08/14/2024 | Press release | Distributed by Public on 08/14/2024 07:06
Filed pursuant to Rule 424(b)(3)
Registration No. 333-248242
PROSPECTUS SUPPLEMENT No. 43
(to Prospectus dated September 2, 2020)
PARKERVISION, INC.
5,871,584 Shares of Common Stock
This Prospectus Supplement relates to the prospectus dated September 2, 2020, as amended and supplemented from time to time (the "Prospectus"), which permits the resale by the selling stockholders listed in the Prospectus of up to 5,871,584 shares of our common stock, par value $0.01 per share ("Common Stock") consisting of an aggregate of 5,871,584 shares of Common Stock issued pursuant to securities purchase agreements dated April 29, 2020, May 22, 2020, June 8, 2020, June 29, 2020, July 24, 2020, and August 19, 2020.
We will not receive proceeds from the sale of the shares of Common Stock by the selling stockholders.
This Prospectus Supplement is being filed to update and supplement the information previously included in the Prospectus with the information contained in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (the "SEC") on August 13, 2024. Accordingly, we have attached the 10-Q to this prospectus supplement. You should read this prospectus supplement together with the prospectus, which is to be delivered with this prospectus supplement.
Any statement contained in the Prospectus shall be deemed to be modified or superseded to the extent that information in this Prospectus Supplement modifies or supersedes such statement. Any statement that is modified or superseded shall not be deemed to constitute a part of the Prospectus except as modified or superseded by this Prospectus Supplement.
This Prospectus Supplement should be read in conjunction with, and may not be delivered or utilized without, the Prospectus.
Our Common Stock is listed on the OTCQB Venture Capital Market under the ticker symbol "PRKR."
You should read this prospectus and any prospectus supplement carefully before you invest in any of our securities.
Investing in our securities involves a high degree of risk. See "Risk Factors" beginning on page 5 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined whether this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this Prospectus Supplement is August 14, 2024.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2024
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________to____________
Commission file number000-22904
PARKERVISION, INC.
(Exact name of registrant as specified in its charter)
Florida |
59-2971472 |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No) |
4446-1A Hendricks Avenue, Suite 354
Jacksonville, Florida 32207
(Address of principal executive offices)
(904) 732-6100
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
Trading Symbol |
Name of Each Exchange on Which Registered |
None |
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such file). 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 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 August 8, 2024, 89,606,984 shares of the issuer's common stock, $.01 par value, were outstanding.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION |
|
Item 1. Financial Statements (Unaudited) |
2 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
19 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
23 |
Item 4. Controls and Procedures |
23 |
PART II - OTHER INFORMATION |
|
Item 1. Legal Proceedings |
24 |
Item 1A. Risk Factors |
24 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
24 |
Item 3. Defaults Upon Senior Securities |
24 |
Item 4. Mine Safety Disclosures |
24 |
Item 5. Other Information |
24 |
Item 6. Exhibits |
25 |
SIGNATURES |
26 |
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
PARKERVISION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except par value data)
June 30, 2024 |
December 31, 2023 |
|||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 1,025 | $ | 2,560 | ||||
Prepaid expenses |
70 | 61 | ||||||
Other current assets |
36 | 34 | ||||||
Total current assets |
1,131 | 2,655 | ||||||
Intangible assets, net |
945 | 1,055 | ||||||
Other assets, net |
312 | 313 | ||||||
Total assets |
$ | 2,388 | $ | 4,023 | ||||
CURRENT LIABILITIES: |
||||||||
Accounts payable |
$ | 438 | $ | 573 | ||||
Accrued expenses: |
||||||||
Salaries and wages |
25 | 23 | ||||||
Professional fees |
55 | 67 | ||||||
Other accrued expenses |
462 | 447 | ||||||
Related party note payable, current portion |
136 | 134 | ||||||
Convertible notes, current portion |
1,300 | 1,045 | ||||||
Total current liabilities |
2,416 | 2,289 | ||||||
LONG-TERM LIABILITIES: |
||||||||
Secured contingent payment obligation |
29,235 | 29,402 | ||||||
Unsecured contingent payment obligations |
7,063 | 7,618 | ||||||
Related party note payable, net of current portion |
271 | 340 | ||||||
Convertible notes, net of current portion |
3,588 | 3,893 | ||||||
Total long-term liabilities |
40,157 | 41,253 | ||||||
Total liabilities |
42,573 | 43,542 | ||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
SHAREHOLDERS' DEFICIT: |
||||||||
Common stock, $0.01 par value, 175,000 shares authorized, 88,890 and 87,681 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively |
889 | 877 | ||||||
Additional paid-in capital |
393,656 | 393,314 | ||||||
Accumulated deficit |
(434,730 | ) | (433,710 | ) | ||||
Total shareholders' deficit |
(40,185 | ) | (39,519 | ) | ||||
Total liabilities and shareholders' deficit |
$ | 2,388 | $ | 4,023 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PARKERVISION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(UNAUDITED)
(in thousands, except per share data)
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
Revenue |
$ | - | $ | - | $ | 25,000 | ||||||||||
Cost of sales |
(58 | ) | (63 | ) | (117 | ) | (106 | ) | ||||||||
Gross margin |
(58 | ) | (63 | ) | (117 | ) | 24,894 | |||||||||
Selling, general and administrative expenses |
683 | 1,125 | 1,457 | 13,210 | ||||||||||||
Total operating expenses |
683 | 1,125 | 1,457 | 13,210 | ||||||||||||
Other income |
16 | - | 40 | - | ||||||||||||
Interest expense |
(104 | ) | (107 | ) | (208 | ) | (213 | ) | ||||||||
Change in fair value of contingent payment obligations |
502 | 2,728 | 722 | 3,077 | ||||||||||||
Total interest and other |
414 | 2,621 | 554 | 2,864 | ||||||||||||
Provision for income taxes |
- | - | - | - | ||||||||||||
Net (loss) income |
(327 | ) | 1,433 | (1,020 | ) | 14,548 | ||||||||||
Other comprehensive income, net of tax |
- | - | - | - | ||||||||||||
Comprehensive (loss) income |
$ | (327 | ) | $ | 1,433 | $ | (1,020 | ) | $ | 14,548 | ||||||
(Loss) earnings per common share |
||||||||||||||||
Basic |
$ | (0.00 | ) | $ | 0.02 | $ | (0.01 | ) | $ | 0.17 | ||||||
Diluted |
$ | (0.00 | ) | $ | 0.01 | $ | (0.01 | ) | $ | 0.12 | ||||||
Weighted average common shares outstanding |
||||||||||||||||
Basic |
88,683 | 85,263 | 88,424 | 84,570 | ||||||||||||
Diluted |
88,683 | 120,061 | 88,424 | 119,700 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PARKERVISION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
