false 2024 Q3 --12-31 0001862068 0001862068 2024-01-01 2024-09-30 0001862068 us-gaap:CommonClassAMember 2024-11-22 0001862068 RBT:CommonClassVMember 2024-11-22 0001862068 RBT:SeriesAConvertiblePerpetualPreferredStockMember 2024-11-22 0001862068 2024-09-30 0001862068 2023-12-31 0001862068 us-gaap:CommonClassAMember 2024-09-30 0001862068 us-gaap:CommonClassAMember 2023-12-31 0001862068 RBT:CommonClassVMember 2024-09-30 0001862068 RBT:CommonClassVMember 2023-12-31 0001862068 2024-07-01 2024-09-30 0001862068 2023-07-01 2023-09-30 0001862068 2023-01-01 2023-09-30 0001862068 us-gaap:CommonStockMember 2023-12-31 0001862068 RBT:CommonStockClassAMember 2023-12-31 0001862068 RBT:CommonStockClassVMember 2023-12-31 0001862068 us-gaap:PreferredStockMember 2023-12-31 0001862068 us-gaap:AdditionalPaidInCapitalMember 2023-12-31 0001862068 us-gaap:RetainedEarningsMember 2023-12-31 0001862068 us-gaap:NoncontrollingInterestMember 2023-12-31 0001862068 us-gaap:CommonStockMember 2024-06-30 0001862068 RBT:CommonStockClassAMember 2024-06-30 0001862068 RBT:CommonStockClassVMember 2024-06-30 0001862068 us-gaap:PreferredStockMember 2024-06-30 0001862068 us-gaap:AdditionalPaidInCapitalMember 2024-06-30 0001862068 us-gaap:RetainedEarningsMember 2024-06-30 0001862068 us-gaap:NoncontrollingInterestMember 2024-06-30 0001862068 2024-06-30 0001862068 us-gaap:CommonStockMember 2022-12-31 0001862068 RBT:CommonStockClassAMember 2022-12-31 0001862068 RBT:CommonStockClassVMember 2022-12-31 0001862068 us-gaap:PreferredStockMember 2022-12-31 0001862068 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001862068 us-gaap:RetainedEarningsMember 2022-12-31 0001862068 us-gaap:NoncontrollingInterestMember 2022-12-31 0001862068 2022-12-31 0001862068 us-gaap:CommonStockMember 2023-06-30 0001862068 RBT:CommonStockClassAMember 2023-06-30 0001862068 RBT:CommonStockClassVMember 2023-06-30 0001862068 us-gaap:PreferredStockMember 2023-06-30 0001862068 us-gaap:AdditionalPaidInCapitalMember 2023-06-30 0001862068 us-gaap:RetainedEarningsMember 2023-06-30 0001862068 us-gaap:NoncontrollingInterestMember 2023-06-30 0001862068 2023-06-30 0001862068 us-gaap:CommonStockMember 2024-01-01 2024-06-30 0001862068 RBT:CommonStockClassAMember 2024-01-01 2024-06-30 0001862068 RBT:CommonStockClassVMember 2024-01-01 2024-06-30 0001862068 us-gaap:PreferredStockMember 2024-01-01 2024-06-30 0001862068 us-gaap:AdditionalPaidInCapitalMember 2024-01-01 2024-06-30 0001862068 us-gaap:RetainedEarningsMember 2024-01-01 2024-06-30 0001862068 us-gaap:NoncontrollingInterestMember 2024-01-01 2024-06-30 0001862068 2024-01-01 2024-06-30 0001862068 us-gaap:CommonStockMember 2024-07-01 2024-09-30 0001862068 RBT:CommonStockClassAMember 2024-07-01 2024-09-30 0001862068 RBT:CommonStockClassVMember 2024-07-01 2024-09-30 0001862068 us-gaap:PreferredStockMember 2024-07-01 2024-09-30 0001862068 us-gaap:AdditionalPaidInCapitalMember 2024-07-01 2024-09-30 0001862068 us-gaap:RetainedEarningsMember 2024-07-01 2024-09-30 0001862068 us-gaap:NoncontrollingInterestMember 2024-07-01 2024-09-30 0001862068 us-gaap:CommonStockMember 2023-01-01 2023-06-30 0001862068 RBT:CommonStockClassAMember 2023-01-01 2023-06-30 0001862068 RBT:CommonStockClassVMember 2023-01-01 2023-06-30 0001862068 us-gaap:PreferredStockMember 2023-01-01 2023-06-30 0001862068 us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-06-30 0001862068 us-gaap:RetainedEarningsMember 2023-01-01 2023-06-30 0001862068 us-gaap:NoncontrollingInterestMember 2023-01-01 2023-06-30 0001862068 2023-01-01 2023-06-30 0001862068 us-gaap:CommonStockMember 2023-07-01 2023-09-30 0001862068 RBT:CommonStockClassAMember 2023-07-01 2023-09-30 0001862068 RBT:CommonStockClassVMember 2023-07-01 2023-09-30 0001862068 us-gaap:PreferredStockMember 2023-07-01 2023-09-30 0001862068 us-gaap:AdditionalPaidInCapitalMember 2023-07-01 2023-09-30 0001862068 us-gaap:RetainedEarningsMember 2023-07-01 2023-09-30 0001862068 us-gaap:NoncontrollingInterestMember 2023-07-01 2023-09-30 0001862068 us-gaap:CommonStockMember 2024-09-30 0001862068 RBT:CommonStockClassAMember 2024-09-30 0001862068 RBT:CommonStockClassVMember 2024-09-30 0001862068 us-gaap:PreferredStockMember 2024-09-30 0001862068 us-gaap:AdditionalPaidInCapitalMember 2024-09-30 0001862068 us-gaap:RetainedEarningsMember 2024-09-30 0001862068 us-gaap:NoncontrollingInterestMember 2024-09-30 0001862068 us-gaap:CommonStockMember 2023-09-30 0001862068 RBT:CommonStockClassAMember 2023-09-30 0001862068 RBT:CommonStockClassVMember 2023-09-30 0001862068 us-gaap:PreferredStockMember 2023-09-30 0001862068 us-gaap:AdditionalPaidInCapitalMember 2023-09-30 0001862068 us-gaap:RetainedEarningsMember 2023-09-30 0001862068 us-gaap:NoncontrollingInterestMember 2023-09-30 0001862068 2023-09-30 0001862068 us-gaap:RevolvingCreditFacilityMember RBT:June2023RevolvingCreditFacilityMember 2024-09-30 0001862068 us-gaap:CommonClassAMember RBT:CantorSalesAgreementMember 2024-09-30 0001862068 us-gaap:CommonClassAMember RBT:MergerAgreementMember 2024-09-30 0001862068 us-gaap:CommonClassBMember RBT:MergerAgreementMember 2024-09-30 0001862068 us-gaap:SegmentDiscontinuedOperationsMember 2024-05-07 0001862068 us-gaap:SegmentDiscontinuedOperationsMember 2023-12-31 0001862068 us-gaap:SegmentDiscontinuedOperationsMember 2024-07-01 2024-09-30 0001862068 us-gaap:SegmentDiscontinuedOperationsMember 2023-07-01 2023-09-30 0001862068 us-gaap:SegmentDiscontinuedOperationsMember 2024-01-01 2024-09-30 0001862068 us-gaap:SegmentDiscontinuedOperationsMember 2023-01-01 2023-09-30 0001862068 RBT:SaaSBusinessMember 2024-05-01 2024-05-07 0001862068 RBT:SeriesAConvertiblePerpetualPreferredStockMember 2024-05-01 2024-05-07 0001862068 RBT:SaaSBusinessMember 2024-05-07 0001862068 us-gaap:PropertyPlantAndEquipmentMember us-gaap:ComputerEquipmentMember 2024-09-30 0001862068 us-gaap:PropertyPlantAndEquipmentMember us-gaap:ComputerEquipmentMember 2023-12-31 0001862068 us-gaap:PropertyPlantAndEquipmentMember us-gaap:FurnitureAndFixturesMember 2024-09-30 0001862068 us-gaap:PropertyPlantAndEquipmentMember us-gaap:FurnitureAndFixturesMember 2023-12-31 0001862068 us-gaap:PropertyPlantAndEquipmentMember us-gaap:LeaseholdImprovementsMember 2024-09-30 0001862068 us-gaap:PropertyPlantAndEquipmentMember us-gaap:LeaseholdImprovementsMember 2023-12-31 0001862068 us-gaap:SegmentDiscontinuedOperationsMember 2024-09-30 0001862068 us-gaap:EquipmentMember RBT:NoncurrentAssetsOfDiscontinuedOperationsMember 2023-12-31 0001862068 RBT:NoncurrentAssetsOfDiscontinuedOperationsMember 2023-12-31 0001862068 us-gaap:EquipmentMember RBT:NoncurrentAssetsOfDiscontinuedOperationsMember 2024-05-07 0001862068 RBT:NoncurrentAssetsOfDiscontinuedOperationsMember 2024-05-07 0001862068 us-gaap:RevolvingCreditFacilityMember 2018-12-14 0001862068 us-gaap:RevolvingCreditFacilityMember 2018-12-01 2018-12-14 0001862068 us-gaap:RevolvingCreditFacilityMember 2023-02-07 0001862068 us-gaap:RevolvingCreditFacilityMember 2023-06-01 2023-06-07 0001862068 us-gaap:RevolvingCreditFacilityMember 2023-01-01 2023-12-31 0001862068 RBT:June2023RevolvingCreditFacilityMember 2023-06-07 0001862068 RBT:June2023RevolvingCreditFacilityMember 2023-06-01 2023-06-07 0001862068 RBT:June2023RevolvingCreditFacilityMember 2024-09-30 0001862068 RBT:June2023RevolvingCreditFacilityMember 2024-05-01 2024-05-07 0001862068 RBT:June2023RevolvingCreditFacilityMember 2023-12-31 0001862068 us-gaap:RevolvingCreditFacilityMember 2024-07-01 2024-09-30 0001862068 us-gaap:RevolvingCreditFacilityMember 2023-07-01 2023-09-30 0001862068 us-gaap:RevolvingCreditFacilityMember 2024-01-01 2024-09-30 0001862068 us-gaap:RevolvingCreditFacilityMember 2023-01-01 2023-09-30 0001862068 RBT:TermLoanFacilityMember 2019-03-29 0001862068 RBT:TermLoanFacilityMember 2023-02-07 0001862068 RBT:TermLoanFacilityMember 2023-02-01 2023-02-07 0001862068 RBT:TermLoanFacilityMember 2023-06-07 0001862068 RBT:TermLoanFacilityMember 2023-01-01 2023-12-31 0001862068 RBT:SubordinatedTermLoanMember 2021-12-22 0001862068 RBT:SubordinatedTermLoanMember 2021-12-01 2021-12-22 0001862068 RBT:SubordinatedTermLoanMember 2024-09-30 0001862068 RBT:SubordinatedTermLoanMember 2023-12-31 0001862068 RBT:SubordinatedTermLoanMember 2024-07-01 2024-09-30 0001862068 RBT:SubordinatedTermLoanMember 2023-07-01 2023-09-30 0001862068 RBT:SubordinatedTermLoanMember 2024-01-01 2024-09-30 0001862068 RBT:SubordinatedTermLoanMember 2023-01-01 2023-09-30 0001862068 RBT:June2023TermLoanMember 2023-06-07 0001862068 RBT:June2023TermLoanMember 2024-09-30 0001862068 RBT:June2023TermLoanMember 2024-05-01 2024-05-07 0001862068 RBT:June2023TermLoanMember 2024-05-07 0001862068 RBT:June2023TermLoanMember 2024-07-01 2024-09-30 0001862068 RBT:June2023TermLoanMember 2023-07-01 2023-09-30 0001862068 RBT:June2023TermLoanMember 2024-01-01 2024-09-30 0001862068 RBT:June2023TermLoanMember 2023-01-01 2023-09-30 0001862068 RBT:InsiderConvertibleDebenturesMember 2022-12-16 0001862068 RBT:InsiderConvertibleDebenturesMember 2022-12-01 2022-12-16 0001862068 RBT:InsiderConvertibleDebenturesMember 2023-07-01 2023-09-30 0001862068 RBT:InsiderConvertibleDebenturesMember 2024-07-01 2024-09-30 0001862068 RBT:InsiderConvertibleDebenturesMember 2024-01-01 2024-09-30 0001862068 RBT:InsiderConvertibleDebenturesMember 2023-01-01 2023-09-30 0001862068 RBT:ThirdPartyConvertibleDebenturesMember 2023-02-02 0001862068 RBT:ThirdPartyConvertibleDebenturesMember 2023-01-30 2023-02-02 0001862068 RBT:ThirdPartyConvertibleDebenturesMember 2024-01-01 2024-09-30 0001862068 RBT:ThirdPartyConvertibleDebenturesMember 2023-01-01 2023-09-30 0001862068 RBT:NZSuperfundMember 2023-02-02 0001862068 RBT:NZSuperfundMember 2023-01-27 2023-02-02 0001862068 RBT:NZSuperfundMember 2024-07-01 2024-09-30 0001862068 RBT:NZSuperfundMember 2023-07-01 2023-09-30 0001862068 RBT:NZSuperfundMember 2024-01-01 2024-09-30 0001862068 RBT:NZSuperfundMember 2023-01-01 2023-09-30 0001862068 RBT:AccruedManagementRolloverObligationMember 2024-09-30 0001862068 RBT:AccruedManagementRolloverObligationMember 2023-12-31 0001862068 us-gaap:TradeNamesMember 2024-09-30 0001862068 srt:MinimumMember us-gaap:CustomerRelationshipsMember 2024-09-30 0001862068 srt:MaximumMember us-gaap:CustomerRelationshipsMember 2024-09-30 0001862068 us-gaap:CustomerRelationshipsMember 2024-09-30 0001862068 srt:MinimumMember us-gaap:NoncompeteAgreementsMember 2024-09-30 0001862068 srt:MaximumMember us-gaap:NoncompeteAgreementsMember 2024-09-30 0001862068 us-gaap:NoncompeteAgreementsMember 2024-09-30 0001862068 us-gaap:TechnologyEquipmentMember 2024-09-30 0001862068 us-gaap:FiniteLivedIntangibleAssetsMember 2024-09-30 0001862068 RBT:DomainNameMember 2024-09-30 0001862068 us-gaap:TradeNamesMember 2023-12-31 0001862068 srt:MinimumMember us-gaap:CustomerRelationshipsMember 2023-12-31 0001862068 srt:MaximumMember us-gaap:CustomerRelationshipsMember 2023-12-31 0001862068 us-gaap:CustomerRelationshipsMember 2023-12-31 0001862068 srt:MinimumMember us-gaap:NoncompeteAgreementsMember 2023-12-31 0001862068 srt:MaximumMember us-gaap:NoncompeteAgreementsMember 2023-12-31 0001862068 us-gaap:NoncompeteAgreementsMember 2023-12-31 0001862068 us-gaap:TechnologyEquipmentMember 2023-12-31 0001862068 us-gaap:FiniteLivedIntangibleAssetsMember 2023-12-31 0001862068 RBT:DomainNameMember 2023-12-31 0001862068 us-gaap:TechnologyEquipmentMember us-gaap:SegmentDiscontinuedOperationsMember 2023-12-31 0001862068 us-gaap:SegmentContinuingOperationsMember 2024-07-01 2024-09-30 0001862068 us-gaap:SegmentContinuingOperationsMember 2023-07-01 2023-09-30 0001862068 us-gaap:SegmentContinuingOperationsMember 2024-01-01 2024-09-30 0001862068 us-gaap:SegmentContinuingOperationsMember 2023-01-01 2023-09-30 0001862068 us-gaap:CommonClassAMember us-gaap:EquityMember 2024-09-30 0001862068 RBT:CommonClassVMember us-gaap:EquityMember 2024-09-30 0001862068 us-gaap:PreferredStockMember us-gaap:EquityMember 2024-09-30 0001862068 us-gaap:EquityMember 2024-09-30 0001862068 us-gaap:CommonClassAMember us-gaap:EquityMember 2023-12-31 0001862068 RBT:CommonClassVMember us-gaap:EquityMember 2023-12-31 0001862068 us-gaap:PreferredStockMember us-gaap:EquityMember 2023-12-31 0001862068 us-gaap:EquityMember 2023-12-31 0001862068 2022-08-02 2022-08-15 0001862068 RBT:PublicWarrantsMember us-gaap:PrivatePlacementMember 2022-08-15 0001862068 RBT:PrivateWarrantsMember us-gaap:PrivatePlacementMember 2022-08-15 0001862068 2022-11-18 0001862068 RBT:SecondamendmentMember RBT:TermLoanWarrantsMember 2023-03-22 0001862068 RBT:ThirdAmendmentMember RBT:TermLoanWarrantsMember 2023-06-07 0001862068 RBT:TermLoanWarrantsMember 2023-01-01 2023-12-31 0001862068 RBT:TermLoanWarrantsMember 2024-01-01 2024-09-30 0001862068 RBT:TermLoanWarrantsMember 2024-09-30 0001862068 RBT:TermLoanWarrantsMember 2023-12-31 0001862068 RBT:SubordinatedTermLoanWarrantsMember 2024-09-30 0001862068 RBT:SubordinatedTermLoanWarrantsMember 2024-01-01 2024-09-30 0001862068 RBT:YAWarrantMember 2022-11-30 0001862068 RBT:YAWarrantMember 2023-12-31 0001862068 RBT:YAWarrantMember 2024-07-01 2024-09-30 0001862068 RBT:YAWarrantMember 2024-01-01 2024-09-30 0001862068 RBT:YAWarrantMember 2023-01-01 2023-12-31 0001862068 RBT:AdvisorWarrantMember 2022-11-30 0001862068 RBT:AdvisorWarrantMember 2024-09-30 0001862068 RBT:June2023TermLoanWarrantsMember 2023-06-01 2023-06-07 0001862068 RBT:June2023TermLoanWarrantsMember 2024-01-01 2024-09-30 0001862068 RBT:June2023TermLoanWarrantsMember 2023-01-01 2023-12-31 0001862068 RBT:June2023TermLoanWarrantsMember 2024-07-01 2024-09-30 0001862068 RBT:YAWarrantMember 2023-07-01 2023-09-30 0001862068 RBT:YAWarrantMember 2023-01-01 2023-09-30 0001862068 2024-05-01 2024-05-07 0001862068 RBT:CantorSalesAgreementMember 2023-09-01 2023-09-05 0001862068 RBT:TwoThousandTwentyTwoPlanMember us-gaap:CommonClassAMember 2022-08-15 0001862068 us-gaap:CommonClassAMember 2024-07-01 2024-09-30 0001862068 us-gaap:CommonClassAMember 2024-01-01 2024-09-30 0001862068 us-gaap:CommonClassAMember 2023-07-01 2023-09-30 0001862068 us-gaap:CommonClassAMember 2023-01-01 2023-09-30 0001862068 us-gaap:FairValueInputsLevel1Member 2024-09-30 0001862068 us-gaap:FairValueInputsLevel2Member 2024-09-30 0001862068 us-gaap:FairValueInputsLevel3Member 2024-09-30 0001862068 us-gaap:FairValueInputsLevel1Member 2023-12-31 0001862068 us-gaap:FairValueInputsLevel2Member 2023-12-31 0001862068 us-gaap:FairValueInputsLevel3Member 2023-12-31 0001862068 RBT:YAWarrantsLiabilitiesMember 2023-12-31 0001862068 RBT:AdditionalSubordinatedTermLoanWarrantsDerivativeMember 2023-12-31 0001862068 RBT:SubordinatedTermLoanWarrantsMakewholeDerivativeMember 2023-12-31 0001862068 RBT:YAWarrantsLiabilitiesMember 2024-01-01 2024-06-30 0001862068 RBT:AdditionalSubordinatedTermLoanWarrantsDerivativeMember 2024-01-01 2024-06-30 0001862068 RBT:SubordinatedTermLoanWarrantsMakewholeDerivativeMember 2024-01-01 2024-06-30 0001862068 RBT:YAWarrantsLiabilitiesMember 2024-06-30 0001862068 RBT:AdditionalSubordinatedTermLoanWarrantsDerivativeMember 2024-06-30 0001862068 RBT:SubordinatedTermLoanWarrantsMakewholeDerivativeMember 2024-06-30 0001862068 RBT:YAWarrantsLiabilitiesMember 2024-07-01 2024-09-30 0001862068 RBT:AdditionalSubordinatedTermLoanWarrantsDerivativeMember 2024-07-01 2024-09-30 0001862068 RBT:SubordinatedTermLoanWarrantsMakewholeDerivativeMember 2024-07-01 2024-09-30 0001862068 RBT:YAWarrantsLiabilitiesMember 2024-09-30 0001862068 RBT:AdditionalSubordinatedTermLoanWarrantsDerivativeMember 2024-09-30 0001862068 RBT:SubordinatedTermLoanWarrantsMakewholeDerivativeMember 2024-09-30 0001862068 RBT:AdditionalSubordinatedTermLoanWarrantsMember 2024-01-01 2024-09-30 0001862068 RBT:SubordinatedTermLoanWarrantsMakewholeDerivativeMember 2024-01-01 2024-09-30 0001862068 RBT:SubordinatedTermLoanWarrantsMakewholeDerivativeMember 2023-01-01 2023-12-31 0001862068 RBT:RodinaWarrantMember 2023-09-01 2023-09-15 0001862068 RBT:RodinaMember 2023-09-22 0001862068 RBT:RodinaMember 2024-01-24 0001862068 RBT:June2023TermLoanAgreementMember 2024-05-01 2024-05-07 0001862068 RBT:SaaSBusinessMember 2024-09-30 0001862068 2024-09-01 2024-09-30 0001862068 RBT:PIPEInvestorMember 2024-09-30 0001862068 RBT:PIPEInvestorMember 2023-10-01 2024-03-31 0001862068 RBT:PalantirMember 2024-01-01 2024-09-30 0001862068 RBT:PalantirMember 2024-09-30 0001862068 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember RBT:ThreeCustomerMember 2024-07-01 2024-09-30 0001862068 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember RBT:TwoCustomerMember 2024-07-01 2024-09-30 0001862068 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember RBT:ThreeCustomerMember 2024-01-01 2024-09-30 0001862068 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember RBT:TwoCustomerMember 2024-01-01 2024-09-30 0001862068 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember RBT:TwoCustomerMember 2023-07-01 2023-09-30 0001862068 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember RBT:OneCustomerMember 2023-07-01 2023-09-30 0001862068 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember RBT:TwoCustomerMember 2023-01-01 2023-09-30 0001862068 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember RBT:OneCustomerMember 2023-01-01 2023-09-30 0001862068 us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember RBT:ThreeCustomersMember 2024-01-01 2024-09-30 0001862068 us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember RBT:ThreeCustomersMember 2023-01-01 2023-12-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure

