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What changed in Phunware, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Phunware, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+196 added−277 removedSource: 10-K (2026-03-27) vs 10-K (2025-03-31)

Top changes in Phunware, Inc.'s 2025 10-K

196 paragraphs added · 277 removed · 159 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeHowever, our product and service capabilities also serve the employee experience in the workplace, the shopper experience for retail, the fan experience for sports, the traveler experience for aviation, the luxury resident experience for real estate and the student experience for education. • We offer integration of our software development kit (“SDK”) licenses into applications, including: o Analytics (SDK that provides data related to application use and engagement); o Content Management (SDK that allows application administrators to create and manage app content in a cloud-based portal); o Alerts, Notifications & Messaging (SDK that enables brands to send messages to app users through the app); and 4 Table of Contents o Location-Based Services (modules that include mapping, navigation, wayfinding, workflow, asset management and policy enforcement). • We also offer development services for customers who wish to have a customized application experience.
Biggest changeHowever, our product and service capabilities also serve the employee experience in the workplace, the shopper experience for retail, the fan experience for sports, the traveler experience for aviation, the luxury resident experience for real estate and the student experience for education. • We offer SDK licenses designed to be deployed individually or in combination and may be integrated into customer applications or existing digital systems, which include: o Analytics (SDK that provides data related to application use and engagement); o Content Management (SDK that allows application administrators to create and manage app content in a cloud-based portal); o Alerts, Notifications & Messaging (SDK that enables brands to send messages to app users through the app); and o Location-Based Services (modules that include mapping, navigation, wayfinding, workflow, asset management and policy enforcement). 4 Table of Contents • Cloud-based intelligence and automation features, including AI-enabled interfaces and analytics capabilities, designed to support contextual user interactions, information discovery and service-related workflows within customer applications. • We are also evaluating the use of AI to derive insights from anonymized application usage, navigation and interaction data generated within customer environments.
We have focused a majority of our recent sales efforts on addressing the patient experience for healthcare and the luxury guest experience for hospitality.
We have focused a majority of our recent sales efforts on addressing the luxury guest experience for hospitality and the patient experience for healthcare.
To date, opportunities to earn and utilize PhunToken in the Token Ecosystem have been limited and there is currently no mechanism for consumers to redeem PhunToken either from the Company or through the Token Ecosystem as the PhunToken ecosystem is still in development. In 2021, we commenced the selling of PhunToken to third parties.
To date, opportunities to earn and utilize PhunToken in the Token Ecosystem have been limited and there is currently no mechanism for consumers to redeem PhunToken either from the Company or through the Token Ecosystem as the PhunToken ecosystem is still in development.We commenced the selling of PhunToken to third parties in 2021.
We are currently researching and assessing future opportunities and next steps for PhunCoin, PhunToken and the development of the Token Ecosystem. Competition The market for technology and solutions related to mobile application lifecycle management is evolving, highly competitive and significantly fragmented.
We are currently researching and assessing future opportunities and next steps for PhunCoin, PhunToken and further development of the Token Ecosystem. Competition The market for technology and solutions related to mobile application lifecycle management is evolving, highly competitive and significantly fragmented.
We actively utilize generative AI tools to streamline internal processes and workflows for mobile app creation and development. We also plan to use predictive AI tools in the future to further enhance these processes.
We actively utilize generative AI tools to streamline internal processes and workflows for mobile app creation and development. We also plan to use predictive and agentic AI tools in the future to further enhance these processes.
We believe the principal competitive factors in our market include the following: • product features and functionality; • location accuracy and latency; • technology architecture; • level of customer satisfaction; • ease of use and integration of products and services; • deployment options and hardware flexibility; • breadth and depth of application functionality; • professional services and customer support; • total costs of ownership; • brand awareness and reputation; • sophistication of technology platform; • actionable insights through big data analytics; • capability for customization, configurability, integration, security, scalability and reliability of applications; • ability to innovate and respond to customer needs rapidly; • domain expertise; • size of customer base and level of user adoption; and • ability to integrate with legacy enterprise infrastructures and third-party applications.
We believe the principal competitive factors in our market include the following: • product features and functionality; • location accuracy and latency; • technology architecture; • level of customer satisfaction; • ease of use and integration of products and services; • deployment options and hardware flexibility; • breadth and depth of application functionality; • professional services and customer support; 8 Table of Contents • total costs of ownership; • brand awareness and reputation; • sophistication of technology platform; • actionable insights through big data analytics; • capability for customization, configurability, integration, security, scalability and reliability of applications; • ability to innovate and respond to customer needs rapidly; • domain expertise; • size of customer base and level of user adoption; and • ability to integrate with legacy enterprise infrastructures and third-party applications.
Primary indirect channels include hardware, software and systems integrators/consultancies. We are focused on building our brand and offerings to grow within existing and target markets where there is strong demand for the products and solutions we provide. Sales and Marketing Our salesforce is focused on direct sales opportunities for our software subscription and services and advertising product lines.
Primary indirect channels include hardware, software and systems integrators/consultancies. We are focused on building our brand and offerings to grow within existing and target markets where there is strong demand for the products and solutions we provide. Sales and Marketing Our sales force is focused on direct sales opportunities for our software subscription and services and advertising product lines.
As a result, these competitors may be better able to respond quickly to new technologies and to undertake more extensive marketing campaigns. In a 8 Table of Contents few cases, some competitors may also be able to offer competing solutions at little or no additional cost by bundling them with their existing suite of solutions.
As a result, these competitors may be better able to respond quickly to new technologies and to undertake more extensive marketing campaigns. In a few cases, some competitors may also be able to offer competing solutions at little or no additional cost by bundling them with their existing suite of solutions.
PhunToken was created as and is intended to be a digital asset utility token which enables holders to engage via Phunware mobile applications initially with the Company and, when and if the ecosystem is further developed, eventually with brands, media buyers and other customers of the Company.
PhunToken was created as and is intended to be a digital asset utility token to enable holders to engage via Phunware mobile applications initially with the Company and, when and if the ecosystem is further developed, eventually with brands, media buyers and other customers of the Company.
Successful claims of infringement by a third party could prevent us from continuing to offer our solution or performing certain services, require us to 9 Table of Contents expend time and money to develop non-infringing solutions or force us to pay substantial damages, including treble damages if we are found to have willfully infringed patents or copyrights, royalties or other fees.
Successful claims of infringement by a third party could prevent us from continuing to offer our solutions or performing certain services, require us to expend time and money to develop non-infringing solutions or force us to pay substantial damages, including treble damages if we are found to have willfully infringed patents or copyrights, royalties or other fees.
During 2018 and 2019, we sold rights to the future issuances of PhunCoin. To date, we have recorded the rights purchases as a liability in our consolidated balance sheets as of December 31, 2024 and 2023, as we have yet to issue any PhunCoin pursuant to our rights offerings.
During 2018 and 2019, we sold rights to receive future issuances of PhunCoin. To date, we have recorded the PhunCoin rights purchases as a liability in our consolidated balance sheets as of December 31, 2025 and 2024, as we have yet to issue any PhunCoin pursuant to our rights offerings.
Employees We leverage our employees’ long-standing, deep customer relationships and strong technical expertise to deliver complex solutions that meet customer needs and advance mobile technology. As of December 31, 2024, we had 29 full-time employees. None of our employees are currently covered under any collective bargaining agreements. We believe our relations with our employees are good.
Employees We leverage our employees’ long-standing, deep customer relationships and strong technical expertise to deliver complex solutions that meet customer needs and advance mobile technology. As of December 31, 2025, we had 26 full-time employees. None of our employees are currently covered under any collective bargaining agreements. We believe our relations with our employees are good.
The Company anticipates that participants in such engagement activities will be rewarded by earning and receiving PhunToken from the Company or other sponsoring parties, and that PhunToken will be redeemable for valuable 7 Table of Contents goods, services and experiences within branded marketplaces, similar to traditional loyalty or rewards programs.
The Company anticipates that participants in such engagement activities will be rewarded by earning and receiving PhunToken from the Company or other sponsoring parties, and that PhunToken will be redeemable for valuable goods, services and experiences within branded marketplaces, similar to traditional loyalty or rewards programs.
The dual-token ecosystem is designed to both empower consumers and brands to engage with each other and other audiences by creating a blockchain-enabled data and engagement exchange that recognizes the value of data and engagement, which we refer to herein as our "Token Ecosystem." PhunCoin is intended to be the “Value of Data” that empowers consumers to take control of and be compensated for their data and will allow holders to participate in the economics of the Token Ecosystem by receiving PhunCoin based on how much information and data they are willing to share with the system.
The dual-token ecosystem was originally designed to both empower consumers, brands and others to engage 7 Table of Contents with each other and other audiences by creating a blockchain-enabled data and engagement exchange that recognizes the value of data and engagement and related monetization opportunities, which we refer to herein collectively as our "Token Ecosystem." PhunCoin was intended to be the “Value of Data” that empowers consumers to take control of and be compensated for their data and will allow holders to participate in the economics of the Token Ecosystem by receiving PhunCoin based on how much information and data they are willing to share with the system.
We may generate additional funding from sales of PhunCoin in the future. PhunToken is intended to be the “Value of Engagement” that empowers consumers to monetize their data and to use PhunToken to engage with brands and others in the Token Ecosystem.
We may generate additional funding from sales of PhunCoin in the future. PhunToken was intended to be the “Value of Engagement” that empowers consumers to further monetize their data and to use their PhunToken to engage with brands and others to receive offers and other value in the Token Ecosystem.
We anticipate that these efficiencies will enable the Company to reduce mobile app development costs significantly and make high-quality customized mobile apps more accessible and affordable for small to medium sized businesses ("SMBs") and enterprises. • AI Features and Functionalities for Engagement and Monetization .
We anticipate that these efficiencies will enable the Company to reduce mobile app development costs significantly and make high-quality mobile apps more accessible and affordable for small to medium sized businesses and enterprises.
For the year ended December 31, 2024, three customers collectively represented 34% of our net revenues. 5 Table of Contents Our Growth Strategy Key elements of our growth strategy include: Expansion and scaling of mobile products and services. Mobile applications and in-application advertising media are among the fastest-growing and complex technology markets.
For the year ended December 31, 2025, two customers collectively represented 36% of our net revenues. Our Growth Strategy Key elements of our growth strategy include: Expansion and scaling of mobile products and services. Mobile applications and in-application advertising media are among the fastest-growing and complex technology markets.
We are developing creative solutions to solve complex technical problems and create competitive advantages for our customers. We hold 18 issued patents, six pending patents and one allowed patent in various areas including content management, location services and cryptocurrency.
We are developing creative solutions to solve complex technical problems and create competitive advantages for our customers. We hold four active issued patents and nine active pending patents in various areas including content management, location services and cryptocurrency.
Upon the sale of PhunToken to customers, we transfer the PhunToken purchased to the customers' ethereum-based wallet address. We have sold PhunToken in the past and may sell additional PhunToken in the future; however, the amount of PhunToken sold in 2023 and 2024 was immaterial.
Upon the sale of PhunToken to customers, we transfer the PhunToken purchased to the customers' ethereum-based wallet address. We have sold PhunToken in the past and may sell additional PhunToken in the future; however, we did not sell any PhunToken in 2024 and 2025.
Fees from advertisers are commonly based on the number of ads delivered or views, clicks or actions by users on mobile advertisements delivered, and we recognize revenue at the time the user views, clicks or otherwise acts on the ad.
We also provide in-application advertising services by charging advertisers to deliver advertisements (ads) to users of mobile connected devices. Fees from advertisers are commonly based on the number of ads delivered or views, clicks or actions by users on mobile advertisements delivered, and we recognize revenue at the time the user views, clicks or otherwise acts on the ad.
We are also hoping to expand our media offerings by attracting new business from local and national advertising agencies. Our contract term for advertising transactions can be as short as a few days to three months for larger advertising campaigns. Our sales cycle is typically short for direct to business customers, whereby it may be longer when partnering with agencies.
We are also hoping to expand our media offerings by attracting new business from local and national advertising agencies. Our contract term for advertising transactions can be as short as a few days to three months for larger advertising campaigns.
We are also developing AI Personal Concierge features and functionalities to serve as a human-like interface in our mobile apps for customers and users thereof to enhance engagement and provide our customers with innovative opportunities to further monetize their products and services with users. • Automation Technology .
We recently developed a generative AI product feature referred to as AI Concierge with functionalities to serve as a human-like interface in our mobile apps for our customers to enhance customer engagement with users and provide customers with innovative opportunities to further monetize their products and services with users.
From time to time, third parties, including certain of these leading companies, may assert patent, copyright, trade secret and other intellectual property rights against us, our channel partners or our customers. Our standard license and other agreements may obligate us to indemnify our indirect sales partners and customers against such claims.
In particular, leading companies in our markets have extensive patent portfolios and are regularly involved in litigation. From time to time, third parties, including certain of these leading companies, may assert patent, copyright, trade secret and other intellectual property rights against us, our channel partners or our customers.
We view the agreements as contracts that ordinarily accompany the business conducted by Phunware and, because of the lack of any commitments to provide a certain amount of business, we are not substantially dependent on the agreements.
We view the agreements as contracts that ordinarily accompany the business conducted by Phunware and, because of the lack of any commitments to provide a certain amount of business, we are not substantially dependent on the agreements. 5 Table of Contents Concentration of Major Customers Due to the nature of our business, we have in the past and may at times in the future, have a material concentration of our revenue with a small number of customers.
The information on, or that can be accessed through, our website is not part of this Annual Report on Form 10-K. We have included our website address as an inactive textual reference only.