(UNAUDITED)
(in thousands)
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
Total shareholders' deficit, beginning balances |
$ | (40,023 | ) | $ | (36,877 | ) | $ | (39,519 | ) | $ | (50,689 | ) | ||||
Common stock |
||||||||||||||||
Beginning balances |
884 | 845 | 877 | 812 | ||||||||||||
Issuance of common stock and warrants in private offerings, net of issuance costs |
- | - | - | 8 | ||||||||||||
Issuance of common stock upon exercise of options and warrants |
- | - | - | 1 | ||||||||||||
Issuance of common stock, warrants, and options for services |
- | 3 | 1 | 5 | ||||||||||||
Issuance of common stock upon conversion and payment of interest-in-kind on convertible debt |
5 | 7 | 11 | 27 | ||||||||||||
Share-based compensation, net of shares withheld for taxes |
- | - | - | 2 | ||||||||||||
Ending balances |
889 | 855 | 889 | 855 | ||||||||||||
Additional paid-in capital |
||||||||||||||||
Beginning balances |
393,496 | 392,388 | 393,314 | 391,724 | ||||||||||||
Issuance of common stock and warrants in private offerings, net of issuance costs |
- | (14 | ) | - | 113 | |||||||||||
Issuance of common stock upon exercise of options and warrants |
- | - | - | 3 | ||||||||||||
Issuance of common stock, warrants, and options for services |
- | 36 | 18 | 115 | ||||||||||||
Issuance of common stock upon conversion and payment of interest-in-kind on convertible debt |
83 | 79 | 175 | 349 | ||||||||||||
Share-based compensation, net of shares withheld for taxes |
77 | 129 | 149 | 314 | ||||||||||||
Ending balances |
393,656 | 392,618 | 393,656 | 392,618 | ||||||||||||
Accumulated deficit |
||||||||||||||||
Beginning balances |
(434,403 | ) | (430,110 | ) | (433,710 | ) | (443,225 | ) | ||||||||
Comprehensive (loss) income for the period |
(327 | ) | 1,433 | (1,020 | ) | 14,548 | ||||||||||
Ending balances |
(434,730 | ) | (428,677 | ) | (434,730 | ) | (428,677 | ) | ||||||||
Total shareholders' deficit, ending balances |
$ | (40,185 | ) | $ | (35,204 | ) | $ | (40,185 | ) | $ | (35,204 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PARKERVISION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Six Months Ended June 30, |
||||||||
2024 |
2023 |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net (loss) income |
$ | (1,020 | ) | $ | 14,548 | |||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |
||||||||
Depreciation and amortization |
118 | 131 | ||||||
Share-based compensation |
149 | 316 | ||||||
Gain on changes in fair value of contingent payment obligations |
(722 | ) | (3,077 | ) | ||||
(Gain) loss on disposal/impairment of equipment and intangible assets |
(7 | ) | 41 | |||||
Paid in kind interest expense |
186 | 202 | ||||||
Changes in operating assets and liabilities: |
||||||||
Prepaid expenses and other assets |
8 | 261 | ||||||
Accounts payable and accrued expenses |
(130 | ) | (156 | ) | ||||
Total adjustments |
(398 | ) | (2,282 | ) | ||||
Net cash (used in) provided by operating activities |
(1,418 | ) | 12,266 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchases of property and equipment |
- | (1 | ) | |||||
Net cash used in investing activities |
- | (1 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Net proceeds from issuance of common stock in private offerings |
- | 121 | ||||||
Net proceeds from exercise of options and warrants |
- | 4 | ||||||
Net proceeds from debt financings |
- | 700 | ||||||
Proceeds from contingent payment obligation |
- | 5,000 | ||||||
Repayment of contingent payment obligation |
- | (13,925 | ) | |||||
Principal payments on long-term debt |
(117 | ) | (74 | ) | ||||
Net cash used in financing activities |
(117 | ) | (8,174 | ) | ||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
(1,535 | ) | 4,091 | |||||
CASH AND CASH EQUIVALENTS, beginning of period |
2,560 | 109 | ||||||
CASH AND CASH EQUIVALENTS, end of period |
$ | 1,025 | $ | 4,200 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PARKERVISION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Description of Business
ParkerVision, Inc. ("ParkerVision", "we" or the "Company") is in the business of innovating fundamental wireless hardware technologies and products.
We have designed and developed proprietary radio frequency ("RF") technologies and integrated circuits based on those technologies, and we license those technologies to others for use in wireless communication products. We currently have five licensees of our technologies. We have expended significant financial and other resources to research and develop our RF technologies and to obtain patent protection for those technologies in the United States of America ("U.S.") and certain foreign jurisdictions. We believe certain patents protecting our proprietary technologies have been broadly infringed by others, and therefore the primary focus of our business plan is the enforcement of our intellectual property rights through patent licensing and infringement litigation efforts. We currently have patent enforcement actions ongoing in various U.S. district courts against mobile handset, smart television and other WiFi product providers, as well as semiconductor suppliers, for the infringement of a number of our RF patents. We have made significant investments in developing and protecting our technologies.
2. Liquidity and Going Concern
For the six months ended June 30, 2024, we incurred a net loss of approximately $1.0million and incurred negative cash flows from operations of approximately $1.4 million. At June 30, 2024, we had cash and cash equivalents of approximately $1.0 million and an accumulated deficit of approximately $434.7 million. At June 30, 2024, we had $2.4 million in current liabilities, including approximately $1.3 million in convertible debt that matures over the next twelve months. In addition, a significant amount of future proceeds that we may receive from our patent enforcement and licensing programs will first be utilized to repay borrowings and legal fees and expenses under our contingent funding arrangements. These circumstances raise substantial doubt about our ability to continue to operate as a going concern for a period of one year following the issue date of these condensed consolidated financial statements.
Our current capital resources are not sufficient to meet our liquidity needs for the next twelve months and we will be required to seek additional capital. Our ability to meet our liquidity needs for the next twelve months is dependent upon (i) our ability to successfully negotiate licensing agreements and/or settlements relating to the use of our technologies by others in excess of our contingent payment obligations, (ii) our ability to control operating costs, (iii) our ability to successfully negotiate extensions to the maturity date for certain convertible notes, and/or (iv) our ability to obtain additional debt or equity financing. We expect that proceeds received by us from patent enforcement actions and technology licenses over the next twelve months may not alone be sufficient to cover our working capital requirements.