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, 2024

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

Commission File Number 001-40910

Rubicon Technologies, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		88-3703651
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification Number)

950 E Paces Ferry Rd NE, Suite 810
Atlanta, GA		30326
(Address of Principal Executive Offices)		(Zip Code)

(844) 479-1507

(Registrant’s Telephone Number, Including Area Code)

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A common stock, par value $0.0001 per share		RBT		N/A*

On July 7, 2024, our Class A common stock was suspended from trading on the New York Stock Exchange and began trading under the symbol “RBTC” on the OTC Pink Marketplace maintained by the OTC Markets Group, Inc.

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, 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 22, 2024, 68,914,542 shares of Class A Common Stock, par value $0.0001 per share, and 776,097 shares of Class V Common Stock, par value $0.0001 per share, were issued and outstanding; and 20,000 shares of Series A Convertible Perpetual Preferred Stock, $0.0001 par value, were issued and outstanding.

Table of Contents

		Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements		1
Item 2. Management’s Discussion and Analysis of Financial Condition and Result of Operations		42
Item 3. Quantitative and Qualitative Disclosures About Market Risk		64
Item 4. Controls and Procedures		64

PART II - OTHER INFORMATION

Item 1. Legal Proceedings		66
Item 1A. Risk Factors		66
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		66
Item 3. Defaults Upon Senior Securities		66
Item 4. Mine Safety Disclosures		66
Item 5. Other Information		66
Item 6. Exhibits		67

Signatures		68

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

RUBICON TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except per share data)


	September 30, 2024			December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	1,346		$	18,695
Accounts receivable, net of allowance for credit losses of $2,644 and $2,726 at September 30, 2024 and December 31, 2023, respectively		84,416			62,930
Contract assets		57,526			75,567
Prepaid expenses		25,535			13,197
Current assets of discontinued operations		-			5,257
Due from affiliates		1,519			-
Other current assets		4,061			3,742
Total Current Assets		174,403			179,388

Property and equipment, net		400			632
Operating right-of-use assets		1,185			567
Other noncurrent assets		1,662			2,114
Goodwill		20,692			20,692
Intangible assets, net		5,191			7,111
Noncurrent assets of discontinued operations		-			12,783
Total Assets	$	203,533		$	223,287

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	81,350		$	65,465
Line of credit		73,461			71,121
Accrued expenses		58,854			76,645
Due to affiliates		3,800			-
Contract liabilities		1,174			1,499
Operating lease liabilities, current		133			725
Warrant liabilities		9,194			26,493
Derivative liabilities		2,892			9,375
Long-term debt, current portion		54,330			-
Current liabilities of discontinued operations		-			6,216
Total Current Liabilities		285,188			257,539

Long-Term Liabilities:
Deferred income taxes		263			197
Operating lease liabilities, noncurrent		1,066			-
Debt obligations, net of debt issuance costs		1,452			81,001
Related-party debt obligations, net of debt issuance costs		17,925			16,302
Derivative liabilities		-			3,683
Earn-out liabilities		9			142
Other long-term liabilities		2,264			3,395
Total Long-Term Liabilities		22,979			104,720
Total Liabilities		308,167			362,259

Redeemable convertible preferred class A stock, $0.0001 par value; 10,000,000 shares authorized and 20,000 shares issued and outstanding as of September 30, 2024 and 0 shares issued and outstanding as of December 31, 2023, respectively. (Aggregate liquidation preference and aggregate redemption amount of $20,640)		15,661			-

Stockholders’ Equity (Deficit):
Common stock – Class A, par value of $0.0001 per share, 690,000,000 shares authorized, 68,914,542 and 39,643,584 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		7			4
Common stock – Class V, par value of $0.0001 per share, 275,000,000 shares authorized, 776,097 and 4,425,388 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		-			-
Additional paid-in capital		266,677			221,986
Accumulated deficit		(392,811	)		(394,804	)
Total stockholders’ deficit attributable to Rubicon Technologies, Inc.		(126,127	)		(172,814	)
Noncontrolling interests		5,832			33,842
Total Stockholders’ Deficit		(120,295	)		(138,972	)
Total Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Deficit	$	203,533		$	223,287

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

RUBICON TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenue:
Service	$	169,305		$	156,362		$	463,282		$	478,712
Recyclable commodity		13,228			12,138			45,460			40,794
Total revenue		182,533			168,500			508,742			519,506

Costs and Expenses:
Cost of revenue (exclusive of amortization and depreciation):
Service		161,011			146,178			444,933			452,999
Recyclable commodity		12,660			10,272			41,607			35,427
Total cost of revenue (exclusive of amortization and depreciation)		173,671			156,450			486,540			488,426
Sales and marketing		1,874			1,824			5,895			6,215
Product development		5,286			7,636			17,182			21,645
General and administrative		6,685			13,565			30,436			45,451
Gain on settlement of incentive compensation		-			-			-			(18,622	)
Amortization and depreciation		885			1,007			2,766			3,194
Total Costs and Expenses		188,401			180,482			542,819			546,309
Loss from continuing operations		(5,868	)		(11,982	)		(34,077	)		(26,803	)

Other Income (Expense):
Interest earned		32			5			91			11
Gain on change in fair value of warrant liabilities		528			3,354			13,997			2,885
Gain on change in fair value of earn-out liabilities		-			150			133			5,440
Gain (loss) on change in fair value of derivatives		5,717			(1,245	)		3,697			(3,778	)
Gain on service fee settlements in connection with the Mergers		-			-			-			6,996
Loss on extinguishment of debt obligations		-			(9,348	)		(8,782	)		(18,234	)
Interest expense		(7,886	)		(9,179	)		(27,049	)		(24,474	)
Related party interest expense		(562	)		(453	)		(1,624	)		(1,707	)
Other expense, net		(538	)		(1,116	)		(2,154	)		(2,019	)
Total Other Expense, Net		(2,709	)		(17,832	)		(21,691	)		(34,880	)
Loss from continuing operations before income taxes		(8,577	)		(29,814	)		(55,768	)		(61,683	)

Income tax expense		102			16			222			49
Net loss from continuing operations, net of tax		(8,679	)		(29,830	)		(55,990	)		(61,732	)

Discontinued Operations:
Net loss from discontinued operations		-			(343	)		(1,125	)		(709	)
Net gain on sale of discontinued operations		-			-			59,674			-
Income tax benefit (expense)		226			-			(1,653	)		-
Net income (loss) from discontinued operations, net of tax		226			(343	)		56,896			(709	)
Net income (loss)		(8,453	)		(30,173	)		906			(62,441	)
Net loss from continuing operations attributable to noncontrolling interests		(89	)		(2,465	)		(2,005	)		(18,207	)
Net loss from continuing operations attributable to Class A common stockholders		(8,590	)		(27,365	)		(53,985	)		(43,525	)
Net income (loss) from discontinued operations attributable to noncontrolling interests		3			(54	)		917			(249	)
Net income (loss) from discontinued operations attributable to Class A common stockholders	$	223		$	(289	)	$	55,979		$	(460	)

Net loss from continuing operations per Class A Common share – basic and diluted		(0.12	)		(0.84	)		(0.47	)		(2.45	)
Net earnings (loss) from discontinued operations per Class A Common share – basic and diluted		-			(0.01	)		0.48			(0.02	)
Net earnings (loss) per Class A Common share – basic and diluted		(0.12	)		(0.85	)		0.01			(2.47	)
Weighted average shares outstanding – basic		68,946,948			32,381,649			57,996,823			17,786,466
Weighted average shares outstanding – diluted		68,946,948			32,381,649			57,996,823			17,786,466

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

RUBICON TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (UNAUDITED)

(in thousands, except shares and units data)


		Common Stock – Class A				Common Stock – Class V					Preferred Stock				Additional Paid-in		Accumulated			Non-controlling				Total
		Shares		Amount		Shares			Amount		Shares		Amount		Capital		Deficit			Interest				Deficit
Balance, December 31, 2023	-		39,643,584	$	4		4,425,388		$	-		-	$	-	$	221,986	$	(394,804	)	$	33,842		-	$	(138,972	)

Equity-based compensation			-		-		-			-		-		-		1,094		-			-				1,094

Issuance of common stock for services rendered			10,669,485		1		-			-		-		-		7,144		-			-				7,145

RSU Settlement			159,581		-		-			-		-		-		-		-			-				-

Issuance of common stock for the FPA Termination Agreement Settlement			1,656,727		-		-			-		-		-		2,000		-			-				2,000

Exchange of Class V Common Stock to Class A Common Stock			3,649,291		-		(3,649,291	)		-		-		-		26,923		-			(26,923	)			-

Exercise and conversion of liability classified warrants			13,135,874		2		-			-		-		-		7,042		-			-				7,044

Net income	-		-		-		-			-		-		-		-		10,360			(1,001	)	-		9,359

Balance, June 30, 2024	-		68,914,542		7		776,097			-		-		-		266,189		(384,444	)		5,918				(112,330	)

Equity-based compensation			-		-		-			-		-		-		488		-			-				488

Net loss	-		-		-		-			-		-		-		-		(8,367	)		(86	)	-		(8,453	)

Balance, September 30, 2024	-		68,914,542	$	7		776,097		$	-		-	$	-	$	266,677	$	(392,811	)	$	5,832			$	(120,295	)

RUBICON TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (UNAUDITED) (Continued)

(in thousands, except shares and units data)


	Members’ Units				Common Stock – Class A				Common Stock – Class V						Preferred Stock				Additional Paid-in			Accumulated			Non controlling			Total
	Units		Amount		Shares		Amount		Shares			Amount			Shares		Amount		Capital			Deficit			Interest			Deficit
Balance, December 31, 2022		-	$	-		6,985,869	$	1		14,432,992		$	1			-	$	-	$	34,658		$	(337,860	)	$	148,747		$	(154,453	)

Equity-based compensation		-		-		-		-		-			-			-		-		11,105			-			-			11,105

Issuance of common stock for services rendered		-		-		1,164,757		-		-			-			-		-		10,244			-			-			10,245

Issuance of equity-classified warrants		-		-		-		-		-			-			-		-		945			-			-			945

Issuance of common stock for vested RSUs		-		-		463,961		-		-			-			-		-		-			-			-			-

Issuance of common stock for vested DSUs		-		-		10,603		-		-			-			-		-		-			-			-			-

RSUs withheld to pay taxes		-		-		-		-		-			-			-		-		(1,067	)		-			-			(1,067	)

Conversion of debt obligations to common stock		-		-		2,517,284		-		-			-			-		-		10,846			-			-			10,846

Proceeds from issuance of common stock		-		-		7,257,334		1		-			-			-		-		24,766			-			-			24,767

Exercise and conversion of liability classified warrants		-		-		319,992		-		-			-			-		-		1,073			-			-			1,073

Exchange of Class V Common Stock to Class A Common Stock		-		-		10,007,604		1		(10,007,604	)		(1	)		-		-		-			-			-			-

Common stock issuance cost		-		-		-		-		-			-			-		-		(32	)		-			-			(32	)

Net loss		-		-		-		-		-			-			-		-		-			(16,331	)		(15,937	)		(32,268	)

Balance, June 30, 2023		-		-		28,727,404		3		4,425,388			-			-		-		92,538			(354,191	)		132,810			(128,839	)

Equity-based compensation		-		-		-		-		-			-			-		-		2,134			-			-			2,134

Issuance of common stock for services rendered		-		-		711,566		-		-			-			-		-		2,055			-			-			2,055

Issuance of equity-classified warrants		-		-		-		-		-			-			-		-		1,682			-			-			1,682

Issuance of common stock for vested RSUs		-		-		1,139,775		-		-			-			-		-		-			-			-			-

Issuance of common stock for vested DSUs		-		-		4,602		-		-			-			-		-		-			-			-			-

Conversion of debt obligations to common stock		-		-		3,900,321		-		-			-			-		-		19,334			-			-			19,334

Exercise and conversion of liability classified warrants		-		-		291,143		-		-			-			-		-		1,139			-			-			1,139

Shares added for fractional shares pursuant to reverse stock split		-		-		29,210		-		-			-			-		-		-			-			-			-

Net loss		-		-		-		-		-			-			-		-		-			(27,654	)		(2,519	)		(30,173	)

Balance, September 30, 2023		-	$	-		34,804,021	$	3		4,425,388		$	-			-	$	-	$	118,882		$	(381,845	)	$	130,291		$	(132,668	)

