What changed in this filing

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Item 1. Financial Statements

2021-11-12 compared with 2021-08-13 · 196 added, 136 removed, 515 unchanged (39% of the section changed)

3 unchanged sentences

(In thousands, except share and per share information)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets:

Cash $ 882 $ 3,940

Accounts receivable, net of allowance for doubtful accounts of $ 242 and $ 356 at June 30, 2021 and December 31, 2020, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 606 and $ 356 at September 30, 2021 and December 31, 2020, respectively

Digital currencies 789 —

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Common stock, $ 0.0001 par value;

1,000,000,000 shares authorized at June 30, 2021 and December 31, 2020;

72,742,689 and 56,380,111 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

1,000,000,000 shares authorized at September 30, 2021 and December 31, 2020;

75,556,118 and 56,380,111 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 180,887 144,156

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Phunware, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except per share information)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Research and development 1,160 572 3,058 1,811

Legal settlement — 4,500 — 4,500

Total operating expenses 5,171 9,731 14,043 19,557

Operating loss ( 4,037 ) ( 7,499 ) ( 11,643 ) ( 14,331 )

Other expense:

Interest expense ( 1,845 ) ( 460 ) ( 4,064 ) ( 561 )

Other income (expense):

Interest income (expense) 7 ( 1,362 ) ( 4,057 ) ( 1,923 )

Loss on extinguishment of debt — ( 950 ) ( 7,952 ) ( 1,031 )

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Gain (loss) on change in fair value of warrant liability 1,501 1,244 ( 148 ) 1,244

Other income (expense) 43 — ( 36 ) —

Total other expense ( 4,099 ) ( 541 ) ( 13,050 ) ( 642 )

Loss before taxes ( 8,293 ) ( 3,511 ) ( 20,656 ) ( 7,474 )

Gain on forgiveness of PPP loan 2,850 — 2,850 —

Other income 51 — 15 —

Total other income (expense) 4,409 ( 1,068 ) ( 10,068 ) ( 1,710 )

Income (loss) before taxes 372 ( 8,567 ) ( 21,711 ) ( 16,041 )

Income tax expense — — — —

Net loss ( 8,293 ) ( 3,511 ) ( 20,656 ) ( 7,474 )

Net income (loss) 372 ( 8,567 ) ( 21,711 ) ( 16,041 )

Other comprehensive income (loss):

Cumulative translation adjustment ( 33 ) 47 ( 18 ) ( 28 )

Comprehensive loss $ ( 8,288 ) $ ( 3,514 ) $ ( 20,641 ) $ ( 7,549 )

Net loss per common share, basic and diluted $ ( 0.12 ) $ ( 0.08 ) $ ( 0.30 ) $ ( 0.18 )

Weighted-average common shares used to compute net loss per share, basic and diluted 71,620 41,869 68,103 40,982

Comprehensive income (loss) $ 339 $ ( 8,520 ) $ ( 21,729 ) $ ( 16,069 )

Net income (loss) per common share, basic $ 0.01 $ ( 0.19 ) $ ( 0.31 ) $ ( 0.38 )

Net income (loss) per common share, diluted $ — $ ( 0.19 ) $ ( 0.31 ) $ ( 0.38 )

Weighted-average common shares used to compute net income (loss) per share, basic 74,347 44,304 70,185 42,089

Weighted-average common shares used to compute net income (loss) per share, diluted 74,699 44,304 70,185 42,089

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

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Shares Amount

Balance - March 31, 2021 71,204 $ 7 $ 175,046 $ ( 158,166 ) $ ( 328 ) $ 16,559

Balance - June 30, 2021 72,736 $ 7 $ 177,254 $ ( 167,886 ) $ ( 323 ) $ 9,052

Exercise of stock options, net of vesting of restricted shares 2 — 1 — — 1

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Cumulative translation adjustment — — — — ( 33 ) ( 33 )

Net loss — — — ( 8,293 ) — ( 8,293 )

Balance - June 30, 2021 72,736 $ 7 $ 177,254 $ ( 166,459 ) $ ( 323 ) $ 10,479

Net income — — — 372 — 372

Balance - September 30, 2021 75,549 $ 8 $ 180,887 $ ( 167,514 ) $ ( 356 ) $ 13,025

Balance - December 31, 2020 56,371 $ 6 $ 144,156 $ ( 145,803 ) $ ( 338 ) $ ( 1,979 )

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Net loss — — — ( 21,711 ) — ( 21,711 )

Balance - June 30, 2021 72,736 $ 7 $ 177,254 $ ( 166,459 ) $ ( 323 ) $ 10,479

Balance - September 30, 2021 75,549 $ 8 $ 180,887 $ ( 167,514 ) $ ( 356 ) $ 13,025

Common Stock Additional

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Stockholders’

Equity (Deficit)

Shares Amount

Balance - March 31, 2020 40,693 $ 4 $ 129,370 $ ( 127,567 ) $ ( 454 ) $ 1,353

Balance - June 30, 2020 43,555 $ 4 $ 132,045 $ ( 131,078 ) $ ( 457 ) $ 514

Exercise of stock options, net of vesting of restricted shares 33 — 9 — — 9

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Issuance of common stock for payment of legal, earned bonus, and board of director fees 164 — 225 — — 225

Sale of common stock 1,302 1 1,341 — — 1,342

Stock-based compensation expense — — 1,708 — — 1,708

Issuance of common stock upon partial conversions of Senior Convertible Note 1,764 — 2,266 — — 2,266

Reacquisition of equity component of Senior Convertible Note — — ( 89 ) — — ( 89 )

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Net loss — — — ( 8,567 ) — ( 8,567 )

Balance - June 30, 2020 43,555 $ 4 $ 132,045 $ ( 131,078 ) $ ( 457 ) $ 514

Balance - September 30, 2020 45,442 $ 5 $ 135,239 $ ( 139,645 ) $ ( 410 ) $ ( 4,811 )

Balance - December 31, 2019 39,811 $ 4 $ 128,008 $ ( 123,604 ) $ ( 382 ) $ 4,026

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Issuance of common stock for payment of legal, earned bonus, and board of director fees 1,297 — 1,239 — 1,239