Corporate Information Our principal executive offices are located at 1002 West Avenue, Austin, Texas 78701, and our telephone number is (512) 693-4199. Our website address is https://www.phunware.com. The information on, or that can be accessed through, our website is not part of this Annual Report on Form 10-K. We have included our website address as an inactive textual reference only.
Our product and service offerings primarily include cloud-based recurring software license subscriptions, most of which are multi-year, application development and support services. Although a majority of our product and service offerings have been sold utilizing an internal sales team, we have also sold our product and service offerings through various sales partners, including value added resellers and systems integrators.
Although a majority of our product and service offerings have been sold utilizing an internal sales team, we have also sold our product and service offerings through various sales partners, including value added resellers and systems integrators. We continue to invest in these relationships.
We generally sell ads on a cost per thousand impressions basis, on which advertisers are charged for each ad delivered to 1,000 consumers. Our Products and Services Our mobile software subscriptions and services offerings include the following: • A cloud-based application framework vertical solution license for iOS and Android-based mobile applications.
We generally sell ads on a cost per thousand impressions basis, on which advertisers are charged for each ad delivered to 1,000 consumers.
Performance, security, depth and breadth of functionality and usability of our solutions drive our technology decisions and research and development.
Performance, security, depth and breadth of functionality and usability of our solutions drive our technology decisions and research and development. Our research and development expenses were $3.2 million and $2.3 million for the fiscal years ended December 31, 2025 and 2024, respectively.
In addition, we have one pending international patent application. Further, we have registered “Phunware” as a trademark in the United States and Canada. We cannot provide assurance that any of our patent applications will result in the issuance of a patent or whether the examination process will require us to narrow our claims.
We cannot provide assurance that any of our patent applications will result in the issuance of a patent or whether the examination process will require us to narrow our claims. Furthermore, even if a patent is issued, we cannot provide assurance that such patent will be adequate to protect our business.
In the United States, we have 17 patents issued and six pending and one allowed non-provisional patent applications. The issued patents expire between the years 2027 and 2037, which are subject to the payment of maintenance fees. We also have one patent in Japan, which expires in 2031, that is subject to the payment of annual fees.
In the United States, we have four active patents issued and nine active pending patent applications. The issued patents expire between the years 2027 and 2037, which are subject to the payment of maintenance fees. Further, we have registered “Phunware” as a 9 Table of Contents trademark in the United States and Canada.
We have made significant investments in research and development and plan to continue extending the functionality and scale of our mobile applications in the future. Deepening of existing customer relationships. We believe that we are well positioned to identify new opportunities or enhance existing services and solutions within and provide additional products and services to our existing customer base.
We believe these capabilities enable our customers to enhance user satisfaction and unlock additional value from their digital environments over time. Deepening of existing customer relationships. We believe that we are well positioned to identify new opportunities or enhance existing services and solutions within and provide additional products and services to our existing customer base.
Despite our efforts to protect our technology and proprietary rights through intellectual property rights, licenses and confidentiality agreements, unauthorized parties may still copy or otherwise obtain and use our software and other technology. In addition, if we expand international operations, effective patent, copyright, trademark and trade secret protections may not be available or may be limited in foreign countries.
We also license software from third parties for integration into our solutions, including open source software and other software available on commercially reasonable terms. Despite our efforts to protect our technology and proprietary rights through intellectual property rights, licenses and confidentiality agreements, unauthorized parties may still copy or otherwise obtain and use our software and other technology.
Our industry is characterized by the existence of a large number of patents and claims and related litigation regarding patent and other intellectual property rights. In particular, leading companies in our markets have extensive patent portfolios and are regularly involved in litigation.
In addition, if we expand international operations, effective patent, copyright, trademark and trade secret protections may not be available or may be limited in foreign countries. Our industry is characterized by the existence of a large number of patents and claims and related litigation regarding patent and other intellectual property rights.
Our platform allows for the sale, licensing and creation of category-defining mobile experiences for customers and their application users worldwide.
Our platform allows for the sale, licensing and creation of category-defining mobile experiences for customers and their application users worldwide. Business Model Our platform is delivered through a combination of mobile applications, software development kits (“SDKs”), cloud-based services, and related tools that enable customers to deploy, operate, and evolve digital experiences across mobile and connected environments.
The result is over a decade of vertical-solution specific mobile application experience, which we believe is a major competitive differentiator.
The result is over a decade of vertical-solution specific mobile application experience, which we believe is a major competitive differentiator. Platform architecture: Our platform architecture allows customers to deploy applications, SDKs, analytics and AI-enabled features in a unified environment, enabling them to evolve digital and physical experiences over time without rearchiteching their underlying systems.
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Business Model Our mobile application business model includes a combination of mobile application software subscription and service offerings that enable customers to engage, manage and monetize their mobile application portfolios throughout the mobile application lifecycle, which occurs in four phases: • Strategize — We help brands define the application experience and determine the operating systems, feature sets and use cases they want their mobile application to support. • Create — We help brands build their application portfolio. • Launch — We help brands launch their applications and build their mobile audience. • Engage, Monetize and Optimize — We help brands activate, monetize and optimize their mobile application portfolios.
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While mobile applications represent an important interface layer, much of our functionality is provided through modular SDKs as well as software licenses that support analytics, content management, messaging, location-based services, and emerging AI-enabled capabilities. Our product and service offerings primarily include cloud-based recurring software license subscriptions, most of which are multi-year, application development and support services.
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We continue to invest in these relationships. We also provide in-application advertising services by charging advertisers to deliver advertisements (ads) to users of mobile connected devices.
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Our Products and Services Our mobile software subscriptions and services offerings include a combination of application frameworks, SDKs, cloud-based services and related capabilities designed to support digital engagement, operational workflows and user experiences and include the following: • A cloud-based application framework vertical solution license for iOS and Android-based mobile experiences, enabling customers to deploy, manage and extend functionality across mobile applications and connected environments.
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Concentration of Major Customers Due to the nature of our business, we have in the past and may at times in the future, have a material concentration of our revenue with a small number of customers.
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These efforts are intended to help customers better understand user behavior, optimize digital and non-site experiences and inform future enhancements to their mobile and SDK-enabled services. These initiatives remain exploratory and subject to ongoing evaluation. • We also offer development services for customers who wish to have a customized application experience.
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Our research and development expenses were $2.3 million and $4.4 million for the fiscal years ended December 31, 2024 and 2023, respectively. 6 Table of Contents Artificial Intelligence (AI) In October 2024, we announced the commencement of the development of a new generative AI-driven software development platform to enable businesses of any size to design, create, build, and deploy high-quality custom mobile applications shorter periods of time.
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We have made significant investments in research and development and plan to continue extending the functionality and scale of our mobile applications in the future. Expansion and scaling of platform capabilities.
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The platform will be designed to utilize generative AI in a manner that will enable businesses to develop and monetize custom mobile app solutions more quickly and at a lower cost, making them more accessible to small and medium-sized businesses. The “artificial intelligence” (AI) in the context of the Company’s platform will initially be generative pre-trained transformer (GPT) technology.
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We are focused on expanding and scaling the core capabilities of our platform, including analytics, location-based services, automation and AI-enabled features, to help customers better understand user behavior, improve the relevance and quality of digital and on-site experiences, and support more effective engagement and service interactions.
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We plan to use such AI in various contexts within our internal systems, product offerings and new software development platform, including the following: • Creator.phunware.com . We have created, deployed and are testing creator.phunware.com, an online platform which is the first step in the Company’s new software development platform initiative.
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Our sales cycle is typically short for direct to business customers, 6 Table of Contents whereby it may be longer when partnering with agencies; however, we are striving to shorten our sales cycles through a more defined, scalable product offering that replaces complex custom development with AI-driven, modular solutions and deployment tools.
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This platform will in the future utilize generative AI (initially GPT technology) to simplify the mobile app request, submission, creation, development, customization and completion processes for customers.
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Artificial Intelligence (AI) In October 2024, we announced the commencement of our investment into the field of artificial intelligence ("AI"). We plan to use AI in various contexts within our internal systems and products and services offerings. The AI technology we have initially used in the context of our platform is generative AI.
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The platform is designed to include a Sales Companion GPT, a generative AI assistant that will guide customers step-by-step through the onboarding and sales processes, helping guide customer decisions in creating, developing, customizing and completing their mobile apps, making them even more intuitive, efficient and less expensive. • Generative AI Tools for Internal Systems .
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We created, deployed and market-tested creator.phunware.com, an online platform and part of the Company's software development initiative to utilize generative AI to simplify and facilitate the creation and completion of mobile apps.
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In the future, we plan to further integrate generative AI into our App Creator process to facilitate collection and evaluation of inputs - such as customer-provided content, branding materials, and other relevant information - and automatically generate necessary configuration files.
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In light of our market testing and recent changes in our senior management team, we decided to pause further development and allocation of resources to completing the app creator platform and instead focus these resources on generative and agentic AI-related features and functionalities within our current product offerings.
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Furthermore, even if a patent is issued, we cannot provide assurance that such patent will be adequate to protect our business. We also license software from third parties for integration into our solutions, including open source software and other software available on commercially reasonable terms.
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We are currently pilot testing the AI Concierge with existing customers as a new feature in their existing mobile applications. We also recently designed and demonstrated, at a major hospitality conference, an agentic AI product feature referred to as Guest Services Agent with functionalities to interact with and perform tasks for customer hospitality guests.
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Key Events and Recent Developments On October 22, 2024, Michael Snavely tendered his resignation as Chief Executive Officer, and as a member of our Board of Directors, effective immediately. On the same date, our Board of Directors appointed Mr. Stephen Chen, our then existing Chairperson of our Board of Directors, as Interim Chief Executive Officer. In connection therewith, while Mr.
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For instance, we anticipate the Guest Services Agent feature will be able to provide information about and book reservations at restaurants located on customer properties. This Guest Services Agent feature is still in the development and testing phase.
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Chen will continue to serve as member of the Board of Directors, effective October 22, 2024, Mr. Chen resigned as Chairperson of the Board and as a member of the Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. To fill the vacancies caused by Mr. Snavely’s resignation from the Board of Directors and Mr.
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We continue to invest in AI, including generative AI and agentic AI, and in the integration of AI capabilities into our products and services. We will continue to evaluate our investments in AI and align investment and resource allocation in the products and markets where we believe we can generate the greatest benefits for customers and opportunities for shareholder returns.
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Chen’s resignation as Chairperson of the Board and as a member of the Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, Rahul Mewawalla was appointed as Chairperson of the Board, effective October 22, 2024, and Quyen Du was appointed as a member of the Board of Directors and each of the Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, effective February 28, 2025.
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Our AI related investments are in the research and development phase, and we may choose not to continue pursuing some of our AI investments. Additionally, some of the investments we pursue may not be successful. Refer to " Risk Factors ", located in Part I, Item 1A of this Annual Report on Form 10-K.
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On November 1, 2024, Troy Reisner notified the Company that he intends to step down as our Chief Financial Officer, and he departed the Company on November 30, 2024. The Company has initiated a search for potential candidates to replace Mr. Reisner. Please see the subsection captioned " Liquidity and Capital Resources " in Part II.
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Although we have the ability to integrate with third-party applications, such third-party applications may view us as their competition and may make it difficult for us or our customers to integrate our solutions.
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Item 7 “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of this Annual Report on Form 10-K for additional discussion on additional recent developments. Corporate Information Our principal executive offices are located at 1002 West Avenue, Austin, Texas 78701, and our telephone number is (512) 693-4199. Our website address is https://www.phunware.com.
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Our standard license and other agreements may obligate us to indemnify our indirect sales partners and customers against such claims.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, if a digital asset we hold is determined to be a security for purposes of the federal securities laws, the additional regulatory restrictions imposed by such a determination could adversely affect the market price of such digital assets and in turn adversely affect the market price of our common stock. 36 Table of Contents Risks Related to our Token Ecosystem and Tokens We have raised capital to fund a Token Generation Event of rights to receive future PhunCoin, and beginning in 2021 we created and sold PhunToken.
Biggest changeRisks Related to our Token Ecosystem and Tokens We have raised capital to fund a Token Generation Event of rights to receive future PhunCoin, and beginning in 2021 we created and sold PhunToken.
Revenue recognition may not occur during the same the same period in which we incur costs associated with our agreements. Our efforts to grow our business may be costlier than we expect and we may not be able to increase our revenue enough to offset our higher operating expenses.
Revenue recognition may not occur during the same period in which we incur costs associated with our agreements. Our efforts to grow our business may be costlier than we expect and we may not be able to increase our revenue enough to offset our higher operating expenses.
If we are unable to execute a timely and orderly transition and successfully integrate the Interim Chief Executive Officer into our leadership team, revenue, operating results and our financial condition may be adversely impacted.
If we are unable to execute a timely and orderly transition and successfully integrate the Interim Chief Executive Officer into our leadership team, our revenue, operating results and financial condition may be adversely impacted.
In addition, customers 12 Table of Contents may delay spending under existing contracts and engagements and may delay entering into new contracts while they evaluate new technologies.
In addition, customers may delay spending under existing contracts and engagements and may delay entering into new contracts while they evaluate new 12 Table of Contents technologies.
Among other things, our certificate of incorporation and bylaws include provisions regarding: • a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors; • the ability of our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the limitation of the liability of, and the indemnification of, our directors and officers; 31 Table of Contents • the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the requirement that directors may only be removed from our board of directors for cause; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of stockholders and could delay the ability of stockholders to force consideration of a stockholder proposal or to take action, including the removal of directors; • the requirement that a special meeting of stockholders may be called only by our board of directors, the chairperson of our board of directors, chief executive officer or president (in the absence of a chief executive officer), which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; • controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings; • the requirement for the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal any provision of our certificate of incorporation or bylaws, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt; • the ability of our board of directors to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company.
