RBT Rubicon Technologies Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

OR

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number 001-40910

 

Rubicon Technologies, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware		88-3703651
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification Number)
335 Madison Avenue, 4th Floor
New York, NY		10017
(Address of Principal Executive Offices)		(Zip Code)

 

(844) 479-1507

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A common stock, par value $0.0001 per share		RBT		New York Stock Exchange

 

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 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject 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 of this chapter) during the preceding 12 months (or for such shorter period 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. See the definitions of “large accelerated filer,” “accelerated filer,” “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 use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

 

As of November 13, 2023, 37,419,939 shares of Class A Common Stock, par value $0.0001 per share, and 4,425,388 shares of Class V Common Stock, par value $0.0001 per share, were issued and outstanding.

 

 

 

Table of Contents

 

		Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements		1
Item 2. Management’s Discussion and Analysis of Financial Condition and Result of Operations		40
Item 3. Quantitative and Qualitative Disclosures About Market Risk		64
Item 4. Controls and Procedures		64
PART II - OTHER INFORMATION
Item 1. Legal Proceedings		65
Item 1A. Risk Factors		65
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		66
Item 3. Defaults Upon Senior Securities		66
Item 4. Mine Safety Disclosures		66
Item 5. Other Information		66
Item 6. Exhibits		67
Signatures		68

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

RUBICON TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

 

		September 30, 2023				December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents		$	13,433			$	10,079
Accounts receivable, net			59,600				65,923
Contract assets			68,629				55,184
Prepaid expenses			19,532				10,466
Other current assets			4,168				2,109
Related-party notes receivable			-				7,020
Total Current Assets			165,362				150,781
Property and equipment, net			1,633				2,644
Operating right-of-use assets			792				2,827
Other noncurrent assets			2,043				4,764
Goodwill			32,132				32,132
Intangible assets, net			8,465				10,881
Total Assets		$	210,427			$	204,029
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current Liabilities:
Accounts payable		$	52,965			$	75,113
Line of credit			65,477				51,823
Accrued expenses			83,666				108,002
Contract liabilities			6,524				5,888
Operating lease liabilities, current			925				1,880
Warrant liabilities			26,502				20,890
Derivative liabilities			8,428				-
Debt obligations, net of deferred debt charges			-				3,771
Total Current Liabilities			244,487				267,367
Long-Term Liabilities:
Deferred income taxes			239				217
Operating lease liabilities, noncurrent			60				1,826
Debt obligations, net of deferred debt charges			76,818				69,458
Related-party debt obligations, net of deferred debt charges			15,794				10,597
Derivative liabilities			5,536				826
Earn-out liabilities			160				5,600
Other long-term liabilities			-				2,590
Total Long-Term Liabilities			98,607				91,114
Total Liabilities			343,094				358,481
Commitments and Contingencies (Note 16)
Stockholders’ (Deficit) Equity:
Common stock – Class A, par value of $0.0001 per share, 690,000,000 shares authorized, 34,803,951 and 6,985,869 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively			3				1
Common stock – Class V, par value of $0.0001 per share, 275,000,000 shares authorized, 4,425,388 and 14,432,992 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively			-				1
Preferred stock – par value of $0.0001 per share, 10,000,000 shares authorized, 0 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively			-				-
Additional paid-in capital			118,884				34,659
Accumulated deficit			(381,845	)			(337,860	)
Total stockholders’ deficit attributable to Rubicon Technologies, Inc.			(262,958	)			(303,199	)
Noncontrolling interests			130,291				148,747
Total Stockholders’ Deficit			(132,667	)			(154,452	)
Total Liabilities and Stockholders’ (Deficit) Equity		$	210,427			$	204,029

 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

 

 

RUBICON TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
Revenue:
Service		$	159,119			$	162,789			$	486,125			$	437,755
Recyclable commodity			12,138				22,194				40,794				71,640
Total revenue			171,257				184,983				526,919				509,395
Costs and Expenses:
Cost of revenue (exclusive of amortization and depreciation):
Service			147,018				157,504				455,213				423,382
Recyclable commodity			10,272				20,234				35,427				65,856
Total cost of revenue (exclusive of amortization and depreciation)			157,290				177,738				490,640				489,238
Sales and marketing			2,903				4,840				8,924				13,336
Product development			8,309				9,803				23,625				28,336
General and administrative			13,803				186,640				45,882				212,520
Gain on settlement of incentive compensation			-				-				(18,622	)			-
Amortization and depreciation			1,277				1,439				3,982				4,331
Total Costs and Expenses			183,582				380,460				554,431				747,761
Loss from Operations			(12,325	)			(195,477	)			(27,512	)			(238,366	)
Other Income (Expense):
Interest earned			5				1				11				1
Gain (loss) on change in fair value of warrant liabilities			3,354				74				2,885				(436	)
Gain on change in fair value of earnout liabilities			150				67,100				5,440				67,100
Loss on change in fair value of derivatives			(1,245	)			(76,919	)			(3,778	)			(76,919	)
Excess fair value over the consideration received for SAFE			-				-				-				(800	)
Gain on service fee settlements in connection with the Mergers			-				-				6,996				-
Loss on extinguishment of debt obligations			(9,348	)			-				(18,234	)			-
Interest expense			(9,179	)			(4,578	)			(24,474	)			(12,264	)
Related party interest expense			(453	)			-				(1,707	)			-
Other expense			(1,116	)			(1,307	)			(2,019	)			(1,994	)
Total Other Income (Expense)			(17,832	)			(15,629	)			(34,880	)			(25,312	)
Loss Before Income Taxes			(30,157	)			(211,106	)			(62,392	)			(263,678	)
Income tax expense			16				19				49				60
Net Loss		$	(30,173	)		$	(211,125	)		$	(62,441	)		$	(263,738	)
Net loss attributable to Holdings LLC unitholders prior to the Mergers			-				(176,384	)			-				(228,997	)
Net loss attributable to noncontrolling interests			(2,519	)			(16,933	)			(18,456	)			(16,933	)
Net Loss Attributable to Class A Common Stockholders		$	(27,654	)		$	(17,808	)		$	(43,985	)		$	(17,808	)
Net loss per Class A Common share – basic and diluted		$	(0.85	)		$	(2.93	)		$	(2.47	)		$	(2.93	)
Weighted average shares outstanding – basic and diluted			32,381,649				6,083,847				17,786,466				6,083,847

 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

 

 

RUBICON TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY (UNAUDITED)

(in thousands, except shares and units data)

 

		Members’ Units								Common Stock – Class A								Common Stock – Class V								Preferred Stock								Additional Paid-in				Accumulated				Non controlling				Total
		Units				Amount				Shares				Amount				Shares				Amount				Shares				Amount				Capital				Deficit				Interest				Deficit
Balance, December 31, 2022			-			$	-				6,985,869			$	1				14,432,992			$	1				-			$	-			$	34,659			$	(337,860	)		$	148,747			$	(154,452	)
Equity-based compensation			-				-				-				-				-				-				-				-				11,105				-				-				11,105
Issuance of common stock for services rendered			-				-				1,164,757				-				-				-				-				-				10,245				-				-				10,245
Issuance of equity-classified warrants			-				-				-				-				-				-				-				-				945				-				-				945
Issuance of common stock for vested RSUs			-				-				463,961				-				-				-				-				-				-				-				-				-
Issuance of common stock for vested DSUs			-				-				10,603				-				-				-				-				-				-				-				-				-
RSUs withheld to pay taxes			-				-				-				-				-				-				-				-				(1,067	)			-				-				(1,067	)
Conversion of debt obligations to common stock			-				-				2,517,284				-				-				-				-				-				10,846				-				-				10,846
Proceeds from issuance of common stock			-				-				7,257,334				1				-				-				-				-				24,766				-				-				24,767
Exercise and conversion of liability classified warrants			-				-				319,922				-				-				-				-				-				1,073				-				-				1,073
Exchange of Class V Common Stock to Class A Common Stock			-				-				10,007,604				1				(10,007,604	)			(1	)			-				-				-				-				-				-
Common stock issuance costs			-				-				-				-				-				-				-				-				(32	)			-				-				(32
Net loss			-				-				-				-				-				-				-				-				-				(16,331	)			(15,937	)			(32,268	)
Balance, June 30, 2023			-			$	-				28,727,334			$	3				4,425,388			$	-				-			$	-			$	92,540			$	(354,191	)		$	132,810			$	(128,838	)
Equity-based compensation			-				-				-				-				-				-				-				-				2,134				-				-				2,134
Issuance of common stock for services rendered			-				-				711,566				-				-				-				-				-				2,055				-				-				2,055
Issuance of equity-classified warrants			-				-				-				-				-				-				-				-				1,682				-				-				1,682
Issuance of common stock for vested RSUs			-				-				1,139,775				-				-				-				-				-				-				-				-				-
Issuance of common stock for vested DSUs			-				-				4,602				-				-				-				-				-				-				-				-				-
Conversion of debt obligations to common stock			-				-				3,900,321				-				-				-				-				-				19,334				-				-				19,334
Exercise and conversion of liability classified warrants			-				-				291,143				-				-				-				-				-				1,139				-				-				1,139
Shares added for fractional shares pursuant to reverse stock split			-				-				29,210				-				-				-				-				-				-				-				-				-
Net loss			-				-				-				-				-				-				-				-				-				(27,654	)			(2,519	)			(30,173	)
Balance, September 30, 2023			-			$	-				34,803,951			$	3				4,425,388			$	-				-			$	-			$	118,884			$	(381,845	)		$	130,291			$	(132,667	)

 

 

		Members’ Units								Common Stock – Class A								Common Stock – Class V								Preferred Stock								Additional Paid-in				Accumulated				Non controlling				Total
		Units				Amount				Shares				Amount				Shares				Amount				Shares				Amount				Capital				Deficit				Interest				Deficit
Balance, December 31, 2021			4,188,659			$	(61,304	)			-			$	-				-			$	-				-			$	-			$	-			$	-			$	-			$	(61,304	)
Compensation costs related to incentive units			-				184				-				-				-				-				-				-				-				-				-				184
Net loss			-				(52,613	)			-				-				-				-				-				-				-				-				-				(52,613	)
Balance, June 30, 2022			4,188,659			$	(113,733	)			-			$	-				-			$	-				-			$	-			$	-			$	-			$	-			$	(113,733	)
Activities prior to the Mergers:
Compensation costs related to incentive units			-				46				-				-				-				-				-				-				-				-				-				46
Net loss			-				(176,384	)			-				-				-				-				-				-				-				-				-				(176,384	)
Effects of the Mergers:
Proceeds, net of redemptions			-				-				-				-				-				-				-				-				196,775				-				-				196,775
Transaction costs related to the Mergers			-				(36,075	)			-				-				-				-				-				-				(31,249	)			-				-				(67,324	)
Accelerated vesting and conversion of incentive units			383,769				77,403				-				-				-				-				-				-				-				-				-				77,403
Exchange of liability classified warrants			7,751				1,717				-				-				-				-				-				-				-				-				-				1,717
Reclassification of SAFE			110,000				8,800				-				-				-				-				-				-				-				-				-				8,800
Phantom units rollover			-				-				-												-				-				-				15,104				-				-				15,104
Reverse recapitalization			(4,690,179	)			238,226				-				-				-				-				-				-				(180,630	)			(57,596	)			-				-
Issuance of common stock upon the Mergers - Class A and Class V			-				-				5,787,501				1				14,834,735				1				-				-				1				-				-				3
Establishment of earn-out liabilities			-				-				-				-				-				-				-				-				(1	)			(74,099	)			-				(74,100	)
Establishment of noncontrolling interests			-				-				-				-				-				-				-				-				-				(177,698	)			177,698				-
Activities subsequent to the Mergers
Equity-based compensation			-				-				-				-				-				-				-				-				10,913				-				-				10,913
Issuance of common stock in connection with SEPA – Class A			-				-				25,000				-				-				-				-				-				892				-				-				892
Exchange of Class V Common Stock to Class A Common Stock			-				-				401,780				-				(401,780	)			-				-				-				-				-				-				-
Net loss			-				-				-				-				-				-				-				-				-				(17,808	)			(16,933	)			(34,741	)
Balance, September 30, 2022			-			$	-				6,214,281			$	1				14,432,955			$	1				-			$	-			$	11,805			$	(327,201	)		$	160,765			$	(154,629	)

 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

 

 

RUBICON TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

		Nine Months Ended
		September 30,
		2023				2022
Cash flows from operating activities:
Net loss		$	(62,441	)		$	(263,738	)
Adjustments to reconcile net loss to net cash flows from operating activities:
Loss on disposal of property and equipment			777				23
Gain on lease agreement amendment			(220	)			-
Amortization and depreciation			3,982				4,026
Amortization of deferred debt charges			6,392				2,378
Amortization of related party debt discount and issuance costs			586				-
Paid-in-kind interest capitalized to principal of debt obligations			6,733				-
Paid-in-kind interest capitalized to principal of related party debt obligations			1,012				-
Bad debt reserve			2,065				(2,366	)
(Gain) Loss on change in fair value of warrants			(2,885	)			436
Loss on change in fair value of derivatives			3,778				76,919
Gain on change in fair value of earn-out liabilities			(5,440	)			(67,100	)
Loss on extinguishment of debt obligations			18,234				-
Excess fair value over the consideration received for SAFE			-				800
SEPA commitment fee settled in Class A Common Stock			-				892
Equity-based compensation			13,239				88,546
Phantom unit expense			-				6,783
Deferred compensation expense			-				1,250
Settlement of accrued incentive compensation			(26,826	)			-
Service fees settled in common stock			5,863				-
Gain on service fee settlement in connection with the Mergers			(6,996	)			-
Deferred income taxes			22				41
Change in operating assets and liabilities:
Accounts receivable			4,258				(13,636	)
Contract assets			(13,445	)			(5,821	)
Prepaid expenses			(6,731	)			(5,528	)
Other current assets			(2,122	)			(131	)
Operating right-of-use assets			868				801
Other noncurrent assets			140				355
Accounts payable			(22,148	)			10,967
Accrued expenses			17,033				52,450
Contract liabilities			636				(142	)
Operating lease liabilities			(1,335	)			(1,273	)
Other liabilities			(1,602	)			150
Net cash flows from operating activities			(66,573	)			(112,918	)
Cash flows from investing activities:
Property and equipment purchases			(750	)			(1,150	)
Forward purchase option derivative purchase			-				(68,715	)
Net cash flows from investing activities			(750	)			(69,865	)
Cash flows from financing activities:
Net borrowings on line of credit			13,653				179
Proceeds from debt obligations			86,226				-
Repayments of debt obligations			(53,500	)			(4,500	)
Proceeds from related party debt obligations			14,520				-
Financing costs paid			(13,891	)			(2,000	)
Proceeds from issuance of common stock			24,767				-
Proceeds from SAFE			-				8,000
Proceeds from the Mergers			-				196,778
Equity issuance costs			(31	)			(21,827	)
RSUs withheld to pay taxes			(1,067	)			-
Net cash flows from financing activities			70,677				176,630
Net change in cash and cash equivalents			3,354				(6,153	)
Cash, beginning of period			10,079				10,617
Cash, end of period		$	13,433			$	4,464
Supplemental disclosure of cash flow information:
Cash paid for interest		$	9,934			$	9,023
Supplemental disclosures of non-cash investing and financing activities:
Exchange of warrant liability for Class A and Class V Common Stock		$	2,250			$	1,716
Conversion of SAFE for Class B Units		$	-			$	8,000
Establishment of earn-out liabilities		$	-			$	74,100
Equity issuance costs accrued but not paid		$	-			$	44,235
Fair value of derivatives issued as deferred debt charges		$	12,739			$	-
Conversions of debt obligations to common stock		$	17,000			$	-
Conversions of related-party debt obligations to common stock		$	3,080			$	-
Equity issuance costs waived		$	6,364			$	-
Equity issuance costs settled with common stock		$	7,069			$	-
Loan commitment asset reclassed to deferred debt charges		$	2,062			$	-

 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

 

 

RUBICON TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

Note 1—Nature of operations and summary of significant accounting policies

 

Description of Business – Rubicon Technologies, Inc. and all subsidiaries are hereafter referred to as “Rubicon” or the “Company.”

 

Rubicon is a digital marketplace for waste and recycling services and provides cloud-based waste and recycling solutions to businesses and governments. Rubicon’s sustainable waste and recycling solutions provide comprehensive management of customers’ waste streams through a platform that powers a modern, digital experience and delivers data-driven insights and transparency for the customers and hauling and recycling partners.

 

Rubicon also provides consultation and management services to customers for waste removal, waste management, logistics, and recycling solutions. Consultation and management services include planning, consolidation of billing and administration, cost savings analyses, and vendor performance monitoring and management. The combination of Rubicon’s technology and services provides a holistic audit of customer waste streams. Rubicon also provides logistics services and markets and resells recyclable commodities.

 

Reverse Stock Split – On September 26, 2023, the Company effected a reverse stock split of its outstanding shares of voting common stock at a ratio of one-for-eight (1:8) pursuant to a Certificate of Amendment to its Certificate of Incorporation filed with the Secretary of State of the State of Delaware. The reverse stock split was reflected on the New York Stock Exchange (the “NYSE”) beginning with the opening of trading on September 27, 2023. Pursuant to the reverse stock split, every eight shares of the Company’s issued and outstanding shares of common stock were automatically combined into one issued and outstanding share of common stock, without any change in the number of authorized shares or the par value per share of the common stock. No fractional shares were issued in connection with the reverse stock split. Any stockholder who would otherwise be entitled to receive a fractional share instead became entitled to receive one whole share of common stock in lieu of such fractional share. Equitable adjustments corresponding to the reverse stock split ratio were made to all (i) issued and outstanding shares of all other classes of stock of the Company, (ii) the exercise prices of and number of shares of common stock underlying the Company’s public and private warrants, (iii) the number of shares of common stock underlying the Company’s outstanding equity awards, and (iv) the number of shares of common stock issuable under the Company’s equity incentive plan. All share and per share amounts of the common stock included in the accompanying condensed consolidated financial statements and these notes to the condensed consolidated financial statements have been retrospectively adjusted to give effect to the reverse stock split for all periods presented, including reclassifying an amount equal to the reduction in par value to additional paid-in capital.

 

Mergers – Rubicon Technologies, Inc. was initially incorporated in the Cayman Islands on April 26, 2021 as a special purposes acquisition company under the name “Founder SPAC” (“Founder”). Founder was formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. On August 15, 2022 (the “Closing Date”), Founder consummated the mergers (the “Mergers”), pursuant to that certain Agreement and Plan of Merger, dated December 15, 2021 (the “Merger Agreement”) (the “Closing”).

 

In connection with the Mergers, the Company was reorganized into an Up-C structure, in which substantially all of the assets and business of the Company are held by Rubicon Technologies Holdings, LLC (“Holdings LLC”) and continue to operate through Rubicon Technologies Holdings, LLC and its subsidiaries, and Rubicon Technologies, Inc.’s material assets are the equity interests of Rubicon Technologies Holdings, LLC indirectly held by it. Pursuant to the Merger Agreement, the Mergers were accounted for as a reverse recapitalization in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) (the “Reverse Recapitalization”). Under this method of accounting, Founder was treated as the acquired company and Holdings LLC was treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Holdings LLC issuing stock for the net assets of Founder, accompanied by a recapitalization. Thus, the accompanying condensed consolidated financial statements reflect (i) the historical operating results of Holdings LLC prior to the Mergers; (ii) the results of Rubicon Technologies, Inc. following the Mergers; and (iii) the acquired assets and liabilities of Founder stated at historical cost, with no goodwill or other intangible assets recorded.

 

See Note 3 for further information regarding the Mergers.

 

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Basis of Presentation and Consolidation – The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to U.S. GAAP and reflect all adjustments which are, in the opinion of management, necessary to a fair presentation of the results of the interim periods presented, under the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). These condensed consolidated financial statements include all adjustments consisting of only normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented. The Company’s condensed consolidated financial statements include the accounts of Rubicon Technologies, Inc., and subsidiaries. The Company’s condensed consolidated financial statements reflect the elimination of all significant inter-company accounts and transactions. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2023. Certain information and note disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes prepared in accordance with U.S. GAAP have been condensed in, or omitted from, these interim financial statements. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes to the consolidated financial statements for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 23, 2023.

 

Segments – The Company operates in one operating segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assessing performance. The Company’s CODM role is fulfilled by the Executive Leadership Team (“ELT”), who allocates resources and assesses performance based upon consolidated financial information.

 

Use of Estimates – The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of any contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Emerging Growth Company – The Company is an emerging growth company (“EGC”), as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company did not opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an EGC, will be required to adopt the new or revised standard at the time the new or revised standard becomes applicable to private companies. The effective dates shown in Note 2 below reflect the election to use the extended transition period.

 

Revenue Recognition – The Company recognizes service revenue over time, consistent with efforts performed and when the customer simultaneously receives and consumes the benefits provided by the Company’s services. The Company recognizes recyclable commodity revenue point in time when the ownership, risks, and rewards transfer. The Company derives its revenue from waste removal, waste management and consultation services, software subscriptions, and the sale of recyclable commodities.

 

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Service Revenue:

 

Service revenues are primarily derived from long-term contracts with waste generator customers including multiple promises delivered through the Company’s digital marketplace platform. The promises include waste removal, consultation services, billing administration and consolidation, cost savings analyses, and vendor procurement and performance management, each of which constitutes an input to the combined service managed through the digital platform. The digital platform and services are highly interdependent, and accordingly, each contractual promise is not considered a distinct performance obligation in the context of the contract and is combined into a single performance obligation. In general, fees are invoiced, and revenue is recognized over time as control is transferred. Revenue is measured as the amount of consideration the Company expects to receive in exchange for providing the service. The Company invoices for certain services prior to performance. These advance invoices are included in contract liabilities and recognized as revenue in the period service is provided.

 

Service revenues also include software-as-a-service subscription, maintenance, equipment and other professional services, which represent separate performance obligations. Once the performance obligations and the transaction price are determined, including an estimate of any variable consideration, the Company then allocates the transaction price to each performance obligation in the contract using a relative standalone selling price method. The Company determines standalone selling price based on the price at which the good or service is sold separately.

 

Recyclable Commodity Revenue:

 

The Company recognizes recyclable commodity revenue through the sales of old corrugated cardboard (OCC), old newsprint (ONP), aluminum, glass, pallets, and other recyclable materials at market prices. The Company purchases recyclable commodities from certain waste generator customers and sells the recyclable materials to recycling and processing facilities. Revenue recognized under these agreements is variable in nature based on the market, type and volume or weight of the materials sold. The amount of revenue recognized is based on commodity prices at the time of sale, which are unknown at contract inception. Fees are billed, and revenue is recognized at a point in time when control is transferred to the recycling and processing facilities.

 

Management reviews contracts and agreements the Company has with its waste generator customers and hauling and recycling partners and performs an evaluation to consider the most appropriate manner in accordance with ASC 606-10, Revenue Recognition: Principal Agent Considerations, by which revenue is presented on the condensed consolidated statements of operations.

 

Judgment is required in evaluating the presentation of revenue on a gross versus net basis based on whether the Company controls the service provided to the end-user and is the principal in the transaction (gross), or the Company arranges for other parties to provide the service to the end-user and is the agent in the transaction (net). Management has concluded that the Company is the principal in most arrangements as it controls the waste removal service and is the primary obligor in the transactions.

 

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) which we recognize revenue at the amount to which the Company has the right to invoice for services performed and (iii) variable consideration which is allocated entirely to a wholly unsatisfied performance obligation. After applying these optional exemptions, the aggregate amount of the transaction price allocated to unsatisfied or partially satisfied performance obligations as of September 30, 2023 and December 31, 2022 was insignificant.

 

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Cost of Revenue, exclusive of amortization and depreciation – Cost of service revenues primarily consists of expenses related to delivering the Company’s service and providing support, including third-party hauler costs, costs of data center capacity, certain fees paid to various third parties for the use of their technology, services and data, and employee-related costs, such as salaries and benefits.

 

Cost of recyclable commodity revenues primarily consists of expenses related to purchases of OCC, ONP, aluminum, glass, pallets and other recyclable materials, and any associated transportation fees.

 

The Company recognizes the cost of revenue exclusive of any amortization or depreciation expenses, which are recognized in amortization and depreciation expenses on the condensed consolidated statements of operations.

 

Cash and Cash Equivalents – The Company considers all highly liquid investments purchased with an original maturity of three months or less when purchased to be cash equivalents. The Company maintains its cash in bank deposit accounts, which at times exceed the Federal Deposit Insurance Corporation insurance limits.

 

Accounts Receivable and Contract Balances –Accounts receivable consist of trade accounts receivable for services provided to customers. Accounts receivable is stated at the amount the Company expects to collect. The Company makes estimates of expected credit and collectability trends for the allowance for credit losses and allowance for unbilled receivables based upon the Company’s assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Past-due balances and other higher-risk amounts are reviewed individually for collectability. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. As of September 30, 2023 and December 31, 2022, the allowances for accounts receivable were $4.6 million and $3.6 million, respectively, and the allowances for contract assets were insignificant.

 

In cases where customers pay for services in arrears, the Company accrues revenue in advance of billings as long as the criteria for revenue recognition are met, thus creating a contract asset (unbilled receivable). As of September 30, 2023 and December 31, 2022, the Company had unbilled receivables of $68.6 million and $55.2 million, respectively. These unbilled balances were the result of services provided in the period, but not yet billed to the customer. During the nine months ended September 30, 2023, the Company invoiced its customers $55.2 million pertaining to contract assets for services delivered prior to December 31, 2022.

 

Contract liabilities (deferred revenue) consist of amounts collected prior to having satisfied the performance obligation. The Company periodically invoices customers for recurring front load services in advance monthly basis. As of September 30, 2023 and December 31, 2022, the Company had deferred revenue balances of $6.5 million and $5.9 million, respectively. During the nine months ended September 30, 2023, the Company recognized $5.5 million of revenue that was included in the contract liabilities balance as of December 31, 2022.

 

Accrued Hauler Expenses – The Company recognizes hauler costs and the cost of recyclable products when services are performed. Accounting for accrued hauler costs and the cost of recyclable commodities requires estimates and assumptions regarding the quantity of waste collected by the vendors and the frequencies of the collections. The Company estimates quantities and frequencies using historical transaction and market data based on the waste stream composition, equipment type, and equipment size. Accrued hauler expenses are presented within accrued expenses on the condensed consolidated balance sheets.

 

Fair Value Measurements – In accordance with U.S. GAAP, the Company groups its financial assets and financial liabilities at fair value in three levels, based on the markets in which the financial assets and financial liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

 

Level 1 – Valuations for financial assets and financial liabilities traded in active exchange markets, such as the NYSE.

 

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Level 2 – Valuations are obtained from readily available pricing sources via independent providers for market transactions involving similar financial assets and financial liabilities.

 

Level 3 – Valuations for financial assets and financial liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models, and similar techniques and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such financial assets or financial liabilities.

 

See Note 15 for further information regarding fair value measurements.

 

Offering Costs – Offering costs, consisting of legal, accounting, printer, filing and advisory fees related to the Mergers, were deferred and offset against proceeds from the Mergers and additional paid-in capital upon consummation of the Mergers. Deferred offering costs capitalized as of September 30, 2023 and December 31, 2022 were $-0-. The total amount of the offering costs recognized as offset against additional paid-in capital at the Closing was $67.3 million. The subsequent settlements of certain offering costs during the nine months ended September 30, 2023 resulted in a gain of $7.0 million, which is recognized as a component of other income (expense) on the accompanying condensed consolidated statements of operations. No such settlement occurred during the three months ended September 30, 2023.

 

Customer Acquisition Costs – The Company makes certain expenditures related to acquiring contracts for future services. These expenditures are capitalized and amortized in proportion to the expected future revenue from the customer, which in most cases results in straight-line amortization over the estimated life of the customer. Amortization of these customer acquisition costs is presented within amortization and depreciation on the condensed consolidated statements of operations.

 

Warrants – The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s Class A common stock, par value $0.0001 per share (“Class A Common Stock”), among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

 

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded in liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the liability-classified warrants are recognized as a component of other income (expense) on the consolidated statement of operations.

 

As of September 30, 2023, the Company has both liability-classified and equity-classified warrants outstanding. See Note 9 for further information.

 

Earn-out Liabilities – Pursuant to the Merger Agreement, (i) Blocked Unitholders (as defined in Note 3) immediately before the Closing received a right to receive a pro rata portion of 186,064 shares of Class A Common Stock (the “Earn-Out Class A Shares”) and (ii) Rubicon Continuing Unitholders (as defined in Note 3) immediately before the Closing received a right to receive a pro rata portion of 1,112,605 Class B Units (as defined in Note 3) (“Earn-Out Units”) and an equivalent number of shares of the Company’s Class V common stock, par value $0.0001 (“Class V Common Stock”) (“Earn-Out Class V Shares”, and together with Earn-Out Class A Shares and Earn-Out Units, “Earn-Out Interests”), in each case, depending upon the performance of Class A Common Stock during the five year period after the Closing (the “Earn-Out Period”), as set forth below upon satisfaction of any of the following conditions (each, an “Earn-Out Condition”).

 

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(1)

50% of the Earn-Out Interests if the volume weighted average price (the “VWAP”) of the Class A Common Stock equals or exceeds $112.00 per share (as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations) for twenty (20) of thirty (30) consecutive trading days during the Earn-Out Period; and

 

(2)

50% of the Earn-Out Interests if the VWAP of the Class A Common Stock equals or exceeds $128.00 per share (as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations) for twenty (20) of any thirty (30) consecutive trading days during the Earn-Out Period.

 

Earn-Out Interests were classified as liability transactions at initial issuance, which offset against additional paid-in capital as of the Closing. At each period end, Earn-Out Interests are remeasured to their fair value, with the changes during that period recognized as a component of other income (expense) on the consolidated statement of operations. Upon issuance and release of the shares after each Earn-Out Condition is met, the related Earn-Out Interests will be remeasured to their fair value at that time with the changes recognized as a component of other income (expense), and such Earn-Out Interests will be reclassed to stockholders’ (deficit) equity on the consolidated balance sheet. As of September 30, 2023 and December 31, 2022, the Earn-Out Interests had a fair value of $0.2 million and $5.6 million, respectively, with the changes in the fair value of $5.4 million recognized as a gain on change in fair value of earn-out liabilities under other income (expense) within the accompanying condensed consolidated statements of operations.

 

Noncontrolling Interest – Noncontrolling interest represents the Company’s noncontrolling interest in consolidated subsidiaries which are not attributable, directly or indirectly, to the controlling Class A Common Stock ownership of the Company.

 

Shares of Class V Common Stock are exchangeable into an equal number of Class A Common Stock. Shares of Class V Common Stock are non-economic voting shares in Rubicon Technologies, Inc., where shares of Class V Common Stock each have one vote per share.

 

The financial results of Holdings LLC were consolidated into Rubicon Technologies, Inc. and 12.1% and 35.9% of Holdings LLC’s net loss during the three and nine months ended September 30, 2023, respectively, was allocated to noncontrolling interests (“NCI”).

 

Income Taxes – Rubicon Technologies, Inc. is a corporation and is subject to U.S. federal as well as state income taxes including the income or loss allocated from its investment in Rubicon Technologies Holdings, LLC. Rubicon Technologies Holdings, LLC is taxed as a partnership for which the taxable income or loss is allocated to its members. Certain of the Rubicon Technologies Holdings, LLC operating subsidiaries are considered taxable corporations for U.S. income tax purposes. Prior to the Mergers, Holdings LLC was not subject to U.S. federal and certain state income taxes at the entity level.

 

The Company accounts for income taxes in accordance with ASC Topic 740, Accounting for Income Taxes (“ASC Topic 740”), which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax bases of its assets and liabilities by applying the enacted tax rates in effect for the year in which the differences are expected to reverse. Such net tax effects on temporary differences are reflected on the Company’s consolidated balance sheets as deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when the Company believes that it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The Company calculates the interim tax provision in accordance with the provisions of ASC Subtopic 740-270, Income Taxes; Interim Reporting. For interim periods, the Company estimates the annual effective income tax rate (“AETR”) and applies the estimated rate to the year-to-date income or loss before income taxes.

 

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ASC Topic 740 prescribes a two-step approach for the recognition and measurement of tax benefits associated with the positions taken or expected to be taken in a tax return that affect amounts reported in the financial statements. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. As of September 30, 2023 or December 31, 2022, the Company has no tax positions that met this threshold and, therefore, has not recognized such benefits. The Company has reviewed and will continue to review the conclusions reached regarding uncertain tax positions, which may be subject to review and adjustment at a later date based on ongoing analyses of tax laws, regulations and interpretations thereof. To the extent that the Company’s assessment of the conclusions reached regarding uncertain tax positions changes as a result of the evaluation of new information, such change in estimates will be recorded in the period in which such determination is made. The Company reports income tax-related interest and penalties relating to uncertain tax positions, if applicable, as a component of income tax expense.

 

The Company’s income tax expense was $-0- million and $-0- million for the three months ended September 30, 2023 and 2022, respectively, with an effective tax rate of (0.1)% and (0.0)%, respectively The Company’s income tax expense was $-0- million and $-0- million for the nine months ended September 30, 2023 and 2022, respectively, with an effective tax rate of (0.1)% and (0.0)%, respectively. The provision for income taxes differs from the amount that would result from applying statutory rates primarily due to loss attributable to noncontrolling interest and differences in the deductibility of certain book and tax expenses, including the changes in fair value of earn-out liabilities, warrant liabilities and derivatives.

 

During the nine months ended September 30, 2023 and the year ended December 31, 2022, the Company recorded a full valuation allowance against its deferred tax assets. The Company intends to maintain this position until there is sufficient evidence to support the reversal of all or some portion of the allowance. The Company also has certain assets with indefinite lives for which the basis is different for book and tax. As a result, the Company is in a net deferred tax liability position of $0.2 million and $0.2 million as of September 30, 2023 and December 31, 2022, respectively.

 

Tax Receivable Agreement Obligation – The Company and Holdings LLC entered into a Tax Receivable Agreement (the “Tax Receivable Agreement” or “TRA”) with Rubicon Continuing Unitholders (as defined in Note 3) and Blocked Unitholders (as defined in Note 3) (together, the “TRA Holders”). Pursuant to the Tax Receivable Agreement, among other things, the Company is required to pay to the TRA Holders 85% of certain of the Company’s realized (or in certain cases deemed realized) tax savings as a result of certain tax benefits related to the transactions contemplated by the Merger Agreement and future exchanges of Class B Units for Class A Common Stock or cash. The actual tax benefit, as well as the amount and timing of any payments under the TRA, will vary depending on a number of factors, including the price of Class A Common Stock at the time of the exchange; the timing of future exchanges; the extent to which exchanges are taxable; the amount and timing of the utilization of tax attributes; the amount, timing and character of the Company’s income; the U.S. federal, state and local tax rates then applicable; the depreciation and amortization periods that apply to the increases in tax basis; the timing and amount of any earlier payments that the Company may have made under the TRA; and the portion of the Company’s payments under the TRA that constitute imputed interest or give rise to depreciable or amortizable tax basis.

 

The Company accounts for the effects of these increases in tax basis and associated payments under the TRAs if and when exchanges occur as follows:

 

a.

recognizes a contingent liability for the TRA obligation when it is deemed probable and estimable, with a corresponding adjustment to additional paid-in-capital, based on the estimate of the aggregate amount that the Company will pay;

 

b.

records an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange;

 

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c.

to the extent the Company estimates that the full benefit represented by the deferred tax asset will not be fully realized based on an analysis that will consider, among other things, the expectation of future earnings, the Company reduces the deferred tax asset with a valuation allowance; and

 

d.

the effects of changes in any of the estimates and subsequent changes in the enacted tax rates after the initial recognition will be included in the Company’s net loss.

 

A TRA liability is determined and recorded under ASC 450, “Contingencies”, as a contingent liability; therefore, the Company is required to evaluate whether the liability is both probable and the amount can be estimated. Since the TRA liability is payable upon cash tax savings and the Company has not determined that positive future taxable income is probable based on the Company’s historical loss position and other factors that make it difficult to rely on forecasts, the Company has not recorded the TRA liability as of September 30, 2023. The Company will evaluate this on a quarterly basis, which may result in an adjustment in future periods.

 

Earnings (Loss) Per Share (“EPS”) – Basic income (loss) per share is computed by dividing net income (loss) attributable to Rubicon Technologies, Inc. by the weighted-average number of shares of Class A Common Stock outstanding during the period.

 

Diluted income (loss) per share is computed giving effect to all potential weighted-average dilutive shares for the period. The dilutive effect of outstanding awards or financial instruments, if any, is reflected in diluted income (loss) per share by application of the treasury stock method or if converted method, as applicable. Stock awards are excluded from the calculation of diluted EPS in the event they are antidilutive or subject to performance conditions for which the necessary conditions have not been satisfied by the end of the reporting period. See Note 14 for additional information on dilutive securities.

 

Prior to the Mergers, the membership structure of Holdings LLC included units with liquidation preferences. The Company analyzed the calculation of loss per unit for periods prior to the Mergers and determined that it resulted in values that would not be meaningful to the users of these condensed consolidated financial statements. As a result, loss per share information has not been presented for periods prior to the Closing.

 

Derivative Financial Instruments – From time to time, the Company utilizes derivative instruments as part of our overall strategy. The Company’s derivative instruments are recorded at fair value on the consolidated balance sheets. These derivative instruments have not been designated as hedges; therefore, both realized and unrealized gains and losses are recognized in earnings. For the purposes of cash flow presentation, realized and unrealized gains or losses are included under cash flows from operating activities. Upfront cash payments received upon the issuance of derivative instruments are included within cash flows from financing activities, while the prepayments made upon the issuance of derivative instruments are included within cash flows from investing activities within the consolidated statements of cash flows.

 

Stock-Based Compensation – The Company measures fair value of employee stock-based compensation awards on the date of grant and uses the straight-line attribution method to recognize the related expense over the requisite service period, and accounts for forfeitures as they occur. The fair value of equity-classified restricted stock units and performance-based restricted stock units is equal to the market price of Class A Common Stock on the date of grant. The liability-classified restricted stock units are recognized at their fair value that is equal to the market price of Class A Common Stock on the date of grant and remeasured to the market price of Class A Common Stock at each period-end with related changes in the fair value recognized in general and administrative expense on the consolidated statement of operations.

 

The Company accounts for nonemployee stock-based transactions using the fair value of the consideration received (i.e., the value of the goods or services) or the fair value of the equity instruments issued, whichever is more reliably measurable.

 

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Note 2—Recent accounting pronouncements

 

Accounting pronouncements adopted during 2023

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans, and available-for-sale debt securities. The Company adopted this ASU as of January 1, 2023. The adoption did not have a material impact on the Company’s consolidated financial statements.

 

In October 2021, the FASB issued ASU 2021-08, Business Combination (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASU 2021-08 will be effective for the Company at the beginning of 2024 on a prospective basis, with early adoption permitted. The Company early adopted this ASU as of January 1, 2023. The adoption did not have a material impact on the Company’s consolidated financial statements.

 

Note 3—Mergers

 

As further discussed in Note 1, on August 15, 2022, the Mergers were consummated pursuant to the Merger Agreement. In connection with the Closing, the following occurred in addition to the disclosures in Note 1:

 

-

(a) Each then-issued and outstanding Class A ordinary share, par value $0.0001 per share, of Founder (“Founder Class A Shares”) automatically converted into one share of Class A Common Stock, (b) each then-issued and outstanding Class B ordinary share, par value $0.0001 per share, of Founder (“Founder Class B Shares” and, together with Founder Class A Shares, “Founder Ordinary Shares”), converted into one share of Class A Common Stock, pursuant to the Sponsor Agreement, dated December 15, 2021, by and among Founder, Founder SPAC Sponsor LLC (“Sponsor”), Holdings LLC, and certain insiders of Founder, (c) each then-issued and outstanding public warrant of Founder, each representing a right to acquire one Founder Class A Share for $92.00 (a “Founder Public Warrant”), converted automatically, on a one-for-one basis, into a public warrant of the Company (a “Public Warrant”) that represents a right to acquire one share of Class A Common Stock for $92.00 pursuant to the Warrant Agreement, dated October 14, 2021, by and between Founder and Continental Stock Transfer and Trust Company (as amended, the “Warrant Agreement”), (d) each then-issued and outstanding private placement warrant of Founder, each representing a right to acquire one Founder Class A Share for $92.00 (a “Founder Private Placement Warrant”), converted automatically, on a one-for-one basis, into a private placement warrant of the Company (the “Private Warrant” and together with the Public Warrants, the “IPO Warrants”) that represents a right to acquire one share of Class A Common Stock for $92.00 pursuant to the Warrant Agreement, and (e) each then-issued and outstanding unit of Founder, each representing a Founder Class A Share and one-half of a Founder Public Warrant (a “Founder Unit”), that had not been previously separated into the underlying Founder Class A Share and one-half of one Founder Public Warrant upon the request of the holder thereof, was separated and automatically converted into one share of Class A Common Stock and one-half of one Public Warrant. No fractional Public Warrants were issued upon separation of the Founder Units.

 

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-

The Company was issued Class A Units in Holdings LLC (“Class A Units”) and all preferred units, common units, and incentive units of Holdings LLC (including such convertible instruments, the “Rubicon Interests”) outstanding were automatically recapitalized into Class A Units and Class B Units of Holdings LLC (“Class B Units”), as authorized by the Eighth Amended and Restated Limited Liability Company Agreement of Holdings LLC (“A&R LLCA”) that was adopted on the Closing Date. On the Closing Date, (a) holders of the Rubicon Interests immediately before the Closing, other than Boom Clover Business Limited, NZSF Frontier Investments Inc., and PLC Blocker A LLC (collectively, the “Blocked Unitholders”), were issued Class B Units (the “Rubicon Continuing Unitholders”), (b) the Rubicon Continuing Unitholders were issued a number of shares of Class V Common Stock equal to the number of Class B Units issued to the Rubicon Continuing Unitholders, (c) the Blocked Unitholders were issued shares of Class A Common Stock, and (d) following the adoption of the equity incentive award plan of Rubicon adopted at the Closing (the “2022 Plan”) and the effectiveness of a registration statement on Form S-8 filed on October 19, 2022, holders of phantom units of Holdings LLC immediately prior to the Closing (“Rubicon Phantom Unitholders”) and those current and former directors, officers and employees of Holdings LLC entitled to certain cash bonuses (the “Rubicon Management Rollover Holders”) are to receive restricted stock units (“RSUs”) and deferred stock units (“DSUs”), and such RSUs and DSUs will vest into shares of Class A Common Stock. In addition to the securities issuable at the Closing and the RSUs and DSUs, certain of the Rubicon Management Rollover Holders received one-time cash payments (the “Cash Transaction Bonuses”). In addition, pursuant to the Merger Agreement, (i) the Blocked Unitholders immediately before the Closing received a right to receive a pro rata portion of the Earn-Out Class A Shares and (ii) the Rubicon Continuing Unitholders immediately before the Closing received a right to receive a pro rata portion of the Earn-Out Units and an equivalent number of shares of Class V Common Stock, in each case, depending upon the performance of Class A Common Stock during the five year period after the Closing, as discussed in greater detail in Note 1.

 

-

Certain investors (the “PIPE Investors”) purchased, and the Company sold to such PIPE Investors an aggregate of 1,512,500 shares of Class A Common Stock at a price of $80.00 per share pursuant to and as set forth in the subscription agreements against payment by such PIPE Investors of the respective amounts set forth therein.

 

-

Certain investors (the “FPA Sellers”) purchased, and the Company issued and sold to such FPA Sellers, an aggregate of 885,327 shares of Class A Common Stock pursuant to and as set forth in the Forward Purchase Agreement entered into between Founder and ACM ARRT F LLC (“ACM Seller”) on August 4, 2022, against payment by such FPA Sellers of the respective amounts set forth therein. The Forward Purchase Agreement was subsequently terminated on November 30, 2022. See Note 10 for further information.

 

-

The Company (a) caused to be issued to certain investors 110,000 Class B Units pursuant to the Merger Agreement, (b) issued 20,000 shares of Class A Common Stock to certain investors, and (c) Sponsor forfeited 20,000 shares of Class A Common Stock.

 

-

Blocked Unitholders and Rubicon Continuing Unitholders retained aggregate 2,480,865 shares of Class A Common Stock and 14,834,735 shares of Class V Common Stock at the Closing.

 

-

The Company and Holdings LLC entered into the Tax Receivable Agreement with the TRA Holders. See Note 1 for further information.

 

-

The Company contributed approximately $73.8 million of cash to Rubicon Technologies Holdings, LLC, representing the net amount held in the Company’s trust account following the redemption of Class A Common Stock originally sold in Founder’s initial public offering, less (a) cash consideration of $28.9 million paid to Holdings LLC’s certain management members, plus (b) $121.0 million in aggregate proceeds received from the PIPE Investors, less (c) the aggregate amount of transaction expenses incurred by the parties to the Merger Agreement and (d) payment to the FPA Sellers pursuant to the Forward Purchase Agreement.

 

-

The Company incurred $67.3 million in transaction costs relating to the Mergers. The Company settled $7.0 million of transaction costs by issuing Class A Common Stock on February 6, 2023, which resulted in a gain of $0.6 million and was recognized as a component of other income (expense) on the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2023. An additional $6.4 million of offering costs related to the Mergers was waived by a certain advisor and settled on April 24, 2023, resulting in a gain of $6.4 million recognized in other income (expense) on the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2023. The transaction costs were offset against additional paid-in capital on the consolidated statements of stockholders’ (deficit) equity upon the Closing.

 

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Note 4—Property and equipment

 

Property and equipment, net is comprised of the following as of September 30, 2023 and December 31, 2022 (in thousands):

 

Schedule of property and equipment
		September 30, 2023				December 31, 2022
Computers, equipment and software		$	2,311			$	3,791
Customer equipment			1,973				1,485
Furniture and fixtures			210				1,699
Leasehold improvements			1,441				3,772
Total property and equipment			5,935				10,747
Less accumulated amortization and depreciation			(4,302	)			(8,103	)
Total property and equipment, net		$	1,633			$	2,644

 

Property and equipment amortization and depreciation expense for the three months ended September 30, 2023 and 2022 was $0.3 million and $0.3 million, respectively. Property and equipment amortization and depreciation expense for the nine months ended September 30, 2023 and 2022 was $1.0 million and $1.0 million, respectively.

 

During the three months ended September 30, 2023, the Company terminated an office lease agreement and entered into an amended agreement for another office lease agreement, which in total, contributed to a decrease of $1.6 million in computers, equipment and software, $1.6 million in furniture and fixtures, $2.3 million in leasehold improvements and $4.8 million in accumulated amortization and depreciation, resulting in a $0.8 million of loss on disposals, which was recognized in other expense on the accompanying condensed consolidated statements of operations for the three months and nine months ended September 30, 2023. See Note 16 for further information regarding these lease agreement termination and amendment.

