Phunware, Inc. (PHUN) 2023年年度報告「NASDAQ」.pdf

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1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2023 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)OF THE SECURITIES EXCHANGE ACT OF 1934F

2、or the transition period from _ to _Commission file number:001-37862PHUNWARE,INC.(Exact name of registrant as specified in its charter)Delaware30-1205798State or other jurisdiction ofincorporation or organization(I.R.S.EmployerIdentification Number)1002 West Avenue,Austin,Texas78701(Address of princ

3、ipal executive offices)(Zip Code)Registrants telephone number,including area code 512-693-4199Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock,par value$0.0001 per sharePHUNThe NASDAQ Capital MarketSec

4、urities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of t

5、he Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject

6、 to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 ofthis chapter)during the preceding 12 months(or for such shorter pe

7、riod that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,smaller reporting company,or an emerging growth company.Seedefinition of“large accelerated filer,”“accelerated fi

8、ler,”“smaller reporting company,”and emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the registrant has elected not to u

9、se the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its in

10、ternal control over financial reportingunder Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial stateme

11、nts of the registrant included in the filing reflect a correction of anerror to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrantsex

12、ecutive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No The aggregate market value of voting stock held by non-affiliates of the registrant was$100,674,230 as o

13、f June 30,2023,the last business day of the registrants most recentlycompleted second fiscal quarter(based on the closing sales price for the common stock on the Nasdaq Capital Market on such date).As of March 8,2024,8,027,082 shares of common stock,par value$0.0001 per share,were issued and outstan

14、ding.DOCUMENTS INCORPORATED BY REFERENCENone.TABLE OF CONTENTSPAGESpecial Note Regarding Forward Looking Statements1Summary of Risk Factors2PART I4Item 1.Business4Item 1A.Risk Factors12Item 1B.Unresolved Staff Comments44Item 1C.Cybersecurity44Item 2.Properties46Item 3.Legal Proceedings46Item 4.Mine

15、Safety Disclosures46PART II47Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities47Item 6.Reserved47Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations48Item 7A.Quantitative and Qualitative Disclosur

16、es About Market Risk61Item 8.Financial Statements and Supplementary Data62Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure100Item 9A.Controls and Procedures100Item 9B.Other Information101Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspec

17、tions101PART III102Item 10.Directors,Executive Officers and Corporate Governance102Item 11.Executive Compensation106Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters112Item 13.Certain Relationships and Related Transactions,and Director Independenc

18、e114Item 14.Principal Accounting Fees and Services118PART IV119Item 15.Exhibits and Financial Statement Schedules119Item 16.Form 10-K Summary122Phunware,Lyte Technology and the Phunware and Lyte Technology design logos and the trademarks or service marks of Phunware,Inc.and its subsidiaries appearin

19、g in thisAnnual Report on Form 10-K are the property of Phunware,Inc.Trade names,trademarks and service marks of other companies that may appear in this report are the property of theirrespective holders.We have omitted the and designations,as applicable,for the trademarks used in this Annual Report

20、 on Form 10-K.SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,as amended(the“Securities Act”)and Section 21Eof the Securities Exchange Act of 1934,as amended(the“Exchange Act”).The

21、se forward-looking statements are intended to be covered by the safe harbor for forward-lookingstatements provided by the Private Securities Litigation Reform Act of 1995.All statements other than statements of historical facts contained in this Annual Report,includingstatements regarding our future

22、 results of operations and financial position,business strategy and plans and our objectives for future operations,are forward-looking statements.Thewords“anticipate,”“believe,”“continue,”“could,”“estimate,”“expect,”“intend,”“may,”“might,”“plan,”“possible,”“potential,”“predict,”“project,”“should,”“w

23、ill,”“would”andsimilar 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 astatement is not forward-looking.The forward-looking statements contained in this Annual Report are based on

24、our current expectations and beliefs concerning future developments and their potential effectson 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 arebeyond our control)and other assum

25、ptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-lookingstatements.These risks and uncertainties include,but are not limited to,those factors described under the heading“Risk Factors.”Should one or more of these risks or

26、uncertaintiesmaterialize,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 noobligation to update or revise any forward-looking statements,whether as a result of new information,future e

27、vents or otherwise,except as may be required under applicable securitieslaws.These risks and others described under“Risk Factors”may not be exhaustive.By their nature,forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may

28、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 developmentsin the industry in which we operate may differ materially from those made in or suggested by the

29、 forward-looking statements contained in this Annual Report.In addition,even if ourresults or operations,financial condition and liquidity,and developments in the industry in which we operate are consistent with the forward-looking statements contained in thisAnnual Report,those results or developme

30、nts may not be indicative of results or developments in subsequent periods.1SUMMARY OF RISK FACTORSBelow is a summary of the principal factors that could materially harm our business,operating results and/or financial condition,impair our future prospects and/or cause theprice of our common stock to

31、 decline.This summary does not address all of the risks that we face.Additional discussion of the risks summarized in this risk factor summary,and otherrisks that we face,can be found below under the heading“Risk Factors”and should be carefully considered,together with other information in this Form

32、 10-K and our other filingswith the Securities and Exchange Commission(SEC)before making an investment decision regarding our common stock.Risks Related to Our Business,Operations and IndustryWe have a history of losses and we may not achieve or sustain profitability in the future.Our future perform

33、ance will depend on the successful transition of our Chief Executive Officer(CEO).Macro-economic uncertainties could have an adverse impact on our business.Our growth could be slower than expected.We have incurred a goodwill impairment charge.Current and future litigation could adversely affect us.O

34、ur results of operations could be negatively affected if we cannot adapt to ongoing market changes.Demand could be adversely affected by uncertain economic conditions.Global political conditions may adversely affect demand for our products.The actual market for our products and services solutions co

35、uld be significantly smaller than estimates.Substantial competition could reduce our market share and significantly harm our financial performance.Our future results will depend on our ability to continue to focus our resources and manage costs effectively.Our business strategy is evolving.Future ac

36、quisitions could harm our business.We may not be able to recognize revenue in the period in which our services are performed.Our financial results may be adversely affected by changes in accounting principles applicable to us.We may experience quarterly fluctuations in our operating results.We could

37、 be liable for damages for security breaches or disclosure of confidential information or personal data.Disruptions in our customers businesses or inadequate service could cause us to lose customers.Our technology offerings and services could infringe upon the intellectual property rights of others.

38、We may be unable to protect our intellectual property rights.If we are unable to collect our receivables our results of operations or financial condition could be adversely affected.Increased costs of labor and employee health and welfare benefits may adversely impact our results of operations.Our g

39、lobal operations are subject to complex risks.If subscription renewal rates decrease our future revenue and operating results may be harmed.We may be unable to attract new customers or increase sales.Because revenue is recognized over the term of subscription contracts,sales results are not immediat

40、ely reflected.If we fail to forecast our revenue accurately our operating results could be adversely affected.Our sales cycle can be long and unpredictable,particularly with respect to large subscriptions,and our sales efforts require considerable time and expense.Advertising fraud could harm our re

41、putation.If we do not maintain and grow advertisers and distribution partners,our services could be adversely affected.Any inability to deliver successful mobile advertising campaigns will prevent us from growing or retaining our advertiser base.We may be unable to deliver advertising in a context t

42、hat is appropriate for mobile advertising campaigns.Activities of our application transaction customers could damage our reputation or give rise to legal claims against us.Any limitation on our ability to collect and use data could significantly diminish the value of our solutions.Evolving governmen

43、tal regulation,legal requirements or industry standards relating to consumer privacy and data protection could impact our business.We may not adequately prevent disclosure of trade secrets and other proprietary technology and information.We could be subject to additional income tax liabilities.Taxin

44、g authorities may assert that we should have collected or in the future should collect sales and use,value-added or similar taxes.Our net operating loss carryforwards may expire unutilized or underutilized.Our large customers have substantial negotiating leverage.Our customers financial distress or

45、disruptions in their business could affect our financial position and results.If we are unable to obtain and maintain adequate insurance,our financial condition could be adversely affected.The requirements of being a public company may strain our systems and resources.2Reduced reporting requirements

46、 available to us,may cause our common stock to be less attractive to investors.If we fail to maintain an effective system of disclosure controls and internal control over financial reporting,our ability to produce timely and accurate financial statements orcomply with applicable regulations could be

47、 impaired.Our business is subject to the risks of catastrophic events outside of our control.Risks Related to Capitalization Matters,Corporate Governance and Market VolatilityWe may sell additional equity or debt securities or enter into other arrangements to fund our operations,which may result in

48、dilution to our stockholders and imposerestrictions or limitations on our business.The failure of financial institutions or transactional counterparties could adversely affect our current and projected business operations.Our business is subject to evolving corporate governance and public disclosure