Sale of common stock 1,302 1 1,341 — — 1,342

Stock-based compensation expense — — 3,458 — — 3,458

4 unchanged sentences

Net loss — — — ( 16,041 ) ( 16,041 )

Balance - June 30, 2020 43,555 $ 4 $ 132,045 $ ( 131,078 ) $ ( 457 ) $ 514

Balance - September 30, 2020 45,442 $ 5 $ 135,239 $ ( 139,645 ) $ ( 410 ) $ ( 4,811 )

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

2 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating activities

2 unchanged sentences

Amortization of debt discount and deferred financing costs 2,770 1,217

Loss on change in fair value of warrant liability 222 —

Loss (gain) on change in fair value of warrant liability 148 ( 1,244 )

Loss on extinguishment of debt 7,952 1,031

Impairment of digital currencies 776 —

Gain on forgiveness of PPP loan ( 2,850 ) —

Stock-based compensation 3,933 3,458

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Effect of exchange rate on cash and restricted cash ( 19 ) ( 30 )

Net decrease in cash and restricted cash ( 1,226 ) ( 117 )

Net (decrease) increase in cash and restricted cash ( 3,058 ) 872

Cash and restricted cash at the beginning of the period 4,031 362

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Supplemental disclosures of non-cash financing activities:

Proceeds not received related to sales of common stock $ 867 $ —

Proceeds not yet received for sales of common stock $ 97 $ —

Issuance of common stock for payment of legal, earned bonus and board of director fees $ 66 $ 1,239

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These interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the year ended December 31, 2020, which are referenced herein.

The accompanying interim condensed consolidated financial statements as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020, are unaudited.

The accompanying interim condensed consolidated financial statements as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020, are unaudited.

The unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with the audited financial statements, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial statements.

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GAAP have been condensed or omitted pursuant to such rules and regulations.

In the opinion of management, the financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to fairly state our financial position as of June 30, 2021 and the results of operations for the three and six months ended June 30, 2021 and 2020, and cash flows for the six months ended June 30, 2021 and 2020.

The results for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future interim period.

Certain reclassifications have been made to our condensed consolidated statement of cash flows for the six months ended June 30, 2020.

In the opinion of management, the financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to fairly state our financial position as of September 30, 2021 and the results of operations for the three and nine months ended September 30, 2021 and 2020, and cash flows for the nine months ended September 30, 2021 and 2020.

The results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future interim period.

Certain reclassifications have been made to our condensed consolidated statement of cash flows for the nine months ended September 30, 2020.

We combined individual line items that we considered to be immaterial and recorded these in our condensed consolidated statement of cash flows as other adjustments to conform to current year presentation.

These reclassifications had no impact on previously reported operating, investing or financing cash flows.

Revised Financial Statements

During the preparation of this Quarterly Report on Form 10-Q, the Company determined that it had inaccurately accounted for an adjustment to certain terms of an outstanding warrant issued in conjunction with our 2020 Convertible Notes (defined below).

As a result of our underwritten public offering in February 2021, the number of shares issuable and the exercise price were each adjusted pursuant to the terms of the warrant.

While we accurately accounted for the decrease in the exercise price (from $ 4.00 per share to $ 2.25 per share), we did not account for the increase in the number of shares available for exercise under the warrant, from 2,160,000 shares to 3,840,000 shares.

This resulted in an understatement of net loss during the three months ended March 31, 2021, an overstatement of net loss for the three months ended June 30, 2021 and an understatement of net loss for the six months ended June 30, 2021.

We assessed the materiality of this misstatement in accordance with Staff Accounting Bulletin No.

108, " Quantifying Misstatements " and concluded this error was not qualitatively material as there was no impact on cash, operating income, or cash flow from operations, among other considerations.

However, we determined this error was a material weakness in our internal control over financial reporting.

See Part I, Item 4, " Controls and Procedures, " included in this Quarterly Report on Form 10-Q for further discussion.

The correction of this error resulted in adjustments to our condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2021 and the three and six months ended June 30, 2021, and our condensed consolidated balance sheets as of March 31, 2021 and June 30, 2021.

As such, the balance of accumulated deficit and total stockholders' equity as of June 30, 2021 contained within in our condensed consolidated statement of changes in stockholders’ equity (deficit) for the three months ended September 30, 2021 has been revised.

Disclosure of the revised amounts will also be reflected in future filings containing applicable periods.

The effect of this revision on certain line items within our condensed consolidated balance sheets and condensed consolidated statements of operations and comprehensive income (loss) for the interim periods subject to the revision is set forth below:

As of or for the three months ended

March 31, 2021

Previously reported Adjustments As revised

Warrant liability $ 2,499 $ 1,944 $ 4,443

Accumulated deficit $ ( 158,166 ) $ ( 1,944 ) $ ( 160,110 )

Loss on change in fair value of warrant liability $ ( 885 ) $ ( 1,944 ) $ ( 2,829 )

Net loss $ ( 12,363 ) $ ( 1,944 ) $ ( 14,307 )

Net loss per common share, basic and diluted $ ( 0.19 ) $ ( 0.03 ) $ ( 0.22 )

As of or for the three months ended

June 30, 2021

Previously reported Adjustments As revised

Warrant liability $ 1,836 $ 1,427 $ 3,263

Accumulated deficit $ ( 166,459 ) $ ( 1,427 ) $ ( 167,886 )

Gain on change in fair value of warrant liability $ 663 $ 517 $ 1,180

Net loss $ ( 8,293 ) $ 517 $ ( 7,776 )

Net loss per common share, basic and diluted $ ( 0.12 ) $ 0.01 $ ( 0.11 )

The revision had no impact on revenue, gross profit and operating income for the three and nine months ended September 30, 2021, as well as, our net loss and cash used in operations for the nine months ended September 30, 2021.

Going Concern, Liquidity and Management’s Plan

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As required by this standard, management’s evaluation shall initially not take into consideration the potential mitigating effects of management’s plans that have not been fully implemented as of the date the financial statements are issued.