 

Note 5—Debt

 

Revolving Credit Facilities

 

Revolving Credit Facility – On December 14, 2018, the Company entered into a $60.0 million “Revolving Credit Facility” secured by all assets of the Company including accounts receivable, intellectual property, and general intangibles. The Revolving Credit Facility’s maturity was December 31, 2023 and bore an interest rate of SOFR plus 5.60% (9.7% at December 31, 2022). On February 7, 2023, the Company entered into an amendment to the Revolving Credit Facility, which (i) increased the maximum borrowing amount under the facility from $60.0 million to $75.0 million and (ii) amended the interest rate it bears to between 4.8% up to SOFR plus 4.9% determined based on certain metrics defined within the amended agreement. On March 22, 2023, the Company amended the Revolving Credit Facility, which (i) the Company and the lender modified its maturity date to the earlier of (a) December 14, 2025, (b) the maturity of the Term Loan (as defined below) and (c) the maturity of the Subordinated Term Loan (as defined below) and (ii) the lender consented to an amendment to the Subordinated Term Loan agreement. The borrowing capacity was calculated based on qualified billed and unbilled receivables. The fee on the average daily balance of unused loan commitments was 0.70%. Interest and fees were payable monthly with principal due upon maturity. In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that these Revolving Credit Facility amendments were debt modifications.

 

The Revolving Credit Facility required a lockbox arrangement, which provided for receipts to be swept daily to reduce borrowings outstanding at the discretion of the lender. This arrangement, combined with the existence of the subjective acceleration clause in the “Line of Credit” agreement, necessitated the Line of Credit be classified as a current liability on the consolidated balance sheets. The acceleration clause allowed for amounts borrowed under the facility to become immediately due in the event of a material adverse change in the Company’s business condition (financial or otherwise), operations, properties or prospects, change of management, or change in control.

 

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On June 7, 2023, the Company fully prepaid the borrowing under the Revolving Credit Facility in the amount of $48.6 million and terminated the facility. As a result, the Company recorded $2.6 million of a loss on extinguishment of debt obligations on the accompanying condensed statements of operations for the nine months ended September 30, 2023.

 

As of December 31, 2022, the Company’s total outstanding borrowings under the Line of Credit were $51.8 million and $5.6 million remained available to draw.

 

June 2023 Revolving Credit Facility – On June 7, 2023, the Company entered into a $90.0 million “June 2023 Revolving Credit Facility” secured by the Company’s accounts receivable, all contracts and contract rights and general intangibles, with a maturity date of the earlier of (i) June 7, 2026 or (ii) 90 days prior to the maturity date of the June 2023 Term Loan (defined below) (the “Springing Maturity”). The June 2023 Revolving Credit Facility bears an interest rate of SOFR plus 4.25% (or 3.95% if the Company meets certain conditions defined in the agreement) (9.7% as of September 30, 2023). The borrowing capacity is calculated based on the Company’s borrowing base collateral as defined in the June 2023 Revolving Credit Facility agreement, which is comprised of qualified billed and unbilled receivables and the September 2023 Rodina Letter of Credit (as defined below). The fee on the average daily balance of unused loan commitments is 0.5%. Interest and fees are payable monthly in arrears on the first day of each month.

 

The June 2023 Revolving Credit Facility requires a lockbox arrangement, which provides for receipts to be swept daily to reduce borrowings outstanding at the discretion of the lender. This arrangement, combined with the existence of the subjective acceleration clause in the Line of Credit agreement, necessitates the Line of Credit be classified as a current liability on the consolidated balance sheets. The acceleration clause allows for amounts borrowed under the facility to become immediately due in the event of a material adverse change in the Company’s business condition (financial or otherwise), operations, properties or prospects, change of management, or change in control.

 

On September 22, 2023, an entity affiliated with Andres Chico (the chairman of the Company’s board of directors) and Jose Miguel Enrich (a beneficial owner of greater than 10% of the issued and outstanding Class A Common Stock and Class V Common Stock) issued a standby letter of credit in the amount of $15.0 million (the “September 2023 Rodina Letter of Credit”) to the lender of the June 2023 Revolving Credit Facility on behalf of the Company, which increased the Company’s borrowing base collateral under the facility by $15.0 million. The expiration date of the September 2023 Rodina Letter of Credit is September 30, 2024 with an automatic renewal option for one additional year through September 30, 2025.

 

As of September 30, 2023, the Company’s total outstanding borrowings under the Line of Credit were $65.5 million and $1.4 million remained available to draw, after accounting for the $15.0 million borrowing base collateral increase discussed above. The June 2023 Revolving Credit Facility is subject to certain financial covenants. As of September 30, 2023, the Company was in compliance with these financial covenants.

 

The Company capitalized $2.9 million in deferred debt charges related to the June 2023 Revolving Credit Facility during the nine months ended September 30, 2023, which has been recorded to prepaid expenses on the condensed consolidated balance sheet and are amortized over the remaining term of the June 2023 Revolving Credit Facility. Amortization of deferred debt charges related to the June 2023 Revolving Credit Facility were $0.2 million and $0.4 million for the three and nine months ended September 30, 2023, respectively.

 

Term Loan Facilities

 

Term Loan – On March 29, 2019, the Company entered into a $20.0 million “Term Loan” agreement secured by a second lien on all assets of the Company including accounts receivable, intellectual property and general intangibles. The Term Loan was subsequently upsized to $60.0 million and bore an interest rate of LIBOR plus 9.5% (13.6% as of December 31, 2022) with a maturity date of the earlier of March 29, 2024, or the maturity date of the Revolving Credit Facility.

 

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On November 18, 2022, the Company entered into an amendment to the Term Loan agreement, in which the lender consented to the amendments to the Revolving Credit Facility agreement and the Subordinated Term Loan agreement. The amended Term Loan agreement required the Company to cause the Yorkville Investor (See Note 11) to purchase the maximum amount of the Company’s equity interests available under the SEPA (See Note 11) and to utilize the net proceeds from such drawdowns to repay the Term Loan until it was fully repaid. Per the amended Term Loan agreement, an additional fee was incurred in the amount of $2.0 million, out of which $1.0 million became due in cash and the other $1.0 million was accrued to the principal balance of the Term Loan as the Company did not repay the Term Loan in full on or before March 27, 2023. Furthermore, beginning on April 3, 2023, an additional $0.15 million fee accrued to the principal balance of the Term Loan each week thereafter until the Term Loan was fully repaid.

 

On February 7, 2023, the Company entered into an amendment to the Term Loan agreement, which (i) amended the interest rate the Term Loan bears to SOFR plus 9.6% and (ii) required the Company to make a prepayment of $10.3 million, including $10.0 million of the principal and $0.3 million of the prepayment premium. Pursuant to the amended agreement, the Company made a $10.3 million payment to the Term Loan lender on February 7, 2023 and recorded $0.8 million as a loss on extinguishments of debt obligations on the accompanying consolidated statements of operations.

 

On May 19, 2023, the Company entered into an amendment to the Term Loan agreement, which extended the maturity date to May 23, 2024.

 

In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that these Term Loan amendments were debt modifications.

 

On June 7, 2023, the Company fully prepaid the borrowing under the Term Loan in the amount of $40.5 million and terminated the facility. As a result, the Company recorded $2.5 million of a loss on extinguishment of debt obligations on the accompanying condensed statements of operations for the nine months ended September 30, 2023.

 

Subordinated Term Loan – On December 22, 2021, the Company entered into a $20.0 million “Subordinated Term Loan” agreement secured by a third lien on all assets of the Company including accounts receivable, intellectual property and general intangibles. The Subordinated Term Loan was originally scheduled to mature on December 22, 2022, bore an interest rate of 15.0% through the original maturity and 14.0% thereafter. Pursuant to the Subordinated Term Loan agreement, the Company entered into warrant agreements and issued common unit purchase warrants (the “Subordinated Term Loan Warrants”).

 

On December 12, 2022, the Subordinated Term Loan Warrants were exercised and converted into Class A Common Stock. On December 30, 2022, the Company entered into an agreement with the lender of the Subordinated Term Loan, pursuant to which the Company agreed to compensate, in cash or shares of Class A Common Stock, the lender for the calculated amount between (a) the closing share price of Class A Common Stock on the business day immediately prior to the lender’s exercise of the Subordinated Term Loan Warrants on December 12, 2022 multiplied by the number of shares of Class A Common Stock issued for such exercise (the “December 2022 Warrant Shares”) and (b) the closing share price of Class A Common Stock on the business day immediately prior to the lender’s sale of the December 2022 Warrant Shares multiplied by the number of the December 2022 Warrant Shares sold by the lender (the “Subordinated Term Loan Warrants Make-Whole Agreement”). The Subordinated Term Loan Warrants Make-Whole Agreement expires on December 12, 2027.

 

The maturity of the Subordinate Term Loan was subsequently extended to December 31, 2023 with the amendment entered into on November 18, 2022. On March 22, 2023, the Company entered into an amendment to the Subordinated Term Loan agreement, modifying its maturity date to March 29, 2024, which was subsequently amended to May 23, 2024 with an amendment entered into on May 19, 2023. Concurrently, the Company entered into amendments to the Subordinated Term Loan Warrants agreements (see Note 9 for further information regarding the Subordinated Term Loan Warrants and the Subordinated Term Loan Warrants Make-Whole Agreement).

 

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On June 7, 2023, the Company entered into an amendment to the Subordinated Term Loan agreement, which modified (a) its maturity to the earlier of (i) the scheduled maturity date (June 7, 2025, which the Company has an option to extend to June 7, 2026 upon achievement of certain conditions) and (ii) the maturity date of the June 2023 Revolving Credit Facility, unless the Springing Maturity applies, and (b) the interest rate the Subordinated Term Loan bears to 15%, of which 11% is to be paid in cash and 4% is to be paid in kind by capitalizing such interest accrued to the principal each month in arrears. Any accrued, capitalized and uncapitalized paid-in-kind interest charges will be due and payable in cash at maturity. Concurrently, the Company entered into an amendment to the Subordinated Term Loan Warrants agreements (see Note 9 for further information regarding the Subordinated Term Loan Warrants).

 

In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that these Subordinated Term Loan amendments were debt modifications.

 

The Company capitalized $11.9 million in deferred debt charges related to the Subordinated Term Loan during the nine months ended September 30, 2023. Amortization of deferred debt charges related to the Subordinated Term Loan agreement was $0.7 million and $0.4 million for the three months ended September 30, 2023 and 2022, respectively. Amortization of deferred debt charges related to the Subordinated Term Loan agreement was $1.8 million and $1.1 million for the nine months ended September 30, 2023 and 2022, respectively.

 

Rodina Note – On February 2, 2023, the Company issued an unsecured promissory note with a certain entity affiliated with Andres Chico and Jose Miguel Enrich for a principal and purchase price of $3.0 million (the “Rodina Note”). The Rodina Note’s maturity date was July 1, 2024 and bore interest at 16.0% per annum which was to be paid in kind by capitalizing the amount of the interest accrued to the principal at the end of each calendar quarter. On May 19, 2023, the Company entered into a loan conversion agreement to convert the principal and accrued interest of the Rodina Note to Class A Common Stock. Pursuant to the loan conversion agreement, on June 20, 2023, the Company issued 940,243 shares of Class A Common Stock to the holder of the Rodina Note for its full and final settlement.

 

June 2023 Term Loan – On June 7, 2023, the Company entered into a $75.0 million “June 2023 Term Loan” agreement secured by the Company’s intellectual property, with a maturity date of the earlier of (i) the scheduled maturity date (June 7, 2025, which the Company has an option to extend to June 7, 2026 upon achievement of certain conditions) and (ii) the maturity date of the June 2023 Revolving Credit Facility, unless the Springing Maturity applies. The June 2023 Term Loan bears an interest rate of the prime rate plus a margin of 8.75% or 8.25% if the Company meets certain conditions defined in the agreement. The Company had the option to pay the interest in kind each month in arrears by capitalizing such interest which accrues through August 31, 2023 as additional principal, and in such instance, the margin applicable for the interest rate is 10.25%. The Company elected to pay the interest accrued through August 31, 2023 in kind. The Company also has the option to pay in kind any excess interest over 13.5% after paying the first 13.5% in cash from September 1, 2023 through the maturity, and the Company elected to pay such excess interest in kind for September 2023. As of September 30, 2023, the applicable interest rate of the June 2023 Term Loan was 16.8%. At the time of any repayment of the June 2023 Term Loan, the Company is required to pay a fee in the amount of 12.0% of the principal repaid. Such repayment fee amount has been accrued as additional principal on the accompanying condensed consolidated balance sheet as of September 30, 2023. Beginning on October 7, 2023 until the June 2023 Term Loan is fully repaid, the lender has the option to elect to convert the outstanding principal into Class A Common Stock. The aggregate number of shares delivered to the lender cannot result in the lender’s ownership exceeding (i) 19.99% of the number shares of Class A Common Stock issued and outstanding or (ii) $10.0 million. Concurrently, the Company entered into warrant agreements and issued common stock purchase warrants (the “June 2023 Term Loan Warrants”) (see Note 9 for further information regarding the June 2023 Term Loan Warrants).

 

The Company capitalized $24.0 million in deferred debt charges related to the June 2023 Term Loan during the nine months ended September 30, 2023. Amortization of deferred debt charges related to the June 2023 Term Loan agreement was $1.8 million and $2.2 million for the three and nine months ended September 30, 2023, respectively.

 

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The June 2023 Revolving Credit Facility, the June 2023 Term Loan and the Subordinated Term Loan are subject to certain cross-default provisions under the intercreditor agreement. In addition, the June 2023 Revolving Credit Facility, the June 2023 Term Loan and the Subordinated Term Loan agreements include covenants, which reduce the available borrowing base collateral under the June 2023 Revolving Credit Facility initially by $19.0 million (the “Minimum Excess Availability Reserve”). During the terms of the agreements, the Minimum Excess Availability Reserve could be decreased by up to $9.0 million, which will make the Minimum Excess Availability Reserve $10.0 million, upon the Company’s achievement of certain financial conditions defined in the agreements. As of September 30, 2023, the Minimum Excess Availability Reserve was $19.0 million. Furthermore, the June 2023 Revolving Credit Facility, the June 2023 Term Loan and the Subordinated Term Loan agreements require the Company to maintain a $2.0 million letter of credit. This letter of credit could be eliminated upon the Company’s achievement of certain financial conditions defined in the agreements.

 

Convertible Debentures

 

YA Convertible Debentures – As part of the security purchase agreement (the “YA SPA”) (see Note 11), the Company issued convertible debentures (collectively, the “YA Convertible Debentures”) to YA II PN, Ltd. (the “Yorkville Investor”) on November 30, 2022 (the “First YA Convertible Debenture”) and on February 3, 2023 (the “Second YA Convertible Debenture”). The principal amount of the First YA Convertible Debenture was $7.0 million for a purchase price of $7.0 million, and the principal amount of the Second YA Convertible Debenture was $10.0 million for a purchase price of $10.0 million. The YA Convertible Debentures had a maturity date of May 30, 2024 and bore interest at the rate of 4.0% per annum. The interest is due and payable upon maturity. At any time, so long as the YA Convertible Debentures are outstanding, the Yorkville Investor may covert all or part of the principal and accrued and unpaid interest of the YA Convertible Debentures into shares of Class A Common Stock at 90% of the lowest daily VWAP of Class A Common Stock during the seven consecutive trading days immediately preceding each conversion date, but in no event lower than $2.00 per share. Outside of an event of default under the YA Convertible Debentures, the Yorkville Investor may not convert in any calendar month more than the greater of (a) 25.0% of the dollar trading volume of the shares of Class A Common Stock during such calendar month, or (b) $3.0 million. The Company capitalized $1.7 million and $2.5 million in deferred debt charges related to the First YA Convertible Debenture and the Second YA Convertible Debenture for their originations, respectively. Amortization of deferred debt charges related to the YA Convertible Debentures was $0.2 million and $1.3 million for the three and nine months ended September 30, 2023, respectively. $-0- and an insignificant amount of accrued and unpaid interest were recorded in accrued expenses on the accompanying condensed consolidated balance sheets as of September 30, 2023 and other long-term liabilities as of December 31, 2022, respectively. During the three months ended September 30, 2023, the Yorkville Investor converted $5.9 million of the principal and insignificant amount of accrued interest of the YA Convertible Debentures to 2,471,561 shares of Class A Common Stock. During the nine months ended September 30, 2023, the Yorkville Investor converted $11.5 million of the principal and $0.3 million of the accrued interest of the YA Convertible Debentures to 4,048,601 shares of Class A Common Stock. The Company recorded $7.6 million and $10.6 million from YA Investor’s conversions in loss on extinguishment of debt obligations on the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2023, respectively.

 

On August 8, 2023, the Yorkville Investor assigned the YA Convertible Debentures to certain existing investors of the Company affiliated with Andres Chico and Jose Miguel Enrich. Pursuant to the assignment agreement, the assignees assumed all of the Yorkville Investor’s duties, liabilities and obligations under the YA Convertible Debentures and the Yorkville Investor was discharged of all of such duties, liabilities and obligations. Subsequently, the Company and the assignees entered into an amendment to the debentures which extended the maturity date to December 1, 2026. On August 25, 2023, the assignees converted all of the remaining principal of $5.6 million and an insignificant amount of accrued and unpaid interest of the YA Convertible Debentures to 1,428,760 shares of Class A Common Stock for the final settlement of the YA Convertible Debentures. The conversion resulted in a $0.9 million loss on debt extinguishment which the Company recognized on the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2023.

 

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Insider Convertible Debentures – On December 16, 2022, the Company issued convertible debentures to certain members of the Company’s management team and board of directors, and certain other existing investors of the Company for a total principal amount of $11.9 million and the total net proceeds of $10.5 million (the “Insider Convertible Debentures”). The Insider Convertible Debentures had a maturity date of June 16, 2024 and accrue interest at the rate of 6.0% per annum. The interest is due and payable quarterly in arrears, and any portion of the aggregate interest accrued may, at the option of the Company, be paid in kind by capitalizing the amount of accrued interest to the principal on each applicable interest payment date. At any time, so long as the Insider Convertible Debentures are outstanding, each of the holders may convert all or part of the principal and accrued and unpaid interest of their Insider Convertible Debentures they hold into shares of Class A Common Stock at a conversion price of $16.96 per share. Concurrent with the issuance of the Insider Convertible Debentures, the Company entered into a lockup agreement with each of the holders of the Insider Convertible Debentures, pursuant to which the holders agreed to not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, any shares of Class A Common Stock the holders may receive from their exercise option to convert the Insider Convertible Debentures until the earlier of (i) June 16, 2024, and (ii) when the Yorkville Investor sells all shares of Class A Common Stock issued under the YA Convertible Debentures (the “Insider Lock-Up Agreement”).

 

On June 2, 2023, the Company entered into an amendment to the Insider Convertible Debentures, with the exception of the three debentures, for which the amendment was executed on July 11, 2023. The amendment extended the maturity date to December 1, 2026. In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that the amendment was a debt modification.

 

On September 15, 2023, the Company entered into an amendment to the Insider Convertible Debentures held by three entities affiliated with Andres Chico and Jose Miguel Enrich. The amendment lowered the conversion price of these three debentures to $10.00 per share of Class A Common Stock. In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that the amendment was a debt extinguishment. Accordingly, as of the amendment date, the Company (i) derecognized the net carrying amount of these three Insider Convertible Debentures of $7.6 million and the remaining capitalized deferred debt charges of $0.6 million, (ii) recognized the three Insider Convertible Debentures at their fair value of $6.7 million and the debt discount of $1.5 million on consolidated balance sheet and (iii) recognized $0.9 million of loss on debt extinguishment on the consolidated statement of operations. Concurrently, the Company issued a warrant to an entity affiliated with Andres Chico and Jose Miguel Enrich which granted the right to purchase 498,119 shares of Class A Common Stock (the “Rodina Warrant”) (See Note 9 for further information regarding the Rodina Warrant). The Company recorded the principal of the Insider Convertible Debentures, including interest incurred between the origination through September 30, 2023, which the Company elected to capitalize to the principal, in related-party debt obligations, net of deferred debt charges on the accompanying condensed consolidated balance sheet as of September 30, 2023. The Company capitalized $0.2 million and $0.5 million of accrued interest to the principal of the Insider Convertible Debentures during the three and nine months ended September 30, 2023, respectively. Amortization of deferred debt charges related to the Insider Convertible Debentures was $0.1 million and $0.4 million for the three and nine months ended September 30, 2023, respectively.

 

As of December 31, 2022, the Company had received $3.5 million of the total $10.5 million net proceeds from the investors and the remaining $7.0 million was recorded in related-party notes receivable on the accompanying condensed consolidated balance sheet as of December 31, 2022. The Company received the remaining $7.0 million in January and February 2023. Neither principal nor accrued interest of the Insider Convertible Debentures was converted to Class A Common Stock from the origination through September 30, 2023.

 

Third Party Convertible Debentures – On February 1, 2023, the Company issued convertible debentures to certain third parties for a total principal amount of $1.4 million and a total net proceeds of $1.2 million (the “Third Party Convertible Debentures”). The Third Party Convertible Debentures had a maturity date of August 1, 2024 and accrue interest at the rate of 6.0% per annum. The interest is due and payable quarterly in arrears, and any portion of the aggregate interest accrued may, at the option of the Company, be paid in kind by capitalizing the amount of accrued interest to the principal on each applicable interest payment date. At any time, so long as the Third Party Convertible Debentures are outstanding, each of the holders may convert all or part of the principal and accrued and unpaid interest of their Third Party Convertible Debentures they hold into shares of Class A Common Stock at a conversion price of $15.52 per share. Concurrent with the issuance of the Third Party Convertible Debentures, the Company entered into a lockup agreement with each of the holders of the Third Party Convertible Debentures, pursuant to which the holders agreed to not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, any shares of Class A Common Stock the holders may receive from their exercise option to convert the Third Party Convertible Debentures until the earlier of (i) August 1, 2024, and (ii) when the Yorkville Investor sells all shares of Class A Common Stock issued under the YA Convertible Debentures (the “Third Party Lock-Up Agreement”).

 

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On June 2, 2023, the Company entered into an amendment to the Third Party Convertible Debentures, with the exception of the three debentures, for which the amendment was executed on July 31, 2023. The amendment extended the maturity date to December 1, 2026. In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that the amendment was a debt modification. The Company recorded the principal of the Third Party Convertible Debentures, including interest incurred between the origination through September 30, 2023 which the Company elected to capitalize to the principal, in debt obligations, net of deferred debt charges on the accompanying condensed consolidated balance sheet as of September 30, 2023. The Company capitalized insignificant amount and $0.1 million of accrued interest to the principal of the Third Party Convertible Debentures during the three and nine months ended September 30, 2023, respectively. Amortization of deferred debt charges related to the Third Party Convertible Debentures was insignificant for the three ended September 30, 2023 and $0.5 million for the nine months ended September 30, 2023. Neither principal nor accrued interest of the Third Party Convertible Debentures was converted from the origination through September 30, 2023.

 

NZ Superfund Convertible Debentures – On February 1, 2023, the Company issued a convertible debenture to Guardians of New Zealand Superannuation (the “NZ Superfund”), a beneficial owner of greater than 10% of the issued and outstanding Class A Common Stock and Class V Common Stock, for a total principal amount of $5.1 million and the total net proceeds of $4.5 million (the “NZ Superfund Convertible Debenture”). The NZ Superfund Convertible Debenture had a maturity date of August 1, 2024 and accrued interest at the rate of 8.0% per annum. The interest is due and payable quarterly in arrears, and any portion of the aggregate interest accrued may, at the option of the Company, be paid in kind by capitalizing the amount of accrued interest to the principal on each applicable interest payment date. At any time, so long as the NZ Superfund Convertible Debenture is outstanding, the NZ Superfund may convert all or part of the principal and accrued and unpaid interest of the NZ Superfund Convertible Debenture it holds into shares of Class A Common Stock at a conversion price of $15.52. Concurrent with the issuance of the NZ Superfund Convertible Debenture, the Company entered into a lockup agreement with the NZ Superfund, pursuant to which it agreed to not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, any shares of Class A Common Stock the holders may receive from its exercise option to convert the NZ Superfund Convertible Debenture until the earlier of (i) August 1, 2024, and (ii) when the Yorkville Investor sells all shares of Class A Common Stock issued under the YA Convertible Debentures (the NZ Superfund Lock-Up Agreement).

 

On June 2, 2023, the Company entered into an amendment to the NZ Superfund Convertible Debenture, which extended the maturity date to December 1, 2026 and modified the interest rate it bears to 14.0%. In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that the amendment was a debt modification. The Company recorded the principal of the NZ Superfund Convertible Debenture, including interest incurred between the origination through September 30, 2023 which the Company elected to capitalize to the principal, in related party debt obligations, net of deferred debt charges on the accompanying condensed consolidated balance sheet as of September 30, 2023. The Company capitalized $0.2 million and $0.4 million of accrued interest to the principal of the NZ Superfund Convertible Debenture during the three and nine months ended September 30, 2023, respectively. Amortization of deferred debt charges related to the NZ Superfund Convertible Debenture was insignificant and $0.1 million for the three and nine months ended September 30, 2023, respectively. Neither principal nor accrued interest of the NZ Superfund Convertible Debenture was converted from the origination through September 30, 2023.

 

22

 

 

Components of the Company’s debt obligations were as follows (in thousands):

 

Schedule of components of long-term debt
		September 30, 2023				December 31, 2022
Term loan balance		$	108,483			$	71,000
Convertible debt balance			1,446				7,000
Related-party convertible debt balance			18,041				11,964
Less unamortized deferred debt charges			(35,358	)			(6,138	)
Total borrowed			92,612				83,826
Less short-term debt obligation balance			-				(3,771	)
Long-term debt obligation balance		$	92,612			$	80,055

 

At September 30, 2023, the future aggregate maturities of long-term debt for the remainder of 2023 and subsequent periods are as follows (in thousands):

 

Schedule of maturities of long-term debt
Fiscal Years Ending December 31,
2023		$	-
2024			-
2025			108,483
2026			19,487
Total		$	127,970

 

The total interest expense related to the Revolving Credit Facilities, Term Loan Facilities, and Convertible Debentures was $9.6 million and $4.6 million for the three months ended September 30, 2023 and 2022, respectively. The total interest expense related to the Revolving Credit Facilities, Term Loan Facilities, and Convertible Debentures was $26.2 million and $12.3 million for the nine months ended September 30, 2023 and 2022, respectively.

 

Note 6—Accrued expenses

 

Accrued expenses consist of the following as of September 30, 2023 and December 31, 2022 (in thousands):

 

Schedule of accrued expenses
		September 30, 2023				December 31, 2022
Accrued hauler expenses		$	63,049			$	44,773
Accrued compensation			15,026				43,054
Accrued income taxes			-				9
Accrued Mergers transaction expenses			-				13,433
FPA Settlement Liability (as defined in Note 10)			2,000				-
Other accrued expenses			3,591				6,733
Total accrued expenses		$	83,666			$	108,002

 

During the nine months ended September 30, 2023, the Company granted certain RSU awards, valued at $8.2 million, as replacement awards for $26.8 million of the accrued management rollover consideration. The replacement awards resulted in a $18.6 million gain, which was included in gain on settlement of incentive compensation on the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2023.

 

23

 

 

Note 7—Goodwill and other intangibles

 

There were no additions to goodwill during the nine months ended September 30, 2023 or the year ended December 31, 2022. No impairment of goodwill was identified for the three or nine months ended September 30, 2023 or the year ended December 31, 2022.

 

Intangible assets consisted of the following (in thousands, except years):

 

Schedule of intangible assets and goodwill
		September 30, 2023
		Useful Life (in years)			Gross Carrying Amount				Accumulated Amortization				Net Carrying Amount
Trade Name		5			$	728			$	(728	)		$	-
Customer and hauler relationships		2 to 8				20,976				(14,061	)			6,915
Non-competition agreements		3 to 4				550				(550	)			-
Technology		3				3,178				(2,298	)			715
Total finite-lived intangible assets						25,432				(17,802	)			7,630
Domain Name		Indefinite				835				-				835
Total intangible assets					$	26,267			$	(17,802	)		$	8,465

 

		December 31, 2022
		Useful Life (in years)			Gross Carrying Amount				Accumulated Amortization				Net Carrying Amount
Trade Name		5			$	728			$	(728	)		$	-
Customer and hauler relationships		2 to 8				20,976				(12,141	)			8,835
Non-competition agreements		3 to 4				550				(550	)			-
Technology		3				3,178				(1,967	)			1,211
Total finite-lived intangible assets						25,432				(15,386	)			10,046
Domain Name		Indefinite				835				-				835
Total intangible assets					$	26,267			$	(15,386	)		$	10,881

 

Amortization expense for these intangible assets was $0.8 million and $0.8 million for the three months ended September 30, 2023 and 2022, respectively. Amortization expense for these intangible assets was $2.4 million and $2.5 million for the nine months ended September 30, 2023 and 2022, respectively. Future amortization expense for the remainder of 2023 and subsequent years is as follows (in thousands):

 

Schedule of finite- lived intangible assets, future amortization expense
Fiscal Years Ending December 31,
2023		$	804
2024			3,110
2025			2,559
2026			1,157
Total future amortization of intangible assets		$	7,630

 

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Note 8—Stockholders’ (deficit) equity

 

The table set forth below reflects information about the Company’s equity as of September 30, 2023.

 

Schedule of stockholders equity
		Authorized				Issued				Outstanding
Class A Common Stock			690,000,000				34,803,951				34,803,951
Class V Common Stock			275,000,000				4,425,388				4,425,388
Preferred Stock			10,000,000				-				-
Total shares as of September 30, 2023			975,000,000				39,229,339				39,229,339

 

The table set forth below reflects information about the Company’s equity as of December 31, 2022.

 

		Authorized				Issued				Outstanding
Class A Common Stock			690,000,000				6,985,869				6,985,869
Class V Common Stock			275,000,000				14,432,992				14,432,992
Preferred Stock			10,000,000				-				-
Total shares as of December 31, 2022			975,000,000				21,418,861				21,418,861

 

Each share of Class A Common Stock and Class V Common Stock entitles the holder one vote per share. Only holders of Class A Common Stock have the right to receive dividend distributions. In the event of liquidation, dissolution or winding up of the affairs of the Company, only holders of Class A Common Stock have the right to receive liquidation proceeds, while the holders of Class V Common Stock are entitled to only the par value of their shares. The holders of Class V Common Stock have the right to exchange Class V Common Stock for an equal number of shares of Class A Common Stock. The Company’s board of directors has discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.

 

During the nine months ended September 30, 2023, 10,007,604 shares of Class V Common Stock were exchanged to the equal number of shares of Class A Common Stock.

 

Note 9—Warrants

 

Public Warrants and Private Warrants – In connection with the Closing, on August 15, 2022, the Company assumed a total of 3,752,107 outstanding warrants to purchase one share of the Company’s Class A Common Stock with an exercise price of $92.00 per share. Of these warrants, the 1,976,560 Public Warrants were originally issued in Founder’s initial public offering (the “IPO”) and 1,775,547 Private Warrants were originally issued in a private placement in connection with the IPO. The Private Warrants are identical to the Public Warrants, except the Private Warrants are exercisable on a cashless basis, at the holder’s option, and are non-redeemable by the Company so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

 

In accordance with the guidance contained in ASC 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Equity, the Company concluded that the IPO Warrants are not precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity.

 

The IPO Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the IPO Warrants. The IPO Warrants became exercisable on September 14, 2022, 30 days after the Closing and no IPO Warrants has been exercised through September 30, 2023. The IPO Warrants will expire five years from the Closing or earlier upon redemption.

 

25

 

 

The Company may redeem the Public Warrants and any Private Warrants no longer held by the initial purchaser thereof or its permitted transferee:

 

-

in whole and not in part;

 

-

at a price of $0.08 per warrant;

 

-

upon not less than 30 days’ prior written notice to each IPO Warrant holder and

 

-

if and only if, the last reported price of the Class A Common Stock equals or exceeds $144.00 per share for any 20 trading days within a 30 trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the IPO Warrant holders.

 

Rodina Warrant – On September 15, 2023, the Company issued the Rodina Warrant, which granted the holder the right to purchase 498,119 shares of Class A Common Stock at the exercise price of $0.08 per share any time prior to September 15, 2026. In accordance with the guidance contained in ASC 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Equity, the Company concluded that the Rodina Warrant is not precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity. Accordingly, the Rodina Warrant was recognized at its fair value of $1.7 million in additional paid-in capital on the consolidated balance sheet upon issuance. The Rodina Warrant has not been exercised and remains outstanding as of September 30, 2023.

 

Warrant Liabilities – Pursuant to the Subordinated Term Loan agreement entered on December 22, 2021 (see Note 5), the Company concurrently entered into warrant agreements and issued the Subordinated Term Loan Warrants under the condition that if the Company did not repay the Subordinated Term Loan on or prior to the original maturity date of December 22, 2022, the lender would receive the right to purchase up to the number of shares of Class A Common Stock worth $2.0 million at the exercise price of $0.08 per share at any time after the original maturity date prior to the earlier of the date principal and interest on all outstanding term loans under this Subordinated Term Loan agreement are repaid, and the tenth anniversary of the issuance date. Additionally, if the Company did not repay the Subordinated Term Loan on or prior to the original maturity date, the Subordinated Term Loan Warrants would be exercisable for additional $0.2 million of Class A Common Stock each additional full calendar month after the maturity date until the Company fully repays the principal and interest in cash (the “Additional Subordinated Term Loan Warrants”). If the Company repaid the Subordinated Term Loan on or prior to the original maturity date, the Subordinated Term Loan Warrants would automatically terminate and be voided and no Subordinated Term Loan Warrant would be exercisable.

 

On November 18, 2022, the Company entered into an amendment to the Subordinated Term Loan Warrants agreements, which (i) increased the number of shares of Class A Common Stock the lender has the right to purchase with the Subordinated Term Loan Warrants to such number of Class A Common Stock worth $2.6 million, (ii) caused the Subordinated Term Loan Warrants to be immediately exercisable upon execution of the amended Subordinated Term Loan Warrants agreements, and (iii) increased the value of Class A Common Stock the Additional Subordinated Term Loan Warrants would earn each additional full calendar month after March 22, 2023 to $0.25 million until the Company repays the Subordinated Term Loan in full.

 

On March 22, 2023, the Company entered into an amendment to the Subordinated Term Loan Warrants agreements, which increased the value of Class A Common Stock the Additional Subordinated Term Loan Warrants earn each additional full calendar month after March 22, 2023 to $0.35 million until the Company repays the Subordinated Term Loan in full.

 

On June 7, 2023, the Company entered into an amendment to the Subordinated Term Loan Warrants agreements, which amended the value of Class A Common Stock the Additional Subordinated Term Loan Warrants earn for the full calendar month starting June 23, 2023 to $0.38 million and such amount to increase by $25,000 each additional full calendar month thereafter until the Company repays the Subordinated Term Loan in full.

 

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The Company determined that the Subordinated Term Loan Warrants required liability classification pursuant to ASC 480. As such, the outstanding Subordinated Term Loan Warrants were recognized as warrant liabilities on the consolidated balance sheets, measured at their inception date fair value and subsequently remeasured at each reporting period with changes in fair value being recorded as a component of other income (expense) on the consolidated statements of operations. On December 12, 2022, the outstanding Subordinated Term Loan Warrants in amount of $2.6 million were converted to 136,553 shares of Class A Common Stock and reclassified from liability to the stockholders’ (deficit) equity.

 

On December 30, 2022, the Company entered into the Subordinated Term Loan Warrants Make-Whole Agreement. In June 2023, the outstanding Additional Subordinated Term Loan Warrants in amount of $1.1 million were exercised and converted to 319,923 shares of Class A Common Stock and reclassified from liability to stockholders’ (deficit) equity. During the three months ended September 30, 2023, the outstanding Additional Subordinated Term Loan Warrants in amount of $1.2 million were exercised and converted to 291,145 shares of Class A Common Stock and reclassified from liability to stockholders’ (deficit) equity. As of September 30, 2023 and December 31, 2022, no Subordinated Term Loan Warrants were outstanding. The impact to the accompanying condensed consolidated statement of operations from the changes in the fair value of the Subordinated Term Loan Warrants was insignificant for the three and nine months ended September 30, 2023 and 2022.

 

Pursuant to ASC 815, the Company determined that the Additional Subordinated Term Loan Warrants and the Subordinated Term Loan Warrants Make-Whole Agreement are derivatives. These derivatives, referred to throughout as the “Additional Subordinated Term Loan Warrants Derivative” and the “Subordinated Term Loan Warrants Make-Whole Derivative”, respectively, are recorded in derivative liabilities on the accompanying condensed consolidated balance sheet as of September 30, 2023. The Company performed fair value measurements for the Additional Subordinated Term Loan Warrants Derivative and the Subordinated Term Loan Warrants Make-Whole Derivative, which are described in Note 15. The fair value of the Additional Subordinated Term Loan Warrants Derivative and the Subordinated Term Loan Warrants Make-Whole Derivative are remeasured at each reporting period.

 

On November 30, 2022, the Company issued a pre-funded warrant for a purchase price of $6.0 million which was paid by the Yorkville Investor upon issuance (the “YA Warrant”). The YA Warrant is exercisable into $20.0 million of shares of Class A Common Stock at an exercise price of $0.0008 per share any time on or after the earlier of (i) August 30, 2023, and (ii) the date upon which all of the YA Convertible Debentures have been fully repaid by the Company or fully converted into shares of Class A Common Stock. On August 25, 2023 (the “Market Price Set Date”), the YA Convertible Debentures were converted into shares of Class A Common Stock for the full settlements, and the YA Warrant became exercisable at the conversion price of $4.52 per share, which was the average of the daily VWAPs of Class A Common Stock per share during the three consecutive trading days immediately following the Market Price Set Date. The conversion price will be adjusted to the lowest of (a) the “3-month Reset Price”, which is the average of the daily VWAPs of Class A Common Stock per share during the three consecutive trading days immediately following the 3-month anniversary of the Market Price Set Date, or (b) the “6-month Reset Price”, which is the average of the daily VWAPs of Class A Common Stock per share during the three consecutive trading days immediately following the 6-month anniversary of the Market Price Set Date, in case (a) or (b) is lower than $4.52 per share. The Company determined that the YA Warrant required liability classification pursuant to ASC 480. As such, the outstanding YA Warrant was recognized as warrant liability on the consolidated balance sheets, measured at its inception date fair value and subsequently remeasured at each reporting period with changes being recorded as a component of other income (expense) on the consolidated statements of operations. The Company measured the fair value of the YA Warrant as of September 30, 2023 and December 31, 2022, and recognized $20.0 million and $20.0 million of warrant liability on the accompanying condensed consolidated balance sheets, respectively. The fair value of the YA Warrant did not change during the three and nine months ended September 30, 2023. Since the issuance through September 30, 2023, the YA Warrant was not exercised.

 

27

 

 

Pursuant to the YA SPA executed with the Yorkville Investor on November 30, 2022 (See Note 11), the Company committed to issue a warrant to an advisor for certain professional services provided in connection with the issuance of the facilities (the “Advisor Warrant”). The Advisor Warrant granted the right to purchase up to 62,500 shares of Class A Common Stock at the exercise price of $0.01 any time prior to November 30, 2025. The Advisor Warrant was issued on January 16, 2023. Prior to the issuance of the Advisor Warrant, pursuant to ASC 480, the Company recorded the related obligation as warrant liability on the consolidated balance sheets at its fair value as of the date the obligation incurred and subsequently remeasured at each reporting period with changes in fair value being recorded as a component of other income (expense) on the consolidated statements of operations. Upon issuance of the Advisor Warrant on January 16, 2023, the Company remeasured the fair value of the Advisor Warrant and recognized $0.1 million of loss on change in fair value of the Advisor Warrant as a component of other income (expense) on the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2023, and the remeasured Advisory Warrant was reclassified to stockholders’ (deficit) equity on the issuance date. Since the issuance through September 30, 2023, the Advisor Warrant was not exercised.

 

Pursuant to the June 2023 Term Loan agreement entered on June 7, 2023 (see Note 5), the Company concurrently entered into warrant agreements and issued the June 2023 Term Loan Warrants, which granted the holders the right to purchase up to 2,121,605 shares of Class A Common Stock (the June 2023 Term Loan Warrants Shares) at the exercise price of $0.08 any time before June 7, 2033. If at any time on or before December 7, 2024, the Company issues additional shares of common stock (excluding any shares of common stock or securities convertible into or exchangeable for shares of common stock under the Company’s equity incentive plans existing as of the issue date), the number of the June 2023 Term Loan Warrants Shares issuable upon exercise immediately prior to such common stock issuance will be proportionately increased such that the percentage represented by the June 2023 Term Loan Warrants Shares in the Company’s diluted common stock outstanding will remain the same. Additionally, the holders of the June 2023 Term Loan Warrants have the right to purchase up to the pro rata portion of any new common stock issuance by the Company up to $20.0 million in the aggregate, other than any issuance in connection with (i) any grant pursuant to any stock option agreement, employee stock purchase plan, or similar equity-based plan or compensation agreement, (ii) the conversion or exchange of any securities into shares of the Company’s common stock, or the exercise of any option, warrant, or other right to acquire such shares, (iii) any acquisition by the Company of the stock, assets, properties, or business, (iv) any merger, consolidation, or other business combination involving the Company, or any other transaction or series of transactions resulting in a change of control of the Company and (v) any stock split, stock dividend, or similar recapitalization transaction. The Company determined that the June 2023 Term Loan Warrants did not qualify for equity classification in accordance with ASC 815. As such, the June 2023 Term Loan Warrants were recognized as warrant liability on the consolidated balance sheets, measured at its inception date fair value and subsequently remeasured at each reporting period with changes in fair value being recorded as a component of other income (expense) on the consolidated statements of operations. The Company measured the fair value of the June 2023 Term Loan Warrants as of the issuance date of June 7, 2023, June 30, 2023 and September 30, 2023, and recognized $9.4 million, $9.8 million and $6.5 million of warrant liability on the consolidated balance sheets, respectively, with the change in fair value of $(3.3) million and $(2.9) recognized as a component of other income (expense) on the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2023, respectively. Since the issuance through September 30, 2023, none of the June 2023 Term Loan Warrants were exercised.

 

28

 

 

Note 10—Forward Purchase Agreement

 

On August 4, 2022, the Company and the FPA Sellers entered into the Forward Purchase Agreement for an OTC Equity Prepaid Forward Transaction (the “Forward Purchase Transaction”). On November 30, 2022, the Company and the FPA Sellers entered into the FPA Termination Agreement and terminated the Forward Purchase Agreement. Pursuant to the FPA Termination Agreement, (i) the Company made a one-time $6.0 million cash payment to the FPA Sellers upon execution of the FPA Termination Agreement and agreed to make a $2.0 million payment to the FPA Sellers, which can be settled in cash or shares of Class A Common Stock at the Company’s sole option, on or around the earlier of (a) May 30, 2024 (the “FPA Lock-Up Date”), and (b) six months following 90% or more of the YA Convertible Debentures is repaid or converted into shares of Class A Common Stock (the “FPA Earlier Lock-Up Date”), (ii) the FPA Sellers forfeited and returned to the Company 277.765 shares of Class A Common Stock which the Company subsequently canceled, and further agreed not to transfer any of 267,606 shares of Class A Common Stock the FPA Sellers retained until the earlier of (a) the FPA Lock-Up Date, and (b) the FPA Earlier Lock-Up Date. As more than 90% of the YA Convertible Debentures were converted into shares of Class A Common Stock on August 25, 2023, the FPA Earlier Lock-Up Date was set as February 25, 2024. The value of 277,765 shares of Class A Common Stock returned by the FPA Seller and subsequently canceled by the Company was $4.6 million as of the FPA Termination Agreement execution date, which was recognized in common stock – Class A and accumulated deficit on the consolidated balance sheet. The $2.0 million obligation (the “FPA Settlement Liability”) has been included in accrued expenses on the accompanying condensed consolidated balance sheets as of September 30, 2023 and other long-term liabilities as of December 31, 2022, respectively.

 

Note 11—Yorkville Facilities

 

Standby Equity Purchase Agreement – On August 31, 2022, the Company entered into a Standby Equity Purchase Agreement (“SEPA”) with the Yorkville Investor, which was subsequently amended on November 30, 2022. Pursuant to the SEPA, the Company had the right to sell to the Yorkville Investor, from time to time, up to $200.0 million of shares of Class A Common Stock until the earlier of the 36-month anniversary of the SEPA, and the date on which the facility has been fully utilized, subject to certain limitations and conditions set forth in the SEPA, including the requirement that there be an effective registration statement registering such shares and limitations on the volume of shares that may be sold. Shares were to be sold to the Yorkville Investor at a price equal to 97% of the lowest daily VWAP of the Class A Common Stock during the three consecutive trading days immediately prior to any notice to sell such securities provided by the Company. The Yorkville Investor was not permitted to beneficially own greater than 9.99% of the outstanding shares of Class A Common Stock. Sales of Class A Common Stock to the Yorkville Investor under the SEPA, and the timing of any such sales, were at the Company’s option, and the Company was under no obligation to sell any securities to the Yorkville Investor under the SEPA. Pursuant to the SEPA, on August 31, 2022, the Company issued the Yorkville Investor 25,000 shares of Class A Common Stock, which represented an initial up-front commitment fee and was recognized in other income (expense) within the accompanying consolidated statements of operations. On August 18, 2023, the SEPA was terminated with no further obligations to the Company or the Yorkville Investor. The Company did not sell any shares of Class A Common Stock under the SEPA from the origination through the termination of the facility.

 

Securities Purchase Agreement – On November 30, 2022, the Company entered into the YA SPA with the Yorkville Investor, where by the Company agreed to issue and sell to the Yorkville Investor (i) convertible debentures (the “YA Convertible Debentures”) in the aggregate principal amount of up to $17.0 million, which were convertible into shares of Class A Common Stock (as converted, the “YA Conversion Shares”), and (ii) the YA Warrant, which is exercisable into $20.0 million of shares of Class A Common Stock. Upon execution of the YA SPA, the Company (i) issued and sold to the Yorkville Investor (a) the First YA Convertible Debenture in the principal amount of $7.0 million for a purchase price of $7.0 million, and (b) the YA Warrant for a pre-funded purchase price of $6.0 million, and (ii) paid the Yorkville Investor a cash commitment fee in the amount of $2.0 million, with such amount being deducted from the proceed of the First YA Convertible Debenture, netting to $11.0 million in total proceeds. The Company issued the YA Warrant to utilize the proceed to fund the cost of the FPA Termination Agreement. See Note 5 for additional information regarding the First YA Convertible Debenture and Note 9 regarding the YA Warrant.

 

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Pursuant to execution of the YA SPA, the Company made a $0.4 million payment in cash and committed to issue the Advisor Warrant for certain professional services provided by a third party professional service firm in connection with the issuance of the facilities. The Advisor Warrant was issued on January 16, 2023. See Note 9 for additional information regarding the Advisor Warrant. The cash payment and the Advisor Warrant were recognized as debt issuance cost upon execution of the YA SPA, YA Convertible Debentures and YA Warrant.

 

Pursuant to the YA SPA, the Yorkville Investor committed to purchasing a YA Convertible Debenture in the principal amount of $10.0 million for a purchase price of $10.0 million upon the Company satisfying certain conditions, including, among others, the Company’s registration statement is declared effective by the SEC for the underlying securities of the First YA Convertible Debenture and YA Warrant. Accordingly, as of the YA SPA execution date, the Company recognized a commitment asset in the amount of $2.1 million, which was included in other noncurrent assets on the accompanying condensed consolidated balance sheet as of December 31, 2022. The Second YA Convertible Debenture was issued and sold to the Yorkville Investor on February 3, 2023 and the commitment asset was reclassified to debt discount upon issuance of the Second YA Convertible Debenture. See Note 5 for additional information regarding the Second YA Convertible Debenture.