We expect to continue to invest in the support of our patent licensing and enforcement program. The long-term continuation of our business plan is dependent upon the generation of sufficient cash flows from our technologies and/or products to offset expenses and debt obligations. In the event that we do not generate sufficient cash flows, we will be required to obtain additional funding through public or private debt or equity financing or contingent fee arrangements and/or reduce operating costs. Failure to generate sufficient cash flows, raise additional capital through debt or equity financings or contingent fee arrangements, and/or reduce operating costs will have a material adverse effect on our ability to meet our long-term liquidity needs and achieve our intended long-term business objectives.
3. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements for the three and six month periods ended June 30, 2024 were prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Operating results for the six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, or future years. All normal and recurring adjustments which, in the opinion of management, are necessary for a fair statement of the consolidated financial condition and results of operations have been included.
The year-end condensed consolidated balance sheet data was derived from audited financial statements for the year ended December 31, 2023. Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with GAAP have been omitted from these interim condensed consolidated financial statements. These interim condensed consolidated financial statements should be read in conjunction with our latest Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 Annual Report"). Certain reclassifications have been made to prior period amounts to conform to the current period presentation.
The condensed consolidated financial statements include the accounts of ParkerVision, Inc. and its wholly-owned German subsidiary, ParkerVision GmbH, after elimination of all intercompany transactions and accounts.
4. Accounting Policies
There have been no changes in accounting policies from those stated in our 2023 Annual Report. We do not expect any newly effective accounting standards to have a material impact on our financial position, results of operations or cash flows when they become effective.
5. Revenue
We have an active monitoring and enforcement program with respect to our intellectual property rights that includes seeking appropriate compensation from third parties that utilize or have utilized our intellectual property without a license. As a result, we may receive payments as part of a settlement or in the form of court-awarded damages for a patent infringement dispute. We recognize such payments as revenue in accordance with Accounting Standards Codification ("ASC") 606, "Revenue from Contracts with Customers."
No revenue was recognized during the six months ended June 30, 2024. We recognized $25.0 million of revenue during the six-month period ended June 30, 2023 from a patent license and settlement agreement with a third party for their use of our technologies. Our performance obligations were satisfied, and therefore revenue recognized, upon transfer of the licensed rights and dismissal of all patent enforcement actions between the parties.
6. (Loss) Earnings per Common Share
Basic (loss) earnings per common share is determined based on the weighted-average number of common shares outstanding during each period. Diluted loss per common share is the same as basic loss per common share for the three and six months ended June 30, 2024 as all common share equivalents are excluded from the calculation because their effect is anti-dilutive. The dilutive effect of outstanding options and warrants is calculated using the treasury stock method. The dilutive effect of shares underlying convertible notes is calculated using the if-converted method. The following table shows the computation of basic and diluted (loss) earnings per share for the six months ended June 30, 2024 and 2023 (net (loss) income and shares in thousands):
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
Numerator: |
||||||||||||||||
Net (loss) income |
$ | (327 | ) | $ | 1,433 | $ | (1,020 | ) | $ | 14,548 | ||||||
Effect of dilutive securities |
- | 102 | - | 202 | ||||||||||||
Net (loss) income adjusted for dilutive effect |
(327 | ) | 1,535 | (1,020 | ) | 14,750 | ||||||||||
Denominator: |
||||||||||||||||
Weighted-average basic shares outstanding |
88,683 | 85,263 | 88,424 | 84,570 | ||||||||||||
Effect of dilutive securities |
- | 34,798 | - | 35,130 | ||||||||||||
Weighted-average diluted shares |
88,683 | 120,061 | 88,424 | 119,700 | ||||||||||||
Basic (loss) earnings per share |
$ | (0.00 | ) | $ | 0.02 | $ | (0.01 | ) | $ | 0.17 | ||||||
Diluted (loss) earnings per share |
$ | (0.00 | ) | $ | 0.01 | $ | (0.01 | ) | $ | 0.12 |
Diluted (loss) earnings per common share for the six months ended June 30, 2024 and 2023 excludes shares underlying options, warrants, and convertible notes that are anti-dilutive. The anti-dilutive common share equivalents at June 30, 2024 and 2023 were as follows (in thousands):
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
Options outstanding |
27,134 | 25,534 | 27,134 | 17,519 | ||||||||||||
Warrants outstanding |
10,346 | 10,346 | 10,346 | 7,346 | ||||||||||||
Shares underlying convertible notes |
35,925 | - | 35,925 | - | ||||||||||||
73,405 | 35,880 | 73,405 | 24,865 |
7. Intangible Assets
Intangible assets consist of the following (in thousands):
June 30, 2024 |
December 31, 2023 |
|||||||
Patents and copyrights |
$ | 10,464 | $ | 10,431 | ||||
Accumulated amortization |
(9,519 | ) | (9,376 | ) | ||||
$ | 945 | $ | 1,055 |
8. Related Party Note Payable
We have an unsecured promissory note of approximately $0.4 million payable to Sterne, Kessler, Goldstein, & Fox, PLLC ("SKGF"), a related party, for outstanding unpaid fees for legal services. The SKGF note, as amended from time to time, accrues interest at a rate of 4% per annum, requires monthly payments of principal and interest of $12,500 with a final balloon payment of approximately $0.02 million in April 2027. We are currently in compliance with all the terms of the note. At June 30, 2024, we estimate the note has an aggregate fair value of approximately $0.33 million and would be categorized within Level 2 of the fair value hierarchy.
9. Convertible Notes
For the six months ended June 30, 2024, we had no conversions of our convertible notes and we repaid an aggregate of $0.05 million of notes at maturity. For the six months ended June 30, 2024, we recognized interest expense of approximately $0.2 million related to the contractual interest on our convertible notes. During the six months ended June 30, 2024, we elected to pay $0.19 million of interest payments in shares of our common stock and issued approximately 1.1 million shares of our common stock as interest-in-kind payments.
At June 30, 2024, we estimate our convertible notes have an aggregate fair value of approximately $3.8 million and would be categorized within Level 2 of the fair value hierarchy.
