Phunware notifies Nasdaq of audit committee non-compliance after executive change

Phunware, Inc. (NASDAQ:PHUN) notified The Nasdaq Stock Market on Thursday that it is not in compliance with Nasdaq’s audit committee requirements following a recent executive appointment, according to a statement issued in a press release and detailed in a filing with the Securities and Exchange Commission.

The company reported that Rahul Mewawalla resigned from its audit committee after being appointed Executive Chairman and Chief Artificial Intelligence Architect on July 13. Nasdaq Listing Rule 5605 requires listed companies to maintain an audit committee with at least three independent members. With Mr. Mewawalla’s resignation, Phunware’s audit committee now consists of two members, Elliot Han and Quyen Du, both of whom are considered independent under Nasdaq rules.

Mr. Mewawalla had also served as the committee’s “audit committee financial expert,” a role defined by the SEC and Nasdaq as requiring financial sophistication. The company stated that it has not yet determined if either Mr. Han or Ms. Du meets the criteria for this designation.

Phunware indicated that it is reviewing options to regain compliance with Nasdaq’s audit committee requirements within the cure period provided by the exchange but noted there is no assurance of regaining compliance or maintaining adherence to other Nasdaq listing standards.

The information is based on a press release statement and a Form 8-K filing with the SEC.

In other recent news, Phunware, Inc. reported its first-quarter financial results for 2025, revealing a revenue of $0.7 million, which marks a slight increase from the previous quarter. The company has also secured a $0.5 million booking with a healthcare facility and acquired three new hospitality customers. Additionally, Phunware announced a leadership change with Jeremy Krol appointed as Interim CEO and Rahul Mewawalla as Executive Chairman and Chief AI Architect. Ascendiant Capital has raised its price target for Phunware stock to $12.50, maintaining a Buy rating due to the stock’s attractive valuation. In contrast, H.C. Wainwright maintained a Neutral rating with a $3.00 price target. Phunware’s 2024 Annual Meeting of Stockholders resulted in the election of Quyen Du as a Class III director and the ratification of the company’s accounting firm. The company plans to launch an AI Personal Concierge product in mid-2025 and is focusing on expanding its customer base in the hospitality sector. Phunware holds approximately $110 million in available cash, which is expected to support mergers and acquisitions to boost revenue growth.

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