 

In accordance with ASC 815, the Company has determined that certain redemption feature within the YA Convertible Debentures was an embedded derivative. This derivative, referred to throughout as the “Redemption Feature Derivative” was recorded in derivative liabilities on the accompanying condensed consolidated balance sheets as of December 31, 2022 and derecognized upon full settlement of the YA Convertible Debentures on August 25, 2023. The Company performed fair value measurements for this derivative as of the YA Convertible Debentures issuance dates, December 31, 2022 and August 25, 2023 which is described further in Note 15. The fair value of the Redemption Feature Derivative was remeasured each reporting period.

 

Note 12—Cantor Sales Agreement

 

On September 5, 2023, the Company entered into a Controlled Equity Offering Sales Agreement (the “Cantor Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”) pursuant to which the Company may offer and sell, from time to time through Cantor, shares of Class A Common Stock for aggregate gross proceeds up to $50.0 million. Pursuant to the Cantor Sales Agreement, Cantor may sell shares of Class A Common Stock in sales deemed to be “at the market offerings” as defined in Rule 415(a)(4) under the Securities Act. The Company has no obligation to sell any shares of Class A Common Stock under the Cantor Sales Agreement. Cantor will act as sales agent and use commercially reasonable efforts to sell on the Company’s behalf all of the shares of Class A Common Stock requested to be sold by the Company. Under the terms of the Cantor Sales Agreement, the Company has agreed to pay Cantor a commission equal to 3.0% of the aggregate gross proceeds from any shares of Class A Common Stock sold pursuant to the Cantor Sales Agreement. The Cantor Sales Agreement will remain in effect until the aggregate gross proceeds of the Company’s sales of shares of Class A Common Stock reach $50.0 million in total unless early terminated under the terms of the Cantor Sales Agreement. The Company did not sell any shares of Class A Common Stock under the Cantor Sales Agreement through September 30, 2023.

 

Note 13—Equity-based compensation

 

During the three and nine months ended September 30, 2023 and 2022, the Company recorded stock-based compensation related to the 2014 and 2022 Plans (as defined below). As more fully described in Notes 1 and 3, the Company completed the Mergers with Founder on August 15, 2022, and all incentive units and phantom units under the 2014 Plan fully vested as of the Closing Date, and the original operating agreement was terminated and replaced by a new operating agreement consistent with the Company’s Up-C structure.

 

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2014 Plan

 

The 2014 Profits Participation Plan and Unit Appreciation Rights Plan (the “2014 Plan”) was a board-approved plan of Holdings LLC. Under the 2014 Plan, Holdings LLC had the authority to grant incentive and phantom units to acquire common units. Unit awards generally vested at 25.0% of the units on the one year anniversary of continued employment, with the remaining 75% vesting in equal monthly installments over the next three years, unless otherwise specified.

 

As further described in Note 3, upon consummation of the Mergers, all incentive units granted under the 2014 Plan vested and converted into the Class V Common Stock and all phantom units granted under the 2014 Plan converted into RSUs and DSUs which will vest into shares of Class A Common Stock. The unrecognized compensation cost related to the 2014 Plan that was remaining at the Closing was recognized as expense upon consummation of the Mergers.

 

2022 Plan

 

The 2022 Equity Incentive Plan (the “2022 Plan”), which became effective on August 15, 2022 in connection with the Closing, provides for the grant to certain employees, officers, non-employee directors and other services providers of options, stock appreciation rights, RSUs, restricted stock and other stock-based awards, any of which may be performance-based, and for incentive bonuses, which may be paid in cash, Common Stock or a combination thereof, as determined by the Company’s Compensation Committee. Under the 2022 Plan, 3,625,000 shares of Class A Common Stock are authorized to be issued. Upon approval by the Company’s board of directors, additional 357,409 shares of Class A Common Stock became available for issuance on January 1, 2023 under the 2022 Plan as a result of the plan’s evergreen provision.

 

The following represents a summary of the Company’s RSU activity and related information during the nine months ended September 30, 2023:

 

Schedule of RSUs activity
		Units				Weighted Average Grant Date Fair Value
Nonvested – December 31, 2022			182,086			$	15.84
Granted			2,016,639				8.10
Vested			(986,461	)			8.98
Forfeited/redeemed			(45,256	)			15.09
Nonvested – September 30, 2023			1,167,008			$	8.30

 

The RSUs exchanged for phantom units vested upon the Closing of the Mergers. The remaining RSUs will vest over the requisite service periods ranging from six to thirty-six months from the grant date.

 

The Company recognized $2.1 million and $90.6 million in total equity compensation costs, including phantom unit expense, for the three months ended September 30, 2023 and 2022, respectively. The Company recognized $13.2 million and $95.3 million in total equity compensation costs, including phantom unit expense, for the nine months ended September 30, 2023 and 2022, respectively.

 

Some of RSUs settled during the nine months ended September 30, 2023 were net share settled such that the Company withheld shares with a value equivalent to the employees’ obligation for the applicable income and other employment taxes and remitted the cash to the appropriate taxing authorities. The total shares withheld were approximately $1.1 million and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price. Total payments to the taxing authorities for employees’ tax obligations pertaining to the withheld shares were $1.0 million. As of September 30, 2023, there were 642,418 vested RSUs and 38,350 vested DSUs remaining which are expected to be settled in shares of Class A Common Stock prior to December 31, 2023.

 

As of September 30, 2023, the total unrecognized compensation cost related to outstanding RSUs was $5.1 million, which the Company expects to recognize over a weighted-average period of 0.6 years.

 

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Note 14—Loss per share

 

Basic net loss per share of Class A Common Stock is computed by dividing net loss attributable to the Company by the weighted average number of shares of Class A Common Stock outstanding during the three and nine months ended September 30, 2023. Diluted net loss per share of Class A Common Stock is computed by dividing net loss attributable to the Company, adjusted for the assumed exchange of all potentially dilutive securities, by weighted average number of shares of Class A Common Stock outstanding adjusted to give effect to potentially dilutive shares.

 

Prior to the Mergers, the membership structure of Holdings LLC included units which had profit interests. The Company analyzed the calculation of loss per unit for periods prior to the Mergers and determined that it resulted in values that would not be meaningful to the users of these condensed consolidated financial statements. Therefore, net loss per share information is not presented for periods prior to August 15, 2022. Shares of the Company’s Class V Common Stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class V Common Stock under the two-class method is not presented.

 

The computation of net loss per share attributable to Rubicon Technologies, Inc. and weighted-average shares of the Company’s Class A Common Stock outstanding for the three and nine months ended September 30, 2023 are as follows (amounts in thousands, except for share and per share amounts):

 

Schedule of net loss per share
		Three Months Ended September 30, 2023				Nine Months Ended September 30, 2023
Numerator:
Net loss		$	(30,173	)		$	(62,441	)
Less: Net loss attributable to noncontrolling interests			(2,519	)			(18,456	)
Net loss attributable to Rubicon Technologies, Inc		$	(27,654	)		$	(43,985	)
Denominator:
Weighted average shares of Class A Common Stock outstanding – Basic and diluted			32,381,649				17,786,466
Net loss per share attributable to Class A Common Stock – Basic and diluted		$	(0.85	)		$	(2.47	)

 

The computation of net loss per share attributable to Rubicon Technologies, Inc. and weighted-average shares of the Company’s Class A Common Stock outstanding for period from August 15, 2022 (the Closing Date) to September 30, 2022 are as follows (amounts in thousands, except for share and per share amounts):

 

Numerator:
Net loss for the period from August 15, 2022 through September 30, 2022		$	(34,741	)
Less: Net loss attributable to noncontrolling interests for the period from August 15, 2022 through September 30, 2022			(16,933	)
Net loss for the period from August 15, 2022 through September 30, 2022 attributable to Rubicon Technologies, Inc. – Basic and diluted		$	(17,808	)
Denominator:
Weighted average shares of Class A Common Stock outstanding – Basic and diluted			6,083,847
Net loss per share attributable to Class A Common Stock – Basic and diluted		$	(2.93	)

 

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The Company’s potentially dilutive securities below were excluded from the computation of diluted loss per share as their effect would be anti-dilutive:

 

-

IPO Warrants, Additional Subordinated Term Loan Warrants, Advisor Warrant, June 2023 Term Loan Warrants, YA Warrant and Rodina Warrant.

 

-

Earn-Out Interests.

 

	-	RSUs and DSUs.
	-	Exchangeable Class V Common Stock.
	-	Potential settlements in Class A Common Stock of the Insider Convertible Debentures, the Third Party Convertible Debentures, the NZ Superfund Convertible Debentures, the June 2023 Term Loan, the FPA Settlement Liability, the Subordinated Term Loan Warrants Make-Whole Agreement and portion of fees for the PIPE Software Services Subscription (as defined in Note 16).

 

Note 15—Fair value measurements

 

The following tables summarize the Company’s financial assets and liabilities measured at fair value on recurring basis by level within the fair value hierarchy as of the dates indicated (in thousands):

 

Schedule of assets and liabilities measured at fair value on recurring basis
		As of September 30, 2023
Liabilities		Level 1				Level 2				Level 3
Warrant liabilities		$	-			$	(26,502	)		$	-
Additional Subordinated Term Loan Warrants Derivative			-				-				(12,058	)
Subordinated Term Loan Warrants Make-Whole Derivative			-				-				(1,906	)
Earn-out liabilities			-				-				(160	)
Total		$	-			$	(26,502	)		$	(14,124	)

 

		As of December 31, 2022
Liabilities		Level 1				Level 2				Level 3
Warrant liabilities		$	-			$	(20,890	)		$	-
Redemption Feature Derivative			-				-				(826	)
Subordinated Term Loan Warrants Make-Whole Derivative			-				-				-
Earn-out liabilities			-				-				(5,600	)
Total		$	-			$	(20,890	)		$	(6,426	)

 

Level 3 Rollfoward		Redemption Feature Derivative				Additional Subordinated Term Loan Warrants Derivative				Subordinated Term Loan Warrants Make-Whole Derivative				Earn-out liabilities
December 31, 2022 balances		$	(826	)		$	-			$	-			$	(5,600	)
Additions			(474	)			(12,264	)			-				-
Changes in fair value			(931	)			(1,602	)			-				5,290
Reclassified to level 2			-				1,050				-
June 30, 2023 balances			(2,231	)			(12,816	)			-				(310	)
Changes in fair value			1,103				(442	)			(1,906	)			150
Reclassified to level 2			-				1,200				-				-
Reclassified to equity			1,128				-				-				-
September 30, 2023 balances		$	-			$	(12,058	)		$	(1,906	)		$	(160	)

 

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The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and contract assets and liabilities, approximate fair value due to their short-term maturities and are excluded from the fair value table above.

 

Warrant liabilities – The warrant liabilities were classified to level 2 as of September 30, 2023 and December 31, 2022. The outstanding warrants which were classified as warrant liabilities as of September 30, 2023 were the YA Warrant and the June 2023 Term Loan Warrants. In addition, as of December 31, 2022, the Advisor Warrants were classified as warrant liabilities as their terms were not determined at that time. The Advisor Warrants were reclassified to equity on January 16, 2023. The sole underlying asset of the outstanding warrant liabilities as of September 30, 2023 and December 31, 2022 was Class A Common Stock, which is an observable input, however the value of the warrants themselves were not directly or indirectly observable. The fair value of the warrant liabilities were determined based on price of the underlying share and the terms of each warrant, specifically whether each warrant is exercisable for a fixed number of shares of Class A Common Stock, hence the value of the total shares a warrant is exercisable for is variable, or a fixed value of shares of Class A Common Stock thus the number of the total shares a warrant is exercisable for is variable. The exercise prices of the liability-classified warrants which were outstanding as of September 30, 2023 and December 31, 2022 were minimal ($0.08 per Class A Common Stock share for the Advisor Warrants and the June 2023 Term Loan Warrants and $0.0008 per Class A Common Stock share for the YA Warrant) and did not have significant impact to the fair value measurements of these warrants. See Note 9 for further information regarding the warrant liabilities.

 

Redemption Feature Derivative – The Redemption Feature Derivative’s fair value was estimated using a single factor binomial lattice model (the “Lattice Model”). The Lattice Model estimates fair value based on changes in the price of the underlying equity over time. It assumes that the stock price can only go up or down at each point in time, and it considers the likelihood of each outcome using a risk-neutral probability framework.

 

The Lattice Model the Company utilized is a single-factor model, which means it only considers uncertainty related to the Company’s stock price. It calculates the value of the option to convert the YA Convertible Debentures into Class A Common Stock using a binomial tree structure and backward induction. The payoffs of the YA Convertible Debentures were computed via backward induction and discounted at a blended rate. The key inputs to the Lattice Model are the yield of a hypothetical identical note without the conversion features, and the volatility of common stock.

 

The following table provides quantitative information of the key assumptions utilized in the Redemption Feature Derivative fair value measurements as of measurement dates:

 

Schedule of derivative fair value measurements
		As of September 30, 2023				As of February 3, 2023				As of December 31, 2022
Price of Class A Common Stock		$	-			$	1.56			$	1.78
Risk-free interest rate			-	%			4.63	%			4.60	%
Yield			-	%			13.6	%			15.6	%
Expected volatility			-	%			50.0	%			50.0	%

 

As of December 31, 2022, the Redemption Feature Derivative outstanding was a derivative embedded in the First YA Convertible Debenture. On February 3, 2023, the Second YA Convertible Debenture was issued with identical terms to the First YA Convertible Debenture, except for the principal amount, purchase price and the fixed conversion price. On various dates through August 25, 2023, all of the YA Convertible Debentures were converted to Class A Common Stock, and upon the final conversion on August 25, 2023, the Company derecognized the remaining Redemption Feature Derivative. The Company measured and recognized the fair value of the Redemption Feature Derivative as of December 31, 2022, February 3, 2023 which is the Second YA Convertible Debenture issuance date, March 31, 2023, June 30, 2023 and August 25, 2023 in derivative liabilities on the consolidated balance sheets, with the respective fair value adjustment recorded in loss on change in fair value of derivatives as a component of other income (expense) on the consolidated statements of operations.

 

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Additional Subordinated Term Loan Warrants Derivative – The Additional Subordinated Term Loan Warrants Derivative’s fair value was estimated using a discounted cashflow/expected present value method. The value the Additional Subordinated Term Loan Warrants earn was $0.35 million for each additional full calendar month after March 22, 2023 through June 22, 2023, and starting June 23, 2023, the value the Additional Subordinated Term Loan Warrants earn increases by $25,000 for each additional full calendar month thereafter until the Company repays the Subordinated Term Loan in full. The key assumption utilized was the probability of the Subordinated Term Loan remaining unpaid through its maturity, which the Company determined to be approximately 75% as of March 22, 2023, which was the execution date of the second amendment to the Subordinated Term Loan, and approximately 100% as of September 30, 2023. As of September 30, 2023, the Company applied a discount rate of 15.0% to calculate the present value of the Additional Subordinated Term Loan Warrants Derivative. The Company measured and recognized fair value for the Additional Subordinated Term Loan Warrants Derivative as of the execution dates of the first (November 18, 2022), second (March 22, 2023) and third amendments (June 7, 2023) to the Subordinated Term Loan Warrants agreements, and at the end of each reporting period in derivative liabilities on the consolidated balance sheets, with the respective fair value adjustment recorded in loss on change in fair value of derivatives as a component of other income (expense) on the consolidated statements of operations.

 

Subordinated Term Loan Warrants Make-Whole Derivative – The Subordinated Term Loan Warrants Make-Whole Derivative’s fair value was estimated using Black Scholes Merton model. The value the Subordinated Term Loan Warrants Make-Whole Agreement is primarily based on the make-whole provision amount between (a) the closing share price of Class A Common Stock on the business day immediately prior to the lender’s exercise of the Subordinated Term Loan Warrants on December 12, 2022 multiplied by the number of the December 2022 Warrant Shares and (b) the closing share price of Class A Common Stock on the business day immediately prior to the lender’s sale of the December 2022 Warrant Shares multiplied by the number of the December 2022 Warrant Shares sold by the lender.

 

The following table provides quantitative information of the key assumptions utilized in the Subordinated Term Loan Warrants Make-Whole Derivative fair value measurements as of measurement dates:

 

Schedule of derivative fair value measurements
		As of September 30, 2023				As of December 31, 2022
Price of Class A Common Stock		$	2.08			$	14.24
Strike Price of Class A Common Stock		$	18.96			$	18.96
Risk-free interest rate			4.70	%			4.00	%
Expected volatility			85.0	%			65.0	%
Expiration Date			December 12, 2027				December 12, 2027

 

The Company measured and recognized fair value for the Subordinated Term Loan Warrants Make-Whole Derivative as of the execution date of the Subordinated Term Loan Warrants Make-Whole Agreement and at the end of each reporting period in derivative liabilities on the consolidated balance sheets, with the respective fair value adjustment recorded in loss on change in fair value of derivatives as a component of other income (expense) on the consolidated statements of operations.

 

Earn-out liabilities – For the contingent consideration related to the Earn-Out Interests, the fair value was estimated using a Monte-Carlo Simulation in which the fair value was based on the simulated stock price of the Company over the maturity date of the contingent consideration. The key inputs used in the determination of the fair value included current stock price, expected volatility, and expected term.

 

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The following table provides quantitative information of the key assumptions utilized in the earn-out liabilities fair value measurements as of measurement dates:

 

Schedule of derivative fair value measurements
		As of September 30, 2023				As of December 31, 2022
Price of Class A Common Stock		$	2.08			$	1.78
Risk-free interest rate			4.70	%			4.00	%
Expected volatility			85.0	%			65.0	%
Expected remaining term			3.9 years				4.6 years

 

The Company measured and recognized the fair value of the Earn-Out Interests as of the end of each reporting period in earn-out liabilities on the consolidated balance sheets, with the respective fair value adjustment recorded in gain on change in fair value of earn-out liabilities as a component of other income (expense) on the consolidated statements of operations.

 

Note 16—Commitments and contingencies

 

Legal Matters

 

In the ordinary course of business, the Company is or may be involved in various legal or regulatory proceedings, claims or purported class actions related to alleged infringement of third-party patents and other intellectual property rights, commercial, corporate and securities, labor and employment, wage and hour and other claims.

 

The Company makes a provision for liabilities relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. The outcomes of legal proceedings and other contingencies are, however, inherently unpredictable and subject to significant uncertainties. At this time, the Company is not able to reasonably estimate the amount or range of possible losses in excess of any amounts accrued, including losses that could arise as a result of application of non-monetary remedies, with respect to the contingencies it faces, and the Company’s estimates may not prove to be accurate.

 

In management’s opinion, resolution of all current matters is not expected to have a material adverse impact on the Company’s consolidated statements of operations, cash flows or balance sheets. However, depending on the nature and timing of any such dispute or other contingency, an unfavorable resolution of a matter could materially affect the Company’s current or future results of operations or cash flows, or both.

 

Leases

 

The Company leases its office facilities under operating lease agreements expiring in 2024. While each of the leases includes renewal options, the Company has only included the base lease term in its calculation of lease assets and liabilities as it is not reasonably certain to utilize the renewal options. The Company does not have any finance leases.

 

The following table presents information regarding the maturities of the undiscounted remaining operating lease payments, with a reconciliation to the amount of the liabilities representing such payments as presented on the September 30, 2023 condensed consolidated balance sheet (in thousands).

 

Schedule of operating lease payments
Years Ending December 31,
2023			309
2024			790
Total minimum lease payments			1,099
Less: Imputed interest			(114	)
Total operating lease liabilities		$	985

 

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During the three months ended September 30, 2023, the Company terminated the lease agreement for one of its office facilities and entered into an amendment to another lease agreement. As a result, the Company derecognized $1.2 million of operating right-of-use assets and $1.4 million of operating lease liabilities on the consolidated balance sheet, with a gain of $0.2 million recorded in other income (expense) on the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2023.

 

Operating lease amounts above do not include sublease income. The Company has a sublease agreement with a third party and expects to receive sublease income of approximately $0.6 million through May 2024.

 

Software services subscription

 

The Company entered into a software services subscription agreement with a certain PIPE Investor (the “PIPE Software Services Subscription”), including related support and update services on September 22, 2021. The Company subsequently amended the agreement on December 15, 2021, March 6, 2023, March 28, 2023, June 27, 2023 and September 30, 2023. The term of the amended agreement is through December 31, 2024. As of September 30, 2023, $19.8 million will become due in the next 12 months and $3.8 million thereafter through October 2024. Pursuant to the amended agreement, the Company settled the $5.6 million subscription fee for the service period between January 1, 2023 and September 30, 2023 in Class A Common Stock. Additionally, the amended agreement provides the Company with the option, in its sole discretion, to settle the $16.0 million subscription fees which are scheduled to become due between October 2023 and June 2024 in cash or Class A Common Stock. Pursuant to the amended agreement entered into on September 30, 2023, for each such future payment the Company makes in Class A Common Stock, with exception of the payment on October 2, 2023 (see Note 20), the Company has an option to repurchase such Class A Common Stock at a price equal to 130% of the per share price applicable for each such payment during the 18-month period following such shares of Class A Common Stock become tradable by the PIPE Investor.

 

Note 17—Related party transactions

 

Convertible debentures – On December 16, 2022, the Company issued the Insider Convertible Debentures, which were subsequently amended, and entered into the Insider Lock-Up Agreement with certain members of the Company’s management team and board of directors, and certain other existing investors of the Company.

 

On February 1, 2023, the Company issued the NZ Superfund Convertible Debenture, which was subsequently amended, and entered into the NZ Superfund Lock-Up Agreement with NZ Superfund.

 

See Note 5 for further information regarding these transactions.

 

Chico PIPE Agreements – On March 16, 2023, the Company entered into subscription agreements (the “Chico PIPE Agreements”) with Jose Miguel Enrich, Andres Chico and Felipe Chico Hernandez pursuant to which the Company issued 1,222,222 shares of Class A Common Stock in exchange for the total purchase price of $1.1 million.

 

March 2023 Financing Commitment – On March 20, 2023, the Company entered into a financing commitment with a certain entity affiliated with Andres Chico and Jose Miguel Enrich whereby the entity or a third party entity designated by the entity intends to provide $15.0 million of financing to the Company through the issuance by the Company of debt and/or equity securities including, without limitation, shares of capital stock, securities convertible into or exchangeable for shares of capital stock, warrants, options, or other rights for the purchase or acquisition of such shares and other ownership or profit interests of the Company (the “March 2023 Financing Commitment”). Any debt issued pursuant to the March 2023 Financing Commitment would have a term of at least 12 months and any equity or equity linked securities issued under the March 2023 Financing Commitment would have a fixed price such that no other shareholder or other exchange approvals would be required. The amount the entity agreed to contribute under the March 2023 Financing Commitment was reduced on a dollar-for-dollar basis by the amount of any other capital the Company receives through December 31, 2023. Pursuant to the March 2023 Financing Commitment, the Company entered into the May 2023 Equity Agreements (see below) and the March 2023 Financing Commitment amount was reduced to $0.

 

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The Rodina Note Conversion Agreement – On May 19, 2023, the Company entered into a loan conversion agreement to convert the principal and accrued interest of the Rodina Note to Class A Common Stock. Pursuant to the agreement, in June 2023, the Company issued Class A Common Stock to the lender of the Rodina Note for a full and final settlement of the Rodina Note. See Note 5 for further information regarding the loan conversion agreement.

 

May 2023 Financing Commitment – On May 20, 2023, the Company entered into the May 2023 Financing Commitment with a certain entity affiliated with Andres Chico and Jose Miguel Enrich whereby the entity, or a third party entity designated by the entity, intends to provide $25.0 million of financing to the Company through the issuance by the Company of debt and/or equity securities including, without limitation, shares of capital stock, securities convertible into or exchangeable for shares of capital stock, warrants, options, or other rights for the purchase or acquisition of such shares and other ownership or profit interests of the Company. Any debt issued pursuant to the May 2023 Financing Commitment would have a term of at least 12 months and any equity or equity linked securities issued under the May 2023 Financing Commitment would have a fixed price such that no other shareholder or other exchange approvals would be required. The amount the entity agreed to contribute under the May 2023 Financing Commitment was reduced on a dollar-for-dollar basis by the amount of any other capital the Company receives outside of the May 2023 Equity Agreements through December 31, 2023. The May 2023 Financing Commitment amount was reduced to $0 in conjunction with the executions of the June 2023 Revolving Credit Facility agreement and the June 2023 Term Loan agreement.

 

May 2023 PIPE Subscription Agreements – In May and June 2023, the Company entered into subscription agreements with various investors, including certain entities affiliated with Andres Chico and Jose Miguel Enrich, to issue Class A Common Stock in exchange for the total purchase price of $23.7 million (the “May 2023 Equity Agreements”). Pursuant to the May 2023 Equity Agreements, the Company issued 7,104,556 shares of Class A Common Stock in June 2023.

 

Rodina Warrant – On September 15, 2023, the Company issued a warrant to an entity affiliated with Andres Chico and Jose Miguel Enrich which granted the right to purchase 498,119 shares of Class A Common Stock. See Note 9 for further information regarding the Rodina Warrant.

 

September 2023 Rodina Letter of Credit – On September 22, 2023, an entity affiliated with Andres Chico and Jose Miguel Enrich issued a standby letter of credit in the amount of $15.0 million to the lender of the June 2023 Revolving Credit Facility on behalf of the Company, which increased the Company’s borrowing capacity under the facility by $15.0 million. The expiration date of this September 2023 Rodina Letter of Credit is September 30, 2024 with an automatic renewal option for one additional year through September 30, 2025. See Note 5 for further information regarding the September 2023 Rodina Letter of Credit.

 

Note 18—Concentrations

 

During the three months ended September 30, 2023, the Company had two customers who individually accounted for 10% or more of the Company's total revenue and together accounted for approximately 33% of the Company’s total revenue. During the nine months ended September 30, 2023, the Company had one customer who individually accounted for approximately 20% of the Company’s total revenue. That customer was the only party who individually accounted for 10% or more of the Company’s total revenue for the nine months ended September 30, 2023. During the three and nine months ended September 30, 2022, the Company had two customers who individually accounted for 10% or more of the Company’s total revenue and together for approximately 25% and 27% of the total revenues, respectively. As of September 30, 2023, the Company had two customers who individually accounted for 10% or more of the Company’s total accounts receivable and contract assets, and together for approximately 40% of the total accounts receivable and contract assets, while as of December 31, 2022, the Company had three customers who individually accounted for 10% or more of the Company’s total accounts receivable and contract assets and together for approximately 38% of the total accounts receivable and contract assets.

 

38

 

 

Note 19—Liquidity

 

During the three and nine months ended September 30, 2023, and in each fiscal year since the Company’s inception, it has incurred losses from operations and generated negative cash flows from operating activities. The Company also has negative working capital and stockholders’ deficit as of September 30, 2023. However, the Company has an option to settle all of the warrant liabilities and derivative liabilities under current liabilities on the accompanying condensed consolidated balance sheets in Class A Common Stock.

 

To address liquidity needs, the Company entered into various financial arrangements during the nine months ended September 30, 2023, including the June 2023 Revolving Credit Facility, the June 2023 Term Loan, the May 2023 Equity Agreements, maturity extensions of the Subordinated Term Loan, the Insider Convertible Debentures, the Third Party Convertible Debentures and the NZ Superfund Convertible Debenture, the Cantor Sales Agreement and full conversions of the Rodina Note and the YA Convertible Debentures to Class A Common Stock. The Company has also been working to execute various initiatives to modify its operations to further reduce spending and improve cash flow.

 

In management’s opinion, the Company’s cash on hand, availability under the line of credit and the execution of the cost reduction initiatives will provide liquidity for the Company for at least one year. However, there can be no assurance that the Company will be successful in executing its cost reduction initiatives and may need to raise additional capital in future periods.

 

Note 20—Subsequent events

 

On October 2, 2023, the Company issued 1,802,885 shares of Class A Common Stock to a certain PIPE Investor as the payment for the $3.8 million subscription fee for services rendered from July 1, 2023 to September 30, 2023 in relation to the PIPE Software Services Subscription.

 

On October 16, 2023, the NYSE notified the Company, and publicly announced, that the NYSE has determined to (a) commence proceedings to delist the Public Warrants and (b) immediately suspend trading of the Public Warrants due to “abnormally low” trading price levels pursuant to Section 802.01D of the NYSE Listed Company Manual. The Company did not appeal the NYSE’s determination. On October 31, 2023, the NYSE issued a notification to the SEC of its intention to remove the Public Warrants from listing and registration on the NYSE on November 13, 2023, pursuant to the provisions of Rule 12d2-2(b) under the Exchange Act.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis of the financial condition and results of operations of Rubicon Technologies, Inc., a Delaware corporation (“Rubicon,” “we,” “us,” and “our”), should be read together with our unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, the risks and uncertainties discussed herein and under the caption “Cautionary Note Regarding Forward-Looking Statements” in this report. We assume no obligation to update any of these forward-looking statements except as required by law.

 

Overview

 

We are a digital marketplace for waste and recycling services. Underpinning this marketplace is a cutting-edge, modular platform that powers a modern, digital experience and delivers data-driven insights and transparency for our customers and hauling and recycling partners. We provide our waste generator customers with a platform that delivers pricing transparency, self-service capabilities, and a seamless customer experience while helping them achieve their environmental goals; we enhance our hauling and recycling partners’ economic opportunities and help them optimize their businesses; and we help governments provide more advanced waste and recycling services that allow them to serve their local communities more effectively.

 

Over the past decade, this value proposition has allowed us to scale our platform considerably. Our digital marketplace now serves over 8,000 customers, including numerous large, blue-chip customers such as Apple, Dollar General, Starbucks, Walmart, Chipotle, and FedEx, and encompasses over 8,000 hauling and recycling partners across North America. We have also deployed our technology in over 100 municipalities in the United States and operate in 20 countries. Furthermore, we have secured a robust portfolio of intellectual property, having been awarded more than 60 patents and 15 trademarks.

 

We operate as one segment. See Note 1 – Nature of operations and summary of significant accounting policies, to our unaudited interim condensed consolidated financial statements included elsewhere in this report for our discussion about segments.

 

Recent Developments

 

Reverse Stock Split

 

On September 26, 2023, we effected a reverse stock split of its outstanding shares of voting common stock at a ratio of one-for-eight (1:8) pursuant to a Certificate of Amendment to its Certificate of Incorporation filed with the Secretary of State of the State of Delaware. The reverse stock split was reflected on the NYSE beginning with the opening of trading on September 27, 2023. Pursuant to the reverse stock split, every eight shares of our issued and outstanding shares of common stock were automatically combined into one issued and outstanding share of common stock, without any change in the number of authorized shares or the par value per share of the common stock. No fractional shares were issued in connection with the reverse stock split. Any stockholder who would otherwise be entitled to receive a fractional share instead became entitled to receive one whole share of common stock in lieu of such fractional share. Equitable adjustments corresponding to the reverse stock split ratio were made to all (i) issued and outstanding shares of all other classes of stock of Rubicon, (ii) the exercise prices of and number of shares of common stock underlying Rubicon’s public and private warrants, (iii) the number of shares of common stock underlying Rubicon’s outstanding equity awards, and (iv) the number of shares of common stock issuable under Rubicon’s equity incentive plan. All share and per share amounts of the common stock included in this Quarterly Report on Form 10-Q, including in the accompanying condensed consolidated financial statements, have been retrospectively adjusted to give effect to the reverse stock split for all periods presented, including reclassifying an amount equal to the reduction in par value to additional paid-in capital.

 

 

Insider Convertible Notes Amendment

 

In June and July 2023, we entered into amendments to the Insider Convertible Debentures, Third Party Convertible Debentures and NZ Superfund Convertible Debenture which extended their maturity date to December 1, 2026 and modified the interest rate the NZ Superfund Convertible Debenture bears to 14.0%. See “—Liquidity and Capital Resources—Debt” below.

 

YA Convertible Debentures Assignment, Amendment and Settlement

 

On August 8, 2023, the Yorkville Investor assigned the YA Convertible Debentures to Rubicon’s certain existing investors affiliated with Andres Chico and Jose Miguel Enrich. Subsequently, the assignees and we entered into an amendment to the debentures, which (a) extended the maturity date to December 1, 2026, (b) modified the fixed conversion price to $12.00 and (c) removed restrictions on the assignees’ ability to convert any portion of Convertible Debentures or receive shares of Class A Common Stock if it would result in (i) the assignees beneficially owning in excess of 4.99% of the Company’s Class A Common Stock and (ii) the greater of (A) 25.0% of the dollar trading volume of the shares of Class A Common Stock during any calendar month or (B) $3.0 million in any calendar month. On August 25, 2023, the assignees converted the remaining principal and accrued and unpaid interests to Class A Common Stock for full and final settlement of the YA Convertible Debentures. See “—Liquidity and Capital Resources—Debt” below.

 

SEPA Termination

 

On August 18, 2023, the Yorkville Investor and we agreed to terminate the SEPA without any further liability to either party under the facility. See “—Liquidity and Capital Resources—Other Financing Arrangements” below.

 

Cantor Sales Agreement

 

On September 5, 2023, we entered into a Controlled Equity Offering Sales Agreement (the “Cantor Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”) pursuant to which we may offer and sell, from time to time through Cantor, shares of Class A Common Stock for aggregate gross proceeds up to $50.0 million. We have no obligation to sell any shares of Class A Common Stock under the Cantor Sales Agreement. Cantor will act as sales agent and use commercially reasonable efforts to sell on our behalf all of the shares of Class A Common Stock requested to be sold by us. See “—Liquidity and Capital Resources—Other Financing Arrangements” below.

 

September 2023 Rodina Letter of Credit

 

On September 22, 2023, an entity affiliated with Andres Chico and Jose Miguel Enrich issued the September 2023 Rodina Letter of Credit to the lender of the June 2023 Revolving Credit Facility on behalf of Rubicon, which increased our borrowing base collateral under the facility by $15.0 million. See “—Liquidity and Capital Resources—Debt” below.

 

Delisting of the Public Warrants

 

On October 16, 2023, the NYSE notified Rubicon, and publicly announced, that the NYSE has determined to (a) commence proceedings to delist the Public Warrants and (b) immediately suspend trading of the Public Warrants due to “abnormally low” trading price levels pursuant to Section 802.01D of the NYSE Listed Company Manual. We did not appeal the NYSE’s determination. On October 31, 2023, the NYSE issued a notification to the SEC of its intention to remove the Public Warrants from listing and registration on the NYSE on November 13, 2023, pursuant to the provisions of Rule 12d2-2(b) under the Exchange Act.

 

Key Factors Affecting Our Performance

 

Financial results from our operations and the growth and future success of our business are dependent upon many factors. While each of these factors presents significant opportunities for us, they also pose challenges that we must successfully address to sustain and grow our business. See also “—Key Metrics and Non-GAAP Financial Measures” below for a discussion of key business and non-GAAP metrics that we use to help manage and evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.

 

 

Industry trends and customers preference

 

The waste and recycling industry is highly regulated and complex, and public policy is increasingly focused on improving diversion from landfills and reducing emissions. Current policies tend to encourage and reward reductions in carbon dioxide emissions, and many major cities in the United States have promulgated climate action plans committing to achieve emissions reductions. Additionally, the waste generators’ awareness of benefits achieved by improved diversion from landfills has been increasing, which we believe is and will continue to drive preference for recycling over landfills. We view these trends as an opportunity to accelerate the growth of our business, including our revenue and profitability.

 

Commodity nature of our recycling program

 

Through our recycling program, we market a variety of materials, including fibers such as old corrugated cardboard (“OCC”), old newsprint (“ONP”), aluminum, glass, pallets and other materials. Currently, OCC is the most significant material in our recycling program. Our recyclable commodity revenue is influenced by fluctuations in prices of the recyclable commodities. Periods of increasing prices generally provide the opportunity for higher revenue while periods of declining prices may result in declines in sales. For the reporting periods, the trend of the recyclable commodity prices was generally downward and contributed to lower recyclable commodity revenue in recent periods. For the three months ended September 30, 2023 and 2022, our recyclable commodity revenue was $12.1 million and $22.2 million, respectively. For the nine months ended September 30, 2023 and 2022, our recyclable commodity revenue was $40.8 million and $71.6 million, respectively.

 

We may use a number of strategies to mitigate impacts from recyclable commodity price fluctuations, including, entering into purchase contracts indexed to the recyclable commodity price such that we mitigate the variability in cash flows generated from the sales of recycled materials at floating prices. We do not use financial instruments for trading purposes and are not a party to any leveraged derivatives. As of September 30, 2023, we were not a party to any recyclable commodity hedging agreements.

 

Investment in products

 

We are actively investing in our business to support future growth and we expect this investment to continue. We have built a leading cloud-based digital marketplace that provides a transformational customer experience through an easy-to-use interface, where customers can manage services, track invoices, and view environmental outcomes. We believe that our platform is highly differentiated, and we expect to continue to invest in product development to further develop and enhance our platform’s features and functionality to further extend the adoption of our platform. While we continue to invest in product development, we are focusing on operational efficiencies and cost reduction measures, such as rationalizing redundancies across the organization. For the three months ended September 30, 2023 and 2022, our product development cost was $8.3 million and $9.8 million, respectively. For the nine months ended September 30, 2023 and 2022, our product development cost was $23.6 million and $28.3 million, respectively. We expect product development costs to be consistent as a percentage of total revenues in the next 12 months.

 

Components of Results of Operations

 

Revenue

 

We generate our revenue from waste removal, waste management and consultation services, platform subscriptions, and the sale of recyclable commodities.

 

Service revenue:

 

Service revenues are comprised of waste removal and consultation services provided to customers for waste, recycling and logistics solutions. Services include planning, consolidation of billing and administration, cost savings analyses, vendor procurement and performance management, and a suite of solutions providing insights into the customers’ waste streams.

 

Recyclable commodity revenue:

 

We recognize recyclable commodity revenue through the sale of old corrugated cardboard (“OCC”), old newsprint (ONP), aluminum, glass, pallets and other recyclable materials.

 

 

Cost of revenue, exclusive of amortization and depreciation

 

Cost of service revenues primarily consists of expenses related to delivering our service and providing support, including third-party hauler costs, costs of data center capacity, certain fees paid to various third parties for the use of their technology, services and data, and employee-related costs such as salaries and benefits. Cost of recyclable commodity revenues is comprised of expenses related to purchases of recyclable materials and any associated transportation fees.

 

As part of our services, we work with our customers to locate opportunities to reduce waste volume and service frequency with the intention to reduce costs for the customers which in turn leads to reduced costs for us. We are typically entitled to bill for a portion of such savings the customers realize as a result of our services in accordance with the terms of our customer contracts.

 

Sales and marketing

 

Sales and marketing expenses consist primarily of compensation costs, including salaries, bonuses, benefits and other incentives to our sales and marketing personnel, advertising expenses, digital marketing expenses, sales commissions and other promotional expenditures.

 

Product development

 

Product development expenses consist primarily of compensation costs, including salaries, bonuses and other benefits to our product development team, contract labor expenses and fees for software licenses, consulting, legal, and other services.

 

General and administrative

 

General and administrative expenses consist primarily of compensation and benefits related costs, including equity-based compensation expense for our general corporate functions. General and administrative costs also consist of third-party professional service fees for external legal, accounting, and other consulting services, insurance charges, hosting fees and overhead costs.

 

We expect that general and administrative expenses will decrease as a percentage of total revenues over the next several years as a result of our increased focus on operational efficiencies and planned cost reduction measures across the organization. We are working to eliminate redundancies across the organization, which were a byproduct of our growth and expansion phase the past few years. However, we expect certain incremental costs to incur as a result of operating as a public company, including expenses to comply with the rules and regulations applicable to companies listed on a national securities exchange and expenses related to compliance and reporting obligations pursuant to the rules and regulations of the SEC.

 

Gain on settlement of incentive compensation

 

Gain on settlement of incentive compensation consists of a gain from settlements of the management rollover bonuses in connection with the Mergers.

 

Amortization and depreciation

 

Amortization and depreciation consist of depreciation and amortization expenses associated with our property and equipment, acquired intangible assets and customer acquisition costs.

 

Interest expense

 

Interest expense consists primarily of interest expense associated with our outstanding debt, including accretion of debt issuance costs.

 

 

Results of Operations

 

The following tables show our results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results.

 

Comparison of the three months ended September 30, 2023 and 2022

 

		Three Months Ended September 30,
		2023				2022				Change $				Change %
		(in thousands, except changes in percentage)
Revenue
Service		$	159,119			$	162,789			$	(3,670	)			(2.3	)%
Recyclable commodity			12,138				22,194				(10,056	)			(45.3	)%
Total revenue			171,257				184,983				(13,726	)			(7.4	)%
Costs and expenses:
Cost of revenue (exclusive of amortization and depreciation)
Service			147,018				157,504				(10,486	)			(6.7	)%
Recyclable commodity			10,272				20,234				(9,962	)			(49.2	)%
Total cost of revenue (exclusive of amortization and depreciation)			157,290				177,738				(20,448	)			(11.5	)%
Sales and marketing			2,903				4,840				(1,937	)			(40.0	)%
Product development			8,309				9,803				(1,494	)			(15.2	)%
General and administrative			13,803				186,640				(172,837	)			(92.6	)%
Amortization and depreciation			1,277				1,439				(162	)			(11.3	)%
Total costs and expenses			183,582				380,460				(196,878	)			(51.7	)%
Loss from operations			(12,325	)			(195,477	)			183,152				(93.7	)%
Other income (expense):
Interest earned			5				1				4				NM	%
Gain on change in fair value of warrant liabilities			3,354				74				3,280				NM	%
Gain on change in fair value of earn-out liabilities			150				67,100				(66,950	)			(99.8	)%
Loss on change in fair value of derivatives			(1,245	)			(76,919	)			75,674				(98.4	)%
Loss on extinguishment of debt obligations			(9,348	)			-				(9,348	)			NM	%
Interest expense			(9,179	)			(4,578	)			(4,601	)			100.5	%
Related party interest expense			(453	)			-				(453	)			NM	%
Other expense			(1,116	)			(1,307	)			191				(14.6	)%
Total other income (expense)			(17,832	)			(15,629	)			(2,203	)			14.1	%
Loss before income taxes			(30,157	)			(211,106	)			180,949				(85.7	)%
Income tax expense			16				19				(3	)			(15.8	)%
Net loss			(30,173	)			(211,125	)			180,952				(85.7	)%
Net loss attributable to Holdings LLC unitholders prior to the Mergers			-				(176,384	)			(176,384	)			(100.0	)%
Net loss attributable to noncontrolling interests			(2,519	)			(16,933	)			14,414				(85.1	)%
Net Loss Attributable to Class A Common Stockholders			(27,654	)			(17,808	)			(9,846	)			55.3	%

 

NM – not meaningful

 

 

Revenue

 

Total revenue decreased by $13.7 million, or 7.4%, for the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

 

Service revenue decreased by $3.7 million, or 2.3%, primarily due to the loss of revenue from canceled customer contracts in the amount of $23.3 million, which was partially offset by increased services and volume with existing customers in the amount of $10.1 million, higher prices charged to existing customers in the amount of $6.4 million, and additional revenue from new customers of $3.1 million.

 

Revenue from sales of recyclable commodities decreased by $10.1 million, or 45.3%, primarily due to a $4.8 million decrease driven by lower sales prices of recyclable commodities, especially in OCC, whose price per unit decreased by 32.3%, a $4.0 million decrease related to canceled customers, and a decrease in volume of $1.2 million for the remaining customers.

 

Cost of revenue, exclusive of amortization and depreciation

 

Total cost of revenue decreased by $20.4 million, or 11.5%, for the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

 

Cost of service revenue decreased by $10.5 million, or 6.7%, primarily due to a $22.2 million decrease in hauling-related costs, as we did not incur costs associated with canceled customer contracts, and a $1.3 million decrease in the customer operations costs driven by lower workforce costs. The decrease in cost of service revenue was partially offset by higher volumes from new and existing customers which increased by $2.1 million and $5.6 million, respectively, and an increase of $5.3 million driven by higher vendor prices.

 

Cost of recyclable commodity revenue decreased by $10.0 million, or 49.2%, primarily due to a $4.8 million decrease in the cost of recyclable commodities sold, mainly driven by decrease in the price of OCC, a decrease in volume of $3.7 million related to canceled customers, and a decrease in volume of $1.1 million for the remaining customers.

 

Sales and marketing

 

Sales and marketing expenses for the three months ended September 30, 2023 decreased $1.9 million, or 40.0% compared to the three months ended September 30, 2022. The decrease was primarily attributable to a decrease in demand generation activities by $0.9 million, lower costs for sales and marketing workforce by $0.6 million, and a decrease in consulting and professional service costs by $0.4 million.

 

Product development

 

Product development expenses decreased by $1.5 million, or 15.2%, for the three months ended September 30, 2023, compared to the three months ended September 30, 2022. The decrease was primarily attributable to lower payroll related costs of $1.3 million and lower product development support costs of $1.0 million, offset by an increase in consulting and professional service costs by $0.9 million.

 

We expect the product development cost to be consistent as a percentage of total revenues over the next 12 months. A significant component of the product development is expected to be a software services subscription cost with a certain PIPE Investor, which provides advanced data analytics capabilities to enhance the data security, visibility, models, and algorithms of our digital platform. See “—Contractual Obligations” below for further information regarding the software services subscription.

 

 

General and administrative

 

General and administrative expenses decreased by $172.8 million, or 92.6%, for the three months ended September 30, 2023, compared to the three months ended September 30, 2022. The decrease was primarily attributable to a lower payroll and compensation related costs by $171.2 million mainly due to the incentives and bonuses, including stock based compensation, incurred in connection with the Mergers during the three months ended September 30, 2022 but did not repeat in 2023, as well as a decrease in other salaries and wages and a decrease in consulting and professional service costs by $1.4 million.

 

Amortization and depreciation

 

Amortization and depreciation expenses for the three months ended September 30, 2023 were relatively unchanged compared to the three months ended September 30, 2022.

 

Other income (expense)

 

Other expense increased by $2.2 million, or 14.1%, for the three months ended September 30, 2023, compared to the three months ended September 30, 2022. The increase was primarily attributable to a $67.0 million decrease in gain on change in fair value of earnout liabilities, an increase of a $9.3 million in loss on extinguishment of debt obligations as a result of conversions of debt obligations to Class A Common Stock and an amendment of debt entered into in September 2023 which was deemed an extinguishment during the three months ended September 30, 2023 (see Note 5 – Debt, to the condensed consolidated financial statements included elsewhere in this report), and a $5.1 million increase in interest expense, including related party interest expense, due to higher borrowings under the revolving line of credit, term loan facilities and convertible notes as well as higher interest rates under revolving credit facility and term loan facilities, partially offset by a $75.7 million decrease in loss on change in fair value of derivatives and a $3.3 million increase in gain on change in fair value of warrant liabilities.

 

Income tax expense

 

Income tax expense for the three months ended September 30, 2023 were relatively unchanged compared to the three months ended September 30, 2022.