Total revenues for the three and six months ended June 30, 2021 and total backlog and cash-on-hand for the period then ended did not meet our expectations, as a result of the continuing, but evolving, uncertainty of the COVID-19 pandemic.

As of June 30, 2021, we have an accumulated deficit of $ 166,459 , and for the six months then ended we incurred a net loss of $ 20,656 and used $ 14,371 in cash for operations.

We also have negative net working capital.

As a result, we anticipate that we will need to raise additional capital, through our at-the-market offering (see Note 9) or by other means, to fund operations.

These conditions raise substantial doubt about our ability to continue as a going concern.

However, management believes that substantial doubt about our ability to meet our obligations for the next twelve months from the date of these financial statements were issued has been alleviated due to, but not limited to, (i) increased activity in our sales pipeline, (ii) growth in channel partner relationships, (iii) the ability to sell our digital currency holdings for cash and (iv) the ability to sale shares of our common stock under our at-the-market offering.

We currently anticipate continuing to sell common stock through our at-the-market offering.

We may also sell additional securities, including common stock, preferred stock, warrants and units through private placement transactions or public offerings.

The predictability of future sales and channel relationships requires significant judgement.

Management cannot provide any assurances that it will be successful in accomplishing any of the Company’s plans.

There can be no assurance that we will be able to obtain additional funding on satisfactory terms or at all.

In addition, no assurance can be given that any such financing, if obtained, will be adequate to meet our capital needs and support growth.

If additional funding cannot be obtained on a timely basis and/or on satisfactory terms, our operations could be materially impacted.

During the quarter ended September 30, 2021, we secured additional financing through the sale of our common stock through an at-the-market offering, as more fully described in Note 9 below.

Furthermore, as detailed in Note 13, " Subsequent Events", we have raised additional cash proceeds from the issuance of our common stock and the exercise of warrants for our common stock.

Subsequent to September 30, 2021, we raised net proceeds totaling approximately $ 66,696 , of which $ 62,061 was cash proceeds from our at-the-market offerings and $ 4,635 from a partial exercise of a warrant that was issued to our 2020 Convertible Notes holder.

We have a history of net losses and although we anticipate our future cash outflows to exceed cash inflows as we continue to invest in revenue growth, as a result of the subsequent cash financings described above, we believe we have sufficient cash on-hand to fund potential net cash outflows for one year following the filing date of this Quarterly Report on

Accordingly, we believe there does not exist any indication of substantial doubt about our ability to continue as a going concern for one year following the filing date of this Quarterly Report on Form 10-Q.

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

They do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to our ability to continue as a going concern.

Summary of Significant Accounting Policies

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Customer A 47 % — %

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Digital Assets

During the six months ended June 30, 2021, we purchased an aggregate of $ 1,497 in digital assets, and we were paid $ 69 in digital assets by various customers.

During the nine months ended September 30, 2021, we purchased an aggregate of $ 1,497 in digital assets, and we were paid $ 87 in digital assets by various customers.

Our purchases of digital assets were comprised solely of bitcoin, while payments by customers to us were made in bitcoin and ethereum.

We currently account for all digital assets held as a result of these transactions as indefinite-lived intangible assets in accordance with Accounting Standards Codification ("ASC") 350, Intangibles—Goodwill and Other .

We currently account for all digital assets held as a result of these transactions as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other .

We have ownership of and control over our digital assets and we may use third-party custodial services to secure them.

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In determining the gain or loss to be recognized upon sale, we calculate the difference between the sales price and carrying value of the digital assets sold immediately prior to sale.

Impairment losses and gains or losses on sales are recognized within other expense in our condensed consolidated statements of operations and comprehensive loss.

Impairment loss was $ 776 for the three and six months ended June 30, 2021 and we did not sell any digital assets during the six months ended June 30, 2021.

Impairment losses and gains or losses on sales are recognized within other expense in our condensed consolidated statements of operations and comprehensive income (loss).

Impairment loss was $ 776 for the nine months ended September 30, 2021 and we did not sell any digital assets during the nine months ended September 30, 2021.

Use of Estimates

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Actual results could differ from those estimates and such differences could be material to the condensed consolidated financial statements.

Loss per Common Share

Basic loss per common share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period.

Income (loss) per Common Share

Basic net income (loss) per common share is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period.

Restricted shares subject to repurchase provisions relating to early exercises under our 2009 Equity Incentive Plan were excluded from basic shares outstanding.

Diluted loss per common share is computed by giving effect to all potential shares of common stock, including those related to our outstanding warrants and stock equity plans, to the extent dilutive.

For all periods presented, these shares were excluded from the calculation of diluted loss per share of common stock because their inclusion would have been anti-dilutive.

As a result, diluted loss per common share is the same as basic loss per common share for all periods presented.

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

Diluted net income (loss) per common share is computed by giving effect to all potential shares of common stock adjusted to include the effect of shares issuable pursuant to our convertible note(s), the exercise of in-the-money warrants

and options and unvested restricted stock units, to the extent dilutive.

Shares are excluded from the calculation of diluted net income (loss) per common share when their inclusion would have been anti-dilutive or out-of-the-money.

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Convertible notes 19,324 7,221,740 19,324 7,221,740

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Fair Value of Financial Instruments

We follow the guidance in ASC 820, Fair Value Measurement , to account for financial assets and liabilities measured on a recurring basis.

We follow the guidance in ASC 820, Fair Value Measurement , to account for financial assets and liabilities measured on a recurring and non-recurring basis.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

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Determining which category an asset or liability falls within the hierarchy requires significant judgment.

Our financial instruments measured at fair value as of June 30, 2021 are set forth below:

Our financial instruments measured at fair value as of September 30, 2021 are set forth below:

Level 1 Level 2 Level 3 Total

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The following table sets forth our net revenues by category:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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We generate revenue in domestic and foreign regions and attribute net revenue to individual countries based on the location of the contracting entity.

We derived 99 % of our net revenues from within the United States for the three and six months ended June 30, 2021.

During the three and six months ended June 30, 2020, 99 % and 94 % of our net revenues were from within the United States.

