GlobeNewswire Inc | Mar 25, 2021 04:05PM EDT

March 25, 2021

AUSTIN, Texas, March 25, 2021 (GLOBE NEWSWIRE) -- Phunware, Inc. (NASDAQ: PHUN) (Phunware or the Company), a fully-integrated enterprise cloud platform for mobile that provides products, solutions, data and services for brands worldwide, today announced financial results for its full year ended December 31, 2020.

This past year was the genesis of an inflection point in our companys history, as we shifted from a non-recurring, low margin transaction business to a far stickier, more scalable, recurring and high margin SaaS licensing business for our Multiscreen-as-a-Service (MaaS) platform, said Alan S. Knitowski, President, CEO and Co-Founder of Phunware. In addition to continued enterprise interest in our MaaS Digital Front Door solution for healthcare and our MaaS Smart Workplace solution for corporations, we have resumed conversations with customers from sectors that were hard hit by the pandemic, including the hospitality and real estate verticals. In conjunction with growing our portfolio of direct customers, we intend to expand our footprint globally by amplifying our go-to-market strategy with indirect sales and channel partners, including an anchor distribution partner that will be formally announced during Q2. In parallel, we are excited about the completion of PhunWallet next month as we launch our blockchain ecosystem powered by PhunCoin and PhunToken. We are on schedule to commercialize, scale and monetize this part of our business and look forward to the accelerated global adoption of our blockchain-enabled MaaS Customer Data Platform and MaaS Mobile Loyalty Ecosystem alike.

Full Year 2020 Summary Financial Highlights

-- Net Revenues for the year totaled $10.0 million -- Multiscreen-as-a-Service (MaaS) Platform Subscriptions and Services Revenues were $9.1 million -- Gross Margin was 66.4% -- Net Loss was ($22.2) million -- Net Loss per Share was ($0.50) -- Non-GAAP Adjusted EBITDA Loss was ($8.4) million

Our executive team continues to proactively attend well-respected financial conferences and meetings with accredited institutional investors in order to bolster our corporate profile within the capital markets, said Matt Aune, CFO of Phunware. With a robust cash position as a result of our recently completed institutional financing of approximately $25 million, we now have the financial flexibility to execute both our near-term and long-term operational initiatives.

Recent Business Highlights

-- Notable Corporate Developments: Closed Public Offering of Common Stock with Net Proceeds of $24.7 million

-- Notable Customer and Partner Wins: Partnered with Vizzia Technologies for Enhanced Digital Front Door on MobileSelected by Dignity Health Yavapai Regional Medical Center for Location Based Services SoftwareDoubled Location Based Services Software Coverage at Baptist Health South FloridaVirginia Hospital Center Selected Phunware for Comprehensive Mobile Healthcare Solution

-- Notable Product Updates: Announced 2021 Blockchain RoadmapReleased Healthy Spaces Mobile App Update for Android on Google PlayReceived Privacy Shield CertificationEngaged Stout to Monetize Intellectual Property Portfolio

Conference Call Information

Phunware management will host a conference call today (March 25, 2021) at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss its financial results for the full year ended December 31, 2020.

Interested parties may access the conference call by dialing (888) 506-0062 in the United States, or (973) 528-0011 from international locations. The conference call will be broadcast live and available for replay here and via the investor relations section of the Companys website at investors.phunware.com.

Safe Harbor Clause and Forward-Looking Statements

This press release includes forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words anticipate, believe, continue, could, estimate, expect, expose, intend, may, might, opportunity, plan, possible, potential, predict, project, should, will, would and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading Risk Factors in our filings with the Securities and Exchange Commission (the SEC), including our reports on Forms 10-K, 10-Q, 8-K and other filings that we make with the SEC from time to time. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under Risk Factors in our SEC filings may not be exhaustive.

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

Disclosure Information

Phunware uses and intends to continue to use its Investor Relations website as a means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor the Companys Investor Relations website, in addition to following the Companys press releases, SEC filings, public conference calls, presentations and webcasts.

About Phunware, Inc.