49、 regulations.The price of our common stock has been,and may continue to be,volatile,and you could lose all or part of your investment.It may be difficult for us to retain or attract qualified officers and directors.If analysts do not cover our business the price and trading volume of our common stoc

50、k could decline.We do not currently intend to pay dividends on our common stock.Delaware law and our organizational documents contain certain anti-takeover provisions that could delay or discourage takeover attempts.Our certificate of incorporation designates the State of Delaware as the exclusive f

51、orum for substantially all disputes between us and our stockholders.Risks Related to our Digital Asset HoldingsWe may acquire additional digital assets in the future.The prices of our digital assets may be influenced by regulatory,commercial,and technical factors.The unregulated nature surrounding b

52、itcoin trading venues may adversely affect the value of our digital asset holdings.If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our digital asset holdings,we may lose some orall of our bitcoin.The loss or destruction

53、 of a private key required to access our bitcoin may be irreversible.A determination that our digital assets are securities could lead to regulation as an“investment company”.Risks Related to our Token Ecosystem and TokensThere can be no assurance that PhunCoin or PhunToken will ever be issued.The d

54、evelopment and acceptance of blockchain networks,are subject to a variety of factors that are difficult to evaluate.Because our tokens will be digital assets built and transacted initially on top of existing third-party blockchain technology,we will be reliant on another blockchain network.The devel

55、opment and operation of our Token Ecosystem(hereinafter defined)will require additional technology and intellectual property rights.Our Token Ecosystem exposes us to risks of privacy data breach and cybersecurity attacks.Our Token Ecosystem may be the target of malicious cyberattacks or may contain

56、exploitable flaws in its underlying code.Our Token Ecosystem is susceptible to mining attacks.There is no trading market for PhunCoin.Any delay in the development of our Token Ecosystem may result in declines in PhunToken revenue.The regulatory regime governing digital assets is uncertain.The sale o

57、f PhunToken or the offerings of PhunCoin may subject us to additional regulatory requirements.The prices of digital assets are extremely volatile.3Table of ContentsPART IItem 1.Business.GeneralPhunware,Inc.and its subsidiaries(the Company,we,us,or our)offers a fully integrated cloud platform for mob

58、ile that provides companies the products,servicesand solutions necessary to engage,manage and monetize their mobile application portfolios and audiences at scale.Our mission is to foster an ecosystem where digital interactionsenable a more engaged,interactive,and valuable experience for all stakehol

59、ders.We are redefining connectivity by ensuring the widespread adoption of our technologies amongstbrands,mobile consumers,partners,digital asset holders,and market participants.Founded in 2009,we are a Delaware corporation headquartered in Austin,Texas.In November 2023,we announced our Phunware 3.0

60、 strategy with three pillars:continued sales of our cloud-based platform offerings to hospitality,healthcare,connected workplace,luxury residential and other markets;monetization of our patent portfolio in ways other than embedding it in our software;anda digital asset strategy that capitalizes on P

61、hunCoin,PhunToken and those assets ability to return control of their data and use to consumers.According to eMarketer,adults in the U.S.spend more than four hours daily on mobile internet;90%of that time in mobile apps(versus mobile web).We believe brands mustestablish a strong identity on mobile,e

62、specially on devices and platforms specific to the Apple iOS and Google Android operating systems and ecosystems.Phunware helps brandsdefine,create,launch,promote,monetize and scale their mobile identities as a means to anchor the consumer journey and improve brand interactions.Our platform allows f

63、or thelicensing and creation of category-defining mobile experiences for customers and their application users worldwide.Business ModelOur business model includes a combination of service,subscription and media transaction offerings that enable customers to engage,manage and monetize their mobileapp

64、lication 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 mobileapplication to support.Create We help brands build their applic

65、ation 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.Our product and service offerings include cloud-based recurring software license subscription

66、s,most of which are multi-year,application development and support servicesand application transaction-based media.Although a majority of our product and service offerings have been sold utilizing an internal sales team,we have also sold our product andservice offerings through various sales partner

67、s,including value added resellers and systems integrators.We continue to invest in these relationships.Lyte Technology,Inc.In October 2021,we acquired Lyte Technology,Inc.(“Lyte”),a provider of high-performance computer systems to individual consumers.On November 1,2023,wecommitted to a plan to disc

68、ontinue and wind down,either by sale or closing,operations of Lyte.We generally completed such plan as of December 31,2023.4Table of ContentsOur Products and ServicesOur mobile software subscriptions and services and application transaction solutions offerings include the following:Integration of ou

69、r software development kit(“SDK”)licenses into existing applications maintained by our customers,including:Analytics(SDK that provides data related to application use and engagement);Content Management(SDK that allows application administrators to create and manage app content in a cloud-based porta

70、l);Alerts,Notifications&Messaging(SDK that enables brands to send messages to app users through the app);Marketing Automation(SDK that enables location-triggered messages and workflow);Advertising(SDK that enables in-app audience monetization);andLocation-Based Services(module that include mapping,n

71、avigation,wayfinding,workflow,asset management and policy enforcement);Cloud-based vertical solutions,which are off-the-shelf,iOS-and Android-based mobile application solutions that address:the patient experience forhealthcare,the shopper experience for retail,the fan experience for sports,the trave

72、ler experience for aviation,the luxury resident experience for realestate,the luxury guest experience for hospitality,the student experience for education and the generic user experience for all other verticals andapplications;andApplication transactions,including re-occurring and one-time transacti

73、onal media purchases for application discovery,user acquisition and audiencebuilding,audience engagement and audience monetization.Competitive StrengthsFully integrated and comprehensive solutions:Our solutions can be used across mobile application experience definition,application portfolio creatio

74、n,user discovery,useracquisition,user engagement and user monetization.Data from application analytics and our analysis of over one petabyte of user data tied to the anonymous Phunware ID can be usedto inform business decisions related to mobile strategy,marketing,operations and more.Built to be mob

75、ile-first,native-first,cloud-based:Phunware was built from the ground up to focus on native mobile development,while other companies in the mobile spacehave attempted to create shortcuts with“write once,run anywhere”software.The result is over a decade of platform-specific mobile expertise,which we

76、believe to be a majorcompetitive differentiator.Results-driven culture:Our employees are granted restricted stock units upon and from time to time after commencement of their employment and are encouraged to think ofPhunware as a company they own rather than a company for which they work.We also pro

77、mote from within to reward top performers and encourage leadership development.Theresult is an employee base singularly focused on solving problems and driving results.Intellectual property portfolio development and world-class engineering resources:Through our world-class in-house technical and eng

78、ineering organization,we havefocused on developing our patents and other intellectual property,which includes methods of accessing wireless account information,rendering content on a wireless device,indoorand outdoor navigation with a mobile device and more.We are developing creative solutions to so

79、lve complex technical problems and create competitive advantages for our customers.We hold eighteen issued patents and six pending patents in various areas including content management,location services and cryptocurrency.Our Growth StrategyKey elements of our growth strategy include:Expansion of mo

80、bile products and services.Mobile applications and in-application advertising media are among the fastest-growing and complex technology markets.Wehave made significant investments in research and development and plan to continue extending the functionality and breadth of our applications in the fut

81、ure.5Table of ContentsDeepening of existing customer relationships.We believe that we are well positioned to identify new opportunities or enhance existing services and solutions within andprovide additional products and services to our existing customer base.We have historically created and expect

82、to continue to create cross and upsell opportunities as our customersseek to deepen their approach to mobile application lifecycle management.Development of new relationships to expand our customer base.We intend to continue to grow our customer base by developing our indirect sales and distribution

83、relationships.We also have partnered with technology providers,who serve as a referral source and provide us with quality leads for businesses interested in our products and servicesand enable us to integrate our products into their offerings.We are able to leverage our mobile expertise and capabili

84、ties to compete effectively for new customers both directly andindirectly.Primary indirect channels and distributors include hardware,software,carriers and systems integrators/consultancies.Continued growth of our customer base through targeted marketing and outreach.We intend to continue to opportu

85、nistically expand into and within industry verticals thatbenefit from our integrated solutions,comprehensive lifecycle approach and ability to engage users in both digital and physical worlds,particularly healthcare and hospitality.Addition of new capabilities and geographic regions through strategi

86、c transactions.We operate in a fragmented market that offers significant consolidation opportunities.We plan to continue to evaluate strategic acquisitions,partnerships and other transactions that enhance our capabilities and expand our geographic footprint,both domestically andinternationally.Expan

87、sion of our partnership network with third-party providers of products and services.We are able to leverage our mobile expertise and capabilities to competeeffectively for new customers both directly and indirectly.Primary indirect channels include hardware,software,carriers and systems integrators/