We derived 99 % of our net revenues from within the United States for the three and nine months ended September 30, 2021.

During the three and nine months ended September 30, 2020, 99 % and 96 % of our net revenues were from within the United States, respectively.

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

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Customer A 35 % — % 15 % — %

Customer E 8 % 9 % 14 % 11 %

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Customer G — % 21 % — % 8 %

Customer H 6 % — % 11 % — %

Deferred Revenue

Our deferred revenue balance consisted of the following:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current deferred revenue

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We recognize deferred revenue as revenue only when revenue recognition criteria are met.

During the six months ended June 30, 2021, we recognized revenue of $ 2,211 that was included in our deferred revenue balance as of December 31, 2020.

During the nine months ended September 30, 2021, we recognized revenue of $ 3,006 that was included in our deferred revenue balance as of December 31, 2020.

Remaining Performance Obligations

Remaining performance obligations were $ 7,990 as of June 30, 2021, of which we expect to recognize 34 % as revenue over the next 12 months and the remainder thereafter.

Remaining performance obligations were $ 6,097 as of September 30, 2021, of which we expect to recognize approximately 38 % as revenue over the next 12 months and the remainder thereafter.

PhunToken ("PHTK")

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We follow the guidance of ASC 606, Revenue from Contracts with Customers , in determination the revenue recognition of our PhunToken sales.

As of June 30, 2021, we sold $ 78 of PhunToken for which we received both cash and digital currency from customers.

As of September 30, 2021, we had sold $ 100 of PhunToken for which we received both cash and digital currency from customers.

PhunToken sales are recorded within application transaction revenue in the table above.

Cash, Cash Equivalents, and Restricted Cash

The following table sets forth our cash and restricted cash as of June 30, 2021 and December 31, 2020:

Cash and restricted cash June 30, 2021

The following table sets forth our cash and restricted cash:

Cash and restricted cash September 30, 2021

December 31, 2020

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The following table sets forth our various debt obligations:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Series A Note (principal amount) $ — $ 2,481

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After the payoff of the senior convertible note and deducting transaction costs, net cash proceeds to the Company was $ 1,751 .

On the same date, we issued a Series B Senior Secured Convertible Note (a “Series B Note,” and together with the Series A Note, the “2020 Convertible Notes”) to the same investor with an initial principal amount of $ 17,280 (reflecting an

original issue discount of $ 1,280 ).

The investor paid for the Series B Note by delivering a secured promissory note (the “Investor Note”) with an initial principal amount of $ 16,000 .

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Upon repayment of the Investor Note, an equal amount of the Series B Note became "unrestricted" and recorded as debt in our condensed consolidated balance sheets.

As a result of multiple offerings of sales of shares of our common stock as more fully described Note 9 below, the investor elected to require us to use forty percent ( 40 %) of the net proceeds from those offerings to satisfy obligations under the 2020 Convertible Notes.

As a result of multiple offerings of sales of shares of our common stock during the first quarter of 2021, as more fully described Note 9 below, the investor elected to require us to use forty percent ( 40 %) of the net proceeds from those offerings to satisfy obligations under the 2020 Convertible Notes.

During the first quarter of 2021, we paid approximately $ 11,507 , of which $ 5,717 was recorded as a loss on extinguishment of debt.

In March 2021, the investor voluntarily prepaid an aggregate of $ 10,250 pursuant to the terms of the Investor Note.

As a result, we received cash proceeds of $ 10,250 and this amount of principal of the Series B Note, along with $ 820 of original issue discount became "unrestricted" and outstanding.

As a result, we received cash proceeds of $ 10,250 and this amount of principal of the Series B Note, along with $ 820 of original

issue discount became "unrestricted" and outstanding.

After the aggregate payments pursuant to the Investor Note by the investor to us, there was no balance outstanding under the Investor Note and no restricted balance under the Series B Note.

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On April 5, 2021, we paid $ 13,902 in cash to the noteholder of our 2020 Convertible Notes in full satisfaction of all obligations under our Series B Note, which amounted to $ 11,718 of principal, interest and make-whole and $ 2,184 for the loss on extinguishment of debt.

During the six months ended June 30, 2021, we also recorded a loss on extinguishment of debt of $ 51 related to monthly installment payments made to the investor.

In addition to the 2020 Convertible Notes, we issued a warrant exercisable for 3 years for the purchase of an aggregate of up to 2,160,000 shares of the Company's common stock, with a current exercise price of $ 2.25 per share, which decreased from $ 4.00 in February 2021 as a result of our underwritten public offering.

During the nine months ended September 30, 2021, we also recorded a loss on extinguishment of debt of $ 51 related to monthly installment payments made to the investor.

In addition to the 2020 Convertible Notes, we issued a warrant exercisable for 3 years for the purchase, initially, of up to an aggregate of 2,160,000 shares of the Company's common stock at an initial exercise price of $ 4.00 per share.

The number of shares and exercise price are each subject to adjustment provided under the warrant.

If, at the time of exercise of the warrant, there is no effective registration statement registering, or no current prospectus available for, the issuance of the shares, then the warrant may also be exercised, in whole or in part, by means of a “cashless exercise.” The registration statement registering the shares of our common stock issuable pursuant to the terms of the warrant was declared effective by the SEC on October 27, 2020.

As a result of our underwritten public offering in February 2021, the exercise price of each share decreased to $ 2.25 per share, and the number of shares for which the warrant is exercisable increased to 3,840,000 shares.

If, at the time of exercise of the warrant, there is no effective registration statement registering, or no current prospectus available for, the issuance of the shares, then the warrant may also be exercised, in whole or in part, by means of a “cashless exercise.” The registration statement registering 2,160,000 shares of our common stock issuable pursuant to the terms of the warrant was declared effective by the SEC on October 27, 2020.

The warrant may not be exercised if, after giving effect to the exercise, the investor would beneficially own amounts in excess of those permissible under the terms of the warrant.

Upon issuance of the warrant, we recorded a warrant liability as a discount to the 2020 Convertible Notes.

We revalued the warrant as of June 30, 2021, and accordingly we recorded the change in the fair value of the warrant liability for the reporting period.