 

 

Comparison of the nine months ended September 30, 2023 and 2022

 

		Nine Months Ended September 30,
		2023				2022				Change $				Change %
		(in thousands, except changes in percentage)
Revenue
Service		$	486,125			$	437,755			$	48,370				11.0	%
Recyclable commodity			40,794				71,640				(30,846	)			(43.1	)%
Total revenue			526,919				509,395				17,524				3.4	%
Costs and expenses:
Cost of revenue (exclusive of amortization and depreciation)
Service			455,213				423,382				31,831				7.5	%
Recyclable commodity			35,427				65,856				(30,429	)			(46.2	)%
Total cost of revenue (exclusive of amortization and depreciation)			490,640				489,238				1,402				0.3	%
Sales and marketing			8,924				13,336				(4,412	)			(33.1	)%
Product development			23,625				28,336				(4,711	)			(16.6	)%
General and administrative			45,882				212,520				(166,638	)			(78.4	)%
Gain on settlement of incentive compensation			(18,622	)			-				(18,622	)			NM	%
Amortization and depreciation			3,982				4,331				(349	)			(8.1	)%
Total costs and expenses			554,431				747,761				(193,330	)			(25.9	)%
Loss from operations			(27,512	)			(238,366	)			210,854				(88.5	)%
Other income (expense):
Interest earned			11				1				10				NM	%
Gain (Loss) on change in fair value of warrant liabilities			2,885				(436	)			3,321				NM	%
Gain on change in fair value of earn-out liabilities			5,440				67,100				(61,660	)			(91.9	)%
Loss on change in fair value of derivatives			(3,778	)			(76,919	)			73,141				(95.1	)%
Excess fair value over the consideration received for SAFE			-				(800	)			800				(100.0	)%
Gain on service fee settlements in connection with the Mergers			6,996				-				6,996				NM	%
Loss on extinguishment of debt obligations			(18,234	)			-				(18,234	)			NM	%
Interest expense			(24,474	)			(12,264	)			(12,210	)			99.6	%
Related party interest expense			(1,707	)			-				(1,707	)			NM	%
Other expense			(2,019	)			(1,994	)			(25	)			1.3	%
Total other income (expense)			(34,880	)			(25,312	)			(9,568	)			37.8	%
Loss before income taxes			(62,392	)			(263,678	)			201,286				(76.3	)%
Income tax expense			49				60				(11	)			(18.3	)%
Net loss			(62,441	)			(263,738	)			201,297				(76.3	)%
Net loss attributable to Holdings LLC unitholders prior to the Mergers			-				(228,997	)			(228,997	)			(100.0	)%
Net loss attributable to noncontrolling interests			(18,456	)			(16,933	)			(1,523	)			9.0	%
Net Loss Attributable to Class A Common Stockholders			(43,985	)			(17,808	)			(26,177	)			147.0	%

 

NM – not meaningful

 

 

Revenue

 

Total revenue increased by $17.5 million, or 3.4%, for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

 

Service revenue increased by $48.4 million, or 11.0%, primarily due to an increase in volumes of $47.8million mainly driven by expanded services with existing customers, higher prices charged to existing customers in the amount of $16.0 million, a $6.4 million increase from new customers and a one-time $1.1 million customer credit in 2022 which did not repeat in 2023, partially offset by a decrease of $22.9 million due to canceled customers.

 

Revenue from sales of recyclable commodities decreased by $30.8 million, or 43.1%, primarily due to a $28.6 million decrease driven by lower sales prices of recyclable commodities, especially in OCC, whose price per unit decreased by 73.1%, and a $4.0 million decrease attributable to customer cancellations. The decrease was partially offset by an increase in pallet sales by $1.8 million, out of which $1.6 million is attributable to an increase in volume and $0.2 million is due to higher price.

 

Cost of revenue, exclusive of amortization and depreciation

 

Total cost of revenue increased by $1.4 million, or 0.3%, for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

 

Cost of service revenue increased by $31.8 million, or 7.5%, primarily due to increased hauling volume by $36.1 million mainly driven by service expansion with existing customers, an increase in hauling-related cost to service existing customers by $15.0 million driven by higher vendor prices, and a $4.1 million increase related to new customers, partially offset by a $20.5 million decrease related to canceled customers and a $2.9 million decrease in the customer operations costs driven by lower workforce costs.

 

Cost of recyclable commodity revenue decreased by $30.4 million, or 46.2%, primarily due to a $28.4 million decrease driven by lower prices of recyclable commodities, especially in OCC. Lower commodity volumes primarily related to canceled customers decreased the cost of recyclable commodity revenue by an additional $4.0 million. The decrease was partially offset by an increase in cost of pallet sales by $1.6 million, out of which $1.5 million was attributable to an increase in volume and $0.1 million is due to higher price.

 

Sales and marketing

 

Sales and marketing expenses for the nine months ended September 30, 2023 decreased by $4.4 million, or 33.1% compared to the nine months ended September 30, 2022. The decrease was primarily attributable to lower costs for sales and marketing activities, such as advertising and events, by $1.9 million, payroll and compensation for sales and marketing employees by $1.7 million, and consulting and outside services by $0.7 million.

 

Product development

 

Product development expenses decreased by $4.7 million, or 16.6%, for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022. The decrease was primarily attributable to lower payroll and workforce related costs by $2.6 million and lower product development support costs by $2.2 million, which were offset by higher consulting and professional service costs by $0.4 million.

 

We expect the product development cost to be consistent as a percentage of total revenues over the next 12 months. A significant component of the product development is expected to be a software services subscription cost with a certain PIPE Investor, which provides advanced data analytics capabilities to enhance the data security, visibility, models, and algorithms of our digital platform. See “—Contractual Obligations” below for further information regarding the software services subscription.

 

 

General and administrative

 

General and administrative expenses decreased by $166.6 million, or 78.4%, for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022. The decrease was primarily attributable to lower payroll and compensation cost by $176.5 million which was mainly driven by bonuses and incentives, including stock based compensation, incurred in connection the Mergers during the third quarter of 2022 but did not repeat in 2023, as well as salaries and wages. Additionally, professional service fees decreased by $1.8 million during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

 

The decreases in general and administrative expenses were partially offset by an increase in severance pay of $6.1 million, an increase in bad debt expense of $4.5 million, and an increase in insurance expenses of $1.6 million. During the nine months ended September 30, 2022, we collected cash for approximately $3.0 million for which reserves had previously been established thereby resulting in a gain during the period.

 

Gain on settlement of incentive compensation

 

The $18.6 million gain on settlement of incentive compensation for the nine months ended September 30, 2023 was entirely attributable to replacing the $26.8 million of the accrued management rollover consideration with RSU awards which were valued at $8.2 million at the time of the settlement.

 

Amortization and depreciation

 

Amortization and depreciation expenses for the nine months ended September 30, 2023 were relatively unchanged compared to the nine months ended September 30, 2022.

 

Other income (expense)

 

Other expense increased by $9.6 million or 37.8% for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022. The increase was primarily attributable to the $5.4 million gain on the change in fair value of earn-out liabilities during the nine months ended September 30, 2023, a decrease of $61.7 million, as compared to the $67.1 million gain during the nine months ended September 30, 2022. Additionally, other expense for the nine months ended September 30, 2023 includes an $18.2 million loss on extinguishment of debt obligations as a result of conversions of debt obligations to Class A Common Stock and an amendment entered into which was deemed a debt extinguishment during the period and prepayments of the Revolving Credit Facility in June 2023 and Term Loan in February and June 2023 (see Note 5 – Debt, to the condensed consolidated financial statements included elsewhere in this report), a $13.9 million increase in interest expense, including related party interest expense, due to higher borrowings under the revolving line of credit, term loan facilities and convertible notes as well as higher interest rates under revolving credit facility and term loan facilities, partially offset by a $73.1 million decrease in loss on change in fair value of derivatives, a $7.0 million gain on service fee settlements in connection with the Mergers, a $3.3 million increase in gain on change in fair value of warrant liabilities and a decreased loss of $0.8 million related to the excess fair value over the consideration received for the SAFE incurred during the nine months end September 30, 2022 but did not repeat in 2023.

 

Income tax expense

 

Income tax expense for the nine months ended September 30, 2023 were relatively unchanged compared to the nine months ended September 30, 2022.

 

 

Key Metrics and Non-GAAP Financial Measures

 

In addition to the measures presented in our unaudited interim condensed consolidated financial statements, we use the following key business and non-GAAP metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.

 

Revenue net retention

 

We believe our ability to retain customers is an indicator of the stability of our revenue base and the long-term value of our customer relationships. We calculate revenue net retention as a year-over-year comparison that measures the percentage of revenue recognized in the current quarter from customers retained from the corresponding quarter in the prior year. We believe that our revenue net retention rate is an important metric to measure overall client satisfaction and the general quality of our service offerings as it is a composition of revenue expansion or contraction within our customer accounts.

 

Our revenue net retention rate was 91.1% and 118.3% as of September 30, 2023 and 2022, respectively.

 

Adjusted gross profit and adjusted gross profit margin

 

Adjusted gross profit is a non-GAAP financial measure which is calculated by adding back amortization and depreciation for revenue generating activities and platform support costs to GAAP gross profit, the most comparable GAAP measurement. Adjusted gross profit margin is calculated as adjusted gross profit divided by total GAAP revenue.

 

We believe adjusted gross profit and adjusted gross profit margin are important measures and useful to investors because they show the progress in scaling our digital platform by quantifying the markup and margin we charge our customers that are incremental to our marketplace vendor costs. These measures demonstrate this progress because changes in these measures are driven primarily by our ability to optimize services for our customers, improve our hauling and recycling partners’ efficiency and achieve economies of scale on both sides of the marketplace. Our management team uses these non-GAAP measures as one of the means to evaluate the profitability of our customer accounts, exclusive of certain costs that are generally fixed in nature, and to assess how successful we are in achieving our pricing strategies. However, it is important to note that other companies, including companies in our industry, may calculate and use these measures differently or not at all, which may reduce their usefulness as a comparative measure. Further, these measures should not be read in isolation from or without reference to our results prepared in accordance with GAAP.

 

 

The following table shows the calculation of GAAP gross profit and a reconciliation of (i) GAAP gross profit to non-GAAP adjusted gross profit and GAAP gross profit margin to non-GAAP adjusted gross profit margin, (ii) amortization and depreciation for revenue generating activities to total amortization and depreciation and (iii) platform support costs to total cost of revenue (exclusive of amortization and depreciation) for each of the periods presented:

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
		(in thousands, except percentages)
Total revenue		$	171,257			$	184,983			$	526,919			$	509,395
Less: total cost of revenue (exclusive of amortization and depreciation)			157,290				177,738				490,640				489,238
Less: amortization and depreciation for revenue generating activities			606				657				1,794				1,886
Gross profit		$	13,361			$	6,588			$	34,485			$	18,271
Gross profit margin			7.8	%			3.6	%			6.5	%			3.6	%
Gross profit		$	13,361			$	6,588			$	34,485			$	18,271
Add: amortization and depreciation for revenue generating activities			606				657				1,794				1,886
Add: platform support costs(1)			5,883				6,884				17,661				19,761
Adjusted gross profit		$	19,850			$	14,129			$	53,940			$	39,918
Adjusted gross profit margin			11.6	%			7.6	%			10.2	%			7.8	%
Amortization and depreciation for revenue generating activities		$	606			$	657			$	1,794			$	1,886
Amortization and depreciation for sales, marketing, general and administrative activities			671				782				2,188				2,445
Total amortization and depreciation		$	1,277			$	1,439			$	3,982			$	4,331
Platform support costs(1)		$	5,883			$	6,884			$	17,661			$	19,761
Marketplace vendor costs(2)			151,407				170,854				472,979				469,477
Total cost of revenue (exclusive of amortization and depreciation)		$	157,290			$	177,738			$	490,640			$	489,238

 

(1)

We define platform support costs as costs to operate our revenue generating platforms that do not directly correlate with volume of sales transactions procured through our digital marketplace. Such costs include employee costs, data costs, platform hosting costs and other overhead costs.

(2)

We define marketplace vendor costs as direct costs charged by our hauling and recycling partners for services procured through our digital marketplace.

 

 

Adjusted EBITDA

 

Adjusted EBITDA is a non-GAAP financial measure and GAAP net loss is its most comparable GAAP measurement. We define adjusted EBITDA as GAAP net loss adjusted to exclude interest expense and income, income tax expense and benefit, amortization and depreciation, gain or loss on extinguishment of debt obligations, equity-based compensation, phantom unit expense, gain or loss on change in fair value of warrant liabilities, gain or loss on change in fair value of earn-out liabilities, gain or loss on change in fair value of derivatives, executive severance charges, gain or loss on settlement of the management rollover bonuses, gain or loss on service fee settlements in connection with the Mergers, other non-operating income and expenses, and unique non-recurring income and expenses.

 

We have included adjusted EBITDA because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses. Further, we believe it is helpful in highlighting trends in our operating results because it allows for more consistent comparisons of financial performance between periods by excluding gains and losses that are non-operational in nature or outside the control of management, as well as items that may differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. It is also often used by analysts, investors and other interested parties in evaluating and comparing our results to other companies within our industry. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors.

 

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of net loss or our other results as reported under GAAP. Some of these limitations are:

 

●

adjusted EBITDA does not reflect our cash expenditures, future requirements for capital expenditures, or contractual commitments;

 

●

adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

 

●

adjusted EBITDA does not reflect our tax expense or the cash requirements to pay our taxes;

 

●

although amortization and depreciation are non-cash charges, the assets being amortized and depreciated will often have to be replaced in the future and adjusted EBITDA does not reflect any cash requirements for such replacements;

 

●

adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items for which we may make adjustments in historical periods; and

 

●

other companies in our industry may calculate adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

 

 

The following table presents a reconciliation of net loss, the most directly comparable financial measure calculated in accordance with GAAP, to adjusted EBITDA for each of the periods presented:

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
		(in thousands, except percentages)
Total revenue		$	171,257			$	184,983			$	526,919			$	509,395
Net loss		$	(30,173	)		$	(211,125	)		$	(62,441	)		$	(263,738	)
Adjustments:
Interest expense			9,179				4,578				24,474				12,264
Related party interest expense			453				-				1,707				-
Interest earned			(5	)			(1	)			(11	)			(1	)
Income tax expense			16				19				49				60
Amortization and depreciation			1,277				1,439				3,982				4,331
Loss on extinguishment of debt obligations			9,348				-				18,234				-
Equity-based compensation			2,133				88,793				13,239				88,977
Phantom unit expense			-				2,213				-				6,783
Deferred compensation expense			-				1,250				-				1,250
(Gain) loss on change in fair value of warrant liabilities			(3,354	)			(74	)			(2,885	)			436
Gain on change in fair value of earn-out liabilities			(150	)			(67,100	)			(5,440	)			(67,100	)
Loss on change in fair value of derivatives			1,245				76,919				3,778				76,919
Executive severance charges			-				-				4,553				-
Gain on settlement of Management Rollover Bonuses			-				-				(26,826	)			-
Excess fair value over the consideration received for SAFE			-				-				-				800
Nonrecurring merger transaction expenses(3)			-				80,712				-				80,712
Gain on service fee settlements in connection with the Mergers			-				-				(6,996	)			-
Other expenses(4)			1,116				1,307				2,019				1,994
Adjusted EBITDA		$	(8,915	)		$	(21,070	)		$	(32,564	)		$	(56,313	)
Net loss as a percentage of total revenue			(17.6	)%			(114.1	)%			(11.9	)%			(51.8	)%
Adjusted EBITDA as a percentage of total revenue			(5.2	)%			(11.4	)%			(6.2	)%			(11.1	)%

 

	(3)	Nonrecurring merger transaction expenses primarily consist of management bonus payments of $31.7 million, including $2.8 million bonuses paid subsequent to the Closing Date, accrual for Rubicon management rollover consideration under the Merger Agreement of $47.6 million, and related payroll tax expense of $1.2 million in connection with the Mergers.
	(4)	Other expenses primarily consist of foreign currency exchange gains and losses, taxes, penalties, fees for certain financing arrangements and gains and losses on sale of property and equipment.

 

 

Liquidity and Capital Resources

 

Liquidity describes the ability of a company to generate sufficient cash flows in the short- and long-term to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions and investments, and other commitments and contractual obligations. We consider liquidity in terms of cash flows from operations and other sources, and their sufficiency to fund our operating and investing activities.

 

Our principal sources of liquidity have been borrowings under our credit facilities, proceeds from the issuance of equity and warrant exercises and cash generated by operating activities. Our primary cash needs are for day-to-day operations, to fund working capital requirements, to fund our growth strategy, and to service our debt obligations.

 

Our principal uses of cash in recent periods have been funding operations and servicing debts. Our long-term future capital requirements will depend on many factors, including revenue growth rate, achieving higher profitability on our revenue contracts, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support investments, including research and development efforts and the continuing market adoption of our products.

 

During the three and nine months ended September 30, 2023, and in each fiscal year since the Company’s inception, we have incurred losses from operations and generated negative cash flows from operating activities. We also have negative working capital and stockholders’ deficit as of September 30, 2023. However, all warrant liabilities and derivative liabilities under current liabilities may be settled in Class A Common Stock.

 

To address liquidity needs, we entered into the June 2023 Revolving Credit Facility, the June 2023 Term Loan, the May 2023 Equity Agreements and the Cantor Sales Agreement during the nine months ended September 30, 2023. Additionally, we have amended the Subordinated Term Loan, Insider Convertible Debentures, Third Party Convertible Debentures and NZ Superfund Convertible Debenture to extend their maturity dates and converted the Rodina Note to Class A Common Stock. Furthermore, the YA Convertible Debentures were assigned to certain existing investors of ours and the assignees converted the remaining principal and accrued interest to Class A Common Stock in August 2023. We have also been working to execute our plan to modify our operations to further reduce spending and improve cash flow.

 

We believe the proceeds from the financing arrangements executed during the nine months ended September 30, 2023, along with the cost reduction initiatives, cash on hand and other cash flows from operations are expected to provide sufficient liquidity to meet our known liquidity needs for the next 12 months. However, there can be no assurance that we will be successful in executing the cost reduction initiatives and may need to raise additional capital in future periods.

 

See “—Contractual Obligations” below for a discussion of other obligations with respect to which we will be required to make significant future payments or under which we have significant financial contractual obligations.

 

Cash Flows

 

The following table summarizes our cash flows for the periods indicated:

 

		Nine Months Ended September 30,
		2023				2022
		(in thousands)
Net cash used in operating activities		$	(66,573	)		$	(112,918	)
Net cash used in investing activities			(750	)			(69,865	)
Net cash provided by financing activities			70,677				176,630
Net increase (decrease) in cash and cash equivalents		$	3,354			$	(6,153	)

 

 

Cash flows used in operating activities

 

Net cash used in operating activities decreased by $46.3 million to $66.6 million for the nine months ended September 30, 2023, compared to $112.9 million for the nine months ended September 30, 2022. The decrease in cash used in operating activities was driven by:

 

●

a $201.3 million decrease in net loss; partially offset by

 

●

a $92.3 million net increase in non-cash gains which was primarily attributable to a $75.3 million decrease in equity-based compensation costs, a $73.1 million decrease in loss on change in fair value of derivatives, a $26.8 million increase in settlement of accrued incentive compensation, a $7.0 million gain on service fee settlement in connection with the Mergers, a $6.8 million decrease in phantom unit expense, a $3.3 million increase in gain on change in fair value of warrants and $1.2 million decrease in deferred compensation expense, partially offset by a $61.7 million decrease in gain on change in fair value of earn-out liabilities, a $18.2 million loss on extinguishment of debt obligations, $7.7 million paid-in-kind interest capitalized to the principal of debt obligations, $5.9 million of service fees settled in common stock, a $4.6 million increase in amortization of deferred debt charges, and a $4.4 million increase in bad debt reserve; and

 

●

a $62.6 million unfavorable impact attributable to changes in operating assets and liabilities, primarily driven by an increase in unfavorable impact from accrued expenses by $35.4 million, accounts payable by $33.1 million, contract assets by $7.6 million, other current assets by $2.0 million, other liabilities by $1.8 million and prepaid expenses by $1.2 million, partially offset by an increase in favorable impact from accounts receivable by $17.9 million.

 

Cash flows used in investing activities

 

Net cash used in investing activities decreased by $69.1 million to $0.8 million for the nine months ended September 30, 2023 compared to $69.9 million for the nine months ended September 30, 2022. The decrease in cash used in investing activities was driven by $68.7 million of payments made under the Forward Purchase Agreement during the nine months ended September 30, 2022, that did not repeat in 2023. Cash used for property and equipment purchases also decreased by $0.4 million.

 

Cash flows from financing activities

 

Net cash provided by financing activities was $70.7 million for the nine months ended September 30, 2023 and $176.7 million for the nine months ended September 30, 2022. Net cash provided by financing activities for the nine months ended September 30, 2023 resulted primarily from proceeds of $86.2 million from new third party debt, $24.8 million from the issuance of common stock, $14.5 million from related party debt and $13.6 million net draws on the line of credit, offset in part by $53.5 million repayments of debt, $13.9 million of financing costs paid, and $1.1 million cash outflow for RSUs withheld to pay taxes. Net cash provided by financing activities for the nine months ended September 30, 2022 resulted primarily from net proceeds from the Mergers of $175.0 million and proceeds of $8.0 million from the SAFE, offset in part by $4.5 million repayments of long-term debt and $2.0 million payments of financing costs.

 

 

Tax Receivable Agreement

 

In connection with the consummation of the Mergers, Rubicon entered into the Tax Receivable Agreement with the TRA Holders, whereby Rubicon is obligated to pay to the TRA Holders 85% of certain of Rubicon’s realized (or in certain cases, deemed realized) tax savings as a result of certain tax benefits related to the transactions contemplated by the Merger Agreement and future exchanges of Class B Units for Class A Common Stock or cash. Rubicon will benefit from the remaining 15% of such tax savings.

 

The actual future payments to the TRA Holders will vary, and estimating the amount of payments that may be made under the Tax Receivable Agreement is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors and future events. The actual future payments under the Tax Receivable Agreement are dependent on a number of factors, including the price of Class A Common Stock at the time of the exchange; the timing of future exchanges; the extent to which exchanges are taxable; the amount and timing of the utilization of tax attributes; the amount, timing and character of our income; the U.S. federal, state and local tax rates then applicable; the depreciation and amortization periods that apply to the increases in tax basis; the timing and amount of any earlier payments that we may have made under the TRA; and the portion of our payments under the TRA that constitutes imputed interest or gives rise to depreciable or amortizable tax basis.

 

A significant portion of any potential future payments under the Tax Receivable Agreement is anticipated to be payable over 15 years, consistent with the period over which the associated tax deductions would be realized by Rubicon, assuming Holdings LLC generates sufficient income to utilize the deductions. If sufficient income is not generated by Holdings LLC, the associated taxable income of Rubicon will be affected and the associated tax benefits to be realized will be limited, thereby similarly reducing the associated Tax Receivable Agreement payments to be made. We may however still need to seek additional sources of financing depending on the given circumstances at the time any payments will be made.

 

While many of the factors that will determine the amount of payments that Rubicon will make under the Tax Receivable Agreement are outside of its control, Rubicon expects that the payments it will make under the Tax Receivable Agreement will be substantial. Rubicon generally expects to fund such distributions out of available cash of Holdings LLC, and as a result, such payments will reduce the cash provided by the tax savings generated from the relevant transactions that would otherwise have been available to Rubicon and Holdings LLC for other uses, including repayment of debt, funding day-to-day operations, reinvestment in the business or returning capital to holders of Class A Common Stock in the form of dividends or otherwise.

 

Rubicon may incur significant costs in addition to the due course obligations arising under the Tax Receivable Agreement described above. In particular, in the event that (a) Rubicon undergoes certain change of control events (e.g., certain mergers, dispositions and other similar transactions), (b) there is a material uncured breach under the Tax Receivable Agreement, or (c) Rubicon elects to terminate the Tax Receivable Agreement early, in each case, Rubicon’s obligations under the Tax Receivable Agreement would accelerate and become payable in a lump sum amount equal to the present value of the anticipated future tax savings calculated based on certain assumptions, as set forth in the Tax Receivable Agreement. In addition, the interest on the payments made pursuant to the Tax Receivable Agreement may significantly exceed Rubicon’s other costs of capital. In certain situations, including upon the occurrence of the events described above, Rubicon could be required to make payments under the Tax Receivable Agreement that exceed its actual cash savings, requiring it to seek funding from other sources, including incurring additional debt. Thus, Rubicon’s obligations under the Tax Receivable Agreement could have a substantial negative effect on its financial condition and liquidity.

 

Despite these potential costs, we do not believe that that the Tax Receivable Agreement will be a material detriment to Rubicon’s and Holdings LLC’s future results of operations and liquidity, as any payments required under the Tax Receivable Agreement will arise directly from realized (or in certain cases, deemed realized) tax savings of Rubicon as a result of certain tax benefits related to the Mergers and future exchanges of Class B Units for Class A Common Stock or cash and are expected to be made in lieu of income taxes otherwise payable by Rubicon. Additionally, Rubicon will receive the benefit of 15% of any such tax savings.

 

 

Debt

 

On December 14, 2018, we entered into a Revolving Credit Facility, which was subsequently amended, and which provided for borrowings of up to $75.0 million with a maturity date of the earlier of (a) December 14, 2025, (b) the maturity of the Term Loan and (c) the maturity of the Subordinated Term Loan. On June 7, 2023, we fully prepaid the borrowing under the Revolving Credit Facility in the amount of $48.6 million and terminated the facility, resulting in $2.6 million of a loss on extinguishment of debt obligations.

 

On March 29, 2019, we entered into a Term Loan agreement, which was subsequently amended, and which provided for $60.0 million of term loan with a maturity date of May 23, 2024. On June 7, 2023, we fully prepaid the borrowing under the Term Loan in the amount of $40.5 million and terminated the facility, resulting in $2.5 million of a loss on extinguishment of debt obligations.

 

On December 22, 2021, we entered into a Subordinated Term Loan agreement which provides for $20.0 million of term loan with a maturity date of May 23, 2024. The Subordinated Term Loan bore interest at 14% until the agreement was amended on June 7, 2023. On June 7, 2023, we entered into an amendment to the Subordinated Term Loan agreement, which modified (a) its maturity date to the earlier of (i) the scheduled maturity date (June 7, 2025, which we have an option to extend to June 7, 2026 upon achievement of certain conditions) and (ii) the maturity date of the June 2023 Revolving Credit Facility, unless the Springing Maturity applies, and (b) the interest rate the Subordinated Term Loan bears to 15.0%, of which 11.0% is paid in cash and 4.0% is paid in kind by capitalizing such interest accrued to the principal each month in arrears. Concurrently, we entered into an amendment to the Subordinated Term Loan Warrants agreement, which amended the value of Class A Common Stock the Additional Subordinated Term Loan Warrants earn for the full calendar month starting June 23, 2023 to $0.38 million and such amount to increase by $25,000 each additional full calendar month thereafter until we repay the Subordinated Term Loan in full.

 

On November 30, 2022, as part of the YA SPA, we issued the First YA Convertible Debenture in the principal amount of $7.0 million for a purchase price of $7.0 million, net proceed of $5.0 million after deduction of commitment fee. The First YA Convertible Debenture had a maturity date of May 30, 2024 and bore interest at the rate of 4.0% per annum. The interest was due and payable upon maturity. At any time, so long as the First YA Convertible Debenture was outstanding, the Yorkville Investor had an option to convert all or part of the principal and accrued and unpaid interest of the First YA Convertible Debenture into shares of Class A Common Stock. Outside of an event of default under the First YA Convertible Debenture, the Yorkville Investor was not permitted to convert in any calendar month more than the greater of (a) 25.0% of the dollar trading volume of the shares of Class A Common Stock during such calendar month, or (b) $3.0 million. During the nine months ended September 30, 2023, the Yorkville Investor converted $4.2 million of the principal and $0.1 million of the accrued interest to Class A Common Stock. On August 8, 2023, the Yorkville Investor assigned the First YA Convertible Debenture to certain existing investors of ours affiliated with Andres Chico and Jose Miguel Enrich. Pursuant to the assignment agreement, the assignees assumed all of the Yorkville Investor’s duties, liabilities and obligations under the First YA Convertible Debentures and the Yorkville Investor was discharged of all of such duties, liabilities and obligations. Subsequently, the assignees and we entered into an amendment to the debenture which (a) extended the maturity date to December 1, 2026, (b) modified the fixed conversion price to $12.00 and (c) removed restrictions on the assignees’ ability to convert any portion of debenture or receive shares of Class A Common Stock if it would result in (i) the assignees beneficially owning in excess of 4.99% of the Company’s Class A Common Stock and (ii) the greater of (A) 25.0% of the dollar trading volume of the shares of Class A Common Stock during any calendar month or (B) $3.0 million in any calendar month. On August 25, 2023, the assignees converted the remaining principal and accrued interest to Class A Common Stock for a full and final settlement of the First YA Convertible Debenture.

 

 

On December 16, 2022, we entered into a security purchase agreement (the “First Closing Insider SPA”) with certain members of our management team and board of directors (the “First Closing Insider Investors”). Pursuant to the First Closing Insider SPA, on December 16, 2022, the First Closing Insider Investors purchased convertible debentures with a total principal amount of $11.9 million and the total net proceeds of $10.5 million (the “First Closing Insider Convertible Debentures”). The First Closing Insider Convertible Debentures had a maturity date of June 16, 2024, and accrue interest at a rate of 6.0% per annum. The interest is due and payable quarterly in arrears, and any portion of the aggregate interest accrued may, at our option, be paid in kind by capitalizing the amount of accrued interest to the principal on each applicable interest payment date. At any time, so long as the First Closing Insider Convertible Debentures are outstanding, each of the First Closing Insider Investors may covert all or part of the principal and accrued and unpaid interest of their First Closing Insider Convertible Debentures into shares of Class A Common Stock. During the nine months ended September 30, 2023, the First Closing Insider Investors did not convert any amount of the principal or accrued interest of the First Closing Insider Convertible Debentures. Concurrent with the issuance of the First Closing Insider Convertible Debentures, we entered into a lockup agreement with each of the First Closing Insider Investors, pursuant to which the First Closing Insider Investors agreed to not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, any shares of Class A Common Stock the holders may receive from their exercise of option to convert the First Closing Insider Convertible Debentures until the earlier of (i) June 16, 2024, and (ii) when the Yorkville Investor sells all shares of Class A Common Stock issued under the YA Convertible Debentures. The First Closing Insider SPA contained customary representations, warranties, and covenants for the sale and purchase of the First Closing Insider Convertible Debentures. On June 2, 2023 and July 11, 2023, we entered into an amendment to all of the First Closing Insider Convertible Debentures, extending their maturity date to December 1, 2026.

 

On February 1, 2023, we entered into security purchase agreements (the “Third Party SPA” and the “NZ Superfund SPA”, collectively the “Second Closing Insider SPA”) with various third-party investors (the “Third Party Insider Investors”) and the NZ Superfund (the Third Party Insider Investors and NZ Superfund collectively, “Second Closing Insider Investors”). Pursuant to the Second Closing Insider SPA, the Second Closing Insider Investors purchased the Third Party Convertible Debentures and NZ Superfund Convertible Debenture (collectively “Second Closing Insider Convertible Debentures”) in the aggregate principal amount of $6.5 million and purchase price of $5.7 million. The Second Closing Insider Convertible Debentures had a maturity date of August 1, 2024, and accrue interest at a rate of 6.0% per annum, except for NZ Superfund Debenture that accrued interest at 8.0% per annum. The interest is due and payable quarterly in arrears, and any portion of the aggregate interest accrued may, at our option, be paid in kind by capitalizing the amount of accrued interest to the principal on each applicable interest payment date. At any time, so long as the Second Closing Insider Convertible Debentures are outstanding, each of the Second Closing Insider Investors may covert all or part of the principal and accrued and unpaid interest of their Second Closing Insider Convertible Debentures into shares of Class A Common Stock. During the nine months ended September 30, 2023, the Second Closing Insider Investors did not convert any amount of the principal or accrued interest of the Second Closing Insider Convertible Debentures. Concurrent with the issuance of the Second Closing Insider Convertible Debentures, we entered into a lockup agreement with each of the Second Closing Insider Investors, pursuant to which the Second Closing Insider Investors agreed to not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, any shares of Class A Common Stock the holders may receive from their exercise of option to convert the Second Closing Insider Convertible Debentures until the earlier of (i) August 1, 2024, and (ii) when the Yorkville Investor sells all shares of Class A Common Stock issued under the YA Convertible Debentures. The Second Closing Insider SPA contained customary representations, warranties, and covenants for the sale and purchase of the Second Closing Insider Convertible Debentures. On June 2, 2023 and July 31, 2023, we entered into amendments to all of the Second Closing Insider Convertible Debentures, extending their maturity date to December 1, 2026 and modifying the interest rate the NZ Superfund Convertible Debenture bears to 14.0%.

 

 

On February 2, 2023, we issued the Rodina Note. The Rodina Note has a principal of $3.0 million, accrued interest at an annual rate of 16.0% and matures on July 1, 2024. Interest was to be paid in kind by quarterly capitalizing the accrued amount to the principal at the end of each calendar quarter and would be due at maturity with the principal. On May 19, 2023, we entered into a loan conversion agreement to convert the principal and accrued interest of the Rodina Note to Class A Common Stock. Pursuant to the conversion agreement, we agreed to issue Class A Common Stock to the lender of the Rodina Note for a full and final settlement of the Rodina Note. On June 20, 2023, we issued Class A Common Stock in accordance with the conversion agreement and settled the Rodina Note.

 

On February 3, 2023, as part of the YA SPA, we issued the Second YA Convertible Debenture in the principal amount of $10.0 million for a purchase price of $10.0 million. The Second YA Convertible Debenture had a maturity date of May 30, 2024 and bore interest at the rate of 4.0% per annum. The interest was due and payable upon maturity. At any time, so long as the Second YA Convertible Debenture was outstanding, the Yorkville Investor had an option to convert all or part of the principal and accrued and unpaid interest of the Second YA Convertible Debenture into shares of Class A Common Stock. Outside of an event of default under the Second YA Convertible Debenture, the Yorkville Investor was not permitted to convert in any calendar month more than the greater of (a) 25.0% of the dollar trading volume of the shares of Class A Common Stock during such calendar month, or (b) $3.0 million. During the nine months ended September 30, 2023, the Yorkville Investor converted $7.2 million of the principal and $0.2 million of the accrued interest of the Second YA Convertible Debenture to Class A Common Stock. On August 8, 2023, the Yorkville Investor assigned the Second YA Convertible Debenture to certain existing investors of ours affiliated with Andres Chico and Jose Miguel Enrich. Pursuant to the assignment agreement, the assignees assumed all of the Yorkville Investor’s duties, liabilities and obligations under the Second YA Convertible Debentures and the Yorkville Investor was discharged of all of such duties, liabilities and obligations. Subsequently, the assignees and we entered into an amendment to the debenture which (a) extended the maturity date to December 1, 2026, (b) modified the fixed conversion price to $12.00 and (c) removed restrictions on the assignees’ ability to convert any portion of debenture or receive shares of Class A Common Stock if it would result in (i) the assignees beneficially owning in excess of 4.99% of the Company’s Class A Common Stock and (ii) the greater of (A) 25.0% of the dollar trading volume of the shares of Class A Common Stock during any calendar month or (B) $3.0 million in any calendar month. On August 25, 2023, the assignees converted the remaining principal and accrued interest to Class A Common Stock for a full and final settlement of the Second YA Convertible Debenture.

 

On June 7, 2023, we entered into the June 2023 Revolving Credit Facility, which provides a line of credit up to $90.0 million, with a maturity date of the earlier of (i) June 7, 2026 or (ii) 90 days prior to the maturity date of the June 2023 Term Loan (the “Springing Maturity”). The June 2023 Revolving Credit Facility bears an interest rate of SOFR plus 4.25% (or 3.95% if the Company meets certain conditions defined in the agreement) (9.7% as of September 30, 2023). As of September 30, 2023, we had $65.5 million of borrowings under the Revolving Credit Facility and $1.4 million remained available to draw. The borrowing capacity is calculated based on our borrowing base collateral, which is comprised of qualified billed and unbilled receivables and the September 2023 Rodina Letter of Credit. The fee on the average daily balance of unused loan commitments is 0.5%. Interest and fees are payable monthly in arrears on the first day of each month. On September 22, 2023, an entity affiliated with Andres Chico and Jose Miguel Enrich issued the September 2023 Rodina Letter of Credit in the amount of $15.0 million to the lender of the June 2023 Revolving Credit Facility on our behalf, which increased our borrowing base collateral under the facility by $15.0 million. The expiration date of the September 2023 Rodina Letter of Credit is September 30, 2024 with an automatic renewal option for one additional year through September 30, 2025. Additionally, we issued the Rodina Warrant, which granted the holder the right to purchase 498,119 shares of Class A Common Stock at the exercise price of $0.08 per share any time prior to September 15, 2026.

 

 

On June 7, 2023, we entered into a $75.0 million June 2023 Term Loan agreement with a maturity date of the earlier of (i) the scheduled maturity date (June 7, 2025, which the Company has an option to extend to June 7, 2026 upon achievement of certain conditions) and (ii) the maturity date of the June 2023 Revolving Credit Facility, unless the Springing Maturity applies. The June 2023 Term Loan bears an interest rate of the prime rate plus a margin of 8.75% or 8.25% if the Company meets certain conditions defined in the agreement. We had the option to pay the interest in kind each month in arrears by capitalizing such interest which accrues through August 31, 2023 as additional principal, and in such instance, the margin applicable for the interest rate was 10.25%. We elected to pay the interest accrued through August 31, 2023 in kind. We also have the option to pay in kind any excess interest over 13.5% after paying the first 13.5% in cash from September 1, 2023 through the maturity. We paid the first 13.5% of interest in cash and elected to pay the rest in kind through October 31, 2023. As of September 30, 2023, the applicable interest rate of the June 2023 Term Loan was 16.8%. At the time of any repayment of the June 2023 Term Loan, we are required to pay a fee in the amount of 12% of the principal repaid. Beginning on October 7, 2023 until the June 2023 Term Loan is fully repaid, the lender has the option to elect to convert the outstanding principal into Class A Common Stock. The aggregate number of shares delivered to the lender cannot result in the lender’s ownership exceeding (i) 19.99% of the number shares of Class A Common Stock issued and outstanding or (ii) $10.0 million. Concurrently, we entered into the June 2023 Term Loan Warrants agreements and issued common stock purchase warrants. The June 2023 Term Loan Warrants granted the lender the right to purchase up to 2,121,605 shares of Class A Common Stock (the June 2023 Term Loan Warrants Shares) at the exercise price of $0.08 any time before June 7, 2033. If at any time on or before December 7, 2024, we issue additional shares of common stock (excluding any shares of common stock or securities convertible into or exchangeable for shares of common stock under our equity incentive plans existing as of the issue date), the number of the June 2023 Term Loan Warrants Shares issuable upon exercise immediately prior to such common stock issuance will be proportionately increased such that the percentage represented by the June 2023 Term Loan Warrants Shares in Rubicon’s diluted common stock outstanding will remain the same. Additionally, the holders of the June 2023 Term Loan Warrants have the right to purchase up to the pro rata portion of any new common stock issuance by Rubicon up to $20.0 million in the aggregate, with certain exceptions defined in the agreement. Since the issuance through September 30, 2023, none of the June 2023 Term Loan Warrants were exercised.

 

The June 2023 Revolving Credit Facility, the June 2023 Term Loan and the Subordinated Term Loan are subject to certain cross-default provisions under the intercreditor agreement. Additionally, the June 2023 Revolving Credit Facility, the June 2023 Term Loan and the Subordinated Term Loan agreements include covenants, which reduce the available borrowing base collateral under the June 2023 Revolving Credit Facility initially by $19.0 million. During the terms of the agreements, such Minimum Excess Availability Reserve could be decreased by up to $9.0 million, which will make the Minimum Excess Availability Reserve $10.0 million, if we achieve certain financial conditions defined in the agreements. As of September 30, 2023, the Minimum Excess Availability Reserve was $19.0 million. Furthermore, the June 2023 Revolving Credit Facility, the June 2023 Term Loan and the Subordinated Term Loan agreements require us to maintain a $2.0 million letter of credit, which could be eliminated upon our achievement of certain financial conditions defined in the agreements.

 

See Note 5 – Debt and Note 9 – Warrants to our unaudited interim condensed consolidated financial statements included elsewhere in this report for a more detailed description of our indebtedness.

 

We do not have any special purpose entities and we do not engage in off-balance sheet financing arrangements.

 

 

Other Financing Arrangements

 

On August 31, 2022, we entered into the SEPA with the Yorkville Investor, which was subsequently amended on November 30, 2022. Pursuant to the SEPA, Rubicon had the right to sell to the Yorkville Investor, from time to time, up to $200.0 million of shares of our Class A Common Stock at a discounted per share price until the earlier of the 36 month anniversary of the SEPA or until the date on which the facility has been fully utilized, subject to certain limitations and conditions set forth therein. Any issuances and sales of Class A Common Stock to the Yorkville Investor under the SEPA, and the timing of any such sales, were at our option, and we were under no obligation to sell any securities to the Yorkville Investor under the SEPA. Pursuant to the SEPA, on August 31, 2022, we issued the Yorkville Investor 25,000 shares of Class A Common Stock, which represented an initial up-front commitment fee. On August 18, 2023, Yorkville Investor and we agreed to terminate the SEPA without any further liability to either party under the facility. We did not sell any shares of Class A Common Stock under the SEPA during the period from the origination through the termination of the facility. For more information regarding the SEPA, see Note 11 – Yorkville Facilities, to our unaudited interim condensed consolidated financial statements included elsewhere in this report.

 

On November 30, 2022, we entered into the YA Warrant, which is exercisable at a price of $0.0008 per share for a number of shares of Class A Common Stock equal to $20.0 million, subject to certain adjustments pursuant to the terms set forth therein. We received approximately $6.0 million in proceeds from the issuance of the YA Warrant. Through September 30, 2023, the YA Warrant has not been exercised. For more information regarding the YA Warrant, see Note 11 – Yorkville Facilities, to our unaudited interim condensed consolidated financial statements included elsewhere in this report.

 

In May 2023, we entered into the May 2023 Equity Agreements with various investors, including entities affiliated with Andres Chico and Jose Miguel Enrich, pursuant to which we agreed to issue Class A Common Stock for the total purchase price of $23.7 million. On June 20, 2023, we issued Class A Common Stock to the investors pursuant to the May 2023 Equity Agreements.

 

On September 5, 2023, we entered into the Cantor Sales Agreement with Cantor, pursuant to which we may offer and sell, from time to time through Cantor, shares of Class A Common Stock for aggregate gross proceeds up to $50.0 million. Pursuant to the Cantor Sales Agreement, Cantor may sell shares of Class A Common Stock in sales deemed to be “at the market offerings” as defined in Rule 415(a)(4) under the Securities Act. We have no obligation to sell any shares of Class A Common Stock under the Cantor Sales Agreement. Cantor will act as sales agent and use commercially reasonable efforts to sell on our behalf all of the shares of Class A Common Stock requested to be sold by us. Under the terms of the Cantor Sales Agreement, we have agreed to pay Cantor a commission equal to 3.0% of the aggregate gross proceeds from any shares of Class A Common Stock sold pursuant to the Cantor Sales Agreement. The Cantor Sales Agreement will remain in effect until the aggregate gross proceeds of our sales of shares of Class A Common Stock reach $50.0 million in total unless terminated pursuant to the terms of the Cantor Sales Agreement. We did not sell any shares of Class A Common Stock under the Cantor Sales Agreement through September 30, 2023.

 

Contractual Obligations

 

Our principal commitments consist of obligations under debt agreements and leases for office facilities. We have a substantial level of debt. For more information regarding our debt service obligations and our lease obligations, see Note 5 – Debt and Note 16 – Commitments and contingencies, to our unaudited interim condensed consolidated financial statements included elsewhere in this report.

 

 

As of September 30, 2023, our software services subscription agreement with a certain PIPE Investor requires us to pay an aggregate of $23.5 million through October 2024, $19.8 million of which is due through September 30, 2024. See Note 15 – Commitments and contingencies, to our unaudited interim condensed consolidated financial statements included elsewhere in this report for more information regarding our software services subscription agreement with the PIPE Investor.

 

As disclosed in Note 16 – Commitments and contingencies, to our unaudited interim condensed consolidated financial statements included elsewhere in this report, on March 6, 2023, March 28, 2023, June 27, 2023 and September 30, 2023, we entered into amendments to the software services subscription agreement with the PIPE Investor, which provide us with the option, in our sole discretion, to settle the $16.0 million of fees which are scheduled to become due between October 2023 and June 2024 (i) in cash or (ii) Class A Common Stock if we satisfy certain conditions as defined within the amended agreement.

 

As disclosed in Note 20 – Subsequent events, to our unaudited interim condensed consolidated financial statements included elsewhere in this report, in accordance with the amended agreement, we settled $3.8 million of the software services subscription fee incurred during the three months ended September 30, 2023 by issuing Class A Common Stock on October 2, 2023.

 

We could also be required to make certain significant payments under the Tax Receivable Agreement discussed above.

 

Critical Accounting Policies and Estimates

 

Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

 

For additional information about our critical accounting policies and estimates, see the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2022 as well as Note 1, Nature of operations and summary of significant accounting policies in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q.

 

Recent Accounting Pronouncements

 

For information regarding recently issued accounting pronouncements and recently adopted accounting pronouncements, see Note 2 – Recent accounting pronouncements, to our unaudited interim condensed consolidated financial statements included elsewhere in this report.

 

 

Cautionary Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding, among other things, the plans, strategies and prospects, both business and financial, of the Company. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company cannot assure that it will achieve or realize these plans, intentions or expectations. All statements, other than statements of present or historical fact included in this Quarterly Report, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “could,” “would,” “should,” “seeks,” “plans,” “scheduled,” “anticipates,” “intends,” the negative of such terms and similar expressions, although not all forward-looking statements contain such identifying words. Forward-looking statements are inherently subject to risks, uncertainties and assumptions and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statement. These forward-looking statements are based upon current expectations, estimates, projections, and assumptions that, while considered reasonable by the Company and its management, are inherently uncertain; factors that may cause actual results to differ materially from current expectations include, but are not limited to: 1) the outcome of any legal proceedings that may be instituted against the Company or others following the closing of the Mergers; 2) the Company’s ability to meet the NYSE’s listing standards following the consummation of the Mergers; 3) the risk that the Mergers disrupt current plans and operations of the Company as a result of consummation of the Mergers; 4) the ability to recognize the anticipated benefits of the Mergers, which may be affected by, among other things, the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; 5) costs related to the Mergers; 6) changes in applicable laws or regulations; 7) the possibility that the Company may be adversely affected by other economic, business and/or competitive factors, including the impacts of the COVID-19 pandemic, geopolitical conflicts, such as the conflict between Russia and Ukraine, the effects of inflation and potential recessionary conditions; 8) the Company’s execution of anticipated operational efficiency initiatives, cost reduction measures and financing arrangements; and 9) other risks and uncertainties. More information regarding the risks and uncertainties and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth under the heading “Risk Factors” in our Annual Report on Form 10-K, as filed with the SEC on March 23,2023, and as may be updated in this and other subsequent Quarterly Reports on Form 10-Q and the Company’s other filings with the SEC. There may be additional risks that the Company presently does not know of or that the Company currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements, many of which are beyond the Company’s control. Forward-looking statements are not guarantees of future performance and speak only as of the date hereof. We do not undertake, and expressly disclaim, any obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise, except as required by law.

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

We are a smaller reporting company, as defined by Rule 12b-2 under the Exchange Act and in Item 10(f)(1) of Regulation S-K and are not required to provide the information under this item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Based on our management’s evaluation (with the participation of our principal executive officer and principal financial officer), as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting

 

During the quarter ended September 30, 2023, there were no significant changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

 

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

In the ordinary course of business, we are or may be involved in various legal or regulatory proceedings, claims or purported class actions related to alleged infringement of third-party patents and other intellectual property rights, commercial, corporate and securities, labor and employment, wage and hour and other claims. In management’s opinion, resolution of all current matters is not expected to have a material adverse impact on our consolidated results of operations, cash flows or financial position.