88、consultancies.We are focused onbuilding our brand to grow within existing and target end markets where there is strong demand for the products and solutions we provide.Our CustomersOur target customers for our mobile software subscription and services are companies that are looking to enact digital

89、transformation in their business whether it is retail,healthcare,hospitality,entertainment,real estate,smart living and workspaces or any other industry.We provide technology and solutions to support these organizations through everystage of the mobile application lifecycle.We believe the multi-year

90、 nature of our software and managed services projects,agreements and related recurring revenues provides revenue visibility.Our subscription andservices agreements with our customers consist of terms relating to length of agreement(for subscriptions and application support),payment,performance,cance

91、llation andtermination,confidentiality,indemnification obligations and limitation of liability,among other provisions.All of these agreements contain terms of service that are generallyconsistent across our customers.Our subscription and services agreements generally do not impose obligations of exc

92、lusivity or other limiting terms upon us.Our application transaction agreements,also known as insertion orders,are,for the most part,governed by the standard terms and conditions from the Interactive AdvertisingBureaus(“IAB”)Standard Terms and Conditions for Internet Advertising for Media Buys One Y

93、ear or Less(IAB Terms).The IAB Terms provide that in the event that payments arenot paid to the agency,then the media company,or us,agrees to hold the advertiser solely liable.We view the agreements as contracts that ordinarily accompany the businessconducted by Phunware and,because of the lack of a

94、ny commitments to provide a certain amount of business,we are not substantially dependent on the agreements.Concentration of Major CustomersDue 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 custome

95、rs.For theyear ended December 31,2023,three customers collectively represented 35%of our net revenues.Sales and MarketingOur salesforce is focused on direct sales opportunities for our platform subscription and services and application transaction product lines.They are experienced across allvertica

96、ls in which we serve and can assist small,mid-sized and large organizations.Our indirect sales function works with our partners to identify sales opportunities,as well asidentify new sales partner relationships.Our marketing efforts focus on building brand reputation,expanding market awareness,drivi

97、ng customer demand and enabling our sales team.6Table of ContentsOur platform subscription and services sales organization is supported by our customer solutions team,which has deep technical expertise.Once contracted,our programmanagement team collaborates with customers to ensure timely deliverabl

98、es of contracted licenses and services.Post implementation,customers are supported post-sale by ourcustomer success function managed within our program management team.Our sales cycle can range many months for large organizations.We market our application transaction product line direct to businesse

99、s and agencies.We are also hoping to expand our media offerings by attracting new business from localand national advertising agencies.Our contract term for application transactions can be as short as a few days to three months for larger advertising campaigns.Our sales cycle istypically short for d

100、irect to business customers,whereby it may be longer when partnering with agencies.Research and DevelopmentOur ability to compete depends in large part on our continuous commitment to research and development and our ability to rapidly introduce new applications,technologies,features and functionali

101、ty into our products,services and solutions.Our research and development efforts are focused on improving and enhancing our existing product and serviceofferings by working closely with our customers,conducting quality assurance testing and improving our core technology as well as developing new pro

102、prietary services and solutions.Performance,security,depth and breadth of functionality and usability of our solutions drive our technology decisions and research and development.Our research and developmentexpenses were$4.4 million and$6.1 million for the fiscal years ended December 31,2023 and 202

103、2,respectively.7Table of ContentsPhunCoin and PhunTokenOur research and development team is also working to continue our vision of a future in which consumers own,control and are rewarded for the access to and use of theirpersonal data and information.In 2018,we began offering rights to future issua

104、nces of PhunCoin,and in 2019 we expanded to a dual token structure by creating PhunToken.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 exchangethat recognizes the value of d

105、ata and engagement,which we refer to herein as our Token Ecosystem.PhunCoin is intended to be the“Value of Data”that empowers consumers totake control of and be compensated for their data and will allow holders to participate in the economics of the Token Ecosystem.PhunToken is intended to be the“Va

106、lue ofEngagement”that empowers consumers to monetize their data and to use PhunToken to engage with brands and others in the Token Ecosystem.In 2021,we commenced the selling ofPhunToken to third parties.Upon the sale of PhunToken to customers,we transfer the PhunToken purchased to the customers ethe

107、reum-based wallet address.We sell and will continueto sell PhunToken.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 asof December 31,2023 and 2022,as we have yet to issue any Phun

108、Coin pursuant to our rights offerings.We may generate additional funding from sales of PhunCoin in the future.We are planning for future enhancements of the Token Ecosystem in 2024;however,there can be no assurance as to when(or if)we will be able to successfully complete thedevelopment of the Token

109、 Ecosystem.CompetitionThe market for technology and solutions related to mobile application lifecycle management is evolving,highly competitive and significantly fragmented.With theintroduction of new technologies and the potential entry of new competitors into the market,we expect competition to in

110、crease and intensify in the future,which could harm our abilityto increase sales,maintain or increase renewals and maintain our prices.We compete primarily with companies offering cloud-based software solutions for location-based services,mobile marketing automation,content management,analytics anda

111、udience monetization,as well as data and campaign management for audience building and engagement.We also sometimes compete with application development agencies,in-house mobile teams and products developed by software providers that allow customers to build and scale new mobile applications.Our com

112、petitors include Airship,Apadmi,Appcelerator,Mutual Mobile,Pointr,Purple and as well as many competitors in the desktop personal computing business.8Table of ContentsWe believe the principal competitive factors in our market include the following:product features and functionality;location accuracy

113、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 r

114、eputation;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;global reach;size of

115、 customer base and level of user adoption;andability to integrate with legacy enterprise infrastructures and third-party applications.Some of our current competitors have,and future competitors may have,greater financial,technical,marketing and other resources,greater resources to devote to thedevel

116、opment,promotion,sale and support of their products and services,more extensive customer bases and broader customer relationships,and/or longer operating histories andgreater name recognition.As a result,these competitors may be better able to respond quickly to new technologies and to undertake mor

117、e extensive marketing campaigns.In a fewcases,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.Government RegulationWe are subject to a variety of laws and regulations in the United States and abroa

118、d that involve matters central to our business.Many of these laws and regulations are stillevolving and being tested in courts,and could be interpreted in ways that could harm our business including,but not limited to,privacy,data protection and personal information,rights of publicity,content,intel

119、lectual property,advertising,marketing,distribution,data security,data retention and deletion,and other communications,protection of minors,consumer protection,telecommunications,product liability,taxation,economic or other trade prohibitions or sanctions,anti-corruption law compliance and securitie

120、s law compliance.In particular,we are subject to federal,state and foreign laws regarding privacy and protection of consumer data.Foreign data protection,privacy,content and other laws andregulations can impose different obligations or be more restrictive than those in the United States.U.S.federal

121、and state and foreign laws and regulations,which in some cases can beenforced by private parties in addition to government entities,are constantly evolving and can be subject to significant change.As a result,the application,interpretation andenforcement of these laws and regulations are often uncer

122、tain,particularly in the new and rapidly evolving industry in which we operate and may be interpreted and appliedinconsistently from country to country and inconsistently with our current policies and practices.Proposed or new legislation and regulations could also significantly affect our business.

123、For example,the European General Data Protection Regulation(GDPR)took effect inMay 2018 and applies to all of our products and services used by people in Europe.The GDPR includes operational requirements for companies that receive or process personal dataof residents of the European Union that are d

124、ifferent from those previously in place in the European Union,and includes significant penalties for non-compliance.Effective August2020,the Brazilian General Data Protection Law imposes requirements similar to GDPR on products and services offered to users in Brazil.The California Consumer Privacy

125、Act(CCPA),which took effect in January 2020,also establishes certain transparency rules and creates new data privacy rights for users.Furthermore,voters in California approvedProposition 24,which expanded the CCPA by limiting businesses use of sensitive business information,such as precise geolocati

126、ng.Proposition 24 took effect January 1,2023 forpersonal data collected after January 1,2022.9Table of ContentsFollowing Californias lead,Colorado,Connecticut,Utah and Virginia have been or will be enforcing new laws around data privacy and protection.Similarly,there are a number oflegislative propo

127、sals in the European Union,the United States,at both the federal and state level,as well as other jurisdictions that could impose new obligations or limitations in areasaffecting our business,such as digital assets.In addition,some countries are considering or have passed legislation implementing da

128、ta protection requirements or requiring localstorage and processing of data or similar requirements that could increase the cost and complexity of delivering our services.New laws enacted by government or regulatory authorities could cause us to incur substantial costs,expose us to unanticipated civ