We revalued the warrant as of September 30, 2021, and accordingly we recorded the change in the fair value of the warrant liability for the reporting period.

The following table sets forth the assumptions used to calculate the fair value of our warrant liability at the respective dates:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Strike price per share $ 2.25 $ 4.00

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Participation Rights

In addition, the Company granted the 2020 Convertible Notes investor participation rights in future equity and equity-linked offerings of securities, subject to certain limited exceptions, during the two years after the later of (a) the closing or (b) the date the 2020 Convertible Notes no longer remains outstanding, in an amount of up to 30 % of the securities being sold in such offerings.

In addition, the Company granted the 2020 Convertible Notes investor participation rights in future equity and equity-linked offerings of securities, subject to certain limited exceptions, during the two years after the later of (a) the closing or (b) the date the 2020 Convertible Notes no longer remain outstanding, in an amount of up to 30 % of the securities being sold in such offerings.

This same investor has an additional 30 % participation right that expires March 20, 2022 pursuant to a separate Securities Purchase Agreement relating to a convertible note that was issued in March 2020, that was subsequently paid in full with the proceeds of the Series A Note.

Paycheck Protection Program ("PPP") Loan

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pursuant to the PPP under the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), which was enacted on March 27, 2020.

The loan, which was in the form of a note dated April 9, 2020, matures on April 9, 2022 and bears interest at a rate of 0.98 % per annum.

The loan, which was in the form of a note dated April 9, 2020, matures on April 9, 2022 and bore interest at a rate of 0.98 % per annum.

The Paycheck Protection Flexibility Act of 2020, extended the deferral period for loan payments to either (i) the date that the Small Business Administration ("SBA") remits the borrower’s loan forgiveness amount to the lender or (ii) if the borrower does not apply for loan forgiveness, ten months after the end of the borrower’s loan forgiveness covered period.

The note may be prepaid by us at any time prior to the maturity with no prepayment penalties.

The principal amount of our PPP loan is subject to forgiveness under the PPP.

On July 7, 2021, we submitted our request to the SBA to forgive the full principal amount of the loan.

The SBA is currently reviewing our forgiveness application.

Although we currently anticipate the loan to be forgiven, there can be no assurance that any part of the PPP loan will be forgiven.

The note could have been prepaid by us at any time prior to the maturity with no prepayment penalties.

The principal amount of our PPP loan was subject to forgiveness under the PPP.

On July 7, 2021, we submitted our request to the SBA to forgive the full principal amount of the loan and on August 16, 2021, we received notification that the SBA approved our PPP loan forgiveness application.

We recorded a gain on the forgiveness of the PPP loan and related interest during the three and nine months ended September 30, 2021.

Convertible Notes

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Interest under the Convertible Notes is payable quarterly beginning on September 30, 2019, and interest and principal under the Convertible Notes is payable monthly beginning on June 30, 2021.

The Convertible Notes are convertible into shares of the Company’s common stock at a price of $ 11.50 per share and mature on June 3, 2024.

The Convertible Notes were convertible into shares of the Company’s common stock at a price of $ 11.50 per share and mature on June 3, 2024.

Additional information about our Convertible Notes is included in Note 8, " Debt " of the notes to the consolidated financial statements included in our Annual Report on Form 10-K.

On October 27, 2021, we paid $ 222 in cash to the noteholder of our Convertible Notes in full satisfaction of all obligations under the Convertible Notes.

Promissory Notes

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The Notes bear ordinary interest at a rate of 10 % per annum.

Interest under the Notes is payable monthly beginning on November 30, 2019.

During the term of the Notes, we are required to maintain a restricted bank account with a minimum balance of one year of interest payments on the aggregate principal balance of all Notes, which will be available for use exclusively to satisfy any payments owed by the Company under the Notes.

The principal and unpaid accrued interest on the Notes will be due and payable on demand by the majority Note holders on or after the date that is 60 months following November 15, 2019.

Interest under the Notes was payable monthly beginning on November 30, 2019.

During the term of the Notes, we were required to maintain a restricted bank account with a minimum balance of one year of interest payments on the aggregate principal balance of all Notes, which was available for use exclusively to satisfy any payments owed by the Company under the Notes.

The principal and unpaid accrued interest on the Notes was due and payable on demand by the majority Note holders on or after the date that is 60 months following November 15, 2019.

Additional information about our Notes is included in Note 8, " Debt " of the notes to the consolidated financial statements included in our Annual Report on Form 10-K.

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Knitowski, our Chief Executive Officer and a member of our board of directors.

On October 27, 2021, we paid $ 905 in cash to the holders of our Notes in full satisfaction of all obligations under the Notes.

Interest Expense

The following table sets forth interest expense for our various debt obligations included on the condensed consolidated statements of operations:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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and Miami, Florida.

As of June 30, 2021, the earliest of our lease agreements currently ends in March 2022 with the latest terminating in June 2025.

As of September 30, 2021, the earliest of our lease agreements currently ends in March 2022 with the latest terminating in June 2025.

Some of our leases include both lease and non-lease components, which we have elected not to account for separately.

Lease components generally include rent, taxes and insurance, while non-lease components generally include common area or other maintenance.

The weighted-average remaining lease term for operating leases as of June 30, 2021 was 3.36 years.

The weighted-average remaining lease term for operating leases as of September 30, 2021 was 3.19 years.

As our leases generally do not include an implicit rate, we compute our incremental borrowing rate based on information available at the lease commencement date applying a rate to each lease.

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We recognize lease expense on a straight-line basis over the lease term with variable lease expense recognized in the period in which the costs are incurred.

The components of lease expense are included in general and administrative expense in our condensed consolidated statement of operations and comprehensive loss.

Lease expense for the three and six months ended June 30, 2021 was $ 209 and $ 421 , respectively.

The components of lease expense are included in general and administrative expense in our condensed consolidated statement of operations and comprehensive income (loss).

Lease expense for the three and nine months ended September 30, 2021 was $ 208 and $ 629 , respectively.