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

RUBICON TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


	Nine Months Ended September 30,
	2024			2023
Cash flows from operating activities:
Net income (loss)	$	906		$	(62,441	)
Net income (loss) from discontinued operations		56,896			(709	)
Net income (loss) from continued operations		(55,990	)		(61,732	)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Loss on disposal of property and equipment		-			777
Gain on lease agreement amendment		-			(220	)
Amortization and depreciation		2,766			3,162
Amortization of debt issuance costs		10,375			6,978
Paid-in-kind interest capitalized to principal of debt obligations		3,291			7,745
Allowances for accounts receivables and contract assets		479			2,024
Gain on change in fair value of warrants		(13,997	)		(2,885	)
Gain (loss) on change in fair value of derivatives		(3,697	)		3,778
Gain on change in fair value of earn-out liabilities		(133	)		(5,440	)
Loss on extinguishment of debt obligations		8,782			18,234
Equity-based compensation		1,582			13,239
Settlement of accrued incentive compensation		-			(26,826	)
Service fees settled in common stock		7,144			5,863
Gain on service fee settlement in connection with the Mergers		-			(6,995	)
Deferred income taxes		66			22
Change in operating assets and liabilities:
Accounts receivable		(17,918	)		4,444
Contract assets		19,096			(13,445	)
Prepaid expenses		(12,781	)		(6,554	)
Other current assets		(1,959	)		(2,254	)
Operating right-of-use assets		545			868
Other noncurrent assets		18			215
Accounts payable		18,894			(22,148	)
Accrued expenses		(17,725	)		16,964
Contract liabilities		(324	)		(213	)
Operating lease liabilities		(690	)		(1,335	)
Other liabilities		(1,134	)		(1,602	)
Total adjustments and changes in operating assets and liabilities		2,680			(5,604	)
Net cash used in operating activities – continuing operations		(53,310	)		(67,336	)
Net cash (used in) provided by operating activities – discontinued operations:
Gain on business disposition – discontinued operations		(59,674	)		-
Adjustments to reconcile net income (loss) to net cash flows from discontinued operations		562			1,472
Net cash (used in) provided by operating activities – discontinued operations		(2,216	)		763
Net cash flows used in operating activities		(55,526	)		(66,573	)

Cash flows from investing activities:
Cash flows from investing activities – continuing operations:
Property and equipment purchases		(292	)		(260	)
Net cash used in investing activities – continuing operations		(292	)		(260	)
Cash flows from investing activities – discontinued operations:
Property and equipment – discontinued operations		156			(490	)
Net cash from sale of business		61,989			-
Net cash (used in) provided by investing activities – discontinued operations		62,145			(490	)
Net cash (used in) provided by from investing activities		61,853			(750	)

Cash flows from financing activities:
Net borrowings on Revolving Credit Facility		2,341			13,653
Proceeds from debt obligations		-			86,226
Repayments of debt obligations		(45,600	)		(53,500	)
Proceeds from related party debt obligations		-			14,520
Financing costs paid		-			(13,891	)
Proceeds from issuance of common stock		-			24,767
Proceeds from issuance of redeemable convertible Class A preferred stock		20,000			-
Equity issuance cost		(417	)		(31	)
RSUs withheld to pay taxes		-			(1,067	)
Net cash flows (used in) provided by financing activities		(23,676	)		70,677

Net change in cash and cash equivalents		(17,349	)		3,354
Cash and cash equivalents, beginning of period		18,695			10,079
Cash and cash equivalents, end of period	$	1,346		$	13,433

Supplemental disclosure of cash flow information:
Cash paid for interest	$	9,945		$	9,934

Supplemental disclosures of non-cash investing and financing activities:
Exchange of warrant liability for common stock	$	7,794		$	2,250
Settlement of the FPA Termination Agreement in common stock	$	2,000		$	-
Issuance of common stock for services rendered	$	7,149		$	-
Proceeds allocation between sale of business and issuance of redeemable convertible Class A preferred stock	$	3,922		$	-
Commitment to issue preferred stock to affiliates for accounts payable settled by affiliates	$	3,800		$	-
Rights-of-use asset in exchange of operating lease liability	$	1,164		$	-
Fair value of derivatives issued as debt discount and issuance cost	$	-		$	12,739
Conversions of debt obligations to common stock	$	-		$	17,000
Conversions of related-party debt obligations to common stock	$	-		$	3,080
Equity issuance costs waived	$	-		$	6,364
Equity issuance costs settled with common stock	$	-		$	7,069
Loan commitment asset reclassed to deferred debt discount	$	-		$	2,062

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

RUBICON TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1—Nature of operations and summary of significant accounting policies

Description of Business – Rubicon Technologies, Inc. and all subsidiaries are hereafter referred to as “Rubicon” or the “Company.”

Rubicon is a digital marketplace for waste and recycling services and provides cloud-based waste and recycling solutions to businesses and governments. Rubicon’s sustainable waste and recycling solutions provide comprehensive management of customers’ waste streams through a platform that powers a modern, digital experience and delivers data-driven insights and transparency for the customers and hauling and recycling partners.

Rubicon also provides consultation and management services to customers for waste removal, waste management, logistics, and recycling solutions. Consultation and management services include planning, consolidation of billing and administration, cost savings analyses, and vendor performance monitoring and management. The combination of Rubicon’s technology and services provides a holistic audit of customer waste streams. Rubicon also provides logistics services and markets and resells recyclable commodities.

Reverse Stock Split – On September 26, 2023, the Company effected a reverse stock split of its outstanding shares of voting common stock at a ratio of one-for-eight (1:8) pursuant to a Certificate of Amendment to its Certificate of Incorporation filed with the Secretary of State of the State of Delaware. The reverse stock split was reflected on the New York Stock Exchange (the “NYSE”) beginning with the opening of trading on September 27, 2023. Pursuant to the reverse stock split, every eight shares of the Company’s issued and outstanding shares of common stock were automatically combined into one issued and outstanding share of common stock, without any change in the number of authorized shares or the par value per share of the common stock. No fractional shares were issued in connection with the reverse stock split. Any stockholder who would otherwise be entitled to receive a fractional share instead became entitled to receive one whole share of common stock in lieu of such fractional share. Equitable adjustments corresponding to the reverse stock split ratio were made to all (i) issued and outstanding shares of all other classes of stock of the Company, (ii) the exercise prices of and number of shares of common stock underlying the Company’s public and private warrants, (iii) the number of shares of common stock underlying the Company’s outstanding equity awards, and (iv) the number of shares of common stock issuable under the Company’s equity incentive plan. All share and per share amounts of the common stock included in the accompanying condensed consolidated financial statements and these notes to the condensed consolidated financial statements have been retrospectively adjusted to give effect to the reverse stock split for all periods presented, including reclassifying an amount equal to the reduction in par value to additional paid-in capital.

Mergers – Rubicon Technologies, Inc. was initially incorporated in the Cayman Islands on April 26, 2021 as a special purposes acquisition company under the name “Founder SPAC” (“Founder”). Founder was formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. On August 15, 2022 (the “Closing Date”), Founder consummated the mergers (the “Mergers”), pursuant to that certain Agreement and Plan of Merger, dated December 15, 2021 (the “Merger Agreement”) (the “Closing”).

In connection with the Mergers, the Company was reorganized into an Up-C structure, in which substantially all of the assets and business of the Company are held by Rubicon Technologies Holdings, LLC (“Holdings LLC”) and continue to operate through Rubicon Technologies Holdings, LLC and its subsidiaries, and Rubicon Technologies, Inc.’s material assets are the equity interests of Rubicon Technologies Holdings, LLC indirectly held by it. Pursuant to the Merger Agreement, the Mergers were accounted for as a reverse recapitalization in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) (the “Reverse Recapitalization”). Under this method of accounting, Founder was treated as the acquired company and Holdings LLC was treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Holdings LLC issuing stock for the net assets of Founder, accompanied by a recapitalization. Thus, the accompanying condensed consolidated financial statements reflect (i) the historical operating results of Holdings LLC prior to the Mergers; (ii) the results of Rubicon Technologies, Inc. following the Mergers; and (iii) the acquired assets and liabilities of Founder stated at historical cost, with no goodwill or other intangible assets recorded.

Sale of Business – During the first quarter of 2024, the Company’s Board of Directors (“Board”) approved a plan to sell the Software-as-a-Service business (the “SaaS Business”). On May 7, 2024, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) and completed the sale of SaaS Business. In connection with the Sale, the Company recognized a gain of $59.7 million on the sale of SaaS Business during the nine months ended September 30, 2024 presented within the accompanying condensed consolidated statements of operations. See Note 3 for additional information. In conjunction to the sale of SaaS Business, the Company also entered into a Securities Purchase Agreement (the “Purchase Agreement” or “SPA”) with MBI Holdings, LP (the “Buyer”), an affiliate of Rodina Capital (“Rodina”). See Note 11 for additional information.

Basis of Presentation and Consolidation – The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to U.S. generally accepted accounting principles (“U.S. GAAP) and reflect all adjustments which are, in the opinion of management, necessary to a fair presentation of the results of the interim periods presented, under the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). These condensed consolidated financial statements include all adjustments consisting of only normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented. The Company’s condensed consolidated financial statements include the accounts of Rubicon Technologies, Inc. and subsidiaries. The Company’s condensed consolidated financial statements reflect the elimination of all significant inter-company accounts and transactions. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2024. Certain information and note disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes prepared in accordance with U.S. GAAP have been condensed in, or omitted from, these interim financial statements. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes to the consolidated financial statements for the fiscal year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2024 and Form 10-K/A filed with SEC on May 20, 2024 due to restatements related to additional paid-in capital and noncontrolling interest.

Liquidity and going concern consideration – The Company has historically incurred losses from operations and generated negative cash flows from operating activities. The Company also has negative working capital and stockholders’ deficit as of September 30, 2024. The Company has net income for the nine months ended September 30, 2024, primarily driven by the gain on sale of its SaaS business, see Note 3 – Discontinued operations and business disposition for further details.

As of September 30, 2024, cash and cash equivalents totaled $1.3 1,346 million, accounts receivable totaled $84.4 84,416 million and unbilled accounts receivable totaled $57.5 million. Through the sale of SaaS Business, the Company received cash for a total amount of $81.7 million, of which $57 million was used to prepay the outstanding balances for the June 2023 Term Loan (as defined in Note 5) and the June 2023 Revolving Credit Facility (as defined in Note 5), $20 million was used to repay the outstanding balances for accounts payable, and $3.2 million was used to pay expenses incurred for the sale. Availability under the June 2023 Revolving Credit Facility, which provided the ability to borrow up to $90.0 million, was $0 million, and the June 2023 Revolving Credit Facility is scheduled to mature on March 9, 2025. In conjunction to the sale of SaaS Business, the Company also entered into side letters with lenders of the June 2023 Term Loan, the June 2023 Revolving Credit Facility, and the December 2021 Subordinated Term Loan. All side letters required the Company to initiate a sale process to sell all or substantially all of the equity interests and assets of the Company within 300 days of the completion of the sale of SaaS Business on May 7, 2024. The letter required two milestones of the sale process, (i) within four months of May 7, 2024, the Company should enter into a binding letter of intent to consummate the sale of the Company and (ii) within ten months of May 7, 2024, the Company should consummate the sale of the Company and repay the outstanding balances of the debts in full. If any of the milestones are not met and such failure is not cured by the Company in accordance with such terms, the outstanding balances for the June 2023 Term Loan, the June 2023 Revolving Credit Facility, and the December 2021 Subordinated Term Loan will become due in full within ten months of May 7, 2024. The Company is currently exploring refinancing options, which are not yet finalized. The side letters effectively accelerate the maturity of the June 2023 Term Loan, the June 2023 Revolving Credit Facility, and the December 2021 Subordinated Term Loan, resulting in potential negative impacts on the Company’s cash position and liquidity. Pursuant to the Cantor Sales Agreement (as defined in Note 12), the Company may offer and sell up to $50.0 million shares of Class A Common Stock through Cantor. However, it is uncertain how quickly Cantor will be able to sell such shares of Class A Common Stock at the price the Company requests to deliver additional liquidity to the Company.

The Company currently projects that it will not have sufficient cash on hand or available liquidity under existing arrangements to meet the Company’s projected liquidity needs for the next 12 months. As a result, there is substantial doubt about the Company’s ability to continue as a going concern.

To address liquidity needs, the Company has been working to execute various initiatives to modify its operations to reduce spending and improve cash flow. Initiatives the Company has undertaken in recent periods include (i) increased focus on operational efficiencies and cost reduction measures, (ii) eliminating redundancies that have been the byproduct of the Company’s recent growth and expansion, (iii) evaluating the Company’s portfolio and less profitable accounts to better ensure the Company is deploying resources efficiently, and (iv) exercising strict capital discipline for future investments, such as requiring investments to meet minimum hurdle rates. Additionally, on May 7, 2024, the Company completed the sale of its SaaS Business (see Note 3 for further information) and entered into the Rodina SPA (see Note 11 for further information) which provided the Company with additional cash.

The Company is currently exploring refinancing options, which are not yet finalized. The Company believes that additional capital will be needed to provide sufficient liquidity to meet the Company’s known liquidity needs for the next 12 months given that the June 2023 Revolving Credit Facility is scheduled to mature and the borrowings under the facility will become due and payable on the maturity date. However, while management believes the Company will be able to obtain additional capital through debt and equity financing, including sales of Class A Common Stock under the Cantor Sales Agreement, to the extent necessary, the Company has obtained no firm commitment from current or prospective investors to date and no assurance can be provided that such additional financing will be obtained at the level acceptable to the Company within the necessary timeframe, if at all. Failure to secure sufficient additional funding in a timely manner or at all will impact the Company’s liquidity, including its ability to service its debt and other liabilities, and may require the Company to modify, delay, or abandon some of its planned future expansion or development, or to otherwise enact additional operating cost reductions available to management, which could have a material adverse effect on the Company’s business, operating results, financial condition, and could force the Company to limit its business activities or discontinue its operations entirely.

The accompanying condensed consolidated financial statements are prepared in accordance with U.S. GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the accompanying condensed consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.

Segments – The Company operates in one operating segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assessing performance. The Company’s CODM role is fulfilled by the Executive Leadership Team (“ELT”), who allocates resources and assesses performance based upon consolidated financial information.

Use of Estimates – The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of any contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Emerging Growth Company – The Company is an emerging growth company (“EGC”), as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company did not opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an EGC, will be required to adopt the new or revised standard at the time the new or revised standard becomes applicable to private companies. The effective dates shown in Note 2 below reflect the election to use the extended transition period.

Revenue Recognition – The Company recognizes service revenue over time, consistent with efforts performed and when the customer simultaneously receives and consumes the benefits provided by the Company’s services. The Company recognizes recyclable commodity revenue at the point in time when the ownership, risks, and rewards transfer. The Company derives its revenue from waste removal, waste management and consultation services, software subscriptions prior to the disposition of the SaaS business (Note 3), and the sale of recyclable commodities.

Service Revenue:

Service revenue is primarily derived from long-term contracts with waste generator customers including multiple promises delivered through the Company’s digital marketplace platform. The promises include waste removal, consultation services, billing administration and consolidation, cost savings analyses, and vendor procurement and performance management, each of which constitutes an input to the combined service managed through the digital platform. The digital platform and services are highly interdependent, and accordingly, each contractual promise is not considered a distinct performance obligation in the context of the contract and is combined into a single performance obligation. In general, fees are invoiced, and revenue is recognized over time as control is transferred. Revenue is measured as the amount of consideration the Company expects to receive in exchange for providing the service. The Company invoices for certain services prior to performance. These advance invoices are included in contract liabilities and recognized as revenue in the period service is provided.

Service revenue also includes software-as-a-service subscription, maintenance, equipment and other professional services, which represent separate performance obligations. Once the performance obligations and the transaction price are determined, including an estimate of any variable consideration, the Company then allocates the transaction price to each performance obligation in the contract using a relative standalone selling price method. The Company determines standalone selling price based on the price at which the good or service is sold separately. The Company invoices for certain services prior to performance. These advance invoices are included in contract liabilities and recognized as revenue in the period service is provided.

Recyclable Commodity Revenue:

The Company recognizes recyclable commodity revenue through the sales of old corrugated cardboard (OCC), old newsprint (ONP), aluminum, glass, pallets, and other recyclable materials at market prices. The Company purchases recyclable commodities from certain waste generator customers and sells the recyclable materials to recycling and processing facilities. Revenue recognized under these agreements is variable in nature based on the market, type and volume or weight of the materials sold. The amount of revenue recognized is based on commodity prices at the time of sale, which are unknown at contract inception. Fees are billed, and revenue is recognized at a point in time when control is transferred to the recycling and processing facilities.

Management reviews contracts and agreements the Company has with its waste generator customers and hauling and recycling partners and performs an evaluation to consider the most appropriate manner in accordance with ASC 606-10, Revenue Recognition: Principal Agent Considerations, by which revenue is presented on the condensed consolidated statements of operations.

Judgment is required in evaluating the presentation of revenue on a gross versus net basis based on whether the Company controls the service provided to the end-user and is the principal in the transaction (gross), or the Company arranges for other parties to provide the service to the end-user and is the agent in the transaction (net). Management has concluded that the Company is the principal in most arrangements as it controls the waste removal service and is the primary obligor in the transactions.

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) which we recognize revenue at the amount to which the Company has the right to invoice for services performed and (iii) variable consideration which is allocated entirely to a wholly unsatisfied performance obligation. After applying these optional exemptions, the aggregate amount of the transaction price allocated to unsatisfied or partially satisfied performance obligations as of September 30, 2024 and December 31, 2023 was insignificant.

Cost of Revenue, exclusive of amortization and depreciation – Cost of service revenues primarily consists of expenses related to delivering the Company’s service and providing support, including third-party hauler costs, costs of data center capacity, certain fees paid to various third parties for the use of their technology, services and data, and employee-related costs, such as salaries and benefits.

Cost of recyclable commodity revenues primarily consists of expenses related to purchases of OCC, ONP, aluminum, glass, pallets and other recyclable materials, and any associated transportation fees.

The Company recognizes the cost of revenue exclusive of any amortization or depreciation expenses, which are recognized in amortization and depreciation expenses on the condensed consolidated statements of operations.

Cash and Cash Equivalents – The Company considers all highly liquid investments purchased with an original maturity of three months or less when purchased to be cash equivalents. The Company maintains its cash in bank deposit accounts, which at times exceed the Federal Deposit Insurance Corporation insurance limits.

Accounts Receivable and Contract Balances – Accounts receivable consist of trade accounts receivable for services provided to customers. Accounts receivable is stated at the amount the Company expects to collect. The Company makes estimates of expected credit and collectability trends for the allowance for credit losses and allowance for unbilled receivables based upon the Company’s assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Past-due balances and other higher-risk amounts are reviewed individually for collectability. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. As of September 30, 2024 and December 31, 2023, the allowances for accounts receivable and contract assets were $2.6 million and $2.7 million, respectively.