 

Item 1A. Risk Factors

 

As of the date of this quarterly report, other than as set forth below, there have been no material changes with respect to those risk factors previously disclosed in our (i) registration statement on Form S-1, as originally filed with the SEC on February 8, 2023 and declared effective on September 18, 2023 (as further amended, the “Registration Statement”), (ii) the 10-K Annual Report as filed with the SEC on March 23, 2023, and (iii) the 10-Q Quarterly Report filed with the SEC on August 11, 2023. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

 

The reverse split of our common stock effected on September 26, 2023 could decrease our total market capitalization and may increase the volatility of our stock price.

 

On September 26, 2023, we effected a reverse stock split of its outstanding shares of voting common stock at a ratio of one-for-eight (1:8) pursuant to a Certificate of Amendment to its Certificate of Incorporation filed with the Secretary of State of the State of Delaware. The reverse stock split was reflected on the NYSE beginning with the opening of trading on September 27, 2023. Pursuant to the reverse stock split, every eight shares of our issued and outstanding shares of common stock were automatically combined into one issued and outstanding share of common stock, without any change in the number of authorized shares or the par value per share of the common stock. No fractional shares were issued in connection with the reverse stock split. Any stockholder who would otherwise be entitled to receive a fractional share instead became entitled to receive one whole share of common stock in lieu of such fractional share.

 

There can be no assurance that the total market capitalization of our common stock after the reverse stock split will be equal to or greater than the total market capitalization before the reverse stock split or that the per share market price of our common stock following the reverse stock split will increase in proportion to the reduction in the number of shares of common stock outstanding before the reverse stock split. Furthermore, a decline in the market price of our common stock after the reverse stock split may result in a greater percentage decline than would occur in the absence of a reverse stock split, and the liquidity of our common stock could be adversely affected following such a reverse stock split.

 

The reverse stock split increased the Company’s authorized but unissued shares of common stock, which could negatively impact a potential investor.

 

Because the number of authorized shares of the Company’s common stock was not reduced proportionately, the reverse stock split increased our board of directors’ ability to issue authorized and unissued shares without further stockholder action. The issuance of additional shares of common stock or securities exercisable or convertible into common stock may have a dilutive effect on earnings per share and relative voting power and may cause a decline in the trading price of the common stock. The Company could use the shares that are available for future issuance in equity financing transactions, or to oppose a hostile takeover attempt or delay or prevent changes in control or changes in or removal of management, including transactions that are favored by a majority of the stockholders or in which the stockholders might otherwise receive a premium for their shares over then-current market prices or benefit in some other manner.

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

Unregistered Sales of Equity Securities

 

Except as previously disclosed in a Current Report on Form 8-K or as disclosed below, no unregistered sales of the Company’s equity securities were made during the fiscal quarter ended September 30, 2023.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

Not applicable.

 

 

Item 6. Exhibits

 

				Incorporated by Reference
Exhibit		Description		Schedule/ Form		File Number		Exhibits		Filing Date
1.1		Controlled Equity OfferingSM Sales Agreement, dated September 5, 2023, between Rubicon Technologies, Inc. and Cantor Fitzgerald & Co.		8-K				1.1		September 11, 2023
3.1		Certificate of Amendment		8-K				3.1		September 27, 2023
4.1		Common Stock Purchase Warrant, dated September 15, 2023, issued by Rubicon Technologies, Inc. to MBI Holdings LP or their assigns		8-K				4.1		September 21, 2023
10.1		Convertible Debenture Assignment and Assumption Agreement, dated as of August 8, 2023, by and between YA II PN, Ltd. and the holder signatories thereto.		8-K				10.1		August 11, 2023
10.2		Amendment to Convertible Debenture No.1, dated as of August 8, 2023, by and between Rubicon Technologies, Inc. and the holder signatories thereto.		8-K				10.2		August 11, 2023
10.3		Amendment to Convertible Debenture No.2, dated as of August 8, 2023, by and between Rubicon Technologies, Inc. and the holder signatories thereto.		8-K				10.3		August 11, 2023
10.4		Securities Purchase Agreement, dated September 15, 2023, by and between Rubicon Technologies, Inc. and MBI Holdings LP		8-K				10.1		September 21, 2023
10.5		Form of Amendment to Convertible Debenture						10.2		September 21, 2023
10.6		Limited Waiver and Amendment No. 1 to Credit, Security and Guaranty Agreement, dated September 17, 2023, by and among the Company, as guarantor, Acquiom Agency Services LLC, as agent, and the borrowers and the lenders party thereto.		8-K				10.3		September 21, 2023
10.7		Limited Waiver and Amendment No. 1 to the Credit, Security and Guaranty Agreement, dated September 17, 2023, by and among the Company, as guarantor, Midcap Funding IV Trust, as agent, and the borrowers and the lenders party thereto.		8-K				10.4		September 21, 2023
10.8		Limited Waiver and Fifth Amendment to Loan and Security Agreement, dated September 17, 2023, by and among the Company, as guarantor, Mizzen Capital, LP, as agent, and the borrowers and the lenders party thereto.		8-K				10.5		September 21, 2023
31.1*		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

*	Filed herewith.
**	Furnished herewith.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Rubicon Technologies, Inc.
Date: November 13, 2023	By:	/s/ Philip Rodoni
		Philip Rodoni
		Chief Executive Officer

 

 

Exhibit 31.1

 

PRINCIPAL EXECUTIVE OFFICER CERTIFICATION

 

I, Phil Rodoni, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q of Rubicon Technologies, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)

[Reserved];

 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 13, 2023	By:	/s/ Phil Rodoni
		Phil Rodoni
		Chief Executive Officer
		(Principal Executive Officer)

 

 

Exhibit 31.2

 

PRINCIPAL FINANCIAL OFFICER CERTIFICATION

 

I, Kevin Schubert, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q of Rubicon Technologies, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)

[Reserved];

 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 13, 2023	By:	/s/ Kevin Schubert
		Kevin Schubert
		Chief Financial Officer and President
		(Principal Financial Officer and President)

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Rubicon Technologies, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2023, as filed with the Securities and Exchange Commission (the “Report”), I, Phil Rodoni, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 13, 2023	By:	/s/ Phil Rodoni
		Phil Rodoni
		Chief Executive Officer
		(Principal Executive Officer)

 

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Rubicon Technologies, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2023, as filed with the Securities and Exchange Commission (the “Report”), I, Kevin Schubert, Chief Financial Officer and President of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 13, 2023	By:	/s/ Kevin Schubert
		Kevin Schubert
		Chief Financial Officer and President
		(Principal Financial Officer and President)

 

v3.23.3

Cover - shares	9 Months Ended
	Sep. 30, 2023	Nov. 13, 2023
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2023
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	001-40910
Entity Registrant Name	Rubicon Technologies, Inc.
Entity Central Index Key	0001862068
Entity Tax Identification Number	88-3703651
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	335 Madison Avenue
Entity Address, Address Line Two	4th Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10017
City Area Code	(844)
Local Phone Number	479-1507
Title of 12(b) Security	Class A common stock, par value $0.0001 per share
Trading Symbol	RBT
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Common Class A [Member]
Entity Common Stock, Shares Outstanding		37,419,939
Common Class V [Member]
Entity Common Stock, Shares Outstanding		4,425,388

v3.23.3

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current Assets:
Cash and cash equivalents	$ 13,433	$ 10,079
Accounts receivable, net	59,600	65,923
Contract assets	68,629	55,184
Prepaid expenses	19,532	10,466
Other current assets	4,168	2,109
Related-party notes receivable		7,020
Total Current Assets	165,362	150,781
Property and equipment, net	1,633	2,644
Operating right-of-use assets	792	2,827
Other noncurrent assets	2,043	4,764
Goodwill	32,132	32,132
Intangible assets, net	8,465	10,881
Total Assets	210,427	204,029
Current Liabilities:
Accounts payable	52,965	75,113
Line of credit	65,477	51,823
Accrued expenses	83,666	108,002
Contract liabilities	6,524	5,888
Operating lease liabilities, current	925	1,880
Warrant liabilities	26,502	20,890
Derivative liabilities	8,428
Debt obligations, net of deferred debt charges		3,771
Total Current Liabilities	244,487	267,367
Long-Term Liabilities:
Deferred income taxes	239	217
Operating lease liabilities, noncurrent	60	1,826
Debt obligations, net of deferred debt charges	76,818	69,458
Related-party debt obligations, net of deferred debt charges	15,794	10,597
Derivative liabilities	5,536	826
Earn-out liabilities	160	5,600
Other long-term liabilities		2,590
Total Long-Term Liabilities	98,607	91,114
Total Liabilities	343,094	358,481
Stockholders’ (Deficit) Equity:
Preferred stock – par value of $0.0001 per share, 10,000,000 shares authorized, 0 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively
Additional paid-in capital	118,884	34,659
Accumulated deficit	(381,845)	(337,860)
Total stockholders’ deficit attributable to Rubicon Technologies, Inc.	(262,958)	(303,199)
Noncontrolling interests	130,291	148,747
Total Stockholders’ Deficit	(132,667)	(154,452)
Total Liabilities and Stockholders’ (Deficit) Equity	210,427	204,029
Common Class A [Member]
Stockholders’ (Deficit) Equity:
Common stock value	3	1
Common Class V [Member]
Stockholders’ (Deficit) Equity:
Common stock value		$ 1

v3.23.3

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common Class A [Member]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized shares	690,000,000	690,000,000
Common stock, shares issued	34,803,951	6,985,869
Common stock, shares outstanding	34,803,951	6,985,869
Common Class V [Member]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized shares	275,000,000	275,000,000
Common stock, shares issued	4,425,388	14,432,992
Common stock, shares outstanding	4,425,388	14,432,992

v3.23.3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue:
Service	$ 159,119	$ 162,789	$ 486,125	$ 437,755
Recyclable commodity	12,138	22,194	40,794	71,640
Total revenue	171,257	184,983	526,919	509,395
Cost of revenue (exclusive of amortization and depreciation):
Service	147,018	157,504	455,213	423,382
Recyclable commodity	10,272	20,234	35,427	65,856
Total cost of revenue (exclusive of amortization and depreciation)	157,290	177,738	490,640	489,238
Sales and marketing	2,903	4,840	8,924	13,336
Product development	8,309	9,803	23,625	28,336
General and administrative	13,803	186,640	45,882	212,520
Gain on settlement of incentive compensation			(18,622)
Amortization and depreciation	1,277	1,439	3,982	4,331
Total Costs and Expenses	183,582	380,460	554,431	747,761
Loss from Operations	(12,325)	(195,477)	(27,512)	(238,366)
Other Income (Expense):
Interest earned	5	1	11	1
Gain (loss) on change in fair value of warrant liabilities	3,354	74	2,885	(436)
Gain on change in fair value of earnout liabilities	150	67,100	5,440	67,100
Loss on change in fair value of derivatives	(1,245)	(76,919)	(3,778)	(76,919)
Excess fair value over the consideration received for SAFE				(800)
Gain on service fee settlements in connection with the Mergers			6,996
Loss on extinguishment of debt obligations	(9,348)		(18,234)
Interest expense	(9,179)	(4,578)	(24,474)	(12,264)
Related party interest expense	(453)		(1,707)
Other expense	(1,116)	(1,307)	(2,019)	(1,994)
Total Other Income (Expense)	(17,832)	(15,629)	(34,880)	(25,312)
Loss Before Income Taxes	(30,157)	(211,106)	(62,392)	(263,678)
Income tax expense	16	19	49	60
Net Loss	(30,173)	(211,125)	(62,441)	(263,738)
Net loss attributable to Holdings LLC unitholders prior to the Mergers		(176,384)		(228,997)
Net loss attributable to noncontrolling interests	(2,519)	(16,933)	(18,456)	(16,933)
Net Loss Attributable to Class A Common Stockholders	$ (27,654)	$ (17,808)	$ (43,985)	$ (17,808)
Net loss per Class A Common share - basic	$ (0.85)	$ (2.93)	$ (2.47)	$ (2.93)
Net loss per Class A Common share - diluted	$ (0.85)	$ (2.93)	$ (2.47)	$ (2.93)
Weighted average shares outstanding, basic	32,381,649	6,083,847	17,786,466	6,083,847
Weighted average shares outstanding, diluted	32,381,649	6,083,847	17,786,466	6,083,847

v3.23.3

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY (UNAUDITED) - USD ($) $ in Thousands	Common Stock [Member]	Common Stock Class A [Member]	Common Stock Class V [Member]	Preferred Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Noncontrolling Interest [Member]	Total
Beginning balance, value at Dec. 31, 2021	$ (61,304)							$ (61,304)
Beginning balance, shares at Dec. 31, 2021	4,188,659
Compensation costs related to incentive units	$ 184							184
Net loss	(52,613)							(52,613)
Ending balance, value at Jun. 30, 2022	$ (113,733)							(113,733)
Ending balance, shares at Jun. 30, 2022	4,188,659
Compensation costs related to incentive units	$ 46							46
Net loss	(176,384)							(176,384)
Proceeds, net of redemptions					196,775			196,775
Transaction costs related to the Mergers	(36,075)				(31,249)			(67,324)
Accelerated vesting and conversion of incentive units	$ 77,403							77,403
Accelerated vesting and conversion of incentive units, shares	383,769
Exchange of liability classified warrants	$ 1,717							1,717
Exchange of liability classified warrants, shares	7,751
Reclassification of SAFE	$ 8,800							8,800
Reclassification of SAFE, shares	110,000
Phantom units rollover					15,104			15,104
Reverse recapitalization	$ 238,226				(180,630)	(57,596)
Reverse recapitalization, shares	(4,690,179)
Issuance of common stock upon the Mergers - Class A and Class V		$ 1	$ 1		1			3
Issuance of common stock upon the Mergers - Class A and Class V, shares		5,787,501	14,834,735
Establishment of earn-out liabilities					(1)	(74,099)		(74,100)
Establishment of noncontrolling interests						(177,698)	177,698
Equity-based compensation					10,913			10,913
Issuance of common stock in connection with SEPA – Class A					892			892
Issuance of common stock in connection with SEPA - Class A, shares		25,000
Exchange of Class V Common Stock to Class A Common Stock
Exchange of Class V Common Stock to Class A Common Stock, shares		401,780	(401,780)
Net loss						(17,808)	(16,933)	(34,741)
Ending balance, value at Sep. 30, 2022		$ 1	$ 1		11,805	(327,201)	160,765	(154,629)
Ending balance, shares at Sep. 30, 2022		6,214,281	14,432,955
Beginning balance, value at Dec. 31, 2022		$ 1	$ 1		34,659	(337,860)	148,747	(154,452)
Beginning balance, shares at Dec. 31, 2022		6,985,869	14,432,992
Equity-based compensation					11,105			11,105
Issuance of common stock for services rendered					10,245			10,245
Issuance of common stock for services rendered, shares		1,164,757
Issuance of equity-classified warrants					945			945
Issuance of common stock for vested RSUs
Issuance of common stock for vested RSUs, shares		463,961
Issuance of common stock for vested DSUs
Issuance of common stock for vested DSUs, shares		10,603
RSUs withheld to pay taxes					(1,067)			(1,067)
Conversion of debt obligations to common stock					10,846			10,846
Conversion of debt obligations to common stock, shares		2,517,284
Proceeds from issuance of common stock		$ 1			24,766			24,767
Proceeds from issuance of common stock, shares		7,257,334
Exercise and conversion of liability classified warrants					1,073			1,073
Exercise and conversion of liability classified warrants, shares		319,922
Exchange of Class V Common Stock to Class A Common Stock		$ 1	$ (1)
Exchange of Class V Common Stock to Class A Common Stock, shares		10,007,604	(10,007,604)
Common stock issuance costs					(32)			(32)
Net loss						(16,331)	(15,937)	(32,268)
Ending balance, value at Jun. 30, 2023		$ 3			92,540	(354,191)	132,810	(128,838)
Ending balance, shares at Jun. 30, 2023		28,727,334	4,425,388
Equity-based compensation					2,134			2,134
Issuance of common stock for services rendered					2,055			2,055
Issuance of common stock for services rendered, shares		711,566
Issuance of equity-classified warrants					1,682			1,682
Issuance of common stock for vested RSUs
Issuance of common stock for vested RSUs, shares		1,139,775
Issuance of common stock for vested DSUs
Issuance of common stock for vested DSUs, shares		4,602
Conversion of debt obligations to common stock					19,334			19,334
Conversion of debt obligations to common stock, shares		3,900,321
Exercise and conversion of liability classified warrants					1,139			1,139
Exercise and conversion of liability classified warrants, shares		291,143
Shares added for fractional shares pursuant to reverse stock split
Shares added for fractional shares pursuant to reverse stock split, shares		29,210
Net loss						(27,654)	(2,519)	(30,173)
Ending balance, value at Sep. 30, 2023		$ 3			$ 118,884	$ (381,845)	$ 130,291	$ (132,667)
Ending balance, shares at Sep. 30, 2023		34,803,951	4,425,388

v3.23.3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net loss	$ (62,441)	$ (263,738)
Adjustments to reconcile net loss to net cash flows from operating activities:
Loss on disposal of property and equipment	777	23
Gain on lease agreement amendment	(220)
Amortization and depreciation	3,982	4,026
Amortization of deferred debt charges	6,392	2,378
Amortization of related party debt discount and issuance costs	586
Paid-in-kind interest capitalized to principal of debt obligations	6,733
Paid-in-kind interest capitalized to principal of related party debt obligations	1,012
Bad debt reserve	2,065	(2,366)
(Gain) Loss on change in fair value of warrants	(2,885)	436
Loss on change in fair value of derivatives	3,778	76,919
Gain on change in fair value of earn-out liabilities	(5,440)	(67,100)
Loss on extinguishment of debt obligations	18,234
Excess fair value over the consideration received for SAFE		800
SEPA commitment fee settled in Class A Common Stock		892
Equity-based compensation	13,239	88,546
Phantom unit expense		6,783
Deferred compensation expense		1,250
Settlement of accrued incentive compensation	(26,826)
Service fees settled in common stock	5,863
Gain on service fee settlement in connection with the Mergers	(6,996)
Deferred income taxes	22	41
Change in operating assets and liabilities:
Accounts receivable	4,258	(13,636)
Contract assets	(13,445)	(5,821)
Prepaid expenses	(6,731)	(5,528)
Other current assets	(2,122)	(131)
Operating right-of-use assets	868	801
Other noncurrent assets	140	355
Accounts payable	(22,148)	10,967
Accrued expenses	17,033	52,450
Contract liabilities	636	(142)
Operating lease liabilities	(1,335)	(1,273)
Other liabilities	(1,602)	150
Net cash flows from operating activities	(66,573)	(112,918)
Cash flows from investing activities:
Property and equipment purchases	(750)	(1,150)
Forward purchase option derivative purchase		(68,715)
Net cash flows from investing activities	(750)	(69,865)
Cash flows from financing activities:
Net borrowings on line of credit	13,653	179
Proceeds from debt obligations	86,226
Repayments of debt obligations	(53,500)	(4,500)
Proceeds from related party debt obligations	14,520
Financing costs paid	(13,891)	(2,000)
Proceeds from issuance of common stock	24,767
Proceeds from SAFE		8,000
Proceeds from the Mergers		196,778
Equity issuance costs	(31)	(21,827)
RSUs withheld to pay taxes	(1,067)
Net cash flows from financing activities	70,677	176,630
Net change in cash and cash equivalents	3,354	(6,153)
Cash, beginning of period	10,079	10,617
Cash, end of period	13,433	4,464
Supplemental disclosure of cash flow information:
Cash paid for interest	9,934	9,023
Supplemental disclosures of non-cash investing and financing activities:
Exchange of warrant liability for Class A and Class V Common Stock	2,250	1,716
Conversion of SAFE for Class B Units		8,000
Establishment of earn-out liabilities		74,100
Equity issuance costs accrued but not paid		44,235
Fair value of derivatives issued as deferred debt charges	12,739
Conversions of debt obligations to common stock	17,000
Conversions of related-party debt obligations to common stock	3,080
Equity issuance costs waived	6,364
Equity issuance costs settled with common stock	7,069
Loan commitment asset reclassed to deferred debt charges	$ 2,062

v3.23.3

Nature of operations and summary of significant accounting policies	9 Months Ended
	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of operations and summary of significant accounting policies	Note 1—Nature of operations and summary of significant accounting policies   Description of Business – Rubicon Technologies, Inc. and all subsidiaries are hereafter referred to as “Rubicon” or the “Company.”   Rubicon is a digital marketplace for waste and recycling services and provides cloud-based waste and recycling solutions to businesses and governments. Rubicon’s sustainable waste and recycling solutions provide comprehensive management of customers’ waste streams through a platform that powers a modern, digital experience and delivers data-driven insights and transparency for the customers and hauling and recycling partners.   Rubicon also provides consultation and management services to customers for waste removal, waste management, logistics, and recycling solutions. Consultation and management services include planning, consolidation of billing and administration, cost savings analyses, and vendor performance monitoring and management. The combination of Rubicon’s technology and services provides a holistic audit of customer waste streams. Rubicon also provides logistics services and markets and resells recyclable commodities.   Reverse Stock Split – On September 26, 2023, the Company effected a reverse stock split of its outstanding shares of voting common stock at a ratio of one-for-eight (1:8) pursuant to a Certificate of Amendment to its Certificate of Incorporation filed with the Secretary of State of the State of Delaware. The reverse stock split was reflected on the New York Stock Exchange (the “NYSE”) beginning with the opening of trading on September 27, 2023. Pursuant to the reverse stock split, every eight shares of the Company’s issued and outstanding shares of common stock were automatically combined into one issued and outstanding share of common stock, without any change in the number of authorized shares or the par value per share of the common stock. No fractional shares were issued in connection with the reverse stock split. Any stockholder who would otherwise be entitled to receive a fractional share instead became entitled to receive one whole share of common stock in lieu of such fractional share. Equitable adjustments corresponding to the reverse stock split ratio were made to all (i) issued and outstanding shares of all other classes of stock of the Company, (ii) the exercise prices of and number of shares of common stock underlying the Company’s public and private warrants, (iii) the number of shares of common stock underlying the Company’s outstanding equity awards, and (iv) the number of shares of common stock issuable under the Company’s equity incentive plan. All share and per share amounts of the common stock included in the accompanying condensed consolidated financial statements and these notes to the condensed consolidated financial statements have been retrospectively adjusted to give effect to the reverse stock split for all periods presented, including reclassifying an amount equal to the reduction in par value to additional paid-in capital.   Mergers – Rubicon Technologies, Inc. was initially incorporated in the Cayman Islands on April 26, 2021 as a special purposes acquisition company under the name “Founder SPAC” (“Founder”). Founder was formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. On August 15, 2022 (the “Closing Date”), Founder consummated the mergers (the “Mergers”), pursuant to that certain Agreement and Plan of Merger, dated December 15, 2021 (the “Merger Agreement”) (the “Closing”).   In connection with the Mergers, the Company was reorganized into an Up-C structure, in which substantially all of the assets and business of the Company are held by Rubicon Technologies Holdings, LLC (“Holdings LLC”) and continue to operate through Rubicon Technologies Holdings, LLC and its subsidiaries, and Rubicon Technologies, Inc.’s material assets are the equity interests of Rubicon Technologies Holdings, LLC indirectly held by it. Pursuant to the Merger Agreement, the Mergers were accounted for as a reverse recapitalization in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) (the “Reverse Recapitalization”). Under this method of accounting, Founder was treated as the acquired company and Holdings LLC was treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Holdings LLC issuing stock for the net assets of Founder, accompanied by a recapitalization. Thus, the accompanying condensed consolidated financial statements reflect (i) the historical operating results of Holdings LLC prior to the Mergers; (ii) the results of Rubicon Technologies, Inc. following the Mergers; and (iii) the acquired assets and liabilities of Founder stated at historical cost, with no goodwill or other intangible assets recorded.   See Note 3 for further information regarding the Mergers.   Basis of Presentation and Consolidation – The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to U.S. GAAP and reflect all adjustments which are, in the opinion of management, necessary to a fair presentation of the results of the interim periods presented, under the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). These condensed consolidated financial statements include all adjustments consisting of only normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented. The Company’s condensed consolidated financial statements include the accounts of Rubicon Technologies, Inc., and subsidiaries. The Company’s condensed consolidated financial statements reflect the elimination of all significant inter-company accounts and transactions. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2023. Certain information and note disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes prepared in accordance with U.S. GAAP have been condensed in, or omitted from, these interim financial statements. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes to the consolidated financial statements for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 23, 2023.   Segments – The Company operates in one operating segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assessing performance. The Company’s CODM role is fulfilled by the Executive Leadership Team (“ELT”), who allocates resources and assesses performance based upon consolidated financial information.   Use of Estimates – The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of any contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.   Emerging Growth Company – The Company is an emerging growth company (“EGC”), as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company did not opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an EGC, will be required to adopt the new or revised standard at the time the new or revised standard becomes applicable to private companies. The effective dates shown in Note 2 below reflect the election to use the extended transition period.   Revenue Recognition – The Company recognizes service revenue over time, consistent with efforts performed and when the customer simultaneously receives and consumes the benefits provided by the Company’s services. The Company recognizes recyclable commodity revenue point in time when the ownership, risks, and rewards transfer. The Company derives its revenue from waste removal, waste management and consultation services, software subscriptions, and the sale of recyclable commodities.   Service Revenue:   Service revenues are primarily derived from long-term contracts with waste generator customers including multiple promises delivered through the Company’s digital marketplace platform. The promises include waste removal, consultation services, billing administration and consolidation, cost savings analyses, and vendor procurement and performance management, each of which constitutes an input to the combined service managed through the digital platform. The digital platform and services are highly interdependent, and accordingly, each contractual promise is not considered a distinct performance obligation in the context of the contract and is combined into a single performance obligation. In general, fees are invoiced, and revenue is recognized over time as control is transferred. Revenue is measured as the amount of consideration the Company expects to receive in exchange for providing the service. The Company invoices for certain services prior to performance. These advance invoices are included in contract liabilities and recognized as revenue in the period service is provided.   Service revenues also include software-as-a-service subscription, maintenance, equipment and other professional services, which represent separate performance obligations. Once the performance obligations and the transaction price are determined, including an estimate of any variable consideration, the Company then allocates the transaction price to each performance obligation in the contract using a relative standalone selling price method. The Company determines standalone selling price based on the price at which the good or service is sold separately.   Recyclable Commodity Revenue:   The Company recognizes recyclable commodity revenue through the sales of old corrugated cardboard (OCC), old newsprint (ONP), aluminum, glass, pallets, and other recyclable materials at market prices. The Company purchases recyclable commodities from certain waste generator customers and sells the recyclable materials to recycling and processing facilities. Revenue recognized under these agreements is variable in nature based on the market, type and volume or weight of the materials sold. The amount of revenue recognized is based on commodity prices at the time of sale, which are unknown at contract inception. Fees are billed, and revenue is recognized at a point in time when control is transferred to the recycling and processing facilities.   Management reviews contracts and agreements the Company has with its waste generator customers and hauling and recycling partners and performs an evaluation to consider the most appropriate manner in accordance with ASC 606-10, Revenue Recognition: Principal Agent Considerations, by which revenue is presented on the condensed consolidated statements of operations.   Judgment is required in evaluating the presentation of revenue on a gross versus net basis based on whether the Company controls the service provided to the end-user and is the principal in the transaction (gross), or the Company arranges for other parties to provide the service to the end-user and is the agent in the transaction (net). Management has concluded that the Company is the principal in most arrangements as it controls the waste removal service and is the primary obligor in the transactions.   The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) which we recognize revenue at the amount to which the Company has the right to invoice for services performed and (iii) variable consideration which is allocated entirely to a wholly unsatisfied performance obligation. After applying these optional exemptions, the aggregate amount of the transaction price allocated to unsatisfied or partially satisfied performance obligations as of September 30, 2023 and December 31, 2022 was insignificant.   Cost of Revenue, exclusive of amortization and depreciation – Cost of service revenues primarily consists of expenses related to delivering the Company’s service and providing support, including third-party hauler costs, costs of data center capacity, certain fees paid to various third parties for the use of their technology, services and data, and employee-related costs, such as salaries and benefits.   Cost of recyclable commodity revenues primarily consists of expenses related to purchases of OCC, ONP, aluminum, glass, pallets and other recyclable materials, and any associated transportation fees.   The Company recognizes the cost of revenue exclusive of any amortization or depreciation expenses, which are recognized in amortization and depreciation expenses on the condensed consolidated statements of operations.   Cash and Cash Equivalents – The Company considers all highly liquid investments purchased with an original maturity of three months or less when purchased to be cash equivalents. The Company maintains its cash in bank deposit accounts, which at times exceed the Federal Deposit Insurance Corporation insurance limits.   Accounts Receivable and Contract Balances –Accounts receivable consist of trade accounts receivable for services provided to customers. Accounts receivable is stated at the amount the Company expects to collect. The Company makes estimates of expected credit and collectability trends for the allowance for credit losses and allowance for unbilled receivables based upon the Company’s assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Past-due balances and other higher-risk amounts are reviewed individually for collectability. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. As of September 30, 2023 and December 31, 2022, the allowances for accounts receivable were $4.6 million and $3.6 million, respectively, and the allowances for contract assets were insignificant.   In cases where customers pay for services in arrears, the Company accrues revenue in advance of billings as long as the criteria for revenue recognition are met, thus creating a contract asset (unbilled receivable). As of September 30, 2023 and December 31, 2022, the Company had unbilled receivables of $68.6 million and $55.2 million, respectively. These unbilled balances were the result of services provided in the period, but not yet billed to the customer. During the nine months ended September 30, 2023, the Company invoiced its customers $55.2 million pertaining to contract assets for services delivered prior to December 31, 2022.   Contract liabilities (deferred revenue) consist of amounts collected prior to having satisfied the performance obligation. The Company periodically invoices customers for recurring front load services in advance monthly basis. As of September 30, 2023 and December 31, 2022, the Company had deferred revenue balances of $6.5 million and $5.9 million, respectively. During the nine months ended September 30, 2023, the Company recognized $5.5 million of revenue that was included in the contract liabilities balance as of December 31, 2022.   Accrued Hauler Expenses – The Company recognizes hauler costs and the cost of recyclable products when services are performed. Accounting for accrued hauler costs and the cost of recyclable commodities requires estimates and assumptions regarding the quantity of waste collected by the vendors and the frequencies of the collections. The Company estimates quantities and frequencies using historical transaction and market data based on the waste stream composition, equipment type, and equipment size. Accrued hauler expenses are presented within accrued expenses on the condensed consolidated balance sheets.   Fair Value Measurements – In accordance with U.S. GAAP, the Company groups its financial assets and financial liabilities at fair value in three levels, based on the markets in which the financial assets and financial liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:   Level 1 – Valuations for financial assets and financial liabilities traded in active exchange markets, such as the NYSE.   Level 2 – Valuations are obtained from readily available pricing sources via independent providers for market transactions involving similar financial assets and financial liabilities.   Level 3 – Valuations for financial assets and financial liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models, and similar techniques and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such financial assets or financial liabilities.   See Note 15 for further information regarding fair value measurements.   Offering Costs – Offering costs, consisting of legal, accounting, printer, filing and advisory fees related to the Mergers, were deferred and offset against proceeds from the Mergers and additional paid-in capital upon consummation of the Mergers. Deferred offering costs capitalized as of September 30, 2023 and December 31, 2022 were $-0-. The total amount of the offering costs recognized as offset against additional paid-in capital at the Closing was $67.3 million. The subsequent settlements of certain offering costs during the nine months ended September 30, 2023 resulted in a gain of $7.0 million, which is recognized as a component of other income (expense) on the accompanying condensed consolidated statements of operations. No such settlement occurred during the three months ended September 30, 2023.   Customer Acquisition Costs – The Company makes certain expenditures related to acquiring contracts for future services. These expenditures are capitalized and amortized in proportion to the expected future revenue from the customer, which in most cases results in straight-line amortization over the estimated life of the customer. Amortization of these customer acquisition costs is presented within amortization and depreciation on the condensed consolidated statements of operations.   Warrants – The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s Class A common stock, par value $0.0001 per share (“Class A Common Stock”), among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.   For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded in liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the liability-classified warrants are recognized as a component of other income (expense) on the consolidated statement of operations.   As of September 30, 2023, the Company has both liability-classified and equity-classified warrants outstanding. See Note 9 for further information.   Earn-out Liabilities – Pursuant to the Merger Agreement, (i) Blocked Unitholders (as defined in Note 3) immediately before the Closing received a right to receive a pro rata portion of 186,064 shares of Class A Common Stock (the “Earn-Out Class A Shares”) and (ii) Rubicon Continuing Unitholders (as defined in Note 3) immediately before the Closing received a right to receive a pro rata portion of 1,112,605 Class B Units (as defined in Note 3) (“Earn-Out Units”) and an equivalent number of shares of the Company’s Class V common stock, par value $0.0001 (“Class V Common Stock”) (“Earn-Out Class V Shares”, and together with Earn-Out Class A Shares and Earn-Out Units, “Earn-Out Interests”), in each case, depending upon the performance of Class A Common Stock during the five year period after the Closing (the “Earn-Out Period”), as set forth below upon satisfaction of any of the following conditions (each, an “Earn-Out Condition”).     (1) 50% of the Earn-Out Interests if the volume weighted average price (the “VWAP”) of the Class A Common Stock equals or exceeds $112.00 per share (as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations) for twenty (20) of thirty (30) consecutive trading days during the Earn-Out Period; and     (2) 50% of the Earn-Out Interests if the VWAP of the Class A Common Stock equals or exceeds $128.00 per share (as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations) for twenty (20) of any thirty (30) consecutive trading days during the Earn-Out Period.   Earn-Out Interests were classified as liability transactions at initial issuance, which offset against additional paid-in capital as of the Closing. At each period end, Earn-Out Interests are remeasured to their fair value, with the changes during that period recognized as a component of other income (expense) on the consolidated statement of operations. Upon issuance and release of the shares after each Earn-Out Condition is met, the related Earn-Out Interests will be remeasured to their fair value at that time with the changes recognized as a component of other income (expense), and such Earn-Out Interests will be reclassed to stockholders’ (deficit) equity on the consolidated balance sheet. As of September 30, 2023 and December 31, 2022, the Earn-Out Interests had a fair value of $0.2 million and $5.6 million, respectively, with the changes in the fair value of $5.4 million recognized as a gain on change in fair value of earn-out liabilities under other income (expense) within the accompanying condensed consolidated statements of operations.   Noncontrolling Interest – Noncontrolling interest represents the Company’s noncontrolling interest in consolidated subsidiaries which are not attributable, directly or indirectly, to the controlling Class A Common Stock ownership of the Company.   Shares of Class V Common Stock are exchangeable into an equal number of Class A Common Stock. Shares of Class V Common Stock are non-economic voting shares in Rubicon Technologies, Inc., where shares of Class V Common Stock each have one vote per share.   The financial results of Holdings LLC were consolidated into Rubicon Technologies, Inc. and 12.1% and 35.9% of Holdings LLC’s net loss during the three and nine months ended September 30, 2023, respectively, was allocated to noncontrolling interests (“NCI”).   Income Taxes – Rubicon Technologies, Inc. is a corporation and is subject to U.S. federal as well as state income taxes including the income or loss allocated from its investment in Rubicon Technologies Holdings, LLC. Rubicon Technologies Holdings, LLC is taxed as a partnership for which the taxable income or loss is allocated to its members. Certain of the Rubicon Technologies Holdings, LLC operating subsidiaries are considered taxable corporations for U.S. income tax purposes. Prior to the Mergers, Holdings LLC was not subject to U.S. federal and certain state income taxes at the entity level.   The Company accounts for income taxes in accordance with ASC Topic 740, Accounting for Income Taxes (“ASC Topic 740”), which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax bases of its assets and liabilities by applying the enacted tax rates in effect for the year in which the differences are expected to reverse. Such net tax effects on temporary differences are reflected on the Company’s consolidated balance sheets as deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when the Company believes that it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The Company calculates the interim tax provision in accordance with the provisions of ASC Subtopic 740-270, Income Taxes; Interim Reporting. For interim periods, the Company estimates the annual effective income tax rate (“AETR”) and applies the estimated rate to the year-to-date income or loss before income taxes.   ASC Topic 740 prescribes a two-step approach for the recognition and measurement of tax benefits associated with the positions taken or expected to be taken in a tax return that affect amounts reported in the financial statements. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. As of September 30, 2023 or December 31, 2022, the Company has no tax positions that met this threshold and, therefore, has not recognized such benefits. The Company has reviewed and will continue to review the conclusions reached regarding uncertain tax positions, which may be subject to review and adjustment at a later date based on ongoing analyses of tax laws, regulations and interpretations thereof. To the extent that the Company’s assessment of the conclusions reached regarding uncertain tax positions changes as a result of the evaluation of new information, such change in estimates will be recorded in the period in which such determination is made. The Company reports income tax-related interest and penalties relating to uncertain tax positions, if applicable, as a component of income tax expense.   The Company’s income tax expense was $-0- million and $-0- million for the three months ended September 30, 2023 and 2022, respectively, with an effective tax rate of (0.1)% and (0.0)%, respectively The Company’s income tax expense was $-0- million and $-0- million for the nine months ended September 30, 2023 and 2022, respectively, with an effective tax rate of (0.1)% and (0.0)%, respectively. The provision for income taxes differs from the amount that would result from applying statutory rates primarily due to loss attributable to noncontrolling interest and differences in the deductibility of certain book and tax expenses, including the changes in fair value of earn-out liabilities, warrant liabilities and derivatives.   During the nine months ended September 30, 2023 and the year ended December 31, 2022, the Company recorded a full valuation allowance against its deferred tax assets. The Company intends to maintain this position until there is sufficient evidence to support the reversal of all or some portion of the allowance. The Company also has certain assets with indefinite lives for which the basis is different for book and tax. As a result, the Company is in a net deferred tax liability position of $0.2 million and $0.2 million as of September 30, 2023 and December 31, 2022, respectively.   Tax Receivable Agreement Obligation – The Company and Holdings LLC entered into a Tax Receivable Agreement (the “Tax Receivable Agreement” or “TRA”) with Rubicon Continuing Unitholders (as defined in Note 3) and Blocked Unitholders (as defined in Note 3) (together, the “TRA Holders”). Pursuant to the Tax Receivable Agreement, among other things, the Company is required to pay to the TRA Holders 85% of certain of the Company’s realized (or in certain cases deemed realized) tax savings as a result of certain tax benefits related to the transactions contemplated by the Merger Agreement and future exchanges of Class B Units for Class A Common Stock or cash. The actual tax benefit, as well as the amount and timing of any payments under the TRA, will vary depending on a number of factors, including the price of Class A Common Stock at the time of the exchange; the timing of future exchanges; the extent to which exchanges are taxable; the amount and timing of the utilization of tax attributes; the amount, timing and character of the Company’s income; the U.S. federal, state and local tax rates then applicable; the depreciation and amortization periods that apply to the increases in tax basis; the timing and amount of any earlier payments that the Company may have made under the TRA; and the portion of the Company’s payments under the TRA that constitute imputed interest or give rise to depreciable or amortizable tax basis.   The Company accounts for the effects of these increases in tax basis and associated payments under the TRAs if and when exchanges occur as follows:     a. recognizes a contingent liability for the TRA obligation when it is deemed probable and estimable, with a corresponding adjustment to additional paid-in-capital, based on the estimate of the aggregate amount that the Company will pay;     b. records an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange;     c. to the extent the Company estimates that the full benefit represented by the deferred tax asset will not be fully realized based on an analysis that will consider, among other things, the expectation of future earnings, the Company reduces the deferred tax asset with a valuation allowance; and     d. the effects of changes in any of the estimates and subsequent changes in the enacted tax rates after the initial recognition will be included in the Company’s net loss.   A TRA liability is determined and recorded under ASC 450, “Contingencies”, as a contingent liability; therefore, the Company is required to evaluate whether the liability is both probable and the amount can be estimated. Since the TRA liability is payable upon cash tax savings and the Company has not determined that positive future taxable income is probable based on the Company’s historical loss position and other factors that make it difficult to rely on forecasts, the Company has not recorded the TRA liability as of September 30, 2023. The Company will evaluate this on a quarterly basis, which may result in an adjustment in future periods.   Earnings (Loss) Per Share (“EPS”) – Basic income (loss) per share is computed by dividing net income (loss) attributable to Rubicon Technologies, Inc. by the weighted-average number of shares of Class A Common Stock outstanding during the period.   Diluted income (loss) per share is computed giving effect to all potential weighted-average dilutive shares for the period. The dilutive effect of outstanding awards or financial instruments, if any, is reflected in diluted income (loss) per share by application of the treasury stock method or if converted method, as applicable. Stock awards are excluded from the calculation of diluted EPS in the event they are antidilutive or subject to performance conditions for which the necessary conditions have not been satisfied by the end of the reporting period. See Note 14 for additional information on dilutive securities.   Prior to the Mergers, the membership structure of Holdings LLC included units with liquidation preferences. The Company analyzed the calculation of loss per unit for periods prior to the Mergers and determined that it resulted in values that would not be meaningful to the users of these condensed consolidated financial statements. As a result, loss per share information has not been presented for periods prior to the Closing.   Derivative Financial Instruments – From time to time, the Company utilizes derivative instruments as part of our overall strategy. The Company’s derivative instruments are recorded at fair value on the consolidated balance sheets. These derivative instruments have not been designated as hedges; therefore, both realized and unrealized gains and losses are recognized in earnings. For the purposes of cash flow presentation, realized and unrealized gains or losses are included under cash flows from operating activities. Upfront cash payments received upon the issuance of derivative instruments are included within cash flows from financing activities, while the prepayments made upon the issuance of derivative instruments are included within cash flows from investing activities within the consolidated statements of cash flows.   Stock-Based Compensation – The Company measures fair value of employee stock-based compensation awards on the date of grant and uses the straight-line attribution method to recognize the related expense over the requisite service period, and accounts for forfeitures as they occur. The fair value of equity-classified restricted stock units and performance-based restricted stock units is equal to the market price of Class A Common Stock on the date of grant. The liability-classified restricted stock units are recognized at their fair value that is equal to the market price of Class A Common Stock on the date of grant and remeasured to the market price of Class A Common Stock at each period-end with related changes in the fair value recognized in general and administrative expense on the consolidated statement of operations.   The Company accounts for nonemployee stock-based transactions using the fair value of the consideration received (i.e., the value of the goods or services) or the fair value of the equity instruments issued, whichever is more reliably measurable.

v3.23.3

Recent accounting pronouncements	9 Months Ended
	Sep. 30, 2023
Recent Accounting Pronouncements
Recent accounting pronouncements	Note 2—Recent accounting pronouncements   Accounting pronouncements adopted during 2023   In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans, and available-for-sale debt securities. The Company adopted this ASU as of January 1, 2023. The adoption did not have a material impact on the Company’s consolidated financial statements.   In October 2021, the FASB issued ASU 2021-08, Business Combination (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASU 2021-08 will be effective for the Company at the beginning of 2024 on a prospective basis, with early adoption permitted. The Company early adopted this ASU as of January 1, 2023. The adoption did not have a material impact on the Company’s consolidated financial statements.

v3.23.3

Mergers	9 Months Ended
	Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]
Mergers	Note 3—Mergers   As further discussed in Note 1, on August 15, 2022, the Mergers were consummated pursuant to the Merger Agreement. In connection with the Closing, the following occurred in addition to the disclosures in Note 1:     - (a) Each then-issued and outstanding Class A ordinary share, par value $0.0001 per share, of Founder (“Founder Class A Shares”) automatically converted into one share of Class A Common Stock, (b) each then-issued and outstanding Class B ordinary share, par value $0.0001 per share, of Founder (“Founder Class B Shares” and, together with Founder Class A Shares, “Founder Ordinary Shares”), converted into one share of Class A Common Stock, pursuant to the Sponsor Agreement, dated December 15, 2021, by and among Founder, Founder SPAC Sponsor LLC (“Sponsor”), Holdings LLC, and certain insiders of Founder, (c) each then-issued and outstanding public warrant of Founder, each representing a right to acquire one Founder Class A Share for $92.00 (a “Founder Public Warrant”), converted automatically, on a one-for-one basis, into a public warrant of the Company (a “Public Warrant”) that represents a right to acquire one share of Class A Common Stock for $92.00 pursuant to the Warrant Agreement, dated October 14, 2021, by and between Founder and Continental Stock Transfer and Trust Company (as amended, the “Warrant Agreement”), (d) each then-issued and outstanding private placement warrant of Founder, each representing a right to acquire one Founder Class A Share for $92.00 (a “Founder Private Placement Warrant”), converted automatically, on a one-for-one basis, into a private placement warrant of the Company (the “Private Warrant” and together with the Public Warrants, the “IPO Warrants”) that represents a right to acquire one share of Class A Common Stock for $92.00 pursuant to the Warrant Agreement, and (e) each then-issued and outstanding unit of Founder, each representing a Founder Class A Share and one-half of a Founder Public Warrant (a “Founder Unit”), that had not been previously separated into the underlying Founder Class A Share and one-half of one Founder Public Warrant upon the request of the holder thereof, was separated and automatically converted into one share of Class A Common Stock and one-half of one Public Warrant. No fractional Public Warrants were issued upon separation of the Founder Units.     - The Company was issued Class A Units in Holdings LLC (“Class A Units”) and all preferred units, common units, and incentive units of Holdings LLC (including such convertible instruments, the “Rubicon Interests”) outstanding were automatically recapitalized into Class A Units and Class B Units of Holdings LLC (“Class B Units”), as authorized by the Eighth Amended and Restated Limited Liability Company Agreement of Holdings LLC (“A&R LLCA”) that was adopted on the Closing Date. On the Closing Date, (a) holders of the Rubicon Interests immediately before the Closing, other than Boom Clover Business Limited, NZSF Frontier Investments Inc., and PLC Blocker A LLC (collectively, the “Blocked Unitholders”), were issued Class B Units (the “Rubicon Continuing Unitholders”), (b) the Rubicon Continuing Unitholders were issued a number of shares of Class V Common Stock equal to the number of Class B Units issued to the Rubicon Continuing Unitholders, (c) the Blocked Unitholders were issued shares of Class A Common Stock, and (d) following the adoption of the equity incentive award plan of Rubicon adopted at the Closing (the “2022 Plan”) and the effectiveness of a registration statement on Form S-8 filed on October 19, 2022, holders of phantom units of Holdings LLC immediately prior to the Closing (“Rubicon Phantom Unitholders”) and those current and former directors, officers and employees of Holdings LLC entitled to certain cash bonuses (the “Rubicon Management Rollover Holders”) are to receive restricted stock units (“RSUs”) and deferred stock units (“DSUs”), and such RSUs and DSUs will vest into shares of Class A Common Stock. In addition to the securities issuable at the Closing and the RSUs and DSUs, certain of the Rubicon Management Rollover Holders received one-time cash payments (the “Cash Transaction Bonuses”). In addition, pursuant to the Merger Agreement, (i) the Blocked Unitholders immediately before the Closing received a right to receive a pro rata portion of the Earn-Out Class A Shares and (ii) the Rubicon Continuing Unitholders immediately before the Closing received a right to receive a pro rata portion of the Earn-Out Units and an equivalent number of shares of Class V Common Stock, in each case, depending upon the performance of Class A Common Stock during the five year period after the Closing, as discussed in greater detail in Note 1.     - Certain investors (the “PIPE Investors”) purchased, and the Company sold to such PIPE Investors an aggregate of 1,512,500 shares of Class A Common Stock at a price of $80.00 per share pursuant to and as set forth in the subscription agreements against payment by such PIPE Investors of the respective amounts set forth therein.     - Certain investors (the “FPA Sellers”) purchased, and the Company issued and sold to such FPA Sellers, an aggregate of 885,327 shares of Class A Common Stock pursuant to and as set forth in the Forward Purchase Agreement entered into between Founder and ACM ARRT F LLC (“ACM Seller”) on August 4, 2022, against payment by such FPA Sellers of the respective amounts set forth therein. The Forward Purchase Agreement was subsequently terminated on November 30, 2022. See Note 10 for further information.     - The Company (a) caused to be issued to certain investors 110,000 Class B Units pursuant to the Merger Agreement, (b) issued 20,000 shares of Class A Common Stock to certain investors, and (c) Sponsor forfeited 20,000 shares of Class A Common Stock.     - Blocked Unitholders and Rubicon Continuing Unitholders retained aggregate 2,480,865 shares of Class A Common Stock and 14,834,735 shares of Class V Common Stock at the Closing.     - The Company and Holdings LLC entered into the Tax Receivable Agreement with the TRA Holders. See Note 1 for further information.     - The Company contributed approximately $73.8 million of cash to Rubicon Technologies Holdings, LLC, representing the net amount held in the Company’s trust account following the redemption of Class A Common Stock originally sold in Founder’s initial public offering, less (a) cash consideration of $28.9 million paid to Holdings LLC’s certain management members, plus (b) $121.0 million in aggregate proceeds received from the PIPE Investors, less (c) the aggregate amount of transaction expenses incurred by the parties to the Merger Agreement and (d) payment to the FPA Sellers pursuant to the Forward Purchase Agreement.     - The Company incurred $67.3 million in transaction costs relating to the Mergers. The Company settled $7.0 million of transaction costs by issuing Class A Common Stock on February 6, 2023, which resulted in a gain of $0.6 million and was recognized as a component of other income (expense) on the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2023. An additional $6.4 million of offering costs related to the Mergers was waived by a certain advisor and settled on April 24, 2023, resulting in a gain of $6.4 million recognized in other income (expense) on the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2023. The transaction costs were offset against additional paid-in capital on the consolidated statements of stockholders’ (deficit) equity upon the Closing.