Future minimum lease obligations are set forth below:

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The term of the sublease commenced on April 1, 2021 and terminates on March 31, 2025.

The subtenant will pay us initial base rent of approximately $ 17 per month, which is subject to certain discounts throughout the sublease, as

well as rent escalations.

We recognized an impairment of our right-to-use asset related to the sublease of $ 77 , which is recorded in other expense in our condensed consolidated statement of operations and comprehensive loss for the six months ended months ended June 30, 2021.

The subtenant will pay us initial base rent of approximately $ 17 per month, which is subject to certain discounts throughout the sublease, as well as rent escalations.

We recognized an impairment of our right-to-use asset related to the sublease of $ 77 , which is recorded in other expense in our condensed consolidated statement of operations and comprehensive income (loss) for the nine months ended September 30, 2021.

Commitments and Contingencies

There have been no changes to the disclosure related to our settlements with Uber Technologies, Inc.

and Ellenoff Grossman & Schole LLP, as well as, the dismissal of claims brought by Sha-Poppin Gourmet Popcorn, LLC since the filing of our Annual Report on Form 10-K.

("Uber") and Ellenoff Grossman & Schole LLP, as well as, the dismissal of claims brought by Sha-Poppin Gourmet Popcorn, LLC since the filing of our Annual Report on Form 10-K, except as set forth below.

See Note 9, " Commitments and Contingencies " in our Annual Report on Form 10-K filed with the SEC on March 31, 2021 for further information on the these matters.

As previously disclosed, on October 9, 2020, we entered into a settlement agreement with Uber and certain other parties related to our complaint against Uber, Uber's cross-complaint against us and Uber's amended cross-complaint against us and certain individual defendants.

As provided in the settlement agreement, both parties agreed to fully and finally settle, compromise, and resolve all disputes, differences and disagreements that have existed, now exist, or may exist between them that fall within the subject matter lawsuit.

Furthermore, each party denies engaging in any wrongdoing whatsoever and specifically denies each and every allegation of wrongdoing alleged in the lawsuit.

The settlement agreement provided that we and our insurance carriers pay a total sum of $ 6,000 to Uber, of which our insurance carrier paid $ 1,500 to settle Uber's claims against the individual defendants while the Company paid a total of $ 4,500 , with the final installment paid by us to Uber in September 2021.

As a result of us remitting the final installment Payment to Uber, on October 13, 2021, Uber's complaint against the Company was dismissed with prejudice.

On December 17, 2019, certain stockholders filed a lawsuit against Phunware and its individual officers and directors.

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Plaintiffs alleged that they invested in various early rounds of financing while the Company was private and that Phunware should not have subjected their shares to a 180 -day “lock up” period.

Plaintiffs also allege that Phunware’s stock price dropped significantly during the lock up period and seek unspecified damages, costs, and professional fees.

Plaintiffs also allege that Phunware’s stock price dropped significantly during the lock up period and seek damages, costs, and professional fees.

On June 23, 2021, Defendants filed a motion to dismiss the petition based on the mandatory forum-selection clause in Phunware’s Articles of Incorporation, which require Plaintiffs’ claims to be filed in Delaware Chancery Court.

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On July 30, 2021, we filed a second action against WSGR in the Superior Court of the State of California for the County of Santa Clara.

As of August 10, 2021, the Court was processing the filing to issue a case number.

This matter is captioned Phunware, Inc., v.

Wilson Sonsini Goodrich & Rosati, Professional Corporation, Does 1-25, Case No.

The second complaint alleges causes of action for negligence, breach of fiduciary duty, and negligent misrepresentation related to services provided by WSGR to Phunware.

We’re seeking compensatory and consequential damages, attorney’s fees and costs, interest and other relief the Court deems just and proper.

The case is in the early stages of litigation;

Both cases are in the early stages of litigation;

the outcome is not certain.

The relief sought, as stated in the complaints, are damages according to proof, interest and costs of suit.

From time to time, we are and may become involved in various legal proceedings in the ordinary course of business.

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accepts payment in the form of cash and digital currencies for purchases of the Rights.

The amount of PhunCoin to be issued to the purchaser is equal to the dollar amount paid by the purchaser divided by the price of PhunCoin at the time of issuance of PhunCoin during the launch of the Token Ecosystem (as defined below) before taking into consideration an applicable discount rate, which is based on the time of the purchase.

Through June 30, 2021, we received aggregate net cash proceeds from our Rights offerings of $ 1,202 .

Proceeds from the Rights are recorded as PhunCoin deposits in the condensed consolidated balance sheet as of June 30, 2021 and December 31, 2020.

The amount of PhunCoin to be issued to the purchaser is equal to the dollar amount paid by the purchaser divided by the price of PhunCoin at the time of issuance of PhunCoin during the launch of the Token Ecosystem (as defined above) before taking into consideration an applicable discount rate, which is based on the time of the purchase.

Through September 30, 2021, we received aggregate net cash proceeds from our Rights offerings of $ 1,202 .

Proceeds from the Rights are recorded as PhunCoin deposits in the condensed consolidated balance sheet as of September 30, 2021 and December 31, 2020.

PhunCoin is expected to be issued to Rights holders the earlier of (i) the launch of the Token Ecosystem (or "Token Generation Event"), (ii) one ( 1 ) year after the issuance of the Rights to the purchaser or (iii) the date PhunCoin, Inc.

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Proceeds from the Rights offering are generally not refundable if the Token Generation Event is not consummated.

We currently anticipate that PhunCoin will be issued to the holders of the Rights in 2021;

We currently anticipate that PhunCoin will be issued to the holders of the Rights during the fourth quarter of 2021;

however, there can be no assurance as to when or if we will be able to successfully launch the Token Ecosystem.

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Stockholders’ Equity

Total common stock authorized to be issued as of June 30, 2021 was 1,000,000,000 shares, with a par value of $ 0.0001 per share.

At June 30, 2021 and December 31, 2020, there were 72,742,689 and 56,380,111 shares of our common stock outstanding, respectively, inclusive of 574 restricted shares subject to repurchase for unvested shares related to early option exercises under the Company’s stock equity plans.