In cases where customers pay for services in arrears, the Company accrues revenue in advance of billings as long as the criteria for revenue recognition are met, thus creating a contract asset (unbilled receivable). As of September 30, 2024 and December 31, 2023, the Company’s continuing operations had unbilled receivables of $57.5 million and $75.6 million, respectively. These unbilled balances were the result of services provided in the period, but not yet billed to the customer. During the nine months ended September 30, 2024, the Company invoiced its customers $75.8 million pertaining to contract assets for services delivered prior to December 31, 2023. As further described in Note 3, $0 million and $1.1 million of contract assets were classified to current assets of discontinued operations on the accompanying condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively.

Contract liabilities (deferred revenue) consist of amounts collected prior to having satisfied the performance obligation. The Company periodically invoices customers for recurring front load services in advance monthly basis. As of September 30, 2024 and December 31, 2023, the Company’s continuing operations had deferred revenue balances of $1.2 million and $1.5 million, respectively. During the nine months ended September 30, 2024, the Company recognized $1.5 million of revenue that was included in the contract liabilities balance as of December 31, 2023. As further described in Note 3, $0 million and $5.9 million of contract liabilities were classified to current liabilities held for sale on the accompanying condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively.

Accrued Hauler Expenses – The Company recognizes hauler costs and the cost of recyclable products when services are performed. Accounting for accrued hauler costs and the cost of recyclable commodities requires estimates and assumptions regarding the quantity of waste collected by the vendors and the frequencies of the collections. The Company estimates quantities and frequencies using historical transaction and market data based on the waste stream composition, equipment type, and equipment size. Accrued hauler expenses are presented within accrued expenses on the condensed consolidated balance sheets.

Fair Value Measurements – In accordance with U.S. GAAP, the Company groups its financial assets and financial liabilities at fair value in three levels, based on the markets in which the financial assets and financial liabilities are traded, and the reliability of the assumptions used to determine fair value. These levels are:

Level 1 – Valuations for financial assets and financial liabilities traded in active exchange markets, such as the NYSE.

Level 2 – Valuations are obtained from readily available pricing sources via independent providers for market transactions involving similar financial assets and financial liabilities.

Level 3 – Valuations for financial assets and financial liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models, and similar techniques and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such financial assets or financial liabilities.

See Note 15 for further information regarding fair value measurements.

Redeemable Convertible Preferred Class A Stock – The Company recorded its redeemable convertible preferred class A stock at the allocated issuance price, less issuance costs on the dates of issuance, May 7, 2024. The redeemable convertible preferred class A stock is classified outside of permanent equity as temporary equity in the condensed consolidated balance sheets. The redeemable convertible preferred class A stock is redeemable at the holder’s option when the redemption will not result in an event of default or similar concept under any existing debt agreements; upon certain change in control events that are outside of the Company’s control such as a change of control of the Company; or an event of insolvency. Holders also have the rights to receive their liquidation preference upon an event of insolvency. The Company has not adjusted the carrying values of the redeemable convertible preferred class A stock since it was not probable of becoming redeemable at September 30, 2024. Subsequent adjustments to the carrying values will be made only when it becomes probable that such redemption will occur. See Note 11 for additional information.

Customer Acquisition Costs – The Company makes certain expenditures related to acquiring contracts for future services. These expenditures are capitalized and amortized in proportion to the expected future revenue from the customer, which in most cases results in straight-line amortization over the estimated life of the customer. Amortization of these customer acquisition costs is presented within amortization and depreciation on the condensed consolidated statements of operations.

Warrants – The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s Class A common stock, par value $0.0001 per share (“Class A Common Stock”), among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded in liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the liability-classified warrants are recognized as a component of other income (expense) on the condensed consolidated statements of operations.

Earn-out Liabilities– Pursuant to the Merger Agreement, (i) Blocked Unitholders immediately before the Closing received a right to receive a pro rata portion of 186,064 shares of Class A Common Stock (the “Earn-Out Class A Shares”) and (ii) Rubicon Continuing Unitholders (as defined in Note 3) immediately before the Closing received a right to receive a pro rata portion of 1,112,605 Class B Units (as defined in Note 3) (“Earn-Out Units”) and an equivalent number of shares of the Company’s Class V common stock, par value $0.0001 (“Class V Common Stock”) (“Earn-Out Class V Shares”, and together with Earn-Out Class A Shares and Earn-Out Units, “Earn-Out Interests”), in each case, depending upon the performance of Class A Common Stock during the five-year period after the Closing (the “Earn-Out Period”), as set forth below upon satisfaction of any of the following conditions (each, an “Earn-Out Condition”):

(1)

50% of the Earn-Out Interests if the volume weighted average price (the “VWAP”) of the Class A Common Stock equals or exceeds $112.00 per share (as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations) for twenty (20) of thirty (30) consecutive trading days during the Earn-Out Period; and

(2)

50% of the Earn-Out Interests if the VWAP of the Class A Common Stock equals or exceeds $128.00 per share (as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations) for twenty (20) of any thirty (30) consecutive trading days during the Earn-Out Period.

The Company accounts for these Earn-Out Interests as either equity-classified or liability-classified instruments based on an assessment of the specific terms (as further defined in Note 3) and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).

Earn-Out Interests were classified as liability transactions at initial issuance, which offset against additional paid-in capital as of the Closing. At each period end, Earn-Out Interests are remeasured to their fair value, with the changes during that period recognized as a component of other income (expense) on the condensed consolidated statement of operations. Upon issuance and release of the shares after each Earn-Out Condition is met, the related Earn-Out Interests will be remeasured to their fair value at that time with the changes recognized as a component of other income (expense), and such Earn-Out Interests will be reclassed to stockholders’ deficit on the condensed consolidated balance sheets. As of September 30, 2024 and December 31, 2023, the Earn-Out Interests had a fair value of $9 thousand and $0.1 million, respectively, with the changes in the fair value of $0.1 million for the nine months ended September 30, 2024, recognized as a gain on change in fair value of earn-out liabilities under other income (expense) within the accompanying condensed consolidated statements of operations.

Noncontrolling Interest – Noncontrolling interest represents the Company’s noncontrolling interest in consolidated subsidiaries which are not attributable, directly or indirectly, to the controlling Class A Common Stock ownership of the Company.

Shares of Class V Common Stock are exchangeable into an equal number of Class A Common Stock. Shares of Class V Common Stock are non-economic voting shares in Rubicon Technologies, Inc., where shares of Class V Common Stock each have one vote per share.

The financial results of Holdings LLC were consolidated into Rubicon Technologies, Inc. and 1.11% and 129.73% of Holdings LLC’s net loss during the three and nine months ended September 30, 2024 was allocated to noncontrolling interests (“NCI”), respectively.

Income Taxes – Rubicon Technologies, Inc. is a corporation and is subject to U.S. federal as well as state income taxes including the income or loss allocated from its investment in Rubicon Technologies Holdings, LLC. Rubicon Technologies Holdings, LLC is taxed as a partnership for which the taxable income or loss is allocated to its members. Certain of the Rubicon Technologies Holdings, LLC operating subsidiaries are considered taxable corporations for U.S. income tax purposes. Prior to the Mergers, Holdings LLC was not subject to U.S. federal and certain state income taxes at the entity level.

The Company accounts for income taxes in accordance with ASC Topic 740, Accounting for Income Taxes (“ASC Topic 740”), which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax bases of its assets and liabilities by applying the enacted tax rates in effect for the year in which the differences are expected to reverse. Such net tax effects on temporary differences are reflected on the Company’s condensed consolidated balance sheets as deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when the Company believes that it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The Company calculates the interim tax provision in accordance with the provisions of ASC Subtopic 740-270, Income Taxes; Interim Reporting. For interim periods, the Company estimates the annual effective income tax rate (“AETR”) and applies the estimated rate to the year-to-date income or loss before income taxes.

ASC Topic 740 prescribes a two-step approach for the recognition and measurement of tax benefits associated with the positions taken or expected to be taken in a tax return that affect amounts reported in the financial statements. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. As of September 30, 2024 and December 31, 2023, the Company has no tax positions that met this threshold and, therefore, has not recognized such benefits. The Company has reviewed and will continue to review the conclusions reached regarding uncertain tax positions, which may be subject to review and adjustment at a later date based on ongoing analyses of tax laws, regulations and interpretations thereof. To the extent that the Company’s assessment of the conclusions reached regarding uncertain tax positions changes as a result of the evaluation of new information, such change in estimates will be recorded in the period in which such determination is made. The Company reports income tax-related interest and penalties relating to uncertain tax positions, if applicable, as a component of income tax expense.

The Company’s income tax benefit was $0.1 million and $0 for the three months ended September 30, 2024 and 2023, respectively, with an effective tax rate of 1.4% and (0.1)%, respectively. The Company’s income tax benefit was $1.9 million and $0 million for the nine months ended September 30, 2024 and 2023, respectively, with an effective tax rate of 67.4% and (0.1)%, respectively. The provision for income taxes differs from the amount that would result from applying statutory rates primarily due to the changes in the deferred tax valuation allowance including a release of valuation allowance on net operating losses, expense related to the gain on the sale of the SaaS business, loss attributable to noncontrolling interest, and differences in the deductibility of certain book and tax expenses, including the changes in fair value of earn-out liabilities, warrant liabilities and derivatives. The Company’s net operating losses utilized are limited under Section 382 and were generated during 2022.

During the nine months ended September 30, 2024 and the year ended December 31, 2023, the Company recorded a full valuation allowance against its deferred tax assets. The Company intends to maintain this position until there is sufficient evidence to support the reversal of all or some portion of the allowance. The Company also has certain assets with indefinite lives for which the basis is different for book and tax. As a result, the Company is in a net deferred tax liability position of $0.3 million and $0.2 million as of September 30, 2024 and December 31, 2023, respectively.

Tax Receivable Agreement Obligation – The Company and Holdings LLC entered into a Tax Receivable Agreement (the “Tax Receivable Agreement” or “TRA”) with Rubicon Continuing Unitholders and Blocked Unitholders (together, the “TRA Holders”). Pursuant to the Tax Receivable Agreement, among other things, the Company is required to pay to the TRA Holders 85% of certain of the Company’s realized (or in certain cases deemed realized) tax savings as a result of certain tax benefits related to the transactions contemplated by the Merger Agreement and future exchanges of Class B Units for Class A Common Stock or cash. The actual tax benefit, as well as the amount and timing of any payments under the TRA, will vary depending on a number of factors, including the price of Class A Common Stock at the time of the exchange; the timing of future exchanges; the extent to which exchanges are taxable; the amount and timing of the utilization of tax attributes; the amount, timing and character of the Company’s income; the U.S. federal, state and local tax rates then applicable; the depreciation and amortization periods that apply to the increases in tax basis; the timing and amount of any earlier payments that the Company may have made under the TRA; and the portion of the Company’s payments under the TRA that constitute imputed interest or give rise to depreciable or amortizable tax basis.

The Company accounts for the effects of these increases in tax basis and associated payments under the TRAs if and when exchanges occur as follows:

recognizes a contingent liability for the TRA obligation when it is deemed probable and estimable, with a corresponding adjustment to additional paid-in-capital, based on the estimate of the aggregate amount that the Company will pay;

records an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange;

to the extent the Company estimates that the full benefit represented by the deferred tax asset will not be fully realized based on an analysis that will consider, among other things, the expectation of future earnings, the Company reduces the deferred tax asset with a valuation allowance; and

the effects of changes in any of the estimates and subsequent changes in the enacted tax rates after the initial recognition will be included in the Company’s net loss.

A TRA liability is determined and recorded under ASC 450, Contingencies, as a contingent liability; therefore, the Company is required to evaluate whether the liability is both probable and the amount can be estimated. Since the TRA liability is payable upon cash tax savings and the Company has not determined that positive future taxable income is probable based on the Company’s historical loss position and other factors that make it difficult to rely on forecasts, the Company has not recorded the TRA liability as of September 30, 2024 or December 31, 2023. The Company will evaluate this on a quarterly basis, which may result in an adjustment in future periods.

Earnings (Loss) Per Share (“EPS”) – Basic income (loss) per share is computed by dividing net income (loss) attributable to Rubicon Technologies, Inc. by the weighted-average number of shares of Class A Common Stock outstanding during the period.

Diluted income (loss) per share is computed giving effect to all potential weighted-average dilutive shares for the period. The dilutive effect of outstanding awards or financial instruments, if any, is reflected in diluted income (loss) per share by application of the treasury stock method or if converted method, as applicable. Stock awards are excluded from the calculation of diluted EPS in the event they are antidilutive or subject to performance conditions for which the necessary conditions have not been satisfied by the end of the reporting period. See Note 14 for additional information on dilutive securities.

Derivative Financial Instruments – From time to time, the Company utilizes derivative instruments as part of our overall strategy. The Company’s derivative instruments are recorded at fair value on the consolidated balance sheets. These derivative instruments have not been designated as hedges; therefore, both realized and unrealized gains and losses are recognized in earnings. For the purposes of cash flow presentation, realized and unrealized gains or losses are included under cash flows from operating activities. Upfront cash payments received upon the issuance of derivative instruments are included within cash flows from financing activities, while the prepayments made upon the issuance of derivative instruments are included within cash flows from investing activities within the consolidated statements of cash flows.

Stock-Based Compensation – The Company measures fair value of employee stock-based compensation awards on the date of grant and uses the straight-line attribution method to recognize the related expense over the requisite service period, and accounts for forfeitures as they occur. The fair value of equity-classified restricted stock units and performance-based restricted stock units is equal to the market price of Class A Common Stock on the date of grant. The liability-classified restricted stock units are recognized at their fair value that is equal to the market price of Class A Common Stock on the date of grant and remeasured to the market price of Class A Common Stock at each period-end with related changes in the fair value recognized in general and administrative expense on the condensed consolidated statements of operations.

The Company accounts for nonemployee stock-based transactions using the fair value of the consideration received (i.e., the value of the goods or services) or the fair value of the equity instruments issued, whichever is more reliably measurable.

Note 2—Recent accounting pronouncements

Accounting pronouncements issued, but not adopted as of September 30, 2024

In November 2023, the FASB issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires enhanced disclosure of significant segment expenses on an annual and interim basis. This ASU will be effective for the annual periods beginning the year ended December 15, 2023, and for interim periods ended December 15, 2024. Early adoption is permitted. Upon adoption, this ASU should be applied retrospectively to all prior periods presented in the financial statements. As the Company only has one segment, the Company anticipates that the impact of this ASU is minimal in the Company’s condensed consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This ASU will be effective for the annual periods beginning the year ended December 15, 2024. Early adoption is permitted. Upon adoption, this ASU can be applied prospectively or retrospectively. The Company is currently evaluating the impact this ASU will have on the Company’s condensed consolidated financial statements.

On March 21, 2024, the FASB issued ASU 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards, which clarifies how an entity determines whether a profits interest or similar award (hereafter a “profits interest award”) is (1) within the scope of ASC 718 or (2) not a share-based payment arrangement and therefore within the scope of other guidance. This ASU will be effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. The Company is currently evaluating the impact this ASU will have on the Company’s condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). The amendments in ASU 2024-03 require public entities to disclose specified information about certain costs and expenses. ASU 2024-03 is effective for the Company’s annual reporting period beginning on July 1, 2027 and interim reporting periods beginning on July 1, 2028, with early adoption permitted. The Company is currently evaluating the impact ASU 2024-03 will have on its condensed consolidated financial statements.

Note 3—Discontinued Operations and Business Disposition

Discontinued Operations

During the three months ended March 31, 2024, the Company commenced a strategic evaluation of its SaaS Business. As of March 31, 2024, the Company had committed to a plan to sell the business within one year and was actively marketing it in its current condition. The SaaS Business met the held for sale criteria and represented a strategic shift in the Company’s operations. As a result, the SaaS Business has been presented as discontinued operations and, as such, has been excluded from both continuing operations for all periods and the notes to the condensed consolidated financial statements have been adjusted on a retrospective basis.

The Company only has one reporting unit. The SaaS Business met the criteria for classification as held for sale and discontinued operations, therefore, goodwill is allocated to noncurrent assets of discontinued operations on the accompanying condensed consolidated balance sheets as of December 31, 2023 based on the relative fair value of the SaaS Business and the remaining business.

On May 7, 2024, the Company entered into an agreement to sell the SaaS Business to an entity affiliated with Andres Chico, chairman of the Company’s board of directors, and Jose Miguel Enrich, a beneficial owner of greater than 10% of the issued and outstanding Class A Common Stock and Class V Common Stock. Refer to Business Disposition below for further discussion on the sale of the SaaS business.