v3.23.3

Property and equipment	9 Months Ended
	Sep. 30, 2023
Property, Plant and Equipment [Abstract]
Property and equipment	Note 4—Property and equipment   Property and equipment, net is comprised of the following as of September 30, 2023 and December 31, 2022 (in thousands):   Schedule of property and equipment                     September 30, 2023     December 31, 2022   Computers, equipment and software   $ 2,311     $ 3,791   Customer equipment     1,973       1,485   Furniture and fixtures     210       1,699   Leasehold improvements     1,441       3,772   Total property and equipment     5,935       10,747   Less accumulated amortization and depreciation     (4,302 )     (8,103 ) Total property and equipment, net   $ 1,633     $ 2,644     Property and equipment amortization and depreciation expense for the three months ended September 30, 2023 and 2022 was $0.3 million and $0.3 million, respectively. Property and equipment amortization and depreciation expense for the nine months ended September 30, 2023 and 2022 was $1.0 million and $1.0 million, respectively.   During the three months ended September 30, 2023, the Company terminated an office lease agreement and entered into an amended agreement for another office lease agreement, which in total, contributed to a decrease of $1.6 million in computers, equipment and software, $1.6 million in furniture and fixtures, $2.3 million in leasehold improvements and $4.8 million in accumulated amortization and depreciation, resulting in a $0.8 million of loss on disposals, which was recognized in other expense on the accompanying condensed consolidated statements of operations for the three months and nine months ended September 30, 2023. See Note 16 for further information regarding these lease agreement termination and amendment.

v3.23.3

Debt	9 Months Ended
	Sep. 30, 2023
Debt Disclosure [Abstract]
Debt	Note 5—Debt   Revolving Credit Facilities   Revolving Credit Facility – On December 14, 2018, the Company entered into a $60.0 million “Revolving Credit Facility” secured by all assets of the Company including accounts receivable, intellectual property, and general intangibles. The Revolving Credit Facility’s maturity was December 31, 2023 and bore an interest rate of SOFR plus 5.60% (9.7% at December 31, 2022). On February 7, 2023, the Company entered into an amendment to the Revolving Credit Facility, which (i) increased the maximum borrowing amount under the facility from $60.0 million to $75.0 million and (ii) amended the interest rate it bears to between 4.8% up to SOFR plus 4.9% determined based on certain metrics defined within the amended agreement. On March 22, 2023, the Company amended the Revolving Credit Facility, which (i) the Company and the lender modified its maturity date to the earlier of (a) December 14, 2025, (b) the maturity of the Term Loan (as defined below) and (c) the maturity of the Subordinated Term Loan (as defined below) and (ii) the lender consented to an amendment to the Subordinated Term Loan agreement. The borrowing capacity was calculated based on qualified billed and unbilled receivables. The fee on the average daily balance of unused loan commitments was 0.70%. Interest and fees were payable monthly with principal due upon maturity. In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that these Revolving Credit Facility amendments were debt modifications.   The Revolving Credit Facility required a lockbox arrangement, which provided for receipts to be swept daily to reduce borrowings outstanding at the discretion of the lender. This arrangement, combined with the existence of the subjective acceleration clause in the “Line of Credit” agreement, necessitated the Line of Credit be classified as a current liability on the consolidated balance sheets. The acceleration clause allowed for amounts borrowed under the facility to become immediately due in the event of a material adverse change in the Company’s business condition (financial or otherwise), operations, properties or prospects, change of management, or change in control.   On June 7, 2023, the Company fully prepaid the borrowing under the Revolving Credit Facility in the amount of $48.6 million and terminated the facility. As a result, the Company recorded $2.6 million of a loss on extinguishment of debt obligations on the accompanying condensed statements of operations for the nine months ended September 30, 2023.   As of December 31, 2022, the Company’s total outstanding borrowings under the Line of Credit were $51.8 million and $5.6 million remained available to draw.   June 2023 Revolving Credit Facility – On June 7, 2023, the Company entered into a $90.0 million “June 2023 Revolving Credit Facility” secured by the Company’s accounts receivable, all contracts and contract rights and general intangibles, with a maturity date of the earlier of (i) June 7, 2026 or (ii) 90 days prior to the maturity date of the June 2023 Term Loan (defined below) (the “Springing Maturity”). The June 2023 Revolving Credit Facility bears an interest rate of SOFR plus 4.25% (or 3.95% if the Company meets certain conditions defined in the agreement) (9.7% as of September 30, 2023). The borrowing capacity is calculated based on the Company’s borrowing base collateral as defined in the June 2023 Revolving Credit Facility agreement, which is comprised of qualified billed and unbilled receivables and the September 2023 Rodina Letter of Credit (as defined below). The fee on the average daily balance of unused loan commitments is 0.5%. Interest and fees are payable monthly in arrears on the first day of each month.   The June 2023 Revolving Credit Facility requires a lockbox arrangement, which provides for receipts to be swept daily to reduce borrowings outstanding at the discretion of the lender. This arrangement, combined with the existence of the subjective acceleration clause in the Line of Credit agreement, necessitates the Line of Credit be classified as a current liability on the consolidated balance sheets. The acceleration clause allows for amounts borrowed under the facility to become immediately due in the event of a material adverse change in the Company’s business condition (financial or otherwise), operations, properties or prospects, change of management, or change in control.   On September 22, 2023, an entity affiliated with Andres Chico (the chairman of the Company’s board of directors) and Jose Miguel Enrich (a beneficial owner of greater than 10% of the issued and outstanding Class A Common Stock and Class V Common Stock) issued a standby letter of credit in the amount of $15.0 million (the “September 2023 Rodina Letter of Credit”) to the lender of the June 2023 Revolving Credit Facility on behalf of the Company, which increased the Company’s borrowing base collateral under the facility by $15.0 million. The expiration date of the September 2023 Rodina Letter of Credit is September 30, 2024 with an automatic renewal option for one additional year through September 30, 2025.   As of September 30, 2023, the Company’s total outstanding borrowings under the Line of Credit were $65.5 million and $1.4 million remained available to draw, after accounting for the $15.0 million borrowing base collateral increase discussed above. The June 2023 Revolving Credit Facility is subject to certain financial covenants. As of September 30, 2023, the Company was in compliance with these financial covenants.   The Company capitalized $2.9 million in deferred debt charges related to the June 2023 Revolving Credit Facility during the nine months ended September 30, 2023, which has been recorded to prepaid expenses on the condensed consolidated balance sheet and are amortized over the remaining term of the June 2023 Revolving Credit Facility. Amortization of deferred debt charges related to the June 2023 Revolving Credit Facility were $0.2 million and $0.4 million for the three and nine months ended September 30, 2023, respectively.   Term Loan Facilities   Term Loan – On March 29, 2019, the Company entered into a $20.0 million “Term Loan” agreement secured by a second lien on all assets of the Company including accounts receivable, intellectual property and general intangibles. The Term Loan was subsequently upsized to $60.0 million and bore an interest rate of LIBOR plus 9.5% (13.6% as of December 31, 2022) with a maturity date of the earlier of March 29, 2024, or the maturity date of the Revolving Credit Facility.   On November 18, 2022, the Company entered into an amendment to the Term Loan agreement, in which the lender consented to the amendments to the Revolving Credit Facility agreement and the Subordinated Term Loan agreement. The amended Term Loan agreement required the Company to cause the Yorkville Investor (See Note 11) to purchase the maximum amount of the Company’s equity interests available under the SEPA (See Note 11) and to utilize the net proceeds from such drawdowns to repay the Term Loan until it was fully repaid. Per the amended Term Loan agreement, an additional fee was incurred in the amount of $2.0 million, out of which $1.0 million became due in cash and the other $1.0 million was accrued to the principal balance of the Term Loan as the Company did not repay the Term Loan in full on or before March 27, 2023. Furthermore, beginning on April 3, 2023, an additional $0.15 million fee accrued to the principal balance of the Term Loan each week thereafter until the Term Loan was fully repaid.   On February 7, 2023, the Company entered into an amendment to the Term Loan agreement, which (i) amended the interest rate the Term Loan bears to SOFR plus 9.6% and (ii) required the Company to make a prepayment of $10.3 million, including $10.0 million of the principal and $0.3 million of the prepayment premium. Pursuant to the amended agreement, the Company made a $10.3 million payment to the Term Loan lender on February 7, 2023 and recorded $0.8 million as a loss on extinguishments of debt obligations on the accompanying consolidated statements of operations.   On May 19, 2023, the Company entered into an amendment to the Term Loan agreement, which extended the maturity date to May 23, 2024.   In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that these Term Loan amendments were debt modifications.   On June 7, 2023, the Company fully prepaid the borrowing under the Term Loan in the amount of $40.5 million and terminated the facility. As a result, the Company recorded $2.5 million of a loss on extinguishment of debt obligations on the accompanying condensed statements of operations for the nine months ended September 30, 2023.   Subordinated Term Loan – On December 22, 2021, the Company entered into a $20.0 million “Subordinated Term Loan” agreement secured by a third lien on all assets of the Company including accounts receivable, intellectual property and general intangibles. The Subordinated Term Loan was originally scheduled to mature on December 22, 2022, bore an interest rate of 15.0% through the original maturity and 14.0% thereafter. Pursuant to the Subordinated Term Loan agreement, the Company entered into warrant agreements and issued common unit purchase warrants (the “Subordinated Term Loan Warrants”).   On December 12, 2022, the Subordinated Term Loan Warrants were exercised and converted into Class A Common Stock. On December 30, 2022, the Company entered into an agreement with the lender of the Subordinated Term Loan, pursuant to which the Company agreed to compensate, in cash or shares of Class A Common Stock, the lender for the calculated amount between (a) the closing share price of Class A Common Stock on the business day immediately prior to the lender’s exercise of the Subordinated Term Loan Warrants on December 12, 2022 multiplied by the number of shares of Class A Common Stock issued for such exercise (the “December 2022 Warrant Shares”) and (b) the closing share price of Class A Common Stock on the business day immediately prior to the lender’s sale of the December 2022 Warrant Shares multiplied by the number of the December 2022 Warrant Shares sold by the lender (the “Subordinated Term Loan Warrants Make-Whole Agreement”). The Subordinated Term Loan Warrants Make-Whole Agreement expires on December 12, 2027.   The maturity of the Subordinate Term Loan was subsequently extended to December 31, 2023 with the amendment entered into on November 18, 2022. On March 22, 2023, the Company entered into an amendment to the Subordinated Term Loan agreement, modifying its maturity date to March 29, 2024, which was subsequently amended to May 23, 2024 with an amendment entered into on May 19, 2023. Concurrently, the Company entered into amendments to the Subordinated Term Loan Warrants agreements (see Note 9 for further information regarding the Subordinated Term Loan Warrants and the Subordinated Term Loan Warrants Make-Whole Agreement).   On June 7, 2023, the Company entered into an amendment to the Subordinated Term Loan agreement, which modified (a) its maturity to the earlier of (i) the scheduled maturity date (June 7, 2025, which the Company has an option to extend to June 7, 2026 upon achievement of certain conditions) and (ii) the maturity date of the June 2023 Revolving Credit Facility, unless the Springing Maturity applies, and (b) the interest rate the Subordinated Term Loan bears to 15%, of which 11% is to be paid in cash and 4% is to be paid in kind by capitalizing such interest accrued to the principal each month in arrears. Any accrued, capitalized and uncapitalized paid-in-kind interest charges will be due and payable in cash at maturity. Concurrently, the Company entered into an amendment to the Subordinated Term Loan Warrants agreements (see Note 9 for further information regarding the Subordinated Term Loan Warrants).   In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that these Subordinated Term Loan amendments were debt modifications.   The Company capitalized $11.9 million in deferred debt charges related to the Subordinated Term Loan during the nine months ended September 30, 2023. Amortization of deferred debt charges related to the Subordinated Term Loan agreement was $0.7 million and $0.4 million for the three months ended September 30, 2023 and 2022, respectively. Amortization of deferred debt charges related to the Subordinated Term Loan agreement was $1.8 million and $1.1 million for the nine months ended September 30, 2023 and 2022, respectively.   Rodina Note – On February 2, 2023, the Company issued an unsecured promissory note with a certain entity affiliated with Andres Chico and Jose Miguel Enrich for a principal and purchase price of $3.0 million (the “Rodina Note”). The Rodina Note’s maturity date was July 1, 2024 and bore interest at 16.0% per annum which was to be paid in kind by capitalizing the amount of the interest accrued to the principal at the end of each calendar quarter. On May 19, 2023, the Company entered into a loan conversion agreement to convert the principal and accrued interest of the Rodina Note to Class A Common Stock. Pursuant to the loan conversion agreement, on June 20, 2023, the Company issued 940,243 shares of Class A Common Stock to the holder of the Rodina Note for its full and final settlement.   June 2023 Term Loan – On June 7, 2023, the Company entered into a $75.0 million “June 2023 Term Loan” agreement secured by the Company’s intellectual property, with a maturity date of the earlier of (i) the scheduled maturity date (June 7, 2025, which the Company has an option to extend to June 7, 2026 upon achievement of certain conditions) and (ii) the maturity date of the June 2023 Revolving Credit Facility, unless the Springing Maturity applies. The June 2023 Term Loan bears an interest rate of the prime rate plus a margin of 8.75% or 8.25% if the Company meets certain conditions defined in the agreement. The Company had the option to pay the interest in kind each month in arrears by capitalizing such interest which accrues through August 31, 2023 as additional principal, and in such instance, the margin applicable for the interest rate is 10.25%. The Company elected to pay the interest accrued through August 31, 2023 in kind. The Company also has the option to pay in kind any excess interest over 13.5% after paying the first 13.5% in cash from September 1, 2023 through the maturity, and the Company elected to pay such excess interest in kind for September 2023. As of September 30, 2023, the applicable interest rate of the June 2023 Term Loan was 16.8%. At the time of any repayment of the June 2023 Term Loan, the Company is required to pay a fee in the amount of 12.0% of the principal repaid. Such repayment fee amount has been accrued as additional principal on the accompanying condensed consolidated balance sheet as of September 30, 2023. Beginning on October 7, 2023 until the June 2023 Term Loan is fully repaid, the lender has the option to elect to convert the outstanding principal into Class A Common Stock. The aggregate number of shares delivered to the lender cannot result in the lender’s ownership exceeding (i) 19.99% of the number shares of Class A Common Stock issued and outstanding or (ii) $10.0 million. Concurrently, the Company entered into warrant agreements and issued common stock purchase warrants (the “June 2023 Term Loan Warrants”) (see Note 9 for further information regarding the June 2023 Term Loan Warrants).   The Company capitalized $24.0 million in deferred debt charges related to the June 2023 Term Loan during the nine months ended September 30, 2023. Amortization of deferred debt charges related to the June 2023 Term Loan agreement was $1.8 million and $2.2 million for the three and nine months ended September 30, 2023, respectively.   The June 2023 Revolving Credit Facility, the June 2023 Term Loan and the Subordinated Term Loan are subject to certain cross-default provisions under the intercreditor agreement. In addition, the June 2023 Revolving Credit Facility, the June 2023 Term Loan and the Subordinated Term Loan agreements include covenants, which reduce the available borrowing base collateral under the June 2023 Revolving Credit Facility initially by $19.0 million (the “Minimum Excess Availability Reserve”). During the terms of the agreements, the Minimum Excess Availability Reserve could be decreased by up to $9.0 million, which will make the Minimum Excess Availability Reserve $10.0 million, upon the Company’s achievement of certain financial conditions defined in the agreements. As of September 30, 2023, the Minimum Excess Availability Reserve was $19.0 million. Furthermore, the June 2023 Revolving Credit Facility, the June 2023 Term Loan and the Subordinated Term Loan agreements require the Company to maintain a $2.0 million letter of credit. This letter of credit could be eliminated upon the Company’s achievement of certain financial conditions defined in the agreements.   Convertible Debentures   YA Convertible Debentures – As part of the security purchase agreement (the “YA SPA”) (see Note 11), the Company issued convertible debentures (collectively, the “YA Convertible Debentures”) to YA II PN, Ltd. (the “Yorkville Investor”) on November 30, 2022 (the “First YA Convertible Debenture”) and on February 3, 2023 (the “Second YA Convertible Debenture”). The principal amount of the First YA Convertible Debenture was $7.0 million for a purchase price of $7.0 million, and the principal amount of the Second YA Convertible Debenture was $10.0 million for a purchase price of $10.0 million. The YA Convertible Debentures had a maturity date of May 30, 2024 and bore interest at the rate of 4.0% per annum. The interest is due and payable upon maturity. At any time, so long as the YA Convertible Debentures are outstanding, the Yorkville Investor may covert all or part of the principal and accrued and unpaid interest of the YA Convertible Debentures into shares of Class A Common Stock at 90% of the lowest daily VWAP of Class A Common Stock during the seven consecutive trading days immediately preceding each conversion date, but in no event lower than $2.00 per share. Outside of an event of default under the YA Convertible Debentures, the Yorkville Investor may not convert in any calendar month more than the greater of (a) 25.0% of the dollar trading volume of the shares of Class A Common Stock during such calendar month, or (b) $3.0 million. The Company capitalized $1.7 million and $2.5 million in deferred debt charges related to the First YA Convertible Debenture and the Second YA Convertible Debenture for their originations, respectively. Amortization of deferred debt charges related to the YA Convertible Debentures was $0.2 million and $1.3 million for the three and nine months ended September 30, 2023, respectively. $-0- and an insignificant amount of accrued and unpaid interest were recorded in accrued expenses on the accompanying condensed consolidated balance sheets as of September 30, 2023 and other long-term liabilities as of December 31, 2022, respectively. During the three months ended September 30, 2023, the Yorkville Investor converted $5.9 million of the principal and insignificant amount of accrued interest of the YA Convertible Debentures to 2,471,561 shares of Class A Common Stock. During the nine months ended September 30, 2023, the Yorkville Investor converted $11.5 million of the principal and $0.3 million of the accrued interest of the YA Convertible Debentures to 4,048,601 shares of Class A Common Stock. The Company recorded $7.6 million and $10.6 million from YA Investor’s conversions in loss on extinguishment of debt obligations on the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2023, respectively.   On August 8, 2023, the Yorkville Investor assigned the YA Convertible Debentures to certain existing investors of the Company affiliated with Andres Chico and Jose Miguel Enrich. Pursuant to the assignment agreement, the assignees assumed all of the Yorkville Investor’s duties, liabilities and obligations under the YA Convertible Debentures and the Yorkville Investor was discharged of all of such duties, liabilities and obligations. Subsequently, the Company and the assignees entered into an amendment to the debentures which extended the maturity date to December 1, 2026. On August 25, 2023, the assignees converted all of the remaining principal of $5.6 million and an insignificant amount of accrued and unpaid interest of the YA Convertible Debentures to 1,428,760 shares of Class A Common Stock for the final settlement of the YA Convertible Debentures. The conversion resulted in a $0.9 million loss on debt extinguishment which the Company recognized on the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2023.   Insider Convertible Debentures – On December 16, 2022, the Company issued convertible debentures to certain members of the Company’s management team and board of directors, and certain other existing investors of the Company for a total principal amount of $11.9 million and the total net proceeds of $10.5 million (the “Insider Convertible Debentures”). The Insider Convertible Debentures had a maturity date of June 16, 2024 and accrue interest at the rate of 6.0% per annum. The interest is due and payable quarterly in arrears, and any portion of the aggregate interest accrued may, at the option of the Company, be paid in kind by capitalizing the amount of accrued interest to the principal on each applicable interest payment date. At any time, so long as the Insider Convertible Debentures are outstanding, each of the holders may convert all or part of the principal and accrued and unpaid interest of their Insider Convertible Debentures they hold into shares of Class A Common Stock at a conversion price of $16.96 per share. Concurrent with the issuance of the Insider Convertible Debentures, the Company entered into a lockup agreement with each of the holders of the Insider Convertible Debentures, pursuant to which the holders agreed to not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, any shares of Class A Common Stock the holders may receive from their exercise option to convert the Insider Convertible Debentures until the earlier of (i) June 16, 2024, and (ii) when the Yorkville Investor sells all shares of Class A Common Stock issued under the YA Convertible Debentures (the “Insider Lock-Up Agreement”).   On June 2, 2023, the Company entered into an amendment to the Insider Convertible Debentures, with the exception of the three debentures, for which the amendment was executed on July 11, 2023. The amendment extended the maturity date to December 1, 2026. In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that the amendment was a debt modification.   On September 15, 2023, the Company entered into an amendment to the Insider Convertible Debentures held by three entities affiliated with Andres Chico and Jose Miguel Enrich. The amendment lowered the conversion price of these three debentures to $10.00 per share of Class A Common Stock. In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that the amendment was a debt extinguishment. Accordingly, as of the amendment date, the Company (i) derecognized the net carrying amount of these three Insider Convertible Debentures of $7.6 million and the remaining capitalized deferred debt charges of $0.6 million, (ii) recognized the three Insider Convertible Debentures at their fair value of $6.7 million and the debt discount of $1.5 million on consolidated balance sheet and (iii) recognized $0.9 million of loss on debt extinguishment on the consolidated statement of operations. Concurrently, the Company issued a warrant to an entity affiliated with Andres Chico and Jose Miguel Enrich which granted the right to purchase 498,119 shares of Class A Common Stock (the “Rodina Warrant”) (See Note 9 for further information regarding the Rodina Warrant). The Company recorded the principal of the Insider Convertible Debentures, including interest incurred between the origination through September 30, 2023, which the Company elected to capitalize to the principal, in related-party debt obligations, net of deferred debt charges on the accompanying condensed consolidated balance sheet as of September 30, 2023. The Company capitalized $0.2 million and $0.5 million of accrued interest to the principal of the Insider Convertible Debentures during the three and nine months ended September 30, 2023, respectively. Amortization of deferred debt charges related to the Insider Convertible Debentures was $0.1 million and $0.4 million for the three and nine months ended September 30, 2023, respectively.   As of December 31, 2022, the Company had received $3.5 million of the total $10.5 million net proceeds from the investors and the remaining $7.0 million was recorded in related-party notes receivable on the accompanying condensed consolidated balance sheet as of December 31, 2022. The Company received the remaining $7.0 million in January and February 2023. Neither principal nor accrued interest of the Insider Convertible Debentures was converted to Class A Common Stock from the origination through September 30, 2023.   Third Party Convertible Debentures – On February 1, 2023, the Company issued convertible debentures to certain third parties for a total principal amount of $1.4 million and a total net proceeds of $1.2 million (the “Third Party Convertible Debentures”). The Third Party Convertible Debentures had a maturity date of August 1, 2024 and accrue interest at the rate of 6.0% per annum. The interest is due and payable quarterly in arrears, and any portion of the aggregate interest accrued may, at the option of the Company, be paid in kind by capitalizing the amount of accrued interest to the principal on each applicable interest payment date. At any time, so long as the Third Party Convertible Debentures are outstanding, each of the holders may convert all or part of the principal and accrued and unpaid interest of their Third Party Convertible Debentures they hold into shares of Class A Common Stock at a conversion price of $15.52 per share. Concurrent with the issuance of the Third Party Convertible Debentures, the Company entered into a lockup agreement with each of the holders of the Third Party Convertible Debentures, pursuant to which the holders agreed to not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, any shares of Class A Common Stock the holders may receive from their exercise option to convert the Third Party Convertible Debentures until the earlier of (i) August 1, 2024, and (ii) when the Yorkville Investor sells all shares of Class A Common Stock issued under the YA Convertible Debentures (the “Third Party Lock-Up Agreement”).   On June 2, 2023, the Company entered into an amendment to the Third Party Convertible Debentures, with the exception of the three debentures, for which the amendment was executed on July 31, 2023. The amendment extended the maturity date to December 1, 2026. In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that the amendment was a debt modification. The Company recorded the principal of the Third Party Convertible Debentures, including interest incurred between the origination through September 30, 2023 which the Company elected to capitalize to the principal, in debt obligations, net of deferred debt charges on the accompanying condensed consolidated balance sheet as of September 30, 2023. The Company capitalized insignificant amount and $0.1 million of accrued interest to the principal of the Third Party Convertible Debentures during the three and nine months ended September 30, 2023, respectively. Amortization of deferred debt charges related to the Third Party Convertible Debentures was insignificant for the three ended September 30, 2023 and $0.5 million for the nine months ended September 30, 2023. Neither principal nor accrued interest of the Third Party Convertible Debentures was converted from the origination through September 30, 2023.   NZ Superfund Convertible Debentures – On February 1, 2023, the Company issued a convertible debenture to Guardians of New Zealand Superannuation (the “NZ Superfund”), a beneficial owner of greater than 10% of the issued and outstanding Class A Common Stock and Class V Common Stock, for a total principal amount of $5.1 million and the total net proceeds of $4.5 million (the “NZ Superfund Convertible Debenture”). The NZ Superfund Convertible Debenture had a maturity date of August 1, 2024 and accrued interest at the rate of 8.0% per annum. The interest is due and payable quarterly in arrears, and any portion of the aggregate interest accrued may, at the option of the Company, be paid in kind by capitalizing the amount of accrued interest to the principal on each applicable interest payment date. At any time, so long as the NZ Superfund Convertible Debenture is outstanding, the NZ Superfund may convert all or part of the principal and accrued and unpaid interest of the NZ Superfund Convertible Debenture it holds into shares of Class A Common Stock at a conversion price of $15.52. Concurrent with the issuance of the NZ Superfund Convertible Debenture, the Company entered into a lockup agreement with the NZ Superfund, pursuant to which it agreed to not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, any shares of Class A Common Stock the holders may receive from its exercise option to convert the NZ Superfund Convertible Debenture until the earlier of (i) August 1, 2024, and (ii) when the Yorkville Investor sells all shares of Class A Common Stock issued under the YA Convertible Debentures (the NZ Superfund Lock-Up Agreement).   On June 2, 2023, the Company entered into an amendment to the NZ Superfund Convertible Debenture, which extended the maturity date to December 1, 2026 and modified the interest rate it bears to 14.0%. In accordance with ASC 470-50, Debt – Modifications and Extinguishments, the Company concluded that the amendment was a debt modification. The Company recorded the principal of the NZ Superfund Convertible Debenture, including interest incurred between the origination through September 30, 2023 which the Company elected to capitalize to the principal, in related party debt obligations, net of deferred debt charges on the accompanying condensed consolidated balance sheet as of September 30, 2023. The Company capitalized $0.2 million and $0.4 million of accrued interest to the principal of the NZ Superfund Convertible Debenture during the three and nine months ended September 30, 2023, respectively. Amortization of deferred debt charges related to the NZ Superfund Convertible Debenture was insignificant and $0.1 million for the three and nine months ended September 30, 2023, respectively. Neither principal nor accrued interest of the NZ Superfund Convertible Debenture was converted from the origination through September 30, 2023.   Components of the Company’s debt obligations were as follows (in thousands):   Schedule of components of long-term debt                     September 30, 2023     December 31, 2022   Term loan balance   $ 108,483     $ 71,000   Convertible debt balance     1,446       7,000   Related-party convertible debt balance     18,041       11,964   Less unamortized deferred debt charges     (35,358 )     (6,138 ) Total borrowed     92,612       83,826   Less short-term debt obligation balance     -       (3,771 ) Long-term debt obligation balance   $ 92,612     $ 80,055     At September 30, 2023, the future aggregate maturities of long-term debt for the remainder of 2023 and subsequent periods are as follows (in thousands):   Schedule of maturities of long-term debt         Fiscal Years Ending December 31,       2023   $ -   2024     -   2025     108,483   2026     19,487   Total   $ 127,970     The total interest expense related to the Revolving Credit Facilities, Term Loan Facilities, and Convertible Debentures was $9.6 million and $4.6 million for the three months ended September 30, 2023 and 2022, respectively. The total interest expense related to the Revolving Credit Facilities, Term Loan Facilities, and Convertible Debentures was $26.2 million and $12.3 million for the nine months ended September 30, 2023 and 2022, respectively.

v3.23.3

Accrued expenses	9 Months Ended
	Sep. 30, 2023
Payables and Accruals [Abstract]
Accrued expenses	Note 6—Accrued expenses   Accrued expenses consist of the following as of September 30, 2023 and December 31, 2022 (in thousands):   Schedule of accrued expenses                     September 30, 2023     December 31, 2022   Accrued hauler expenses   $ 63,049     $ 44,773   Accrued compensation     15,026       43,054   Accrued income taxes     -       9   Accrued Mergers transaction expenses     -       13,433   FPA Settlement Liability (as defined in Note 10)     2,000       -   Other accrued expenses     3,591       6,733   Total accrued expenses   $ 83,666     $ 108,002     During the nine months ended September 30, 2023, the Company granted certain RSU awards, valued at $8.2 million, as replacement awards for $26.8 million of the accrued management rollover consideration. The replacement awards resulted in a $18.6 million gain, which was included in gain on settlement of incentive compensation on the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2023.

v3.23.3

Goodwill and other intangibles	9 Months Ended
	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and other intangibles	Note 7—Goodwill and other intangibles   There were no additions to goodwill during the nine months ended September 30, 2023 or the year ended December 31, 2022. No impairment of goodwill was identified for the three or nine months ended September 30, 2023 or the year ended December 31, 2022.   Intangible assets consisted of the following (in thousands, except years):   Schedule of intangible assets and goodwill                                   September 30, 2023       Useful Life (in years)     Gross Carrying Amount     Accumulated Amortization     Net Carrying Amount   Trade Name   5     $ 728     $ (728 )   $ -   Customer and hauler relationships   2 to 8       20,976       (14,061 )     6,915   Non-competition agreements   3 to 4       550       (550 )     -   Technology   3       3,178       (2,298 )     715   Total finite-lived intangible assets           25,432       (17,802 )     7,630   Domain Name   Indefinite       835       -       835   Total intangible assets         $ 26,267     $ (17,802 )   $ 8,465         December 31, 2022       Useful Life (in years)     Gross Carrying Amount     Accumulated Amortization     Net Carrying Amount   Trade Name   5     $ 728     $ (728 )   $ -   Customer and hauler relationships   2 to 8       20,976       (12,141 )     8,835   Non-competition agreements   3 to 4       550       (550 )     -   Technology   3       3,178       (1,967 )     1,211   Total finite-lived intangible assets           25,432       (15,386 )     10,046   Domain Name   Indefinite       835       -       835   Total intangible assets         $ 26,267     $ (15,386 )   $ 10,881     Amortization expense for these intangible assets was $0.8 million and $0.8 million for the three months ended September 30, 2023 and 2022, respectively. Amortization expense for these intangible assets was $2.4 million and $2.5 million for the nine months ended September 30, 2023 and 2022, respectively. Future amortization expense for the remainder of 2023 and subsequent years is as follows (in thousands):   Schedule of finite- lived intangible assets, future amortization expense         Fiscal Years Ending December 31,       2023   $ 804   2024     3,110   2025     2,559   2026     1,157   Total future amortization of intangible assets   $ 7,630

v3.23.3

Stockholders’ (deficit) equity	9 Months Ended
	Sep. 30, 2023
Equity [Abstract]
Stockholders’ (deficit) equity	Note 8—Stockholders’ (deficit) equity   The table set forth below reflects information about the Company’s equity as of September 30, 2023.   Schedule of stockholders equity                             Authorized     Issued     Outstanding   Class A Common Stock     690,000,000       34,803,951       34,803,951   Class V Common Stock     275,000,000       4,425,388       4,425,388   Preferred Stock     10,000,000       -       -   Total shares as of September 30, 2023     975,000,000       39,229,339       39,229,339     The table set forth below reflects information about the Company’s equity as of December 31, 2022.       Authorized     Issued     Outstanding   Class A Common Stock     690,000,000       6,985,869       6,985,869   Class V Common Stock     275,000,000       14,432,992       14,432,992   Preferred Stock     10,000,000       -       -   Total shares as of December 31, 2022     975,000,000       21,418,861       21,418,861     Each share of Class A Common Stock and Class V Common Stock entitles the holder one vote per share. Only holders of Class A Common Stock have the right to receive dividend distributions. In the event of liquidation, dissolution or winding up of the affairs of the Company, only holders of Class A Common Stock have the right to receive liquidation proceeds, while the holders of Class V Common Stock are entitled to only the par value of their shares. The holders of Class V Common Stock have the right to exchange Class V Common Stock for an equal number of shares of Class A Common Stock. The Company’s board of directors has discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.   During the nine months ended September 30, 2023, 10,007,604 shares of Class V Common Stock were exchanged to the equal number of shares of Class A Common Stock.

v3.23.3

Warrants	9 Months Ended
	Sep. 30, 2023
Warrants
Warrants	Note 9—Warrants   Public Warrants and Private Warrants – In connection with the Closing, on August 15, 2022, the Company assumed a total of 3,752,107 outstanding warrants to purchase one share of the Company’s Class A Common Stock with an exercise price of $92.00 per share. Of these warrants, the 1,976,560 Public Warrants were originally issued in Founder’s initial public offering (the “IPO”) and 1,775,547 Private Warrants were originally issued in a private placement in connection with the IPO. The Private Warrants are identical to the Public Warrants, except the Private Warrants are exercisable on a cashless basis, at the holder’s option, and are non-redeemable by the Company so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.   In accordance with the guidance contained in ASC 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Equity, the Company concluded that the IPO Warrants are not precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity.   The IPO Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the IPO Warrants. The IPO Warrants became exercisable on September 14, 2022, 30 days after the Closing and no IPO Warrants has been exercised through September 30, 2023. The IPO Warrants will expire five years from the Closing or earlier upon redemption.   The Company may redeem the Public Warrants and any Private Warrants no longer held by the initial purchaser thereof or its permitted transferee:     - in whole and not in part;     - at a price of $0.08 per warrant;     - upon not less than 30 days’ prior written notice to each IPO Warrant holder and     - if and only if, the last reported price of the Class A Common Stock equals or exceeds $144.00 per share for any 20 trading days within a 30 trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the IPO Warrant holders.   Rodina Warrant – On September 15, 2023, the Company issued the Rodina Warrant, which granted the holder the right to purchase 498,119 shares of Class A Common Stock at the exercise price of $0.08 per share any time prior to September 15, 2026. In accordance with the guidance contained in ASC 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Equity, the Company concluded that the Rodina Warrant is not precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity. Accordingly, the Rodina Warrant was recognized at its fair value of $1.7 million in additional paid-in capital on the consolidated balance sheet upon issuance. The Rodina Warrant has not been exercised and remains outstanding as of September 30, 2023.   Warrant Liabilities – Pursuant to the Subordinated Term Loan agreement entered on December 22, 2021 (see Note 5), the Company concurrently entered into warrant agreements and issued the Subordinated Term Loan Warrants under the condition that if the Company did not repay the Subordinated Term Loan on or prior to the original maturity date of December 22, 2022, the lender would receive the right to purchase up to the number of shares of Class A Common Stock worth $2.0 million at the exercise price of $0.08 per share at any time after the original maturity date prior to the earlier of the date principal and interest on all outstanding term loans under this Subordinated Term Loan agreement are repaid, and the tenth anniversary of the issuance date. Additionally, if the Company did not repay the Subordinated Term Loan on or prior to the original maturity date, the Subordinated Term Loan Warrants would be exercisable for additional $0.2 million of Class A Common Stock each additional full calendar month after the maturity date until the Company fully repays the principal and interest in cash (the “Additional Subordinated Term Loan Warrants”). If the Company repaid the Subordinated Term Loan on or prior to the original maturity date, the Subordinated Term Loan Warrants would automatically terminate and be voided and no Subordinated Term Loan Warrant would be exercisable.   On November 18, 2022, the Company entered into an amendment to the Subordinated Term Loan Warrants agreements, which (i) increased the number of shares of Class A Common Stock the lender has the right to purchase with the Subordinated Term Loan Warrants to such number of Class A Common Stock worth $2.6 million, (ii) caused the Subordinated Term Loan Warrants to be immediately exercisable upon execution of the amended Subordinated Term Loan Warrants agreements, and (iii) increased the value of Class A Common Stock the Additional Subordinated Term Loan Warrants would earn each additional full calendar month after March 22, 2023 to $0.25 million until the Company repays the Subordinated Term Loan in full.   On March 22, 2023, the Company entered into an amendment to the Subordinated Term Loan Warrants agreements, which increased the value of Class A Common Stock the Additional Subordinated Term Loan Warrants earn each additional full calendar month after March 22, 2023 to $0.35 million until the Company repays the Subordinated Term Loan in full.   On June 7, 2023, the Company entered into an amendment to the Subordinated Term Loan Warrants agreements, which amended the value of Class A Common Stock the Additional Subordinated Term Loan Warrants earn for the full calendar month starting June 23, 2023 to $0.38 million and such amount to increase by $25,000 each additional full calendar month thereafter until the Company repays the Subordinated Term Loan in full.   The Company determined that the Subordinated Term Loan Warrants required liability classification pursuant to ASC 480. As such, the outstanding Subordinated Term Loan Warrants were recognized as warrant liabilities on the consolidated balance sheets, measured at their inception date fair value and subsequently remeasured at each reporting period with changes in fair value being recorded as a component of other income (expense) on the consolidated statements of operations. On December 12, 2022, the outstanding Subordinated Term Loan Warrants in amount of $2.6 million were converted to 136,553 shares of Class A Common Stock and reclassified from liability to the stockholders’ (deficit) equity.   On December 30, 2022, the Company entered into the Subordinated Term Loan Warrants Make-Whole Agreement. In June 2023, the outstanding Additional Subordinated Term Loan Warrants in amount of $1.1 million were exercised and converted to 319,923 shares of Class A Common Stock and reclassified from liability to stockholders’ (deficit) equity. During the three months ended September 30, 2023, the outstanding Additional Subordinated Term Loan Warrants in amount of $1.2 million were exercised and converted to 291,145 shares of Class A Common Stock and reclassified from liability to stockholders’ (deficit) equity. As of September 30, 2023 and December 31, 2022, no Subordinated Term Loan Warrants were outstanding. The impact to the accompanying condensed consolidated statement of operations from the changes in the fair value of the Subordinated Term Loan Warrants was insignificant for the three and nine months ended September 30, 2023 and 2022.   Pursuant to ASC 815, the Company determined that the Additional Subordinated Term Loan Warrants and the Subordinated Term Loan Warrants Make-Whole Agreement are derivatives. These derivatives, referred to throughout as the “Additional Subordinated Term Loan Warrants Derivative” and the “Subordinated Term Loan Warrants Make-Whole Derivative”, respectively, are recorded in derivative liabilities on the accompanying condensed consolidated balance sheet as of September 30, 2023. The Company performed fair value measurements for the Additional Subordinated Term Loan Warrants Derivative and the Subordinated Term Loan Warrants Make-Whole Derivative, which are described in Note 15. The fair value of the Additional Subordinated Term Loan Warrants Derivative and the Subordinated Term Loan Warrants Make-Whole Derivative are remeasured at each reporting period.   On November 30, 2022, the Company issued a pre-funded warrant for a purchase price of $6.0 million which was paid by the Yorkville Investor upon issuance (the “YA Warrant”). The YA Warrant is exercisable into $20.0 million of shares of Class A Common Stock at an exercise price of $0.0008 per share any time on or after the earlier of (i) August 30, 2023, and (ii) the date upon which all of the YA Convertible Debentures have been fully repaid by the Company or fully converted into shares of Class A Common Stock. On August 25, 2023 (the “Market Price Set Date”), the YA Convertible Debentures were converted into shares of Class A Common Stock for the full settlements, and the YA Warrant became exercisable at the conversion price of $4.52 per share, which was the average of the daily VWAPs of Class A Common Stock per share during the three consecutive trading days immediately following the Market Price Set Date. The conversion price will be adjusted to the lowest of (a) the “3-month Reset Price”, which is the average of the daily VWAPs of Class A Common Stock per share during the three consecutive trading days immediately following the 3-month anniversary of the Market Price Set Date, or (b) the “6-month Reset Price”, which is the average of the daily VWAPs of Class A Common Stock per share during the three consecutive trading days immediately following the 6-month anniversary of the Market Price Set Date, in case (a) or (b) is lower than $4.52 per share. The Company determined that the YA Warrant required liability classification pursuant to ASC 480. As such, the outstanding YA Warrant was recognized as warrant liability on the consolidated balance sheets, measured at its inception date fair value and subsequently remeasured at each reporting period with changes being recorded as a component of other income (expense) on the consolidated statements of operations. The Company measured the fair value of the YA Warrant as of September 30, 2023 and December 31, 2022, and recognized $20.0 million and $20.0 million of warrant liability on the accompanying condensed consolidated balance sheets, respectively. The fair value of the YA Warrant did not change during the three and nine months ended September 30, 2023. Since the issuance through September 30, 2023, the YA Warrant was not exercised.   Pursuant to the YA SPA executed with the Yorkville Investor on November 30, 2022 (See Note 11), the Company committed to issue a warrant to an advisor for certain professional services provided in connection with the issuance of the facilities (the “Advisor Warrant”). The Advisor Warrant granted the right to purchase up to 62,500 shares of Class A Common Stock at the exercise price of $0.01 any time prior to November 30, 2025. The Advisor Warrant was issued on January 16, 2023. Prior to the issuance of the Advisor Warrant, pursuant to ASC 480, the Company recorded the related obligation as warrant liability on the consolidated balance sheets at its fair value as of the date the obligation incurred and subsequently remeasured at each reporting period with changes in fair value being recorded as a component of other income (expense) on the consolidated statements of operations. Upon issuance of the Advisor Warrant on January 16, 2023, the Company remeasured the fair value of the Advisor Warrant and recognized $0.1 million of loss on change in fair value of the Advisor Warrant as a component of other income (expense) on the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2023, and the remeasured Advisory Warrant was reclassified to stockholders’ (deficit) equity on the issuance date. Since the issuance through September 30, 2023, the Advisor Warrant was not exercised.   Pursuant to the June 2023 Term Loan agreement entered on June 7, 2023 (see Note 5), the Company concurrently entered into warrant agreements and issued the June 2023 Term Loan Warrants, which granted the holders the right to purchase up to 2,121,605 shares of Class A Common Stock (the June 2023 Term Loan Warrants Shares) at the exercise price of $0.08 any time before June 7, 2033. If at any time on or before December 7, 2024, the Company issues additional shares of common stock (excluding any shares of common stock or securities convertible into or exchangeable for shares of common stock under the Company’s equity incentive plans existing as of the issue date), the number of the June 2023 Term Loan Warrants Shares issuable upon exercise immediately prior to such common stock issuance will be proportionately increased such that the percentage represented by the June 2023 Term Loan Warrants Shares in the Company’s diluted common stock outstanding will remain the same. Additionally, the holders of the June 2023 Term Loan Warrants have the right to purchase up to the pro rata portion of any new common stock issuance by the Company up to $20.0 million in the aggregate, other than any issuance in connection with (i) any grant pursuant to any stock option agreement, employee stock purchase plan, or similar equity-based plan or compensation agreement, (ii) the conversion or exchange of any securities into shares of the Company’s common stock, or the exercise of any option, warrant, or other right to acquire such shares, (iii) any acquisition by the Company of the stock, assets, properties, or business, (iv) any merger, consolidation, or other business combination involving the Company, or any other transaction or series of transactions resulting in a change of control of the Company and (v) any stock split, stock dividend, or similar recapitalization transaction. The Company determined that the June 2023 Term Loan Warrants did not qualify for equity classification in accordance with ASC 815. As such, the June 2023 Term Loan Warrants were recognized as warrant liability on the consolidated balance sheets, measured at its inception date fair value and subsequently remeasured at each reporting period with changes in fair value being recorded as a component of other income (expense) on the consolidated statements of operations. The Company measured the fair value of the June 2023 Term Loan Warrants as of the issuance date of June 7, 2023, June 30, 2023 and September 30, 2023, and recognized $9.4 million, $9.8 million and $6.5 million of warrant liability on the consolidated balance sheets, respectively, with the change in fair value of $(3.3) million and $(2.9) recognized as a component of other income (expense) on the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2023, respectively. Since the issuance through September 30, 2023, none of the June 2023 Term Loan Warrants were exercised.

v3.23.3

Forward Purchase Agreement	9 Months Ended
	Sep. 30, 2023
Forward Purchase Agreement
Forward Purchase Agreement	Note 10—Forward Purchase Agreement   On August 4, 2022, the Company and the FPA Sellers entered into the Forward Purchase Agreement for an OTC Equity Prepaid Forward Transaction (the “Forward Purchase Transaction”). On November 30, 2022, the Company and the FPA Sellers entered into the FPA Termination Agreement and terminated the Forward Purchase Agreement. Pursuant to the FPA Termination Agreement, (i) the Company made a one-time $6.0 million cash payment to the FPA Sellers upon execution of the FPA Termination Agreement and agreed to make a $2.0 million payment to the FPA Sellers, which can be settled in cash or shares of Class A Common Stock at the Company’s sole option, on or around the earlier of (a) May 30, 2024 (the “FPA Lock-Up Date”), and (b) six months following 90% or more of the YA Convertible Debentures is repaid or converted into shares of Class A Common Stock (the “FPA Earlier Lock-Up Date”), (ii) the FPA Sellers forfeited and returned to the Company 277.765 shares of Class A Common Stock which the Company subsequently canceled, and further agreed not to transfer any of 267,606 shares of Class A Common Stock the FPA Sellers retained until the earlier of (a) the FPA Lock-Up Date, and (b) the FPA Earlier Lock-Up Date. As more than 90% of the YA Convertible Debentures were converted into shares of Class A Common Stock on August 25, 2023, the FPA Earlier Lock-Up Date was set as February 25, 2024. The value of 277,765 shares of Class A Common Stock returned by the FPA Seller and subsequently canceled by the Company was $4.6 million as of the FPA Termination Agreement execution date, which was recognized in common stock – Class A and accumulated deficit on the consolidated balance sheet. The $2.0 million obligation (the “FPA Settlement Liability”) has been included in accrued expenses on the accompanying condensed consolidated balance sheets as of September 30, 2023 and other long-term liabilities as of December 31, 2022, respectively.