Everything You Need to Succeed on Mobile Transforming Digital Human Experience

Phunware, Inc. (NASDAQ: PHUN), is the pioneer of Multiscreen-as-a-Service (MaaS), an award-winning, fully integrated enterprise cloud platform for mobile that provides companies the products, solutions, data and services necessary to engage, manage and monetize their mobile application portfolios and audiences globally at scale. Phunwares Software Development Kits (SDKs) include location-based services, mobile engagement, content management, messaging, advertising, loyalty (PhunCoin & Phun) and analytics, as well as a mobile application framework of pre-integrated iOS and Android software modules for building in-house or channel-based mobile application and vertical solutions. Phunware helps the worlds most respected brands create category-defining mobile experiences, with more than one billion active devices touching its platform each month. For more information about how Phunware is transforming the way consumers and brands interact with mobile in the virtual and physical worlds, visit https://www.phunware.com, https://www.phuncoin.com, https://www.phuntoken.com, and follow @phunware, @phuncoin and @phuntoken on all social media platforms.

Phunware PR & Media Inquiries:Email: press@phunware.comPhone: (512) 693-4199

Phunware Investor Relations:Matt Glover and John YiGateway Investor RelationsEmail: PHUN@gatewayir.comPhone: (949) 574-3860

Consolidated Balance Sheets(In thousands, except per share information)

December 31, December 31, 2020 2019Assets Current assets: Cash $ 3,940 $ 276 Accounts receivable, net of allowance for doubtfulaccounts of $356 and $3,179 at December31, 2020 664 1,671 and 2019, respectivelyPrepaid expenses and other current assets 304 368 Total current assets 4,908 2,315 Property and equipment, net 13 24 Goodwill 25,900 25,857 Intangible assets, net 111 253 Deferred tax asset 537 241 Restricted cash 91 86 Other assets 276 276 Total assets 31,836 29,052 Liabilities and stockholders? equity (deficit) Current liabilities: Accounts payable $ 8,462 $ 10,159 Accrued expenses 5,353 4,035 Accrued legal settlement 3,000 ? Deferred revenue 2,397 3,360 PhunCoin deposits 1,202 1,202 Factored receivables payable ? 1,077 Current maturities of long-term debt, net 4,435 ? Warrant liability 1,614 ? Total current liabilities 26,463 19,833 Long-term debt 3,762 910 Long-term debt - related party 195 195 Deferred tax liability 537 241 Deferred revenue 2,678 3,764 Deferred rent 180 83 Total liabilities 33,815 25,026 Commitments and contingencies Stockholders? equity (deficit) Common stock, $0.0001 par value 6 4 Additional paid-in capital 144,156 128,008 Accumulated other comprehensive loss (338 ) (382 ) Accumulated deficit (145,803 ) (123,604 ) Total stockholders? equity (deficit) (1,979 ) 4,026 Total liabilities and stockholders? equity 31,836 29,052 (deficit)

Consolidated Statements of Operations and Comprehensive Income (Loss)(In thousands, except per share information)

Year Ended December 31, 2020 2019Net revenues $ 10,001 $ 19,150 Cost of revenues 3,357 9,020 Gross profit 6,644 10,130 Operating expenses: Sales and marketing 1,653 2,706 General and administrative 15,361 15,403 Research and development 2,628 4,333 Legal Settlement 4,500 ? Total operating expenses 24,142 22,442 Operating loss (17,498 ) (12,312 ) Other income (expense): Interest expense (3,413 ) (581 ) Loss on extinguishment of debt (2,158 ) ? Fair value adjustment for warrant liabilities 872 ? Other income ? 27 Total other expense (4,699 ) (554 ) Loss before taxes (22,197 ) (12,866 ) Income tax (provision) benefit (2 ) (5 ) Net loss (22,199 ) (12,871 ) Cumulative translation adjustment 44 36 Comprehensive loss $ (22,155 ) $ (12,835 ) Loss per share, basic and diluted $ (0.50 ) $ (0.35 ) Weighted-average common shares used to compute 44,269 36,879 loss per share, basic and diluted

Consolidated Statements of Cash Flows(In thousands)