129、il and criminal liability or penalties(including substantial monetary remedies),interrupt or require us to change our business practices in a manner materially adverse to our business,divert resources and the attention ofmanagement from our business or subject us to other remedies that adversely aff

130、ect our business.Intellectual PropertyOur ability to protect our intellectual property,including our technologies,is an important factor in the success and continued growth of our business.We protect ourintellectual property through trade secrets law,patents,copyrights,trademarks and contracts.In so

131、me cases,we partner with law firms and others to seek enforcement of our rightsunder the patents we hold and to recover damages for any finding of infringement thereof.We have established business procedures designed to maintain the confidentiality of ourproprietary information such as the use of ou

132、r license agreements with customers and our use of our confidentiality agreements and intellectual property assignment agreements withour employees,consultants,business partners and advisors where appropriate.Some of our technologies rely upon third party licensed intellectual property.In the United

133、 States,we have 18 patents issued and 6 pending non-provisional patent applications.The issued patents expire between the years 2027 and 2037,which aresubject 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 ad

134、dition,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 theexamination process will require us to narrow our claims.Furthermore,even if a patent is issued,we c

135、annot 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.Despite our efforts to protect our technology

136、and proprietary rights through intellectual property rights,licenses and confidentiality agreements,unauthorized parties may stillcopy or otherwise obtain and use our software and other technology.In addition,if we expand international operations,effective patent,copyright,trademark and trade secret

137、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.Inparticular,leading companies in our markets have extensive p

138、atent portfolios and are regularly involved in litigation.From time to time,third parties,including certain of these leadingcompanies,may assert patent,copyright,trade secret and other intellectual property rights against us,our channel partners or our customers.Our standard license and other agreem

139、entsmay obligate us to indemnify our indirect sales partners and customers against such claims.Successful claims of infringement by a third party could prevent us from continuing to offerour solution or performing certain services,require us to expend time and money to develop non-infringing solutio

140、ns or force us to pay substantial damages,including treble damagesif we are found to have willfully infringed patents or copyrights,royalties or other fees.Competitors may also be more likely to claim that our solutions infringe their proprietary rightsand seek an injunction against us from continui

141、ng to offer our platform and/or components thereof.We cannot provide assurance that we do not currently infringe,or that we will not inthe future infringe,upon any third-party patents or other proprietary rights.EmployeesWe leverage our employees long-standing,deep customer relationships and strong

142、technical expertise to deliver complex solutions that meet customer needs and advancemobile technology.As of December 31,2023,we had 25 full-time employees.None of our employees are currently covered under any collective bargaining agreements.We believeour relations with our employees are good.Corpo

143、rate InformationOur principal executive offices are located at 1002 West Avenue,Austin,Texas 78701,and our telephone number is(512)693-4199.Our website address ishttps:/.The information on,or that can be accessed through,our10Table of Contentswebsite is not part of this Annual Report on Form 10-K.We

144、 have included our website address as an inactive textual reference only.Available InformationOur Annual Report on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a)and 15(d)of the Exchange Act are available fr

145、ee of charge on the investor relations section of our website,located at https:/,which we post as soon as reasonablypracticable after we electronically file such material with,or furnish it to,the SEC.The SEC also maintains an Internet website that contains reports and other information regardingiss

146、uers,such as Phunware,that can be filed electronically with the SEC.The SECs Internet website is located at http:/www.sec.gov.11Table of ContentsItem 1A.Risk Factors.Risk FactorsAn investment in our securities involves a high degree of risk.You should consider carefully the risks and uncertainties d

147、escribed below,together with all of the otherinformation contained in this Annual Report,including our consolidated financial statements and related notes,before deciding to invest in our securities.If any of the following eventsoccur,our business,financial condition and operating results may be mat

148、erially adversely affected.In that event,the trading price of our securities could decline,and you could loseall or part of your investment.The risks and uncertainties described below are not the only ones we face.Additional risks and uncertainties that we are unaware of,or that wecurrently believe

149、are not material,may also become important factors that adversely affect our business or results of operations.Risks Related to Our Business,Operations and IndustryWe have a history of losses,we expect to continue to incur losses and we may not achieve or sustain profitability in the future.We have

150、incurred significant losses in each fiscal year since our inception.We experienced a consolidated net loss for the years ended December 31,2023 and December 31,2022.These losses were due to both a decline in platform revenue in 2022 and 2023,as compared to previous years,losses related to our digita

151、l asset holdings and the substantialinvestments we made to build our products and services,grow and maintain our business,acquire customers and service our various debt obligations.You should not consider ourhistorical revenue levels or operating expenses prior to recent periods as indicative of our

152、 future performance.Key elements of our growth strategy include acquiring new customersand continuing to innovate and expand our product offerings.As a result,our operating expenses may continue to increase in the future due to expected increased sales and marketingexpenses,operating costs,research

153、and development costs and general and administrative costs and,therefore,our operating losses may continue or even potentially increase for theforeseeable future.In addition,as a public company we incur significant legal,accounting and other expenses,including,but not limited to additional costs in

154、resolving our existinglegal matters.Furthermore,to the extent that we are successful in increasing our customer base,we may also incur increased expenses because costs associated with generating andsupporting customer agreements are generally incurred up front.Revenue recognition may not occur durin

155、g the same the same period in which we incur costs associated with ouragreements.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.We mayincur significant losses in the future for many reasons

156、,including the other risks described in this Annual Report and unforeseen expenses,difficulties,complications and delays andother unknown events.You should not rely upon future bookings we may announce or revenue growth as indicative of our future performance.We cannot assure you that we will reachp

157、rofitability in the future or at any specific time in the future or that,if and when we do become profitable,that we will sustain profitability.If we are ultimately unable to generatesufficient revenue to meet our financial targets,become profitable and have sustainable positive cash flows,investors

158、 could lose their investment.Our future performance will depend on the successful transition of our Chief Executive Officer(CEO).On October 25,2023,the Company and Russell Buyse,the Companys CEO,entered into a separation agreement which provided that Mr.Buyses employment with theCompany terminated.O

159、n the same day,our board of directors appointed the Companys Chief Revenue Officer,Michael Snavely,as CEO.If we are unable to execute a timely andorderly transition and successfully integrate our new CEO into our leadership team,revenue,operating results and our financial condition may be adversely

160、impacted.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 andto identify and pursue new opportunities as well as service and product innovations.These changes,and any future changes,

161、in our operations and management team could bedisruptive to our operations.Further,if our new CEO formulates different or changed views,the future strategy and plans of our business may differ materially from those of the past.We are currently operating in a period of significant macro-economic unce

162、rtainty,including supply-chain disruptions and inflationary pressures.Weakened economic conditionsmay have an adverse impact on our business and results of operations.Adverse macroeconomic conditions,including inflation,slower growth or recession,new or increased tariffs,changes to fiscal and moneta

163、ry policy,tighter credit,higherinterest rates,high unemployment and currency fluctuations could materially adversely affect demand for our products and services.Our principal operating expense is compensationrelated costs.Inflation rates,particularly in the United States,have increased recently to l

164、evels not seen in years,and increased inflation12Table of Contentsmay result in decreased demand for our products and services,increases in our operating costs(including our labor costs),reduced liquidity and limits on our ability to access credit orotherwise raise capital.The effects of inflation o

165、n customer and consumer budgets could result in the reduction of our customers spending plans.These and other economic factorscould materially adversely affect our business,results of operations and financial condition.If we are unable to expand or renew sales to existing customers,or attract new cu

166、stomers,our growth could be slower than expected and our business may be harmed.Our future growth depends upon expanding sales and renewals of sales of our technology,products and services to existing customers.Our customers may not continue topurchase our technology offerings and services,or our cu

167、stomers may reduce their purchase rate of services,if we do not demonstrate the value proposition for their investment and wemay not be able to replace existing customers with new customers.In addition,our customers may not renew their contracts with us on the same terms,or at all,because ofdissatis

168、faction with our product or service offerings.If our customers do not renew their contracts,our revenue may grow more slowly than expected,may not grow at all,or maydecline.Additionally,increasing incremental sales to our current customer base may require increasingly sophisticated and costly sales

169、efforts that are targeted at senior management.We plan to continue expanding our sales efforts but we may be unable to hire qualified sales personnel,may be unable to successfully train those sales personnel that we are able tohire and sales personnel may not become fully productive on the timelines

170、 that we have projected,or at all.Additionally,although we dedicate significant resources to sales andmarketing programs,these sales and marketing programs may not have the desired effect and may not expand sales.We cannot provide assurance that our efforts will increase sales toexisting customers o

171、r generate additional revenue.If our efforts to upsell to our customers are not successful or we cannot find additional expansion opportunities,our future growthmay grow more slowly than expected,may not grow at all,or may decline.Our ability to achieve significant growth in revenue in the future wi