Convertible notes payable at June 30, 2024 and December 31, 2023 consist of the following (in thousands):
Principal Outstanding as of |
||||||||||||||||||
June 30, |
December 31, |
|||||||||||||||||
Description |
Fixed Conversion Rate |
Stated Interest Rate |
Maturity Date |
2024 |
2023 |
|||||||||||||
Convertible note dated September 18, 2018 |
$ | 0.25 | 8.0 | % |
March 18, 2026 |
425 | 425 | |||||||||||
Convertible notes dated February/March 2019 |
$ | 0.25 | 8.0 | % |
February 28, 2026 to March 13, 2026 |
750 | 750 | |||||||||||
Convertible notes dated June 2019 |
$ | 0.10 | 8.0 | % |
December 1, 2024 1 |
150 | 150 | |||||||||||
Convertible notes dated June 2019 |
$ | 0.10 | 5.0 | % |
March 15, 2026 2 |
25 | 25 | |||||||||||
Convertible notes dated June/July 2019 |
$ | 0.10 | 8.0 | % |
January 15, 2026 to March 19, 2026 3 |
70 | 120 | |||||||||||
Convertible notes dated July 18, 2019 |
$ | 0.08 | 7.5 | % |
December 1, 2024 4 |
700 | 700 | |||||||||||
Convertible note dated September 13, 2019 |
$ | 0.10 | 5.0 | % |
March 15, 2026 5 |
50 | 50 | |||||||||||
Convertible notes dated January 8, 2020 |
$ | 0.13 | 8.0 | % |
January 8, 2025 6 |
450 | 450 | |||||||||||
Convertible notes dated May-August 2022 |
$ | 0.13 | 8.0 | % |
May 10, 2027 to August 3, 2027 |
1,468 | 1,468 | |||||||||||
Convertible note dated January 11, 2023 |
$ | 0.11 | 9.0 | % |
January 11, 2028 7 |
500 | 500 | |||||||||||
Convertible notes dated January 13, 2023 |
$ | 0.16 | 9.0 | % |
January 13, 2028 |
200 | 200 | |||||||||||
Convertible note dated September 15, 2023 |
$ | 0.25 | 8.0 | % |
March 15, 2026 |
100 | 100 | |||||||||||
Total principal balance |
4,888 | 4,938 | ||||||||||||||||
Less current portion |
1,300 | 1,045 | ||||||||||||||||
$ | 3,588 | $ | 3,893 |
1 |
On June 3, 2024, this note was amended to extend the maturity date to December 1, 2024. |
2 | On May 10, 2024, this note was amended to extend its maturity date to March 15, 2026 and reduce its interest rate on a going forward basis from 8% to 5%. |
3 | Between June 18 and July 9, 2024, these notes were amended to extend the maturity dates to January 15, 2026 through March 19, 2026. |
4 | Between June 3, 2024 and July 8, 2024, these notes were amended to extend their maturity date from July 18, 2024 to December 1, 2024. |
5 | On May 10, 2024, this note, held by a director of ours, was amended to extend its maturity date to March 15, 2026 and reduce its interest rate on a going forward basis from 8% to 5%. |
6 | On July 8, 2024, a note with a face value of $400,000 was amended to provide for up to ten (10) one-year automatic extensions of the original maturity date, at the original stated interest rate, provided the holder does not revoke the extension option in writing at least ten (10) trading days prior to the then applicable maturity date. |
7 | On July 8, 2024, this note was amended to provide for up to ten (10) one-year automatic extensions of the original maturity date, at the original stated interest rate, provided the holder does not revoke the extension option in writing at least ten (10) trading days prior to the then applicable maturity date. In addition, the note was amended to reduce the conversion price from $0.16 to $0.11. |
10. Contingent Payment Obligations
Secured Contingent Payment Obligation
The following table provides a reconciliation of our secured contingent payment obligation, measured at estimated fair value, for the six months ended June 30, 2024 and the year ended December 31, 2023 (in thousands):
Six Months Ended June 30, 2024 |
Year Ended December 31, 2023 |
|||||||
Secured contingent payment obligation, beginning of period |
$ | 29,402 | $ | 40,708 | ||||
Borrowings |
- | 5,000 | ||||||
Repayments |
- | (13,925 | ) | |||||
Change in fair value |
(167 | ) | (2,381 | ) | ||||
Secured contingent payment obligation, end of period |
$ | 29,235 | $ | 29,402 |
Our secured contingent payment obligation consists of a secured, non-recourse note (the "Note") and a prepaid forward purchase contract (the "PPFPA") with Brickell Key Investments, LP ("Brickell"). The Note has a face value of $45.5 million ("Face Value"), accrues simple interest at a fixed rate, and matures on August 14, 2028. Payments under the Note will be made solely from proceeds from our patent assets, net of contingent fees payable to attorneys ("Distributions"). We are obligated to pay one hundred percent (100%) of the first $5.8 million in Distributions to Brickell, and thereafter will pay a percentage of Distributions, which varies depending upon the origin of the Distributions, until the Face Value of the Note, and accrued interest thereon, has been repaid in full. If the amounts payable to Brickell from Distributions are insufficient to repay the face value and interest accrued on the Note by the maturity date, our remaining repayment obligations under the Note will be reduced to zero with future payment obligations, if any, being determined under the PPFPA. The Note is secured by our patent assets and related proceeds and contains standard and customary representations, warranties and covenants. The Note contains events of default including, but not limited to, (a) failure to pay principal or interest on the Note when due; (b) breach of representations or covenants, (c) impairment in the perfection or priority of Brickell's security interests in the collateral, and (d) bankruptcy or dissolution of the Company. In the event of a default, the outstanding principal and accrued interest on the Note will become immediately due and payable. The PPFPA extends beyond the maturity date of the Note and provides that Brickell is entitled to a specified percentage of monetary recoveries resulting from our patent-related actions to the extent not already paid to Brickell under the Note, or otherwise prior to the inception of the Note. The PPFPA also contains standard and customary representations, warranties and covenants. The Note and PPFPA are collectively referred to as our secured contingent payment obligation.
We have elected to measure our secured contingent payment obligation at its estimated fair value based on probability-weighted estimated cash outflows, discounted back to present value using a discount rate determined in accordance with accepted valuation methods (see Note 11). The secured contingent payment obligation is remeasured to fair value at each reporting period with changes recorded in the condensed consolidated statements of comprehensive income (loss) until the contingency is resolved.
The underlying carrying value of the Note, which includes the Face Value plus accrued interest, was approximately $55.1 million and $51.0 million as of June 30, 2024 and December 31, 2023, respectively. The range of potential proceeds payable to Brickell is discussed more fully in Note 11. As of June 30, 2024, we are in compliance with our obligations under the Note and the PPFPA.
