I Disbelieve…a Quick Update on PHUNW

Originally published January 17, 2019

Did you ever play Dungeons & Dragons? Raise your hands geeks.

I admit I played quite a bit in college. I spent one long 3 day weekend playing almost non-stop. Not a proud moment.

If you have played the game you’ll remember there was a “disbelieve” option whenever a character in the game cast a spell or did something unwanted to your character.

So if  a dragon suddenly appeared, you could tell the dungeon master (the guy running the game for you non-D&Ders) that you “disbelieve”, and if it was a spell there was a chance (roll the dice) that your character saw through the spell and knew there was really no dragon there.

So, Phunware warrants. Is there a dragon there or not?

Here is a brief update on what I’ve learned in the past few days about the warrants. I’ll put out something longer in a day or two detailing how I think this will play out, but wanted to update anyone who read my post from a few days ago.

First, the CFO of Phunware, Matt Aune, did get back to me. (At 11 pm at night no less, thanks Matt!) He seemed to confirm that the warrants are exercisable at $11.50 and that they give you one share of PHUN, which was my understanding from going through the SEC filing.

Second, he said they need to file a registration statement with the SEC so the shares (issued upon warrant exercise) are available to trade. I don’t foresee any issue with filing the registration statement from what I’ve read. So, both good signs for warrant holders. Matt also sent along a link to a new investor relations FAQ on the Phunware site: https://investors.phunware.com/resources/faqs/

This gives me more confidence that the warrants are extremely undervalued. While there is still a risk that a wrench will be thrown into the machine, a 5 year warrant, exercisable (once the registration statement is filed) for one share of common at $11.50, should not be trading for $.50 when the stock is trading in the $130s.

From my experience, the stock will definitely be impacted by the warrant registration, but I’ll detail out what I think that will look like in my next post. For now, I used “disbelieve” today and rolled the dice by buying a few more warrants.

Let me know if you have any questions in the comments below. Happy to discuss. This is an interesting one.

BTW, I’m psyched to have kicked off The Warrant Observer today. We’d love to have you.