The following table presents the aggregate carrying amounts of the classes of assets and liabilities of discontinued operations of the SaaS Business disposed as of May 7, 2024 (disposition date) and December 31, 2023 (in thousands):


Assets and Liabilities of Discontinued Operations	May 7, 2024		December 31, 2023
Accounts receivable, net	$	680	$	4,047
Contract assets, net		-		1,054
Prepaid expenses		83		108
Other current assets		129		48
Current assets of discontinued operations		892		5,257
Deferred commissions		142		-
Property and equipment, net		787		793
Goodwill		11,440		11,440
Intangible assets, net		318		550
Total assets of discontinued operations	$	13,579	$	18,040

Accrued expenses	$	645	$	356
Contract liabilities		6,697		5,860
Current liabilities of discontinued operations	$	7,342	$	6,216

The results of operations are recorded as net loss from discontinued operations, net of tax on the accompanying condensed consolidated statements of operations for all periods presented. The following table presents the aggregate results of discontinued operations of the SaaS Business for three months ended September 30, 2024 and 2023 (in thousands):


Results of Discontinued Operations	September 30, 2024		September 30, 2023
Revenue: Service	$	-	$	2,757
Cost of revenue (exclusive of amortization and depreciation): Service		-		840
Sales and marketing		-		1,079
Product development		-		673
General and administrative		-		238
Amortization and depreciation		-		270
Total costs and expense		-		3,100
Loss before income taxes		-		(343	)
Income taxes benefit		226		-
Net income (loss) from discontinued operations, net of taxes	$	226	$	(343	)

The results of operations are recorded as net loss from discontinued operations, net of tax on the accompanying condensed consolidated statements of operations for all periods presented. The following table presents the aggregate results of discontinued operations of the SaaS Business for nine months ended September 30, 2024 and 2023 (in thousands):

Results of Discontinued Operations	September 30, 2024			September 30, 2023
Revenue: Service	$	4,058		$	7,413
Cost of revenue (exclusive of amortization and depreciation)		1,440			2,214
Sales and marketing		2,093			2,709
Product development		977			1,980
General and administrative		279			431
Amortization and depreciation		394			788
Total costs and expense		5,183			8,122
Loss before income taxes		(1,125	)		(709	)
Pre-tax gain on sale of discontinued operations		59,674			-
Income taxes expenses		(1,653	)		-
Net income (loss) from discontinued operations, net of taxes	$	56,896		$	(709	)

Business Disposition

On May 7, 2024, the Company completed the sale of the SaaS Business to an entity affiliated with Andres Chico, chairman of the Company’s board of directors, and Jose Miguel Enrich, a beneficial owner of greater than 10% of the issued and outstanding Class A Common Stock and Class V Common Stock. The total consideration was $61.7 million, which was calculated based on total closing date consideration of $68.2 million minus the working capital adjustment of $6.5 million. In conjunction with the sale of the SaaS business, on May 7, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement” or “SPA”) with MBI Holdings, LP (the “Buyer”), which is also commonly controlled by Andres Chico and Jose Miguel Enrich. Pursuant to the SPA, the Company issued and sold to the Buyer 20,000 shares of Series A Convertible Perpetual Preferred Stock, at $0.0001 par value per share (the “Preferred Stock”), for an aggregate purchase price of $20 million. The Company evaluated both events and identified two units of accounting, which is the Asset Purchase Agreement (“APA”) of the sale of the SaaS business and the SPA of the issuance of Series A Convertible Perpetual Preferred Stock. As such, the total cash proceeds from the sale of the SaaS business and the issuance of Series A Convertible Perpetual Preferred Stock were allocated between the two transactions based on the relative fair value of the SaaS business and the Series A Convertible Perpetual Preferred Stock, resulting in $65.9 million allocated to the sale of the SaaS business and $16.1 million allocated to the issuance of the Series A Convertible Perpetual Preferred Stock (See Note 11).

The APA provides a potential earn-out payment to the Company of $12.5 million if the SaaS Business, after the transaction, achieves a certain annual recurring revenue target on or prior to December 31, 2024. The potential earn-out payment will be decreased by the amount of contingent payment of $2.5 million from the “Take-private Transaction” discussed below. Given that the earn-out payment depends on the SaaS business sold achieving a certain level of annual recurring revenue target, the earn-out consideration is not accounted for as derivative. The Company records the earn-out consideration at its fair value at the transaction date and determined that the fair value of the earn-out payment was $0.3 million at the closing of the transaction on May 7, 2024, and recognized a $0.3 million contingent consideration receivable included in other current assets on its condensed consolidated balance sheets as of September 30, 2024 since the fair value of the earn-out consideration did not change significantly. The Company will perform subsequent assessments at each reporting date to evaluate and adjust the fair value for the receivable, if needed.

Additionally, the APA also provides a contingent payment of $2.5 million from the Buyer if the shareholder approval of a “Take-private Transaction” with the Buyer or the Buyer’s affiliates occurs prior to December 31, 2024. In order for the Company to receive the contingent payment of $2.5 million, a business combination, a merger, or other change of control must occur between the Buyer or the Buyer’s Affiliates or the Buyer’s Parent resulting in a delisting and deregistration of the Company’s stock with the SEC. The payment of the $2.5 million is based on a binary event, which is a business combination, which either occurs or does not occur and is outside the control of the Company. Therefore, this contingent payment of $2.5 million is recognized when it occurs.

To determine the gain derived from the sale of the SaaS business, the Company performed the calculation based on the allocated proceeds of the sale of the SaaS business and the closing balances of the SaaS businesses reported as of May 7, 2024, which consisted of total assets in the amount of $13.6 million, total liabilities of $7.3 million, for a net assets disposed of $6.2 million, compared to the allocated proceeds of $65.9 million. As such, the Company recognized $59.7 million in gain from the sale of the SaaS business on May 7, 2024.

The Company has only one reporting unit and evaluates goodwill for impairment at the single reporting unit level. As a result, there is no goodwill assigned specifically to the SaaS business and goodwill pertaining to the sale of the SaaS business is allocated based on the relative fair value of the SaaS Business and the remaining business. As such, the Company allocated goodwill in the amount of $11.4 million to the SaaS business at the close of the sale on May 7, 2024, at which such goodwill was part of total assets in the gain calculation above.

Note 4—Property and equipment

Property and equipment, net are comprised of the following as of September 30, 2024 and December 31, 2023 (in thousands):

Schedule of property and equipment
	September 30,			December 31,
	2024			2023
Computers, equipment and software	$	2,403		$	2,324
Furniture and fixtures		210			210
Leasehold improvements		1,495			1,441
Total property and equipment		4,108			3,975
Less accumulated amortization and depreciation		(3,708	)		(3,343	)
Total property and equipment, net	$	400		$	632

Property and equipment of discontinued operations:
Customer equipment	$	-		$	1,891
Less: accumulated amortization and depreciation		-			(1,098	)
Total property and equipment, net	$	-		$	793

Property and equipment amortization and depreciation expense of continuing operations for the three months ended September 30, 2024 and 2023 was $0.1 million and $0.1 million, respectively. Property and equipment amortization and depreciation expense of continuing operations for the nine months ended September 30, 2024 and 2023 was $0.4 million and $0.7 million, respectively. As further described in Note 3, $1.9 million of customer equipment and $1.1 million of related accumulated depreciation were classified to noncurrent assets of discontinued operations on the accompanying condensed consolidated balance sheets as of December 31, 2023. On May 7, 2024, $2.0 million of customer equipment and $1.3 million of related accumulated depreciation were disposed as part of the sale of the SaaS business.

Note 5—Debt

Revolving Credit Facilities

Revolving Credit Facility – On December 14, 2018, the Company entered into a $60.0 million “Revolving Credit Facility” secured by all assets of the Company including accounts receivable, intellectual property, and general intangibles. The Revolving Credit Facility’s maturity was December 14, 2023 and bore an interest rate of SOFR plus 5.60%. On February 7, 2023, the Company entered into an amendment to the Revolving Credit Facility, which increased the maximum borrowing amount to $75.0 million and amended the interest rate to between 4.8% up to SOFR plus 4.9%. On March 22, 2023, the Company entered into another amendment which included a modification of the maturity date and a lender’s consent to an amendment to the Subordinated Term Loan agreement. In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that these Revolving Credit Facility amendments were debt modifications.

On June 7, 2023, the Company fully prepaid the borrowing under the Revolving Credit Facility in the amount of $48.6 million and terminated the facility. As a result, the Company recorded $2.6 million of a loss on extinguishment of debt obligations on the condensed consolidated statement of operations for the year ended December 31, 2023.

June 2023 Revolving Credit Facility – On June 7, 2023, the Company entered into a $90.0 million “June 2023 Revolving Credit Facility” secured by the Company’s accounts receivable, all contracts and contract rights and general intangibles, with a maturity date of the earlier of (i) June 7, 2026 or (ii) 90 days prior to the maturity date of the June 2023 Term Loan (defined below) (the “Springing Maturity”). The June 2023 Revolving Credit Facility bears an interest rate of SOFR plus 4.25% (or 3.95% if the Company meets certain conditions defined in the agreement) (9.6% as of September 30, 2024). The borrowing capacity is calculated based on the Company’s borrowing base collateral as defined in the June 2023 Revolving Credit Facility agreement, which is comprised of qualified billed and unbilled receivables and the September 2023 Rodina Letter of Credit (as defined below). The fee on the average daily balance of unused loan commitments is 0.5%. Interest and fees are payable monthly in arrears on the first day of each month.

The June 2023 Revolving Credit Facility requires a lockbox arrangement, which provides for receipts to be swept daily to reduce borrowings outstanding at the discretion of the lender. This arrangement, combined with the existence of the subjective acceleration clause in the Line of Credit agreement, necessitates the Line of Credit be classified as a current liability on the condensed consolidated balance sheets. The acceleration clause allows for amounts borrowed under the facility to become immediately due in the event of a material adverse change in the Company’s business condition (financial or otherwise), operations, properties or prospects, change of management, or change in control.

On September 22, 2023, an entity affiliated with Andres Chico and Jose Miguel Enrich issued a standby letter of credit in the amount of $15.0 million (the “September 2023 Rodina Letter of Credit”) to the lender of the June 2023 Revolving Credit Facility on behalf of the Company, which increased the Company’s borrowing base collateral under the facility by $15.0 million. The expiration date of the September 2023 Rodina Letter of Credit is September 30, 2024, which was automatically renewed for one additional year through September 30, 2025.

On December 5, 2023, the Company entered into an amendment to the June 2023 Revolving Credit Facility. The amendment temporally modified the calculation methodology of the borrowing base collateral, resulting in its increase by $5.0 million through January 15, 2024, which was subsequently extended to March 15, 2024 with an option to be further extended to June 15, 2024. To date, the modified calculation methodology of the borrowing base has been extended on a month-to-month basis.

On May 7, 2024, the Company entered into an amendment to the June 2023 Revolving Credit Facility. Pursuant to the amendment, (i) the lender consented to the SaaS Business sale and (ii) the Company agreed to make a partial prepayment of $11.4 million upon close of the sale of SaaS Business. Concurrently, the Company executed a side letter with the lender of the June 2023 Revolving Credit Facility, which included additional non-financial covenants for certain time-based milestones in relation to potential transactions the Company may enter into in future periods, including an agreement of a sale of all or substantially all of the Company’s equity interests and assets or a merger. The side letter required the Company to initiate a sale process within 300 days of the completion of the sale of SaaS Business on May 7, 2024. The letter required two milestones of the sale process, (i) within four months of May 7, 2024, the Company should enter into a binding letter of intent to consummate the sale of the Company and (ii) within ten months of May 7, 2024, the Company should consummate the sale of the Company and repay the outstanding balance of the debts in full. If any of the milestones are not met and such failure is not cured by the Company in accordance with such terms, the June 2023 Revolving Credit Facility will become due in full within ten months of May 7, 2024. The Company prepaid the $11.4 million at the close of the sale of SaaS Business on May 7, 2024. The prepayment did not result a change in the borrowing capacity of June 2023 Revolving Credit Facility.

In accordance with ASC 470-50, the Company concluded that these Revolving Credit Facility amendments were debt modifications and not extinguishments.

As of September 30, 2024, the Company’s total outstanding borrowings under the Line of Credit were $71.2 million and no amount remained available to draw, after accounting for all the changes discussed above. The June 2023 Revolving Credit Facility is subject to certain financial covenants.

The Company capitalized $2.9 million in deferred debt charges related to the June 2023 Revolving Credit Facility during the year ended December 31, 2023, which has been recorded to prepaid expenses on the accompanying condensed consolidated balance sheets and are amortized over the remaining term of the June 2023 Revolving Credit Facility. The deferred debt charges balance as of September 30, 2024 and December 31, 2023 was $1.6 million and $2.3 million, respectively. Amortization of deferred debt charges related to the June 2023 Revolving Credit Facility were $0.2 million and $0.2 million for the three months ended September 30, 2024 and 2023, respectively. Amortization of deferred debt charges related to the June 2023 Revolving Credit Facility were $0.7 million and $0.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Term Loan Facilities

Term Loan – On March 29, 2019, the Company entered into a $20.0 million “Term Loan” agreement secured by a second lien on all assets of the Company including accounts receivable, intellectual property and general intangibles. The Term Loan was subsequently upsized to $60.0 million and bore an interest rate of LIBOR plus 9.5% with a maturity date of the earlier of March 29, 2024, or the maturity date of the Revolving Credit Facility.

On November 18, 2022, the Company entered into an amendment to the Term Loan agreement, in which the lender consented to the amendments to the Revolving Credit Facility agreement and the Subordinated Term Loan (as defined below) agreement. Per the amended Term Loan agreement, an additional fee was incurred in the amount of $2.0 million, out of which $1.0 million became due in cash and the other $1.0 million was accrued to the principal balance of the Term Loan as the Company did not repay the Term Loan in full on or before March 27, 2023. Furthermore, beginning on April 3, 2023, an additional $0.15 million fee accrued to the principal balance of the Term Loan each week thereafter until the Term Loan was fully repaid.

On February 7, 2023, the Company entered into an amendment, which (i) amended the interest rate to SOFR plus 9.6% and (ii) required the Company to make a prepayment of $10.3 million, including $10.0 million of the principal and $0.3 million of the prepayment premium. Pursuant to the amended agreement, the Company made a $10.3 million payment to the Term Loan lender on February 7, 2023 and recorded $0.8 million as a loss on extinguishment of debt obligations on the accompanying condensed consolidated statements of operations.

On May 19, 2023, the Company entered into an amendment to the Term Loan agreement, which extended the maturity date to May 23, 2024.

In accordance with ASC 470-50, the Company concluded that these Term Loan amendments were debt modifications.

On June 7, 2023, the Company fully prepaid the borrowing under the Term Loan in the amount of $40.5 million and terminated the facility. As a result, the Company recorded $2.5 million of a loss on extinguishment of debt obligations on the condensed consolidated statement of operations for the year ended December 31, 2023.

Subordinated Term Loan – On December 22, 2021, the Company entered into a $20.0 million “Subordinated Term Loan” agreement secured by a third lien on all assets of the Company including accounts receivable, intellectual property and general intangibles. The Subordinated Term Loan was originally scheduled to mature on December 22, 2022, bore an interest rate of 15.0% through the original maturity and 14.0% thereafter. Pursuant to the Subordinated Term Loan agreement, the Company entered into warrant agreements and issued common unit purchase warrants (the “Subordinated Term Loan Warrants”).

On December 12, 2022, the Subordinated Term Loan Warrants were exercised and converted into Class A Common Stock. On December 30, 2022, the Company entered into an agreement with the lender of the Subordinated Term Loan, pursuant to which the Company agreed to compensate, in cash or shares of Class A Common Stock, the lender for the calculated amount between (a) the closing share price of Class A Common Stock on the business day immediately prior to the lender’s exercise of the Subordinated Term Loan Warrants on December 12, 2022 multiplied by the number of shares of Class A Common Stock issued for such exercise (the “December 2022 Warrant Shares”) and (b) the closing share price of Class A Common Stock on the business day immediately prior to the lender’s sale of the December 2022 Warrant Shares multiplied by the number of the December 2022 Warrant Shares sold by the lender (the “Subordinated Term Loan Warrants Make-Whole Agreement”). The Subordinated Term Loan Warrants Make-Whole Agreement expires on December 12, 2027.

The maturity of the Subordinated Term Loan was subsequently extended to December 31, 2023 with the amendment entered into on November 18, 2022. On March 22, 2023, the Company entered into an amendment modifying its maturity date to March 29, 2024, which was subsequently amended to May 23, 2024 with an amendment entered into on May 19, 2023. Concurrently, the Company entered into amendments to the Subordinated Term Loan Warrants agreements (see Note 9 for further information regarding the Subordinated Term Loan Warrants and the Subordinated Term Loan Warrants Make-Whole Agreement).

On June 7, 2023, the Company entered into an amendment to the Subordinated Term Loan agreement, which modified (a) its maturity to the earlier of (i) the scheduled maturity date (June 7, 2025, which the Company has an option to extend to June 7, 2026 upon achievement of certain conditions) and (ii) the maturity date of the June 2023 Revolving Credit Facility, unless the Springing Maturity applies, and (b) the interest rate the Subordinated Term Loan bears to 15%, of which 11% is to be paid in cash and 4% is to be paid in kind by capitalizing such interest accrued to the principal each month in arrears. Any accrued, capitalized and uncapitalized paid-in-kind interest charges will be due and payable in cash at maturity. Concurrently, the Company entered into an amendment to the Subordinated Term Loan Warrants agreements (see Note 9 for further information regarding the Subordinated Term Loan Warrants).

In accordance with ASC 470-50, the Company concluded that these Subordinated Term Loan amendments were debt modifications.

On May 7, 2024, the Company entered into an amendment to the Subordinated Term Loan agreement. Pursuant to the amendment, the lender consented to the sale of the SaaS Business. Concurrently, the Company executed a side letter with the lender of the Subordinated Term Loan, which included additional non-financial covenants for certain time-based milestones in relation to potential transactions the Company may enter into in future periods, including an agreement of a sale of all or substantially all of the Company’s equity interest and assets or a merger. The side letter required the Company to initiate a sale process within 300 days of the completion of the sale of SaaS Business on May 7, 2024. The letter required two milestones of the sale process, (i) within four months of May 7, 2024, the Company should enter into a binding letter of intent to consummate the sale of the Company and (ii) within ten months of May 7, 2024, the Company should consummate the sale of the Company and repay the outstanding balance of the debts in full. If any of the milestones are not met and such failure is not cured by the Company in accordance with such terms, the Subordinated Term Loan will become due in full within ten months of May 7, 2024.

In accordance with ASC 470-50, the Company concluded that these Subordinate Term Loan amendments were debt modifications and not extinguishments.

As of September 30, 2024 and December 31, 2023, the outstanding balance of the subordinated term loan were $21.3 million and $20.7 million, respectively.

The Company capitalized $12.5 million in deferred debt charges related to the Subordinated Term Loan during the year ended December 31, 2023. The balance of deferred debt charges as of September 30, 2024 and December 31, 2023 was $6.3 million and $10.3 million, respectively. Amortization of deferred debt charges related to the Subordinated Term Loan agreement was $1.6 million and $0.7 million for the three months ended September 30, 2024 and 2023, respectively. Amortization of deferred debt charges related to the Subordinated Term Loan agreement was $4.0 million and $1.8 million for the nine months ended September 30, 2024 and 2023, respectively.