Unsecured Contingent Payment Obligations
The following table provides a reconciliation of our unsecured contingent payment obligations, measured at estimated fair value, for the six months ended June 30, 2024 and the year ended December 31, 2023 (in thousands):
Six Months Ended June 30, 2024 | Year Ended December 31, 2023 | |||||||
Unsecured contingent payment obligations, beginning of period |
$ | 7,618 | $ | 5,089 | ||||
Change in fair value |
(555 | ) | 2,529 | |||||
Unsecured contingent payment obligations, end of period |
$ | 7,063 | $ | 7,618 |
Our unsecured contingent payment obligations represent amounts payable to others from future patent-related proceeds including (i) a termination fee due to a litigation funder and (ii) contingent payment rights issued to accredited investors in connection with equity financings. We have elected to measure these unsecured contingent payment obligations at their estimated fair value based on probability-weighted estimated cash outflows, discounted back to present value using a discount rate determined in accordance with accepted valuation methods. The unsecured contingent payment obligations will be remeasured to fair value at each reporting period with changes recorded in the condensed consolidated statements of comprehensive loss until the contingency is resolved (see Note 11).
11. Fair Value Measurements
The following tables summarize the fair value of our contingent payment obligations measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 (in thousands):
Fair Value Measurements |
||||||||||||||||
Total Fair Value |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
June 30, 2024: |
||||||||||||||||
Liabilities: |
||||||||||||||||
Secured contingent payment obligation |
$ | 29,235 | $ | - | $ | - | $ | 29,235 | ||||||||
Unsecured contingent payment obligations |
7,063 | - | - | 7,063 |
Fair Value Measurements |
||||||||||||||||
Total Fair Value |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
December 31, 2023: |
||||||||||||||||
Liabilities: |
||||||||||||||||
Secured contingent payment obligation |
$ | 29,402 | $ | - | $ | - | $ | 29,402 | ||||||||
Unsecured contingent payment obligations |
7,618 | - | - | 7,618 |
The fair values of our secured and unsecured contingent payment obligations were estimated using a probability-weighted income approach based on various cash flow scenarios as to the outcome of patent-related actions both in terms of timing and amount, discounted to present value using a risk-adjusted rate. We used a risk-adjusted discount rate for the secured and unsecured contingent payment obligations of 18.62% and 18.9%, respectively, at June 30, 2024, based on a risk-free rate of 4.62% and 4.9%, respectively, as adjusted by 8% for credit risk and 6% for litigation inherent risk.
The following table provides quantitative information about the significant unobservable inputs used in the measurement of fair value for both the secured and unsecured contingent payment obligations at June 30, 2024, including the lowest and highest undiscounted payout scenarios as well as a weighted average payout scenario based on relative undiscounted fair value of each cash flow scenario.
Secured Contingent Payment Obligation |
Unsecured Contingent Payment Obligations |
|||||||||||||||||||||||
Unobservable Inputs |
Low |
Weighted Average |
High |
Low |
Weighted Average |
High |
||||||||||||||||||
Estimated undiscounted cash outflows (in millions) |
$ | - | $ | 42.7 | $ | 79.6 | $ | - | $ | 9.1 | $ | 10.8 | ||||||||||||
Duration (in years) |
1.0 | 2.2 | 3.0 | 1.0 | 1.5 | 3.0 | ||||||||||||||||||
Estimated probabilities |
5 | % | 19 | % | 35 | % | 5 | % | 21 | % | 35 | % |
We evaluate the estimates and assumptions used in determining the fair value of our contingent payment obligations each reporting period and make any adjustments prospectively based on those evaluations. Changes in any of these Level 3 inputs could result in a significantly higher or lower fair value measurement.
12. Commitments and Contingencies
Legal Proceedings
From time to time, we are subject to legal proceedings and claims which arise in the ordinary course of our business. These proceedings include patent enforcement actions initiated by us against others for the infringement of our technologies, as well as proceedings brought by others against us in an attempt to invalidate certain of our patent claims.
The majority of our litigation is being paid for through contingency fee arrangements with our litigation counsel as well as third-party litigation financing. In general, litigation counsel is entitled to recoup on a priority basis, from litigation proceeds, any out-of-pocket expenses incurred. Following reimbursement of out-of-pocket expenses, litigation counsel is generally entitled to a percentage of remaining proceeds based on the terms of the specific arrangement between us, counsel and our third-party litigation funder.
ParkerVision v. Qualcomm (Middle District of Florida-Orlando Division) - Appealed to U.S. Court of Appeals for the Federal Circuit
In March 2022, the district court in the Middle District of Florida ruled on a number of pre-trial motions in our patent infringement case against Qualcomm that was originally filed in May 2014. The court granted Qualcomm motions to strike and exclude our technical expert report, essentially precluding the support of infringement testimony at trial. The court also issued an order granting Qualcomm's motion for summary judgment ruling that Qualcomm did not infringe the remaining three patents in the case. We appealed these rulings to the United States Court of Appeals for the Federal Circuit ("CAFC") and oral arguments were heard in November 2023. In July 2024, the CAFC issued an order indicating that it did not have jurisdiction over this case as the district court had not entered a final judgement on Qualcomm's counterclaims of invalidity. The CAFC indicated that the appeal could be refiled, without fees, by August 15, 2024. The parties filed a motion with the district court requesting an order dismissing Qualcomm's counterclaims of invalidity without prejudice. On August 1, 2024, the district court issued such an order, and on August 7, 2024, the matter was transferred back to the CAFC.We are currently awaiting a final ruling from the CAFC. As a result of the court's summary judgment motion in favor of Qualcomm, Qualcomm has the right to petition the court for its fees and costs. The court has granted a Qualcomm motion to delay such a petition until 30 days following the appellate court's decision. We are represented in this case on a full contingency fee basis.
ParkerVision v. Apple and Qualcomm (Middle District of Florida-Jacksonville Division)
We have a patent infringement case in the Middle District of Florida against Apple Inc. ("Apple") and Qualcomm, filed in December 2015, alleging infringement of four of our patents, which was subsequently reduced to one patent. Fact discovery has closed in this case and a jury trial was scheduled to begin in August 2020. In March 2020, as a result of the impact of COVID-19, the parties filed a motion requesting an extension of certain deadlines in the case. In April 2020, the court stayed this proceeding pending the outcome of the infringement case against Qualcomm in the Orlando Division of the Middle District of Florida, which is currently pending an appeal.
ParkerVision v. LG (District of New Jersey)
In July 2017, we filed a patent infringement complaint in the District of New Jersey against LG for the alleged infringement of four patents previously asserted in the Middle District of Florida (see ParkerVision v. Apple and Qualcomm above). We elected to dismiss the case originally filed against LG in the Middle District of Florida and re-file in New Jersey as a result of a Supreme Court ruling regarding venue. In March 2018, the court stayed this case pending a final decision in ParkerVision v. Apple and Qualcomm in the Middle District of Florida. As part of this stay, LG has agreed to be bound by the final claim construction decision in that case.