Year Ended December 31, 2020 2019Operating activities Net loss $ (22,199 ) $ (12,871 ) Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation 11 59 Amortization of acquired intangibles 142 268 Amortization of debt discount and deferred financing 2,185 ? costsGain on change in fair value of warrants (872 ) ? Loss on sale of digital currencies ? 4 Loss on extinguishment of debt 2,158 ? Non-cash interest expense 55 ? Bad debt (recovery) expense 205 114 Settlement of accounts payable (453 ) ? Stock-based compensation 4,492 1,784 Deferred income taxes ? ? Changes in operating assets and liabilities: Accounts receivable 796 1,817 Prepaid expenses and other assets 65 184 Accounts payable 427 740 Accrued expenses 1,064 1,133 Accrued legal settlement 3,000 ? Deferred revenue (2,049 ) 581 Net cash used by operating activities (10,973 ) (6,187 ) Investing activities Proceeds received from sale of digital currencies ? 88 Capital expenditures ? (18 ) Net cash provided by investing activities ? 70 Financing activities Proceeds from borrowings, net of issuance costs 14,815 1,105 Proceeds from related party bridge loans 560 ? Payments on convertible notes (8,418 ) ? Payments on related party notes (560 ) ? Proceeds from PhunCoin deposits ? 212 Net repayments on factoring agreement (1,077 ) (1,357 ) Proceeds from sales of common stock, net of issuance 9,177 ? costsProceeds from warrant exercises ? 6,092 Proceeds from exercise of stock options 99 287 Series A convertible preferred stock redemptions and ? (6,240 ) dividend paymentsNet cash provided for financing activities 14,596 99 Effect of exchange rate on cash and restricted cash 46 36 Net increase (decrease) in cash and restricted cash 3,669 (5,982 ) Cash and restricted cash at the beginning of the 362 6,344 periodCash and restricted cash at the end of the period $ 4,031 $ 362 Supplemental disclosure of cash flow information Interest paid $ 1,251 $ 603

Year Ended December 31, 2020 2019Supplemental disclosure of non-cash information Issuance of common stock for payment of legal, earned $ 1,283 $ 562 bonus and board of director feesIssuance of common stock upon partial conversions of $ 2,266 $ ? Senior Convertible NoteReacquisition of equity component of Senior Convertible $ (1,388 ) $ ? NoteEquity classified cash conversion feature of Senior $ 219 $ ? Convertible NoteWaiver of sponsor promissory note $ ? $ 1,993

Non-GAAP Financial Measures and Reconciliation

Adjusted EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with Generally Accepted Accounting Principles in the United States (GAAP). It is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income (loss), as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other businesses. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations include: (i) Non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating its ongoing operating performance for a particular period, (ii) Adjusted EBITDA does not reflect the impact of certain charges resulting from matters we consider not to be indicative of ongoing operations, and (iii) other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

We compensate for these limitations to Adjusted EBITDA by relying primarily on its GAAP results and using Adjusted EBITDA only for supplemental purposes. Adjusted EBITDA includes adjustments for items that may not occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our business and complicate comparisons of our internal operating results and operating results of other peer companies over time. Each of the normal recurring adjustments and other adjustments described in this paragraph help management with a measure of our operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses.

Reconciliation of GAAP to Non-GAAP Financial Measures(In thousands)

Year Ended December 31, 2020 2019Net loss $ (22,199 ) $ (12,871 ) Add back:Depreciation and amortization 153 328 Add back:Interest expense 3,413 581 Add back/less:Income tax (expense) benefit 2 5 EBITDA (18,631 ) (11,957 ) Add Back: Stock-based compensation 4,492 1,784 Add Back: Legal settlement 4,500 ? Add Back: Loss on extinguishment of debt 2,158 ? Less: Fair value adjustment for warrant (872 ) ? liabilitiesAdjusted EBITDA $ (8,353 ) $ (10,173 )

Supplemental Information($ In thousands)

Year Ended December 31, Change 2020 2019 Amount %Net Revenue Platform subscriptions $ 9,108 $ 17,243 $ (8,135 ) (47.2 ) %and servicesApplication 893 1,907 (1,014 ) (53.2 ) %transactionTotal revenue $ 10,001 $ 19,150 $ (9,149 ) (47.8 ) %Platform subscriptionsand services as a 91.1 % 90.0 % percentage of totalrevenueApplicationtransactions as a 8.9 % 10.0 % percentage of totalrevenue