June 2023 Term Loan – On June 7, 2023, the Company entered into a $75.0 million “June 2023 Term Loan” agreement secured by the Company’s intellectual property, with a maturity date of the earlier of (i) the scheduled maturity date (June 7, 2025, which the Company has an option to extend to June 7, 2026 upon achievement of certain conditions) and (ii) the maturity date of the June 2023 Revolving Credit Facility, unless the Springing Maturity applies. The June 2023 Term Loan bears an interest rate of the prime rate plus a margin of 8.75% or 8.25% if the Company meets certain conditions defined in the agreement. The Company had the option to pay the interest in kind each month in arrears by capitalizing such interest which accrues through August 31, 2023 as additional principal, and in such instance, the margin applicable for the interest rate was 10.25%. The Company elected to pay the interest accrued through August 31, 2023 in kind. The Company also has the option to pay in kind any excess interest over 13.5% after paying the first 13.5% in cash from September 1, 2023 through the maturity, and the Company elected to pay such excess interest in kind since September 2023. As of September 30, 2024, the applicable interest rate of the June 2023 Term Loan was 16.75%. At the time of any repayment of the June 2023 Term Loan, the Company is required to pay a fee in the amount of 12.0% of the principal repaid. Such repayment fee amount has been accrued as additional principal on the accompanying condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023. Beginning on October 7, 2023 until the June 2023 Term Loan is fully repaid, the lender has the option to elect to convert the outstanding principal into Class A Common Stock. The aggregate number of shares delivered to the lender cannot result in the lender’s ownership exceeding (i) 19.99% of the number shares of Class A Common Stock issued and outstanding or (ii) $10.0 million. Concurrently, the Company entered into warrant agreements and issued common stock purchase warrants (the “June 2023 Term Loan Warrants”) (see Note 9 for further information regarding the June 2023 Term Loan Warrants).

On May 7, 2024, the Company entered into an amendment to the June 2023 Term Loan agreement. Pursuant to the amendment, (i) the lender consented to the sale of SaaS Business and (ii) the Company agreed to make a partial prepayment of $45.6 million, including $43.4 million of the principal and $2.2 million of the accrued exit fee, upon close of the SaaS Business sale. On May 15, 2024, the Company executed a side letter with one of the three lenders of the June 2023 Term Loan, and interest rate (including cash interest and paid-in-kind interest) was capped at 14%. The side letter also included additional non-financial covenants for certain time-based milestones in relation to potential transactions the Company may enter into in future periods, including an agreement of a sale of all or substantially all of the Company’s equity interests and assets or a merger. The side letter required the Company to initiate a sale process within 300 days of the completion of the sale of SaaS Business on May 7, 2024. The letter required two milestones of the sale process, (i) within four months of May 7, 2024, the Company should enter into a binding letter of intent to consummate the sale of the Company and (ii) within ten months of May 7, 2024, the Company should consummate the sale of the Company and repay the outstanding balance of the debts in full. If any of the milestones are not met and such failure is not cured by the Company in accordance with such terms, the June 2023 Term Loan will become due in full within ten months of May 7, 2024.

In accordance with ASC 470-50, the Company concluded that the prepayment of $45.6 million under the amendments to the June 2023 Term Loan was a partial extinguishment of the debt obligation and a debt modification for the remaining debt obligation. The Company recorded $8.5 million as a loss on extinguishment of debt obligations on the accompanying condensed consolidated statements of operations for the partial extinguishment of the debt obligation.

The Company capitalized $24.0 million in deferred debt charges related to the June 2023 Term Loan during the year ended December 31, 2023. The balance of deferred debt charges as of September 30, 2024 and December 31, 2023 was $5.1 million and $19.5 million, respectively. Amortization of deferred debt charges related to the June 2023 Term Loan agreement was $1.5 million and $1.8 million for the three months ended September 30, 2024 and 2023, respectively. Amortization of deferred debt charges related to the June 2023 Term Loan agreement was $5.8 million and $2.2 million for the nine months ended September 30, 2024 and 2023, respectively.

The June 2023 Revolving Credit Facility, the June 2023 Term Loan and the Subordinated Term Loan are subject to certain cross-default provisions under the intercreditor agreement. In addition, the June 2023 Revolving Credit Facility, the June 2023 Term Loan and the Subordinated Term Loan agreements include covenants, which reduce the available borrowing base collateral under the June 2023 Revolving Credit Facility initially by $19.0 million (the “Minimum Excess Availability Reserve”). During the terms of the agreements, the Minimum Excess Availability Reserve could be decreased by up to $9.0 million, which will make the Minimum Excess Availability Reserve $10.0 million, upon the Company’s achievement of certain financial conditions defined in the agreements. As of September 30, 2024, the Minimum Excess Availability Reserve was $19.0 million. Furthermore, the June 2023 Revolving Credit Facility, the June 2023 Term Loan and the Subordinated Term Loan agreements require the Company to maintain a $2.0 million letter of credit. This letter of credit could be eliminated upon the Company’s achievement of certain financial conditions defined in the agreements.

Insider Convertible Debentures – On December 16, 2022, the Company issued convertible debentures to certain members of the Company’s management team and board of directors, and certain other existing investors of the Company for a total principal amount of $11.9 million and the total net proceeds of $10.5 million (the “Insider Convertible Debentures”). The Insider Convertible Debentures had a maturity date of June 16, 2024 and accrue interest at the rate of 6.0% per annum. The interest is due and payable quarterly in arrears, and any portion of the aggregate interest accrued may, at the option of the Company, be paid in kind by capitalizing the amount of accrued interest to the principal on each applicable interest payment date. At any time, so long as the Insider Convertible Debentures are outstanding, each of the holders may convert all or part of the principal and accrued and unpaid interest of their Insider Convertible Debentures they hold into shares of Class A Common Stock at a conversion price of $16.96 per share.

On June 2, 2023, the Company entered into an amendment to the Insider Convertible Debentures, with the exception of the three debentures, for which the amendment was executed on July 11, 2023. The amendment extended the maturity date to December 1, 2026. In accordance with ASC 470-50, the Company concluded that the amendment was a debt modification.

On September 15, 2023, the Company entered into an amendment to the Insider Convertible Debentures held by three entities affiliated with Andres Chico and Jose Miguel Enrich. The amendment lowered the conversion price of these three debentures to $10.00 per share of Class A Common Stock. In accordance with ASC 470-50, the Company concluded that the amendment was a debt extinguishment. As of the amendment date, the Company recognized $0.9 million of loss on debt extinguishment on the condensed consolidated statement of operations. Concurrently, the Company issued a warrant to an entity affiliated with Andres Chico and Jose Miguel Enrich which granted the right to purchase 498,119 shares of Class A Common Stock (the “Rodina Warrant”) (See Note 9 for further information regarding the Rodina Warrant.)

The Company recorded the principal of the Insider Convertible Debentures, including interest incurred between the origination through September 30, 2024, which the Company elected to capitalize to the principal, in related-party debt obligations, net of deferred debt charges on the accompanying condensed consolidated balance sheets as of September 30, 2024. The Company capitalized $0.2 million and $0.2 million of accrued interest to the principal of the Insider Convertible Debentures during the three months ended September 30, 2024 and 2023, respectively. The Company capitalized $0.6 million and $0.5 million of accrued interest to the principal of the Insider Convertible Debentures during the nine months ended September 30, 2024 and 2023, respectively. Amortization of deferred debt charges related to the Insider Convertible Debentures was $0.1 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively. Amortization of deferred debt charges related to the Insider Convertible Debentures was $0.3 million and $0.4 million for the nine months ended September 30, 2024 and 2023, respectively. Neither principal nor accrued interest of the Insider Convertible Debentures was converted to Class A Common Stock from the origination through September 30, 2024. As of September 30, 2024 and December 31, 2023, the outstanding balance of the insider convertible debenture loan were $12.0 million and $11.1 million, respectively.

Third Party Convertible Debentures – On February 1, 2023, the Company issued convertible debentures to certain third parties for a total principal amount of $1.4 million and a total net proceeds of $1.2 million (the “Third Party Convertible Debentures”). The Third Party Convertible Debentures had a maturity date of August 1, 2024 and accrue interest at the rate of 6.0% per annum. The interest is due and payable quarterly in arrears, and any portion of the aggregate interest accrued may, at the option of the Company, be paid in kind by capitalizing the amount of accrued interest to the principal on each applicable interest payment date. At any time, so long as the Third Party Convertible Debentures are outstanding, each of the holders may convert all or part of the principal and accrued and unpaid interest of their Third Party Convertible Debentures they hold into shares of Class A Common Stock at a conversion price of $15.52 per share.

On June 2, 2023, the Company entered into an amendment to the Third Party Convertible Debentures, with the exception of the three debentures, for which the amendment was executed on July 31, 2023. The amendment extended the maturity date to December 1, 2026. In accordance with ASC 470-50, the Company concluded that the amendment was a debt modification. The Company recorded the principal of the Third Party Convertible Debentures, including interest incurred between the origination through September 30, 2024 which the Company elected to capitalize to the principal, in debt obligations, net of deferred debt charges on the accompanying condensed consolidated balance sheets as of September 30, 2024. The Company capitalized an insignificant amount of accrued interest to the principal of the Third Party Convertible Debentures during the three months ended September 30, 2024 and 2023, respectively. The Company capitalized $0.1 million and $0.1 million of accrued interest to the principal of the Third Party Convertible Debentures during the nine months ended September 30, 2024 and 2023, respectively. Amortization of deferred debt charges related to the Third Party Convertible Debentures was insignificant for the three and nine months ended September 30, 2024 and 2023, respectively. Neither principal nor accrued interest of the Third Party Convertible Debentures was converted from the origination through September 30, 2024.

NZ Superfund Convertible Debenture – On February 1, 2023, the Company issued a convertible debenture to Guardians of New Zealand Superannuation (the “NZ Superfund”), a then beneficial owner of greater than 10% of the issued and outstanding Class A Common Stock and Class V Common Stock, for a total principal amount of $5.1 million and the total net proceeds of $4.5 million (the “NZ Superfund Convertible Debenture”). The NZ Superfund Convertible Debenture had a maturity date of August 1, 2024 and accrued interest at the rate of 8.0% per annum. The interest is due and payable quarterly in arrears, and any portion of the aggregate interest accrued may, at the option of the Company, be paid in kind by capitalizing the amount of accrued interest to the principal on each applicable interest payment date. At any time, so long as the NZ Superfund Convertible Debenture is outstanding, the NZ Superfund may convert all or part of the principal and accrued and unpaid interest of the NZ Superfund Convertible Debenture it holds into shares of Class A Common Stock at a conversion price of $15.52.

On June 2, 2023, the Company entered into an amendment to the NZ Superfund Convertible Debenture, which extended the maturity date to December 1, 2026 and modified the interest rate it bears to 14.0%. In accordance with ASC 470-50, the Company concluded that the amendment was a debt modification. The Company recorded the principal of the NZ Superfund Convertible Debenture, including interest incurred between the origination through September 30, 2024 which the Company elected to capitalize to the principal, in related party debt obligations, net of deferred debt charges on the accompanying condensed consolidated balance sheets as of September 30, 2024. The Company capitalized $0.2 million and $0.2 million of accrued interest to the principal of the NZ Superfund Convertible Debenture during the three months ended September 30, 2024 and 2023, respectively. The Company capitalized $0.6 million and $0.4 million of accrued interest to the principal of the NZ Superfund Convertible Debenture during the nine months ended September 30, 2024 and 2023, respectively. Amortization of deferred debt charges related to the NZ Superfund Convertible Debenture was insignificant for the three months ended September 30, 2024 and 2023, respectively. Amortization of deferred debt charges related to the NZ Superfund Convertible Debenture was $0.1 million and $0.1 million for the nine months ended September 30, 2024 and 2023, respectively. Neither principal nor accrued interest of the NZ Superfund Convertible Debenture was converted from the origination through September 30, 2024.

Components of the Company’s debt obligations were as follows (in thousands):


	September 30,			December 31,
	2024			2023
Term loan balance	$	65,859		$	109,422
Convertible debt balance		1,535			1,467
Related-party convertible debt balance		19,626			18,424
Less: unamortized deferred debt charges		(13,313	)		(32,010	)
Total borrowed		73,707			97,303
Less: short-term debt obligation balance		(54,330	)		-
Long-term debt obligation balance	$	19,377		$	97,303

At September 30, 2024, the future aggregate maturities of long-term debt for the remainder of 2024 and subsequent periods are as follows (in thousands):


Fiscal Years Ending December 31,
2024	$	-
2025		65,859
2026		21,161
Total	$	87,020

The total interest expense related to the Revolving Credit Facilities, Term Loan Facilities, and Convertible Debentures was $7.8 million and $9.6 million for the three months ended September 30, 2024 and 2023, respectively. The total interest expense related to the Revolving Credit Facilities, Term Loan Facilities, and Convertible Debentures was $27.1 million and $26.2 million for the nine months ended September 30, 2024 and 2023, respectively.

Note 6—Accrued expenses

Accrued expenses consist of the following as of September 30, 2024 and December 31, 2023 (in thousands):

Schedule of accrued expenses
	September 30,		December 31,
	2024		2023
Accrued hauler expenses	$	44,141	$	63,367
Accrued compensation		6,424		4,221
FPA Settlement Liability (as defined in Note 10)		-		2,000
Accrued income taxes		1,703		-
Other accrued expenses		6,586		7,057
Total accrued expenses	$	58,854	$	76,645

Accrued expenses of discontinued operations:
Accrued expenses	$	-	$	356

During the nine months ended September 30, 2023, the Company granted certain RSU awards, valued at $8.2 million, as replacement awards for $26.8 million of the accrued management rollover consideration. The replacement awards resulted in a $18.6 million gain, which was included in gain on settlement of incentive compensation on the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2023. No such RSU awards were granted during the three and nine months ended September 30, 2024.

During the year ended December 31, 2023, the Company settled with certain Rubicon Management Rollover Holders on a portion of the accrued management rollover consideration and the Company agreed to make quarterly cash payments to these Rubicon Management Rollover Holders through December 31, 2026. As a result, the Company recognized related liabilities of $1.7 million and $2.2 million in accrued expenses and $2.2 million and $3.4 million in other long-term liabilities on the accompanying condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively. See Note 16 for further information.

As further described in Note 3, the Company reported $1.9 million accrued income tax liabilities from discontinued operations, as of September 30, 2024, as a result of the sale of the SaaS Business; and $0.4 million of accrued expenses were classified to current liabilities of discontinued operations on the accompanying condensed consolidated balance sheets as of December 31, 2023.

Note 7—Goodwill and other intangibles

There were no additions to goodwill during the nine months ended September 30, 2024 or the year ended December 31, 2023. No impairment of goodwill was identified for the three or nine months ended September 30, 2024 or the year ended December 31, 2023.

Goodwill consisted of the following (in thousands):


Balance at December 31, 2023	$	32,132
Balance allocated to SaaS business		(11,440	)
Balance at September 30, 2024	$	20,692

Intangible assets consisted of the following (in thousands, except years):


	September 30, 2024
	Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade Name	5	$	728	$	(728	)	$	-
Customer and hauler relationships	2 to 8		20,976		(16,620	)		4,356
Non-competition agreements	3 to 4		550		(550	)		-
Technology	3		1,197		(1,197	)		-
Total finite-lived intangible assets			23,451		(19,095	)		4,356
Domain Name	Indefinite		835		-			835
Total intangible assets		$	24,286	$	(19,095	)	$	5,191

	December 31, 2023
	Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intangible assets of continuing operations:
Trade Name	5	$	728	$	(728	)	$	-
Customer and hauler relationships	2 to 8		20,976		(14,700	)		6,276
Non-competition agreements	3 to 4		550		(550	)		-
Technology	3		1,197		(1,197	)		-
Total finite-lived intangible assets			23,451		(17,175	)		6,276
Domain Name	Indefinite		835		-			835
Total intangible assets		$	24,286	$	(17,175	)	$	7,111

Intangible assets of discontinued operations:
Technology	3	$	1,981	$	(1,431	)	$	550
Total intangible assets of discontinued operations		$	1,981	$	(1,431	)	$	550

Amortization expense for intangible assets of continuing operations was $0.6 million and $0.7 million for the three months ended September 30, 2024, and 2023, respectively. Amortization expense for intangible assets of continuing operations was $1.9 million and $1.9 million for the nine months ended September 30, 2024, and 2023, respectively. Future amortization expense for the remainder of 2024 and subsequent years is as follows (in thousands):

Schedule of goodwill
Fiscal Years Ending December 31,
2024	$	640
2025		2,559
2026		1,157
Total future amortization of intangible assets	$	4,356

As further described in Note 3, $2.0 million of technology intangible assets, $1.4 million of related accumulated amortization and $11.4 million of goodwill were reallocated to noncurrent assets of discontinued operations on the accompanying condensed consolidated balance sheets as of December 31, 2023. On May 7, 2024, $2.0 million of technology intangible assets, $1.7 million of related accumulated amortization and $11.4 million of goodwill allocated to noncurrent assets of discontinued operations were disposed as part of the sale of the SaaS business.

Note 8—Stockholders’ equity (deficit)

The table set forth below reflects information about the Company’s equity as of September 30, 2024:

Schedule of stockholders equity
	Authorized		Issued		Outstanding
Class A Common Stock		690,000,000		68,914,542		68,914,542
Class V Common Stock		275,000,000		776,097		776,097
Preferred Stock		10,000,000		-		-
Total shares as of September 30, 2024		975,000,000		69,690,639		69,690,639

The table set forth below reflects information about the Company’s equity as of December 31, 2023:

	Authorized		Issued		Outstanding
Class A Common Stock		690,000,000		39,643,584		39,643,584
Class V Common Stock		275,000,000		4,425,388		4,425,388
Preferred Stock		10,000,000		-		-
Total shares as of December 31, 2023		975,000,000		44,068,972		44,068,972

Each share of Class A Common Stock and Class V Common Stock entitles the holder one vote per share. Only holders of Class A Common Stock have the right to receive dividend distributions. In the event of liquidation, dissolution or winding up of the affairs of the Company, only holders of Class A Common Stock have the right to receive liquidation proceeds, while the holders of Class V Common Stock are entitled to only the par value of their shares. The holders of Class V Common Stock have the right to exchange Class V Common Stock for an equal number of shares of Class A Common Stock. The Company’s board of directors has discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.