Among other things, our certificate of incorporation and bylaws include provisions regarding: • a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors; • the ability of our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the limitation of the liability of, and the indemnification of, our directors and officers; • the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the requirement that directors may only be removed from our board of directors for cause; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of stockholders and could delay the ability of stockholders to force consideration of a stockholder proposal or to take action, including the removal of directors; 31 Table of Contents • the requirement that a special meeting of stockholders may be called only by our board of directors, the chairperson of our board of directors, chief executive officer or president (in the absence of a chief executive officer), which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; • controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings; • the requirement for the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal any provision of our certificate of incorporation or bylaws, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt; • the ability of our board of directors to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company.
The slowing or stopping of the development, general acceptance and adoption and usage of blockchain networks and digital assets may materially adversely affect our business plans to launch and maintain PhunCoin, sell PhunToken and continue to develop the Token Ecosystem.
The slowing or stopping of the development, general acceptance and adoption and usage of blockchain networks and digital assets may materially adversely affect our business plans to launch and maintain PhunCoin, sell PhunToken and continue to develop, launch and maintain the Token Ecosystem.
In addition to the other risks described herein, factors that may affect our quarterly operating results include: • the amount and timing of completion of application development services and other service-related engagements; • changes in spending on subscriptions, services and advertising media offerings and services by our current or prospective customers; • pricing our technology, products, and services effectively so that we are able to attract and retain customers without compromising our operating results; • one-time, non-recurring revenue events; • attracting new customers and increasing our existing customers’ use of our technology offerings and services; • the mix between new contracts and renewals of existing contracts; • customer renewal rates and the amounts for which agreements are renewed; • awareness of our brand; • changes in the competitive dynamics of our market, including consolidation among competitors or customers and the introduction of new technologies and technology enhancements; • our ability to manage our existing business and future growth; • unforeseen costs and expenses related to the expansion of our business, operations and infrastructure, including disruptions in our hosting network infrastructure and privacy and data security; • customer delays in purchasing decisions in anticipation of new products or product enhancements by us or our competitors; • budgeting cycles of our customers; • changes in the competitive dynamics of our market, including consolidation among competitors or customers; • the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses (including marketing events and commissions and bonuses associated with performance) and employee benefit expenses; • changes to the commission plans, quotas and other compensation related metrics for our sales representatives; • the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments and other non-cash charges; • the amount and timing of costs associated with recruiting, training and integrating new employees; • the amount and timing of cash collections from our customers and the mix of quarterly and annual billings; 17 Table of Contents • unforeseen costs and expenses related to the expansion of our business, operations and infrastructure; • changes in the levels of our capital expenditures; • foreign currency exchange rate fluctuations; and • general economic and political conditions.
In addition to the other risks described herein, factors that may affect our quarterly operating results include: • the amount and timing of completion of application development services and other service-related engagements; • changes in spending on subscriptions, services and advertising media offerings and services by our current or prospective customers; • pricing our technology, products, and services effectively so that we are able to attract and retain customers without compromising our operating results; • one-time, non-recurring revenue events; • attracting new customers and increasing our existing customers’ use of our technology offerings and services; • the mix between new contracts and renewals of existing contracts; • customer renewal rates and the amounts for which agreements are renewed; • awareness of our brand; • changes in the competitive dynamics of our market, including consolidation among competitors or customers and the introduction of new technologies and technology enhancements; • our ability to manage our existing business and future growth; • unforeseen costs and expenses related to the expansion of our business, operations and infrastructure, including disruptions in our hosting network infrastructure and privacy and data security; • customer delays in purchasing decisions in anticipation of new products or product enhancements by us or our competitors; • budgeting cycles of our customers; • changes in the competitive dynamics of our market, including consolidation among competitors or customers; • the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses (including marketing events and commissions and bonuses associated with performance) and employee benefit expenses; • changes to the commission plans, quotas and other compensation related metrics for our sales representatives; • the amount and timing of non-cash expenses, including stock-based compensation, and other non-cash charges; • the amount and timing of costs associated with recruiting, training and integrating new employees; • the amount and timing of cash collections from our customers and the mix of quarterly and annual billings; 17 Table of Contents • unforeseen costs and expenses related to the expansion of our business, operations and infrastructure; • changes in the levels of our capital expenditures; • foreign currency exchange rate fluctuations; and • general economic and political conditions.
As we rely heavily on our data centers, computer and communications systems and the internet to conduct our business and provide high-quality customer service, such disruptions could negatively impact our ability to run our business and either directly or indirectly disrupt our customers’ business, which could have a material adverse effect on our business, results of operations and financial condition. 28 Table of Contents Risks Related to Capitalization Matters, Corporate Governance and Market Volatility We have and may sell additional equity or debt securities or enter into other arrangements to fund our operations, which may result in dilution to our stockholders and impose restrictions or limitations on our business.
As we rely heavily on our data centers, computer and communications systems and the internet to conduct our business and provide high-quality customer service, such disruptions could negatively impact our ability to run our business and either directly or indirectly disrupt our customers’ business, which could have a material adverse effect on our business, results of operations and financial condition. 28 Table of Contents Risks Related to Capitalization Matters, Corporate Governance and Market Volatility We have sold and may sell additional equity or debt securities or enter into other arrangements to fund our operations, which may result in dilution to our stockholders and impose restrictions or limitations on our business.
The legal test for determining whether any given digital asset is a security is a highly complex, fact-driven analysis, and the outcome is difficult to predict. The SEC generally does not provide advance guidance or confirmation on the status of any particular digital asset as a security.
The legal test for determining whether any given digital asset is a security is a highly complex, fact-driven analysis, and the outcome is often difficult to predict. The SEC generally does not provide advance guidance or confirmation on the status of any particular digital asset as a security.
There can be no assurances that we will properly characterize any given digital asset as a security or non-security or that the SEC, foreign regulatory authority, or a court, if the question was presented to it, would agree with our assessment.
There can be no assurances that we will properly characterize any given digital asset as a security or non-security or that the SEC, or any state or foreign regulatory authority, or a court, if the question was presented to it, would agree with our assessment.
Should we be subjected to any or all of the foregoing, our business would be materially and adversely affected. The prices of digital assets are volatile. Fluctuations in the prices of digital assets and/or waning interest of investors in the digital asset markets could materially and adversely affect the Token Ecosystem.
If we should be subjected to any or all of the foregoing, our business would be materially and adversely affected. The prices of digital assets are volatile. Fluctuations in the prices of digital assets and/or waning interest of investors in the digital asset markets could materially and adversely affect the Token Ecosystem.
The open-source structure of some of the Token Ecosystem protocols means that the Token Ecosystem may be susceptible to developments by users or contributors that could damage the Token Ecosystem and our reputation and could affect the sale and utilization of PhunCoin, PhunToken and the Token Ecosystem.
The open-source structure of some of the Token Ecosystem protocols means that the Token Ecosystem may be susceptible to developments or changes by users or contributors that could damage the Token Ecosystem and our reputation and could affect the sale and utilization of PhunCoin, PhunToken and the Token Ecosystem.
Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee or agent to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or 32 Table of Contents bylaws, or (v) any action asserting a claim against us governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.
Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee or agent to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws, or (v) any action asserting a claim against us governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.
In addition, if the SEC or a court of competent jurisdiction were to find that we are in violation of the Investment Company Act for having failed to register as an investment company thereunder, possible consequences include, but are not limited to, the following: (i) the SEC could apply to a district court to enjoin the violation; (ii) we could be sued by investors in us and in our securities for damages caused by the violation; and (iii) any contract to which we are a party that is made in, or whose performance involves a, violation of the Investment Company Act would be unenforceable by any party to the contract unless a court were to find that under the circumstances enforcement would produce a more equitable result than nonenforcement and would not be inconsistent with the purposes of the Investment Company Act.
In addition, if the SEC or a court of competent jurisdiction were to find that we are in violation of the Investment Company Act for having failed to register as an investment company thereunder, possible consequences include, but are not limited to, the following: (i) the SEC could apply to a district court to enjoin the violation; (ii) we could be sued by investors in us and in our 36 Table of Contents securities for damages caused by the violation; and (iii) any contract to which we are a party that is made in, or whose performance involves a, violation of the Investment Company Act would be unenforceable by any party to the contract unless a court were to find that under the circumstances enforcement would produce a more equitable result than nonenforcement and would not be inconsistent with the purposes of the Investment Company Act.
Several factors may influence the interest in digital assets such as PhunCoin and PhunToken, including, but not limited to: • global digital asset supply; 40 Table of Contents • businesses’ acceptance of digital assets like cryptocurrencies as payment for goods and services, the security of online digital asset exchanges and digital wallets that hold blockchain assets, the perception that the use and holding of digital assets is safe and secure, and the regulatory restrictions on their use; • purchasers’ expectations with respect to the rate of inflation; • changes in the software, software requirements or hardware requirements underlying the Token Ecosystem; • changes in the rights, obligations, incentives, or rewards for the users of and other participants in the Token Ecosystem; • interest rates; • currency exchange rates, including the rates at which digital assets may be exchanged for fiat currencies; • fiat currency withdrawal and deposit policies of digital asset exchanges on which users may trade digital assets and liquidity on such exchanges; • interruptions in service from or failures of major digital asset exchanges in which users may trade digital assets; • investment and trading activities of large investors, including private and registered funds, that may directly or indirectly puchase PhunCoin or other digital assets; • monetary policies of governments, trade restrictions, currency devaluations and revaluations; • regulatory measures that may affect the purchase or use of digital assets, including PhunCoin and PhunToken; • the maintenance and development of the open-source software protocol of certain digital assets; • global or regional political, economic or financial events and conditions; or • expectations among the Token Ecosystem or other digital asset market participants that the value and/or utility of certain digital assets will soon change.
Several factors may influence the interest in digital assets such as PhunCoin and PhunToken, including, but not limited to: • global digital asset supply; • businesses’ acceptance of digital assets like cryptocurrencies as payment for goods and services, the security of online digital asset exchanges and digital wallets that hold digital assets, the perception that the use and holding of digital assets is safe and secure, and the regulatory restrictions on their use; • purchasers’ expectations with respect to the rate of inflation; • changes in the software, software requirements or hardware requirements underlying the Token Ecosystem; • changes in the rights, obligations, incentives, or rewards for the users of and other participants in the Token Ecosystem; • interest rates; • currency exchange rates, including the rates at which digital assets may be exchanged for fiat currencies; • fiat currency withdrawal and deposit policies of digital asset exchanges on which users may trade digital assets and liquidity on such exchanges; • interruptions in service from or failures of major digital asset exchanges in which users may trade digital assets; • investment and trading activities of large investors, including private and registered funds, that may directly or indirectly purchase digital assets, including PhunCoin and PhunToken; • monetary policies of governments, trade restrictions, currency devaluations and revaluations; • regulatory measures that may affect the purchase or use of digital assets, including PhunCoin and PhunToken; • the maintenance and development of the open-source software protocol of certain digital assets; • global or regional political, economic or financial events and conditions; or • expectations among the Token Ecosystem or other digital asset market participants that the value and/or utility of certain digital assets will soon change.
As of December 31, 2024, a total of $1.2 million has been raised in both Rights offerings. During the second quarter of 2019, Phunware announced the launch of a separate token, PhunToken, by our wholly owned subsidiary, Phun Token International, which enables holders to participate in our blockchain-enabled data exchange and mobile loyalty engagement ecosystem.
As of December 31, 2025, a total of $1.2 million has been raised in both Rights offerings. During the second quarter of 2019, Phunware announced the launch of a separate token, PhunToken, by our wholly owned subsidiary, Phun Token International, which enables holders to participate in our blockchain-enabled data exchange and mobile loyalty engagement ecosystem.
As of December 31, 2024, we sold an aggregate of $2.6 million of PhunToken. Upon sale of PhunToken to customers, we deliver PhunToken to the respective customer's Ethereum-based wallet. We plan to use commercially reasonable efforts to develop the Token Ecosystem and deliver PhunCoin and PhunToken, respectively, but there is no assurance that such efforts will be successful.
As of December 31, 2025, we sold an aggregate of $2.6 million of PhunToken. Upon sale of PhunToken to customers, we deliver PhunToken to the respective customer's Ethereum-based wallet. We plan to use commercially reasonable efforts to develop the Token Ecosystem and deliver PhunCoin and PhunToken, respectively, but there is no assurance that such efforts will be successful.
For example, given the regulatory complexity and uncertainty with respect to digital assets, complying with such laws and regulations, which could change in the future or be subject to new interpretations, could have a material and adverse effect on our ability to develop, launch and continue to operate PhunCoin, PhunToken and the Token Ecosystem.
For example, given the regulatory complexity and uncertainty with respect to digital assets, complying with such laws and regulations, which could change in the future or be subject to new interpretations, could have a material and adverse effect on our ability to develop, launch and continue to develop, launch and maintain PhunCoin, PhunToken and the Token Ecosystem.
Various foreign jurisdictions may, in the future, adopt additional laws, regulations, or directives that affect the characterization of digital assets as “securities.” The classification of a digital asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer and sale of such assets.
Various foreign jurisdictions may, in the future, adopt additional laws, regulations, or policies that affect the characterization of digital assets as “securities.” The classification of a digital asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer and sale of such assets.
However, AI presents various risks, challenges, and potential unintended consequences that could disrupt our ability to effectively integrate and leverage these technologies. The process of refining and expanding our AI-driven offerings may involve significant costs, and there can be no assurance that our efforts will ultimately succeed.
AI presents various risks, challenges, and potential unintended consequences that could disrupt our ability to effectively integrate and leverage these technologies. The process of refining and expanding our AI-driven platforms and offerings may involve significant costs, and there can be no assurance that our efforts will ultimately succeed.