v3.23.3

Yorkville Facilities	9 Months Ended
	Sep. 30, 2023
Yorkville Facilities
Yorkville Facilities	Note 11—Yorkville Facilities   Standby Equity Purchase Agreement – On August 31, 2022, the Company entered into a Standby Equity Purchase Agreement (“SEPA”) with the Yorkville Investor, which was subsequently amended on November 30, 2022. Pursuant to the SEPA, the Company had the right to sell to the Yorkville Investor, from time to time, up to $200.0 million of shares of Class A Common Stock until the earlier of the 36-month anniversary of the SEPA, and the date on which the facility has been fully utilized, subject to certain limitations and conditions set forth in the SEPA, including the requirement that there be an effective registration statement registering such shares and limitations on the volume of shares that may be sold. Shares were to be sold to the Yorkville Investor at a price equal to 97% of the lowest daily VWAP of the Class A Common Stock during the three consecutive trading days immediately prior to any notice to sell such securities provided by the Company. The Yorkville Investor was not permitted to beneficially own greater than 9.99% of the outstanding shares of Class A Common Stock. Sales of Class A Common Stock to the Yorkville Investor under the SEPA, and the timing of any such sales, were at the Company’s option, and the Company was under no obligation to sell any securities to the Yorkville Investor under the SEPA. Pursuant to the SEPA, on August 31, 2022, the Company issued the Yorkville Investor 25,000 shares of Class A Common Stock, which represented an initial up-front commitment fee and was recognized in other income (expense) within the accompanying consolidated statements of operations. On August 18, 2023, the SEPA was terminated with no further obligations to the Company or the Yorkville Investor. The Company did not sell any shares of Class A Common Stock under the SEPA from the origination through the termination of the facility.   Securities Purchase Agreement – On November 30, 2022, the Company entered into the YA SPA with the Yorkville Investor, where by the Company agreed to issue and sell to the Yorkville Investor (i) convertible debentures (the “YA Convertible Debentures”) in the aggregate principal amount of up to $17.0 million, which were convertible into shares of Class A Common Stock (as converted, the “YA Conversion Shares”), and (ii) the YA Warrant, which is exercisable into $20.0 million of shares of Class A Common Stock. Upon execution of the YA SPA, the Company (i) issued and sold to the Yorkville Investor (a) the First YA Convertible Debenture in the principal amount of $7.0 million for a purchase price of $7.0 million, and (b) the YA Warrant for a pre-funded purchase price of $6.0 million, and (ii) paid the Yorkville Investor a cash commitment fee in the amount of $2.0 million, with such amount being deducted from the proceed of the First YA Convertible Debenture, netting to $11.0 million in total proceeds. The Company issued the YA Warrant to utilize the proceed to fund the cost of the FPA Termination Agreement. See Note 5 for additional information regarding the First YA Convertible Debenture and Note 9 regarding the YA Warrant.   Pursuant to execution of the YA SPA, the Company made a $0.4 million payment in cash and committed to issue the Advisor Warrant for certain professional services provided by a third party professional service firm in connection with the issuance of the facilities. The Advisor Warrant was issued on January 16, 2023. See Note 9 for additional information regarding the Advisor Warrant. The cash payment and the Advisor Warrant were recognized as debt issuance cost upon execution of the YA SPA, YA Convertible Debentures and YA Warrant.   Pursuant to the YA SPA, the Yorkville Investor committed to purchasing a YA Convertible Debenture in the principal amount of $10.0 million for a purchase price of $10.0 million upon the Company satisfying certain conditions, including, among others, the Company’s registration statement is declared effective by the SEC for the underlying securities of the First YA Convertible Debenture and YA Warrant. Accordingly, as of the YA SPA execution date, the Company recognized a commitment asset in the amount of $2.1 million, which was included in other noncurrent assets on the accompanying condensed consolidated balance sheet as of December 31, 2022. The Second YA Convertible Debenture was issued and sold to the Yorkville Investor on February 3, 2023 and the commitment asset was reclassified to debt discount upon issuance of the Second YA Convertible Debenture. See Note 5 for additional information regarding the Second YA Convertible Debenture.   In accordance with ASC 815, the Company has determined that certain redemption feature within the YA Convertible Debentures was an embedded derivative. This derivative, referred to throughout as the “Redemption Feature Derivative” was recorded in derivative liabilities on the accompanying condensed consolidated balance sheets as of December 31, 2022 and derecognized upon full settlement of the YA Convertible Debentures on August 25, 2023. The Company performed fair value measurements for this derivative as of the YA Convertible Debentures issuance dates, December 31, 2022 and August 25, 2023 which is described further in Note 15. The fair value of the Redemption Feature Derivative was remeasured each reporting period.

v3.23.3

Cantor Sales Agreement	9 Months Ended
	Sep. 30, 2023
Cantor Sales Agreement
Cantor Sales Agreement	Note 12—Cantor Sales Agreement   On September 5, 2023, the Company entered into a Controlled Equity Offering Sales Agreement (the “Cantor Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”) pursuant to which the Company may offer and sell, from time to time through Cantor, shares of Class A Common Stock for aggregate gross proceeds up to $50.0 million. Pursuant to the Cantor Sales Agreement, Cantor may sell shares of Class A Common Stock in sales deemed to be “at the market offerings” as defined in Rule 415(a)(4) under the Securities Act. The Company has no obligation to sell any shares of Class A Common Stock under the Cantor Sales Agreement. Cantor will act as sales agent and use commercially reasonable efforts to sell on the Company’s behalf all of the shares of Class A Common Stock requested to be sold by the Company. Under the terms of the Cantor Sales Agreement, the Company has agreed to pay Cantor a commission equal to 3.0% of the aggregate gross proceeds from any shares of Class A Common Stock sold pursuant to the Cantor Sales Agreement. The Cantor Sales Agreement will remain in effect until the aggregate gross proceeds of the Company’s sales of shares of Class A Common Stock reach $50.0 million in total unless early terminated under the terms of the Cantor Sales Agreement. The Company did not sell any shares of Class A Common Stock under the Cantor Sales Agreement through September 30, 2023.

v3.23.3

Equity-based compensation	9 Months Ended
	Sep. 30, 2023
Equity [Abstract]
Equity-based compensation	Note 13—Equity-based compensation   During the three and nine months ended September 30, 2023 and 2022, the Company recorded stock-based compensation related to the 2014 and 2022 Plans (as defined below). As more fully described in Notes 1 and 3, the Company completed the Mergers with Founder on August 15, 2022, and all incentive units and phantom units under the 2014 Plan fully vested as of the Closing Date, and the original operating agreement was terminated and replaced by a new operating agreement consistent with the Company’s Up-C structure.   2014 Plan   The 2014 Profits Participation Plan and Unit Appreciation Rights Plan (the “2014 Plan”) was a board-approved plan of Holdings LLC. Under the 2014 Plan, Holdings LLC had the authority to grant incentive and phantom units to acquire common units. Unit awards generally vested at 25.0% of the units on the one year anniversary of continued employment, with the remaining 75% vesting in equal monthly installments over the next three years, unless otherwise specified.   As further described in Note 3, upon consummation of the Mergers, all incentive units granted under the 2014 Plan vested and converted into the Class V Common Stock and all phantom units granted under the 2014 Plan converted into RSUs and DSUs which will vest into shares of Class A Common Stock. The unrecognized compensation cost related to the 2014 Plan that was remaining at the Closing was recognized as expense upon consummation of the Mergers.   2022 Plan   The 2022 Equity Incentive Plan (the “2022 Plan”), which became effective on August 15, 2022 in connection with the Closing, provides for the grant to certain employees, officers, non-employee directors and other services providers of options, stock appreciation rights, RSUs, restricted stock and other stock-based awards, any of which may be performance-based, and for incentive bonuses, which may be paid in cash, Common Stock or a combination thereof, as determined by the Company’s Compensation Committee. Under the 2022 Plan, 3,625,000 shares of Class A Common Stock are authorized to be issued. Upon approval by the Company’s board of directors, additional 357,409 shares of Class A Common Stock became available for issuance on January 1, 2023 under the 2022 Plan as a result of the plan’s evergreen provision.   The following represents a summary of the Company’s RSU activity and related information during the nine months ended September 30, 2023:   Schedule of RSUs activity                     Units     Weighted Average Grant Date Fair Value   Nonvested – December 31, 2022     182,086     $ 15.84   Granted     2,016,639       8.10   Vested     (986,461 )     8.98   Forfeited/redeemed     (45,256 )     15.09   Nonvested – September 30, 2023     1,167,008     $ 8.30     The RSUs exchanged for phantom units vested upon the Closing of the Mergers. The remaining RSUs will vest over the requisite service periods ranging from six to thirty-six months from the grant date.   The Company recognized $2.1 million and $90.6 million in total equity compensation costs, including phantom unit expense, for the three months ended September 30, 2023 and 2022, respectively. The Company recognized $13.2 million and $95.3 million in total equity compensation costs, including phantom unit expense, for the nine months ended September 30, 2023 and 2022, respectively.   Some of RSUs settled during the nine months ended September 30, 2023 were net share settled such that the Company withheld shares with a value equivalent to the employees’ obligation for the applicable income and other employment taxes and remitted the cash to the appropriate taxing authorities. The total shares withheld were approximately $1.1 million and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price. Total payments to the taxing authorities for employees’ tax obligations pertaining to the withheld shares were $1.0 million. As of September 30, 2023, there were 642,418 vested RSUs and 38,350 vested DSUs remaining which are expected to be settled in shares of Class A Common Stock prior to December 31, 2023.   As of September 30, 2023, the total unrecognized compensation cost related to outstanding RSUs was $5.1 million, which the Company expects to recognize over a weighted-average period of 0.6 years.

v3.23.3

Loss per share	9 Months Ended
	Sep. 30, 2023
Earnings Per Share [Abstract]
Loss per share	Note 14—Loss per share   Basic net loss per share of Class A Common Stock is computed by dividing net loss attributable to the Company by the weighted average number of shares of Class A Common Stock outstanding during the three and nine months ended September 30, 2023. Diluted net loss per share of Class A Common Stock is computed by dividing net loss attributable to the Company, adjusted for the assumed exchange of all potentially dilutive securities, by weighted average number of shares of Class A Common Stock outstanding adjusted to give effect to potentially dilutive shares.   Prior to the Mergers, the membership structure of Holdings LLC included units which had profit interests. The Company analyzed the calculation of loss per unit for periods prior to the Mergers and determined that it resulted in values that would not be meaningful to the users of these condensed consolidated financial statements. Therefore, net loss per share information is not presented for periods prior to August 15, 2022. Shares of the Company’s Class V Common Stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class V Common Stock under the two-class method is not presented.   The computation of net loss per share attributable to Rubicon Technologies, Inc. and weighted-average shares of the Company’s Class A Common Stock outstanding for the three and nine months ended September 30, 2023 are as follows (amounts in thousands, except for share and per share amounts):   Schedule of net loss per share                     Three Months Ended September 30, 2023     Nine Months Ended September 30, 2023   Numerator:                 Net loss   $ (30,173 )   $ (62,441 ) Less: Net loss attributable to noncontrolling interests     (2,519 )     (18,456 ) Net loss attributable to Rubicon Technologies, Inc   $ (27,654 )   $ (43,985 )                   Denominator:                 Weighted average shares of Class A Common Stock outstanding – Basic and diluted     32,381,649       17,786,466                     Net loss per share attributable to Class A Common Stock – Basic and diluted   $ (0.85 )   $ (2.47 )   The computation of net loss per share attributable to Rubicon Technologies, Inc. and weighted-average shares of the Company’s Class A Common Stock outstanding for period from August 15, 2022 (the Closing Date) to September 30, 2022 are as follows (amounts in thousands, except for share and per share amounts):   Numerator:         Net loss for the period from August 15, 2022 through September 30, 2022   $ (34,741 ) Less: Net loss attributable to noncontrolling interests for the period from August 15, 2022 through September 30, 2022     (16,933 ) Net loss for the period from August 15, 2022 through September 30, 2022 attributable to Rubicon Technologies, Inc. – Basic and diluted   $ (17,808 )           Denominator:         Weighted average shares of Class A Common Stock outstanding – Basic and diluted     6,083,847             Net loss per share attributable to Class A Common Stock – Basic and diluted   $ (2.93 )   The Company’s potentially dilutive securities below were excluded from the computation of diluted loss per share as their effect would be anti-dilutive:     - IPO Warrants, Additional Subordinated Term Loan Warrants, Advisor Warrant, June 2023 Term Loan Warrants, YA Warrant and Rodina Warrant.     - Earn-Out Interests.     - RSUs and DSUs.         - Exchangeable Class V Common Stock.         - Potential settlements in Class A Common Stock of the Insider Convertible Debentures, the Third Party Convertible Debentures, the NZ Superfund Convertible Debentures, the June 2023 Term Loan, the FPA Settlement Liability, the Subordinated Term Loan Warrants Make-Whole Agreement and portion of fees for the PIPE Software Services Subscription (as defined in Note 16).

v3.23.3

Fair value measurements	9 Months Ended
	Sep. 30, 2023
Fair Value Disclosures [Abstract]
Fair value measurements	Note 15—Fair value measurements   The following tables summarize the Company’s financial assets and liabilities measured at fair value on recurring basis by level within the fair value hierarchy as of the dates indicated (in thousands):   Schedule of assets and liabilities measured at fair value on recurring basis                             As of September 30, 2023   Liabilities   Level 1     Level 2     Level 3   Warrant liabilities   $ -     $ (26,502 )   $ -   Additional Subordinated Term Loan Warrants Derivative     -       -       (12,058 ) Subordinated Term Loan Warrants Make-Whole Derivative     -       -       (1,906 ) Earn-out liabilities     -       -       (160 ) Total   $ -     $ (26,502 )   $ (14,124 )       As of December 31, 2022   Liabilities   Level 1     Level 2     Level 3   Warrant liabilities   $ -     $ (20,890 )   $ -   Redemption Feature Derivative     -       -       (826 ) Subordinated Term Loan Warrants Make-Whole Derivative     -       -       -   Earn-out liabilities     -       -       (5,600 ) Total   $ -     $ (20,890 )   $ (6,426 )   Level 3 Rollfoward   Redemption Feature Derivative     Additional Subordinated Term Loan Warrants Derivative     Subordinated Term Loan Warrants Make-Whole Derivative     Earn-out liabilities   December 31, 2022 balances   $ (826 )   $ -     $ -     $ (5,600 ) Additions     (474 )     (12,264 )     -       -   Changes in fair value     (931 )     (1,602 )     -       5,290   Reclassified to level 2     -       1,050       -           June 30, 2023 balances     (2,231 )     (12,816 )     -       (310 ) Changes in fair value     1,103       (442 )     (1,906 )     150   Reclassified to level 2     -       1,200       -       -   Reclassified to equity     1,128       -       -       -   September 30, 2023 balances   $ -     $ (12,058 )   $ (1,906 )   $ (160 )   The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and contract assets and liabilities, approximate fair value due to their short-term maturities and are excluded from the fair value table above.   Warrant liabilities – The warrant liabilities were classified to level 2 as of September 30, 2023 and December 31, 2022. The outstanding warrants which were classified as warrant liabilities as of September 30, 2023 were the YA Warrant and the June 2023 Term Loan Warrants. In addition, as of December 31, 2022, the Advisor Warrants were classified as warrant liabilities as their terms were not determined at that time. The Advisor Warrants were reclassified to equity on January 16, 2023. The sole underlying asset of the outstanding warrant liabilities as of September 30, 2023 and December 31, 2022 was Class A Common Stock, which is an observable input, however the value of the warrants themselves were not directly or indirectly observable. The fair value of the warrant liabilities were determined based on price of the underlying share and the terms of each warrant, specifically whether each warrant is exercisable for a fixed number of shares of Class A Common Stock, hence the value of the total shares a warrant is exercisable for is variable, or a fixed value of shares of Class A Common Stock thus the number of the total shares a warrant is exercisable for is variable. The exercise prices of the liability-classified warrants which were outstanding as of September 30, 2023 and December 31, 2022 were minimal ($0.08 per Class A Common Stock share for the Advisor Warrants and the June 2023 Term Loan Warrants and $0.0008 per Class A Common Stock share for the YA Warrant) and did not have significant impact to the fair value measurements of these warrants. See Note 9 for further information regarding the warrant liabilities.   Redemption Feature Derivative – The Redemption Feature Derivative’s fair value was estimated using a single factor binomial lattice model (the “Lattice Model”). The Lattice Model estimates fair value based on changes in the price of the underlying equity over time. It assumes that the stock price can only go up or down at each point in time, and it considers the likelihood of each outcome using a risk-neutral probability framework.   The Lattice Model the Company utilized is a single-factor model, which means it only considers uncertainty related to the Company’s stock price. It calculates the value of the option to convert the YA Convertible Debentures into Class A Common Stock using a binomial tree structure and backward induction. The payoffs of the YA Convertible Debentures were computed via backward induction and discounted at a blended rate. The key inputs to the Lattice Model are the yield of a hypothetical identical note without the conversion features, and the volatility of common stock.   The following table provides quantitative information of the key assumptions utilized in the Redemption Feature Derivative fair value measurements as of measurement dates:   Schedule of derivative fair value measurements                             As of September 30, 2023     As of February 3, 2023     As of December 31, 2022   Price of Class A Common Stock   $ -     $ 1.56     $ 1.78   Risk-free interest rate     - %     4.63 %     4.60 % Yield     - %     13.6 %     15.6 % Expected volatility     - %     50.0 %     50.0 %   As of December 31, 2022, the Redemption Feature Derivative outstanding was a derivative embedded in the First YA Convertible Debenture. On February 3, 2023, the Second YA Convertible Debenture was issued with identical terms to the First YA Convertible Debenture, except for the principal amount, purchase price and the fixed conversion price. On various dates through August 25, 2023, all of the YA Convertible Debentures were converted to Class A Common Stock, and upon the final conversion on August 25, 2023, the Company derecognized the remaining Redemption Feature Derivative. The Company measured and recognized the fair value of the Redemption Feature Derivative as of December 31, 2022, February 3, 2023 which is the Second YA Convertible Debenture issuance date, March 31, 2023, June 30, 2023 and August 25, 2023 in derivative liabilities on the consolidated balance sheets, with the respective fair value adjustment recorded in loss on change in fair value of derivatives as a component of other income (expense) on the consolidated statements of operations.   Additional Subordinated Term Loan Warrants Derivative – The Additional Subordinated Term Loan Warrants Derivative’s fair value was estimated using a discounted cashflow/expected present value method. The value the Additional Subordinated Term Loan Warrants earn was $0.35 million for each additional full calendar month after March 22, 2023 through June 22, 2023, and starting June 23, 2023, the value the Additional Subordinated Term Loan Warrants earn increases by $25,000 for each additional full calendar month thereafter until the Company repays the Subordinated Term Loan in full. The key assumption utilized was the probability of the Subordinated Term Loan remaining unpaid through its maturity, which the Company determined to be approximately 75% as of March 22, 2023, which was the execution date of the second amendment to the Subordinated Term Loan, and approximately 100% as of September 30, 2023. As of September 30, 2023, the Company applied a discount rate of 15.0% to calculate the present value of the Additional Subordinated Term Loan Warrants Derivative. The Company measured and recognized fair value for the Additional Subordinated Term Loan Warrants Derivative as of the execution dates of the first (November 18, 2022), second (March 22, 2023) and third amendments (June 7, 2023) to the Subordinated Term Loan Warrants agreements, and at the end of each reporting period in derivative liabilities on the consolidated balance sheets, with the respective fair value adjustment recorded in loss on change in fair value of derivatives as a component of other income (expense) on the consolidated statements of operations.   Subordinated Term Loan Warrants Make-Whole Derivative – The Subordinated Term Loan Warrants Make-Whole Derivative’s fair value was estimated using Black Scholes Merton model. The value the Subordinated Term Loan Warrants Make-Whole Agreement is primarily based on the make-whole provision amount between (a) the closing share price of Class A Common Stock on the business day immediately prior to the lender’s exercise of the Subordinated Term Loan Warrants on December 12, 2022 multiplied by the number of the December 2022 Warrant Shares and (b) the closing share price of Class A Common Stock on the business day immediately prior to the lender’s sale of the December 2022 Warrant Shares multiplied by the number of the December 2022 Warrant Shares sold by the lender.   The following table provides quantitative information of the key assumptions utilized in the Subordinated Term Loan Warrants Make-Whole Derivative fair value measurements as of measurement dates:   Schedule of derivative fair value measurements                     As of September 30, 2023     As of December 31, 2022   Price of Class A Common Stock   $ 2.08     $ 14.24   Strike Price of Class A Common Stock   $ 18.96     $ 18.96   Risk-free interest rate     4.70 %     4.00 % Expected volatility     85.0 %     65.0 % Expiration Date     December 12, 2027       December 12, 2027     The Company measured and recognized fair value for the Subordinated Term Loan Warrants Make-Whole Derivative as of the execution date of the Subordinated Term Loan Warrants Make-Whole Agreement and at the end of each reporting period in derivative liabilities on the consolidated balance sheets, with the respective fair value adjustment recorded in loss on change in fair value of derivatives as a component of other income (expense) on the consolidated statements of operations.   Earn-out liabilities – For the contingent consideration related to the Earn-Out Interests, the fair value was estimated using a Monte-Carlo Simulation in which the fair value was based on the simulated stock price of the Company over the maturity date of the contingent consideration. The key inputs used in the determination of the fair value included current stock price, expected volatility, and expected term.   The following table provides quantitative information of the key assumptions utilized in the earn-out liabilities fair value measurements as of measurement dates:   Schedule of derivative fair value measurements                     As of September 30, 2023     As of December 31, 2022   Price of Class A Common Stock   $ 2.08     $ 1.78   Risk-free interest rate     4.70 %     4.00 % Expected volatility     85.0 %     65.0 % Expected remaining term     3.9 years       4.6 years     The Company measured and recognized the fair value of the Earn-Out Interests as of the end of each reporting period in earn-out liabilities on the consolidated balance sheets, with the respective fair value adjustment recorded in gain on change in fair value of earn-out liabilities as a component of other income (expense) on the consolidated statements of operations.

v3.23.3

Commitments and contingencies	9 Months Ended
	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and contingencies	Note 16—Commitments and contingencies   Legal Matters   In the ordinary course of business, the Company is or may be involved in various legal or regulatory proceedings, claims or purported class actions related to alleged infringement of third-party patents and other intellectual property rights, commercial, corporate and securities, labor and employment, wage and hour and other claims.   The Company makes a provision for liabilities relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. The outcomes of legal proceedings and other contingencies are, however, inherently unpredictable and subject to significant uncertainties. At this time, the Company is not able to reasonably estimate the amount or range of possible losses in excess of any amounts accrued, including losses that could arise as a result of application of non-monetary remedies, with respect to the contingencies it faces, and the Company’s estimates may not prove to be accurate.   In management’s opinion, resolution of all current matters is not expected to have a material adverse impact on the Company’s consolidated statements of operations, cash flows or balance sheets. However, depending on the nature and timing of any such dispute or other contingency, an unfavorable resolution of a matter could materially affect the Company’s current or future results of operations or cash flows, or both.   Leases   The Company leases its office facilities under operating lease agreements expiring in 2024. While each of the leases includes renewal options, the Company has only included the base lease term in its calculation of lease assets and liabilities as it is not reasonably certain to utilize the renewal options. The Company does not have any finance leases.   The following table presents information regarding the maturities of the undiscounted remaining operating lease payments, with a reconciliation to the amount of the liabilities representing such payments as presented on the September 30, 2023 condensed consolidated balance sheet (in thousands).   Schedule of operating lease payments         Years Ending December 31,       2023     309   2024     790   Total minimum lease payments     1,099   Less: Imputed interest     (114 ) Total operating lease liabilities   $ 985     During the three months ended September 30, 2023, the Company terminated the lease agreement for one of its office facilities and entered into an amendment to another lease agreement. As a result, the Company derecognized $1.2 million of operating right-of-use assets and $1.4 million of operating lease liabilities on the consolidated balance sheet, with a gain of $0.2 million recorded in other income (expense) on the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2023.   Operating lease amounts above do not include sublease income. The Company has a sublease agreement with a third party and expects to receive sublease income of approximately $0.6 million through May 2024.   Software services subscription   The Company entered into a software services subscription agreement with a certain PIPE Investor (the “PIPE Software Services Subscription”), including related support and update services on September 22, 2021. The Company subsequently amended the agreement on December 15, 2021, March 6, 2023, March 28, 2023, June 27, 2023 and September 30, 2023. The term of the amended agreement is through December 31, 2024. As of September 30, 2023, $19.8 million will become due in the next 12 months and $3.8 million thereafter through October 2024. Pursuant to the amended agreement, the Company settled the $5.6 million subscription fee for the service period between January 1, 2023 and September 30, 2023 in Class A Common Stock. Additionally, the amended agreement provides the Company with the option, in its sole discretion, to settle the $16.0 million subscription fees which are scheduled to become due between October 2023 and June 2024 in cash or Class A Common Stock. Pursuant to the amended agreement entered into on September 30, 2023, for each such future payment the Company makes in Class A Common Stock, with exception of the payment on October 2, 2023 (see Note 20), the Company has an option to repurchase such Class A Common Stock at a price equal to 130% of the per share price applicable for each such payment during the 18-month period following such shares of Class A Common Stock become tradable by the PIPE Investor.

v3.23.3

Related party transactions	9 Months Ended
	Sep. 30, 2023
Related Party Transactions [Abstract]
Related party transactions	Note 17—Related party transactions   Convertible debentures – On December 16, 2022, the Company issued the Insider Convertible Debentures, which were subsequently amended, and entered into the Insider Lock-Up Agreement with certain members of the Company’s management team and board of directors, and certain other existing investors of the Company.   On February 1, 2023, the Company issued the NZ Superfund Convertible Debenture, which was subsequently amended, and entered into the NZ Superfund Lock-Up Agreement with NZ Superfund.   See Note 5 for further information regarding these transactions.   Chico PIPE Agreements – On March 16, 2023, the Company entered into subscription agreements (the “Chico PIPE Agreements”) with Jose Miguel Enrich, Andres Chico and Felipe Chico Hernandez pursuant to which the Company issued 1,222,222 shares of Class A Common Stock in exchange for the total purchase price of $1.1 million.   March 2023 Financing Commitment – On March 20, 2023, the Company entered into a financing commitment with a certain entity affiliated with Andres Chico and Jose Miguel Enrich whereby the entity or a third party entity designated by the entity intends to provide $15.0 million of financing to the Company through the issuance by the Company of debt and/or equity securities including, without limitation, shares of capital stock, securities convertible into or exchangeable for shares of capital stock, warrants, options, or other rights for the purchase or acquisition of such shares and other ownership or profit interests of the Company (the “March 2023 Financing Commitment”). Any debt issued pursuant to the March 2023 Financing Commitment would have a term of at least 12 months and any equity or equity linked securities issued under the March 2023 Financing Commitment would have a fixed price such that no other shareholder or other exchange approvals would be required. The amount the entity agreed to contribute under the March 2023 Financing Commitment was reduced on a dollar-for-dollar basis by the amount of any other capital the Company receives through December 31, 2023. Pursuant to the March 2023 Financing Commitment, the Company entered into the May 2023 Equity Agreements (see below) and the March 2023 Financing Commitment amount was reduced to $0.   The Rodina Note Conversion Agreement – On May 19, 2023, the Company entered into a loan conversion agreement to convert the principal and accrued interest of the Rodina Note to Class A Common Stock. Pursuant to the agreement, in June 2023, the Company issued Class A Common Stock to the lender of the Rodina Note for a full and final settlement of the Rodina Note. See Note 5 for further information regarding the loan conversion agreement.   May 2023 Financing Commitment – On May 20, 2023, the Company entered into the May 2023 Financing Commitment with a certain entity affiliated with Andres Chico and Jose Miguel Enrich whereby the entity, or a third party entity designated by the entity, intends to provide $25.0 million of financing to the Company through the issuance by the Company of debt and/or equity securities including, without limitation, shares of capital stock, securities convertible into or exchangeable for shares of capital stock, warrants, options, or other rights for the purchase or acquisition of such shares and other ownership or profit interests of the Company. Any debt issued pursuant to the May 2023 Financing Commitment would have a term of at least 12 months and any equity or equity linked securities issued under the May 2023 Financing Commitment would have a fixed price such that no other shareholder or other exchange approvals would be required. The amount the entity agreed to contribute under the May 2023 Financing Commitment was reduced on a dollar-for-dollar basis by the amount of any other capital the Company receives outside of the May 2023 Equity Agreements through December 31, 2023. The May 2023 Financing Commitment amount was reduced to $0 in conjunction with the executions of the June 2023 Revolving Credit Facility agreement and the June 2023 Term Loan agreement.   May 2023 PIPE Subscription Agreements – In May and June 2023, the Company entered into subscription agreements with various investors, including certain entities affiliated with Andres Chico and Jose Miguel Enrich, to issue Class A Common Stock in exchange for the total purchase price of $23.7 million (the “May 2023 Equity Agreements”). Pursuant to the May 2023 Equity Agreements, the Company issued 7,104,556 shares of Class A Common Stock in June 2023.   Rodina Warrant – On September 15, 2023, the Company issued a warrant to an entity affiliated with Andres Chico and Jose Miguel Enrich which granted the right to purchase 498,119 shares of Class A Common Stock. See Note 9 for further information regarding the Rodina Warrant.   September 2023 Rodina Letter of Credit – On September 22, 2023, an entity affiliated with Andres Chico and Jose Miguel Enrich issued a standby letter of credit in the amount of $15.0 million to the lender of the June 2023 Revolving Credit Facility on behalf of the Company, which increased the Company’s borrowing capacity under the facility by $15.0 million. The expiration date of this September 2023 Rodina Letter of Credit is September 30, 2024 with an automatic renewal option for one additional year through September 30, 2025. See Note 5 for further information regarding the September 2023 Rodina Letter of Credit.

v3.23.3

Concentrations	9 Months Ended
	Sep. 30, 2023
Risks and Uncertainties [Abstract]
Concentrations	Note 18—Concentrations   During the three months ended September 30, 2023, the Company had two customers who individually accounted for 10% or more of the Company's total revenue and together accounted for approximately 33% of the Company’s total revenue. During the nine months ended September 30, 2023, the Company had one customer who individually accounted for approximately 20% of the Company’s total revenue. That customer was the only party who individually accounted for 10% or more of the Company’s total revenue for the nine months ended September 30, 2023. During the three and nine months ended September 30, 2022, the Company had two customers who individually accounted for 10% or more of the Company’s total revenue and together for approximately 25% and 27% of the total revenues, respectively. As of September 30, 2023, the Company had two customers who individually accounted for 10% or more of the Company’s total accounts receivable and contract assets, and together for approximately 40% of the total accounts receivable and contract assets, while as of December 31, 2022, the Company had three customers who individually accounted for 10% or more of the Company’s total accounts receivable and contract assets and together for approximately 38% of the total accounts receivable and contract assets.

v3.23.3

Liquidity	9 Months Ended
	Sep. 30, 2023
Liquidity
Liquidity	Note 19—Liquidity   During the three and nine months ended September 30, 2023, and in each fiscal year since the Company’s inception, it has incurred losses from operations and generated negative cash flows from operating activities. The Company also has negative working capital and stockholders’ deficit as of September 30, 2023. However, the Company has an option to settle all of the warrant liabilities and derivative liabilities under current liabilities on the accompanying condensed consolidated balance sheets in Class A Common Stock.   To address liquidity needs, the Company entered into various financial arrangements during the nine months ended September 30, 2023, including the June 2023 Revolving Credit Facility, the June 2023 Term Loan, the May 2023 Equity Agreements, maturity extensions of the Subordinated Term Loan, the Insider Convertible Debentures, the Third Party Convertible Debentures and the NZ Superfund Convertible Debenture, the Cantor Sales Agreement and full conversions of the Rodina Note and the YA Convertible Debentures to Class A Common Stock. The Company has also been working to execute various initiatives to modify its operations to further reduce spending and improve cash flow.   In management’s opinion, the Company’s cash on hand, availability under the line of credit and the execution of the cost reduction initiatives will provide liquidity for the Company for at least one year. However, there can be no assurance that the Company will be successful in executing its cost reduction initiatives and may need to raise additional capital in future periods.

v3.23.3

Subsequent events	9 Months Ended
	Sep. 30, 2023
Subsequent Events [Abstract]
Subsequent events	Note 20—Subsequent events   On October 2, 2023, the Company issued 1,802,885 shares of Class A Common Stock to a certain PIPE Investor as the payment for the $3.8 million subscription fee for services rendered from July 1, 2023 to September 30, 2023 in relation to the PIPE Software Services Subscription.   On October 16, 2023, the NYSE notified the Company, and publicly announced, that the NYSE has determined to (a) commence proceedings to delist the Public Warrants and (b) immediately suspend trading of the Public Warrants due to “abnormally low” trading price levels pursuant to Section 802.01D of the NYSE Listed Company Manual. The Company did not appeal the NYSE’s determination. On October 31, 2023, the NYSE issued a notification to the SEC of its intention to remove the Public Warrants from listing and registration on the NYSE on November 13, 2023, pursuant to the provisions of Rule 12d2-2(b) under the Exchange Act.

v3.23.3

Nature of operations and summary of significant accounting policies (Policies)	9 Months Ended
	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business	Description of Business – Rubicon Technologies, Inc. and all subsidiaries are hereafter referred to as “Rubicon” or the “Company.”   Rubicon is a digital marketplace for waste and recycling services and provides cloud-based waste and recycling solutions to businesses and governments. Rubicon’s sustainable waste and recycling solutions provide comprehensive management of customers’ waste streams through a platform that powers a modern, digital experience and delivers data-driven insights and transparency for the customers and hauling and recycling partners.   Rubicon also provides consultation and management services to customers for waste removal, waste management, logistics, and recycling solutions. Consultation and management services include planning, consolidation of billing and administration, cost savings analyses, and vendor performance monitoring and management. The combination of Rubicon’s technology and services provides a holistic audit of customer waste streams. Rubicon also provides logistics services and markets and resells recyclable commodities.
Reverse Stock Split	Reverse Stock Split – On September 26, 2023, the Company effected a reverse stock split of its outstanding shares of voting common stock at a ratio of one-for-eight (1:8) pursuant to a Certificate of Amendment to its Certificate of Incorporation filed with the Secretary of State of the State of Delaware. The reverse stock split was reflected on the New York Stock Exchange (the “NYSE”) beginning with the opening of trading on September 27, 2023. Pursuant to the reverse stock split, every eight shares of the Company’s issued and outstanding shares of common stock were automatically combined into one issued and outstanding share of common stock, without any change in the number of authorized shares or the par value per share of the common stock. No fractional shares were issued in connection with the reverse stock split. Any stockholder who would otherwise be entitled to receive a fractional share instead became entitled to receive one whole share of common stock in lieu of such fractional share. Equitable adjustments corresponding to the reverse stock split ratio were made to all (i) issued and outstanding shares of all other classes of stock of the Company, (ii) the exercise prices of and number of shares of common stock underlying the Company’s public and private warrants, (iii) the number of shares of common stock underlying the Company’s outstanding equity awards, and (iv) the number of shares of common stock issuable under the Company’s equity incentive plan. All share and per share amounts of the common stock included in the accompanying condensed consolidated financial statements and these notes to the condensed consolidated financial statements have been retrospectively adjusted to give effect to the reverse stock split for all periods presented, including reclassifying an amount equal to the reduction in par value to additional paid-in capital.
Mergers	Mergers – Rubicon Technologies, Inc. was initially incorporated in the Cayman Islands on April 26, 2021 as a special purposes acquisition company under the name “Founder SPAC” (“Founder”). Founder was formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. On August 15, 2022 (the “Closing Date”), Founder consummated the mergers (the “Mergers”), pursuant to that certain Agreement and Plan of Merger, dated December 15, 2021 (the “Merger Agreement”) (the “Closing”).   In connection with the Mergers, the Company was reorganized into an Up-C structure, in which substantially all of the assets and business of the Company are held by Rubicon Technologies Holdings, LLC (“Holdings LLC”) and continue to operate through Rubicon Technologies Holdings, LLC and its subsidiaries, and Rubicon Technologies, Inc.’s material assets are the equity interests of Rubicon Technologies Holdings, LLC indirectly held by it. Pursuant to the Merger Agreement, the Mergers were accounted for as a reverse recapitalization in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) (the “Reverse Recapitalization”). Under this method of accounting, Founder was treated as the acquired company and Holdings LLC was treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Holdings LLC issuing stock for the net assets of Founder, accompanied by a recapitalization. Thus, the accompanying condensed consolidated financial statements reflect (i) the historical operating results of Holdings LLC prior to the Mergers; (ii) the results of Rubicon Technologies, Inc. following the Mergers; and (iii) the acquired assets and liabilities of Founder stated at historical cost, with no goodwill or other intangible assets recorded.   See Note 3 for further information regarding the Mergers.
Basis of Presentation and Consolidation	Basis of Presentation and Consolidation – The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to U.S. GAAP and reflect all adjustments which are, in the opinion of management, necessary to a fair presentation of the results of the interim periods presented, under the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). These condensed consolidated financial statements include all adjustments consisting of only normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented. The Company’s condensed consolidated financial statements include the accounts of Rubicon Technologies, Inc., and subsidiaries. The Company’s condensed consolidated financial statements reflect the elimination of all significant inter-company accounts and transactions. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2023. Certain information and note disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes prepared in accordance with U.S. GAAP have been condensed in, or omitted from, these interim financial statements. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes to the consolidated financial statements for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 23, 2023.
Segments	Segments – The Company operates in one operating segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assessing performance. The Company’s CODM role is fulfilled by the Executive Leadership Team (“ELT”), who allocates resources and assesses performance based upon consolidated financial information.
Use of Estimates	Use of Estimates – The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of any contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Emerging Growth Company	Emerging Growth Company – The Company is an emerging growth company (“EGC”), as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company did not opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an EGC, will be required to adopt the new or revised standard at the time the new or revised standard becomes applicable to private companies. The effective dates shown in Note 2 below reflect the election to use the extended transition period.
Revenue Recognition	Revenue Recognition – The Company recognizes service revenue over time, consistent with efforts performed and when the customer simultaneously receives and consumes the benefits provided by the Company’s services. The Company recognizes recyclable commodity revenue point in time when the ownership, risks, and rewards transfer. The Company derives its revenue from waste removal, waste management and consultation services, software subscriptions, and the sale of recyclable commodities.   Service Revenue:   Service revenues are primarily derived from long-term contracts with waste generator customers including multiple promises delivered through the Company’s digital marketplace platform. The promises include waste removal, consultation services, billing administration and consolidation, cost savings analyses, and vendor procurement and performance management, each of which constitutes an input to the combined service managed through the digital platform. The digital platform and services are highly interdependent, and accordingly, each contractual promise is not considered a distinct performance obligation in the context of the contract and is combined into a single performance obligation. In general, fees are invoiced, and revenue is recognized over time as control is transferred. Revenue is measured as the amount of consideration the Company expects to receive in exchange for providing the service. The Company invoices for certain services prior to performance. These advance invoices are included in contract liabilities and recognized as revenue in the period service is provided.   Service revenues also include software-as-a-service subscription, maintenance, equipment and other professional services, which represent separate performance obligations. Once the performance obligations and the transaction price are determined, including an estimate of any variable consideration, the Company then allocates the transaction price to each performance obligation in the contract using a relative standalone selling price method. The Company determines standalone selling price based on the price at which the good or service is sold separately.   Recyclable Commodity Revenue:   The Company recognizes recyclable commodity revenue through the sales of old corrugated cardboard (OCC), old newsprint (ONP), aluminum, glass, pallets, and other recyclable materials at market prices. The Company purchases recyclable commodities from certain waste generator customers and sells the recyclable materials to recycling and processing facilities. Revenue recognized under these agreements is variable in nature based on the market, type and volume or weight of the materials sold. The amount of revenue recognized is based on commodity prices at the time of sale, which are unknown at contract inception. Fees are billed, and revenue is recognized at a point in time when control is transferred to the recycling and processing facilities.   Management reviews contracts and agreements the Company has with its waste generator customers and hauling and recycling partners and performs an evaluation to consider the most appropriate manner in accordance with ASC 606-10, Revenue Recognition: Principal Agent Considerations, by which revenue is presented on the condensed consolidated statements of operations.   Judgment is required in evaluating the presentation of revenue on a gross versus net basis based on whether the Company controls the service provided to the end-user and is the principal in the transaction (gross), or the Company arranges for other parties to provide the service to the end-user and is the agent in the transaction (net). Management has concluded that the Company is the principal in most arrangements as it controls the waste removal service and is the primary obligor in the transactions.   The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) which we recognize revenue at the amount to which the Company has the right to invoice for services performed and (iii) variable consideration which is allocated entirely to a wholly unsatisfied performance obligation. After applying these optional exemptions, the aggregate amount of the transaction price allocated to unsatisfied or partially satisfied performance obligations as of September 30, 2023 and December 31, 2022 was insignificant.
Cost of Revenue, exclusive of amortization and depreciation	Cost of Revenue, exclusive of amortization and depreciation – Cost of service revenues primarily consists of expenses related to delivering the Company’s service and providing support, including third-party hauler costs, costs of data center capacity, certain fees paid to various third parties for the use of their technology, services and data, and employee-related costs, such as salaries and benefits.   Cost of recyclable commodity revenues primarily consists of expenses related to purchases of OCC, ONP, aluminum, glass, pallets and other recyclable materials, and any associated transportation fees.   The Company recognizes the cost of revenue exclusive of any amortization or depreciation expenses, which are recognized in amortization and depreciation expenses on the condensed consolidated statements of operations.
Cash and Cash Equivalents	Cash and Cash Equivalents – The Company considers all highly liquid investments purchased with an original maturity of three months or less when purchased to be cash equivalents. The Company maintains its cash in bank deposit accounts, which at times exceed the Federal Deposit Insurance Corporation insurance limits.
Accounts Receivable and Contract Balances	Accounts Receivable and Contract Balances –Accounts receivable consist of trade accounts receivable for services provided to customers. Accounts receivable is stated at the amount the Company expects to collect. The Company makes estimates of expected credit and collectability trends for the allowance for credit losses and allowance for unbilled receivables based upon the Company’s assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Past-due balances and other higher-risk amounts are reviewed individually for collectability. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. As of September 30, 2023 and December 31, 2022, the allowances for accounts receivable were $4.6 million and $3.6 million, respectively, and the allowances for contract assets were insignificant.   In cases where customers pay for services in arrears, the Company accrues revenue in advance of billings as long as the criteria for revenue recognition are met, thus creating a contract asset (unbilled receivable). As of September 30, 2023 and December 31, 2022, the Company had unbilled receivables of $68.6 million and $55.2 million, respectively. These unbilled balances were the result of services provided in the period, but not yet billed to the customer. During the nine months ended September 30, 2023, the Company invoiced its customers $55.2 million pertaining to contract assets for services delivered prior to December 31, 2022.   Contract liabilities (deferred revenue) consist of amounts collected prior to having satisfied the performance obligation. The Company periodically invoices customers for recurring front load services in advance monthly basis. As of September 30, 2023 and December 31, 2022, the Company had deferred revenue balances of $6.5 million and $5.9 million, respectively. During the nine months ended September 30, 2023, the Company recognized $5.5 million of revenue that was included in the contract liabilities balance as of December 31, 2022.
Accrued Hauler Expenses	Accrued Hauler Expenses – The Company recognizes hauler costs and the cost of recyclable products when services are performed. Accounting for accrued hauler costs and the cost of recyclable commodities requires estimates and assumptions regarding the quantity of waste collected by the vendors and the frequencies of the collections. The Company estimates quantities and frequencies using historical transaction and market data based on the waste stream composition, equipment type, and equipment size. Accrued hauler expenses are presented within accrued expenses on the condensed consolidated balance sheets.
Fair Value Measurements	Fair Value Measurements – In accordance with U.S. GAAP, the Company groups its financial assets and financial liabilities at fair value in three levels, based on the markets in which the financial assets and financial liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:   Level 1 – Valuations for financial assets and financial liabilities traded in active exchange markets, such as the NYSE.   Level 2 – Valuations are obtained from readily available pricing sources via independent providers for market transactions involving similar financial assets and financial liabilities.   Level 3 – Valuations for financial assets and financial liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models, and similar techniques and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such financial assets or financial liabilities.   See Note 15 for further information regarding fair value measurements.
Offering Costs	Offering Costs – Offering costs, consisting of legal, accounting, printer, filing and advisory fees related to the Mergers, were deferred and offset against proceeds from the Mergers and additional paid-in capital upon consummation of the Mergers. Deferred offering costs capitalized as of September 30, 2023 and December 31, 2022 were $-0-. The total amount of the offering costs recognized as offset against additional paid-in capital at the Closing was $67.3 million. The subsequent settlements of certain offering costs during the nine months ended September 30, 2023 resulted in a gain of $7.0 million, which is recognized as a component of other income (expense) on the accompanying condensed consolidated statements of operations. No such settlement occurred during the three months ended September 30, 2023.
Customer Acquisition Costs	Customer Acquisition Costs – The Company makes certain expenditures related to acquiring contracts for future services. These expenditures are capitalized and amortized in proportion to the expected future revenue from the customer, which in most cases results in straight-line amortization over the estimated life of the customer. Amortization of these customer acquisition costs is presented within amortization and depreciation on the condensed consolidated statements of operations.
Warrants	Warrants – The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s Class A common stock, par value $0.0001 per share (“Class A Common Stock”), among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.   For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded in liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the liability-classified warrants are recognized as a component of other income (expense) on the consolidated statement of operations.   As of September 30, 2023, the Company has both liability-classified and equity-classified warrants outstanding. See Note 9 for further information.
Earn-out Liabilities	Earn-out Liabilities – Pursuant to the Merger Agreement, (i) Blocked Unitholders (as defined in Note 3) immediately before the Closing received a right to receive a pro rata portion of 186,064 shares of Class A Common Stock (the “Earn-Out Class A Shares”) and (ii) Rubicon Continuing Unitholders (as defined in Note 3) immediately before the Closing received a right to receive a pro rata portion of 1,112,605 Class B Units (as defined in Note 3) (“Earn-Out Units”) and an equivalent number of shares of the Company’s Class V common stock, par value $0.0001 (“Class V Common Stock”) (“Earn-Out Class V Shares”, and together with Earn-Out Class A Shares and Earn-Out Units, “Earn-Out Interests”), in each case, depending upon the performance of Class A Common Stock during the five year period after the Closing (the “Earn-Out Period”), as set forth below upon satisfaction of any of the following conditions (each, an “Earn-Out Condition”).     (1) 50% of the Earn-Out Interests if the volume weighted average price (the “VWAP”) of the Class A Common Stock equals or exceeds $112.00 per share (as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations) for twenty (20) of thirty (30) consecutive trading days during the Earn-Out Period; and     (2) 50% of the Earn-Out Interests if the VWAP of the Class A Common Stock equals or exceeds $128.00 per share (as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations) for twenty (20) of any thirty (30) consecutive trading days during the Earn-Out Period.   Earn-Out Interests were classified as liability transactions at initial issuance, which offset against additional paid-in capital as of the Closing. At each period end, Earn-Out Interests are remeasured to their fair value, with the changes during that period recognized as a component of other income (expense) on the consolidated statement of operations. Upon issuance and release of the shares after each Earn-Out Condition is met, the related Earn-Out Interests will be remeasured to their fair value at that time with the changes recognized as a component of other income (expense), and such Earn-Out Interests will be reclassed to stockholders’ (deficit) equity on the consolidated balance sheet. As of September 30, 2023 and December 31, 2022, the Earn-Out Interests had a fair value of $0.2 million and $5.6 million, respectively, with the changes in the fair value of $5.4 million recognized as a gain on change in fair value of earn-out liabilities under other income (expense) within the accompanying condensed consolidated statements of operations.
Noncontrolling Interest	Noncontrolling Interest – Noncontrolling interest represents the Company’s noncontrolling interest in consolidated subsidiaries which are not attributable, directly or indirectly, to the controlling Class A Common Stock ownership of the Company.   Shares of Class V Common Stock are exchangeable into an equal number of Class A Common Stock. Shares of Class V Common Stock are non-economic voting shares in Rubicon Technologies, Inc., where shares of Class V Common Stock each have one vote per share.   The financial results of Holdings LLC were consolidated into Rubicon Technologies, Inc. and 12.1% and 35.9% of Holdings LLC’s net loss during the three and nine months ended September 30, 2023, respectively, was allocated to noncontrolling interests (“NCI”).
Income Taxes	Income Taxes – Rubicon Technologies, Inc. is a corporation and is subject to U.S. federal as well as state income taxes including the income or loss allocated from its investment in Rubicon Technologies Holdings, LLC. Rubicon Technologies Holdings, LLC is taxed as a partnership for which the taxable income or loss is allocated to its members. Certain of the Rubicon Technologies Holdings, LLC operating subsidiaries are considered taxable corporations for U.S. income tax purposes. Prior to the Mergers, Holdings LLC was not subject to U.S. federal and certain state income taxes at the entity level.   The Company accounts for income taxes in accordance with ASC Topic 740, Accounting for Income Taxes (“ASC Topic 740”), which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax bases of its assets and liabilities by applying the enacted tax rates in effect for the year in which the differences are expected to reverse. Such net tax effects on temporary differences are reflected on the Company’s consolidated balance sheets as deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when the Company believes that it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The Company calculates the interim tax provision in accordance with the provisions of ASC Subtopic 740-270, Income Taxes; Interim Reporting. For interim periods, the Company estimates the annual effective income tax rate (“AETR”) and applies the estimated rate to the year-to-date income or loss before income taxes.   ASC Topic 740 prescribes a two-step approach for the recognition and measurement of tax benefits associated with the positions taken or expected to be taken in a tax return that affect amounts reported in the financial statements. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. As of September 30, 2023 or December 31, 2022, the Company has no tax positions that met this threshold and, therefore, has not recognized such benefits. The Company has reviewed and will continue to review the conclusions reached regarding uncertain tax positions, which may be subject to review and adjustment at a later date based on ongoing analyses of tax laws, regulations and interpretations thereof. To the extent that the Company’s assessment of the conclusions reached regarding uncertain tax positions changes as a result of the evaluation of new information, such change in estimates will be recorded in the period in which such determination is made. The Company reports income tax-related interest and penalties relating to uncertain tax positions, if applicable, as a component of income tax expense.   The Company’s income tax expense was $-0- million and $-0- million for the three months ended September 30, 2023 and 2022, respectively, with an effective tax rate of (0.1)% and (0.0)%, respectively The Company’s income tax expense was $-0- million and $-0- million for the nine months ended September 30, 2023 and 2022, respectively, with an effective tax rate of (0.1)% and (0.0)%, respectively. The provision for income taxes differs from the amount that would result from applying statutory rates primarily due to loss attributable to noncontrolling interest and differences in the deductibility of certain book and tax expenses, including the changes in fair value of earn-out liabilities, warrant liabilities and derivatives.   During the nine months ended September 30, 2023 and the year ended December 31, 2022, the Company recorded a full valuation allowance against its deferred tax assets. The Company intends to maintain this position until there is sufficient evidence to support the reversal of all or some portion of the allowance. The Company also has certain assets with indefinite lives for which the basis is different for book and tax. As a result, the Company is in a net deferred tax liability position of $0.2 million and $0.2 million as of September 30, 2023 and December 31, 2022, respectively.
Tax Receivable Agreement Obligation	Tax Receivable Agreement Obligation – The Company and Holdings LLC entered into a Tax Receivable Agreement (the “Tax Receivable Agreement” or “TRA”) with Rubicon Continuing Unitholders (as defined in Note 3) and Blocked Unitholders (as defined in Note 3) (together, the “TRA Holders”). Pursuant to the Tax Receivable Agreement, among other things, the Company is required to pay to the TRA Holders 85% of certain of the Company’s realized (or in certain cases deemed realized) tax savings as a result of certain tax benefits related to the transactions contemplated by the Merger Agreement and future exchanges of Class B Units for Class A Common Stock or cash. The actual tax benefit, as well as the amount and timing of any payments under the TRA, will vary depending on a number of factors, including the price of Class A Common Stock at the time of the exchange; the timing of future exchanges; the extent to which exchanges are taxable; the amount and timing of the utilization of tax attributes; the amount, timing and character of the Company’s income; the U.S. federal, state and local tax rates then applicable; the depreciation and amortization periods that apply to the increases in tax basis; the timing and amount of any earlier payments that the Company may have made under the TRA; and the portion of the Company’s payments under the TRA that constitute imputed interest or give rise to depreciable or amortizable tax basis.   The Company accounts for the effects of these increases in tax basis and associated payments under the TRAs if and when exchanges occur as follows:     a. recognizes a contingent liability for the TRA obligation when it is deemed probable and estimable, with a corresponding adjustment to additional paid-in-capital, based on the estimate of the aggregate amount that the Company will pay;     b. records an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange;     c. to the extent the Company estimates that the full benefit represented by the deferred tax asset will not be fully realized based on an analysis that will consider, among other things, the expectation of future earnings, the Company reduces the deferred tax asset with a valuation allowance; and     d. the effects of changes in any of the estimates and subsequent changes in the enacted tax rates after the initial recognition will be included in the Company’s net loss.   A TRA liability is determined and recorded under ASC 450, “Contingencies”, as a contingent liability; therefore, the Company is required to evaluate whether the liability is both probable and the amount can be estimated. Since the TRA liability is payable upon cash tax savings and the Company has not determined that positive future taxable income is probable based on the Company’s historical loss position and other factors that make it difficult to rely on forecasts, the Company has not recorded the TRA liability as of September 30, 2023. The Company will evaluate this on a quarterly basis, which may result in an adjustment in future periods.
Earnings (Loss) Per Share (“EPS”)	Earnings (Loss) Per Share (“EPS”) – Basic income (loss) per share is computed by dividing net income (loss) attributable to Rubicon Technologies, Inc. by the weighted-average number of shares of Class A Common Stock outstanding during the period.   Diluted income (loss) per share is computed giving effect to all potential weighted-average dilutive shares for the period. The dilutive effect of outstanding awards or financial instruments, if any, is reflected in diluted income (loss) per share by application of the treasury stock method or if converted method, as applicable. Stock awards are excluded from the calculation of diluted EPS in the event they are antidilutive or subject to performance conditions for which the necessary conditions have not been satisfied by the end of the reporting period. See Note 14 for additional information on dilutive securities.   Prior to the Mergers, the membership structure of Holdings LLC included units with liquidation preferences. The Company analyzed the calculation of loss per unit for periods prior to the Mergers and determined that it resulted in values that would not be meaningful to the users of these condensed consolidated financial statements. As a result, loss per share information has not been presented for periods prior to the Closing.
Derivative Financial Instruments	Derivative Financial Instruments – From time to time, the Company utilizes derivative instruments as part of our overall strategy. The Company’s derivative instruments are recorded at fair value on the consolidated balance sheets. These derivative instruments have not been designated as hedges; therefore, both realized and unrealized gains and losses are recognized in earnings. For the purposes of cash flow presentation, realized and unrealized gains or losses are included under cash flows from operating activities. Upfront cash payments received upon the issuance of derivative instruments are included within cash flows from financing activities, while the prepayments made upon the issuance of derivative instruments are included within cash flows from investing activities within the consolidated statements of cash flows.
Stock-Based Compensation	Stock-Based Compensation – The Company measures fair value of employee stock-based compensation awards on the date of grant and uses the straight-line attribution method to recognize the related expense over the requisite service period, and accounts for forfeitures as they occur. The fair value of equity-classified restricted stock units and performance-based restricted stock units is equal to the market price of Class A Common Stock on the date of grant. The liability-classified restricted stock units are recognized at their fair value that is equal to the market price of Class A Common Stock on the date of grant and remeasured to the market price of Class A Common Stock at each period-end with related changes in the fair value recognized in general and administrative expense on the consolidated statement of operations.   The Company accounts for nonemployee stock-based transactions using the fair value of the consideration received (i.e., the value of the goods or services) or the fair value of the equity instruments issued, whichever is more reliably measurable.