During the three and nine months ended September 30, 2024, 0 and 3,649,291 shares of Class V Common Stock were exchanged for an equal number of Class A Common Stock shares, respectively. During the three and nine months ended September 30, 2023, 0 and 10,007,604 shares of Class V Common Stock were exchanged for an equal number of Class A Common Stock shares, respectively.

Note 9—Warrants

Public Warrants and Private Warrants – In connection with the Closing, on August 15, 2022, the Company assumed a total of 3,752,107 outstanding warrants to purchase one share of the Company’s Class A Common Stock with an exercise price of $92.00 per share. Of these warrants, the 1,976,560 Public Warrants were originally issued in Founder’s initial public offering (the “IPO”) and 1,775,547 Private Warrants were originally issued in a private placement in connection with the IPO. In accordance with the guidance contained in ASC 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Equity, the Company concluded that the IPO Warrants are not precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity. The IPO Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the IPO Warrants. The IPO Warrants became exercisable on September 14, 2022, 30 days after the Closing and no IPO Warrants have been exercised through September 30, 2024. The IPO Warrants will expire five years from the Closing or earlier upon redemption.

The Company may redeem the IPO Warrants:

in whole and not in part;

at a price of $0.08 per warrant;

upon not less than 30 days’ prior written notice to each IPO Warrant holder and

if and only if, the last reported price of the Class A Common Stock equals or exceeds $144.00 per share for any 20 trading days within a 30 trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the IPO Warrant holders.

Rodina Warrant – On September 15, 2023, the Company issued the Rodina Warrant, which granted the holder the right to purchase 498,119 shares of Class A Common Stock at the exercise price of $0.08 per share any time prior to September 15, 2026. In accordance with the guidance contained in ASC 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Equity, the Company concluded that the Rodina Warrant is not precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity. Accordingly, the Rodina Warrant was recognized at its fair value of $1.7 million in additional paid-in capital on the condensed consolidated balance sheet upon issuance. The Rodina Warrant has not been exercised and remains outstanding as of September 30, 2024.

Subordinated Term Loan Warrants – Pursuant to the Subordinated Term Loan agreement entered on December 22, 2021 (see Note 5), the Company concurrently entered into warrant agreements and issued the Subordinated Term Loan Warrants under the condition that if the Company did not repay the Subordinated Term Loan on or prior to the original maturity date of December 22, 2022, the lender would receive the right to purchase up to the number of shares of Class A Common Stock worth $2.0 million at the exercise price of $0.08 per share at any time after the original maturity date prior to the earlier of the date principal and interest on all outstanding term loans under this Subordinated Term Loan agreement are repaid, and the tenth anniversary of the issuance date. Additionally, if the Company did not repay the Subordinated Term Loan on or prior to the original maturity date, the Subordinated Term Loan Warrants would be exercisable for additional $0.2 million of Class A Common Stock each additional full calendar month after the maturity date until the Company fully repays the principal and interest in cash (the “Additional Subordinated Term Loan Warrants”). If the Company repaid the Subordinated Term Loan on or prior to the original maturity date, the Subordinated Term Loan Warrants would automatically terminate and be voided, and no Subordinated Term Loan Warrant would be exercisable.

On November 18, 2022, the Company entered into an amendment to the Subordinated Term Loan Warrants agreements, which increased the number of shares of Class A Common Stock the lender has the right to purchase up to $2.6 million, caused the Subordinated Term Loan Warrants to be immediately exercisable upon execution of the amendment, and increased the value of Class A Common Stock the Additional Subordinated Term Loan Warrants would earn.

On March 22, 2023, the Company entered into an amendment to the Subordinated Term Loan Warrants agreements, which increased the value of Class A Common Stock the Additional Subordinated Term Loan Warrants earnout each additional full calendar month after March 22, 2023 to $0.35 million until the Company repays the Subordinated Term Loan in full.

On June 7, 2023, the Company entered into an amendment to the Subordinated Term Loan Warrants agreements, which amended the value of Class A Common Stock the Additional Subordinated Term Loan Warrants earnout for the full calendar month starting June 23, 2023 to $0.38 million and such amount to increase by $25,000 each additional full calendar month thereafter until the Company repays the Subordinated Term Loan in full.

The Company determined that the Subordinated Term Loan Warrants required liability classification pursuant to ASC 480, Distinguishing Liabilities from Equity. As such, the outstanding Subordinated Term Loan Warrants were recognized as warrant liabilities on the condensed consolidated balance sheets, measured at their inception date fair value and subsequently remeasured at each reporting period with changes in fair value being recorded as a component of other income (expense) on the condensed consolidated statements of operations.

On December 30, 2022, the Company entered into the Subordinated Term Loan Warrants Make-Whole Agreement. During the year ended December 31, 2023, the Additional Subordinated Term Loan Warrants in the amount of $3.7 million were exercised and converted to 1,355,045 shares of Class A Common Stock and reclassified from liability to stockholders’ deficit. During the three months ended September 30, 2024, no Additional Subordinated Term Loan Warrants were exercised. During the nine months ended September 30, 2024, the outstanding Additional Subordinated Term Loan Warrants in the amount of $2.9 million were exercised and converted to 6,043,438 shares of Class A Common Stock in stockholders’ deficit. As of September 30, 2024, and December 31, 2023, and $0.9 million and $0 of the Subordinated Term Loan Warrants were outstanding and recorded in warrant liabilities on the accompanying condensed consolidated balance sheets, respectively.

In June 2024, one of the holders of the Subordinated Term Loan Warrants notified the Company that it had sold the shares subject to the warrant make-whole term and the make-whole amount in scope of the Make-Whole Agreement. The holder further indicated that a recuperation of the difference between the value of the in-scope warrant issued and sale value of such warrant will be required and the settlement will be paid in cash when the Company becomes private. The Company remeasured the fair value of the derivative to the settlement amount of $1.9 million on the agreement execution date, derecognized the derivative liabilities, and recognized the settlement amount as accrued expense in other current liabilities as of September 30, 2024. The change of fair value at remeasurement was $0.1 million.

Pursuant to ASC 815, the Company determined that the Additional Subordinated Term Loan Warrants and the Subordinated Term Loan Warrants Make-Whole Agreement are derivatives. These derivatives, referred to throughout as the “Additional Subordinated Term Loan Warrants Derivative” and the “Subordinated Term Loan Warrants Make-Whole Derivative”, respectively, are recorded in derivative liabilities on the accompanying condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023. The Company performed fair value measurements for the Additional Subordinated Term Loan Warrants Derivative and the Subordinated Term Loan Warrants Make-Whole Derivative, which are described in Note 15. The fair value of the Additional Subordinated Term Loan Warrants Derivative and the Subordinated Term Loan Warrants Make-Whole Derivative are remeasured at each reporting period.

YA Warrant – On November 30, 2022, the Company issued a pre-funded warrant for a purchase price of $6.0 million which was paid by the Yorkville Investor upon issuance (the “YA Warrant”). The YA Warrant is exercisable into $20.0 million of shares of Class A Common Stock at an exercise price of $0.0008 per share any time on or after the earlier of (i) August 30, 2023, and (ii) the date upon which all of the YA Convertible Debentures have been fully repaid by the Company or fully converted into shares of Class A Common Stock. On August 25, 2023 (the “Market Price Set Date”), the YA Convertible Debentures were converted into shares of Class A Common Stock for the full settlements, and the YA Warrant became exercisable at the conversion price of $4.52 per share. The conversion price is to be adjusted to the lowest of (a) the “3-month Reset Price”, which is the average of the daily VWAPs of Class A Common Stock per share during the three consecutive trading days immediately following the 3-month anniversary of the Market Price Set Date, or (b) the “6-month Reset Price”, which is the average of the daily VWAPs of Class A Common Stock per share during the three consecutive trading days immediately following the 6-month anniversary of the Market Price Set Date, in case (a) or (b) is lower than $4.52 per share. The 3-month Reset Price was set at $2.80 per share in November 2023 and the 6-month Reset Price was set at $0.76 per share in February 2024.

The Company initially determined that the YA Warrant required liability classification pursuant to ASC 480 until the 6-month Reset Price was set on February 28, 2024. While the YA Warrant was liability classified, the outstanding YA Warrant was recognized as warrant liability on the condensed consolidated balance sheets, measured at its inception date fair value and subsequently remeasured at each reporting period with changes being recorded as a component of other income (expense) on the condensed consolidated statements of operations. During the year ended December 31, 2023, the Company issued 499,975 shares of Class A Common Stock for partial exercise of the YA Warrant. The Company measured the fair value of the YA Warrant as of December 31, 2023 and recognized $18.6 million of warrant liability on the accompanying condensed consolidated balance sheets.

The Company also determined that the YA Warrant is within the scope of ASC 815-40 where in the event of a purchase offer, tender offer, or exchange offer where holders of 50% or more of the total voting power of the Company’s Class A Common Stock sell, tender or exchange their shares for other securities, cash or property, the holders of the YA Warrant have the option to receive cash equal to the product of $20,000,000 multiplied by the quotient of the number of Warrant shares called for by the Warrant divided by the original number of Warrant Shares underlying the Warrant. The Company determined that a tender offer or exchange event is outside the control of the Company and upon the consummation of a tender offer event it is possible that a change of control of the Company will not have occurred. As a result, the warrants could be cash settled upon an event outside the Company’s control and it is possible that less than all or substantially all of the Class A Shares would be eligible to receive cash and the provision that would result in the cash settlement would not lead to a change in control of the Company due to the existence of the Class V shares.

During the three and nine months ended September 30, 2024, the Company issued 0 and 7,092,436 shares of Class A Common Stock for partial exercise of the YA Warrant, respectively. No warrants were exercised during the three and nine months ended September 30, 2023. The Company’s fair value of the YA Warrant as of September 30, 2024 and December 31, 2023 was $8.3 million and $18.6 million, respectively.

Advisor Warrant – Pursuant to the YA SPA executed with the Yorkville Investor on November 30, 2022, the Company committed to issue a warrant to an advisor for certain professional services provided in connection with the issuance of the facilities (the “Advisor Warrant”). The Advisor Warrant granted the right to purchase up to 62,500 shares of Class A Common Stock at the exercise price of $0.08 any time prior to November 30, 2025. The Advisor Warrant was issued on January 16, 2023. Prior to the issuance of the Advisor Warrant, pursuant to ASC 480, the Company recorded the related obligation as warrant liability on the condensed consolidated balance sheets at its fair value as of the date the obligation incurred and subsequently remeasured at each reporting period with changes in fair value being recorded as a component of other income (expense) on the condensed consolidated statements of operations. Upon issuance of the Advisor Warrant on January 16, 2023, the Company remeasured the fair value of the Advisor Warrant and recognized $0.1 million of loss on change in fair value of the Advisor Warrant as a component of other income (expense) on the accompanying condensed consolidated statement of operations for the three months ended March 31, 2023, and the remeasured Advisory Warrant was reclassified to stockholders’ deficit on the issuance date. Since the issuance through September 30, 2024, the Advisor Warrant was not exercised.

June 2023 Term Loan Warrants – Pursuant to the June 2023 Term Loan agreement entered into on June 7, 2023 (see Note 5), the Company concurrently entered into warrant agreements and issued the June 2023 Term Loan Warrants, which granted the holders the right to purchase up to 2,121,605 shares of Class A Common Stock (the June 2023 Term Loan Warrants Shares) at the exercise price of $0.08 any time before June 7, 2033. If at any time on or before December 7, 2024, the Company issues additional shares of common stock (excluding any shares of common stock or securities convertible into or exchangeable for shares of common stock under the Company’s equity incentive plans existing as of the issue date), the number of the June 2023 Term Loan Warrants Shares issuable upon exercise immediately prior to such common stock issuance will be proportionately increased such that the percentage represented by the June 2023 Term Loan Warrants Shares in the Company’s diluted common stock outstanding will remain the same. Additionally, the holders of the June 2023 Term Loan Warrants have the right to purchase up to the pro rata portion of any new common stock issuance by the Company up to $20.0 million in the aggregate, other than any issuance in connection with (i) any grant pursuant to any stock option agreement, employee stock purchase plan, or similar equity-based plan or compensation agreement, (ii) the conversion or exchange of any securities into shares of the Company’s common stock, or the exercise of any option, warrant, or other right to acquire such shares, (iii) any acquisition by the Company of the stock, assets, properties, or business, (iv) any merger, consolidation, or other business combination involving the Company, or any other transaction or series of transactions resulting in a change of control of the Company and (v) any stock split, stock dividend, or similar recapitalization transaction. The Company determined that the June 2023 Term Loan Warrants did not qualify for equity classification in accordance with ASC 815. As such, the June 2023 Term Loan Warrants were recognized as warrant liability on the condensed consolidated balance sheets, measured at its inception date fair value and subsequently remeasured at each reporting period with changes in fair value being recorded as a component of other income (expense) on the condensed consolidated statements of operations.

On May 7, 2024, the Company entered into an amendment to the June 2023 Term Loan Warrants, which extended the period wherein if a dividend or stock split occurred, the number of shares issuable under the warrants proportionally increase such that the warrant holders are not diluted by the stock dividend or stock split. The amendment extended such period from 18 months to 30 months.

The Company measured the fair value of the June 2023 Term Loan Warrants as of September 30, 2024 and December 31, 2023, and recognized $1 thousand and $7.9 million of warrant liability on the accompanying condensed consolidated balance sheets, respectively, with the change in fair value of $0.5 million and $7.9 million recognized as a component of other income (expense) on the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2024, respectively. The change in fair value was ($3.3) million and ($2.9) million for the three and nine months ended September 30, 2023, respectively, and is recognized as a component of other income (expense) on the accompanying condensed consolidated statements of operations. Since the issuance through September 30, 2023, none of the June 2023 Term Loan Warrants were exercised.

Note 10—Forward Purchase Agreement

On August 4, 2022, the Company and the Forward Purchase Agreement (“FPA”) Sellers entered into the Forward Purchase Agreement for an OTC Equity Prepaid Forward Transaction (the “Forward Purchase Transaction”). On November 30, 2022, the Company and the FPA Sellers entered into the FPA Termination Agreement and terminated the Forward Purchase Agreement. Pursuant to the FPA Termination Agreement, (i) the Company made a one-time $6.0 million cash payment to the FPA Sellers upon execution of the FPA Termination Agreement and agreed to make a $2.0 million payment to the FPA Sellers, which can be settled in cash or shares of Class A Common Stock at the Company’s sole option, on or around the earlier of (a) May 30, 2024 (the “FPA Lock-Up Date”), and (b) nine months following 90% or more of the YA Convertible Debentures is repaid or converted into shares of Class A Common Stock (the “FPA Earlier Lock-Up Date”), (ii) the FPA Sellers forfeited and returned to the Company 277,765 shares of Class A Common Stock which the Company subsequently canceled, and further agreed not to transfer any of 267,606 shares of Class A Common Stock the FPA Sellers retained until the earlier of (a) the FPA Lock-Up Date, and (b) the FPA Earlier Lock-Up Date. As more than 90% of the YA Convertible Debentures were converted into shares of Class A Common Stock on August 25, 2023, the FPA Earlier Lock-Up Date was set as February 25, 2024. The value of 277,765 shares of Class A Common Stock returned by the FPA Seller and subsequently canceled by the Company was $4.6 million as of the FPA Termination Agreement execution date, which was recognized in common stock – Class A and accumulated deficit on the condensed consolidated balance sheets. The $2.0 million obligation (the “FPA Settlement Liability”) was included in accrued expenses on the accompanying condensed consolidated balance sheets as of December 31, 2023 and settled by issuance of 1,656,727 shares of Class A Common Stock in February 2024 and $0.8 million cash payment made by the Company in March 2024. No other activities occurred during the three months and nine months ended on September 30, 2024.

Note 11—Redeemable Convertible Preferred Class A Stock

On May 7, 2024 (the “Original Issue Date”), in conjunction with the sale of SaaS business (see Note 3), the Company entered into a Securities Purchase Agreement (the “Purchase Agreement” or “SPA”) with MBI Holdings, LP (the “Buyer”), an affiliate of Rodina Capital (“Rodina”), which is an affiliate of Mr. Andres Chico and Mr. Jose Miguel Enrich. Pursuant to the Purchase Agreement, the Company agreed to issue and sell to the Buyer 20,000 shares of Series A Convertible Perpetual Preferred Stock, at $0.0001 par value per share (the “Preferred Stock”), for an aggregate purchase price of $20 million. After the issuance of the Series A Convertible Perpetual Preferred Stock, the Rodina entities and affiliates effectively had over 65% ownership of the Company on a fully diluted basis.

The Series A Convertible Perpetual Preferred Stock include the following rights:

Dividends – The holders of the Series A Convertible Perpetual Preferred Stock are entitled to participate in all dividends declared on the common stock on an as-converted basis and are also entitled to a cumulative dividend at the rate of 8% per annum, which will increase by 1% per annum starting on the second anniversary of the Original Issue Date and up to a maximum 11% per annum. The dividend rate is subject to increase under certain specified circumstances. The dividend will be accrued daily from the Original Issue Date, whether or not declared. In the event the dividends are not declared and paid, the dividends otherwise payable will continue to accrue daily and will be compounded quarterly. The cumulated dividend for the three months and nine months ended September 30, 2024 was $0.4 million and $0.6 million, respectively.

Liquidation – In the event of any liquidation event, the holders of Preferred Stock are entitled to receive, on a pari passu basis, assets of the Company available for distribution to its stockholders. The Preferred Stock ranks senior to the common stock with respect to dividend rights and rights on the distribution of assets in the event of a liquidation, dissolution or winding up of the affairs of the Company, ranks pari passu with any parity securities, and ranks junior to secured and unsecured indebtedness and other senior class of stocks. The Preferred Stock has a Liquidation Preference equal to the greater of (i) the initial stated value of $1,000, increased by compound dividend and accrued but unpaid dividends per share (the “Accumulated Stated Value”), and (ii) the amount per share of Preferred Stock that a holder would have received if such holder, immediately prior to such liquidation event, converted such share into common stock. The aggregate liquidation preference amount was $20.6 million based on the Accumulated Stated Value at September 30, 2024.