If an author or other third party that distributes open-source software we use were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, including being enjoined from the offering of the components of our Token Ecosystem that contained the open-source software and being required to comply with the foregoing conditions, which could disrupt our ability to offer the affected software.
If an author or other third party that distributes open-source software we use were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, including being enjoined from the offering of the components of our Token Ecosystem that contained 34 Table of Contents the open-source software and being required to comply with the foregoing conditions, which could disrupt our ability to offer the affected software.
Such events may result in a loss of trust in the security and operation of the Token Ecosystem and a decline in user activity and could negatively impact the sale and utilization of and development, acceptance and adoption of the Token Ecosystem, PhunCoin and PhunToken. Open-source software is generally freely accessible, usable and modifiable.
Such events may result in a loss of trust in the security and operation of the Token Ecosystem and a decline in user activity and could negatively impact the sale and utilization of and development, launch and adoption of the Token Ecosystem, PhunCoin and PhunToken. Open-source software is generally freely accessible, usable and modifiable.
The introduction of these alternative networks and the potential entry of new competitors into the market could harm our ability to increase sales, which could negatively impact the Token Ecosystem, PhunCoin and PhunToken. There is no trading market for PhunCoin. There is no established public market for PhunCoin.
The introduction of these alternative platforms or networks and the potential entry of new competitors into the market could harm our ability to increase sales, which could negatively impact the Token Ecosystem, PhunCoin and PhunToken. There is no trading market for PhunCoin. There is no established public market for PhunCoin.
Security compromises could harm the Token Ecosystem’s reputation, erode user confidence in the effectiveness of its security measures, negatively impact its ability to attract new users, or cause existing users to stop using the Token Ecosystem, or purchasing and using or consuming PhunCoin and PhunToken.
Security breaches could harm the Token Ecosystem’s reputation, erode user confidence in the effectiveness of its security measures, negatively impact its ability to attract new users, or cause existing users to stop using the Token Ecosystem, or purchasing and using or consuming PhunCoin and PhunToken.
If Token Ecosystem’s security is compromised or if the Token Ecosystem is subjected to attacks that frustrate or thwart our users’ ability to access the Token Ecosystem, their PhunCoin, PhunToken or the Token Ecosystem products and services, users may cease using the Token Ecosystem altogether. The Token Ecosystem uses and will use new technology.
If Token Ecosystem’s security is compromised or if the Token Ecosystem is subjected to attacks that frustrate or thwart our users’ ability to access the Token Ecosystem, their PhunCoin, PhunToken or the Token Ecosystem, and users may cease using the Token Ecosystem altogether. The Token Ecosystem uses and will use new technology.
Future sales or issuances of our common stock, or the perception that such sales could occur, could depress the trading price of our common stock. During 2024, we sold and issued common stock via at-the-market offerings and public offerings under a shelf registration statement.
Future sales or issuances of our common stock, or the perception that such sales could occur, could depress the trading price of our common stock. During 2025, we sold and issued common stock via at-the-market offerings and public offerings under a shelf registration statement.
In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance 30 Table of Contents with listing requirements would allow our common stock to be listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq listing requirements.
In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our common stock to be listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq listing requirements.
As a result of this analysis of all available evidence, both positive and negative, we concluded that a valuation allowance against our net U.S. deferred tax assets should be applied as of December 31, 2024.
As a result of this analysis of all available evidence, both positive and negative, we concluded that a valuation allowance against our net U.S. deferred tax assets should be applied as of December 31, 2025.
Any such faults or 38 Table of Contents attacks on PhunCoin, PhunToken or users’ data may materially and adversely affect PhunCoin, PhunToken and the Token Ecosystem. There are a number of data protection, security, privacy and other government- and industry-specific requirements, including those that require companies to notify individuals of data security incidents involving certain types of personal data.
Any such faults or attacks on PhunCoin, PhunToken or users’ data may materially and adversely affect PhunCoin, PhunToken and the Token Ecosystem. There are a number of data protection, security, privacy and other government- and industry-specific requirements, including those that require companies to notify individuals of data security incidents involving certain types of personal data.
The laws and regulations applicable to digital assets, blockchain technologies, digital asset exchanges and offerings of and transactions in digital assets is complex and evolving, and new regulations or policies may materially adversely affect the development and the value of our tokens.
The laws and regulations applicable to digital assets, blockchain networks, digital asset exchanges and offerings of and transactions in digital assets is complex and evolving, and new laws, regulations or policies may materially adversely affect the development and the value of our tokens.
Persons that effect transactions in digital assets that are securities in the United States 41 Table of Contents may be subject to registration with the SEC as a “broker” or “dealer.” Platforms that bring together purchasers and sellers to trade digital assets that are securities in the United States are generally subject to registration as national securities exchanges, or must qualify for an exemption, such as by being operated by a registered broker-dealer as an alternative trading system (ATS) in compliance with rules for ATSs.
Persons that effect transactions in digital assets that are securities in the United States may be subject to registration with the SEC as a “broker” or “dealer.” Platforms that bring together purchasers and sellers to trade digital assets that are securities in the United States are generally subject to registration as national securities exchanges, or must qualify for an exemption, such as by being operated by a registered broker-dealer as an alternative trading system (ATS) in compliance with rules for ATSs.
We could also be subject to suits by parties claiming ownership of what we believe to be open-source software. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition and require us to devote additional research and development resources to change our products.
We could also be subject to legal proceedings by parties claiming ownership of what we believe to be open-source software. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition and require us to devote additional research and development resources to change our products.
Customers that purchased, earned or received such digital assets on our platform and suffered losses could also seek to rescind a transaction that we facilitated as the basis that it was conducted in violation of applicable law, which could subject us to significant liability.
Customers that purchased, earned or received such digital assets on our 38 Table of Contents platform and suffered losses could also seek to rescind a transaction that we facilitated as the basis that it was conducted in violation of applicable law, which could subject us to significant liability.
If a court were to find either exclusive-forum provision in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm its results of operations.
If a court were to find either exclusive-forum provision in our certificate of incorporation 32 Table of Contents to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm its results of operations.
The slowing or stopping of the development or acceptance of blockchain networks and blockchain assets could have a material adverse effect on our business plans, which may have a material adverse effect on the Company and our stockholders.
The slowing or stopping of the development or acceptance of blockchain technology, networks and digital assets could have a material adverse effect on our business plans, which may have a material adverse effect on the Company and our stockholders.
Further, the Token Ecosystem may also be the target of malicious attacks seeking to identify and exploit weaknesses in the software or the Token Ecosystem which may result in the loss or theft of PhunCoin or PhunToken.
Further, the Token Ecosystem may also be the target of malicious attacks seeking to identify and exploit weaknesses in the Token Ecosystem infrastructure which may result in the loss or theft of PhunCoin or PhunToken.
Regardless of our conclusions, we could be subject to legal or regulatory action in the event the SEC, a state or foreign regulatory authority, or a court were to determine that a digital asset, including PhunCoin and PhunToken, implemented on our platform is a “security” under applicable laws.
Regardless of our conclusions, we could be subject to legal or regulatory action in the event the SEC, a state or foreign regulatory authority, or a court were to determine that a digital asset, including PhunCoin and PhunToken, is a “security” under applicable laws.
Furthermore, though we have not definitively concluded that PhunCoin, which is still in the development stage, would fall within the definition of “security,” we have operated under the assumption that it will be characterized as such out of an abundance of caution.
Furthermore, although we have not definitively concluded that PhunCoin, which is still in the development stage, would fall within the definition of “security,” we have operated under the assumption that PhunCoin will be characterized as such out of an abundance of caution.
In addition, we could be subject to judicial or administrative sanctions for failing to offer or sell the digital asset in compliance with the registration requirements, or for acting as a broker, dealer, or national securities exchange without appropriate registration.
In addition, we could be subject to judicial or administrative sanctions for failing to offer or sell the digital asset in compliance with applicable securities laws, or for acting as a broker, dealer, or national securities exchange without appropriate registration.
Such a delisting would likely have a negative effect on the price of our common stock and would impair our stockholders' ability to sell or purchase shares of our common stock when they wish to do so.
Such a delisting would likely have a negative effect on the price of our common stock and would impair our stockholders' ability to sell or purchase shares of our common stock when they 30 Table of Contents wish to do so.
The laws and regulations applicable to digital assets, blockchain technologies and digital asset exchanges, are complex and evolving and varies significantly among U.S. federal, state and foreign jurisdictions and is subject to significant uncertainty at this time.
The laws and regulations applicable to digital assets, blockchain technologies and digital asset exchanges, are complex and evolving and vary significantly among U.S. federal, state and foreign jurisdictions and are subject to significant uncertainty at this time.
The prices of blockchain assets such as bitcoin and ethereum have historically been subject to dramatic fluctuations and are highly volatile.
The prices of digital assets such as bitcoin and ethereum have historically been subject to dramatic fluctuations and are highly volatile.
Any resulting change in characterization may also affect the manner in which such digital assets are reflected in our financial statements. The SEC and its staff have taken the position that certain digital or “crypto” assets fall within the definition of a “security” under the U.S. federal securities laws.
Any resulting change in characterization may also affect the manner in which such digital assets are reflected in our financial statements. 37 Table of Contents The SEC and its staff have taken the position that certain digital assets or "crypto assets" fall within the definition of a “security” under the U.S. federal securities laws.
Despite efforts by us, the risk of known or novel mining attacks exists. Alternative platforms or networks may be established that compete with or are more widely used than the Token Ecosystem.
Despite efforts by us, the risk of known or novel mining attacks exists. 35 Table of Contents Alternative platforms or networks may be established that compete with or are or become more widely used than the Token Ecosystem.
We experienced a consolidated net loss for the years ended December 31, 2024 and December 31, 2023.
We experienced a consolidated net loss for the years ended December 31, 2025 and December 31, 2024.
Some of our Token Ecosystem code and protocols rely on open-source code publicly available.
Some of our Token Ecosystem code and protocols rely on open-source code which is publicly available.
At December 31, 2024, we had state and local net operating loss carryforwards of approximately $236.7 million, with the majority beginning to expire in 2030 if not utilized. We periodically assess the likelihood that we will be able to recover net deferred tax assets.
At December 31, 2025, we had state and local net operating loss carryforwards of approximately $247.8 million, with the majority beginning to expire in 2030 if not utilized. We periodically assess the likelihood that we will be able to recover net deferred tax assets.
Some investors and other market participants may disagree with this strategy or actions we undertake to implement it. If the price of bitcoin falls or our bitcoin acquisition strategy otherwise proves unsuccessful, it would adversely impact our financial condition, results of operations, and the market price of our common stock.
Some investors and other market participants may disagree with this strategy or actions we undertake to implement it. If the price of digital assets we hold falls or our digital assets acquisition strategy otherwise proves unsuccessful, it could adversely impact our financial condition, results of operations, and the market price of our common stock.
In the event that PhunCoin remains untradeable for a significant period of time or indefinitely, their value could be materially adversely affected. 39 Table of Contents The delay, or perceived delay, in the full development of our Token Ecosystem may result in declines in PhunToken revenue. PhunToken is intended to be used or consumed within our Token Ecosystem.
In the event that PhunCoin remains untradeable for a significant period of time or indefinitely, their value could be materially adversely affected. Additional delays in the full development of our Token Ecosystem may result in declines in PhunToken revenue. PhunToken is intended to be used or consumed within our Token Ecosystem.
As with other decentralized digital assets, the blockchain used in connection with PhunCoin, PhunToken and the Token Ecosystem may be susceptible to mining attacks, including double-spend attacks, majority mining power attacks, selfish-mining attacks, and race condition attacks. Any successful attacks present a risk to the Token Ecosystem and our tokens.
The blockchain networks used in connection with PhunCoin, PhunToken and the Token Ecosystem may be susceptible to mining attacks, including double-spend attacks, majority mining power attacks, selfish-mining attacks, and race condition attacks. Any successful attacks present a risk to the Token Ecosystem and our tokens.
Any such faults or attacks on PhunCoin or PhunToken may materially and adversely affect our business. 37 Table of Contents Because our tokens will be digital assets built and transacted initially on top of existing third-party blockchain technology, Phunware is reliant on another blockchain network, and users could be subject to the risk of wallet incompatibility and blockchain protocol risks.
Any such faults or attacks on PhunCoin or PhunToken may materially and adversely affect our business. Because our tokens will be digital assets built and transacted initially on top of existing blockchain technology and networks, Phunware is reliant on other blockchain networks, and users could be subject to the risk of wallet incompatibility and blockchain protocol risks.
Failure by us to comply with any laws, rules and regulations, some of which may not exist yet or are subject to interpretation and may be subject to change, could result in a variety of adverse consequences, including civil penalties and fines. The sale of PhunToken or the offerings of PhunCoin may subject us to additional regulatory requirements.
Failure by us to comply with any laws, rules and regulations, some of which may not exist yet or are subject to interpretation and may be subject to change, could result in a variety of adverse consequences, including civil penalties and fines.
The growth of the blockchain industry in general, as well as the networks on which we will rely to consummate the Token Generation Event, is subject to a high degree of uncertainty. The digital asset and digital asset industries as a whole have been characterized by rapid changes and innovations and are constantly evolving.
The growth of blockchain technology in general, as well as the networks on which we will rely to consummate the Token Generation Event and develop the Token Ecosystem, is subject to a high degree of uncertainty. Blockchain networks and digital assets 33 Table of Contents as a whole have been characterized by rapid changes and innovations and are constantly evolving.
We have policies and processes to analyze whether each digital asset, including PhunCoin and PhunToken, that we seek to implement within our platform could be deemed to be a “security” under applicable laws.
We have policies and processes to analyze whether each digital asset, including PhunCoin and PhunToken, that we seek to hold or issue could be deemed to be a “security” under applicable laws.
As of December 31, 2024, we had federal net operating loss carryforwards of approximately $248.2 million, of which $162.5 million will never expire and $85.7 million will expire at various dates beginning in 2030.
As of December 31, 2025, we had federal net operating loss carryforwards of approximately $276.4 million, of which $190.7 million will never expire and $85.7 million will expire at various dates beginning in 2030.
Bitcoin is a highly volatile asset that has traded below $41,000 and above $104,000 per bitcoin during 2024.
Bitcoin is a highly volatile asset that has traded below $77,000 and above $125,000 per bitcoin during 2025.
The service providers used by us, may also use, store, and transmit such information. We intend to implement detailed privacy and cybersecurity policies and procedures and an incident response plan designed to protect such sensitive personal information and prevent data loss and security breaches.
We intend to implement detailed privacy and cybersecurity policies and procedures and an incident response plan designed to protect such sensitive personal information and prevent data loss and security breaches.
The Token Ecosystem is designed to distribute PhunCoin or PhunToken to consumers who provide certain personal information to us. Providing this data exposes us to risks of privacy data breach and cybersecurity attacks. We utilize a substantial amount of electronic information. This includes transaction information and sensitive personal information of the users of the Token Ecosystem.
The Token Ecosystem is designed to distribute PhunCoin or PhunToken to consumers who provide certain personal information to us. Providing this data to us exposes us to risks of data breach and loss and cybersecurity attacks.
We will be adversely affected if we are, or any of our subsidiaries is, determined to have been subject to registration as an investment company under the Investment Company Act. We are currently not deemed an “investment company” subject to regulation under the Investment Company Act.
The sale of PhunToken or the offerings of PhunCoin may subject us to additional regulatory requirements if we are, or any of our subsidiaries is, determined to have been subject to registration as an investment company under the Investment Company Act. We are currently not deemed an “investment company” subject to regulation under the Investment Company Act.
We and our officers and directors, may become subject to other legal proceedings in our ordinary course of business. We cannot predict with certainty the outcome of these legal proceedings. The outcome of these or future legal proceedings could require us to take, or refrain from taking, actions which could negatively affect our operations.
Current and future litigation and arbitration proceedings could adversely affect us. We and our officers and directors are or may become subject to legal proceedings in the ordinary course of business. We cannot predict with certainty the outcome of legal proceedings.
If we are ultimately unable to generate sufficient revenue to meet our financial targets, become profitable and have sustainable positive cash flows, investors could lose their investment. Our future performance will depend on the successful transition of our Chief Executive Officer (CEO). On October 22, 2024, the Company and Michael Snavely entered into a separation agreement which provided that Mr.
If we are ultimately unable to generate sufficient revenue to meet our financial targets, become profitable and have sustainable positive cash flows, investors could lose their investment. Our future performance will depend on the successful transition of our Chief Executive Officer (CEO). Changes in our management team could disrupt our business and adversely affect our results of operations.
Our future performance also will continue to depend on the services and contributions of our other senior management and key employees to execute on our business plan and to identify and pursue new opportunities as well as service and product innovations. These changes, and any future changes, in our operations and management team could be disruptive to our operations.
Our future performance also will continue to depend on the services and contributions of our other senior management and key employees and their abilities to execute on our business plan and strategy and to identify and pursue new opportunities and innovations for our products and services.
Risks Related to our Digital Asset Holdings We currently hold and may acquire additional digital assets in the future, which may expose us to various risks associated with bitcoin and other digital assets. We are continually examining the risks and rewards of our bitcoin acquisition strategy. This strategy has not been tested over time or under various market conditions.
Risks Related to our Digital Asset Holdings We currently hold and may acquire additional digital assets in the future, which may expose us to various risks associated with bitcoin and other digital assets.
Further, if the Interim Chief Executive Officer formulates different or changed views, the future strategy and plans of our business may differ materially from those of the past. 11 Table of Contents If we are unable to expand or renew sales to existing customers, or attract new customers, our growth could be slower than expected and our business may be harmed.
These interim chief executive changes, and any future changes in our senior management 11 Table of Contents team could be disruptive to our operations. If we are unable to expand or renew sales to existing customers, or attract new customers, our growth could be slower than expected and our business may be harmed.
These losses were due to both a decline in platform revenue in 2023 and 2024, as compared to previous years, goodwill impairment in 2023, investments we made to build our products and services, grow and maintain our business, acquire customers and service our various debt obligations.
These losses were due to (i.) both a decline in revenue in 2024 and 2025, as compared to previous years, (ii.) investments we made to build our products and services, grow and maintain our business, (iii.) attempts to acquire new customers and (iv.) general and administrative expenses, including legal and professional fees for litigation.
Our results of operations and ability to grow could be negatively affected if we cannot adapt and expand our technology and product and service offerings in response to ongoing market changes. The software and technology solutions business and markets are characterized by rapid technological change, evolving industry standards, changing customer preferences and new product and service introductions.
The software and technology solutions business and markets are characterized by rapid technological change, evolving industry standards, changing customer preferences and new product and service introductions.
Such legal proceedings involve substantial costs, including the costs associated with investigation, litigation, arbitration and possible settlement, judgment, penalty, or fine. As a smaller company, the collective costs of litigation and arbitration proceedings represent a drain on our cash resources, and require an inordinate amount of our management’s time and attention.
As a smaller company, the collective costs of legal proceedings may represent a drain on our cash resources, and require an inordinate amount of our management’s and board of directors' time and attention. An adverse ruling with respect to any such legal proceeding could have a material adverse effect on our results of operations and financial condition.
An adverse ruling with respect to our current or any other litigation could have a material adverse effect on our results of operations and financial condition. Negative publicity surrounding such legal proceedings may also harm our reputation and adversely impact our business and results.
Negative publicity surrounding such legal proceedings may also harm our reputation and adversely impact our business and financial condition. Our results of operations and ability to grow could be negatively affected if we cannot adapt and expand our technology and product and service offerings in response to ongoing market changes.
If we fail to satisfy the continued listing requirements of Nasdaq Capital Market, such as corporate governance requirements or the minimum bid requirement, Nasdaq may take steps to delist our common stock.
We have, in the past, received notices from the Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company was not in compliance with the rules for continued listing, all of which have been remediated. If we fail to satisfy the continued listing requirements of Nasdaq, Nasdaq may take steps to delist our common stock.
Snavely’s employment with the Company as its Chief Executive Officer terminated. On the same day, our board of directors appointed Stephen Chen, the Company’s then Chairperson and Class I director, as Interim Chief Executive Officer.
On July 14, 2025, Jeremy Krol, who was then serving as Chief Operating Officer of the Company, was appointed to replace Stephen Chen as the Company's Interim Chief Executive Officer.
Removed
Current and future litigation and arbitration proceedings could adversely affect us. The Company is party to litigation with Wild Basin Investments, LLC and other parties as further described in this Annual Report as well as arbitration with Wilson Sonsini Goodrich & Rosati, Professional Corporation, as further described in this Annual Report.
Added
We experienced a number of changes in our senior leadership team in recent years, including CEO and/or Interim CEO transitions in 2025, 2024, 2023 and 2022 and various changes in other senior management positions. Specifically, on July 13, 2025, the Board of Directors (the "Board") of the Company terminated Stephen Chen's at-will employment as Interim Chief Executive Officer.
Removed
On January 10, 2025, we received notice from the Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company was not in compliance with the rules for continued listing as set forth in Nasdaq Listing Rules 5620(a) and 5810(c)(2)(G) because the Company had not held an annual meeting of stockholders within 12 months of year-end for the fiscal year ended as of December 31, 2023.
Added
Pursuant to the terms of Mr. Chen's employment agreement dated October 22, 2024, his termination as Interim Chief Executive Officer also constituted a termination from all positions that Mr. Chen held as a member of the Board and any committee thereof, effective as of the same date.
Removed
On February 14, 2025, we submitted a plan for compliance formal response to the Nasdaq Notice requesting an extension to June 30, 2025 to regain compliance with the applicable continued listing requirements and have begun preparations to hold the 2024 annual stockholders meeting in May 2025.
Added
The outcome of any such legal proceedings could require us to take, or refrain from taking, actions which could negatively affect our operations. Such legal proceedings may involve substantial costs, including the costs associated with investigation, litigation, arbitration and possible settlement, award, judgment, penalty, or fine.
Removed
There can be no assurance that we will regain such compliance and Nasdaq could make a determination to delist our common stock.
Added
We are continually examining the risks and rewards of our bitcoin and other digital assets acquisition strategy, and we only held approximately $96 thousand in bitcoin and other digital assets as of December 31, 2025. This strategy has not been tested over time or under various market conditions.
Removed
In connection with owning bitcoin, we may investigate other potential approaches to holding our bitcoin assets. If we change the means by which we have historically held bitcoin assets, the accounting treatment for our bitcoin may correspondingly change.
Added
The Token Ecosystem is designed to utilize a substantial amount of electronic information, including transaction information and sensitive personal information of the users of the Token Ecosystem. The service providers used by us, may also use, store, and transmit such information.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOn July 30, 2021, Phunware filed a second action against WSGR in the Superior Court of the State of California for the County of Santa Clara, which is styled Phunware, Inc., v. Wilson Sonsini Goodrich & Rosati, Professional Corporation, Does 1-25, Case No. 21CV386411. The two actions were then removed to arbitration.
Biggest changeWilson Sonsini Goodrich & Rosati, Professional Corporation, Does 1-25, Case No. 21CV386411, originally filed in the Superior Court of the State of California and then removed to arbitration in California, have been settled and released by the Company and the other applicable parties pursuant to a Settlement Agreement and Mutual Release of Claims on or about February 25, 2026, and dismissed with prejudice on or about March 17, 2026.
Item 4. Min e Safety Disclosures. Not applicable. 44 Table of Contents PA RT II
Min e Safety Disclosures. Not applicable. 40 Table of Contents PA RT II
We intend to vigorously defend against the remaining claims in this lawsuit and any appeals. The information set forth under the subheading " Litigation" in Note 10, " Commitments and Contingencies " of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K is also incorporated herein by reference.
Mewawalla in this arbitration. The information set forth under the subheading " Litigation" in Note 7, " Commitments and Contingencies " and Note 13, " Related Party Transactions " of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K is also incorporated herein by reference. Item 4.
Phunware, Inc., et al., was filed in the Court of Chancery of the State of Delaware (Cause No. 2022-0168-LWW).
Item 3. L egal Proceedings. The Company legal proceedings styled as Wild Basin Investments, LLC, et al. v. Phunware, Inc., et al., filed in the Court of Chancery of the State of Delaware (Cause No. 2022-0168-LWW) and Phunware, Inc. v.
Removed
Item 3. L egal Proceedings. On March 30, 2021, Phunware filed an action against its former counsel Wilson Sonsini Goodrich & Rosati, PC (“WSGR”), which is styled Phunware, Inc., v. Wilson Sonsini Goodrich & Rosati, Professional Corporation, Does 1-25, Case No. 21CV381517, in the Superior Court of the State of California for the County of Santa Clara.
Added
These settlements resolved, among other things, the outstanding accounts payable invoices that were previously alleged to be owed by the Company to WSGR.
Removed
Phunware sought affirmative relief in these actions, as stated in the complaints, for damages according to proof, interest 43 Table of Contents and costs of suit. WSGR filed crossclaims against Phunware in these actions related to services provided by WSGR to Phunware and sought to recover fees related to the services at issue in these actions and interest.
Added
In connection with these settlements, the Company recorded approximately $4.7 million in other income and $3.8 million in additional legal fees and costs in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2025 related to the foregoing.
Removed
In March 2024, WSGR and Phunware settled their claims in the arbitration proceeding relating to Case No. 21CV381517 and Phunware paid approximately $2.2 million of the outstanding amount alleged to be owed by Phunware to WSGR in that proceeding.
Added
On October 1, 2025, Rahul Mewawalla, then a Class I Director and Chairperson of the Board of the Company, filed a demand for arbitration and statements of claims against the Company with the American Arbitration Association (Case No. 01-25-004-9738) alleging, among other things, that the Company breached an Executive Chairman and Chief AI Architect Agreement dated July 13, 2025 between the Company and Mr.
Removed
The Phunware and WSGR claims related to Case No. 21CV386411 remain pending in arbitration and the remaining balance of the payables amount alleged to be owed by Phunware will continue to be arbitrated.
Added
Mewawalla (the “EC Agreement”), the Company's rescission of the EC Agreement was not justified, unpaid compensation, retaliation/wrongful termination, defamation and violations of other Washington state employment-related laws. Mr. Mewawalla seeks relief of amounts allegedly due, double damages where applicable, interest, fees, cost and punitive damages where applicable.
Removed
On August 16, 2024, the Company and WSGR entered into an agreed stay of that arbitration proceeding, which provides for a mutually agreed upon stay of that proceeding until the earlier to occur of (a) August 30, 2025 (subject to either party's right to move to lift the stay earlier than that date for good cause) and (b) the settlement or issuance of a judgment in the Wild Basin litigation, as more fully described below.
Added
He further sought interim and injunctive relief, including a declaration that the EC Agreement remains in force and continued service and compliance with the EC Agreement. The Company responded to Mr. Mewawalla's initial arbitration demand claims for injunctive relief on November 6, 2025. On December 15, 2025, the arbitrator issued an order denying his motion for interim and injunctive relief.
Removed
The outcome of this proceeding and the related Phunware and WSGR claims is uncertain. On February 18, 2022, certain stockholders filed a lawsuit against Phunware and certain of its prior and then existing individual officers and directors. The case, captioned Wild Basin Investments, LLC, et al. v.
Added
Mr. Mewawalla filed an amended statement of claim against the Company on January 16, 2026, in which he alleges, among other things, amended claims and various specific categories and amounts of damages which collectively exceed $34 million. The Company filed its response to the amended statement of claims on February 6, 2026.
Removed
Plaintiffs allege that they invested in Phunware through various early rounds of financing while the Company was private and that following completion of the business combination transactions resulting in Phunware becoming a public company these stockholders received new shares of Phunware common stock and Phunware warrants that were but should not have been subjected to a 180-day “lock up” period.
Added
The arbitration hearing is currently scheduled to occur in September 2026. The Company believes its rescission of the EC Agreement was proper and in accordance with applicable law and rejects all of Mr. Mewawalla's allegations, claims and asserted damages amounts. The Company plans to vigorously dispute and defend against all allegations, claims and asserted damages amounts made by Mr.
Removed
Plaintiffs also allege that Phunware’s stock price dropped significantly during the lock up period and seek damages, costs and professional fees.
Removed
On or about October 24, 2024, Plaintiffs, Phunware and individual director and officer defendants entered into a Confidential Settlement Agreement, and on or about October 28, 2024, Phunware, the individual director and officer defendants and the applicable Phunware insurers entered into a Settlement Agreement and Mutual Release (collectively, the “Settlement Agreements”).
Removed
The Settlement Agreements collectively provide for, among other things, the settlement and release of the Plaintiffs' claims against the individual director and officer defendants, certain agreements between the Plaintiffs and Phunware, including the Plaintiffs' agreement to stay collection of any judgment obtained by the Plaintiffs against Phunware until the settlement or conclusion of the pending WSGR arbitration proceeding.
Removed
Further, the Settlement Agreements provide for a payment of $2.8 million from the Company’s insurers to the Plaintiffs, the payment of $0.2 million from the insurers to Phunware and the release of the insurers’ subrogation claims against Phunware recoveries from WSGR or its insurers in the WSGR arbitration proceeding.
Removed
Phunware's insurers made the $2.8 million and the $0.2 million payments on or about December 4, 2024. The Plaintiffs claims against Phunware in this lawsuit remain in effect. A bench trial occurred in March 2025, and we expect the court to render an order or ruling in the case sometime during the third quarter of 2025.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 44 PART II 45 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 45 Item 6. [Reserved] 45 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 46 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 57 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 40 PART II 41 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 41 Item 6. [Reserved] 41 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 42 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 52 Item 8.
Added
Financial Statements and Supplementary Data 53 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 81 Item 9A. Controls and Procedures 81

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+0 added−0 removed4 unchanged
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock, $0.0001 par value, is listed on the Nasdaq Capital Market under the symbol “PHUN”. Holders On March 21, 2025, there were approximately 169 holders of record of our common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock, $0.0001 par value, is listed on the Nasdaq Capital Market under the symbol “PHUN”. Holders On March 16, 2026, there were approximately 156 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

47 edited+9 added−43 removed44 unchanged
Biggest changeHowever, our product capabilities also serve the employee experience in the workplace, the shopper experience for retail, the fan experience for sports, the traveler experience for aviation, the luxury resident experience for real estate and the student experience for education. • Enterprise mobile software development kits (SDKs) including business intelligence and analytics, content management, alerts, notifications and messaging, and location-based services; • Development services for customers who wish to have to have a customized application experience; and • In-app advertising services for mobile audience building, user acquisition, application discovery, audience engagement and monetization.
Biggest changeHowever, our product and service capabilities also serve the employee experience in the workplace, the shopper experience for retail, the fan experience for sports, the traveler experience for aviation, the luxury resident experience for real estate and the student experience for education. • We offer SDK licenses designed to be deployed individually or in combination and may be integrated into customer applications or existing digital systems, which include: o Analytics (SDK that provides data related to application use and engagement); o Content Management (SDK that allows application administrators to create and manage app content in a cloud-based portal); o Alerts, Notifications & Messaging (SDK that enables brands to send messages to app users through the app); and o Location-Based Services (modules that include mapping, navigation, wayfinding, workflow, asset management and policy enforcement). • Cloud-based intelligence and automation features, including AI-enabled interfaces and analytics capabilities, designed to support contextual user interactions, information discovery and service-related workflows within customer applications. • Development services for customers who wish to have a customized application experience; and • In-app advertising services for mobile audience building, user acquisition, application discovery, audience engagement and monetization. 42 Table of Contents In October 2024, we announced the commencement of our investment into the field of artificial intelligence (AI).
We have focused a majority of our recent sales efforts on addressing the patient experience for healthcare and the luxury guest experience for hospitality.
We have focused a majority of our recent sales efforts on addressing the luxury guest experience for hospitality and the patient experience for healthcare.
We currently do not expect to be profitable in the near future. Key Business Metrics Our management regularly monitors certain financial measures to track the progress of our business against internal goals and targets. We believe that the most important of these measures include backlog and deferred revenue. Bookings, Backlog and Deferred Revenue.
We currently do not expect to be profitable in the near future. Key Business Metrics Our management regularly monitors certain financial measures to track the progress of our business against internal goals and targets. We believe that the most important of these measures include bookings, backlog and deferred revenue. Bookings, Backlog and Deferred Revenue.
We utilized $13.3 million of cash from operating activities during 2024 resulting from a net loss of $10.3 million. The net loss included non-cash charges of $0.9 million, primarily consisting from stock-based compensation offset by a non-cash writeoffs of accounts payable.
We utilized $13.3 million of cash from operating activities during 2024 resulting from a net loss of $10.3 million. The net loss included non-cash charges of $0.9 million, primarily consisting of stock-based compensation offset by non-cash writeoffs of aged accounts payable.
We have invested and expect to continue investing in the expansion of our ability to market, sell and provide our current and future products and services to customers globally. We also expect to continue investing in the development and improvement of new and existing products and services to address customers’ needs.
We have also invested and expect to continue investing in the expansion of our ability to market, sell and provide our current and future products and services to customers globally. We plan to continue investing in the development and improvement of new and existing products and services to address customers’ needs.
Research and development expenses consist primarily of employee compensation costs and overhead allocation. We believe that continued investment in our platform is important for our growth. As a result, our research and development expenses may increase in absolute dollars as our business grows but may fluctuate as a percentage of revenue from period to period. Impairment of Goodwill.
Research and development expenses consist primarily of employee compensation costs, contractor costs and overhead allocation. We believe that continued investment in our platform is important for our growth. As a result, our research and development expenses may increase in absolute dollars as our business grows but may fluctuate as a percentage of revenue from period to period.
We expect to incur additional general and administrative expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the 50 Table of Contents SEC and listing standards of Nasdaq, additional insurance expenses, investor relations activities and other administrative and professional services.
We expect to incur additional general and administrative expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and listing standards of Nasdaq, additional insurance expenses, investor relations activities and other administrative and professional services.
Although we expect to generate operating losses and negative operating cash flows in the future, based on the financing events described above, management believes it has sufficient cash on hand for at least one year following the filing date of this Annual Report on Form 10-K. 54 Table of Contents Our future capital requirements will depend on many factors, including our pace of growth, subscription renewal activity, the timing and extent of spend to support development efforts, additional investments in AI technology and infrastructure, the expansion of sales and marketing activities and the market acceptance of our products and services.
Although we expect to generate operating losses and negative operating cash flows in the future, management believes it has sufficient cash on hand for at least one year following the filing date of this Annual Report on Form 10-K. 49 Table of Contents Our future capital requirements will depend on many factors, including our pace of growth, subscription renewal activity, the timing and extent of spend to support development efforts, additional investments in AI technology and infrastructure, the expansion of sales and marketing activities and the market acceptance of our products and services.
Liquidity and Capital Resources As of December 31, 2024, we held total cash of $113 million, all of which was held in the United States. We have a history of operating losses and negative operating cash flows. As we continue to focus on growing our revenues, we expect these trends to continue into the foreseeable future.
Liquidity and Capital Resources As of December 31, 2025, we held total cash of $100.6 million, all of which was held in the United States. We have a history of operating losses and negative operating cash flows. As we continue to focus on growing our revenues, we expect these trends to continue into the foreseeable future.
We believe adjusted EBITDA provides helpful information with respect to operating performance as viewed by management, including a view of our business that is not dependent on (i) the impact of our capitalization structure and (ii) items that are not part of day-to-day operations.
(2) Adjusted EBITDA is a non-GAAP financial measure. We believe adjusted EBITDA provides helpful information with respect to operating performance as viewed by management, including a view of our business that is not dependent on (i) the impact of our capitalization structure and (ii) items that are not part of day-to-day operations.
We believe that adjusted gross profit and adjusted gross margin provide supplemental information with respect to gross profit and gross margin regarding ongoing performance. We define adjusted gross profit as net revenues less cost of revenue, adjusted to exclude one-time revenue adjustments, stock-based compensation and amortization of intangible assets.
We believe that adjusted gross profit and adjusted gross margin provide supplemental information with respect to gross profit and gross margin regarding ongoing performance. We define adjusted gross profit as net revenues less cost of revenue, adjusted to exclude one-time revenue adjustments and stock-based compensation. We define adjusted gross margin as adjusted gross profit as a percentage of net revenues.
We reasonably expect approximately 42% of our backlog as of December 31, 2024 will be invoiced during the subsequent 12-month period, primarily due to the fact that our contracts are typically one to three years in length. • Deferred revenue consists of amounts that have been invoiced but have not yet been recognized as revenues as of the end of a reporting period.
We reasonably expect approximately 59% of our backlog as of December 31, 2025 will be invoiced during the subsequent 12-month period, primarily due to timing and amount of invoicing of existing contracts and the fact that our contracts are typically one to three years in length. • Deferred revenue consists of amounts that have been invoiced but have not yet been recognized as revenues as of the end of a reporting period.
We also use certain non-GAAP financial measures that fall within the meaning ascribed in SEC Regulation G and Regulation S-K Item 10(e), which may provide users of the financial information with additional meaningful comparison to prior period results.
Non-GAAP Financial Measures Adjusted Gross Profit, Adjusted Gross Margin and Adjusted EBITDA We report our financial results in accordance with GAAP. We also use certain non-GAAP financial measures that fall within the meaning ascribed in SEC Regulation G and Regulation S-K Item 10(e), which may provide users of the financial information with additional meaningful comparison to prior period results.
We anticipate that these efficiencies will enable the Company to reduce mobile app development costs significantly and make high-quality customized mobile apps more accessible and affordable for small to medium sized businesses ("SMBs") and enterprises. • AI Features and Functionalities for Engagement and Monetization .
We anticipate that these efficiencies will enable the Company to reduce mobile app development costs significantly and make high-quality mobile apps more accessible and affordable for small to medium sized businesses and enterprises.
We define adjusted EBITDA as net loss plus (or minus) (i) interest expense (income), (ii) income tax expense, (iii) depreciation, and further adjusted for (iv) non-cash impairment, (v) valuation adjustments and (vi) stock-based compensation expense.
We define adjusted EBITDA as net loss plus or 45 Table of Contents (minus) (i) depreciation, (ii) interest expense, (iii) (interest income), (iv) income tax (benefit) or expense, and further adjusted for (v) stock-based compensation expense, (vi) one-time adjustments and (vii) non-cash impairment and valuation adjustments.
The following table summarizes our cash flows for the periods presented: Year Ended December 31, (in thousands, except percentages) 2024 2023 Consolidated statement of cash flows Net cash used in operating activities $ (13,302 ) $ (18,435 ) Net cash provided by investing activities $ - $ 15,382 Net cash provided by financing activities $ 122,342 $ 4,975 Operating Activities Our primary source of cash from operating activities is receipts sales for our various product and service offerings as further described elsewhere in this Annual Report.
The following table summarizes our cash flows for the periods presented: Year Ended December 31, (in thousands) 2025 2024 Consolidated statement of cash flows Net cash used in operating activities $ (12,467 ) $ (13,302 ) Net cash for investing activities $ - $ - Net cash provided by financing activities $ 80 $ 122,342 Operating Activities Our primary source of cash from operating activities is receipts sales for our various product and service offerings as further described elsewhere in this Annual Report.
Advertising gross profit decreased $0.2 million, or (18.1%), as a result of decreased revenue noted above.
Advertising gross profit decreased $0.7 million, or (81.2%), as a result of decreased revenue noted above.
The following table sets forth our contractual obligations as of December 31, 2024 (in thousands): Payments due by period Contractual obligations Total Less than 1 year 1-3 years 3-5 years More than 5 years Operating lease obligations $ 1,014 $ 360 $ 654 $ - $ - Off-Balance Sheet Arrangements During the years ended December 31, 2024 and 2023, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K, such as the use of unconsolidated subsidiaries, structured finance, special purpose entities or variable interest entities.
Rent expense under operating leases totaled $0.3 million and $0.6 million for the years ended December 31, 2025 and 2024, respectfully. 50 Table of Contents The following table sets forth our contractual obligations as of December 31, 2025: Payments due by period (in thousands) Total Less than 1 year 1-3 years 3-5 years More than 5 years Operating lease obligations $ 654 $ 370 $ 284 $ - $ - Off-Balance Sheet Arrangements During the years ended December 31, 2025 and 2024, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K, such as the use of unconsolidated subsidiaries, structured finance, special purpose entities or variable interest entities.
Refer to Note 6 " Goodwill " of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion on our goodwill impairment.
Refer to the subsection " Litigation" in Note 7, " Commitments and Contingencies " of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion on our litigation settlements.
Costs directly attributable to the development or support of applications relating to platform subscription customers are included in cost of sales, whereas costs related to the ongoing development and maintenance of our software platform are expensed in research and development. As a result, platform subscriptions and services gross profit may fluctuate from period to period.
Costs directly attributable to the development or support of applications relating to platform subscription customers are included in cost of sales, whereas costs related to the ongoing development and maintenance of our software platform are expensed in research and development.
Advertising We also generate revenue by charging advertisers to deliver advertisements (ads) to users of mobile connected devices. We generally sell our ads by cost per thousand impressions and recognize revenue when the ad loads onto the device of a user.
As a result, platform subscriptions and services gross profit may fluctuate from period to period. 46 Table of Contents Advertising We also generate revenue by charging advertisers to deliver advertisements (ads) to users of mobile connected devices. We generally sell our ads by cost per thousand impressions and recognize revenue when the ad loads onto the device of a user.
The following table sets forth our software subscription and services bookings: Year Ended December 31, (in thousands) 2024 2023 Bookings $ 3,078 $ 928 The following table sets forth our backlog and deferred revenue: (in thousands) December 31, 2024 December 31, 2023 Backlog $ 3,635 $ 2,750 Deferred revenue 1,562 1,909 Total backlog and deferred revenue $ 5,197 $ 4,659 For further information regarding our deferred revenue balances, refer to Note 4 “ Revenue ” of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. 47 Table of Contents Non-GAAP Financial Measures Adjusted Gross Profit, Adjusted Gross Margin and Adjusted EBITDA We report our financial results in accordance with GAAP.
The following table sets forth our software subscription and services bookings: Year Ended December 31, (in thousands) 2025 2024 Bookings $ 993 $ 3,078 The following table sets forth our backlog and deferred revenue: (in thousands) December 31, 2025 December 31, 2024 Backlog $ 2,275 $ 3,635 Deferred revenue 1,755 1,562 Total backlog and deferred revenue $ 4,030 $ 5,197 For further information regarding our deferred revenue balances, refer to Note 3 “ Revenue ” of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
By applying these technologies, we expect to improve the quality and personalization of our 46 Table of Contents mobile apps for customers and drastically reduce the time required to adapt our mobile app development framework to meet specific customer needs.
We also plan to use predictive and agentic AI tools in the future to further enhance these processes. By applying these technologies, we expect to improve the quality and personalization of our mobile apps for customers and drastically reduce the time required to adapt our mobile app development framework to meet specific customer needs.
We are also developing AI Personal Concierge features and functionalities to serve as a human-like interface in our mobile apps for customers and users thereof to enhance engagement and provide our customers with innovative opportunities to further monetize their products and services with users. • Automation Technology .
We recently developed an AI Concierge generative AI product feature with functionalities to serve as a human-like interface in our mobile apps for our customers to enhance customer engagement with users and provide customers with innovative opportunities to further monetize their products and services with users.
We determine revenue recognition through the following five-step framework: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract or contracts; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, we satisfy a performance obligation.
Our revenue recognition policy follows guidance from Accounting Standards Codification ("ASC") No. 606, Revenue from Contracts with Customers (Topic 606) . 51 Table of Contents We determine revenue recognition through the following five-step framework: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract or contracts; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, we satisfy a performance obligation.
Refer to Note 8 " Debt " of the notes to consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information on debt offerings.
Refer to Note 7 " Commitments and Contingencies " of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion on the litigation settlement.
Management uses these measures (i) to compare operating performance on a consistent basis, (ii) to calculate incentive compensation for our employees, (iii) for planning purposes including the preparation of our internal annual operating budget and (iv) to evaluate the performance and effectiveness of operational strategies.
Management uses these measures (i) to compare operating performance on a consistent basis, (ii) to calculate incentive compensation for our employees, (iii) for planning purposes including the preparation of our internal annual operating budget and (iv) to evaluate the performance and effectiveness of operational strategies. 44 Table of Contents Our non-GAAP financial measures should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Until such time as these amounts are invoiced, they are not recorded in revenue, deferred revenue, accounts receivable or elsewhere in our consolidated financial statements and are considered by us to be backlog.
At any point in the contract term, there can be amounts that we have not yet been contractually able to invoice. Until such time as these amounts are invoiced, they are not recorded in revenue, deferred revenue, accounts receivable or elsewhere in our consolidated financial statements and are considered by us to be backlog.
We believe that bookings reflects the current demand for our products and services and provides us insight into how well our sales and marketing efforts are performing. • Backlog represents future amounts to be invoiced under our active contracts. At any point in the contract term, there can be amounts that we have not yet been contractually able to invoice.
We believe that bookings reflects the current demand for our products and services and provides us insight into how well our sales and marketing efforts are performing. 43 Table of Contents • Backlog represents future amounts to be invoiced under our active contracts.
Year Ended December 31, (in thousands, except percentages) 2024 2023 Gross profit $ 1,454 $ 1,686 Add back: Stock-based compensation 179 447 Adjusted gross profit $ 1,633 $ 2,133 Adjusted gross margin 51.2 % 44.1 % Year Ended December 31, (in thousands) 2024 2023 Net loss from continuing operations $ (10,316 ) $ (41,944 ) Add back: Depreciation 16 84 Add back: Interest expense 135 1,733 Less: Interest income (1,732 ) - Add back: Income tax expense 41 29 EBITDA (11,856 ) (40,098 ) Add back: Stock-based compensation 1,656 4,071 Add back: Impairment of digital assets - 50 Add back/less: (Gain) loss on extinguishment of debt (535 ) 237 Add back: Loss on disposal of subsidiary 418 - Add back: Impairment of goodwill - 25,819 Less: Fair value adjustment for warrant liabilities - (256 ) Less: Gain on sale of digital assets, net of impairment - (5,310 ) Adjusted EBITDA $ (10,317 ) $ (15,487 ) 49 Table of Contents Components of Results of Operations Revenue and Gross Profit There are a number of factors that impact the revenue and margin profile of the services and technology offerings we provide, including, but not limited to, solution and technology complexity, technical expertise requiring the combination of products and types of services provided, as well as other elements that may be specific to a particular client solution.
Year Ended December 31, (in thousands, except percentages) 2025 2024 Gross profit $ 1,291 $ 1,454 Add back: Stock-based compensation 62 179 Adjusted gross profit $ 1,353 $ 1,633 Adjusted gross margin 53.0 % 51.2 % Year Ended December 31, (in thousands) 2025 2024 Net loss $ (11,401 ) $ (10,316 ) Add back: Depreciation 13 16 Add back: Interest expense 32 135 Less: Interest income (4,268 ) (1,732 ) Add back: Income tax (benefit) expense (19 ) 41 EBITDA (15,643 ) (11,856 ) Add back: Stock-based compensation 455 1,656 Less: Gain on extinguishment of debt - (535 ) Add back: Loss on disposal of subsidiary - 418 Less: Gain on legal settlement (959 ) - Adjusted EBITDA $ (16,147 ) $ (10,317 ) Components of Results of Operations Revenue and Gross Profit There are a number of factors that impact the revenue and margin profile of the services and technology offerings we provide, including, but not limited to, solution and technology complexity, technical expertise requiring the combination of products and types of services provided, as well as other elements that may be specific to a particular client solution.
We also may seek additional debt financings to fund the expansion of our business or to finance strategic acquisitions in the future, which may have an impact on our interest expense. Income Tax Expense We are subject to U.S. Federal income taxes, state income taxes net of federal income tax effect and nondeductible expenses.
Interest Expense During 2024, interest expense included interest related to our outstanding debt, including amortization of discounts and deferred issuance costs. We also may seek additional debt financing to fund the expansion of our business or to finance strategic acquisitions in the future, which may have an impact on our interest expense. Income Tax Expense We are subject to U.S.
Our primary uses of cash from operating activities are payments to employees for compensation and related expenses, publishers and other vendors for the purchase of digital media inventory and related costs, sales and marketing expenses, general operating expenses and employee and material costs for Lyte Technology, Inc. ("Lyte") in discontinued operations.
Our primary uses of cash from operating activities are payments to employees for compensation and related expenses, publishers and other vendors for the purchase of digital media inventory and related costs, sales and marketing expenses and general operating expenses. We utilized $12.5 million of cash from operating activities during 2025 resulting from a net loss of $11.4 million.
Refer to Note 8 " Debt " of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion on the 2022 Promissory Note. These items were partially offset by a $0.4 million loss on disposal of subsidiary.
Refer to Note 7 " Commitments and Contingencies " of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion on the litigation settlement. This increase was partially offset by a $1.0 million decrease in stock-based compensation expense.
GAAP Financial Measures Year ended December 31, (in thousands, except percentages) 2024 2023 Gross profit $ 1,454 $ 1,686 Gross margin 45.6 % 34.9 % Net loss from continuing operations $ (10,316 ) $ (41,944 ) 48 Table of Contents Year Ended December 31, (in thousands, except percentages) 2024 2023 Adjusted gross profit (1) $ 1,633 $ 2,133 Adjusted gross margin (1) 51.2 % 44.1 % Adjusted EBITDA (2) $ (10,317 ) $ (15,487 ) (1) Adjusted gross profit and adjusted gross margin are non-GAAP financial measures.
GAAP Financial Measures Year ended December 31, (in thousands, except percentages) 2025 2024 Gross profit $ 1,291 $ 1,454 Gross margin 50.6 % 45.6 % Net loss $ (11,401 ) $ (10,316 ) Non-GAAP Financial Measures Year Ended December 31, (in thousands, except percentages) 2025 2024 Adjusted gross profit (1) $ 1,353 $ 1,633 Adjusted gross margin (1) 53.0 % 51.2 % Adjusted EBITDA (2) $ (16,147 ) $ (10,317 ) (1) Adjusted gross profit and adjusted gross margin are non-GAAP financial measures.
Contractual Obligations We lease various office facilities, including our corporate headquarters in Austin, Texas under a non-cancellable operating lease agreement that expires September 2027. The terms of the lease agreement provide for rental payments on a graduated basis. We recognize rent expense on a straight-line basis over the lease periods.
Financing Activities Our financing activities during 2024 and 2025 consisted of proceeds from sales of our common stock. Contractual Obligations Our corporate headquarters in Austin, Texas is under a non-cancellable operating lease agreement that expires September 2027. The terms of the lease agreement provide for rental payments on a graduated basis.
Other income (expense) Year Ended December 31, (in thousands, except percentages) 2024 2023 Other income (expense) Interest expense $ (135 ) $ (1,733 ) Interest income 1,732 - Gain (loss) on extinguishment of debt 535 (237 ) Gain on sale of digital currencies - 5,310 Other income, net 1,482 436 Total other income $ 3,614 $ 3,776 During 2024, we recorded other income of $3.6 million, primary as a result of a $1.7 million of interest income from earned from our cash and equivalents, $1.4 million as a result of writeoffs of aged accounts payable and $0.5 million of a gain on the extinguishments related to our 2022 Promissory Note (defined elsewhere herein).
During 2024, we recorded other income of $3.6 million primarily as a result of $1.7 million of interest income earned from cash and equivalents, $1.4 million as a result of writeoffs of aged accounts payable and $0.5 million of a gain on the extinguishments related to our 2022 Promissory Note.
Cost of Revenues, Gross Profit and Gross Margin Year Ended December 31, Change (in thousands, expect percentages) 2024 2023 Amount % Cost of Revenue Software subscriptions and services $ 1,270 $ 2,468 $ (1,198 ) (48.5 %) Advertising 465 678 (213 ) (31.4 %) Total cost of revenue $ 1,735 $ 3,146 $ (1,411 ) (44.9 %) Gross Profit Software subscriptions and services $ 637 $ 689 $ (52 ) (7.5 %) Advertising 817 997 (180 ) (18.1 %) Total gross profit $ 1,454 $ 1,686 $ (232 ) (13.8 %) Gross Margin Software subscriptions and services 33.4 % 21.8 % Advertising 63.7 % 59.5 % Total gross margin 45.6 % 34.9 % Software gross profit increased $0.1 million, or (7.5%), for the year ended December 31, 2024 compared to the corresponding period in 2023, as a result of lower costs associated with customer projects due to the delivery of a large customer project in 2023.
Cost of Revenues, Gross Profit and Gross Margin Year Ended December 31, Change (in thousands, except percentages) 2025 2024 Amount % Cost of Revenue Software subscriptions and services $ 1,134 $ 1,270 $ (136 ) (10.7 %) Advertising 128 465 (337 ) (72.5 %) Total cost of revenue $ 1,262 $ 1,735 $ (473 ) (27.3 %) Gross Profit Software subscriptions and services $ 1,137 $ 637 $ 500 78.5 % Advertising 154 817 (663 ) (81.2 %) Total gross profit $ 1,291 $ 1,454 $ (163 ) (11.2 %) Gross Margin Software subscriptions and services 50.1 % 33.4 % Advertising 54.6 % 63.7 % Total gross margin 50.6 % 45.6 % Software gross profit increased $0.5 million, or 78.5%, for the year ended December 31, 2025 compared to the corresponding period in 2024, as a result of delivery of customer projects in 2025 which were booked in 2024.
Operating Expenses Year Ended December 31, Change (in thousands, except percentages) 2024 2023 Amount % Operating expenses Sales and marketing $ 2,605 $ 3,329 $ (724 ) (21.7 %) General and administrative 10,473 13,780 (3,307 ) (24.0 %) Research and development 2,265 4,449 (2,184 ) (49.1 %) Impairment of goodwill - 25,819 (25,819 ) (100.0 %) Total operating expenses $ 15,343 $ 47,377 $ (32,034 ) (67.6 %) Sales and Marketing Sales and marketing expense decreased $0.7 million, or (21.7%), for the year ended December 31, 2024 compared to the corresponding period of 2023, primarily due to a decrease in payroll and related expenses as a result of lower headcount.
Operating Expenses Year Ended December 31, Change (in thousands, except percentages) 2025 2024 Amount % Operating expenses Sales and marketing $ 3,352 $ 2,605 $ 747 28.7 % General and administrative 15,295 10,473 4,822 46.0 % Research and development 3,163 2,265 898 39.6 % Total operating expenses $ 21,810 $ 15,343 $ 6,467 42.1 % 48 Table of Contents Sales and Marketing Sales and marketing expense increased $0.7 million, or 28.7%, for the year ended December 31, 2025 compared to the corresponding period of 2024, primarily due to an increase in marketing consultants and marketing spend, as well as payroll and related expenses in our sales function.
Revenue is recognized when control of these products or services are transferred to our 56 Table of Contents customers in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Our revenue recognition policy follows guidance from Accounting Standards Codification ("ASC") No. 606, Revenue from Contracts with Customers (Topic 606) .
Revenue We derive our revenue primarily from vertical solution and SDK subscription fees, which include access to our platform, application development and support fees. Revenue is recognized when control of these products or services are transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those services.
We actively utilize generative AI tools to streamline internal processes and workflows for mobile app creation and development. We also plan to use predictive AI tools in the future to further enhance these processes.
We plan to use AI in various contexts within our internal systems and products and services offerings. The AI technology we have initially used in the context of our platform is generative AI. We actively utilize generative AI tools to streamline internal processes and workflows for mobile app creation and development.
In addition, changes in our operating assets and liabilities amounted to cash decreases resulting in approximately $3.8 million, mainly attributable to a decrease in accounts payable related to a partial legal settlement as further detailed in the subsection " Litigation" in Note 10, " Commitments and Contingencies " of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K and lease liability payments.
In addition, changes in our operating assets and liabilities amounted to cash decreases of approximately $3.8 million, mainly attributable to a decrease in accounts payable related to a partial legal settlement and lease liability payments. Investing Activities We did not have any investing activities during 2024 and 2025.
Results of Operations Comparison of Fiscal Years Ended December 31, 2024 and 2023 Net Revenues Year Ended December 31, Change (in thousands, expect percentages) 2024 2023 Amount % Revenue Software subscriptions and services $ 1,907 $ 3,157 $ (1,250 ) (39.6 %) Advertising 1,282 1,675 (393 ) (23.5 %) Total revenue $ 3,189 $ 4,832 $ (1,643 ) (34.0 %) Software subscriptions and services as a percentage of total revenue 59.8 % 65.3 % Advertising as a percentage of total revenue 40.2 % 34.7 % Platform revenue as a percentage of total revenue 100.0 % 100.0 % Software and subscriptions revenue decreased $1.3 million, or (39.6%), for the year ended December 31, 2024 compared to the corresponding period in 2023 , as a result of development fees and additional customer reimbursable costs in 2023. 51 Table of Contents Advertising revenue decreased by $0.4 million, or (23.5%), due to decreased level of advertising campaigns.
Refer to Note 11 " Income Taxes " of the notes to consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion. 47 Table of Contents Results of Operations Comparison of Fiscal Years Ended December 31, 2025 and 2024 Net Revenues Year Ended December 31, Change (in thousands, except percentages) 2025 2024 Amount % Revenue Software subscriptions and services $ 2,271 $ 1,907 $ 364 19.1 % Advertising 282 1,282 (1,000 ) (78.0 %) Net revenue $ 2,553 $ 3,189 $ (636 ) (19.9 %) Software subscriptions and services as a percentage of total revenue 89.0 % 59.8 % Advertising as a percentage of total revenue 11.0 % 40.2 % Platform revenue as a percentage of total revenue 100.0 % 100.0 % Software and subscriptions revenue increased $0.4 million, or 19.1%, for the year ended December 31, 2025 compared to the corresponding period in 2024 , as a result of increase in development services revenue in 2025.
In addition, certain changes in our operating assets and liabilities resulted in significant cash decreases as follows: $1.6 million from a combined decrease in accounts payable and accrued expenses and lease liability payments, $1.3 million from the discontinued operation of Lyte, as well as $0.4 million from other working capital changes, primarily related to a decrease in deferred revenue. revenue and lease liability payments.
The net loss included non-cash gain of $0.4 million, primarily from a $1.0 million gain from litigation settlements that was partially offset by $0.5 million of stock-based compensation. In addition, changes in our operating assets and liabilities amounted to cash decreases of approximately $0.7 million, mainly attributable to lease liability payments and a decrease in accounts payable and accrued expenses.
General and Administrative General and administrative expense decreased $3.3 million, or (24.0%), for the year ended December 31, 2024 compared to the corresponding period of 2023, as a result of a decrease of $2.0 million in stock-based compensation, $1.6 million in decreased payroll and related expenses as a result of lower headcount and $0.5 million decrease in facilities and termination costs related to expired lease terms.
General and Administrative General and administrative expense increased $4.8 million, or 46.0%, for the year ended December 31, 2025 compared to the corresponding period of 2024, as a result of an increase of $5.8 million in professional and consulting fees mainly related to legal fees for litigation and settlement of the Company's legal and arbitration proceedings.
Our effective tax rate will vary depending on permanent non-deductible expenses and other factors. Refer to Note 14 " Income Taxes " of the notes to consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.
Federal income taxes, state income taxes net of federal income tax effect and nondeductible expenses. Our effective tax rate will vary depending on permanent non-deductible expenses and other factors.
Research and Development Research and development expense decreased $2.2 million, or (49.1%) for the year ended December 31, 2024, compared to the corresponding period of 2023, primarily due to a decrease in payroll and related expenses as a result of lower headcount. 52 Table of Contents Impairment of Goodwill We recorded an impairment of goodwill of $25.8 million for the year ended December 31, 2023.
Research and Development Research and development expense increased $0.9 million, or 39.6% for the year ended December 31, 2025, compared to the corresponding period of 2024, primarily due to an increase in consulting spend in our engineering and technical teams.
Overview We offer a mobile-application cloud-based platform that equips companies with the products, solutions and services necessary to engage, manage and monetize their mobile application portfolios. Our offerings include: • A cloud-based application framework vertical solution license for iOS and Android-based mobile applications (apps).
Overview Our mobile software subscriptions and services offerings include a combination of application frameworks, SDKs, cloud-based services and related capabilities designed to support digital engagement, operational workflows and user experiences and include the following: • A cloud-based application framework vertical solution license for iOS and Android-based mobile experiences, enabling customers to deploy, manage and extend functionality across mobile applications and connected environments.
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In October 2024, we announced the commencement of the development of a new generative AI-driven software development platform to enable businesses of any size to design, create, build, and deploy high-quality custom mobile applications in shorter periods of time.
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We created, deployed and market-tested creator.phunware.com, an online platform and part of the Company's software development initiative to utilize generative AI to simplify and facilitate the creation and completion of mobile apps.
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The platform will be designed to utilize generative AI in a manner that will enable businesses to develop and monetize custom mobile app solutions more quickly and at a lower cost, making them more accessible to small and medium-sized businesses. The “artificial intelligence” (AI) in the context of the Company’s platform will initially be generative pre-trained transformer (GPT) technology.
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In light of our market testing and recent changes in our senior management team, we decided to pause further development and allocation of resources to completing the app creator platform and instead focus these resources on generative and agentic AI-related features and functionalities within our current product offerings.
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We plan to use such AI in various contexts within our internal systems, product offerings and new software development platform, including the following: • Creator.phunware.com . We have created, deployed and are testing creator.phunware.com, an online platform which is the first step in the Company’s new software development platform initiative.
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We are currently pilot testing the AI Concierge with existing customers as a new feature in their existing mobile applications. We also recently designed and demonstrated, at a major hospitality conference, our Guest Services Agent agentic AI product feature with functionalities to interact with and perform tasks for customer hospitality guests.
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This platform will in the future utilize generative AI (initially GPT technology) to simplify the mobile app request, submission, creation, development, customization and completion processes for customers.
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For instance, we anticipate the Guest Services Agent feature will be able to provide information about and book reservations at restaurants located on customer properties. This Guest Services Agent feature is still in the development and testing phase.
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The platform is designed to include a Sales Companion GPT, a generative AI assistant that will guide customers step-by-step through the onboarding and sales processes, helping guide customer decisions in creating, developing, customizing and completing their mobile apps, making them even more intuitive, efficient and less expensive. • Generative AI Tools for Internal Systems .
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We continue to invest in AI, including generative AI and agentic AI, and in the integration of AI capabilities into our products and services. We will continue to evaluate our investments in AI and align investment and resource allocation in the products and markets where we believe we can generate the greatest benefits for customers and opportunities for shareholder returns.
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In the future, we plan to further integrate generative AI into our App Creator process to facilitate collection and evaluation of inputs - such as customer-provided content, branding materials, and other relevant information - and automatically generate necessary configuration files. We intend to continue investing for long-term growth.
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Our AI related investments are in the research and development phase, and we may choose not to continue pursuing some of our AI investments. We intend to continue investing for long-term growth.
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Our non-GAAP financial measures should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
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Advertising revenue decreased by $1.0 million, or (78.0%),as a result of a decrease in advertising campaigns mainly due to softening market demand from advertising agency partners.
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We define adjusted gross margin as adjusted gross profit as a percentage of net revenues. (2) Adjusted EBITDA is a non-GAAP financial measure.
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Other Income (Expense) Year Ended December 31, (in thousands) 2025 2024 Other income (expense) Interest expense $ (32 ) $ (135 ) Interest income 4,268 1,732 Gain on extinguishment of debt - 535 Other income, net 4,863 1,482 Total other income $ 9,099 $ 3,614 During 2025, we recorded other income of $9.1 million primarily as a result of $4.3 million of interest income earned from cash and equivalents and $4.9 million primarily related to the settlement of litigation and arbitration proceedings.
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Goodwill impairment consists of non-cash impairment charges related to goodwill. We review goodwill for impairment annually on October 1 and more frequently if events or changes in circumstances indicate an impairment may exist.
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We recognize rent expense on a straight-line basis over the lease periods.
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If the carrying value of the reporting unit continues to exceed its fair value, the fair value of the Company’s goodwill is calculated and an impairment charge equal to the excess is recorded. Interest Expense Interest expense includes interest related to our outstanding debt, including amortization of discounts and deferred issuance costs.
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These decreases were partially offset by an increase in consulting and professional fees of $0.9 million mainly related to legal expenses for our litigation matters.
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During 2023, we recorded other income of $3.8 million primarily as a result of a $5.3 million gain on sale of our digital asset holdings, primarily bitcoin and ethereum. This gain was offset by interest expense recorded related to our 2022 Promissory Note.
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Refer to Note 2, " Summary of Significant Accounting Policies " and Note 5, " Digital Assets " of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion regarding our digital asset holdings.
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On February 1, 2022, we filed a Form S-3, which was subsequently declared effective by the SEC on February 9, 2022, pursuant to which we could issue up to $200 million in common stock, preferred stock, warrants and units.
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Contained therein, was a prospectus supplement pursuant to which we could sell up to $100 million of our common stock in an “at the market offering” pursuant to an At Market Issuance Sales Agreement we entered into with H.C. Wainwright & Co., LLC (“Wainwright”) on January 31, 2022. We terminated our agreement with Wainwright effective June 3, 2024.
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On July 6, 2022, we entered into a note purchase agreement and completed the sale of an unsecured promissory note (referred to herein as the 2022 Promissory Note) with an original principal amount of $12.8 million in a private placement. After deducting all transaction fees paid by us at closing, net cash proceeds to us at closing were $11.8 million.
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No interest was to accrue on the 2022 Promissory Note. On August 14, 2023, we entered into an amendment to the 2022 Promissory Note with the noteholder.
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The amendment extended the maturity date to June 1, 2024 and provided that effective August 1, 2023, we were required to make monthly amortization payments of at least $800 thousand commencing on August 31, 2023 until the 2022 Promissory Note is paid-in-full.
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We also granted the noteholder certain limited conversion rights, which if elected by the noteholder, would reduce the required monthly payment. The limited conversion rights were subject to advance payment and volume conditions.
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The amendment also provided that the outstanding balance shall accrue interest at a rate of 8% and payment deferrals are no longer permitted under the 2022 Promissory Note. During the first quarter of 2024, we issued 336,550 shares of our common stock to the holder of the 2022 Promissory Note.
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These conversions were made pursuant to the terms of the amended 2022 Promissory Note. In addition, conversions were made in 53 Table of Contents connection with the Company granting the holder additional conversion rights. As a result of the conversions, the 2022 Promissory Note has been paid-in-full.
Removed
On August 22, 2023, we entered into a common stock purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”), which provided that, upon the terms and subject to the conditions and limitations set forth therein, we had the right, but not the obligation, to sell to Lincoln Park up to $30.0 million in value of shares of our common stock from time to time over the 24-month term of the purchase agreement.
Removed
Concurrently with entering into the purchase agreement, we also entered into a registration rights agreement with Lincoln Park pursuant to which the Company agreed to register the sale of the shares of the Company’s common stock that have been issued to Lincoln Park under the purchase agreement. We did not sell any shares to Lincoln Park during 2024.
Removed
On October 24, 2024, we terminated the common stock purchase agreement with Lincoln Park effective October 25, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative a nd Qualitative Disclosures About Market Risk. We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and as such, we are not required to provide the information required under this Item. 57 Table of Contents
Biggest changeItem 7A. Quantitative a nd Qualitative Disclosures About Market Risk. We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and as such, we are not required to provide the information required under this Item. 52 Table of Contents

Other PHUN 10-K year-over-year comparisons