ParkerVision v. Intel (Western District of Texas)
We filed two patent infringement complaints in the Western District of Texas against Intel Corporation ("Intel") in 2020, alleging infringement of approximately ten of our patents by Intel cellular, WiFi and Bluetooth products. The first case was scheduled for trial commencing February 6, 2023. Beginning in November 2022, the parties filed a number of pre-trial motions. The court held hearings on these pre-trial motions in January 2023. The court issued its written orders with regard to these motions immediately prior to the February 6, 2023 trial start date. As a result of the court's pre-trial rulings, the potential damages in the case decreased significantly. On February 7, 2023, the parties resolved their outstanding dispute and we dismissed all pending actions against Intel.
ParkerVision v. Realtek (Western District of Texas)
We filed two patent infringement actions in the Western District of Texas against Realtek Semiconductor Corp. ("Realtek"), the first in 2022 and a second in 2023, alleging infringement of an aggregate of seven of our patents. A claim construction hearing was held in January 2024 in the first Realtek action and the court adopted the majority of our claim constructions. A jury trial for the first Realtek action is scheduled for March 2025. A claim construction hearing was held in June 2024 in the second Realtek action and we are currently awaiting a claim construction ruling and trial date.
ParkerVision v. TCL (Western District of Texas)
We filed two patent infringement actions in the Western District of Texas in 2020 and 2021 against TCL Industries Holdings Co., Ltd, a Chinese company, TCL Electronics Holdings Ltd., Shenzhen TCL New Technology Co., Ltd, TCL King Electrical Appliances (Huizhou) Co., Ltd., TCL Moka Int'l Ltd. and TCL Moka Manufacturing S.A. DE C.V. (collectively "TCL") alleging infringement of approximately twelve of our patents. The court issued its claim construction recommendations in the first TCL case, adopting our claim constructions for nearly all of the disputed terms. In January 2023, the TCL action was stayed pending final resolution of patent infringement action filed against Realtek, the manufacturer of the integrated circuits used in TCL's alleged infringing products.
ParkerVision v. MediaTek (Western District of Texas)
We filed three patent infringement actions in the Western District of Texas against MediaTek Inc. and MediaTek USA Inc. (collectively, "MediaTek"), the first in 2022 and two additional cases in 2023, alleging infringement of an aggregate of ten of our patents. A claim construction hearing was held in January 2024 in the first MediaTek action and the court adopted the majority of our claim constructions. A jury trial for the first MediaTek action is currently scheduled for April 2025. A claim construction hearing was held in June 2024 in the second MediaTek action. We are currently awaiting the claim construction ruling and a jury trial is tentatively scheduled for February 2026.
ParkerVision v. LGE (Western District of Texas)
We filed a patent infringement action in the Western District of Texas against LG Electronics, a South Korean company ("LGE") in 2021, alleging infringement of ten of our patents. The court issued its claim construction recommendations in June 2022, adopting our claim constructions for nearly all of the disputed terms. In January 2023, the LGE action was stayed pending final resolution of patent infringement actions filed against Realtek and MediaTek as well as final resolution of IPR actions against patents in this case.
ParkerVision v. Texas Instruments (Western District of Texas)
We filed a patent infringement action in the Western District of Texas against Texas Instruments ("TI") in 2023, alleging infringement of three of our patents. In December 2023, TI filed a motion to change venue to the Northern District of Texas. Although a formal order has not been issued on the change of venue matter, the court informed the parties prior to the claim construction hearing that it intends to deny this motion. The claim construction hearing was held in June 2024. The court adopted the majority of our claim constructions, and we are currently awaiting its formal claim construction ruling. A jury trial is tentatively scheduled for May 2025.
ParkerVision v. NXP Semiconductors (Western District of Texas)
We filed a patent infringement action in the Western District of Texas against NXP Semiconductors ("NXP") in 2023, alleging infringement of three of our patents. A claim construction hearing was held in June 2024. The court adopted the majority of our claim constructions, and we are currently awaiting its formal claim construction ruling. A jury trial is tentatively scheduled for August 2025.
Intel (USPTO) v. ParkerVision (PTAB)
We appealed an IPR action, originally filed by Intel, against our U.S. patent 8,190,108, ("the '108 Patent") which was asserted in ParkerVision v. Intel in the Western District of Texas. Following our February 2023 resolution of the infringement actions against Intel, Intel withdrew from the IPR cases; however the U.S. Patent and Trademark Office ("USPTO") has exercised its right to intervene to defend the PTAB's decisions. In June 2022, the PTAB issued its final decision for the '108 Patent, determining that the challenged claims of the '108 Patent were unpatentable. We appealed this decision to the CAFC and oral arguments were presented on May 9, 2024. On May 16, 2024, the CAFC issued its decision upholding the PTAB ruling that the challenged claims are unpatentable.
TCL and LGE v. ParkerVision (PTAB)
We appealed two IPR actions filed by TCL and LGE against our U.S. patent 7,292,835 ("the '835 Patent") and U.S. patent 7,110,444 ("the '444 Patent"), both of which are asserted in the infringement cases against these parties in the Western District of Texas. Oral hearings for these IPRs were held by the PTAB in September 2022. In November 2022, the PTAB issued its written decision ruling that the challenged claims for both patents were unpatentable. We appealed these decisions to the CAFC and oral arguments for both appeals were presented to the CAFC on June 3, 2024. On June 5, 2024, the CAFC issued its final decision in both of these cases, upholding the PTAB rulings that the challenged claims are unpatentable.
MediaTek v. ParkerVision (PTAB)
MediaTek filed an IPR petition in November 2023 against the '835 Patent, which is one of the patents asserted in the first MediaTek infringement action. On May 23, 2024, the PTAB instituted the IPR petition. On May 21, 2024, MediaTek filed a second IPR petition against the '686 Patent which is one of the patents asserted in the second MediaTek infringement action.
TI v. ParkerVision (PTAB)
In May 2024, TI filed IPR petitions against all three of the patents asserted in our infringement action against them.
NXP v. ParkerVision (PTAB)
In June 2024, NXP filed IPR petitions against two of the three patents asserted in our infringement action against them. Both of the IPR challenges are against patents also challenged by TI IPR petitions in May 2024.