172、ll also depend upon our ability to attract and sell our technology,products and services to new customers.This may be particularly challenging where an organization has already invested substantial personnel and financial resources to integrate competing technology,products and services.An organizat

173、ion may be reluctant or unwilling to invest in new technology offerings and services.If we fail to attract new customers and maintain and expand those customerrelationships,our revenue may grow more slowly than expected,may not grow at all,or may decline and our business may be harmed.We have incurr

174、ed a goodwill impairment charge.We completed our annual goodwill impairment analysis during the fourth quarter of 2023,and we concluded goodwill was impaired.Goodwill impairment charges of$25.8million were recorded during the year ended December 31,2023.For additional details,refer to Note 6 Goodwil

175、l of the notes to the consolidated financial statements included in PartII,Item 8 of this Annual Report on Form 10-K for further discussion on our goodwill impairment.Current and future litigation could adversely affect us.We,along with certain of our former executive officers and certain former boa

176、rd members,are parties to litigation with Wild Basin Investments,LLC as further described onour Current Report on Form 8-K filed with the SEC on January 10,2020.We,along with our officers and directors,may also become subject to other legal proceedings in our ordinarycourse of business.We cannot pre

177、dict with certainty the outcome of this legal proceeding.The outcome of this or future legal proceeding could require us to take,or refrain fromtaking,actions which could negatively affect our operations.Such legal proceedings involve substantial costs,including the costs associated with investigati

178、on,litigation and possiblesettlement,judgment,penalty,or fine.As a smaller company,the collective costs of litigation proceedings represent a drain on our cash resources,and require an inordinate amount ofour managements time and attention.An adverse ruling with respect to our current or any other l

179、itigation could have a material adverse effect on our results of operations and financialcondition.Negative publicity surrounding such legal proceedings may also harm our reputation and adversely impact our business and results.Our results of operations and ability to grow could be negatively affect

180、ed if we cannot adapt and expand our technology and product and service offerings in response to ongoingmarket changes.The collaboration and technology solutions business and markets are characterized by rapid technological change,evolving industry standards,changing customer preferencesand new prod

181、uct and service introductions.Our success depends on our ability to continue to develop and implement technology,product and service offerings that anticipate or timelyrespond to rapid and continuing changes in technology and industry developments and offerings by new technology providers to serve t

182、he evolving needs of our customers.Examplesof areas of significant change in the industry include cloud,software defined13Table of Contentsinfrastructure,virtualization,security,mobility,data analytics and IoT,the continued shift from maintenance to managed services and ultimately to cloud based ser

183、vices,as-a-servicesolutions,security and information technology automation.In addition,enterprises are continuing to shift from on-premise,hardware infrastructure to software centric hosted solutions.Technological developments such as these may materially affect the cost and use of technology and se

184、rvices by our customers and could affect the nature of how our revenue isgenerated.These technologies and others that may emerge,could reduce and,over time,replace some of our current business.In addition,customers may delay spending underexisting contracts and engagements and may delay entering int

185、o new contracts while they evaluate new technologies.If we do not sufficiently invest in new technology,industrydevelopments and our personnel,or evolve and expand our business at sufficient speed and scale,or if we do not make the right strategic investments to respond to these developmentsand succ

186、essfully drive innovation,our technology,products and services,our results of operations and our ability to develop and maintain a competitive advantage and growth could benegatively affected.In addition,if we are unable to keep up with changes in technology and new hardware,software and services of

187、ferings,for example,by providing the appropriate training toour customer solutions team,sales directors,program management team,channel partners and software development and product engineers to enable them to effectively sell anddeliver such new offerings to customers,our business,results of operat

188、ions,or financial condition could be adversely affected.Demand for our technology,product and service offerings could be adversely affected by volatile,negative,or uncertain economic conditions and the effects of these conditions onour customers businesses.Our revenue and profitability depend on the

189、 demand for our technology,product and service offerings,which could be negatively affected by numerous factors,many ofwhich are beyond our control.Volatile,negative,or uncertain economic conditions affect our customers businesses and the markets we serve.Such economic conditions in ourmarkets have

190、undermined and could in the future undermine business confidence in our markets and cause our customers to reduce or defer their spending on new technology offeringsand services,or may result in customers reducing,delaying or eliminating spending under existing contracts with us,which would negative

191、ly affect our business.Growth in themarkets we serve could be at a slow rate,or could stagnate or contract,in each case for an extended period of time.Ongoing economic volatility and uncertainty and changing demandpatterns affect our business in a number of other ways,including making it more diffic

192、ult to accurately forecast customer demand and effectively build our revenue and resource plans.Economic volatility and uncertainty is particularly challenging because it may take some time for the effects and changes in demand patterns resulting from these and otherfactors to manifest themselves in

193、 our business and results of operations.Changing demand patterns from economic volatility and uncertainty could have a significant negative impacton our business,results of operations,or financial condition.Global political conditions may adversely affect demand for our products.Global political con

194、ditions may create uncertainties that could adversely affect our business.The United States has been and may continue to be involved in armed conflictsthat could have a further impact on our sales.The consequences of armed conflict,political instability or civil or military unrest are unpredictable,

195、and we may not be able to foreseeevents that could have a material adverse effect on us.Terrorist attacks or other hostile acts may negatively affect our operations,or adversely affect demand for our products,and suchattacks or related armed conflicts may impact our physical facilities or those of o

196、ur suppliers or customers.Furthermore,these attacks or hostile acts may make travel and thetransportation of our products more difficult and more expensive,which could materially adversely affect us.Any of these events could cause consumer spending to decrease or resultin increased volatility in the

197、 United States economy and global financial markets.The actual market for our products and services could be significantly smaller than estimates of total potential market opportunity and if customer demand for our products andservices does not meet expectations,our ability to generate revenue and m

198、eet our financial targets could be adversely affected.While we expect growth in the markets for our products,it is possible that the growth in some or all of these markets may not meet our expectations,or materialize at all.Themethodology on which our estimate of our total potential market opportuni

199、ty is based includes several key assumptions based on our industry knowledge and customer experience.Ifany of these assumptions proves to be inaccurate,then the actual market for our solutions could be significantly smaller than our estimates of our total potential market opportunity.Ifthe customer

200、demand for our products or services or the adoption rate in our target markets does not meet our expectations,our ability to generate revenue from customers and meetour financial targets could be adversely affected.Substantial competition could reduce our market share and significantly harm our fina

201、ncial performance.14Table of ContentsThe markets in which we operate are highly competitive,with relatively low barriers to entry for some software,product or service organizations.Some customers may behesitant to switch vendors or to adopt cloud-based software such as ours and prefer to maintain th

202、eir existing relationships.Some of our competitors are larger and have greater namerecognition,much longer operating histories,larger marketing budgets and significantly greater resources than we do.We also face competition from custom-built software vendorsand from vendors of specific applications,

203、some of which offer cloud-based solutions.We may also face competition from a variety of vendors of software and products that addressonly a portion of our platform.In addition,other companies that provide cloud-based software in different target markets may develop software or acquire companies tha

204、t operate inour target markets,and some potential customers may elect to develop their own internal software.With the introduction of new technologies and market entrants,we expect thiscompetition to intensify in the future.Many of our competitors are able to devote greater resources to the developm

205、ent,promotion and sale of their products and services.Furthermore,our current or potentialcompetitors may be acquired by third parties with greater available resources and the ability to initiate or withstand substantial price competition.In addition,many of our competitorshave established marketing

206、 relationships,access to larger customer bases and major distribution agreements with consultants,system integrators and resellers.Our competitors mayalso establish cooperative relationships among themselves or with third parties that may further enhance their product offerings or resources.If our t

207、echnology,products and servicesdo not become more accepted relative to those of our competitors,or if our competitors are successful in bringing their products or services to market earlier than ours,or if theproducts or services of our competitors are more technologically capable than ours,then our

208、 revenues could be adversely affected.In addition,some of our competitors may offer theirproducts and services at lower prices.If we are unable to achieve our target pricing levels,our operating results may be negatively affected.Pricing pressures and increasedcompetition could result in reduced sal

209、es,reduced margins,losses or a failure to maintain or improve our competitive market position,any of which could adversely affect ourbusiness.Our future results will depend on our ability to continue to focus our resources and manage costs effectively.We are continually focusing on measures intended

210、 to further improve cost efficiency.We may be unable to realize all expected cost savings in connection with these effortswithin the expected time frame,or at all,and we may incur additional and/or unexpected costs to realize them.Further,we may not be able to sustain any achieved savings in thefutu