If the remaining assets available for distribution to stockholders were insufficient, the holders of the Preferred Stock will receive distributions ratably among the holders of Preferred Stock and common stock in proportion to the respective full preferential amounts.

Voting Rights – The holders of the Series A Convertible Perpetual Preferred Stock are entitled to vote as a single class with the holders of the common stock, with a vote equal to the number of shares of common stock into which the Preferred Stock could be converted.

Conversion – The Series A Convertible Perpetual Preferred Stock is convertible at any time into a number of shares of common stock based on a conversion rate set in accordance with the Certificate of Designations of the Preferred Stock. The conversion rate is calculated by dividing (i) the sum of (A) the Accumulated Stated Value, plus (B) compounded dividends (if such dividends have not yet been added to the Accumulated Stated Value) plus (C) accrued and unpaid dividends for the most recent period by (ii) the Conversion Price(initially $0.35 per share and is subject to certain anti-dilution adjustments) in effect immediately prior to the conversion.

Anti-Dilution Adjustments – The Series A Convertible Perpetual Preferred Stock is subject to anti-dilution adjustment upon the occurrence of certain events, including issuance of subdivisions or combination of common stock, stock dividends or distributions to holders of common stock, distribution of certain rights, options or warrants to holders of common stock, distribution of certain equity securities, indebtedness, other securities, assets or properties, tender offer, exchange offer, and the occurrence of reorganization events, subject to limitations set forth in the Certificate of Designations.

Redemption – The Series A Convertible Perpetual Preferred Stock is redeemable at any time after the latest maturity date (the first date on which the Company satisfies its obligation outlined in the Certificate of Designations of the Preferred Stock that does not cause an event of default under existing debt agreements) at the option of the holders into a number of shares of common stock based on a Redemption Price set in accordance with the Certificate of Designations of the Preferred Stock. The Redemption Price is calculated the greatest of (i) the Accumulated Stated Value, (ii) the product of (A) the number of shares of common stock such Preferred Stock is convertible into at the Conversion Price immediately prior to the redemption multiplied by (B) the greater of (x) the current market price of the Company’s stock on the trading day prior to the redemption date and (y) the last reported sale price of the Company’s stock on the trading day prior to the redemption date, and (iii) the product of 2 multiplied by the initial stated value of $1,000. The aggregate redemption amount was $20.6 million based on the Accumulated Stated Value at September 30, 2024.

The Series A Convertible Perpetual Preferred Stock is redeemable at the option of the Company into a number of shares of common stock based on a Redemption Price upon a change of control that is outside of the Company’s control. All of the Preferred Stock will be redeemed into a number of shares of common stock based on the Liquidation Preference upon the occurrence of an insolvency event.

Registration Rights – On May 7, 2024, the Company entered into a Registration Rights Agreement (the “RRA”) with the holders of the Series A Convertible Perpetual Preferred Stock, pursuant to which, among other things, and on the terms and subject to certain limitations set forth therein, the Company was obligated to file a registration statement registering the sale or distribution of shares of common stock held by any holder, including any shares of common stock acquired by any holder pursuant to the conversion of the Preferred Stock, and any other securities upon the exercise of any option, warrant or right or the conversion or exchange of any convertible or exchangeable securities (the “Registrable Securities”). In addition, pursuant to the RRA, the holders have the right to require the Company, subject to certain limitations, to effect a sale of any or all of their Registrable Securities by means of shelf registration and piggyback registration.

The total cash proceeds from the issuance of the Series A Convertible Perpetual Preferred Stock and the sale of SaaS business were allocated to the two transactions based on the relative fair value of these transactions. Therefore, the Company recorded the issuance of the Series A Convertible Perpetual Preferred Stock at $15.7 million, net of issuance costs of $0.4 million on the issuance date of May 7, 2024. The redeemable convertible preferred stock is classified outside of permanent equity as temporary equity in the condensed consolidated balance sheets as of September 30, 2024. The Company has not adjusted the carrying value of the Series A Convertible Perpetual Preferred Stock since it was not probable of becoming redeemable at September 30, 2024. Subsequent adjustments to the carrying values will be made only when it becomes probable that such redemption will occur.

Note 12—Cantor Sales Agreement

On September 5, 2023, the Company entered into a Controlled Equity Offering Sales Agreement (the “Cantor Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”) pursuant to which the Company may offer and sell, from time to time through Cantor, shares of Class A Common Stock for aggregate gross proceeds up to $50.0 million. Pursuant to the Cantor Sales Agreement, Cantor may sell shares of Class A Common Stock in sales deemed to be “at the market offerings” as defined in Rule 415(a)(4) under the Securities Act. The Company has no obligation to sell any shares of Class A Common Stock under the Cantor Sales Agreement. Cantor will act as sales agent and use commercially reasonable efforts to sell on the Company’s behalf all of the shares of Class A Common Stock requested to be sold by the Company. Under the terms of the Cantor Sales Agreement, the Company has agreed to pay Cantor a commission equal to 3.0% of the aggregate gross proceeds from any shares of Class A Common Stock sold pursuant to the Cantor Sales Agreement. The Cantor Sales Agreement will remain in effect until the aggregate gross proceeds of the Company’s sales of shares of Class A Common Stock reach $50.0 million in total unless early terminated under the terms of the Cantor Sales Agreement. The Company did not sell any shares of Class A Common Stock under the Cantor Sales Agreement through September 30, 2024.

Note 13—Equity-based compensation

During the three and nine months ended September 30, 2024 and 2023, the Company recorded stock-based compensation related to the 2022 Plans (as defined below).

The 2022 Equity Incentive Plan (the “2022 Plan”), which became effective on August 15, 2022 in connection with the Closing, provides for the grant to certain employees, officers, non-employee directors and other services providers of options, stock appreciation rights, RSUs, restricted stock and other stock-based awards, any of which may be performance-based, and for incentive bonuses, which may be paid in cash, Common Stock or a combination thereof, as determined by the Company’s Compensation Committee. Under the 2022 Plan, 3,982,409 shares of Class A Common Stock were authorized to be issued. Upon approval by the Company’s board of directors, additional 2,055,769 shares of Class A Common Stock became available for issuance on January 1, 2023 under the 2022 Plan as a result of the plan’s evergreen provision.

The following represents a summary of the Company’s RSU activity and related information during the nine months ended September 30, 2024:

Schedule of RSUs activity
	Units			Weighted Average Grant Date Fair Value
Nonvested – December 31, 2023		518,625		$	10.02
Granted		-			-
Vested		(187,265	)		10.20
Forfeited/redeemed		(71,640	)		8.88
Nonvested – September 30, 2024		259,720		$	10.21

The remaining RSUs will vest over the requisite service periods ranging from six to thirty-six months from the grant date.

The Company recognized $0.5 million and $2.1 million in total equity compensation costs for the three months ended September 30, 2024 and 2023, respectively. The Company recognized $1.6 million and $13.2 million in total equity compensation costs for the nine months ended September 30, 2024 and 2023, respectively.

Some of RSUs settled during the nine months ended September 30, 2023 were net share settled such that the Company withheld shares with a value equivalent to the employees’ obligation for the applicable income and other employment taxes and remitted the cash to the appropriate taxing authorities. The total shares withheld were approximately $1.1 million and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price. Total payments to the taxing authorities for employees’ tax obligations pertaining to the withheld shares were $1.0 million. As of September 30, 2024, there were 197,382 vested RSUs and 17,331 vested Deferred Share Unit (“DSUs”) remaining which are expected to be settled in shares of Class A Common Stock.

As of September 30, 2024, the total unrecognized compensation cost related to outstanding RSUs was $2.7 million, which the Company expects to recognize over a weighted-average period of 1.0 year.

Note 14—Earnings (Loss) per share

Basic net loss per share of Class A Common Stock is computed by dividing net loss attributable to the Company by the weighted average number of shares of Class A Common Stock outstanding during the three and nine months ended September 30, 2024. Diluted net loss per share of Class A Common Stock is computed by dividing net loss attributable to the Company, adjusted for the assumed exchange of all potentially dilutive securities, by weighted average number of shares of Class A Common Stock outstanding adjusted to give effect to potentially dilutive shares.

The computation of net loss per share attributable to Rubicon Technologies, Inc. and weighted-average shares of the Company’s Class A Common Stock outstanding for the three and nine months ended September 30, 2024 are as follows (amounts in thousands, except for share and per share amounts):


	Three Months Ended September 30, 2024			Nine Months Ended September 30, 2024
Numerator:
Net loss from continuing operations	$	(8,679	)	$	(55,990	)
Net loss continuing operations attributable to noncontrolling interests		(89	)		(2,005	)
Allocation of undistributed net earnings to participating securities		-			(26,908	)
Allocation of undistributed net loss from continuing operations of Class A common stockholders	$	(8,590	)	$	(27,077	)

Net income from discontinued operations	$	226		$	56,896
Net income discontinued operations attributable to noncontrolling interests		3			917
Allocation of undistributed net earnings to participating securities		-			27,902
Allocation of undistributed net income from discontinued operations of Rubicon Technologies, Inc.	$	223		$	28,077

Denominator:
Weighted average shares of Class A Common Stock outstanding – Basic		68,946,948			57,996,823
Weighted average shares of Class A Common Stock outstanding – Diluted		68,946,948			57,996,823

Net loss from continuing operations per share attributable to Class A Common Stock – Basic and diluted	$	(0.12	)	$	(0.47	)
Net earnings from discontinued operations per share attributable to Class A Common Stock – Basic and diluted	$	0.00		$	0.48
Net earnings per Class A Common share – basic and diluted	$	(0.12	)	$	0.01

The computation of net loss per share attributable to Rubicon Technologies, Inc. and weighted-average shares of the Company’s Class A Common Stock outstanding for the three and nine months ended September 30, 2023 are as follows (amounts in thousands, except for share and per share amounts):


	Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
Numerator:
Net loss from continuing operations	$	(29,830	)	$	(61,732	)
Net loss continuing operations attributable to noncontrolling interests		(2,465	)		(18,207	)
Net loss: attributable to continuing operations of Rubicon Technologies, Inc.	$	(27,365	)	$	(43,525	)

Net loss from discontinued operations	$	(343	)	$	(709	)
Net loss discontinued operations attributable to noncontrolling interests		(54	)		(249	)
Net loss: attributable to discontinued operations of Rubicon Technologies, Inc.	$	(289	)	$	(460	)

Denominator:
Weighted average shares of Class A Common Stock outstanding – Basic and diluted*		32,381,649			17,786,466

Net loss from continuing operations per share attributable to Class A Common Stock – Basic and diluted*	$	(0.84	)	$	(2.45	)
Net loss from discontinued operations per share attributable to Class A Common Stock – Basic and diluted*	$	(0.01	)	$	(0.02	)

The Company effected a reverse stock split of its outstanding shares of voting common stock at a ratio of one-for-eight (1:8) on September 29, 2023. Pursuant to the reverse stock split, every eight shares of the Company’s issued and outstanding shares of common stock were automatically combined into one issued and outstanding share of common stock, without any change in the number of authorized shares or the par value per share of the common stock. Therefore, the weighted average share of Class A Common Stock outstanding – basic and diluted, and loss per share attributable for Class A Common Stock for continuing operations and discontinued operations have been retroactively adjusted.

The Company’s potentially dilutive securities below were excluded from the computation of diluted loss per share as their effect would be anti-dilutive:

IPO Warrants, Additional Subordinated Term Loan Warrants, Advisor Warrant, June 2023 Term Loan Warrants, YA Warrant and Rodina Warrant.

Earn-Out Interests.

RSUs and DSUs.

Exchangeable Class V Common Stock.

Potential settlements in Class A Common Stock of the Insider Convertible Debentures, the Third Party Convertible Debentures, the NZ Superfund Convertible Debentures, the June 2023 Term Loan, the Subordinated Term Loan Warrants Make-Whole Agreement and portion of fees for the PIPE Software Services Subscription (as defined in Note 17).

Potential conversion of the Redeemable Convertible Preferred Stock.

Note 15—Fair value measurements

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of the dates indicated (in thousands):


	As of September 30, 2024
Liabilities	Level 1		Level 2			Level 3
Warrant liabilities	$	-	$	(867	)	$	(8,327	)
Additional Subordinated Term Loan Warrants Derivative		-		-			(2,254	)
Subordinated Term Loan Warrants Make-Whole Derivative		-		-			(638	)
Total	$	-	$	(867	)	$	(11,219	)

	As of December 31, 2023
Liabilities	Level 1		Level 2			Level 3
Warrant liabilities	$	-	$	(26,493	)	$	-
Additional Subordinated Term Loan Warrants Derivative		-		-			(11,045	)
Subordinated Term Loan Warrants Make-Whole Derivative		-		-			(2,013	)
Total	$	-	$	(26,493	)	$	(13,058	)

Level 3 Rollforward	YA Warrants Liabilities			Additional Subordinated Term Loan Warrants Derivative			Subordinated Term Loan Warrants Make-Whole Derivative
December 31, 2023 balances	$	-		$	(11,045	)	$	(2,013	)
Reclassified from Level 2		(18,601	)		-			-
Additions		-			-			-
Exercise of warrants		4,919			-			-
Changes in fair value		5,355			(755	)		(471	)
Derecognition of derivative		-			-			1,934
Reclassified to Level 2		-			3,525			-
June 30, 2024 balances		(8,327	)		(8,275	)		(550	)
Additions		-			-			-
Exercise of warrants		-			-			-
Changes in fair value		-			5,805			(88	)
Derecognition of derivative		-			-			-
Reclassified to Level 2		-			216			-
September 30, 2024 balances	$	(8,327	)	$	(2,254	)	$	(638	)

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and contract assets and liabilities, approximate fair value due to their short-term maturities and are excluded from the fair value table above.

Warrant liabilities – The outstanding warrants which were classified as warrant liabilities, as of September 30, 2024, were the YA Warrant and the June 2023 Term Loan Warrants.

The June 2023 Term Loan Warrants were classified as Level 2 as of September 30, 2024, and December 31, 2023, respectively. The sole underlying asset of the outstanding warrant liabilities as of September 30, 2024, was Class A Common Stock, which is an observable input. However, the value of the warrants themselves was not directly or indirectly observable. The fair value of the warrant liabilities for the June 2023 Term Loan Warrants was estimated using the Black–Scholes Merton model. The value of the June 2023 Term Loan Warrants is calculated by using the call price times the number of Class A shares in scope, which were 2,121,605 as of September 30, 2024, and December 31, 2023. The key assumption utilized was the probability of refinancing the June 2023 Term Loan in November 2024. The Company determined this probability to be approximately 95% for refinancing and 5% for not refinancing as of the date financial statements were available to be issued.

The YA warrant liabilities were classified to Level 3 as of September 30, 2024 and Level 2 as of December 31, 2023, respectively. The sole underlying asset of the outstanding warrant liabilities as of September 30, 2024 was Class A Common Stock, which is an observable input, however the value of the warrants themselves were not directly or indirectly observable. The fair value of the warrant liabilities for the June 2023 Term Loan Warrants were determined based on price of the underlying share and the terms of each warrant, specifically whether each warrant is exercisable for a fixed number of shares of Class A Common Stock, hence the value of the total shares a warrant is exercisable for is variable, or a fixed value of shares of Class A Common Stock thus the number of the total shares a warrant is exercisable for is variable. The exercise prices of the liability-classified warrants which were outstanding as of September 30, 2024 were minimal ($0.08 per Class A Common Stock share) and did not have significant impact to the fair value measurements of these warrants. The fair value of the YA Warrant liability was determined using the redemption value of the warrant upon the occurrence of a Fundamental Transaction, as defined in the Warrant Agreement. See Note 9 for further information regarding the warrant liabilities.

Additional Subordinated Term Loan Warrants Derivative – The Additional Subordinated Term Loan Warrants Derivative’s fair value was estimated using a discounted cashflow/expected present value method. The value of the Additional Subordinated Term Loan Warrants earnout was $0.35 million for each additional full calendar month after March 22, 2023 through June 22, 2023, and starting June 23, 2023, the value the Additional Subordinated Term Loan Warrants earn-out increases by $25,000 for each additional full calendar month thereafter until the Company repays the Subordinated Term Loan in full. The key assumption utilized was the probability of refinancing the Subordinated Term Loan in November 2024. The Company determined this probability to be approximately 95% for refinancing and 5% for not refinancing. As September 30, 2024, the Company applied a discount rate of 25.0% to calculate the present value of the Additional Subordinated Term Loan Warrants Derivative. The Company measured and recognized fair value for the Additional Subordinated Term Loan Warrants Derivative at the end of each reporting period in derivative liabilities on the condensed consolidated balance sheets, with the respective fair value adjustment recorded in loss on change in fair value of derivatives as a component of other income (expense) on the condensed consolidated statements of operations.

Subordinated Term Loan Warrants Make-Whole Derivative – The Subordinated Term Loan Warrants Make-Whole Derivative’s fair value was estimated using Black Scholes Merton model. The value the Subordinated Term Loan Warrants Make-Whole Agreement is primarily based on the make-whole provision amount between (a) the closing share price of Class A Common Stock on the business day immediately prior to the lender’s exercise of the Subordinated Term Loan Warrants on December 12, 2022 multiplied by the number of the December 2022 Warrant Shares and (b) the closing share price of Class A Common Stock on the business day immediately prior to the lender’s sale of the December 2022 Warrant Shares multiplied by the number of the December 2022 Warrant Shares sold by the lender.

The following table provides quantitative information of the key assumptions utilized in the Subordinated Term Loan Warrants Make-Whole Derivative fair value measurements as of measurement dates:


	As of			As of
	September 30,			December 31,
	2024			2023
Price of Class A Common Stock	$	0.05		$	1.85
Strike Price of Class A Common Stock	$	18.96		$	18.96
Risk-free interest rate		3.60	%

Rubicon Technologies, Inc. 10-Q