v3.23.3

Property and equipment (Tables)	9 Months Ended
	Sep. 30, 2023
Property, Plant and Equipment [Abstract]
Schedule of property and equipment	Schedule of property and equipment                     September 30, 2023     December 31, 2022   Computers, equipment and software   $ 2,311     $ 3,791   Customer equipment     1,973       1,485   Furniture and fixtures     210       1,699   Leasehold improvements     1,441       3,772   Total property and equipment     5,935       10,747   Less accumulated amortization and depreciation     (4,302 )     (8,103 ) Total property and equipment, net   $ 1,633     $ 2,644

v3.23.3

Debt (Tables)	9 Months Ended
	Sep. 30, 2023
Debt Disclosure [Abstract]
Schedule of components of long-term debt	Schedule of components of long-term debt                     September 30, 2023     December 31, 2022   Term loan balance   $ 108,483     $ 71,000   Convertible debt balance     1,446       7,000   Related-party convertible debt balance     18,041       11,964   Less unamortized deferred debt charges     (35,358 )     (6,138 ) Total borrowed     92,612       83,826   Less short-term debt obligation balance     -       (3,771 ) Long-term debt obligation balance   $ 92,612     $ 80,055
Schedule of maturities of long-term debt	Schedule of maturities of long-term debt         Fiscal Years Ending December 31,       2023   $ -   2024     -   2025     108,483   2026     19,487   Total   $ 127,970

v3.23.3

Accrued expenses (Tables)	9 Months Ended
	Sep. 30, 2023
Payables and Accruals [Abstract]
Schedule of accrued expenses	Schedule of accrued expenses                     September 30, 2023     December 31, 2022   Accrued hauler expenses   $ 63,049     $ 44,773   Accrued compensation     15,026       43,054   Accrued income taxes     -       9   Accrued Mergers transaction expenses     -       13,433   FPA Settlement Liability (as defined in Note 10)     2,000       -   Other accrued expenses     3,591       6,733   Total accrued expenses   $ 83,666     $ 108,002

v3.23.3

Goodwill and other intangibles (Tables)	9 Months Ended
	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of intangible assets and goodwill	Schedule of intangible assets and goodwill                                   September 30, 2023       Useful Life (in years)     Gross Carrying Amount     Accumulated Amortization     Net Carrying Amount   Trade Name   5     $ 728     $ (728 )   $ -   Customer and hauler relationships   2 to 8       20,976       (14,061 )     6,915   Non-competition agreements   3 to 4       550       (550 )     -   Technology   3       3,178       (2,298 )     715   Total finite-lived intangible assets           25,432       (17,802 )     7,630   Domain Name   Indefinite       835       -       835   Total intangible assets         $ 26,267     $ (17,802 )   $ 8,465         December 31, 2022       Useful Life (in years)     Gross Carrying Amount     Accumulated Amortization     Net Carrying Amount   Trade Name   5     $ 728     $ (728 )   $ -   Customer and hauler relationships   2 to 8       20,976       (12,141 )     8,835   Non-competition agreements   3 to 4       550       (550 )     -   Technology   3       3,178       (1,967 )     1,211   Total finite-lived intangible assets           25,432       (15,386 )     10,046   Domain Name   Indefinite       835       -       835   Total intangible assets         $ 26,267     $ (15,386 )   $ 10,881
Schedule of finite- lived intangible assets, future amortization expense	Schedule of finite- lived intangible assets, future amortization expense         Fiscal Years Ending December 31,       2023   $ 804   2024     3,110   2025     2,559   2026     1,157   Total future amortization of intangible assets   $ 7,630

v3.23.3

Stockholders’ (deficit) equity (Tables)	9 Months Ended
	Sep. 30, 2023
Equity [Abstract]
Schedule of stockholders equity	Schedule of stockholders equity                             Authorized     Issued     Outstanding   Class A Common Stock     690,000,000       34,803,951       34,803,951   Class V Common Stock     275,000,000       4,425,388       4,425,388   Preferred Stock     10,000,000       -       -   Total shares as of September 30, 2023     975,000,000       39,229,339       39,229,339     The table set forth below reflects information about the Company’s equity as of December 31, 2022.       Authorized     Issued     Outstanding   Class A Common Stock     690,000,000       6,985,869       6,985,869   Class V Common Stock     275,000,000       14,432,992       14,432,992   Preferred Stock     10,000,000       -       -   Total shares as of December 31, 2022     975,000,000       21,418,861       21,418,861

v3.23.3

Equity-based compensation (Tables)	9 Months Ended
	Sep. 30, 2023
Equity [Abstract]
Schedule of RSUs activity	Schedule of RSUs activity                     Units     Weighted Average Grant Date Fair Value   Nonvested – December 31, 2022     182,086     $ 15.84   Granted     2,016,639       8.10   Vested     (986,461 )     8.98   Forfeited/redeemed     (45,256 )     15.09   Nonvested – September 30, 2023     1,167,008     $ 8.30

v3.23.3

Loss per share (Tables)	9 Months Ended
	Sep. 30, 2023
Earnings Per Share [Abstract]
Schedule of net loss per share	Schedule of net loss per share                     Three Months Ended September 30, 2023     Nine Months Ended September 30, 2023   Numerator:                 Net loss   $ (30,173 )   $ (62,441 ) Less: Net loss attributable to noncontrolling interests     (2,519 )     (18,456 ) Net loss attributable to Rubicon Technologies, Inc   $ (27,654 )   $ (43,985 )                   Denominator:                 Weighted average shares of Class A Common Stock outstanding – Basic and diluted     32,381,649       17,786,466                     Net loss per share attributable to Class A Common Stock – Basic and diluted   $ (0.85 )   $ (2.47 )   The computation of net loss per share attributable to Rubicon Technologies, Inc. and weighted-average shares of the Company’s Class A Common Stock outstanding for period from August 15, 2022 (the Closing Date) to September 30, 2022 are as follows (amounts in thousands, except for share and per share amounts):   Numerator:         Net loss for the period from August 15, 2022 through September 30, 2022   $ (34,741 ) Less: Net loss attributable to noncontrolling interests for the period from August 15, 2022 through September 30, 2022     (16,933 ) Net loss for the period from August 15, 2022 through September 30, 2022 attributable to Rubicon Technologies, Inc. – Basic and diluted   $ (17,808 )           Denominator:         Weighted average shares of Class A Common Stock outstanding – Basic and diluted     6,083,847             Net loss per share attributable to Class A Common Stock – Basic and diluted   $ (2.93 )

v3.23.3

Fair value measurements (Tables)	9 Months Ended
	Sep. 30, 2023
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Schedule of assets and liabilities measured at fair value on recurring basis	Schedule of assets and liabilities measured at fair value on recurring basis                             As of September 30, 2023   Liabilities   Level 1     Level 2     Level 3   Warrant liabilities   $ -     $ (26,502 )   $ -   Additional Subordinated Term Loan Warrants Derivative     -       -       (12,058 ) Subordinated Term Loan Warrants Make-Whole Derivative     -       -       (1,906 ) Earn-out liabilities     -       -       (160 ) Total   $ -     $ (26,502 )   $ (14,124 )       As of December 31, 2022   Liabilities   Level 1     Level 2     Level 3   Warrant liabilities   $ -     $ (20,890 )   $ -   Redemption Feature Derivative     -       -       (826 ) Subordinated Term Loan Warrants Make-Whole Derivative     -       -       -   Earn-out liabilities     -       -       (5,600 ) Total   $ -     $ (20,890 )   $ (6,426 )   Level 3 Rollfoward   Redemption Feature Derivative     Additional Subordinated Term Loan Warrants Derivative     Subordinated Term Loan Warrants Make-Whole Derivative     Earn-out liabilities   December 31, 2022 balances   $ (826 )   $ -     $ -     $ (5,600 ) Additions     (474 )     (12,264 )     -       -   Changes in fair value     (931 )     (1,602 )     -       5,290   Reclassified to level 2     -       1,050       -           June 30, 2023 balances     (2,231 )     (12,816 )     -       (310 ) Changes in fair value     1,103       (442 )     (1,906 )     150   Reclassified to level 2     -       1,200       -       -   Reclassified to equity     1,128       -       -       -   September 30, 2023 balances   $ -     $ (12,058 )   $ (1,906 )   $ (160 )
Redemption Feature Derivative [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Schedule of derivative fair value measurements	Schedule of derivative fair value measurements                             As of September 30, 2023     As of February 3, 2023     As of December 31, 2022   Price of Class A Common Stock   $ -     $ 1.56     $ 1.78   Risk-free interest rate     - %     4.63 %     4.60 % Yield     - %     13.6 %     15.6 % Expected volatility     - %     50.0 %     50.0 %
Subordinated Term Loan Warrants Makewhole Derivative [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Schedule of derivative fair value measurements	Schedule of derivative fair value measurements                     As of September 30, 2023     As of December 31, 2022   Price of Class A Common Stock   $ 2.08     $ 14.24   Strike Price of Class A Common Stock   $ 18.96     $ 18.96   Risk-free interest rate     4.70 %     4.00 % Expected volatility     85.0 %     65.0 % Expiration Date     December 12, 2027       December 12, 2027
Earn Out Liability [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Schedule of derivative fair value measurements	Schedule of derivative fair value measurements                     As of September 30, 2023     As of December 31, 2022   Price of Class A Common Stock   $ 2.08     $ 1.78   Risk-free interest rate     4.70 %     4.00 % Expected volatility     85.0 %     65.0 % Expected remaining term     3.9 years       4.6 years

v3.23.3

Commitments and contingencies (Tables)	9 Months Ended
	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Schedule of operating lease payments	Schedule of operating lease payments         Years Ending December 31,       2023     309   2024     790   Total minimum lease payments     1,099   Less: Imputed interest     (114 ) Total operating lease liabilities   $ 985

v3.23.3

Nature of operations and summary of significant accounting policies (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Apr. 24, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Allowance for doubtful accounts		$ 4,600		$ 4,600		$ 3,600
Unbilled receivables		68,600		68,600		55,200
Customer invoice				55,200
Deferred revenue		6,500		6,500		5,900
Contract liability recognized				5,500
Deferred offering costs capitalized		0		0		0
Additional paid-in capital		67,300		67,300
Gain on settlement	$ 6,400	0		7,000
Fair value of Earn-out Interests		200		200		5,600
Other income (expense)				5,400
Income tax expense (benefit)		$ 0		$ 0	$ 0
Effective tax rate		0.10%	0.00%	0.10%	0.00%
Net deferred tax liability		$ 200		$ 200		$ 200
Common Class A [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Common stock, par value		$ 0.0001		$ 0.0001		$ 0.0001
Common Class A [Member] | Merger Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Shares issued		186,064		186,064
Common Class B [Member] | Merger Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Shares issued		1,112,605		1,112,605
Common Class V [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Common stock, par value		$ 0.0001		$ 0.0001		$ 0.0001

v3.23.3

Mergers (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended	9 Months Ended
	Aug. 15, 2022	Apr. 24, 2023	Sep. 30, 2023	Sep. 30, 2023
Business Acquisition [Line Items]
Contributed capital			$ 73,800	$ 73,800
Cash consideration				28,900
Aggregate proceeds received from the PIPE Investors			121,000	121,000
Transaction costs				67,300
Other expense				600
Gain on settlement		$ 6,400	$ 0	$ 7,000
Offering costs recognized		$ 6,400
Common Stock Class A [Member]
Business Acquisition [Line Items]
Retained aggregate shares				2,480,865
Transaction costs				$ 7,000
Common Stock Class V [Member]
Business Acquisition [Line Items]
Retained aggregate shares				14,834,735
Class A Common Stock [Member]
Business Acquisition [Line Items]
Number of shares newly issued				20,000
Class B Units [Member]
Business Acquisition [Line Items]
Number of shares newly issued				110,000
Class A Shares [Member]
Business Acquisition [Line Items]
Number of shares forfeited				20,000
Founder Warrants [Member]
Business Acquisition [Line Items]
Warrant, description	each representing a right to acquire one Founder Class A Share for $92.00 (a “Founder Public Warrant”), converted automatically, on a one-for-one basis, into a public warrant of the Company (a “Public Warrant”) that represents a right to acquire one share of Class A Common Stock for $92.00 pursuant to the Warrant Agreement
PIPE Investors [Member] | Class A Common Stock [Member]
Business Acquisition [Line Items]
Aggregate of shares				1,512,500
Share Price			$ 80.00	$ 80.00
FPA Sellers [Member] | Class A Common Stock [Member]
Business Acquisition [Line Items]
Aggregate of shares				885,327

v3.23.3

Property and equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 5,935	$ 10,747
Less accumulated amortization and depreciation	(4,302)	(8,103)
Total property and equipment, net	1,633	2,644
Property, Plant and Equipment [Member] | Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	2,311	3,791
Property, Plant and Equipment [Member] | Equipment [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	1,973	1,485
Property, Plant and Equipment [Member] | Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	210	1,699
Property, Plant and Equipment [Member] | Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 1,441	$ 3,772

v3.23.3

Property and equipment (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Property, Plant and Equipment [Abstract]
Amortization and depreciation expense	$ 300	$ 300	$ 1	$ 1
Lease agreement description			Company terminated an office lease agreement and entered into an amended agreement for another office lease agreement, which in total, contributed to a decrease of $1.6 million in computers, equipment and software, $1.6 million in furniture and fixtures, $2.3 million in leasehold improvements and $4.8 million in accumulated amortization and depreciation, resulting in a $0.8 million of loss on disposals, which was recognized in other expense on the accompanying condensed consolidated statements of operations for the three months and nine months ended September 30, 2023.

v3.23.3

Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Disclosure [Abstract]
Term loan balance	$ 108,483	$ 71,000
Convertible debt balance	1,446	7,000
Related-party convertible debt balance	18,041	11,964
Less unamortized deferred debt charges	(35,358)	(6,138)
Total borrowed	92,612	83,826
Less short-term debt obligation balance		(3,771)
Long-term debt obligation balance	$ 92,612	$ 80,055

v3.23.3

Debt (Details 1) $ in Thousands	Sep. 30, 2023 USD ($)
Debt Disclosure [Abstract]
2023
2024
2025	108,483
2026	19,487
Total	$ 127,970

v3.23.3

Debt (Details Narrative) - USD ($) $ in Thousands						1 Months Ended					3 Months Ended		6 Months Ended	9 Months Ended
	Jun. 07, 2023	Feb. 07, 2023	Feb. 02, 2023	Feb. 02, 2023	Dec. 14, 2018	Aug. 25, 2023	Dec. 16, 2022	Nov. 30, 2022	Dec. 22, 2021	Mar. 29, 2019	Sep. 30, 2023	Sep. 30, 2022	Jun. 20, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 22, 2023	Dec. 31, 2022
Line of Credit Facility [Line Items]
Principal amount								$ 7,000
Loss on extinguishments of debt											$ (9,348)			$ (18,234)
Interest expense											9,600	4,600		26,200	12,300
Convertible Debentures [Member]
Line of Credit Facility [Line Items]
Loss on extinguishment of debt											7,600			10,600
Deferred debt charges											1,700			1,700			$ 2,500
Amortization of deferred debt charges											200			1,300
Principal amount								$ 7,000
Interest rate								4.00%
Accrued interest to principal														300
Principal converted into shares											$ 5,900			$ 11,500
Convertible debentures share											2,471,561			4,048,601
Y A Convertible Debentures [Member]
Line of Credit Facility [Line Items]
Loss on extinguishment of debt						$ 900
Accrued interest to principal														$ 0
Principal converted into shares						$ 5,600
Convertible debentures share						1,428,760
Insider Convertible Debentures [Member]
Line of Credit Facility [Line Items]
Maturity date							Jun. 16, 2024
Amortization of deferred debt charges											$ 100			400
Principal amount							$ 11,900
Interest rate							6.00%
Accrued interest to principal											200			$ 500
Net proceeds							$ 10,500
Related party notes receivable discription														As of December 31, 2022, the Company had received $3.5 million of the total $10.5 million net proceeds from the investors and the remaining $7.0 million was recorded in related-party notes receivable on the accompanying condensed consolidated balance sheet as of December 31, 2022. The Company received the remaining $7.0 million in January and February 2023. Neither principal nor accrued interest of the Insider Convertible Debentures was converted to Class A Common Stock from the origination through September 30, 2023.
Changes in fair value
Line of Credit Facility [Line Items]
Maturity date			Aug. 01, 2024
Interest rate effective percentage			6.00%	6.00%
Amortization of deferred debt charges														$ 500
Principal amount			$ 1,400	$ 1,400
Accrued interest to principal														100
Net proceeds			$ 1,200
NZ Superfund [Member]
Line of Credit Facility [Line Items]
Maturity date				Aug. 01, 2024
Interest rate effective percentage			8.00%	8.00%
Amortization of deferred debt charges														100
Principal amount			$ 5,100	$ 5,100
Accrued interest to principal											200			400
Net proceeds				$ 4,500
Rodina [Member]
Line of Credit Facility [Line Items]
Line of credit																$ 15,000
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Long-term debt, gross		$ 75,000			$ 60,000
Maturity date		Dec. 14, 2025			Dec. 31, 2023
Interest rate effective percentage		4.80%			5.60%												9.70%
Repayments of debt	$ 48,600
Loss on extinguishment of debt	2,600
Line of credit											51,800			51,800
Remainning credit value											$ 5,600			5,600
Amortization of deferred debt charges														$ 400
June 2023 Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Long-term debt, gross	$ 90,000
Maturity date	Jun. 07, 2026
Interest rate effective percentage	4.25%										9.70%			9.70%
Line of credit											$ 65,500			$ 65,500
Remainning credit value											1,400			1,400
Borrowing base collateral														15,000
Deferred debt charges											2,900			2,900
Amortization of deferred debt charges											200
Term Loan Facility [Member]
Line of Credit Facility [Line Items]
Long-term debt, gross										$ 20,000
Maturity date										Mar. 29, 2024
Interest rate effective percentage		9.60%								9.50%							13.60%
Principal amount		$ 10,000
Loss on extinguishments of debt	$ 2,500	$ 800
Subordinated Term Loan [Member]
Line of Credit Facility [Line Items]
Maturity date									Dec. 22, 2022
Interest rate effective percentage									14.00%
Deferred debt charges											11,900			11,900
Amortization of deferred debt charges											$ 700	$ 400		$ 1,800	$ 1,100
Long-term construction loan									$ 20,000
Private Warrants [Member]
Line of Credit Facility [Line Items]
Maturity date			Jul. 01, 2024
Interest rate effective percentage			16.00%	16.00%
Principal amount			$ 3,000	$ 3,000
Number of shares issued													940,243
June 2023 Term Loan [Member]
Line of Credit Facility [Line Items]
Interest rate effective percentage	10.25%										16.80%			16.80%
Deferred debt charges											$ 24,000			$ 24,000
Amortization of deferred debt charges											$ 1,800			$ 2,200
Principal amount	$ 75,000
Term debt description														The June 2023 Revolving Credit Facility, the June 2023 Term Loan and the Subordinated Term Loan are subject to certain cross-default provisions under the intercreditor agreement. In addition, the June 2023 Revolving Credit Facility, the June 2023 Term Loan and the Subordinated Term Loan agreements include covenants, which reduce the available borrowing base collateral under the June 2023 Revolving Credit Facility initially by $19.0 million (the “Minimum Excess Availability Reserve”). During the terms of the agreements, the Minimum Excess Availability Reserve could be decreased by up to $9.0 million, which will make the Minimum Excess Availability Reserve $10.0 million, upon the Company’s achievement of certain financial conditions defined in the agreements. As of September 30, 2023, the Minimum Excess Availability Reserve was $19.0 million. Furthermore, the June 2023 Revolving Credit Facility, the June 2023

v3.23.3

Accrued expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Accrued hauler expenses	$ 63,049	$ 44,773
Accrued compensation	15,026	43,054
Accrued income taxes		9
Accrued Mergers transaction expenses		13,433
FPA Settlement Liability (as defined in Note 10)	2,000
Other accrued expenses	3,591	6,733
Total accrued expenses	$ 83,666	$ 108,002

v3.23.3

Accrued expenses (Details Narrative) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
Payables and Accruals [Abstract]
RSUs granted amount	$ 8,200
Amount of rollover consideration	26,800
Gain on settlement of incentive compensation	$ 18,600

v3.23.3

Goodwill and other intangibles (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 26,267	$ 26,267
Accumulated Amortization	(17,802)	(15,386)
Net Carrying Amount	8,465	10,881
Domain Name [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	835	835
Accumulated Amortization
Net Carrying Amount	835	835
Finite-Lived Intangible Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	25,432	25,432
Accumulated Amortization	(17,802)	(15,386)
Net Carrying Amount	$ 7,630	$ 10,046
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	5 years	5 years
Gross Carrying Amount	$ 728	$ 728
Accumulated Amortization	(728)	(728)
Net Carrying Amount
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	20,976	20,976
Accumulated Amortization	(14,061)	(12,141)
Net Carrying Amount	$ 6,915	$ 8,835
Customer Relationships [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	2 years	2 years
Customer Relationships [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	8 years	8 years
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 550	$ 550
Accumulated Amortization	(550)	(550)
Net Carrying Amount
Noncompete Agreements [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	3 years	3 years
Noncompete Agreements [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	4 years	4 years
Technology Equipment [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	3 years	3 years
Gross Carrying Amount	$ 3,178	$ 3,178
Accumulated Amortization	(2,298)	(1,967)
Net Carrying Amount	$ 715	$ 1,211

v3.23.3

Goodwill and other intangibles (Details 1) $ in Thousands	Sep. 30, 2023 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2023	$ 804
2024	3,110
2025	2,559
2026	1,157
Total future amortization of intangible assets	$ 7,630

v3.23.3

Goodwill and other intangibles (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 800	$ 800	$ 2,400	$ 2,500

v3.23.3

Stockholders' (deficit) equity (Details) - shares	Sep. 30, 2023	Dec. 31, 2022
Class of Stock [Line Items]
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Equity [Member]
Class of Stock [Line Items]
Total shares authorized	975,000,000	975,000,000
Total shares issued	39,229,339	21,418,861
Total shares outstanding	39,229,339	21,418,861
Common Class A [Member]
Class of Stock [Line Items]
Common stock, shares authorized	690,000,000	690,000,000
Common stock, shares issued	34,803,951	6,985,869
Common stock, shares outstanding	34,803,951	6,985,869
Common Class A [Member] | Equity [Member]
Class of Stock [Line Items]
Common stock, shares authorized	690,000,000	690,000,000
Common stock, shares issued	34,803,951	6,985,869
Common stock, shares outstanding	34,803,951	6,985,869
Common Class V [Member]
Class of Stock [Line Items]
Common stock, shares authorized	275,000,000	275,000,000
Common stock, shares issued	4,425,388	14,432,992
Common stock, shares outstanding	4,425,388	14,432,992
Common Class V [Member] | Equity [Member]
Class of Stock [Line Items]
Common stock, shares authorized	275,000,000	275,000,000
Common stock, shares issued	4,425,388	14,432,992
Common stock, shares outstanding	4,425,388	14,432,992
Preferred Stock [Member] | Equity [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding

v3.23.3

Stockholders’ (deficit) equity (Details Narrative)	9 Months Ended
	Sep. 30, 2023 shares
Equity [Abstract]
Number of common stock exchanged	10,007,604

v3.23.3

Warrants (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended			3 Months Ended	9 Months Ended
	Jun. 07, 2023	Aug. 15, 2022	Sep. 30, 2023	Jun. 30, 2023	Dec. 22, 2022	Sep. 30, 2023	Sep. 30, 2023	Mar. 22, 2023	Dec. 31, 2022	Nov. 30, 2022	Nov. 18, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants, description		Company assumed a total of 3,752,107 outstanding warrants to purchase one share of the Company’s Class A Common Stock with an exercise price of $92.00 per share.
Warrant liabilities											$ 2,600
Public Warrants [Member] | Private Placement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Outstanding warrants		1,976,560
Private Warrants [Member] | Private Placement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Outstanding warrants		1,775,547
Warrant [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrant agreements, description							Company concurrently entered into warrant agreements and issued the Subordinated Term Loan Warrants under the condition that if the Company did not repay the Subordinated Term Loan on or prior to the original maturity date of December 22, 2022, the lender would receive the right to purchase up to the number of shares of Class A Common Stock worth $2.0 million at the exercise price of $0.08 per share at any time after the original maturity date prior to the earlier of the date principal and interest on all outstanding term loans under this Subordinated Term Loan agreement are repaid, and the tenth anniversary of the issuance date. Additionally, if the Company did not repay the Subordinated Term Loan on or prior to the original maturity date, the Subordinated Term Loan Warrants would be exercisable for additional $0.2 million of Class A Common Stock each additional full calendar month after the maturity date until the Company fully repays the principal and interest in cash (the “Additional Subordinated Term Loan Warrants”). If the Company repaid the Subordinated Term Loan on or prior to the original maturity date, the Subordinated Term Loan Warrants would automatically terminate and be voided and no Subordinated Term Loan Warrant would be exercisable.
Term Loan Warrants [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants converted into common stock, amount			$ 1,200	$ 1,100	$ 2,600
Warrants converted into common stock, shares			291,145	319,923
Term Loan Warrants [Member] | Firstamendment [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrant liabilities								$ 250
Term Loan Warrants [Member] | Second Amendment [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrant liabilities								$ 350
Term Loan Warrants [Member] | Additions
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrant liabilities	$ 380
YA Warrant [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrant liabilities			$ 20,000			$ 20,000	$ 20,000		$ 20,000
Warrant purchase price										$ 6,000
Warrant is exercisable amount										$ 20,000
Warrant exercise price										$ 0.0008
Advisor Warrant [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Outstanding warrants										62,500
Warrant exercise price										$ 0.08
Loss on change in fair value			100			100	100
June 2023 Term Loan Warrants [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants converted into common stock, shares	2,121,605
Warrant exercise price	$ 0.01
Fair value of warrants	$ 9,400		$ 6,500	$ 9,800
Change in fair value of warrants						$ 3,300	$ 2,900

v3.23.3

Forward Purchase Agreement (Details Narrative)	9 Months Ended
	Sep. 30, 2023
Forward Purchase Agreement
Termination Agreement	the FPA Sellers entered into the Forward Purchase Agreement for an OTC Equity Prepaid Forward Transaction (the “Forward Purchase Transaction”). On November 30, 2022, the Company and the FPA Sellers entered into the FPA Termination Agreement and terminated the Forward Purchase Agreement. Pursuant to the FPA Termination Agreement, (i) the Company made a one-time $6.0 million cash payment to the FPA Sellers upon execution of the FPA Termination Agreement and agreed to make a $2.0 million payment to the FPA Sellers, which can be settled in cash or shares of Class A Common Stock at the Company’s sole option, on or around the earlier of (a) May 30, 2024 (the “FPA Lock-Up Date”), and (b) six months following 90% or more of the YA Convertible Debentures is repaid or converted into shares of Class A Common Stock (the “FPA Earlier Lock-Up Date”), (ii) the FPA Sellers forfeited and returned to the Company 277.765 shares of Class A Common Stock which the Company subsequently canceled, and further agreed not to transfer any of 267,606 shares of Class A Common Stock the FPA Sellers retained until the earlier of (a) the FPA Lock-Up Date, and (b) the FPA Earlier Lock-Up Date. As more than 90% of the YA Convertible Debentures were converted into shares of Class A Common Stock on August 25, 2023, the FPA Earlier Lock-Up Date was set as February 25, 2024. The value of 277,765 shares of Class A Common Stock returned by the FPA Seller and subsequently canceled by the Company was $4.6 million as of the FPA Termination Agreement execution date, which was recognized in common stock – Class A and accumulated deficit on the consolidated balance sheet. The $2.0 million obligation (the “FPA Settlement Liability”) has been included in accrued expenses on the accompanying condensed consolidated balance sheets as of September 30, 2023 and other long-term liabilities as of December 31, 2022

v3.23.3

Yorkville Facilities (Details Narrative) - USD ($) $ in Thousands	1 Months Ended
	Aug. 31, 2022	Sep. 30, 2023	Nov. 30, 2022
Defined Benefit Plan Disclosure [Line Items]
Standby equity purchase agreement, description	Company entered into a Standby Equity Purchase Agreement (“SEPA”) with the Yorkville Investor, which was subsequently amended on November 30, 2022. Pursuant to the SEPA, the Company had the right to sell to the Yorkville Investor, from time to time, up to $200.0 million of shares of Class A Common Stock until the earlier of the 36-month anniversary of the SEPA, and the date on which the facility has been fully utilized, subject to certain limitations and conditions set forth in the SEPA, including the requirement that there be an effective registration statement registering such shares and limitations on the volume of shares that may be sold. Shares were to be sold to the Yorkville Investor at a price equal to 97% of the lowest daily VWAP of the Class A Common Stock during the three consecutive trading days immediately prior to any notice to sell such securities provided by the Company. The Yorkville Investor was not permitted to beneficially own greater than 9.99% of the outstanding shares of Class A Common Stock
Principal Amount			$ 7,000
Purchase price			7,000
Noncurrent assets			$ 2,000
Yorkville [Member] | Common Class A [Member]
Defined Benefit Plan Disclosure [Line Items]
Shares, Issued	25,000
Yorkville Facilities [Member]
Defined Benefit Plan Disclosure [Line Items]
Principal Amount		$ 10,000
Purchase price		10,000
Noncurrent assets		$ 2,100

v3.23.3

Cantor Sales Agreement (Details Narrative) - USD ($) $ in Thousands		9 Months Ended
	Sep. 05, 2023	Sep. 30, 2023	Sep. 30, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Proceeds from common stock		$ 24,767
Cantor Sales Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Proceeds from common stock	$ 50,000

v3.23.3

Equity-based compensation (Details)	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Equity [Abstract]
Options outstanding, beginning balance	182,086
Weighted average grant date fair value, beginning | $ / shares	$ 15.84
Options granted	2,016,639
Weighted average grant date fair value, granted	8.10
Options vested	(986,461)
Weighted average grant date fair value, vested | $ / shares	$ 8.98
Options forfeited/redeemed	(45,256)
Weighted average grant date fair value, forfeited/redeemed | $ / shares	$ 15.09
Options outstanding,ending balance	1,167,008
Weighted average grant date fair value, ending | $ / shares	$ 8.30

v3.23.3

Equity-based compensation (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Aug. 15, 2022
Class of Stock [Line Items]
Equity compensation costs	$ 2,100	$ 90,600	$ 13,200	$ 95,300
Exchange of vested RSUs	642,418		642,418
Exchange of vested DSUs	38,350		38,350
Unrecognized compensation	$ 5,100		$ 5,100
Weighted-average period			7 months 6 days
Common Class A [Member]
Class of Stock [Line Items]
Common stock, shares authorized	690,000,000		690,000,000		690,000,000
Common stock, shares issued	34,803,951		34,803,951		6,985,869
Common stock, shares outstanding	34,803,951		34,803,951		6,985,869
2022 Plan [Member] | Common Class A [Member]
Class of Stock [Line Items]
Common stock, shares authorized						3,625,000
Common stock, shares issued						357,409
Common stock, shares outstanding						357,409

v3.23.3

Loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands	2 Months Ended	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net loss		$ (30,173)	$ (211,125)	$ (62,441)	$ (263,738)
Less: Net loss attributable to non-controlling interests		(2,519)	(16,933)	(18,456)	(16,933)
Net loss attributable to Rubicon Technologies, Inc		$ (27,654)	$ (17,808)	$ (43,985)	$ (17,808)
Weighted average shares outstanding, basic		32,381,649	6,083,847	17,786,466	6,083,847
Weighted average shares outstanding, diluted		32,381,649	6,083,847	17,786,466	6,083,847
Net loss per Class A Common share - basic		$ (0.85)	$ (2.93)	$ (2.47)	$ (2.93)
Net loss per Class A Common share - diluted		$ (0.85)	$ (2.93)	$ (2.47)	$ (2.93)
Common Class A [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net loss	$ (34,741)
Less: Net loss attributable to non-controlling interests	(16,933)
Net loss attributable to Rubicon Technologies, Inc	$ (17,808)
Weighted average shares outstanding, basic	6,083,847
Weighted average shares outstanding, diluted	6,083,847
Net loss per Class A Common share - basic	$ (2.93)
Net loss per Class A Common share - diluted	$ (2.93)

v3.23.3

Fair value measurements (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022
Redemption Feature Derivative [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Begiining balances	$ (2,231)	$ (826)
Additions		(474)
Changes in fair value	1,103	(931)
Reclassified to level 2
Reclassified to equity	1,128
Ending balances		(2,231)
Additional Subordinated Term Loan Warrants Derivative [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Begiining balances	(12,816)
Additions		(12,264)
Changes in fair value	(442)	(1,602)
Reclassified to level 2	1,200	1,050
Reclassified to equity
Ending balances	(12,058)	(12,816)
Subordinated Term Loan Warrants Makewhole Derivative [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Begiining balances
Additions
Changes in fair value	(1,906)
Reclassified to level 2
Reclassified to equity
Ending balances	(1,906)
Earn Out Liability [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Begiining balances	(310)	(5,600)
Additions
Changes in fair value	150	5,290
Reclassified to level 2
Reclassified to equity
Ending balances	(160)	$ (310)
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Warrant liabilities
Redemption Feature Derivative
Additional Subordinated Term Loan Warrants Derivative
Subordinated Term Loan Warrants Make-Whole Derivative
Earn-out liabilities
Total
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Warrant liabilities	(26,502)		(20,890)
Redemption Feature Derivative
Additional Subordinated Term Loan Warrants Derivative
Subordinated Term Loan Warrants Make-Whole Derivative
Earn-out liabilities
Total	(26,502)		(20,890)
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Warrant liabilities
Redemption Feature Derivative			(826)
Additional Subordinated Term Loan Warrants Derivative	(12,058)
Subordinated Term Loan Warrants Make-Whole Derivative	(1,906)
Earn-out liabilities	(160)		(5,600)
Total	$ (14,124)		$ (6,426)

v3.23.3

Fair value measurements (Details 1) - Redemption Feature Derivative [Member] - $ / shares	1 Months Ended	9 Months Ended	12 Months Ended
	Feb. 03, 2023	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Price of Class A Common Stock	$ 1.56		$ 1.78
Risk-free interest rate	4.63%	(0.00%)	4.60%
Yield	13.60%	(0.00%)	15.60%
Expected volatility	50.00%	(0.00%)	50.00%

v3.23.3

Fair value measurements (Details 2) - Subordinated Term Loan Warrants Makewhole Derivative [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Price of Class A Common Stock	$ 2.08	$ 14.24
Strike Price of Class A Common Stock	$ 18.96	$ 18.96
Risk-free interest rate	4.70%	4.00%
Expected volatility	85.00%	65.00%
Expiration Date	December 12, 2027	December 12, 2027

v3.23.3

Fair value measurements (Details 3) - Earn Out Liability [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Price of Class A Common Stock	$ 2.08	$ 1.78
Risk-free interest rate	4.70%	4.00%
Expected volatility	85.00%	65.00%
Expected remaining term	3 years 10 months 24 days	4 years 7 months 6 days

v3.23.3

Fair value measurements (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Advisor Warrants [Member]
Class of Warrant or Right [Line Items]
Exercise prices	$ 0.08	$ 0.08
YA Warrant [Member]
Class of Warrant or Right [Line Items]
Exercise prices	$ 0.0008	$ 0.0008
Additional Subordinated Term Loan Warrants [Member]
Class of Warrant or Right [Line Items]
Value of derivative	$ 350
Discount rate	15.00%

v3.23.3

Commitments and contingencies (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2023	$ 309
2024	790
Total minimum lease payments	1,099
Less: Imputed interest	(114)
Total operating lease liabilities	$ 985

v3.23.3

Commitments and contingencies (Details Narrative) - USD ($) $ in Thousands	1 Months Ended	9 Months Ended
	Jun. 30, 2024	Sep. 30, 2023	Oct. 31, 2024
Finite-Lived Intangible Assets [Line Items]
Lease agreement description		Company terminated an office lease agreement and entered into an amended agreement for another office lease agreement, which in total, contributed to a decrease of $1.6 million in computers, equipment and software, $1.6 million in furniture and fixtures, $2.3 million in leasehold improvements and $4.8 million in accumulated amortization and depreciation, resulting in a $0.8 million of loss on disposals, which was recognized in other expense on the accompanying condensed consolidated statements of operations for the three months and nine months ended September 30, 2023.
Sublease income		$ 600
Due in the next 12 months		19,800
Subscription fee		$ 5,600
Subsequent Event [Member]
Finite-Lived Intangible Assets [Line Items]
Thereafter			$ 3,800
Subscription fee	$ 16,000
Lease Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Lease agreement description		Company terminated the lease agreement for one of its office facilities and entered into an amendment to another lease agreement. As a result, the Company derecognized $1.2 million of operating right-of-use assets and $1.4 million of operating lease liabilities on the consolidated balance sheet, with a gain of $0.2 million recorded in other income (expense) on the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2023.

v3.23.3

Related party transactions (Details Narrative) - USD ($) $ in Thousands	1 Months Ended		9 Months Ended
	Sep. 15, 2023	Mar. 20, 2023	Sep. 30, 2023	Sep. 22, 2023	Mar. 16, 2023	Nov. 30, 2022
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Purchase price						$ 7,000
Deferred Finance Costs		$ 15,000
Number of shares issued			7,104,556
Rodina [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Letter of Credit				$ 15,000
Rodina Warrant [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Number of warrants granted	498,119
Felipe Chico Hernandez [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Common stock shares issued					1,222,222
Purchase price					$ 1,100

v3.23.3

Concentrations (Details Narrative) - Customer Concentration Risk [Member]	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Revenue Benchmark [Member] | Two Customer [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	33.00%
Revenue Benchmark [Member] | Total shares issued
Concentration Risk [Line Items]
Concentration Risk, Percentage			20.00%
Revenue Benchmark [Member] | Two Customers [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage		25.00%		27.00%
Accounts Receivable [Member] | Two Customers [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage			40.00%
Accounts Receivable [Member] | Three Customers [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage					38.00%

v3.23.3

Subsequent events (Details Narrative) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended
	Oct. 02, 2023	Sep. 30, 2023	Sep. 30, 2023
Subsequent Event [Line Items]
Number of shares issued			7,104,556
Payment of subscription fee		$ 3,800
Subsequent Event [Member] | PIPE Investor [Member]
Subsequent Event [Line Items]
Number of shares issued	1,802,885

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