Other Contingencies
In July 2024, a public relations firm engaged by us in late 2019 threatened to file a claim against us for the collection of payment for billed and unbilled services totaling approximately $0.3 million purportedly performed by them under our engagement agreement during the period from December 2019 through May 2021. We currently do not believe a loss related to this claim is probable based on the merits, and therefore our financial statements for the period ended June 30, 2024 do not reflect any accrued liability related to this matter. Due to the inherent uncertainty of the outcome of litigation, we believe a loss related to this threatened action is reasonably possible in the future, although the estimated amount and relative materiality of such possible future loss is currently indeterminable.
13. Stock Authorization and Issuance
Stock Issuances
Payment for Services
During the six months ended June 30, 2024, we issued 120,000 shares of our common stock to third parties, valued at approximately $19,000, as payment for consulting services over a one-year period.
Common Stock Warrants
As of June 30, 2024, we had outstanding warrants for the purchase of up to 10.3 million shares of our common stock. The estimated grant date fair value of these warrants of $3.5 million is included in additional paid-in capital in our condensed consolidated balance sheets. As of June 30, 2024, our outstanding warrants have an average exercise price of $0.75 per share and a weighted average remaining life of approximately 1.0 years.
14. Share-Based Compensation
There has been no material change in the assumptions used to compute the fair value of our equity awards, nor in the method used to account for share-based compensation from those stated in our 2023 Annual Report.
For the six months ended June 30, 2024 and 2023, we recognized share-based compensation expense of approximately $0.15 million and $0.32 million, respectively. Share-based compensation is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of comprehensive income (loss). As of June 30, 2024, there was $0.2 million of total unrecognized compensation cost related to all non-vested share-based compensation awards. The cost is expected to be recognized over a weighted-average remaining life of approximately 0.8 years.
15. Income Taxes
The Company's effective income tax rate was 0.0% for each of the six months ended June 30, 2024 and 2023 as we expect to be able to utilize net operating loss carryforwards not previously recognized as a tax benefit to offset any income tax expense related to income for the 2023 and 2024 tax years.
16. Related Party Transactions
On May 10, 2024, we amended convertible notes held by three of our directors. A June 19, 2019 note with a principal balance of $25,000 and a September 13, 2019 note with a principal balance of $50,000, both held by Lewis Titterton, were amended to extend the maturity dates to March 15, 2026, reduce the interest rate from 8% to 5% and to replace the quarterly interest payments with a single payment of unpaid, accrued interest at the earlier of conversion or maturity of the notes (see Note 9). Additional convertible notes with an aggregate principal balance of $475,000 were also amended to replace the quarterly interest payment dates with a single payment of unpaid, accrued interest at the earlier of conversion or maturity of the notes. These additional amended notes include a $50,000 convertible note dated January 8, 2020 and a $200,000 convertible note dated May 10, 2022, both held by Lewis Titterton, a $100,000 convertible note dated May 10, 2022 and a $100,000 convertible note dated September 15, 2023, both held by Paul Rosenbaum, and a $25,000 convertible note dated August 3, 2022 held by Sanford Litvak.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
We believe that it is important to communicate our future expectations to our shareholders and to the public. This quarterly report contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, including, in particular, statements about our future plans, objectives, and expectations contained in this Item. When used in this quarterly report and in future filings by us with the Securities and Exchange Commission ("SEC"), the words or phrases "expects", "will likely result", "will continue", "is anticipated", "estimated" or similar expressions are intended to identify "forward-looking statements." Readers are cautioned not to place undue reliance on such forward-looking statements, each of which speaks only as of the date made. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected, including the risks and uncertainties identified in our annual report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 Annual Report") and in this Item 2 of Part I of this quarterly report. Examples of such risks and uncertainties include general economic and business conditions, competition, unexpected changes in technologies and technological advances, the timely development and commercial acceptance of new products and technologies, reliance on our intellectual property, the outcome of our intellectual property litigation and the ability to obtain adequate financing in the future. We have no obligation to publicly release the results of any revisions which may be made to any forward-looking statements to reflect anticipated events or circumstances occurring after the date of such statements.
Corporate Website
We announce investor information, including news and commentary about our business, financial performance and related matters, SEC filings, notices of investor events, and our press and earnings releases, in the investor relations section of our website (http://ir.parkervision.com). Additionally, if applicable, we webcast our earnings calls and certain events we participate in or host with members of the investment community in the investor relations section of our website. Investors and others can receive notifications of new information posted in the investor relations section in real time by signing up for email alerts and/or RSS feeds. Further corporate governance information, including our governance guidelines, board of directors ("Board") committee charters, and code of conduct, is also available in the investor relations section of our website under the heading "Corporate Governance." The content of our website is not incorporated by reference into this Quarterly Report or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.
Overview
We have invented and developed proprietary radio frequency ("RF") technologies and integrated circuits based on those technologies, and we license those technologies to third parties for use in wireless communication products. We have expended significant financial and other resources to research and develop our RF technologies and to obtain patent protection for those technologies in the United States of America ("U.S.") and certain foreign jurisdictions. We believe certain patents protecting our proprietary technologies have been broadly infringed by others and therefore the primary focus of our business plan is the enforcement of our intellectual property rights through patent licensing and infringement litigation efforts. We currently have patent enforcement actions ongoing in various U.S. district courts against mobile handset, smart television, and other WiFi product providers, as well as semiconductor suppliers, for the infringement of several of our RF patents. We have made significant investments in developing and protecting our technologies, the returns on which are dependent upon the generation of future revenues for realization.
Liquidity and Capital Resources
We used cash for operations of approximately $1.4 million for the six months ended June 30, 2024 and generated cash from operations of $12.3 million for the six months ended June 30, 2023. The decrease in cash generated from operations from 2023 to 2024 is primarily due to proceeds received from the patent license and settlement agreement entered into in February 2023, net of contingent legal fees and expenses paid.
At June 30, 2024, we had cash and cash equivalents of approximately $1.0 million, an accumulated deficit of $434.7 million, and a working capital deficit of $1.3 million. At June 30, 2024, we had $2.4 million in current liabilities, including approximately $1.3 million in convertible debt that matures over the next twelve months. In addition, a significant amount of future proceeds that we may receive from our patent enforcement and licensing programs will first be utilized to repay borrowings and legal fees and expenses under our contingent funding arrangements. These circumstances raise substantial doubt about our ability to continue to operate as a going concern for a period of one year following the issue date of these condensed consolidated financial statements.
Our current capital resources are not sufficient to meet our liquidity needs for the next twelve months and we may be required to seek additional capital. Our ability to meet our liquidity needs for the next twelve months is dependent upon (i) our ability to successfully negotiate licensing agreements and/or settlements relating to the use of our technologies by others in excess of our contingent payment obligations, (ii) our ability to control operating costs, (iii) our ability to successfully negotiate extensions to the maturity date for certain convertible notes, and/or (iv) our ability to obtain additional debt or equity financing. We expect that proceeds received by us from patent enforcement actions and technology licenses over the next twelve months may not alone be sufficient to cover our working capital requirements.
We expect to continue to invest in the support of our patent licensing and enforcement program. The long-term continuation of our business plan is dependent upon the generation of sufficient cash flows from our technologies and/or products to offset expenses and debt obligations. In the event that we do not generate sufficient cash flows, we will be required to obtain additional funding through public or private debt or equity financing or contingent fee arrangements and/or reduce operating costs. Failure to generate sufficient cash flows, raise additional capital through debt or equity financings or contingent fee arrangements, and/or reduce operating costs will have a material adverse effect on our ability to meet our long-term liquidity needs and achieve our intended long-term business objectives.
Financial Condition
Our working capital decreased approximately $1.7 million from December 31, 2023 to June 30, 2024. This decrease in working capital is primarily the result of cash used in operations during the six months ended June 30, 2024 and an increase in current liabilities from the reclassification of an additional $0.3 million of convertible notes that mature within the next twelve months, from long-term to current liabilities.
Our long-term liabilities decreased $1.1 million from December 31, 2023 to June 30, 2024, primarily due to the reclassification of an additional $0.3 million of convertible notes that mature within the next twelve months from long-term to current liabilities and an overall decrease in the estimated fair value our contingent payment obligations of $0.7 million.
Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023
Revenue and Cost of Sales
We reported no licensing revenue for the three and six months ended June 30, 2024 or the three months ended June 30, 2023. Licensing revenue was $25.0 million for the six months ended June 30, 2023, resulting from a patent license and settlement agreement entered into in February 2023. The parties' performance obligations were met in February 2023 and we recognized revenue at that time. Cost of sales for the three and six months ended June 30, 2024 and 2023 consists of amortization expense related to the patents covered under license agreements. Revenue resulting from our patent enforcement actions is highly unpredictable with respect to the amount and timing of receipt, and there can be no assurance that we will achieve our anticipated results.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses consist primarily of litigation fees and expenses, personnel and related costs, including share-based compensation, for executive, Board, finance and accounting and technical support personnel for our patent enforcement program, and costs incurred for insurance and outside professional fees for accounting, legal and business consulting services.
Our selling, general and administrative expenses decreased by approximately $0.4 million, or 39.3%, during the three months ended June 30, 2024 when compared to the same period in 2023. This is primarily the result of a $0.2 million decrease in compensation expense, including share-based compensation and a $0.2 million decrease in consulting expenses.
Our selling, general and administrative expenses decreased by approximately $11.8 million, or 89.0%, during the six months ended June 30, 2024 when compared to the same period in 2023. This is primarily the result of an $11.1 million decrease in litigation fees and expenses, a $0.3 million decrease in compensation expense, including share-based compensation, and a $0.3 million decrease in consulting expenses.
The decrease in our compensation expense for the three and six months ended June 30, 2024 is the result of the elimination of bonuses and share-based awards to employees and executives in 2024. As of June 30, 2024, we had $0.2 million of total unrecognized compensation cost related to non-vested share-based compensation awards that is expected to be recognized over a period of approximately 0.8 years. The decrease in consulting fees for the three and six months ended June 30, 2024 is primarily due to decisions not to continue or extend prior consulting arrangements as a result of changes in business strategy.
The decrease in litigation fees and expenses from 2023 to 2024 is the result of contingent legal fees and expenses recognized in 2023 in conjunction with the confidential patent license and settlement agreement reached in February 2023.
Change in Fair Value of Contingent Payment Obligations
We have elected to measure our secured and unsecured contingent payment obligations at fair value which is based on significant unobservable inputs. We estimated the fair value of our secured contingent payment obligations using a probability-weighted income approach based on the estimated present value of projected future cash outflows using a risk-adjusted discount rate. Increases or decreases in the significant unobservable inputs could result in significant increases or decreases in fair value. Generally, changes in fair value are a result of changes in estimated amounts and timing of projected future cash flows due to increases in funded amounts, passage of time, and changes in the probabilities based on the status of the funded actions.
For the three months ended June 30, 2024 and 2023, we recorded aggregate decreases in the fair value of our secured and unsecured contingent payment obligations of approximately $0.5 million and $2.7 million, respectively. For the six months ended June 30, 2024 and 2023, we recorded aggregate decreases in the fair value of our secured and unsecured contingent payment obligations of approximately $0.7 million and $3.1 million, respectively. The change in fair value for the three and six months ended June 30, 2024 was primarily the result of changes in the estimated amounts and timing of projected future cash flows due to changes in probabilities and time frames based on the status of various patent infringement actions.
Off-Balance Sheet Transactions, Arrangements and Other Relationships
As of June 30, 2024, we had outstanding warrants to purchase approximately 10.3 million shares of our common stock. The estimated grant date fair value of these warrants of approximately $3.5 million is included in shareholders' deficit in our condensed consolidated balance sheets. The outstanding warrants have a weighted average exercise price of $0.75 per share and a weighted average remaining life of approximately 1.0 years.
Critical Accounting Policies
There have been no changes in accounting policies from those stated in our 2023 Annual Report. We do not expect any newly effective accounting standards to have a material impact on our financial position, results of operations or cash flows when they become effective.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
ITEM 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of June 30, 2024, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our "disclosure controls and procedures," as defined in Rule 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of June 30, 2024.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
Reference is made to the section entitled "Legal Proceedings" in Note 12 to our unaudited condensed consolidated financial statements included in this quarterly report for a discussion of current legal proceedings, which discussion is incorporated herein by reference.
ITEM 1A. Risk Factors.
There have been no material changes from the risk factors disclosed in Item 1A of Part I of our Annual Report. In addition to the information in this quarterly report, the risk factors disclosed in our Annual Report should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds, Issuer Purchases of Equity Securities.
None.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. Mine Safety Disclosures.
Not applicable.
ITEM 5. Other Information.
None.
ITEM 6. Exhibits.
* 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.
ParkerVision, Inc. |
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Registrant |
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August 13, 2024 |
By: |
/s/Jeffrey L. Parker |
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Jeffrey L. Parker |
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Chairman and Chief Executive Officer |
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(Principal Executive Officer) |
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August 13, 2024 |
By: |
/s/Cynthia L. French |
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Cynthia L. French |
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Chief Financial Officer |
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(Principal Financial Officer and Principal |
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Accounting Officer) |