On August 14, 2020, we entered into an At-The-Market Issuance Sales Agreement (the “Sales Agreement”) with Ascendiant Capital Markets, LLC (“Ascendiant”), as sales agent, pursuant to which the Company would offer and sell, from time to time, through Ascendiant shares of common stock for an aggregate offering price of up to $ 15,000 .

Total common stock authorized to be issued as of September 30, 2021 was 1,000,000,000 shares, with a par value of $ 0.0001 per share.

At September 30, 2021 and December 31, 2020, there were 75,556,118 and 56,380,111 shares of our common stock outstanding, respectively, inclusive of 574 restricted shares subject to repurchase for unvested shares related to early option exercises under the Company’s stock equity plans.

On August 14, 2020, we entered into an At-The-Market Issuance Sales Agreement (the “Sales Agreement”) with Ascendiant Capital Markets, LLC (“Ascendiant”), as sales agent, pursuant to which the Company would offer and sell, from time to time, through Ascendiant shares of our common stock for an aggregate offering price of up to $ 15,000 .

In January 2021, 2,670,121 shares of our common stock were sold for aggregate net cash proceeds of $ 5,058 .

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Riley"), pursuant to which we may offer and sell, from time to time, shares of our common stock through or to B.

Riley, for an aggregate offering price of up to $ 25,000 .

We will pay B.

Riley a commission of 3 % of the gross proceeds of the sales price per share for sales of our common stock sold through or to B.

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We are not obligated to sell shares under the sales agreement with B.

As of June 30, 2021, 691,584 shares of our common stock has been sold and we have received aggregate net cash proceeds of $ 979 , of which $ 112 had been received by us in cash as of June 30, 2021.

We received the balance subsequent to the end of the quarter, and accordingly, we recorded $ 867 in prepaid expenses and other current assets as of June 30, 2021.

As of September 30, 2021, 2,730,654 shares of our common stock had been sold and we had received aggregate net cash proceeds of $ 3,149 , of which $ 3,052 had been received by us in cash as of September 30, 2021.

We received the balance subsequent to the end of the quarter, and accordingly, we recorded $ 97 in prepaid expenses and other current assets as of September 30, 2021.

Transaction costs were $ 97 .

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We have various warrants outstanding.

A summary of our outstanding warrants as of June 30, 2021 and December 31, 2020 is set forth below:

A summary of our outstanding warrants is set forth below:

September 30, 2021

December 31, 2020

Warrant Type Cash Exercise

share Warrants Outstanding

share Number of warrants Cash Exercise

share Number of warrants

2020 Convertible Note warrants $ 2.25 3,840,000 $ 4.00 2,160,000

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In 2018, our board of directors adopted, and our stockholders approved, our 2018 Equity Incentive Plan (the “2018 Plan”).

The purposes of the 2018 Plan are to attract and retain the best available personnel for positions of substantial

responsibility, to provide additional incentives to employees, directors and consultants who perform services to the Company, and to promote the success of our business.

The purposes of the 2018 Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentives to employees, directors and consultants who perform services to the Company, and to promote the success of our business.

These incentives are provided through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares.

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In addition, the shares of common stock reserved for issuance under the 2018 Plan also will include any shares of common stock subject to stock options, restricted stock units or similar awards granted under the 2009 Equity Incentive Plan (the “2009 Plan”), that, on or after the adoption of the 2018 Plan, expire or otherwise terminate without having been exercised in full and shares of common stock issued pursuant to awards granted under the 2009 Plan that are forfeited to or repurchased by us.

As of June 30, 2021, the maximum number of shares of common stock that may be added to the 2018 Plan pursuant to the foregoing is 1,072,356 .

As of June 30, 2021, restricted stock units have been the only stock-based incentives granted under the 2018 Plan.

A summary of our restricted stock unit activity under the 2018 Plan for the six months ended June 30, 2021 is set forth below:

As of September 30, 2021, the maximum number of shares of common stock that may be added to the 2018 Plan pursuant to the foregoing is 1,068,271 .

Not including the maximum number of shares from the 2009 Plan that may be added to the 2018 Plan, the 2018 Plan had 1,227,964 and 2,551,720 shares of common stock reserved for future issuances as of September 30, 2021 and December 31, 2020, respectively.

Restricted Stock Units

A summary of our restricted stock unit activity under the 2018 Plan for the nine months ended September 30, 2021 is set forth below:

Shares Weighted Average Grant Date Fair Value

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Forfeited ( 334,357 ) 1.49

Outstanding as of June 30, 2021 4,665,060 $ 1.82

Not including the maximum number of shares from the 2009 Plan that may be added to the 2018 Plan noted above, the 2018 Plan had 1,190,332 and 2,551,720 shares of common stock reserved for future issuances as of June 30, 2021 and December 31, 2020, respectively.

Outstanding as of September 30, 2021 3,807,154 $ 1.86

During the first quarter of 2021, we granted 3,488,262 restricted stock unit awards to team members with an average grant date fair value of $ 2.03 per share.

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The awards granted to team members vest over range of 47 months with various installment and vesting dates, and are subject to service conditions.

During the third quarter of 2021, we granted 54,000 restricted stock unit awards to team members with an average grant date fair value of $ 1.09 per share.

The awards granted to team members vest over range of 47 months with various installment and vesting dates, and are subject to service conditions.

The restricted stock unit grants were valued based on the fair value of our common stock on the date of grant.

Stock Options

During third quarter of 2021, we granted 50,000 stock options to a non-employee consultant at an exercise price of $ 1.08 per share.

The stock options vest over one year in twelve equal monthly installments.

As of September 30, 2021, this is the only stock option grant outstanding under the 2018 Plan.

2018 Employee Stock Purchase Plan

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The purpose of the 2018 ESPP is to provide eligible employees with an opportunity to purchase shares of our common stock at a discount through accumulated contributions generally in the form of payroll deductions of up to 15 % of eligible compensation, subject to caps of $ 25,000 in any calendar year and 4,000 shares on any purchase date.

The 2018 ESPP provides for 24 -month offering periods, generally beginning in December and June of each year, and each offering period consists of four six-month purchase periods.