211、re.Future results will depend on the success of these efforts.If we are unable to control costs,our operating margins could decrease and we may incur additional losses.Our future profitability will depend on our ability to manage costsor increase productivity.An inability to effectively manage costs

212、 could adversely impact our business,results of operations or financial condition.Our profitability could suffer if we are not able to manage large and complex projects and complete fixed price,fixed timeframe contracts on budget and on time.Our profitability and operating results are dependent on t

213、he scale of our projects and the prices we are able to charge for our technology,products and services.We perform asignificant portion of our work through fixed price contracts,in which we assume full control of the project team and manage all facets of execution.As a significant portion of ourproje

214、cts are on a fixed price model,we may be unable to accurately estimate the appropriate project price and successfully manage such projects.Although we use specified technicalprocesses and our past experience to reduce the risks associated with estimating,planning and performing fixed price and fixed

215、 timeframe projects,we face the risk of cost overruns,completion delays and wage inflation in connection with these projects.If we fail to accurately estimate the resources or time required for a project or future rates of wage inflation,orif we fail to perform contractual obligations within the con

216、tractual timeframe,our profitability could suffer.15Table of ContentsThe challenges of managing larger and more complex projects include:maintaining high quality control and process execution standards;maintaining planned resource utilization rates on a consistent basis;maintaining productivity leve

217、ls and implementing necessary process improvements;controlling project costs;maintaining close customer contact and high levels of customer satisfaction;recruiting and retaining sufficient numbers of skilled engineering,design and program management professionals;andmaintaining effective customer re

218、lationships.In addition,large and complex projects may involve multiple engagements or stages and there is a risk that a customer may choose not to retain us for additional stages or maycancel or delay additional planned engagements.Such cancellations or delays may make it difficult to plan our proj

219、ect resource requirements and may result in lower profitabilitylevels than we anticipated upon commencing engagements.Our business strategy is evolving.Investments in new services and technologies may not be successful and may involve pursuing new lines of business or strategic transactionsand inves

220、tments,or dispositions of assets or businesses that may no longer help us meet our objectives.Such efforts may not be successful.We continue to invest in new services and technologies,including adding additional vertical solutions to our product offerings and blockchain.The complexity of thesesoluti

221、ons,our learning curve in developing and supporting them and significant competition in the markets for these solutions could make it difficult for us to market and implementthese solutions successfully.Additionally,there is a risk that our customers may not adopt these solutions widely,which could

222、prevent us from realizing expected returns on theseinvestments.Even if these solutions are successful in the market,they may rely on third-party technology,software,services and our ability to meet stringent service levels.If we areunable to deploy these solutions successfully or profitably,it could

223、 adversely impact our business,results of operations or financial condition.Our industry is undergoing significant change and our business strategy is continuing to evolve to meet these changes.In order to profitably grow our business,we may needto expand into new lines of business beyond our curren

224、t focus of mobile engagement analytics products,mobile application advertising and services,which may involve pursuingstrategic transactions,including potential acquisitions of,or investments in,related or unrelated businesses and assets.In addition,we may seek divestitures of existing businesses or

225、assets.There can be no assurance that we will be successful with our efforts to evolve our business strategy and we could suffer significant losses as a result,which could have amaterial adverse effect on our business,financial condition and results of operations.If we decide to sell assets or a bus

226、iness,we may encounter difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner,which could delaythe achievement of our strategic objectives.We may also dispose of assets or a business at a price or on terms that are less desirable than we had anticipated.In

227、 addition,we mayexperience greater dis-synergies than expected and the impact of the divestiture on our revenue may be larger than projected.16Table of ContentsFuture acquisitions could disrupt our business and may divert managements attention and,if unsuccessful,harm our business.We may choose to e

228、xpand by making additional acquisitions that could be material to our business.We have in the past made several acquisitions of complementarybusinesses,including acquisitions of Odyssey,Simplikate,Digby,Tapit!,GoTV and Lyte.Acquisitions involve many risks,including the following:an acquisition may n

229、egatively affect our results of operations and financial condition because it may require us to incur charges or assume substantialdebt or other liabilities,may cause adverse tax consequences or unfavorable accounting treatment,may expose us to claims and disputes by third parties,including intellec

230、tual property claims and disputes,or may not generate sufficient financial return to offset additional costs and expenses related to theacquisition;we may encounter difficulties or unforeseen expenditures in integrating the business,technologies,products,personnel,or operations of any companythat we

231、 acquire,particularly if key personnel of the acquired company decide not to work for us;an acquisition may disrupt our ongoing business,divert resources,increase our expenses,or distract our management;an acquisition may result in a delay or reduction of customer purchases for both us and the compa

232、ny we acquired due to customer uncertainty aboutcontinuity and effectiveness of service from either company;we may encounter difficulties in,or may be unable to,successfully sell any acquired technology,products or services;an acquisition may involve the entry into geographic or business markets in

233、which we have little or no prior experience or where competitors havestronger market positions;the challenges inherent in effectively managing an increased number of employees in diverse locations;the potential strain on our financial and managerial controls and reporting systems and procedures;the

234、potential known and unknown liabilities associated with an acquired company;our use of cash to pay for acquisitions would limit other potential uses for our cash;if we incur additional debt to fund such acquisitions,such debt may subject us to additional material restrictions on our ability to condu

235、ct our business aswell as additional financial maintenance covenants;the risk of impairment charges related to potential write-downs of acquired assets or goodwill in future acquisitions;to the extent that we issue a significant amount of equity or equity linked securities in connection with future

236、acquisitions,existing stockholders may bediluted and earnings per share may decrease;andmanaging the varying intellectual property protection strategies and other activities of an acquired company.We may not succeed in addressing these or other risks or any other problems encountered in connection w

237、ith the integration of any acquired business.The inability tointegrate successfully the business,technologies,products,services,personnel or operations of any acquired business,or any significant delay in achieving integration,could harm ourbusiness,results of operations or financial condition.We ma

238、y not be able to recognize revenue in the period in which our services are performed,which may cause our margins to fluctuate.Our services are performed under both fixed-price and time and material contract arrangements.All revenue is recognized pursuant to applicable accounting standards.Ourfailure

239、 to meet all the obligations,or otherwise meet a customers17Table of Contentsexpectations,may result in us having to record the cost related to the performance of services in the period that services were rendered,but delay the timing of revenue recognition to afuture period in which all service obl

240、igations have been met.Our financial results may be adversely affected by changes in accounting principles applicable to us.U.S.generally accepted accounting principles(“GAAP”)are subject to interpretation by the Financial Accounting Standards Board(“FASB”),the SEC,and other variousbodies formed to

241、promulgate and interpret appropriate accounting principles.A change in these principles or interpretations could have a significant effect on our reported financialresults for periods prior and subsequent to such change.We may adopt changes in accounting standards retrospectively to prior periods an

242、d the adoption may result in an adversechange to previously reported results.To adopt new standards,we may have to implement new modules in our accounting system,hire consultants and increase our spending on audit fees,thereby increasing ourgeneral and administrative expense.Any difficulties in impl

243、ementing changes in accounting standards or adequately accounting after adoption could cause us to fail to meet ourfinancial reporting obligations,which could result in regulatory discipline and harm investors confidence in us.18Table of ContentsWe may experience quarterly fluctuations in our operat

244、ing results due to a number of factors,which makes our future results difficult to predict and could cause our operatingresults to fall below expectations.Our quarterly operating results have fluctuated in the past and we expect them to fluctuate in the future due to a variety of factors,many of whi

245、ch are outside of our control.As a result,our past results may not be indicative of our future performance and comparing our operating results on a period-to-period basis may not be meaningful.In addition to theother risks described herein,factors that may affect our quarterly operating results incl

246、ude:the amount and timing of completion of application development services and other service-related engagements;changes in spending on subscriptions,services and application transactions media offerings and services by our current or prospective customers;pricing our technology,products,and servic

247、es 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 o

248、f 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 technologiesand technology enhancements;our ability

249、 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 networkinfrastructure and privacy and data security;customer delays in purchasing decisions in anticipation of

250、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 s

251、ales and marketing expenses(includingmarketing 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

252、 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;unforeseen costs and ex

253、penses related to the expansion of our business,operations and infrastructure;changes in the levels of our capital expenditures;foreign currency exchange rate fluctuations;andgeneral economic and political conditions.We may not be able to accurately forecast the amount and mix of future technology,p

254、roducts and services,size or duration of contracts,revenue and expenses and,as a result,our operating results may fall below our estimates.19Table of ContentsWe could be held liable for damages or our reputation could suffer from security breaches or disclosure of confidential information or persona

255、l data.We are also dependent on technology networks and systems to process,transmit and securely store electronic information and to communicate among our locations and withour customers.Security breaches of this infrastructure could lead to shutdowns or disruptions of our systems and potential loss

256、 or unauthorized disclosure of confidential informationor data,including personal data.In addition,many of our engagements involve projects that are critical to the operations of our customers businesses.The theft and/or unauthorizeduse or publication of our,or our customers,confidential information

257、 or other proprietary business information as a result of such an incident could adversely affect our competitiveposition and reduce marketplace acceptance of our products and services.Any failure in the networks or computer systems used by us or our customers could result in a claim forsubstantial

258、damages against us and significant reputational harm,regardless of our responsibility for the failure.In addition,we often have access to or are required to manage,utilize,collect and store sensitive or confidential customer or employee data,including personal data.As aresult,we are subject to numer

259、ous U.S.and non-U.S.laws and regulations designed to protect this information,such as the European Unions GDPR and various U.S.federal and statelaws governing the protection of personal data.If any person,including any of our employees,negligently disregards or intentionally breaches controls or pro

260、cedures with which weare responsible for complying with respect to such data,or otherwise mismanages or misappropriates that data,or if unauthorized access to or disclosure of data in our possession orcontrol occurs,we could be subject to liability and penalties in connection with any violation of a

261、pplicable privacy laws and/or criminal prosecution,as well as significant liability toour customers or our customers clients for breaching contractual confidentiality and security provisions or privacy laws.These risks will increase as we continue to grow our cloud-based product offerings and servic

262、es and store and process increasingly large amounts of our customers confidential information and data and host or manage parts of our customersbusinesses,especially in industries involving particularly sensitive data such as the healthcare industry which we serve.The loss or unauthorized disclosure

263、 of sensitive or confidentialcustomer or employee data,including personal data,whether through breach of computer systems,systems failure,employee negligence,fraud or misappropriation,or otherwise,could damage our reputation and cause us to lose customers.Similarly,unauthorized access to or through

264、our information systems and networks or those we develop or manage for ourcustomers,whether by our employees or third parties,could result in negative publicity,legal liability and damage to our reputation,which could in turn harm our business,results ofoperations,or financial condition.If we cause

265、disruptions in our customers businesses or provide inadequate service,our customers may have claims for substantial damages against us,which could cause us tolose customers,have a negative effect on our corporate reputation and adversely affect our results of operations.If we make errors in the cour

266、se of delivering services to our customers or fail to consistently meet our service-level obligations to or other service requirements of ourcustomers,such errors or failures could disrupt our customers business,which could result in a reduction in our revenue or a claim for substantial damages agai

267、nst us.In addition,afailure or inability by us to meet a contractual requirement could subject us to penalties,cause us to lose customers or damage our brand or corporate reputation and limit our ability toattract new business.The services we provide are often critical to our customers businesses.Ce

268、rtain of our customer contracts require us to comply with security obligations including maintainingnetwork security and backup data,ensuring our network is virus free,maintaining business continuity planning procedures and ensuring our employees conduct their job functions witha high level of integ

269、rity.Any failure in a customers system,failure of our data center,cloud or other offerings,or breach of security relating to the services we provide to a customercould damage our reputation or result in a claim for substantial damages against us.Any significant failure of our equipment or systems,or

270、 any major disruption to basic infrastructurein the locations in which we operate,such as power and telecommunications,could impede our ability to provide services to our customers,have a negative impact on our reputation,cause us to lose customers and adversely affect our results of operations.Unde

271、r our customer contracts,our liability for breach of our obligations is in some cases limited pursuant to the terms of the contract.Such limitations may be unenforceableor otherwise may not protect us from liability for damages.In addition,certain liabilities,such as claims of third parties for whic

272、h we may be required to indemnify our customers,aregenerally not limited under our contracts.The successful assertion of one or more large claims against us in amounts greater than those covered by our current insurance policies couldharm our business,results of operations,or financial condition.Eve

273、n if such assertions against us are unsuccessful,we may incur reputational harm and substantial legal fees.Our technology offerings and services could infringe upon the intellectual property rights of others or we might lose our ability to use intellectual property of others.20Table of ContentsWe ca

274、nnot be sure that our brand,software solution and products and services do not infringe upon the intellectual property rights of third parties,who could claim that we orour customers are infringing upon their intellectual property rights.These claims could harm our reputation,cause us to incur subst

275、antial costs or prevent us from offering someproducts or services in the future,or require us to rebrand.Any related proceedings could require us to expend significant resources over an extended period of time.In most of ourcontracts,we agree to indemnify our customers for expenses and liabilities r

276、esulting from claimed infringements of the intellectual property rights of third parties.In some instances,the amount of these indemnities could be greater than the revenue we receive from the customer.Any claims or litigation in this area,regardless of merit,could be time-consuming andcostly,damage

277、 our reputation,and/or require us to incur additional costs to obtain the right to continue to offer a product,service or solution to our customers.If we cannot secure thisright at all or on reasonable terms,or,alternatively,substitute a non-infringing technology,our business,results of operations,o

278、r financial condition could be harmed.Similarly,if weare unsuccessful in defending a trademark claim,we could be forced to re-brand,which could harm our business,results of operations or financial condition.Additionally,in recentyears,individuals and firms have purchased intellectual property assets

279、 where their sole or primary purpose is to assert claims of infringement against technology providers andcustomers that use such technology.Any such action naming us or our customers could be costly to defend or lead to an expensive settlement or judgment against us.Moreover,suchan action could resu

280、lt in an injunction being ordered against our customer or our own services or operations,causing further damages.If we are unable to protect our intellectual property rights from unauthorized use or infringement by third parties,our business could be adversely affected.Our success depends,in part,up

281、on our ability to protect our proprietary methodologies and other intellectual property.Existing laws offer only limited protection of ourintellectual property rights and the protection in some countries in which we operate or may operate in the future may be very limited.We rely upon a combination

282、of confidentialitypolicies,nondisclosure and other contractual arrangements and trade secret,copyright and trademark laws to protect our intellectual property rights.These laws are subject to change atany time and could further limit our ability to protect our intellectual property.There is uncertai

283、nty concerning the scope of available intellectual property protection for software andbusiness methods,which are fields in which we rely on intellectual property laws to protect our rights.The validity and enforceability of any intellectual property rights we obtain maybe challenged by others and,t

284、o the extent we have enforceable intellectual property rights,those intellectual property rights may not prevent competitors from reverse engineering ourproprietary information or independently developing technology,products and services similar to or duplicative of us.Further,the steps we take in t

285、his regard might not be adequate toprevent or deter infringement or other misappropriation of our intellectual property by competitors,former employees or other third parties and we might not be able to detectunauthorized use of,or take appropriate and timely steps to enforce,our intellectual proper

286、ty rights.Enforcing our intellectual property rights might also require considerable time,money and oversight and we may not be successful in enforcing our rights.If we are unable to collect our receivables from,or bill our unbilled services to,our customers,our business,results of operations or fin

287、ancial condition could be adverselyaffected.Our business depends on our ability to successfully obtain payment from our customers of the amounts they owe us for products sold or services performed.We typicallyevaluate the financial condition of our customers and usually bill and collect on relativel

288、y short cycles.We maintain allowances against receivables and unbilled services for which webelieve collection is doubtful.Actual losses on customer balances could differ from those that we currently anticipate and,as a result,we might need to adjust our allowances.There isno guarantee that we will

289、accurately assess the creditworthiness of our customers.Macroeconomic conditions could also result in financial difficulties for our customers,includinglimited access to the credit markets,insolvency,or bankruptcy,and,as a result,could cause customers to delay payments to us,request modifications to

290、 their payment arrangementsthat could increase our receivables balance,or default on their payment obligations to us.Timely collection of customer balances also depends on our ability to perform obligations tocustomers and bill and collect our contracted revenue.If we are unable to meet our contract

291、ual requirements,we might experience delays in collection of and/or be unable to collectour customer balances and if this occurs,our business,results of operations,or financial condition could be adversely affected.In addition,if we experience an increase in the time tobill and collect for our servi

292、ces,our cash flows could be adversely affected.Increased costs of labor and employee health and welfare benefits may adversely impact our results of operations.Labor related costs represent a significant portion of our expenses and we have experienced increases compensation related expenses.Addition

293、al increases in labor costs,forexample,as a result of increased competition for skilled labor,or employee benefit costs,such as healthcare costs or otherwise,could further impact our business,results of operationsor financial condition.21Table of ContentsOur global operations are subject to complex

294、risks,some of which might be beyond our control.Although international revenue currently represents a small portion of our revenue,our business from outside of the United States may expand in the future as we expand ourinternational presence,including but not limited to our subscription,application

295、transaction,services and digital asset offerings.As a result,we may be subject to risks inherentlyassociated with international operations,including risks associated with foreign currency exchange rate fluctuations,difficulties in enforcing intellectual property and/or contractualrights,the burdens

296、of complying with a wide variety of foreign laws and regulations,potentially adverse tax consequences,tariffs,quotas and other barriers,potential difficulties incollecting accounts receivable,international hostilities,terrorism and natural disasters.Expansion of international operations also increas

297、es the likelihood of potential or actualviolations of domestic and international anti-corruption laws,such as the Foreign Corrupt Practices Act,or of U.S.and international export control and sanctions regulations.We mayalso face difficulties integrating any new facilities in different countries into

298、 our existing operations,as well as integrating employees that we hire in different countries into ourexisting corporate culture.If we are unable to manage the risks of our global operations,our business,results of operations,or financial condition could be adversely affected.Economic uncertainties

299、or downturns in the global economy or the industries in which our customers operate could disproportionately affect the demand for our products andservices solutions and negatively impact our operating results.Global economic conditions could experience a significant downturn causing market volatili

300、ty widespread uncertainty.As a result,we and our customers could find itextremely difficult to accurately forecast and plan future business activities.In addition,these conditions could cause our customers or prospective customers to reduce theirinformation technology and other budgets,which could d

301、ecrease corporate and individual spending on our product and service offerings,resulting in delayed and lengthened salescycles,a decrease in new customer acquisition and/or loss of customers.Furthermore,during challenging economic times,our customers may face issues with their cash flows andwith gai

302、ning timely access to sufficient credit or obtaining credit on reasonable terms,which could impair their ability to make timely payments to us,impact customer renewal ratesand adversely affect our revenue.If such conditions occur,we may be required to increase our reserves,allowances for doubtful ac

303、counts and write-offs of accounts receivable and ouroperating results would be harmed.In addition,a downturn in the technology-related spend by our customers may disproportionately affect us.We cannot predict the timing,strengthor duration of any economic slowdown or recovery,whether global,regional

304、 or within specific markets.If the conditions of the global economy or markets in which we operateworsen,our business could be harmed.In addition,even if the global economy does not worsen or improves,the market for product and service offerings may not experience growthor we may not experience grow

305、th.If platform subscription renewal rates decrease,or we do not accurately predict subscription renewal rates,our future revenue and operating results may be harmed.Our customers have no obligation to renew their subscriptions for our solutions after the expiration of their subscription period,which

306、 generally ranges from one to threeyears.In addition,our customers may renew for lower subscription amounts or for shorter contract lengths.We may not accurately predict renewal rates for our customers.Ourrenewal rates may decline or fluctuate as a result of a number of factors,including customer us

307、age,pricing changes,number of applications used by our customers,customersatisfaction with our service,increased competition,the acquisition of our customers by other companies and deteriorating general economic conditions.If our customers do not renewtheir subscriptions for our solutions or decreas

308、e the amount they spend with us,our revenue will decline and our business will suffer.If we are unable to attract new customers or sell additional products or services to our existing customers,our revenue growth will be adversely affected.To increase our revenue,we must add new customers,encourage

309、existing customers to renew their subscriptions on terms favorable to us,increase their usage of our solutionsand sell additional products,services and functionality to existing customers.As our industry matures,as interactive channels develop further,or as competitors introduce lower costand/or dif

310、ferentiated products or services that are perceived to compete with ours,our ability to sell and renew based on pricing,technology and functionality could be impaired.Inaddition,attracting,retaining and growing our relationship with customers may require us to effectively employ different strategies

311、 than we have historically used with currentcustomers and we may face challenges in doing so.As a result,we may be unable to renew our agreements with existing customers or attract new customers or new business fromexisting customers on terms that would be favorable or comparable to prior periods,wh

312、ich could have an adverse effect on our revenue and growth.22Table of ContentsBecause we recognize revenue from application development services as deliverables are transferred to customers and platform subscriptions over the term of the relevantcontract,downturns or upturns in sales are not immedia

313、tely reflected in full in our operating results.We recognize revenue related to application development services upon the transfer of control to the customer of those services.We recognize software subscription revenueover the term of each of our contracts,which,generally ranges from one to three ye

314、ars.As a result,much of the revenue we report each quarter results from contracts entered intoduring previous quarters.Consequently,a shortfall in demand for our professional services and software solutions or a decline in new,expanded or renewed contracts in any onequarter may not significantly red

315、uce our revenue for that quarter but could negatively affect our revenue in the future.Accordingly,the effect of significant downturns in new orexpanded sales or renewals of our professional services or software license solutions will not be reflected in full in our operating results until future pe

316、riods.Our revenue recognitionmodel also makes it difficult for us to rapidly increase our revenue through additional sales in any period.If we fail to forecast our revenue accurately,or if we fail to match our expenditures with corresponding revenue,our operating results could be adversely affected.

317、The lengthy sales cycle for the evaluation and implementation of our platform software and service solutions,which typically extends for several months,may cause us toexperience a delay between increasing operating expenses for such sales efforts,and,upon successful sales,the generation of correspon

318、ding revenue.Accordingly,we may be unableto prepare accurate internal financial forecasts or replace anticipated revenue that we do not receive as a result of delays arising from these factors.As a result,our operating results infuture reporting periods may be significantly below the expectations of

319、 the public market,equity research analysts or investors,which could harm the price of our common stock.The length and unpredictability of the sales cycle for our technology,products and services could delay new sales and cause our revenue and cash flows for any given quarter tofail to meet our proj

320、ections or market expectations.The sales cycle between our initial contact with a potential customer and the signing of a contract to provide technology,products and services varies.As a result of the lengthand unpredictability of the sales cycle,we have a limited ability to forecast the timing of s

321、ales.A delay in or failure to complete transactions could harm our business and financialresults and could cause our financial results to vary significantly from quarter to quarter.Our sales cycle varies widely,reflecting differences in our potential customers decision-making processes,procurement r

322、equirements and budget cycles and is subject to significant risks over which we have little or no control,including:our customers budgetary constraints and priorities;the timing of our customers budget cycles;the impact of the COVID-19 pandemic and related disruptions on our customers;andthe length

323、and timing of customers approval processes.If we fail to detect advertising fraud or other actions that impact our advertising campaign performance,we could harm our reputation with advertisers or agencies,which couldcause our revenue and business to suffer.Our advertising business relies on our abi

324、lity to deliver successful and effective advertising campaigns.Some of those campaigns may experience fraudulent and other invalidimpressions,clicks or conversions that advertisers may perceive as undesirable,such as non-human traffic generated by machines that are designed to simulate human users a

325、ndartificially inflate user traffic on websites.These activities could overstate the performance of any given advertising campaign and could harm our reputation.It may be difficult for usto detect advertising-related fraud and other malicious activity because we do not own content and rely in part o

326、n our digital media partners to control such activity.These risks becomemore pronounced as the digital video industry shifts to programmatic buying.Both governmental and industry self-regulatory bodies have increased their scrutiny and awareness ofand have taken recent actions to address advertising

327、-related fraud and other malicious activity.While we routinely review the campaign performance,such reviews may not detect orprevent advertising-related fraud or malicious activity.If we fail to detect or prevent fraud or other malicious activity,the affected advertisers may experience or perceive a

328、 reducedreturn on their investment and our reputation may be harmed.High levels of fraud or malicious activity could lead to dissatisfaction with our solutions,refusals to pay,prompt refundor future credit demands or withdrawal of future business.In addition,advertisers increasingly rely on third pa

329、rty vendors to measure campaigns against audience guarantee,viewability and other requirements and to detect fraud.If we are unable to successfully integrate our technology with such vendors,or our measurement and fraud detection differsfrom their findings,our customers could lose confidence in our

330、solutions,we may not get paid for certain campaigns and our revenues could decrease.If we fail to detect fraud or other23Table of Contentsmalicious activities that impact the performance of our brand advertising campaigns,we could harm our reputation with our advertisers or agencies and our revenue

331、and business couldsuffer.Further,if advertisers demand fraud-free inventory,our supply could fall drastically,making it impossible to sustain our current business model.If we do not maintain and grow a critical mass of advertisers and distribution partners,the value of our services could be adversel

332、y affected.Our success depends,in large part,on the maintenance and growth of a critical mass of advertisers and distribution partners.Advertisers will generally seek the mostcompetitive return on investment from advertising and marketing services.Distribution partners will also seek the most favora

333、ble payment terms available in the market.Advertisersand distribution partners may change providers or the volume of business with a provider,unless the product and terms are competitive.In this environment,we must compete toacquire and maintain our network of advertisers and distribution partners.If our business is unable to maintain and grow our base of advertisers,our current distribution partn