Phunware Inc (PHUN)

[candeloro]

Lets see what happened:

1st take away. The company wanted to exercise warrants vs cash.
Most of the warrants that you could/can buy at the open market allow you to buy a share for 11.50 US$

Lets say you bought 1 warrant at 50 Cents.

At the point in time when the warrant can be exercised lets imagine the stock is at 20 US$

Would you exercise the warrant?
Sure, you would hand over your warrant that you bought for 50 Cent, plus 11.50 US$ in cash and with that total payment of 12 US$ you get a share worth 20 US$ at the stock market.

The company would get the 11.50 US$

If the stockprice is under 11.50 US$ you would not exercise the warrant because you could buy the share cheaper at the stock market.


Now 2.9 million warrants were converted to shares without a cash payment to the company.
This means that the company in return for the dilution was expecting cash and as S1 shows most of the warrants should have been converted at a cash premium of 11.50 US$

As the exchanged happend without cash (due to the missed deadline) the company "lost" (did not get) at maximum 2.9 million x 11.50US$ = 33.35 million US$.

That number is roughly the same as the whole revenue of last fiscal year. You can make up your own decision of how hard it is for the company to "lose" a years revenue.


The dilution as per the numbers "old S1" vs "new S1" is 9.4% as you figured out yourself.

As you correctly said that should mean the valuation between Monday close price (new S1 not known) and Tuesday (new S1 known) should go down by 9.4%

Price per share went down 8.35% at the stock market, which is reflecting the dilution