The 2018 ESPP provides for 24 -month

offering periods, generally beginning in December and June of each year, and each offering period consists of four six-month purchase periods.

The initial offering period began on June 1, 2021 and will end in May 2023.

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We use a Black-Scholes option pricing model to determine the fair value of shares to be purchased under the 2018 ESPP.

Stock-based compensation expense related to our 2018 ESPP for the three and six months ended June 30, 2021 was not significant.

Stock-based compensation expense related to our 2018 ESPP for the three and nine months ended September 30, 2021 was not significant.

The number of shares of common stock that may be made available for sale under the 2018 ESPP also includes an annual increase on the first day of each fiscal year beginning for the fiscal year following the fiscal year in which the first enrollment date occurs equal to the lesser of (i) 3 % of the expected post-closing outstanding shares of common stock;

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The total amount received in exchange for these shares has been included in accrued expenses on the accompanying condensed consolidated balance sheets and is reclassified to equity as the shares vest.

As of June 30, 2021 and December 31, 2020, 574 shares were unvested amounting to $ 1 in accrued expenses.

As of September 30, 2021 and December 31, 2020, 574 shares were unvested amounting to $ 1 in accrued expenses.

Effective with the adoption of the 2018 Plan, no additional grants will be made under the 2009 Plan.

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Forfeited ( 8,647 ) 2.13

Outstanding as of June 30, 2021 1,071,782 $ 0.82 6.12 $ 728

Exercisable as of June 30, 2021 999,508 $ 0.79 6.09 $ 695

For the six months ended June 30, 2021, the aggregate intrinsic value of options exercised was $ 224 and the total fair value of options vested was $ 35 .

Outstanding as of September 30, 2021 1,067,697 $ 0.82 5.88 $ 303

Exercisable as of September 30, 2021 1,019,321 $ 0.79 5.85 $ 295

For the nine months ended September 30, 2021, the aggregate intrinsic value of options exercised was $ 295 and the total fair value of options vested was $ 50 .

Stock-Based Compensation

Compensation costs that have been included in our condensed consolidated statements of operations and comprehensive loss for all stock-based compensation arrangements is set forth below:

Three Months Ended June 30, Six Months Ended June 30,

Compensation costs that have been included in our condensed consolidated statements of operations and comprehensive income (loss) for all stock-based compensation arrangements is set forth below:

Three Months Ended September 30, Nine Months Ended September 30,

Stock-based compensation 2021 2020 2021 2020

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We recognize forfeitures as they occur.

As of June 30, 2021, the unamortized fair value of the restricted stock units under the 2018 Plan was approximately $ 7,267 .

As of September 30, 2021, the unamortized fair value of the restricted stock units under the 2018 Plan was approximately $ 5,881 .

The weighted-average remaining recognition period over which these costs will be amortized was approximately 2.7 years.

Unrecognized stock compensation expense for options granted under the 2009 Plan was $ 47 as of June 30, 2021.

Unrecognized stock compensation expense for options granted under the 2009 Plan was $ 33 as of September 30, 2021.

Domestic and Foreign Operations

Identifiable long-lived assets attributed to the United States and international geographies are based upon the country in which the asset is located or owned.

As of June 30, 2021 and December 31, 2020, all of our identifiable long-lived assets were in the United States.

As of September 30, 2021 and December 31, 2020, all of our identifiable long-lived assets were in the United States.

Related-Party Transactions

Accounts Payable

There are $ 255 included in accounts payables in our condensed consolidated balance sheet as of June 30, 2021 and December 31, 2020 for Nautilus Energy Management Corporation, an affiliate of a current member and former member of our board of directors.

There are $ 255 included in accounts payables in our condensed consolidated balance sheet as of September 30, 2021 and December 31, 2020 for Nautilus Energy Management Corporation, an affiliate of a current member and former member of our board of directors.

As more fully discussed in Note 5, Debt , the Company entered into a Note (defined above) with a certain related party.

The Note was subsequently paid in full on October 27, 2021.

Subsequent Events

We have evaluated subsequent events through the date the financial statements were issued.

Through August 13, 2021, we sold an additional 1,691,572 shares of our common stock pursuant to the terms of our at-the-market offering with B.

On September 10, 2021, we entered into a Stock Purchase Agreement (the "Agreement") with Caleb Borgstorm for the purchase of all issued and outstanding shares of common stock of Lyte Technology, Inc.

for total consideration of up to $ 10,317 .

On October 18, 2021, we closed the acquisition contemplated by the Agreement with an adjusted purchase price of up to $ 10,980 ($ 2,500 of which is an earnout payment based upon Lyte operations meeting certain annual revenue milestone), representing an increase in working capital as of the closing date.

We are currently determining the final purchase price allocation, but we expect the majority to be allocated to intangible assets and goodwill.

We also expect to finalize the valuation and complete the price purchase allocation in the fourth quarter of 2021.

In conjunction with the acquisition, we also entered into a note purchase agreement and completed the sale of an unsecured promissory note with an original principal amount of $ 5,220 in a private placement that closed on October 18, 2021.

The promissory note was sold with an original issue discount of $ 200 and other issuance costs that total $ 280 .

After deducting all transaction cost, net cash proceeds to the Company were $ 4,740 .

No interest will accrue on the promissory note unless and until the occurrence of an event of default (as defined in the promissory note).

Beginning on January 15, 2022 and on the same day of each month thereafter until the promissory note is paid in full, we are required to make a monthly amortization payments in the amount of $ 574 .

We may prepay any or all outstanding balance of the promissory note earlier than it is due with a prepayment premium of 110 % which also applies to the monthly amortization payments.

On October 22, 2021, the holder of our 2020 Convertible Notes partially exercised its warrant for 2,060,000 shares of common stock with an exercise price of $ 2.25 for net proceeds of $ 4,635 to the Company.

Through November 12, 2021, we sold an additional 18,220,369 shares of our common stock pursuant to the terms of our At Market Issuance Sales Agreement with B.

Aggregate net cash proceeds were $ 62,061 and transaction costs were $ 1,919 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements