabilities also serve the employee experience in the workplace, the shopper experience for retail, the fan experience for sports, the traveler experience for aviation, the luxury resident experience for real estate and the student experience for education.

•

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

•

Development services for customers who wish to have to have a customized application experience; and

•

In-app advertising services for mobile audience building, user acquisition, application discovery, audience engagement and monetization.

In October 2024, we announced the commencement of our investment into the field of artificial intelligence (AI). We plan to use AI in various contexts within our internal systems and products and services offerings.

The AI technology we initially used in the context of our platform is generative AI. We actively utilize generative AI tools to streamline internal processes and workflows for mobile app creation and development. We also plan to use predictive and agentic AI tools in the future to further enhance these processes. By applying these technologies, we expect to improve the quality and personalization of our mobile apps for customers and drastically reduce the time required to adapt our mobile app development framework to meet specific customer needs. We anticipate that these efficiencies will enable the Company to reduce mobile app development costs significantly and make high-quality customized mobile apps more accessible and affordable for small to medium sized businesses and enterprises.

We created, deployed and market-tested creator.phunware.com, an online platform and part of the Company's software development initiative to utilize generative AI to simplify and facilitate the creation and completion of mobile apps. In light of our market testing and recent changes in our senior management team, we decided to pause further development and allocation of resources

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to completing the app creator platform and instead focus these resources on generative AI-related features and functionalities within our current product offerings.

We recently developed an AI Concierge generative AI product feature with functionalities to serve as a human-like interface in our mobile apps for our customers to enhance customer engagement with users and provide customers with innovative opportunities to further monetize their products and services with users. We are currently engaging with existing customers to run pilot testing programs with our AI Concierge feature in their existing mobile applications.

We also recently designed and demonstrated, at a major hospitality conference, our Guest Services Agent agentic AI product feature with functionalities to interact with and perform tasks for customer hospitality guests. For instance, we anticipate the Guest Services Agent feature will be able to provide information about and book reservations at restaurants located on customer properties. This Guest Services Agent feature is still in the development and testing phase.

We continue to invest in AI, including generative AI and agentic AI, and in the integration of AI capabilities into our products and services. We will continue to evaluate our investments in AI and align investment and resource allocation in the products and markets where we believe we can generate the greatest benefits for customers and opportunities for shareholder returns. Our AI related investments are in the research and development phase, and we may choose not to continue pursuing some of our AI investments and some of the investments we pursue may not be successful. Refer to Risk Factors, located in Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on March 31, 2025.

We intend to continue investing for long-term growth. We have also 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 plan 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.

Key Business Metrics

Our management regularly monitors certain financial measures to track the progress of our business against internal goals and targets. We believe that the most important of these measures include backlog and deferred revenue.

Bookings, Backlog and Deferred Revenue. We define these measures and purpose as follows:

•

Bookings represents actual contracted value for a period, whether invoiced or not, to be invoiced and recognized as revenue over time. We believe that bookings reflects the current demand for our products and services and provides us insight into how well our sales and marketing efforts are performing.

•

Backlog represents future amounts to be invoiced under our active contracts. 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 48% of our backlog as of September 30, 2025 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.

•

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.

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The following table sets forth our software and subscriptions bookings:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Bookings	$	50	$	476	$	977

Phunware, Inc. 10-Q